Federal Judicial Conference Evidence Rules Committee Releases Possible New Rule Pertaining to Artificial Intelligence

By Bexis on June 2, 2025

Almost ten years ago Bexis argued that the Federal Rules were technologically out-of-date and proposed a number of topics that would benefit from rules-based codification. One of those topics involved machine learning – specifically use of predictive coding in ediscovery.

That didn’t go anywhere, but on May 2, 2025, the Advisory Committee on Evidence Rules proposed language for a new rule – Fed. R. Evid. 707 – addressed to the impact of artificial-intelligence-generated evidence in the courtroom. Here’s the proposed language:

Rule 707. Machine-Generated Evidence

When machine-generated evidence is offered without an expert witness and would be subject to Rule 702 if testified to by a witness, the court may admit the evidence only it if satisfies the requirements of Rule 702 (a)-(d). This rule does not apply to the output of basic scientific instruments.

Committee on Rules of Practice and Procedure, Agenda Book, at Appendix B, page 75 of 486 (June 10, 2025). This proposal is the product of three years of research and investigation. Id.

Third Party Payer Class Certified in Avandia MDL

By Steven Boranian on May 30, 2025

The Avandia MDL has been a long, winding, and ultimately meritless road. The FDA approved the drug to treat Type II diabetes in 1999, and the MDL got going in 2007, after a widely publicized, but ultimately disproven meta-analysis purported to show that Avandia presented an increased risk of heart attacks.

That was 18 years ago. In that time, the FDA asked the manufacturer to add a black box warning on myocardial ischemia—only to remove it six years later when it determined that the science did not support it. The FDA likewise imposed a REMS program that significantly restricted access to the product—only to end the program after long-term study results dispelled any increased risk. In the meantime, the parties and the courts have expended a tremendous amount of public and private resources, and patients were deprived of a therapeutic option that undoubtedly would have benefited many.

All because of a cardiac risk that the FDA has determined did not exist. Heck, just last November, Bexis published a blogpost entitled, “Avandia Litigation – Is This Finally the End?”

Well, it is not quite the end. At least not yet. The personal injury claims have long been resolved—either settled or dismissed (for example, here, here, and here). But third party payers still have RICO and consumer fraud claims asserting that they paid for more Avandia prescriptions than they would have had the manufacturer accurately disclosed information on cardiac risks in real time. We have serious doubts about the merits of these claims: The payers got exactly what they paid for, and they do not allege that any patient was actually harmed. Moreover, any price impact would have been dwarfed by the FDA’s requirement, and then removal, of the ultimately unnecessary boxed warning.

Regardless, the district court has now certified a TPP class and is allowing them to proceed in a collective manner. In In re Avandia Marketing, Sales Practices, and Products Liability Litigation, No. 07-md-1871, 2025 U.S. Dist. Lexis 97465 (E.D. Pa. May 22, 2025), the district court certified a class of TPPs who purchased Avandia from January 1, 2005 through August 14, 2007. The TPPs’ theory of liability has shifted over time, but it appears they have settled on arguing that the manufacturer marketed the drug as having better cardiovascular outcomes, but had data showing that was not true as early as 2005. The truth allegedly came out, according to the TPPs, when the aforementioned meta-analysis was published in 2007. (Although the court does not explain it, these allegations appear to frame the beginning and end of the class period.)

In urging class certification, the TPPs argued that the manufacturer’s “marketing fraud” was a standardized campaign directed at the entire healthcare community with “market-wide impact,” thus making it susceptible to class-wide proof. The manufacturer disagreed, mainly on the ground that that leads to denial of most TPP economic harm class actions—causation. We see the manufacturer’s point. To link the alleged wrongdoing to the alleged harm, the TPPs have to prove that the manufacturer misrepresented the benefits of Avandia, that a prescribing physician relied on those representations in prescribing Avandia, that the prescriber would not have prescribed the product but for the representations, and the prescriber would instead have prescribed a cheaper medicine or nothing at all. These elements require individualized proof, especially reliance. There are, after all, many reasons why physicians prescribed Avandia, and they may or may not have even seen or heard the alleged “marketing,” let alone relied on it.

Despite this, the court found that the TPPs could prove causation on a class-wide basis. First, the court determined that it could infer reliance on the manufacturer’s marketing, and it distinguished cases holding otherwise on the basis that “every provider’s goal when considering whether to prescribe Avandia is largely the same—to treat a patient’s diabetes without otherwise causing harm.” Id. at *20. Based on this (oversimplified) view of prescribing decisions, the court concluded that “even though the decision to prescribe Avandia is not ‘one-dimensional,’ it is not so subjective that a provider’s reliance cannot be inferred.” Id. at *20-*21.

Second, the court found that the TPPs could prove class-wide reliance through statistical econometric models, even though the court already excluded the plaintiffs’ expert’s regression analysis purporting to show causation. In its place, the court accepted the plaintiffs’ offer of the manufacturer’s own internal studies of how its marketing impacted sales and other “generalized” proof, such as “papers, internal corporate studies, and communications.” Id. at *21-*22.

The court therefore found that common issues predominated over the element of reliance. That is not the correct outcome. It was undisputed that providers prescribed Avandia for many reasons, and the manufacturer submitted testimony from individual providers contesting that they relied on the manufacturer’s marketing. The court, however, ruled that this individualized evidence was minimal by comparison and that it would not engage in conjecture on what other evidence the manufacturer would be able to marshal at trial.

The manufacturer offered other reasons why individual issues would swamp common issues. RICO claims require proof of concrete financial loses, yet there were multiple scenarios under which putative class members suffered no aggregate loss at all. Determining this element—which relates to liability, and not only damages—could be determined only be examining each class member. The court, however, ruled that each TPP’s harm occurred at the time of each Avandia purchase, which means that any TPP who paid for even one Avandia prescription suffered an injury. That logic erases individualized issues, but it clears the way for class-wide recovery for a class whose members may not have lost any money, or may even have come out ahead. Indeed, the plaintiffs’ own expert concluded that 26 percent to 33 percent of TPPs in one dataset had “zero or negative damages.” Id. at *28.

The manufacturer also cited the plaintiffs’ reliance on oral statements, which by nature are inappropriate for class treatment. The court rejected this argument too, on the basis that the manufacturers’ marketing messages and tactics did not vary by region and that “the oral component of the fraudulent sales presentations did not vary appreciably” from provider to provider.

Finally, the court found that the class was ascertainable. Under the TPPs’ proposal, they would use vendors to compile a list of every TPP, then each potential class member would submit sworn affidavits as claim forms following judgment. The court accepted this method, relying on Third Circuit authority allowing “some level of verification” during the claims administration process. The devil, however, is in the details, and when starting with an overly broad list of every TPP, the contemplated affidavits will be much more than mere “verification.” Moreover, the facts asserted will not be subject to cross-examination. The class members would essentially be expected to prove their claims on an individual basis after the fact, which is not what class actions should be.

In certifying a TPP class, this order is in the distinct minority, and the difference is that these plaintiffs will be allowed to round over the edges of individualized inquires using “common” proof at trial. If we are searching for a silver lining, we would point to the limited, two-and-a-half-year class period. But that’s not saying much given the overall result. We would not be surprised if the manufacturer seeks an interlocutory appeal, and the manufacturer also has a motion for summary judgment pending. This may not be our last word on Avandia.

Not So Lonely Pine?

By Lisa Baird on May 29, 2025

In our legal world, Lone Pine is not a small California town near the majestic Mt. Whitney and the sobering Manzanar National Historic Site. It is an order directing plaintiffs to come forward with some evidence that they took, or were exposed to, the product they are suing over, and some evidence about their alleged injury (that it exists, and maybe even that it was connected to the product).

To those who don’t live in our legal world: Yes, lawsuits are filed all the time on behalf of people who never took the drug, had the device, used the product, were exposed to the chemical. And yes, lawsuits are filed all the time on behalf of people who have no injury from that drug, device, product, or chemical. And no, it is not so easy to get rid of such cases—it can take years of expensive discovery and motion practice for the truth to out, particularly if the bad lawsuit apples are hiding out amongst several hundred bushels in an MDL or mass tort.

We now have a PFAS case, Conklin v. Corteva, 2025 U.S. Dist. LEXIS 92028, 2025 WL 1402696 (E.D.N.C. May 14, 2025), to add to our Lone Pine Cheat Sheet, which these days is getting slightly more populated.

In Conklin, after the Eastern District of North Carolina partially denied a motion to dismiss and allowed some claims to proceed toward discovery, the defendants requested a Lone Pine order. The defendants asked for entry of a case management order directing the plaintiffs (60 in all, across 8 related cases) to come forward with expert declarations confirming they each had the injuries they allege, and that those injuries were proximately caused by their exposure to PFAS.

The court thought that requiring a “‘measure of evidence’” near the outset of the cases might help it “‘identify and cull potentially meritless claims and streamline litigation.’” Id. at *3 (quoting In re Digitek Prod. Liab. Litig., 264 F.R.D. 249, 255 (S.D.W. Va. 2010) and In re Vioxx Prod. Liab. Litig., 557 F. Supp. 2d 741, 743 (E.D. La. 2008)). So, it went through the Lone Pine factorial test.

Factor 1: What is the posture of the litigation?

A pre-discovery Lone Pine order can be appropriate where “the requested information is the kind that plaintiffs should have had in their possession before filing the lawsuit pursuant to Fed. R. Civ. P. 11.” This was true in Conklin. Plaintiffs had full access to their own medical records and would eventually need to produce supporting expert testimony anyway. In fact, by the time the Lone Pine order was requested, their lawsuits already had been on file for two years, so this wasn’t even a particularly early Lone Pine request. This procedural posture favored a Lone Pine order, and would not impose undue burdens.

Factor 2: What are the peculiar case management needs of the litigation?

Although the plaintiffs argued that the litigation involved too few cases to warrant a Lone Pine order, the court—juggling 60 plaintiffs across 8 lawsuits—disagreed. A Lone Pine order would help with case management.

Factor 3: Have questions been raised about the plaintiffs’ medical and scientific evidence?

The parties traded arguments about EPA findings regarding what levels of exposure to PFAS could cause harmful effects as well as university research about the defendant’s PFAS use. Safe to say, questions had been raised, and the fact that there was debate was the point. Although plaintiffs could not be faulted for filing suit without waiting for full scientific clarity, they had to “accept that ongoing research concerning PFAS compounds [would] affect the viability of their claims.”

Factor 4: Would other procedures accomplish the same goals?

Federal procedure, of course, allows for the usual forms of discovery (depositions, interrogatories, independent medical exams, requests for documents), and motions for summary judgment are another procedure that requires a plaintiff to come forward with some evidence in support of his or her claim. But unlike a Lone Pine order, these usual discovery tools and usual forms of motion practice are just not very efficient and take too long, and they thus would be “insufficient to address the issues at hand.”

Factor 5: What are the injuries alleged, and their alleged cause?

Lone Pine orders are well suited for environmental contamination matters, and plaintiffs’ PFAS allegations fit that paradigm. (Although we would hasten to add, Lone Pine orders are well suited to pharmaceutical and medical device product liability litigation as well.)

All the factors in Conklin thus favored a Lone Pine order “requiring plaintiffs to submit expert declarations confirming their injuries and proximate causation.” This was basic evidence they were supposed to have before filing a lawsuit, and eventually would need to produce anyway to prevail at trial.

In short, another good Lone Pine decision. Maybe someday we will have a whole pine forest.

Don’t Say “Disingenuous”

By Stephen McConnell on May 28, 2025

Cordero v. Olson Assocs. P.C., 2025 U.S. Dist. LEXIS 91994, 2025 WL1383217 (D. Utah May 13, 2025), is just another FDCA case. Except it is not the Food, Drug and Cosmetic Act that is in controversy, but, rather, the Fair Debt Collection Act. The plaintiff sued several defendants, including law firms, for allegedly unlawful debt collection practices. She claimed that those debt collection practices caused emotional distress and physical injuries.

So what is a debt collection case doing on the DDL Blog? We owe an explanation.

Cordero ends up being interesting for how the court (a magistrate judge) handled the plaintiff’s lawyer, who seems to have been something of a “Rambo litigator” — and most of you have had the misfortune of encountering representatives of that unpleasant species. To be fair, this was a Rambo in the sense of words, not deeds. As far as we know, the lawyer did not do last minute document dumps or commit fraud or anything like that. Instead, it appears that the lawyer hurled a lot of useless, silly invectives. But after a certain point, name-calling can be irksome enough to move a court to action.

At issue in this decision were the plaintiff’s medical records and various disputes related to her deposition topics and location. The plaintiff filed a motion for a protective order and the defendants filed competing motions to open up certain avenues of discovery. The plaintiff wanted to prevent sharing of her records among the defendant law firms. She also wanted to limit questioning about her medical or financial condition that she deemed irrelevant or overly intrusive. This type of skirmishing is typical in American litigation, and the issues are seldom novel or intriguing. The plaintiff won a couple of her arguments, and lost a few more.

But Cordero highlighted a couple of points that are either instructive or at least a source of solid schadenfreude.

First, on substance, the defendant was entitled to take the plaintiff’s deposition in person at the offices of defense counsel. It was the plaintiff, after all, who brought the suit. She was obviously a key witness. Her injury claims placed her credibility at the center of the case. The plaintiff resisted a personal appearance at the defense law firm on grounds of inconvenience and burden, but these arguments did not impress the court. The noticer of a deposition chooses the location, and the default form of deposition remains in-person, face to face. The plaintiff could not force the defendants to take a remote deposition.

If any of this arrives as a surprise to you, count yourself instructed. You’re welcome.

Now for the moment of schadenfreude. The court admonished plaintiff’s counsel on “professionalism” for the purple prose he deployed in his briefs, which the court considered to be a series of personal attacks on opposing counsel. The plaintiff’s briefing characterized defense arguments as being “disingenuous,” “nonsense,” “meaningless,” “callous,” “intellectually dishonest,” “baseless,” “blatantly untrue,” etc. etc. You get the idea. It appears that the plaintiff briefing devoted as much ink to impugning the other side’s motives as to addressing the logic of the arguments. That is not a good or smart. When we edit a brief and see this sort of thing (the word “disingenuous” is always a giveaway) we wince, and then we delete. Heat is a poor substitute for light.

(We can recall with precision the first time we encountered the word “disingenuous.” We were in an undergraduate course on the history of the Supreme Court. The teacher was Archibald Cox. One session was devoted to FDR’s 1937 court-packing plan. SCOTUS had invalidated several New Deal initiatives. FDR’s purported rationale for adding Justices to the Court had nothing to do with the High Court’s rulings. Instead, FDR expressed concern that SCOTUS was filled with “aged or infirm Justices.” The plan failed. Critics called FDR’s stated reason “disingenuous.” The word means dishonest — an innocent-sounding cover for something devious.)

In Cordero, the court expressed displeasure with the plaintiff lawyer’s “hostile, discourteous, and uncivil” conduct. Such judicial disappointment would hurt enough. But the Cordero court went as far as imposing a sanction against the plaintiff counsel, apparently sua sponte. (From the opinion we learn that the plaintiff lawyer asked for sanctions against the defense, but we read nothing about the defense asking for sanctions. How’s that for comeuppance?) The court ordered the plaintiff lawyer to read the Utah Standards of Professionalism, certify to having done so, and certify that he will comply with those standards “in both letter and spirit.” The court clearly had enough, and warned of further sanctions and referral to the disciplinary board for any future unprofessional conduct.

It is probably a good thing for judges to take actions against lawyers who make the occupation more nasty than it needs to be. But while we used the word schadenfreude to signal our approval of the Cordero decision, we did so fully aware that poison pens exist on both sides of the v. (Yes, maybe even occasionally on this blog. Yes, mostly the author of this post. Yes, we grieve over this fact during dark evenings of the soul.) We defense hacks can do better. And that is not mere moralizing. Judges hate it when lawyers challenge the honesty of their opponents. (A couple of weeks ago, Justice Gorsuch dressed down perhaps the finest current SCOTUS advocate during oral argument for labeling her “friends on the other side” as liars.) The best way to get sanctions against the other side is to make sure that your own side does not stray into incivility. Make the contrast clear for the court. Tamp down the name-calling, avoid ad hominem attacks, and clobber the other side on the facts and law.

Will the Supreme Court Turn Fraudulent Joinder into a Free Shot for Plaintiffs?

By Bexis on May 27, 2025

We have learned, through repeated harsh experience (e.g., Mallory, Wullschleger, Harrington) that while the current Supreme Court can be described as “conservative,” that hardly means that it is pro-business. Indeed, it appears that when the issue is p-side forum-shopping, the Notorious RBG (opponent of all things preemption) was far more “pro-business” than justices bearing the “ultra-conservative” label.

With that in mind, we turn to the Court’s latest certiorari grant in a plaintiff forum-shopping case − Palmquist v. Hain Celestial Group, Inc., 103 F.4th 294 (5th Cir. 2024). Palmquist is a food case, and the plaintiffs sued − in addition to the targeted manufacturer − a local grocery store in a transparent effort to destroy diversity and thereby keep the case in state court. The manufacturer removed, claiming that joinder of the intermediate seller was fraudulent under a state (Texas) statute that, with some exceptions, immunized such sellers from suit. After abandoning their initial complaint in favor of an amended complaint that attempted to plead around the statute, plaintiffs sought remand. They lost, and the district court retained jurisdiction. See Id. at 299-300 (describing procedural history). That was in 2021. The suit, now between completely diverse parties, was litigated in federal court over the next two years until, during a jury trial, the defendant successfully moved for judgment as a matter of law on grounds that the plaintiffs presented “no evidence of general causation” since they had no expert witness. Id. at 300.

On appeal the Fifth Circuit never reached the slam-dunk reason why the defense won on the merits. Instead, it found – under the extremely low pleading bar that plaintiffs enjoy when they engage in fraudulent joinder − that even the original complaint (which plaintiffs abandoned) had successfully evaded the Texas statute that the legislature enacted to stop precisely what the plaintiffs in Palmquist did:

The language in the as-removed complaint was broad enough to encompass both breach of express and implied warranties claims. The paragraph was entitled “Breach of Warranties,” which could include both express and implied claims. Although the language in the as-removed complaint generally discussed [the intermediate seller’s] implied warranties, it also discussed [its] express representations regarding [the manufacturer’s] products. We therefore hold that the district court erred in concluding that the [plaintiffs] added a new breach of express warranty claim in their second amended complaint.

103 F.4th at 302. Under the “no possibility of recovery” fraudulent joinder standard, the plaintiffs’ threadbare pleading sufficed. Id. at 304. “As the [plaintiffs] argue, the [intermediate seller’s] business model depends on [its] reputation and customers’ willingness to a pay a premium for products that [it] advertises as healthy and high quality.” Id. at 307.

Finding a non-waivable subject-matter-jurisdiction defect, the Fifth Circuit threw two years of litigation between the diverse parties out the window and let the plaintiffs have a do-over in state court. Standing in the way was a Supreme Court decision in a prior case involving improper removal, where the Supreme Court had refused to jettison the results of that litigation, holding:

[Plaintiffs’] arguments are hardly meritless, but they run up against an overriding consideration. Once a diversity case has been tried in federal court, with rules of decision supplied by state law. . ., considerations of finality, efficiency, and economy become overwhelming.

Caterpillar Inc. v. Lewis, 519 U.S. 61, 75 (1996) (citation omitted).

Palmquist, however, distinguished Caterpillar. According to Palmquist, the Caterpillar plaintiffs had surrendered their jurisdictional argument by “cur[ing]” it themselves. 103 F.4th at 307. Those plaintiffs had settled with the non-diverse defendant, thus eliminating any lack of jurisdiction, whereas in Palmquist the plaintiffs had not.

Unlike Caterpillar, complete diversity did not exist at the time judgment was entered because the [plaintiffs] alleged non-fraudulent claims against a non-diverse defendant. . . . Where a jurisdictional defect lingers (i.e., lack of subject matter jurisdiction) through judgment in the district court, the case must be remanded because the federal court lacked jurisdiction.

103 F.4th at 308 (citation omitted).

What this “conservative” Fifth Circuit panel did in Palmquist was to convert fraudulent joinder – or any other means of involuntarily eliminating a non-diverse defendant – into a free shot for plaintiffs.

If the plaintiff ultimately wins, or settles, in federal court, then the plaintiff would simply forget about jurisdiction – a winning or settling plaintiff would have no reason to appeal and to challenge subject-matter jurisdiction. For their part, defendants in such a situation would face judicial estoppel if they contested their loss by raising lack of subject matter jurisdiction, since they had initially removed the case to federal court. E.g., American Fire & Casualty Co. v. Finn, 341 U.S. 6, 17 (1951).

But now, under the Fifth Circuit’s Palmquist decision, whenever plaintiffs lose in a case removed to federal court, they get a free shot at a do-over if, on appeal, they can convince a federal court of appeals that the diversity-destroying defendant should not have been dismissed, and that the case should have been remanded to state court. This makes fraudulent joinder far more risky for defendants, because even if they win, they can still lose on appeal – with the penalty being that everything done in federal court was for naught, and that plaintiffs get a second bite at the apple (with the advantage everything they learned about a defendant’s case) back in state court.

To the Fifth Circuit in Palmquist, it was of no moment that the parties before it, who had actually litigated the case to a final judgment, were fully diverse, or that there was no other error aside from the jurisdictional defect. Nor was any mention made of the plaintiff taking any steps to pursue any claim in state court against the defendant dismissed as fraudulently joined.

Now, the Supreme Court granted certiorari on the following question:

Whether a district court’s final judgment as to completely diverse parties must be vacated when an appellate court later determines that it erred by dismissing a non-diverse party at the time of removal.

Hain Celestial Group, Inc. v. Palmquist, 2025 WL 1211787 (U.S. April 28, 2025); Petition for Certiorari, at i (filed March 25, 2025).

You wouldn’t know it from the Fifth Circuit’s opinion, but this is hardly the first time that plaintiffs have sought this kind of free shot. The petition cited Junk v. Terminix International Co., 628 F.3d 439 (8th Cir. 2010), so we checked out that decision, which turned out to be anything but eponymous. Junk held that the later dismissal of plaintiff’s claims against the non-diverse defendant cured the jurisdictional defect:

[Plaintiff] urges that the erroneous denial of remand should void the court’s subsequent rulings in favor of [the diverse defendants], but “a district court’s error in failing to remand a case improperly removed is not fatal to the ensuing adjudication if federal jurisdictional requirements are met at the time judgment is entered.” Upon [the non-diverse defendant’s] dismissal, the court’s diversity jurisdiction was perfected and the litigation could proceed as to [the diverse defendants].

Id. at 447 (quoting and following Caterpillar; other citation omitted).

The petition also relied on Gould v. Mutual Life Insurance Co., 790 F.2d 769, 774 (9th Cir. 1986), which held essentially the same thing prior to Caterpillar:

When final judgment was entered, only a diverse defendant remained because the nondiverse defendants had been dismissed by summary judgment. . . . Essentially, the rule requires an appellant to have a remand issue certified for interlocutory review. . . . Under the [Supreme Court’s] rule, the court below had subject matter jurisdiction. The nondiverse defendants had been dismissed by the state trial court and that dismissal had not yet been overturned on appeal. The only parties before the court were diverse. Although application of this rule puts an appellant to a choice, it promotes finality and judicial efficiency.

Id. at 774 (citations omitted).

The Fourth Circuit is also on the other side of the circuit split. Moffitt v. Residential Funding Co., LLC, 604 F.3d 156 (4th Cir. 2010), also rejected the sort of mandatory nullification rule that the Fifth Circuit adopted in Palmquist. “[E]xcus[ing] jurisdictional defects at the time of removal” “is grounded not only in the interest of ‘finality’ but also in larger considerations of ‘judicial economy.’” Id. at 160 (quoting Able v. Upjohn Co., 829 F.2d 1330, 1334 (4th Cir. 1987), overruled on other grounds in Caterpillar). “[I]t would be a waste of judicial resources to remand these cases on the basis of an antecedent violation of the removal statute now that jurisdiction has been established.” Id.

Here, judicial economy and finality require that the district court’s judgment be allowed to stand. Where a matter has proceeded to judgment on the merits and principles of federal jurisdiction and fairness to parties remain uncompromised, to disturb the judgment on the basis of a defect in the initial removal would be a waste of judicial resources.

Able, 829 F.2d at 1334 (citation omitted).

On the other hand, the petition concedes that the Eleventh Circuit has the same rule as the Fifth – that when a district court errs by dismissing a nondiverse party as fraudulently joined, any final judgment it later issues against the remaining completely diverse parties that remain must be overturned for lack of subject matter jurisdiction. Petition at 19 (citing and discussing Henderson v. Washington National Insurance Co., 454 F.3d 1278, 1284 (11th Cir. 2006)).

The plaintiffs’ opposing brief in Hain v. Palmquist, claimed that any circuit split was “stale and non-recurring.” Id. at 8. Anybody who regularly litigates in this space knows that this is not true. Plaintiffs appeal all the time trying to nullify adverse results due to claims of purported jurisdictional defects. Most of the time they lose on the jurisdictional issue, but the threat of nullification is always there. Otherwise, the plaintiff-respondents: (1) distinguished Caterpillar in the same way the Fifth Circuit did, id. at 7-8; (2) attacked the petitioning defendant’s reading of circuit split cases for a variety of reasons, id. at 10-19; (3) relied on a post-Caterpillar case, Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567 (2004), holding that a defendant could not cure a jurisdictional defect by changing its own citizenship in the middle of the litigation, id. at 19-21; and (4) relied on Royal Canin U.S.A., Inc. v. Wullschleger, 604 U.S. 22 (2025), id. at 22, which we discussed here. Royal Canin has no bearing on the nullification issue, as it allowed plaintiffs to amend their complaints to add diversity-destroying new defendants. Since such amendments must be made promptly, they implicate none of the “overwhelming” “considerations of finality, efficiency, and economy” that carried the day in Caterpillar. Grupo Dataflux seems distinguishable because the defendant, not the plaintiff, had sought to change jurisdictional facts after the fact.

In reply, the defendant-petitioner reiterated that the circuit split was real and “intractable.” Id. at 2-7. It pointed out that the main ground plaintiffs raised to minimize the circuit split was an issue that Caterpillar did decide – that failure to take an immediate interlocutory appeal following denial of remand did not constitute a waiver on the part of a plaintiff. Id. at 5-6. They argued that one of the arguments plaintiffs made further demonstrated the wrong-headedness of the Fifth Circuit’s rule of absolute nullification whenever a jurisdictional defect existed at the beginning of the case. Id. at 7-9 (it’s esoteric, but you can read it here). Finally, the reply reiterated both the common-place nature of the issue, and the judicial economy reasons that counsel against the Fifth Circuit’s nullification ruling. Id. at 9-10.

Now the Court has taken the case.

Will the defense prevail, or will the recent trend continue of this “conservative” Court now being more sympathetic to p-side forum shopping than when former Justice Ginsburg still sat? We don’t know, but we do know that the decision in Hain Celestial will be a big deal, given the frequency with which plaintiffs join non-diverse plaintiffs on fanciful claims that they never intend to pursue once defendants are trapped in state court following expiration of the 1-year period for diversity-based removals. We don’t think that every successful fraudulent joinder removal should create a looming background threat of everything that happens thereafter being for naught.

If that were to happen, we would be in favor of either universal application of the minimal diversity model currently found in the Class Action Fairness Act, a requirement that the plaintiff have diligently pursued a state-court claim against the dismissed non-diverse defendant, or failing either of those, giving plaintiffs an immediate and mandatory interlocutory appeal as of right from any denial of remand based on fraudulent joinder. It’s crazy to waste that much time and effort., both for the parties and of the courts. We hope that the Supreme Court agrees.

Magistrate Recommends Dismissal of Acne OTC / Benzene Claims

By Susanna Moldoveanu on May 23, 2025

Today we address two more cooked-up—literally—Valisure cases, Bodunde v. Walgreens Boots Alliance, Inc., No. 1:24-CV-00985-JLT-SAB, 2025 WL 1411306 (E.D. Cal. May 15, 2025), and Navarro v. Walgreens Boots Alliance, Inc., No. 1:24-CV-00290-JLT-SAB, 2025 WL 1411406 (E.D. Cal. May 15, 2025).

These two cases involve legally identical magistrate recommendations that Defendant’s motions to dismiss be granted. The cases are part of a putative consumer fraud class action regarding the sale of Walgreens’s over-the-counter benzol peroxide (“BPO”) acne treatment drug products. The complaint incorporated allegations in an FDA citizen petition filed by Valisure, an entity well known to readers of the Blog by now (see here, here, and here, to name a few), stating that it had tested the BPO products and found high levels of benzene when stored at above-ambient temperatures. Valisure reached this result by “incubating” the products at 122 degrees Fahrenheit for 18 days. Earlier this year, we discussed the FDA’s response to that petition. In short, the FDA was not impressed. FDA tested 95 BPO-containing acne products, and more than 90% of tested products had undetectable or extremely low levels of benzene; FDA initiated a limited number of voluntary recalls for the small number of products with elevated benzene levels, and even in those, only specific lot numbers. Undeterred, Plaintiffs here brought claims under various consumer fraud and deceptive trade practices statutes, unjust enrichment, and breach of implied warranty of merchantability. Walgreens moved to dismiss for lack of standing and failure to state a claim.

Standing

Walgreens asserted that Plaintiffs lacked Article III standing because they did not allege that the BPO products they purchased actually contained benzene; therefore, there was no injury-in-fact.

The court held this argument was disposed of by the Ninth Circuit’s recent decision in Bowen v. Energizer Holdings, Inc., 118 F.4th 1134 (9th Cir. 2024). In Bowen—a case involving allegations of benzene in sunscreen—the court held that under a theory of economic harm, a plaintiff must only prove that he or she “paid more for the product than she otherwise would have paid or bought it when she otherwise would not have done so” absent the alleged false representation or non-disclosure. Id. at 1147 (cleaned up). The court concluded that standard was met by the plaintiffs’ allegations. Bodunde, 2025 WL 1411306 at * 9; Navarro, 2025 WL 1411406 at *8.

Preemption

Walgreens also argued that the claims were expressly and impliedly preempted by the FDCA.

With respect to OTC drugs like the BPO products, the FDCA has a broad express preemption prohibiting any state requirement “(1) that relates to the regulation of a [nonprescription drug]; and (2) that is different from or in addition to, or that is otherwise not identical with, a requirement under” the FDCA. 21 U.S.C. § 379r(a). OTC acne products are governed by a comprehensive set of FDA regulations called a monograph that contains specific requirements for labeling and expressly permits BPO in these products in an amount from 2.5-10%. Under the regulations, if a product complies with the monograph it “is generally recognized as safe and effective and is not misbranded.” Id. at § 333.301.

However, the express preemption provision does not bar state law claims that impose identical or “parallel” requirements to FDA regulations. Bodunde, 2025 WL 1411306 at * 11; Navarro, 2025 WL 1411406 at *10 (citing Riegel v. Medtronic, 552 U.S. 312, 330 (2008)). The claim here was that the BPO products were misbranded by omission: they did not disclose or warn that the products contain or might contain benzene. The court correctly concluded that “federal labeling regulations do not require such a statement, so Plaintiffs’ claims, insofar as they grounded on this basis, are expressly preempted.” Bodunde, 2025 WL 1411306 at *12; Navarro, 2025 WL 1411406 at *11. The acne monograph specifically lists BPO as a permissible active ingredient and does not require manufacturers to include any warning about benzene. Any added warning about benzene would be an “additional” requirement of state law and is expressly preempted. Id.

The court also rejected the claim that benzene should have been listed as an inactive ingredient. Inactive ingredients are “any component other than an active ingredient.” 21 C.F.R. § 201.66(b)(8). Benzene would not qualify as a component because it was not “intended for use in the manufacture of a drug product.” 21 C.F.R. § 210.3(b)(3). “[B]ecause Walgreens did not intend for benzene to end up in its BPO products, claims based on this theory are preempted.” Bodunde, 2025 WL 1411306 at *12; Navarro, 2025 WL 1411406, *12.

The court then considered a parallel claim based on violation of “Current Good Manufacturing Practice” regulations, which concern manufacturing processes and operations. This is where the court went awry. Without much discussion, the court found that “to the extent Plaintiffs’ state law claims are parallel claims brought for violations of CGMPs, those claims are not categorically preempted.” Bodunde, 2025 WL 1411306 at *14; Navarro, 2025 WL 1411406 at *14. These allegations were based on the vaguest cCGMPs possible (having “written procedures” for “process controls”). In part, the court relied on the Ninth Circuit’s Davidson decision, which we lamented here, which allows FDCA enforcement laundered through state laws. In this case, those state laws were state consumer or “little FDCA” statutes, even though it’s not clear here what actionable facts could support such a claim.

In Bodunde, Walgreens also argued that Plaintiffs’ claim was barred by the Illinois consumer fraud statute’s “safe harbor” provision. The court declined to apply this exception, holding that the fact that federal law allows for the omission of benzene warnings does not make it “specifically authorized.” Bodunde, 2025 WL 1411306 at *14.

Fraud

Walgreens also attacked Plaintiffs’ fraud claim as not alleging the “when,” “where,” and “how” as required by Rule 9(b). Although the court found that the “when” and “where” were there, it agreed with Walgreens that the complaints lacked allegations of the “how.” “While Plaintiffs have listed at least 22 CGMPs that Walgreens purportedly violated, the Court finds that Plaintiffs have not alleged facts that either establish that Walgreens allegedly violated the subject CGMPs, or even if Walgreens did violate the CGMPs, how those violations ultimately deceived Plaintiffs.” Bodunde, 2025 WL 1411306 at *15; Navarro, 2025 WL 1411406 at *15. Plaintiffs improperly used a circular reasoning that just because benzene was found in product in the United States, there must necessarily have been a CGMP violation by Walgreens. This type of “res ipsa loquitor” theory is not sufficient.

Primary jurisdiction and injunctive relief

Finally, the court addressed primary jurisdiction and injunctive relief. It rejected the argument that the court should stay or dismiss the action based on the FDA’s primary jurisdiction, and it held that the argument that equitable relief is not available where there is an adequate remedy of law was premature given the failure to state a claim.

The court granted the motions to dismiss but with leave to amend in the entirety. Right result, some wrong reasoning, which we hope the magistrate or the district judge will fix on the next round.

Oh, Snap (Removal)

By Eric Alexander on May 22, 2025

The passage of time can change our collective perception of what is normal and accepted. By way of a somewhat contrived example, back in 1989, there was a popular cross-over rap song called “Just a Friend” by Biz Markie. It was catchy, entertaining, and a contrast to so-called “gangsta rap” that scared the Parents Music Resource Center and others. In one lyric, the protagonist declares “Oh, snap” when he sees his paramour osculating another male the protagonist had been led to believe was “just a friend.” Yes, gentle reader, this was an expression used back in the day. And, yes, this was a popular song, not just a karaoke staple of the emergent arthritis set. Today, a similar scene in a popular song might describe the protagonist’s reaction as being violent or at least profane.

A decade after “Just a Friend” was released, the Supreme Court issued its decision in Murphy Bros., Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344 (1999). The issue in Murphy Bros. was whether a notice of removal was filed too late. In answering that the time for removal starts with formal service, not with earlier informal receipt of the complaint, the stage was set for the rise of snap removals. Also referred to as wrinkle removals, the epithet “snap” refers to how quickly the notice of removal is filed before service can be accomplished. Before Murphy Bros., courts had generally held that the application of the forum defendant rule’s bar on removal should not depend on the timing of service. See, e.g., Hunter Douglas Inc. v. Sheet Metal Workers Intern Ass’n Local 159, 714 F.2d 342, 345 (4th Cir. 1983); Pecherski v. General Motors Corp., 636 F.2d 1156, 1160–61 (8th Cir. 1981). Within a few years of Murphy Bros., we started seeing district courts reject motions to remand brought in cases removed before any in-state defendant had been served. Other district courts rejected snap removal, at least in some situations, often based on the reasoning that it was not fair for defendants to watch dockets and remove cases that would not have been removable had they learned of the case by being served. For us, focused as we are on litigation against drug and device manufacturers, concerns about gamesmanship and the use of technology by defendants are ironic. Plaintiffs engage in all manner of gamesmanship to try to keep cases out of federal court. The timing of filing and serving cases is often strategic. Once litigation starts, technology is generally a vehicle for increasing the burden on defendants. Setting aside the scales for weighing the gamesmanship by both sides of the v., however, the language of 18 U.S.C. § 1441(b)(2) is not subject to serious debate.

By now, more than twenty-five years after Murphy Bros., every circuit court to directly address the propriety of snap removal has held that the forum defendant rule—barring removal “if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought”—does not apply when no forum defendant has yet been served. Among those circuits is the Third Circuit, which covers Delaware, New Jersey, Pennsylvania, and the U.S. Virgin Islands, states that collectively serve as the home—principal place of business or state of incorporation—for many drug, device, and other companies targeted in serial product liability litigation. Grossly overgeneralizing, the plaintiff lawyers who sue these companies prefer to do so in their home state courts rather than federal courts and the companies prefer federal courts. So, the decision Encompass Ins. Co. v. Stone Mansion Rest., Inc., 902 F.3d 147, 152 (3d Cir. 2018), which endorsed snap removal as the unambiguous reading of § 1441(b)(2), comes up fairly often.

In Higgins v. Novartis Pharms. Corp., C.A. No. 25-247 (MN), 2025 WL 1397045 (D. Del. May 14, 2025), we have such a straightforward application of snap removal that we took notice of how things have changed. Plaintiffs chose Delaware state court for their product liability case against a drug company that has its principal place of business in New Jersey and its state of incorporation in Delaware. This is also a change: Delaware used to not be a preferred destination for product liability plaintiffs; historically, its state courts were hailed as savvy and business-friendly. In Higgins, plaintiff named a bunch of John Doe defendants along with the drug company, which removed the case before it or any fictitious defendants were served. Not that fictitious defendants count for removal under § 1441(b)(1) anyway. Citing Encompass and Avenatti v. Fox News Network LLC, 411 F.4th 125, 128 n.1 (3d Cir. 2022), Higgins concluded that the manufacturer had “properly removed this action in accordance with the plain language of § 1441(b)(2).” 2025 WL 1397045, *2. By contrast.

Plaintiffs’ policy appeals regarding the technological advantages of electronic dockets and resulting overuse of snap removal by defendants are unavailing in the face of clear statutory text. It is for Congress, not this Court, to revise the statute.

Id.

And that was it. No big analysis or survey of caselaw was required. In the circuit where so many drug and device companies are at home for purposes of general personal jurisdiction, snap removal is undoubtedly permissible. In other words, Higgins has got what we need when it comes to snap removal.

Stream of Commerce Jurisdiction Still Alive, But Hard to Establish Even in Difficult Forums

By Michelle Yeary on May 21, 2025

This post is from the non-Reed Smith side of the blog.

Not a drug or a device case, the recent personal jurisdiction ruling in In re: Hair Relaxer Marketing Sales Practices and Products Liability Litigation, 2025 WL 1331791 (N.D. Ill. May 7, 2025), caught our attention because typically the Seventh Circuit is not a very favorable place to be from a corporate personal jurisdiction standpoint. And coming shortly after the disappointing Ninth Circuit foreign defendant personal jurisdiction ruling, we thought we could use some good news on this topic. In re Hair Relaxer delivers, making it a nice checklist for avoiding foreign parent jurisdiction even in a difficult forum.

In re: Hair Relaxer involves claims against the manufacturers of various hair relaxer products, including L’Oréal USA. As is sometimes the case in MDLs, you get a rogue plaintiff. Here, that rogue plaintiff added L’Oréal USA’s French parent company, L’Oréal S.A. as a defendant. Id. at *1-2. On the parent defendant’s motion to dismiss, the question before the court was whether plaintiff’s allegations demonstrated that the court had specific jurisdiction over the foreign company. Specific jurisdiction hinges on the defendant having contacts with the forum state that show it purposefully availed itself or purposefully directed activities at the state and that plaintiff’s alleged injury arose from the forum-related activities. Id. at *3.

Plaintiff argued that personal jurisdiction was established under the stream-of-commerce doctrine—which allows the exercise of jurisdiction over a foreign corporation if it “delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum state.” Id. (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297-98 (1980)). However, ever since Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017), we have considered the door at least partially closed on stream-of-commerce jurisdiction. The Third Circuit, for example, does not recognize it at all. See Shuker v. Smith & Nephew, PLC, 885 F.3d 760 (3d Cir. 2018) (noting that a plurality of the Supreme Court has twice rejected the theory). But it’s still alive and kicking in the Seventh Circuit.

In fact, the Seventh Circuit has adopted a broad, knowledge-based stream-of-commerce doctrine whereby “as long as a participant in the stream of commerce is aware that the final product is being marketed in the forum state, the possibility of a lawsuit there cannot come as a surprise.” In re Hair Relaxer, at *3. Moreover, stream-of-commerce jurisdiction applies to non-manufacturing parent companies when parents “significantly contribute” to the placement of the product in the stream-of-commerce. Clearly the Seventh Circuit does not make it easy on foreign defendants. But even with the weight of the law on plaintiff’s side, the court found her allegations severely lacking.

Plaintiff’s allegations that the foreign parent itself placed the products into the stream of commerce were unsupported and conclusory. The foreign parent submitted a declaration to the contrary that plaintiff did not rebut. Id. at *4. So, plaintiff’s primary argument was that the parent company placed the products into the stream of commerce “through control of the actions of its subsidiaries.” Id.

First, plaintiff attempted to attribute statements in L’Oréal Groupe’s annual report and investor website to L’Oréal S.A. But none of the statements specifically were about L’Oréal S.A. itself as opposed to one of its subsidiaries. Id. at *5. Rather, L’Oréal Groupe refers to all of the entities and brands under the corporate umbrella. That is not enough for personal jurisdiction. Nor does the fact that the parent company owned the products’ formulas or held U.S. patents for the products or licensed the products to its U.S. subsidiary establish that the products at issue in the litigation were actually the parent’s products. Id. The existence of a licensing arrangement is not enough alone to establish jurisdiction; the question is the degree of control exercised by the licensor or parent.

Try as she might, plaintiff could not demonstrate the type of pervasive control needed to disregard corporate separateness. Overlapping board members are common, as is a parent maintaining some financial records regarding its subsidiaries or sharing infrastructure like an intranet site. Id. at *6. That fact that the U.S. subsidiary’s website is a page on the L’Oréal Groupe’s website was not only irrelevant to the level of control exercised by L’Oréal S.A., but “simply running a website that is accessible in all 50 states is not enough to create the ‘minimum contacts’ necessary to establish personal jurisdiction in the forum state. Id. Take that Ninth Circuit.

The court also found the parent company’s involvement in the litigation irrelevant to the jurisdictional question. While the court had previously found the parent and subsidiary had a close relationship such that the parent was required to produce documents, the standard for establishing “control” for purposes of discovery “is much lower than the standard for establishing an alter-ego relationship.” Id. at *7. And then plaintiff got desperate. She argued that the parent’s issuing of a press release about the MDL was evidence of control. It’s not and moreover, the press release was issued by L’Oréal Groupe, not L’Oréal S.A.

The court concluded that the two entities operate separately and independently and that the parent does not control the day-to-day operations of the subsidiary. Therefore, plaintiff failed to demonstrate sufficient minimum contacts to warrant exercising jurisdiction over the foreign parent or even to state a colorable claim to warrant jurisdictional discovery.

Criminal Liability is Different from Product Liability

By Stephen McConnell on May 20, 2025

Bexis knows that cases like Daughtry v. Silver Fern Chemical, Inc., 2025 U.S. App. LEXIS 11431, 2025 WL 1364806 (5th Cir. May 12, 2025), hit our sweet spot. It is a civil case, but it also emits a whiff of criminal law. It purports to be, among other things, a product liability case, but it turns out that it isn’t. And even the nature of the product is hazy. Is it a drug or is it a chemical? Either way, the case was dismissed.

Daughtry is a half drug/half chemical decision involving allegations of unusual personal injury. The chemical was an industrial solvent with various innocuous uses. But the chemical could also be used as a date-rape drug. Maybe it is both a drug and a chemical. Call it Schrodinger’s product.

The Drug Enforcement Administration (DEA) investigated the defendant company, which had been selling the drug/chemical to the plaintiffs’ employer. In response to a government subpoena, the defendant company turned over records, including invoices, purchase agreements, safety data sheets, and emails between the defendant and the plaintiffs. The DEA relied upon those documents to prosecute the plaintiffs for controlled substances offenses. The government seized assets of the plaintiffs. Some of the plaintiffs pleaded guilty. End of story.

Except that was not the end of the story. The plaintiffs claimed that they later found out that the defendant company and some of its employees had altered the documents produced to the government. (There were different versions of the story as to how the plaintiffs discovered that documents had been doctored, and the appellate court seemed a bit skeptical.) The plaintiffs claimed that the defendants altered the emails to help the government’s criminal and civil cases against the plaintiffs, that the defendants were in fact covering up their own tracks, and that it was the defendants, not the plaintiffs, who failed to operate according to the appropriate standards. According to the plaintiffs, the government relied upon the phony documents, especially the safety data sheet, to show that the plaintiffs were not employing voluntary industry practices.

You would think that the altered documents would form the basis of some sort of effort to obtain post-conviction relief, perhaps undoing the convictions. That is usually a long shot. But what the Daughtry case concerns is the plaintiffs’ civil claim against the defendants for defrauding them, for product liability failure to warn, negligent misrepresentation, constructive fraud, and civil conspiracy. The injury alleged was the litigation against the government and the guilty pleas. On its face, that theory sounds screwy. Then again, a criminal conviction probably is worse than most of the specious injuries we see alleged in the mass tort cases that clog our files.

The trial court dismissed the case on both substantive grounds and for lack of personal jurisdiction against one of the individual defendants. The appeal went up to the Fifth Circuit, which has become far and away the most fascinating of all the circuit courts. If the next SCOTUS nominee is not from the Fifth Circuit, we’ll eat a big, fat Texas bug.

The Fifth Circuit disagreed with the district court’s holding that specific personal jurisdiction was lacking against one of the defendants. Seeking to induce a criminal prosecution against Texans connected the defendants to Texas, so there was personal jurisdiction. If that is a holding you end up using some day, your practice is far more interesting than ours. (This case will be a published, precedential decision.)

The most pertinent part of the Daughtry case for purposes of our little blog is the dismissal of the plaintiffs’ cause of action for product liability. The product liability claim was based on the defendant’s alleged failure to attach a government-mandated date-rape warning label to the product it sold to plaintiffs. That was also the subject of the email doctoring. But the injuries the plaintiffs claimed related to the government’s prosecution for their own unlawful distribution of the product as a drug, not to the risk mentioned in the missing label. Those injuries did not stem from any defect in the product’s warnings.

The court rejected the plaintiffs’ fraud claim because the plaintiffs were not the defrauded parties. They weren’t the ones who relied upon the allegedly doctored documents. It was the government that relied on the documents (though such reliance was to the plaintiffs’ detriment).

Nor could the plaintiffs assert a negligent undertaking claim under Rest. (Second) of Torts sections 323 or 324Aconcerning the missing label. Recovery for negligent undertaking is limited to physical harm. None of the plaintiff’s alleged harms was physical, but rather related to the government’s raids, seizures, and their monetary consequences.

It is possible that the plaintiffs had a legitimate beef against the defendants. But their causes of actions were the wrong ones.

First Amendment Still Prevails Over California’s Prop 65

By Steven Boranian on May 19, 2025

We reported about a year and a half ago on a Ninth Circuit opinion holding that the First Amendment prohibited cancer warnings required by California’s Proposition 65 because the warnings were government-compelled speech. Because there was no scientific consensus that the product at issue (glyphosate) causes cancer, the compelled warning failed intermediate scrutiny and thus violated the Constitution. You know about Prop 65. It is the voter-enacted law that requires businesses to warn Californians about significant exposures to chemicals that allegedly cause cancer or birth defects. See Cal. H&S Code § 25249.5 et seq. The result is that California is now blanketed with boilerplate warnings of chemicals “known to the state” to cause cancer that literally no one pays any attention to.

This was not the first time the Ninth Circuit ruled that the First Amendment trumps Prop 65. You might recall the court order circa 2018 requiring Starbucks and other coffee shops to warn California consumers that drinking coffee poses a risk of cancer because it contains dietary acrylamide. The problem with that warning is that it is not true. Dietary acrylamide forms naturally in many foods when prepared at high temperatures, and epidemiological studies are inconclusive on whether it is carcinogenic. One epidemiologist who reviewed the literature has concluded there are no studies showing that eating food with acrylamide increases the risk of cancer at all.

The California Chamber of Commerce thus stepped in and sued to enjoin the State from compelling businesses to disparage their own products with alarmist warnings that have no factual support. Long story short, the Chamber won, and the Ninth Circuit affirmed a preliminary injunction preventing the State from enforcing Prop 65. See our post on the opinion here.

So we have the Ninth Circuit holding that unsupported Prop 65 cancer warnings violate the First Amendment. Twice. Including in a case specifically involving dietary acrylamide. And what then did the great State of California do?

It doubled down.

Instead of turning its attention to matters that might actually harm Californians, the State promulgated a new regulation effective January 1, 2025, specifically requiring a Prop 65 cancer warning for dietary acrylamide.

And the State lost again. On remand from the Ninth Circuit, the district court has now permanently enjoined the State from enforcing its new regulation. In California Chamber of Commerce v. Bonta, No. 2:19-cv-02019, 2025 U.S. Dist. LEXIS 84289 (E.D. Cal. May 2, 2025), the district court explained that the carcinogenic risk of dietary acrylamide has been the subject of debate since its discovery in 2002. The court acknowledged animal studies showing that mice and rats develop tumors when they eat food containing acrylamide. But, “as [the] court has previously acknowledged, the implications of these animal studies and mechanistic data for assessing dietary acrylamide’s cancer risk are uncertain.” Id. at *9-*11 (emphasis in original). The FDA stated in 2024 that it is “not clear exactly what risk acrylamide poses to humans,” and as noted above, epidemiological studies have been inconclusive. Id. at *12-*14.

The district court first rejected the State’s argument that the Chamber failed to show that any of its members were compelled to provide a warning because it did not provide evidence that their food products contain acrylamide. That was beside the point. Businesses in California are under “constant, credible threat of enforcement” of Prop 65 because the statute makes it “absurdly easy” to bring a private action. A private plaintiff “need only credibly allege that a product has some of the chemical at issue, not that the amount . . . is harmful or exceeds [the designated] level.” Id. at *22-*24. The Chamber also provided evidence of hundreds of private enforcement actions alleging the presence of acrylamide, which shows how Prop 65 really works. Id at *25. The Chamber and its members definitely had standing.

On the merits, the district court ruled that the State’s new regulation was unconstitutional under Supreme Court precedent on the First Amendment—Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (1985), and Central Hudson Gas & Electric Corp. v. Public Service Commission, 447 U.S. 557 (1980). Under the less-stringent Zauderer test, the government can compel speech so long as it is reasonably related to a substantial governmental interest and the compelled speech is (1) purely factual, (2) noncontroversial, and (3) not unjustified or unduly burdensome. The district court found that the Prop 65 warnings were “neither uncontroversial nor purely factual as the warnings espouse a one-sided view that dietary acrylamide poses a human cancer risk despite a lack of scientific consensus on that point.” Id. at *28. The State argued that its newly formulated acrylamide warning strung together statements that were factually true. But the State was ignoring “the reality that [the warning] conveys the ‘core message’ that consumer a food containing acrylamide poses a risk of cancer.” Id. at *36-*37.

The new regulation failed under Central Hudson, too. Under Central Hudson’s intermediate scrutiny standard, the Prop 65 dietary acrylamide warning must “directly advance the governmental interest asserted and must not be more extensive than is necessary to serve that interest.” Id. at *41. California clearly has an interest in protecting the public from health hazards. “However, misleading statements about acrylamide’s carcinogenicity do not directly advance that interest.” Id. at *42. Moreover, California has other means available to inform consumers of its opinion that acrylamide in food can cause cancer without burdening the free speech of businesses, including advertising and posting information on the Internet.

The district court therefore granted the Chamber’s request for declaratory relief and a permanent injunction against enforcement of the Prop 65 acrylamide regulation. The State may or may not appeal. Or maybe a private enforcement organization (i.e., the plaintiffs’ bar) will intervene and appeal, which is what happened last time. We don’t know why the State doubled down on its unsupported and anything-but-noncontroversial acrylamide Prop 65 warning. But being the defense hacks that we are, we can’t help but see the influence of private enforcers trying to protect a profit center. Part of us would like to see another appeal, and a third opinion from the Ninth Circuit holding that the First Amendment trumps Prop 65.

Drug & Device Law