Some of your favorite Drug and Device Law bloggers will be presenting at Reed Smith’s Life Sciences CLE Day, which will be presented live in Reed Smith’s Philadelphia office and via videoconference to our Pittsburgh office on Thursday, November 15. This is a free, full-day CLE program designed for in-house counsel at life sciences companies.

Bexis will be covering “Key Issues Currently Before the Supreme Court and Other Supremely Interesting Cases,” discussing cases teed up for the current Supreme Court term that could have significant implications for preemption in prescription drug cases, class action strike suits, and even basic product liability law.

Steve McConnell and Rachel Weil will be discussing “Games People Play: Decision Points in MDLs,” which will examine recent trends in multidistrict litigation, particularly in life sciences and product liability cases. The focus will be on strategies for being in the right court, reasonably cabining the scope of discovery, facilitating federal-state and joint defense cooperation, and avoiding adverse trial scenarios.

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

  • Ethics “do’s and don’t’s” in-house counsel can learn from some real stories of questionable ethics and sanctionable conduct
  • The recent N.J. Supreme Court decision where the Court unanimously upgraded the state’s standards for admission of expert testimony, and wider discussion around expert testimony
  • Health tech developments affecting drug and device companies
  • Unexpected issues that are arising for life sciences and health companies in a post-GDPR world, despite companies’ careful preparedness for GDPR implementation
  • Key State AG enforcement activities relevant for life sciences companies, and likely new trends in this area
  • Pharmaceutical pricing and contracting compliance and the potential impact of the Trump administration’s “Blueprint” to address concerns over pricing

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

This program is presumptively approved for 5.0 general CLE credit and 1.0 Ethics credit in Pennsylvania, California, Texas and Florida. The program is also approved for 6.0 general CLE credit and 1.0 Ethics credit in New Jersey. It is presumptively approved for 5.0 general CLE credit and 1.0 Ethics credit under New York’s approved jurisdiction policy. Applications for general and Ethics CLE are pending in Delaware, Illinois, and West Virginia.

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

 

Not terribly long ago, we had a series of posts—too many to link—that recounted court decisions rejecting efforts to impose liability on a generic manufacturer for the standard design and labeling claims and/or on an NDA holder for injuries allegedly caused by the use of the generic version of its drug. When the conjunctive held, we called it a one-two punch. We cannot say that we coined the term as used here, but we repeated it more than a few times. It has since become fairly standard for most claims against generic manufacturers to be held preempted by the frightful duo of Mensing and Bartlett. Save abominations like the T.H. case, the concept of innovator liability has largely been put to bed like a kid crashing after a sugar high. Still, plaintiffs sometimes try to impose liability on both the generic manufacturer whose drug they took and the branded manufacturer whose drug they did not.

When they do and a court rules, we pull the one-two punch from the back of our metaphor closet and see how it lands. In Preston v. Janssen Pharms., Inc., No. 158570/17, 2018 WL 5017045 (N.Y. Sup. Ct. Oct. 12, 2018), the plaintiff claimed vision loss from her off-label use of the generic version of Topiramate, a well-established anti-convulsive. For more than a decade before she began her three year course, the label for the branded version contained warnings and precautions about ocular conditions that could result in permanent vision loss if untreated. After waiting more than two years to sue, she sued both the branded and generic manufacturers, claiming the records were unclear as to which drug she took for three years.

The branded manufacturer moved to dismiss, contending the complaint only asserted claims based on the generic drug that it did not make. It is not clear that the plaintiff tried to assert innovator liability in addition to claiming that the branded dug might have been used, but the court looked at the evidence and ruled on the merits. Because the evidence was clear that only the generic drug had been used, the next step to first punch was whether New York recognizes innovator liability. Citing the same cases we have before, the Preston court held that “named-brand drug manufacturers . . . cannot be held liable to the user of the generic form of that drug, since the manufacturer of the brand named drug owes no duty to the user of the drug’s generic form.” Id. at *3.

That takes us to the motion to dismiss of the generic manufacturer, the potential second punch. Plaintiff conceded, and the court accepted, that design claims are preempted because the generic manufacturer cannot change the drug’s design. Id. at *6. The plaintiff disputed that the warnings claim was preempted based on an alleged failure to update the generic label to match the branded drug’s label. For about eight months after the plaintiff started the generic drug, its label allegedly did not match. When the plaintiff alleged suffered her injuries, it did. A few years later, it allegedly did not match again. Plaintiff claimed that the later mismatch knocked out preemption for any warnings claim, but the court parried that argument. Following Mensing, the court held preempted claims based on any period when the warning of the generic drug matched, but allowed at the pleadings stage any claim based on the pre-injury period when there was an alleged failure to update. Id. at *5. So, the second punch did not quite land flush. It may be difficult for the plaintiff to sustain a claim about the warning when the plaintiff was first prescribed the drug when she kept receiving it when the warning was updated and her injuries allegedly developed during this later period. We suppose the warning claim might get kicked at the summary judgment stage. Preston also addressed the adequacy of pleading of various other claims that tend to be thrown into a product liability complaint, but she will have a chance to try to correct what was inadequately pled. Nothing too decisive or interesting about that, at least to us and at this stage.

An unexpected bit of good news as we go into November. Bexis will be presenting at the Reed Smith annual client CLE program on big-deal pending cases.  In preparation, he took a look at the SCOTUSBlog page for Merck Sharp & Dohme Corp. v. Albrecht, No 17-290 (that’s the Supreme Court name for In re Fosamax in the Third Circuit).  There’s a new entry from last Friday: “Justice Alito is no longer recused in this case.”  See also, from the Supreme Court’s official docket:

Oct 26 2018 Justice Alito is no longer recused in this case.

That’s good news for our side, because as we mentioned at the time certiorari was accepted:

We do note one unfortunate aspect of the order granting review: “Justice Alito took no part in the consideration or decision of this petition.” Since Justice Alito has historically supported preemption – he wrote the dissent in Wyeth v. Levine, 555 U.S. 555 (2009) – that means we’re short a vote.

Not any more. Our understanding, based on something we heard several years ago, is that Justice Alito at one time held stock in Merck. Evidently not any longer. While we’re not counting our chickens in Albrecht before they’ve hatched, we’re not playing a man short any longer, either. So we like our side’s chances in Albrecht even better now.

For more of our Albrecht/Fosamax coverage see here, here, here, and here.

Happy Halloween. We are very old school when it comes to this spooky holiday. Our pumpkins are orange, our candy bowl is full of Kit Kats, and our favorite horror movies are black and white Universal monster movies from the 1930’s and 40’s. To our ears, nothing screams Halloween quite like the great Una O’Connor screaming. See and listen here for examples of her wonderful performances in The Invisible Man and Bride of Frankenstein as a proper lady properly terrorized by creepy creatures. (O’Connor’s last film role was in Witness for the Prosecution as an ear-witness who resisted impeachment.) The Invisible Man, Bride of Frankenstein, and the original Frankenstein movie were all directed by James Whale, a man of enormous talents and humor, as well as enormous tortures. The Gods and Monsters film portrays Whale in his uneasy later days.

At this point, we cannot resist a Halloween joke, this one by Dana Gould. It goes like this: In this country we celebrate a holiday where frightening strangers come to our homes and take goodies from us. We call it Halloween. A month later, the next big holiday arrives – Thanksgiving. But Native Americans have another name for that holiday; they call it … Halloween.

Recently, we found ourselves screaming like Una O’Connor after a plaintiff filed a summary judgment motion against us. That plaintiff had the temerity to argue that her failure to warn claim was a foregone conclusion. Our screams arose from surprise, indignation, and, finally, laughter. With one brain tied behind our back, we could scare up a genuine factual dispute. Take a look at the report by our expert, who is very smart and says our warning was adequate and no reasonable doctor would have been misled. While you’re at it, read our Daubert motion, wherein we demonstrate that the plaintiff experts are about as scientific as Colin Clive in Frankenstein, dancing under the lightning and proclaiming, “It’s alive, alive!” Not quite. Our expert marshals the data and literature and says this about the lawsuit: “It’s dead, dead!”

Plaintiff motions for summary judgment are menacing, but miss the mark more often than not. That was certainly true in Nielsen v. Smith & Nephew Inc. et al., 2018 WL 5282901 (E.D. Wisc. Oct. 24, 2018). If anyone is screaming in this case, it is the judge, obviously pained by bad briefing. The plaintiff alleged that a hip replacement device fractured ten years after it had been implanted. The complaint’s main target was the distributor of the implants, because the manufacturer had gone under. There were 11 causes of action, but a defense summary judgment motion prompted the plaintiff to concede that almost all were pure hooey. Not a great start for the plaintiff. The only real motion fight was on the negligence claim against the distributor. Meanwhile, the plaintiff moved for summary judgment against the distributor on two grounds: (1) that the distributor of the hip devices could be liable under Wisconsin law because the manufacturer had gone bankrupt and lacked insurance coverage, and (2) the device lacked adequate warnings.

To put it mildly, the Nielsen judge was not impressed by the plaintiff’s motion. The plaintiff supported his motion by attaching letters and emails from the manufacturer’s counsel and insurer. That’s all inadmissible hearsay. Consequently, the solvency of the manufacturer — and, therefore, whether the distributor could be a proper defendant — would need to be decided at trial, not on summary judgment. The plaintiff’s summary judgment on product warnings fared no better. The plaintiff’s expert did, predictably, say the warnings should have been more explicit and petrifying. But just as predictably, the defense expert pronounced the warnings to be just peachy. We in the business call this sort of thing a factual dispute. That’s also what the court called it. It was not a close call, as far the court was concerned. The plaintiff “inexplicably declined to dispute any of [the distributor defendant’s] statements of additional facts.” Moreover, the plaintiff offered no relevant case law under Wisconsin’s product liability act. Rather, the plaintiff “seems content to leave it to the Court to find the law that supports his arguments. It will not do so.” Ouch.

The distributor defendant’s motion for summary judgment was more successful than the plaintiff’s motion. (Frankly, it is unimaginable how it could be less successful.) The plaintiff’s motion was premised on his expert’s opinion about what the warnings should have included. But the issue was the warning obligation of a “reasonable distributor.” Amazingly, the plaintiff’s expert addressed only manufacturer duties. Those duties were plainly inapplicable to the distributor defendant, which was “simply a middle man.” The complete failure of the plaintiff to join issue mightily annoyed the judge, who wrote as follows: “Such minimal effort, devoid of any citation to law or meaningful discussion of evidence, is an insult to the Court.” Double ouch. The plaintiff basically brought motions and then made no attempt to prove what he had to prove.

The distributor defendant did not cross-move on every claim. There is still a strict liability claim against it, and that claim will go to trial in November. But based on what happened with the cross motions for summary judgment, if we were the Nielsen plaintiff we would not be sanguine. Nope. We’d be scared.

Failure to warn claims premised on a failure to report incidents to a federal governing agency are preempted in the Third Circuit. Sikkelee v. Precision Airmotive Corporation, — F.3d –, 2018 WL 5289702 (3d. Cir. Oct. 25, 2018). And this would be a DDL Blog drop the mic moment if the ruling had come in a prescription drug case instead of in an opinion involving airplanes. However, throughout the decision, the court analogizes to drug preemption decisions making us feel safe to say that Sikkelee’s Buckman-based rationale applies to all governmental agencies – FDA included. This isn’t the first time we’ve blogged about Sikkelee (see here and here). It’s bounced back and forth from the Middle District of Pennsylvania to the Third Circuit a couple of times with preemption at the forefront.

And, in the unanimous portion of the decision, the Third Circuit upheld the district court’s decision to grant defendant’s summary judgement motion dismissing plaintiff’s failure-to-notify-the-FAA claim. Id. at *11. FAA regulations require manufacturers to “report any failure, malfunction, or defect in any product . . . that it determines has results in any of the [listed] occurrences.” Id. Plaintiff argued that the alleged defect at issue was the type required to be reported, that defendant failed to report, and if it had reported, the FAA would have taken action. Id. Sound familiar? Replace “defect” with “adverse event” and “FAA” with “FDA” and you’ve got a Stengel claim. But unlike the Ninth Circuit, the Third Circuit found that what plaintiff was doing was trying “to use a federal duty and standard of care as the basis for this state-law negligence claim.” Id. Right. We say that all the time in pharmaceutical cases. Federal law does not require warnings to plaintiffs or their doctors. State law does not require warnings to the FDA. In the absence of a state-law duty to make reports to a government agency, a failure to report claim is an improper private attempt to enforce the FDCA (or FAA as the case may be). The Third Circuit based its decision primarily on Buckman as analogous to a fraud-on-the-FDA claim and rendering it impliedly preempted.

After Sikkelee, we also feel it’s safe to say that the horrendous decision a few months ago in Bull v. St. Jude Medical, Inc., 2018 WL 3397544 (E.D. Pa. Jul. 12, 2018) (recognizing failure-to-report-to-FDA claim), is now just bull. (Decision discussed here).

We can’t completely ignore that the Third Circuit also overturned, in a 2-1 decision, the district court’s decision finding plaintiff’s other claims were conflict preempted. The majority found the regulatory framework to be more like Wyeth v. Levine, 555 U.S. 555 (2009) – finding FAA regulations would have allowed defendant to make a change without prior FAA approval and therefore concluding that the claim was not preempted absent “clear evidence” that FAA would have rejected the change. Whereas the Middle District and dissenting Third Circuit opinions found PLIVA, Inc. v. Mensing, 564 U.S. 604 (2011) and Mutual Pharmaceutical Co. v. Bartlett, 570 U.S. 472 (2013) controlled interpreting FAA regulations as not allowing independent design changes. Since this discussion really turns on distinguishable FAA-based regulatory facts, we don’t think it has much impact on our drug and device world except the continued recognition of Mensing and Bartlett outside the generic drug arena. Also, the clear evidence aspects of the decision likely will be affected by the Supreme Court’s decision in the pending Fosamax appeal.

Private plaintiffs love to scream “fraud on the FDA”!  Agency fraud is their magic potion for dissolving any FDA action that they don’t like.  Just assert that the FDA was bamboozled and invite some jury somewhere to ignore what the FDA actually did.  Unfortunately for the other side, Buckman Co. v. Plaintiffs Legal Committee, 531 U.S. 341 (2001), precludes private plaintiffs from bringing such allegations bases on state tort law.  The FDCA is quite clear, in 21 U.S.C. §337(a), that only the government – not private plaintiffs – may seek to enforce the Act.

In Buckman, the Court held (unanimously), first, that “fraud-on-the-FDA claims inevitably conflict with the FDA’s responsibility to police fraud consistently with the Administration’s judgment and objectives.”  Id. at 350.  That’s rather obvious, because the logic of any agency fraud claim is that “fraud” allows a factfinder to conclude that, if not defrauded, the agency wouldn’t have done what it did.  That presents a rather raw conflict with whatever the agency actually did, which (unless revoked by the affected agency) is a federal decision presumably still in effect.

Second, in the context of the FDCA specifically, the Court recognized that Congress did not want private individuals running around purporting to enforce any of the many requirements imposed by the FDA under the Act.  That’s the §337(a) aspect:  “The FDCA leaves no doubt that it is the Federal Government rather than private litigants who are authorized to file suit for noncompliance with the medical device provisions:  ‘[A]ll such proceedings for the enforcement, or to restrain violations, of this chapter shall be by and in the name of the United States.’”  531 U.S. at 349 n.4 (quoting §337(a)). “[W]e have clear evidence that Congress intended that the MDA be enforced exclusively by the Federal Government.”  Id. at 352 (again citing §337(a)).

But Buckman involved only state-law claims and thus preemption was easily invoked to prevent both the inherent conflict and the private enforcement problems identified by the Court.  So Buckman does not directly prohibit private litigants from using a federal statute to assert purported fraud-on-the-FDA claims.  One federal statute does not preempt another.  POM Wonderful LLC v. Coca-Cola Co., 573 U.S. 102, ___, 134 S. Ct. 2228, 2236 (2014) (“the alleged preclusion of a cause of action under one federal statute by the provisions of another federal statute” “is not a pre-emption case”).  There are at least four types of federal statutes that we expect plaintiffs to use to attempt private enforcement of fraud-on-the-FDA claims:  the False Claims Act (“FCA”), the Lanham Act, RICO, and antitrust statutes.  Most of the action, particularly recently, has involved the FCA.

There are other types of wanna-be private FDCA enforcement than fraud on the FDA – that’s what POM Wonderful was about (FDA-permitted food labels that allegedly deceived the public, not the FDA) – but we’re more interested in Buckman than anything else, so we wanted to see how fraud-on-the-FDA claims specifically have fared, when asserted under these other federal statutes.

Most recently, in a FCA decision that we discussed here, the First Circuit rejected allegations that were little different, substantively, from those that had produced Buckman itself.  Plaintiff alleged that the defendant “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.”  United States ex rel. Nargol v. DePuy Orthopaedics, Inc., 865 F.3d 29, 31 (1st Cir. 2017).  Based on those allegations, the Nargol plaintiffs claimed the every use of the product was as false claim – without the FDA’s (allegedly fraudulently obtained) approval, “doctors would not have certified the devices for government reimbursement.”  Id.  The First Circuit held, in effect, “hell, no.” The FDA was aware of all the mud the plaintiffs threw against the wall and did not rescind its decision:

Such very strong evidence [of immateriality] becomes 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.  In such a case, it is not plausible that the conduct of the manufacturer in securing FDA approval constituted a material falsehood capable of proximately causing the payment of a claim by the government.  Ruling otherwise would “turn the FCA into a tool with which a jury of six people could retroactively eliminate the value of FDA approval and effectively require that a product largely be withdrawn from the market even when the FDA itself sees no reason to do so.”  [T]here is no allegation that the FDA withdrew or even suspended product approval upon learning of the alleged misrepresentations.

Id. at 35 (citations omitted).  Thus, “the FDA was paying attention,” but the Agency “viewed the information . . . differently than [plaintiffs] do.”  Id.

The government, having heard what [plaintiffs] had to say, was still paying claims not because of what was said to or by the doctors, but because the government through the FDA affirmatively deemed the product safe and effective.  And, absent some action by the FDA, we can see no plausible way to prove to a jury that FDA approval was fraudulently procured.

Id. at 36.  So, rather than preemption, Nargol disposed of fraud on the FDA-based FCA claims on materiality grounds, as long as the FDA (as is 95%+ the case) did not act on the purported fraud.  That’s basically Buckman modified by that decision’s two-justice concurrence that a different result might occur had the FDA itself found fraud.  531 U.S. at 353-55 (Stevens & Thomas, JJ. concurring).

The omitted citations in our quote from Nargol were to an earlier First Circuit decision that reached a similar result, D’Agostino v. ev3, Inc., 845 F.3d 1 (1st Cir. 2016).  In D’Agostino (which we previously discussed here), the First Circuit saw FCA-based fraud-on-the-FDA claims for what they really were, an attempt to hijack the FCA and turn it into a vehicle for second-guessing FDA decisions:

To rule otherwise would be to turn the FCA into a tool with which a jury of six people could retroactively eliminate the value of FDA approval and effectively require that a product largely be withdrawn from the market even when the FDA itself sees no reason to do so.  The FCA exists to protect the government from paying fraudulent claims, not to second-guess agencies’ judgments about whether to rescind regulatory rulings.

Id. at 8 (citation omitted).  Thus, the same policy reasons the Supreme Court gave for preemption in Buckman all counseled against recognizing agency fraud claims under a federal statute:

The collateral effects of allowing juries in qui tam actions to find causation by determining the judgment of the FDA when the FDA itself has not spoken are akin to those practical effects that counsel in favor of not allowing state-law fraud-on-the-FDA claims.  See Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341, 349-51 (2001).  If jurors in a single qui tam case could determine precisely what representations were essential to approval, which experts to believe, and how the FDA interpreted submissions made to it, some potential applicants who would otherwise seek approval for new products might be deterred, others might swamp the FDA with more data than it wants, and the “FDA’s responsibility to police fraud consistently with the Administration’s judgment and objectives” might be undercut.  Id. at 350.

Id. at 8-9.

Additionally, as already mentioned in connection with Nargol, the D’Agostino decision also relied upon the “demanding” materiality standard for “implied certification” FCA claims.  Id. at 7.  That agency fraud supposedly “could have” influenced FDA approval wasn’t enough.  “[C]ould have . . . falls short of pleading a causal link between the representations made to the FDA and the [false claim] payments.”  Id.

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.  Moreover, the D’Agostino fraud-on-the-FDA allegations failed for lack of causation.  If the FDA’s response to the fraud allegations is “doesn’t impress me much,” and the FDA thus doesn’t rescind its decision, then causation is impossible – and that’s what happened in D’Agostino:

In the six years since [relator] surfaced the alleged fraud, the FDA has apparently demanded neither recall nor relabeling of [the product] − this notwithstanding the agency’s [list of enforcement options].  The FDA’s failure actually to withdraw its approval . . . in the face of [plaintiff’s] allegations precludes [plaintiff] from resting his claims on a contention that the FDA’s approval was fraudulently obtained.

Id. at 8.  “[C]ausation is an element of the fraudulent inducement claims [plaintiff] alleges and . . . the absence of official action by the FDA establishing such causation leaves a fatal gap.”  Id. at 9.

In Southeast Laborers Health & Welfare Fund v. Bayer Corp., 444 F. Appx. 401, 410 n.2 (11th Cir. 2011), the court held that plaintiffs could not pursue a fraud on the FDA-based RICO causation theory.  However, the court’s discussion of RICO simply referred back to its prior discussion of why a similar state-law claim could not survive:

A theory of causation relying solely on an allegation that the medication in question would not have been on the market absent the alleged fraudulent conduct is no more than a state law “fraud on the FDA” theory, a theory that has been specifically rejected by the Supreme Court. . . .  Accordingly, [our prior decision] could not have implicitly approved of a state law “fraud on the FDA” theory of causation . . . whereby a third-party payor is permitted to state a causal nexus between the alleged fraudulent conduct and the payor’s ascertainable loss by simply asserting that absent the allegedly fraudulent conduct, the FDA would not have approved the medication to be on the market.

Id. at 407 (Buckman discussion omitted).

Those are all the appellate cases having anything to do with agency fraud that cite Buckman in the same paragraph as one of the four federal statutes we earlier identified.  As for district courts, United States ex rel. v. Medtronic, Inc., 2017 WL 4023092 (C.D. Cal. Sept. 11, 2017), likewise rejected a fraud on the FDA-based FCA claim:

[C]laims of fraud are disfavored if made by third parties who seek to second guess a decision by the FDA to certify a device.  Relator’s claims are in effect such a challenge as to the decision of the FDA to grant §510(k) clearance for the Subject Devices. Alleged fraudulent conduct directed to the FDA, without more, is inadequate to support an FCA claim.  [discussion of Buckman omitted]

Given the resources available to the FDA to investigate and approve medical devices, and to pursue remedies for alleged violations that arise in connection with the process, the policy concerns expressed in [Buckman] are material here.  The premise of the alleged fraud in the FAC is that Defendants misled the FDA during the §510(k) certification process.  However, an FCA action is not the proper way to bring such a claim.

Id. at *7 (citing inter alia the district court opinion in D’Agostino, 153 F. Supp.3d 519).

On the other side, we have also found a couple of district court FCA cases that have allowed the sort of fraud on the FDA-based allegations that Nargol and D’Agostino reject.  See United States ex rel. Brown v. Pfizer, Inc., 2016 WL 807363, at *9 (E.D. Pa. March 1, 2016) (“The claims in Buckman were state law tort claims, not claims brought under the FCA.  Defendant has provided no authority, and we are aware of none, that has extended the holding in Buckman to FCA claims.”); United States ex rel. Krahling v. Merck & Co., 44 F. Supp. 3d 581, 593 (E.D. Pa. 2014) (“alleg[ations] that Defendant consistently and deliberately withheld pertinent information as to the safety and efficacy of a medication from the government . . . is [a] grounds for FCA liability.”).  Neither of these cases had the benefit of Nargol or D’Agostino, and neither addressed causation/materiality, so it is questionable whether they would be decided in the same fashion today.

Beyond the FCA, we found a magistrate’s opinion, Meijer, Inc. v. Ranbaxy Inc., 2016 WL 4697331 (Mag. D. Mass. Sept. 7, 2016), that the case “present[ed] an issue of apparent first impression: whether Sherman Act claims . . . may be predicated on an underlying fraud on the [FDA].”  The Magistrate effectively gave antitrust plaintiffs free rein to assert fraud-on-the-FDA claims:

The FDA’s enabling statute does not entrust it with policing antitrust or RICO; therefore, Plaintiffs’ claims do not usurp the agency’s statutory right to… calibrate a measured response to alleged fraud committed against it.  The question of whether or not particular acts of regulatory gaming harm competition is and should be an antitrust question

Id. at *11 (citations and quotation marks omitted).  See Id. at *19 (“these claims sound in antitrust, not violations of the FDCA”).  We note that Meijer evidently differs from the vast majority fraud-on-the-FDA pleadings, in that the plaintiffs allege that the FDA actually did determine that it had been misled and took affirmative corrective action.  Id. at *5, 13.  Perhaps that is the reason that Meijer nowhere cited the otherwise extremely pertinent D’Agostino district court decision.  Also of interest, permission for an interlocutory appeal has been granted, Meijer, Inc. v. Ranbaxy Inc., 245 F. Supp.3d 312 (D. Mass. 2017), and that appeal in pending in the First Circuit.  In the interim, of course, the First Circuit has decided both Nargol and D’Agostino since the district court originally decided Meijer.

Finally, we expected to find agency fraud claims brought under the Lanham Act, but didn’t.  There are certainly enough other types of attempted private FDCA enforcement that have been asserted under the Lanham Act.  But our search (which required the term “Lanham” to appear in the same paragraph as “Buckman” or several variants of “fraud on the FDA”) didn’t produce anything directly on point.  The closest approximation was Intra-Lock International, Inc. v. Choukroun, 2015 WL 11422285 (S.D. Fla. May 4, 2015), which alleged the sale of a “medical device” without getting any form of FDA pedigree.  There was no fraud on the FDA, because there were no interactions with the FDA at all. The Lanham Act claim in Intra-Lock was dismissed because plaintiff’s theory of selling a medical device without a license was purely a violation of the FDCA.  Id. at *7.  But the case wasn’t – at least overtly – a true agency fraud claim.  Cf. Organ Recovery Systems, Inc. v. Preservation Solutions, Inc., 2012 WL 116041, at *7-8 (N.D. Ill. Jan. 16, 2012) (allowing non-FDA-related Lanham Act claims while making clear that plaintiff’s preempted agency fraud claims were not based on the federal statute).

So far, there hasn’t been an appellate court in the country that has allowed a private plaintiff to avoid Buckman by bringing a fraud-on-the-FDA claim disguised as a federal statutory claim.  While we’re not out of the woods, yet, the current trend can be described as favorable.

A year and a half ago we celebrated a rare prescription drug preemption win in the Philadelphia County Court of Common Pleas.  Then the decision was appealed, and we held our breath.  Preemption is never an easy sell in state courts, and Pennsylvania appellate courts are not exactly defendant friendly in prescription medical product liability cases.

Well, the wait is over and preemption won.  See Caltagirone v. Cephalon, Inc., 190 A.3d 596 (Pa. Super. 2018), allocatur denied, No. 248 EAL 2018 (Pa. Oct. 16, 2018).  We held off blogging even after the published Pa. Superior Court win, because we didn’t want to jinx anything.

Here’s what went down.

As we described before, the plaintiff had no basis for saying that anything about the drug in question (a strong opioid) was defective.  As the court pointed out, the purported wrongful death in Caltagirone was 2½ years after use of the drug at issue had ceased.  190 A.3d at 598 (plaintiff’s physician “stopped prescribing [the drug] for Mr. Caltagirone and moved him to other opioids.  About two and a half years later, on May 15, 2014, Mr. Caltagirone died.”).  Probably because the drug that killed the plaintiff’s decedent was a generic (that’s a guess on our part, but methadone has been around a long time), plaintiff nonetheless sued the manufacturer of this branded drug despite the 18-month gap.  “The overarching theme of the complaint is that even though Mr. Caltagirone died from methadone toxicity. . ., his underlying addiction was proximately caused by [defendant’s] program of promoting [the branded drug] for non-FDA approved pain management.”  Id.

In other words, rather than alleging any sort of traditional product liability “defect,” plaintiff attacked the drug because of alleged off-label promotion and off-label use – the decedent had been prescribed the drug for “migraine headaches.”  Id. at 597.

However, the defendant’s labeling forcefully warned about the drug’s addictive potential:

[The drug] carries a “Black Box” warning label, (the most serious type of FDA warning, named for the required distinctive black perimeter), advising of the risk of serious adverse health consequences from the use of [the drug], including respiratory depression, addiction, and death.  The Black Box label warns against the use of [the drug] for any condition other than cancer pain, including, specifically, migraine headaches.

Id. at 597-98.  Thus, the plaintiff’s arguments on appeal focused largely on the alleged off-label promotion of the drug – that it supposedly violated the muchdiscussed FDA ban on any promotion, truthful or not, of off-label uses of regulated products.

The Superior Court recognized that claim for what it was – an attempt at private enforcement of the FDA’s off-label promotion ban – facially preempted under Buckman Co. v. Plaintiffs Legal Committee, 531 U.S. 341 (2001):

[Plaintiff’s] pleadings are legally insufficient. . . .  [T]he pervasive claim of [the] complaint is that [defendant’s] various derelictions, (principally, promoting sales for off-label purposes), were not approved or were in direct violation of the FDCA or its implementing regulations.

However, with narrow exceptions not asserted and not applicable here, the general rule is that there is no private right to enforce the law and regulations of the FDCA.  [citing 21 U.S.C. §337(a) and Buckman]

Because [Plaintiff’s] claims rely on asserted violations of the FDA’s “off-label” restrictions, which are pre-empted, the trial court properly sustained [defendant’s] preliminary objections.

Id. at 599-600.

Plaintiff appealed again, to the Pennsylvania Supreme Court, but on October 16, that court rejected the appeal.  We could stop holding our breath.

So we have another win for Buckman, this time against a plaintiff hell-bent on suing the manufacturer of a drug that didn’t in fact cause the complained-of injuries.  Once and for all, “off-label promotion” alone can’t be the basis of a state-law tort claim.

J.P.M.L. Denies Request for New Gadolinium MDL

“Eventually, all things merge into one, and a river runs through it. The river was cut by the world’s great flood and runs over rocks from the basement of time. On some of the rocks are timeless raindrops. Under the rocks are the words, and some of the words are theirs. I am haunted by waters.”  Norman Maclean, “A River Runs Through It.”

Last weekend, we stood on the banks of the Flathead River, just outside of Glacier National Park.   We retreat to Montana, every now and then, when we need to restore our soul.  This we have in common with Maclean, for this is where he wrote his novel about fly-fishing and life, to the extent that there is a distinction between the two.  As we stood under the aptly-named “big sky,” with the river at our feet and the mountains in the distance, we felt tucked into our proper berth in the cosmos and all of the proportions felt right.

In the very short decision about which we report today, a group of plaintiff lawyers needed the J.P.M.L.’s smackdown to be relegated to their proper place in the jurisprudential universe.  In In re Linear Gadolinium-Based Contrast Agents Prods. Liab. Litig., 2018 WL 4905435 (J.P.M.L. Oct. 10, 2018), plaintiffs in seventeen gadolinium cases moved to centralize the suits in a new MDL. This would be the second MDL go-round for gadolinium.   You can read some of our posts about the first MDL here.

Gadolinium is a contrast agent.  Plaintiffs allege that it causes injury when it is retained in the body after it is used for radiological testing.  This time around, the plaintiffs argued that their suits should be centralized either in the Northern District of California or in the District of Massachusetts.   The defendants argued that the cases should not be consolidated, or, in the alternative, that the J.P.M.L. should stay its decision until general causation discovery was completed in actions pending in the District of Arizona.

The J.P.M.L. concluded that “centralization would not serve the convenience of the parties or further the just and efficient conduct of [the] litigation.”  Gadolinium, 2018 WL 4905435 at *1.  First, the Panel held that the plaintiffs had “failed to demonstrate that any common questions of fact and law [were] sufficiently complex or numerous to justify centralization.”  Id.  This was because several different product formulations, from different manufacturers, were involved, and the injuries “appear[ed] to be highly plaintiff-specific. . . .”  Id.  In addition, because most plaintiffs were represented by a single law firm or by other firms working with that firm, centralization was unnecessary.  As the Panel stated, “Given the significant overlap of plaintiffs’ counsel, alternatives to transfer exist that may minimize [the] possibilities . . . of duplicative discovery and/or inconsistent pretrial rulings.”  Id. at *2.  And then came the music to the ears of all of us who spend our professional lives watching plaintiffs abuse the MDL framework:  “. . . [C]entralization under Section 1407 should be the last solution after review of all other options.”  Id. (citations omitted).  Bexis tells us that this seems to be the first time the Panel has issued this admonition in the context of prescription medical product liability litigation.   We hope it’s not the last, and we’ll keep you posted.

In the meantime, thumb through “A River Runs Through It.”  It’s magic.  We promise.

Happy birthday, Aubrey Drake Graham.  Most people know Mr. Graham strictly by his middle name.  The Canadian rapper Drake has carved out a hugely successful career for himself.  He sells lots and lots of records – or whatever it is that they sell in the music business these days.  Surprise: Drake’s music isn’t exactly our thing.  We still play the Beatles more than anything else, we sing along with Crosby, Stills, & Nash in the car, and we have difficulty naming songs post-dating Nirvana.  (Seinfeld once famously asked, “How could you not like the Drake?”  He was talking about somebody else.  Still, it’s a question we hear frequently from friends and family, chiding us for our retrograde taste in music.) Nevertheless, it’s impossible to swim in this culture without getting at least a little wet from Drake’s songs.  With “Worst Behavior,” for example, we got doused with language that you won’t hear in “Hello/Goodbye,” “Suite: Judy Blue Eyes,” or even “Come as You Are.” The main lyrics in “Worst Behavior” are about remembering how some bad, um, person, didn’t love Drake enough.  Anyway, thinking about that song made us review instances of the worst behavior by plaintiffs we have known and not loved.  There’s outright lying, cheating, and stealing.  And that’s looking only at the Plaintiff’s Fact Sheet.  Sometimes it goes beyond that.  Way beyond that.  Sometimes there’s hiding assets, including one’s pending tort claims, in bankruptcy.  It’s a swell way to stiff creditors.

This is not the first time we’ve encountered a case where a plaintiff neglected to list a mass tort claim as an asset in a bankruptcy proceeding.  See our blogposts here and here, for example.  Such neglect can have serious consequences, including staying or even dismissing the tort claim.  In today’s case, Kinderline v. Accord Healthcare, Inc., (In re Taxotere Prod. Liab. litigation), 2018 WL 5016219 (E.D. Louisiana Oct. 16, 2018), the plaintiff declared bankruptcy first, and two months later brought the mass tort action.  The plaintiff did not amend the bankruptcy papers to identify the claim.  The mass tort being an MDL, it dragged on, and the plaintiff’s bankruptcy closed with the trustee not hearing about the pending mass tort claim.  The plaintiff received a “no asset” discharge from bankruptcy. A fresh start! The plaintiff’s failure to include the tort claim in the bankruptcy proceeding was caught only after she was deposed by the defendant in the MDL.  (See – there’s a reason why that bankruptcy question shows up in your depo outlines.). The plaintiff then belatedly reopened the bankruptcy proceeding to list the tort claim.  The issue was whether the plaintiff was collaterally estopped from pursuing the tort claim in the MDL.

First things first.  Which law governed the estoppel issue? The plaintiff wanted to apply the law of her home jurisdiction, Ohio.   But the application of judicial estoppel is a matter of federal common law, and the case had been transferred to the MDL court in Louisiana, which is part of the Fifth Circuit.    There is precedent, though not by the Fifth Circuit, holding that application of federal (Constitutional, statutory, or common) law is governed by the law of the transferee court.  Judge Fallon in E.D. Louisiana went that route in the Vioxx MDL.  It certainly makes administration of the MDL easier.  (That’s not the same thing as saying it is right.) Even without Fifth Circuit precedent squarely on point, the Taxotere MDL court was convinced that the circuit law of the transferee court held sway, and therefore applied Fifth Circuit, not Sixth Circuit, law.  We’re not sure there is any difference in terms of application of judicial estoppel.  That is usually the threshold issue in a choice of law analysis.  Not so here.

This choice of law rule might be important to you when you are deciding what court you will argue for when it comes to creating an MDL.  Most lawyers tend to focus on the particular judge and district court they like better (or which particular judge and district court most terrifies them), but we should also think about the circuit court.   For instance, we recently argued for sending an MDL to the district of New Jersey.   The judge there seemed quite good.   But we were not blind to the fact that Third Circuit Law on preemption, in the form of the dreaded Fosamax decision, was bad bad bad.  We ended up concluding that Fosamax was so obviously bad that SCOTUS would reverse it.  That’s a heck of a gamble.  Right now, as we mentioned recently when we reviewed the Solicitor General’s amicus brief in Fosamax, it looks like a good gamble.  To quote a musician much more likely to be found in our playlist (and much more likely to be found in the Third Circuit), Fosamax is “going down, down, down, down.”

Back to Kinderline.  The court held that the plaintiff was, indeed, estopped.  Fifth Circuit law on estoppel, like the law in most places, looks at three elements: (1) the party against whom estoppel is sought has asserted a position plainly inconsistent with a prior position; (2) a court accepted the prior position; and (3) the party did not act inadvertently.  The first element was met here because the plaintiff failed to amend her bankruptcy petition to disclose a claim pursued after filing the petition.  The duty to disclose claims/assets in bankruptcy is an ongoing obligation. The second element is straightforward and obviously satisfied, because the court accepted the prior position – hence the no-asset discharge.  Now comes the third element, inadvertence.  To establish a defense of inadvertence, a party must prove (1) that she did not know about the inconsistency, or (2) that she lacked a motive for concealment.  There is no help for the plaintiff in Kinderline there, as there is no evidence she was oblivious to the inconsistency between the filing of the lawsuit and the failure to list it in bankruptcy, and the motive for concealment, keeping creditors away from any proceeds of the lawsuit, is undeniable and has, in fact, been recognized by the Fifth Circuit in another judicial estoppel case.  The plaintiff “would have reaped a windfall if she had been able to pursue this claim and collect a judgment from Accord without having to share the judgment with her creditors.”

The best fact the Kinderline plaintiff had going for her was that she reopened the bankruptcy proceeding before the defendant managed to move for estoppel.  She won the race to the courthouse.  Whoopee.  Not good enough.  The plaintiff did not seek to correct the record until being caught at her deposition and until almost a year after she knew of the lawsuit as asset.  Borrowing from Fifth Circuit precedent, it is clear that to bless the plaintiff’s gamesmanship by allowing the debtor to “back-up, reopen the bankruptcy case, and amend [her] bankruptcy filings, only after [her] omission has been challenged by an adversary, suggests that a debtor should consider disclosing personal assets only if [she] is caught concealing them.”   In other words, there must be consequences for the plaintiff’s bad behavior.  The plaintiff claimed that her delay was caused by her decision to wait to confirm product identification to ensure she was suing the correct party.  Hmmm. Such carefulness on the part of the plaintiff and her attorneys!  Yet it did not stop her from filing the tort lawsuit.  Nor did it account for all of the year-long delay. The plaintiff is not innocent.  For that reason, judicial estoppel means that she cannot pursue her lawsuit in the MDL.

But the Chapter 7 trustee is innocent and is the real party in interest.  The Trustee did not hide assets.  For that reason, the bankruptcy trustee could pursue the plaintiff’s claim.   But here’s an odd wrinkle:  the rejection of the plaintiff’s right to claim on her own behalf meant that her husband’s consortium claim was extinguished, as it was purely derivative of his wife’s claim.  To allude to the title of another Drake song, the husband’s claim was “Over.”

What happens when you have a class action where some putative class members suffered an injury while others did not? Can such a proposed class even be certified? The answer depends on whom you ask. The plaintiffs/class representatives will surely point out that whether any individual class member actually suffered a compensable injury is a mere administrative detail that can be sorted out after the fact. Trust us, Judge. Just certify the class, and we’ll make sure the right people get paid.

The defendants on the other hand will emphasize (correctly) that there is this little thing called due process, which prohibits certifying a class where individual class members have contested injuries or no injuries at all. That was the dilemma that the First Circuit addressed in In re Asacol Antitrust Litig., No. 18-1065, 2018 WL 4958856 (1st. Cir. Oct. 15, 2018), and the court came to the correct conclusion that a class that includes uninjured class members cannot be certified. The First Circuit also poured buckets of cold water on questionable concepts of aggregated proof and statistical modeling.

Here is what happened. The plaintiffs sued the defendant claiming that its discontinuation of one drug and introduction of similar substitute drugs violated the consumer protection and antitrust laws of twenty-six jurisdictions. Id. at *1. The district court later certified a class of “all Asacol purchasers who subsequently purchased [the alleged substitute drugs] in one of those twenty-six jurisdictions.” Id.

But here is the rub. In certifying the class, the district court found that approximately 10 percent of the class members (mostly if not entirely third-party payers) had not suffered any injury attributable to the defendants’ alleged wrongful conduct. Id. And here is the further rub. The defendants claimed that uninjured class members actually made up more than 10 percent of the class, and the plaintiffs claimed that the number actually was less. In other words, it was undisputed that some portion of the class had no compensable injury, and the fact of injury was contested for some additional and unknown portion of the class.

The district court determined nonetheless that the uninjured class members could be removed “in a proceeding conducted by a claims administrator.” Id. When someone suggests relying on a post-certification “claims process” to smooth over disputed individual issues in a class action, the red flags start to wave in our heads. The submission of a form to a “claims administrator” is not an adequate substitute for the due process to which defendants are entitled absent an agreement, such as with a class settlement.

Red flags waived in the heads of the First Circuit too, resulting in an opinion reversing class certification. First, there was the issue of standing. The defendants argued that the class representatives had never made purchases within twenty-two of the jurisdictions and thus lacked standing to sue under those states’ laws. Id. at *3. In the First Circuit’s view, the issue was whether the class representatives had the proper incentive to advance claims under all those states’ laws, and it ruled that they did. Id. at **3-5. The only carve out was New York, which uniquely requires proof of deception. Id.

Second, the First Circuit considered Rule 23(c)(3)’s requirement that common issues predominate over individual issues, and this is where this class action failed. It was undisputed that some number above or below ten percent of the certified class suffered no compensable injury. Id. at *6. The district court’s major error was its assumption that it would be possible “to establish a mechanism for distinguishing the injured from the uninjured class members” and that “Class members will be asked to submit a claim form, along with data and documentation that may be deemed necessary for consideration.” Id. at *7.

That process would not be sufficient, in part because “[o]ne can only guess what data and documentation may be deemed necessary, what the formula will be, and how the claims administrator will decide who suffered no injury.” Id. The First Circuit distinguished the situation where class members would establish their claims through “’unrebutted testimony’ contained in affidavits.” Id. (distinguishing In re Nexium Antitrust Litig., 777 F.3d 9 (1st Cir. 2015)). Here, the plaintiffs did not intend to rely on unrebutted testimony to eliminate uninjured class members, and the defendants had expressed their intention to challenge any affidavits that might be gathered. Id. Because such disputed individual issues cannot be resolved under Rule 23, the First Circuit’s “inability to fairly presume that these plaintiffs can rely on unrebutted testimony in affidavits to prove injury-in-fact is fatal to plaintiffs’ motion to certify this case.” Id. at *8.

This is an important holding. The predominance of individual issues should preclude class certification under Rule 23(c) in every instance, and that rule applies with no less force when the predominating individual issue is whether each class member has suffered an injury in fact. It is not sufficient, as the First Circuit held, to certify the class based on vague promises of sorting it out later.

Nor is it acceptable to promise proof of “class-wide impact” through purported expert testimony. According to the plaintiffs, proof of “class-wide impact” would result in some uninjured class members receiving compensation, but it will all “net out” in the end and “should be of no concern” to the defendants. Id. at *9. Such rough justice ignores that when a defendant is not liable to particular individuals because they suffered no injury, the amount of total damages should be reduced. Id. Moreover, when relief depends on determining whether an individual has been injured, the defendant must have an opportunity to challenge each class member’s proof. Id.

Finally, the First Circuit condemned the reliance on statistical analysis at the expense of due process. The following quote is long, but you should read it because it is powerful:

Accepting plaintiffs’ proposed procedure for class litigation would also put us on a slippery slope, at risk of an escalating disregard of the difference between representative civil litigation and statistical observations of tendencies and distributions. Once one accepts plaintiffs’ “no harm, no foul” position there would be no logical reason to prevent a named plaintiff from bringing suit on behalf of a large class of people, forty-nine percent or even ninety-nine percent of whom were not injured, so long as aggregate damages on behalf of “the class” were reduced proportionately. Such a result would fly in the face of the core principle that class actions are the aggregation of individual claims, and do not create a class entity or re-apportion substantive claims.

Id. at *10 (emphasis added). Read that last line again because it re-emphasizes that Rule 23 is a rule of procedure. It does not bestow substantive rights, nor could it alter substantive law—such as laws requiring proof of an injury in fact before someone can sue—without running afoul of the Rules Enabling Act.

The First Circuit here applied the predominance requirement in a way that essentially enforces the requirement of ascertainability—i.e., you can’t certify a class if you can’t ascertain who would be in the class before certification. The First Circuit also walked back from the Neurontin trilogy, which pushed concepts of aggregated proof beyond the breaking point, which we discussed here. Both are welcome developments.