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No surprise, we are not fans of civil RICO.  We don’t like how it is misused by lawyers on the other side to convert run-of-the-mill pharmaceutical and medical device cases into class actions.  We don’t like that it carries the possibility of treble damages and attorneys’ fees.  We don’t like the elasticity of its terms.  And we don’t like its nationwide personal jurisdiction and venue provisions, 18 U.S.C. 1965(a)-(d). 

In short, we think it is madness to use civil RICO outside of the racketeering context for which it was designed.  Today’s discussion of RICO madness comes by way of Medical Marijuana, Inc. v. Horn, where a pending Supreme Court cert petition raises an issue with significant ramifications for our clients and readers.  

RICO permits plaintiffs “injured in [their] business or property by reason of” a defendant’s racketeering activity to sue for treble damages and attorneys’ fees. 18 U.S.C. § 1964(c). 

The good news is that the “business or property” requirement “exclud[es] … personal injuries.”  RJR Nabisco, Inc. v. Eur. Cmty., 579 U.S. 325, 350 (2016).  

The bad news is that some federal circuits split hairs to conclude, notwithstanding the Supreme Court’s clear holding in RJR Nabisco, that economic damages that flow from personal injuries—think medical expenses and lost wages that are part of every personal injury case— are “business or property” within the meaning of the civil RICO statute.

Not all do.  The Sixth, Seventh, and Eleventh Circuits have rejected the idea that economic damages flowing from personal injuries are an injury to “business or property.”  See Jackson v. Sedgwick Claims Mgmt. Servs., 731 F.3d 556 (6th Cir. 2013) (en banc); Evans v. City of Chicago, 434 F.3d 916, 926-27 (7th Cir. 2006), overruled on other grounds by Hill v. Tangherlini, 724 F.3d 965, 967 n.1 (7th Cir. 2013); and Grogan v. Platt, 835 F.2d 844, 848 (11th Cir. 1988).  These circuits, in our view, are on solid ground.  A distinction between personal injuries and injuries to “business or property” is pretty much black letter law.  See Black’s Law Dictionary 925 (Rev. 4th ed. 1968) (A “personal injury” is a “hurt or damage done to a man’s person … as distinguished from an injury to his property or reputation.”).

But the Ninth Circuit has been fine with the premise that personal injury damages like medical expenses and lost wages are “business or property” for quite some time now.  See Diaz v. Gates, 420 F.3d 897, 900 (9th Cir. 2005) (en banc). 

And then, in August, the Second Circuit joined that view in Horn v. Med. Marijuana, Inc., 80 F.4th 130 (2d Cir. 2023), deepening the circuit split to 3-2 and potentially teeing up the issue for Supreme Court resolution.

Does it matter that much that the Second and Ninth Circuits have opened the RICO door to personal injury cases when economic damages are alleged?  Given that civil RICO provides for treble damages and attorneys’ fees, and that New York (Second Circuit) and California (Ninth Circuit) already are populous magnets for both business and litigation, we think so.

It also matters because the nationwide jurisdiction and venue provisions of civil RICO make it relatively easy (as compared to ordinary product liability claims) for civil RICO plaintiffs to go forum shopping for favorable courts .  Venue is proper for a civil RICO claim any district in which a defendant “resides, is found, has an agent, or transacts his affairs.”  18 U.S.C. § 1965(a).  Civil RICO plaintiffs can join defendants with no connection to the forum if “the ends of justice” so require.  18 U.S.C. § 1965(b).  Defendants can be served “in any judicial district in which such person resides, is found, has an agent, or transacts his affairs.”  21 U.S.C. § 1965(d); see also Laurel Gardens, LLC v. McKenna, 948 F.3d 105, 114, 118-19, 121-22 (3d Cir. 2020) (allowing nationwide service of process for civil RICO cases where justice so requires). The litigation corollary of Gresham’s Law will apply, with bad jurisdictions crowding out the good.

We will be watching to see if the Supreme Court takes this case and if it does, hoping that it steps in to stop this one particular form of RICO abuse.

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

A court within the Fifth Circuit has held that the FDCA impliedly preempts unfair-competition and consumer-protection claims asserted by a drug manufacturer against a compounding pharmacy. Despite generally rooting for drug manufacturers, we are okay with the decision, Zyla Life Scis., LLC v. Wells Pharma of Houston, LLC, 2023 WL 6301651 (S.D. Tex. 2023), because it rejects the use of state law to impose requirements beyond those imposed by the FDA.

In general, a prescription drug must be approved by the FDA before it may be sold. 21 U.S.C. § 355(a). There is, however, an exception for drugs produced by a qualifying compounding pharmacy. Drug compounding is a “process by which a pharmacist combines or alters drug ingredients according to a doctor’s prescription to create a medication to meet the unique needs of an individual … patient.” Med. Ctr. Pharmacy v. Mukasey, 536 F.3d 383, 387 (5th Cir. 2008). Qualifying compounding pharmacies do not require FDA approval to sell compounded drugs.

The defendant in Zyla is a qualifying compounding pharmacy that sells without FDA approval a compounded product containing the active ingredient found in the plaintiff manufacturer’s FDA-approved product. The manufacturer sued the pharmacy, claiming that sale of the compounded product without FDA approval violated various states’ unfair-competition and consumer-protection statutes. The manufacturer claimed that sale of the compounded product violated state law because each of the relevant states has a law requiring that a drug sold in the state be FDA-approved.

Contending that the manufacturer’s claims were impliedly preempted, the compounding pharmacy moved to dismiss the manufacturer’s complaint. The court agreed and dismissed the complaint, rejecting the manufacturer’s assertion that preemption is an affirmative defense that cannot be decided on a motion to dismiss.

Quoting Spano v. Whole Foods, Inc., 65 F.4th 260 (5th Cir. 2023), a case involving food-labeling, the Zyla court said that a claim avoids preemption under the FDCA if it does “not (a) ‘add to’ federal requirements or (b) impinge on the FDA’s sole authority over food-labeling requirements.” 2023 WL 6301651, at *4. Applying this rubric, the court concluded that the drug manufacturer’s claims against the compounding pharmacy were preempted because a state law requiring that a compounding pharmacy drug obtain premarket approval from the FDA before selling a compounded drug “adds to the federal requirements under the FDCA—which does not require compounding facilities to acquire premarket approval.” Id. We agree.

We are, moreover, pleased that the Zyla court recognized that the Fifth Circuit’s Spano decision, bad though it may be, does not foreclose implied preemption when a plaintiff predicates state-law claims on purported FDCA requirements.

Spano, which reversed a district court decision that we had earlier touted as holding certain food-labeling claims impliedly preempted, is confused in its analysis and wrong in its result. To start, Spano conflates express- and implied-preemption principles, citing the concept of “parallel” claims to reject implied preemption in the particular case even though the concept is relevant only to express-preemption analysis. See Spano, 65 F.4th at 264. In a related error, Spano—following the Fifth Circuit’s misguided decision in Hughes v. Boston Scientific Corp., 631 F.3d 762 (5th Cir. 2011)—reads Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341 (2001), far too narrowly, holding that it preempts state-law claims only when “there is no independent state duty upon which the [plaintiff] can hang a particular claim.” 65 F.4th at 264.

That is wrong. As we have explained many times before, a claim’s reliance on an “independent state duty” (Spano, 65 F.4th at 265) is not by itself sufficient for the claim to escape implied preemption under Buckman. Rather,

the conduct on which the claim is premised must be the type of conduct that would traditionally give rise to liability under state law—and that would give rise to liability under state law even if the FDCA had never been enacted. If the defendant’s conduct is not of this type, then the plaintiff is effectively suing for a violation of the FDCA (no matter how the plaintiff labels the claim), and the plaintiff’s claim is thus impliedly preempted under Buckman.

Riley v. Cordis Corp., 625 F. Supp. 2d 769, 777 (D. Minn. 2009); accord, e.g., Blankenship v. Medtronic, Inc., 6 F. Supp. 3d 979, 986 (E.D. Mo. 2014); Caplinger v. Medtronic, Inc., 921 F. Supp. 2d 1206, 1214 (W.D. Okla. 2013), aff’d, 784 F.3d 1335 (10th Cir. 2015) (Gorsuch, J.).

So, Zyla represents a good result within the confines of bad Fifth Circuit precedent.

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Lately, there seems to be an overdose of OTC (Over the Counter) drug cases. Everywhere we look, we see more and more lawsuits centered on OTC’s, both in the areas of product liability and consumer fraud.  Is it because OTC litigation offers plaintiff lawyers the prospect of a huge potential plaintiff population?  Is it because, unlike with prescription medications, plaintiffs can easily exaggerate or even make up the extent of their product usage? Is it because claims against OTC’s sidestep the pesky learned intermediary doctrine?  We have our suspicions.  In any event, most of the OTC cases littering our inbox seem awfully weak, sometimes even desperately so.

In Kampmann v. Procter & Gamble Co., 2023 WL 7042531 (C.D. Illinois Oct. 24, 2023), the plaintiff filed a class action alleging that the sale of a “Daytime Convenience Pack,” which consisted of Dayquil Cold relief medicine and a vitamin C supplement, deceived consumers into believing that the vitamin C independently treated cold and flu symptoms.  This allegation should have enjoyed the half-life of a sneeze, considering that the label on the vitamin C supplement stated in all capital letters that “THIS PRODUCT IS NOT INTENDED TO TREAT COLDS OR FLU.” The court ended up dismissing the consumer fraud action (which rested on statutes in Illinois and various other states, as well as common law fraud, breach of warranty, and unjust enrichment claims), but it took nine pages to do so.  We cannot help but wonder why the court did not dump the case in nine lines.  There was simply no misrepresentation. 

What in the world was the plaintiff’s fraud theory?  The plaintiff argued that mere juxtaposition of the cold treatment and vitamin C products was an implied misrepresentation because the dietary supplement allegedly was “not an effective treatment” for cold/flu, while the OTC drug was.  But shouldn’t the specific disclaimer regarding the vitamin C preclude any implied misrepresentation merely by physical juxtaposition?  The plaintiff cited a national survey showing that 60% of Americans believe that vitamin C is as good as OTC medications in treating cold and flu symptoms. Thus, so the reasoning goes, the joint OTC-plus-vitamin C convenience package exploits a common misconception.  The packaging did not correct that misconception (except it did), and therefore perpetrated fraud by omission. People paid more for the convenience pack than they would have if they had known that vitamin C is useless, so they should get some money back.  And let’s not forget about attorney fees.

The Kampmann court rejected the fraud claim because the complaint did not set forth an actual fraudulent communication. Even fraud by omission requires some sort of communication. Construing “side-by-side” joint packaging as a communication was novel and unsupported by precedent.  Pure product placement cases (like the one we discussed here) were not particularly relevant where a third-party had done the shelving.  Absent any actual communication, the disclaimer precluded any claim of actual deception.  The Kampmann court also distinguished away cases where plaintiffs were allowed to press claims that OTC cough syrup boasting of “maximum strength” might deceive consumers.  (We criticized here a similar ruling as being maximum dumb.)   

The plaintiff also contended that the co-packaging was misleading because it did not conform to the FDA’s proposed rule 80 Fed. Reg. 79776, which views co-packaging to be an implied claim that the products are intended to be used together for a common or related therapeutic purpose.  As an initial matter, whether or not the packaging complied with FDA “convenience pack” regulations, was irrelevant.  Plaintiffs could not privately enforce the FDCA, so a violation of an FDA rule, by itself,  cannot establish deceptive advertising.  Moreover, the plaintiff did not address “that vitamin C, which admittedly may decrease colds’ duration if taken regularly before the onset of symptoms, might be perceived as having a common or related therapeutic purpose with a drug meant to treat the symptoms.” We were personally glad to see the court make that point, since we take vitamin C (in the form of delicious gummies) to ward off colds, and did not wish to discover that we are thimble-headed for doing so. 

So much for fraud.  And without any fraud, there could be no claim for unjust enrichment.  As for the warranty claims, they failed for reasons both similar to and dissimilar to what sunk the fraud claims. First, the express warranty claim is a goner because there was no express representation.  Second, the warranty claims independently failed for lack of pre-complaint notice. 

Besides asking for cold, hard cash, the plaintiff sought an injunction making the defendant’s representations about the product “consistent with its abilities, attributes, and/or composition.” But the plaintiff now lacks standing to pursue such relief, as “she is now aware that Super C is not effective in treating the symptoms of colds and flu.”  The plaintiff tried to get around this epistemological hurdle by suggesting certain “assurances,” or maybe forcing the products to be sold separately.  Of course, the products already can be purchased separately.  The Kampmann court found “the requested relief ill-defined and nonsensical, apparently filed with little thought.”  The court then observed that the plaintiff lawyer “has authored a barrage of consumer fraud claims,” and that he “has been advised on multiple occasions, by courts throughout the country, that a plaintiff does not have standing for injunctive relief where the plaintiff is aware of the alleged deception and is no longer subject to being injured by it.”  

And yet, with all of the infirmities in the complaint warranting complete dismissal, and with the plaintiff lawyer’s track record, the Kampmann court granted the plaintiff leave to amend.  The court “cautioned” the plaintiff that “there must be a good faith basis for an amended complaint,” but is such a caution likely to head off a case that was a sheer money grab from the start?  We’d prefer to see a judicial convenience/combo pack of vitamins D (dismissal) and P (prejudice).      

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Listen to your gut.  Follow your instincts.  Trust your intuition.  Great advice in many situations.  Like deciding whether to buy skinny jeans or whether to buy your forever home.  Or, when things seem “off” or feel “dangerous.”  Or, when your body is trying to tell you something about your health.  These are all times to investigate your feelings about a situation and allow your “gut” or “sense” to be your guide (or at least a back seat driver you don’t ignore).  A general sense, feeling, or impression, however, does not get the job done when you are the medical causation expert in a complex medical device case.  As the court in Hobus v. Howmedica Osteonics Corporation, 2023 WL 6850144 (D. Ore. Oct. 17, 2023) told plaintiff when it dismissed his case. 

Plaintiff suffered from back problems nearly his whole life that were exacerbated by a car accident in 2014 that led to spinal fusion surgery in 2016 during which his surgeon chose to implant an expandable interbody fusion cage device manufactured by the defendant.  Plaintiff alleged that the collapse of the cage caused him to have to undergo revision surgery and caused him to suffer chronic pain.  Plaintiff submitted three expert reports – a medical causation report from his implanting surgeon, a design defect report from a biomedical engineer, and a damages report.  Defendant moved to exclude all three and for summary judgment.  The motion on the damages expert was denied which was of no consequence because the court excluded the medical causation expert in his entirety and the bulk of the engineering opinion. 

Because plaintiff’s medical causation expert was his treating surgeon, the court took its time detailing the surgeon’s opinions in the treating records.  Opinions such as:  plaintiff’s MRI shows no cord compression or nerve root impingement and “there is nothing there to account for his [pain];” or based on further MRIs the surgeon saw “no obvious problems there or explanation as to why [plaintiff] was having symptoms.”  Most importantly, when device failure was identified, his surgeon noted that plaintiff had achieved a “solid fusion” and therefore the failure was “of questionable significance,” there was still no neural impingement, and there was a “low” likelihood that revision surgery would alleviate plaintiff’s pain.  Id. at *2-3. 

Flash forward to becoming plaintiff’s expert, and the surgeon’s new opinion was that the collapse of the cage was an “important contributing factor” to and “major cause” of plaintiff’s injuries.  Id. at *5.  Plaintiff’s expert report provided “little detail” regarding how he reached this new conclusion.  And when asked at deposition what his methodology was, the best he could say was “it’s just my sense.”  His “gut says he might have done better.”  Confirming he used no methodology, he said “I just have my instincts as a clinician.”  Id. at *5-6.  So, it was no stretch for the court to conclude that plaintiff’s expert “utilized no generally accepted methodology in arriving at his medical conclusions.”  Id. at *6.  Clinical experience can be a basis for reliable expert testimony, but only where the clinician has “extensive experience” with the issue on which he is opining.  Here, plaintiff’s expert had only one patient who experienced a cage collapse – plaintiff.  Id.  The court found it “difficult” to call that sufficient experience on which to base his opinion.                

Plaintiff also tried to argue that his surgeon relied on his own medical records to reach his conclusions.  As pointed out above, that’s a stretch too.  But more importantly, the court stated the general principle that

Although medical records may, in some circumstances, support a clinician’s overall conclusion, they do not independently verify the methodology that the clinician used. That is, while a medical record may be the basis of an expert’s findings, it offers no explanation for the validity of the expert’s methods.

Id.  At most, the surgeon’s records demonstrated a “consistent uncertainty” as to whether the cage collapse was a possible cause of plaintiff’s injuries. 

Finally, plaintiff’s expert failed to address “the numerous possible factors causing plaintiff’s pain.”  Id. at *8.  He deemed the cage collapse was a significant causative factor of plaintiff’s pain without considering the impact of other factors affecting pain.  “[A]n expert opinion that wholly fails to consider alternative causes cannot be a reliably based opinion.”  Id.  Taken together, the court had more than enough reasons to exclude plaintiff’s medical causation expert.

Plaintiff’s design defect expert did not fare much better.  She concluded that to be safe, defendant’s cage needed to withstand a force of 2,000 N.  But beyond that, the court could not conclude that she reliably applied that opinion to the facts of the case.  She looked at six clinical failure reports but conducted no inquiry as to why the devices failed in those cases – she had no information on those patients’ ages, weights, activity levels, etc. to know the amount of force placed on those devices.  She “assumed” those failures were due to a design defect.  Do assumptions ever really work out in any context?  Id. at *11.

Plaintiff’s expert did not test the model of cage that was used in plaintiff’s surgery.  In other words, the expert did not determine whether the device could withstand 2,000 N before opining it was defective for failing to meet that standard.  The company testing that the expert did rely on was about “breakage” not device collapse and the expert offered no explanation for her “leap” from breakage to collapse making her opinion “wholly speculative.”  Id. at *12.  Not only did the expert not test the model, she did not test the actual device used in plaintiff’s surgery.  She could have but decided not to because of the cost.  Failing to take this step that would have provided an objective basis for her opinion, “deeply undermines the reliability” of her conclusion.  Id.  

The design expert also offered an opinion on feasible alternative design.  She offered two—the first was not an alternative design and the second was not feasible.  First, she suggested alternative designs that were not expandable.  But that is a significant design feature of defendant’s product that provides utility not available in static cages.  Id. at *14.  So, as we have pointed out in other cases a different product is simply a different product, not an alternative design of the product at issue.  Second, plaintiff’s expert testified about ways the expandable cage could be improved but had not performed any analysis to determine if any of her ideas were feasible.  So, she could not testify on alternative design.

Finally, perhaps realizing where things were headed with his medical causation expert, plaintiff tried to sneak in medical causation through his biomedical engineer.  But rendering opinions as to the specific cause of plaintiff’s injuries goes well beyond her engineering expertise.  Her engineering experience and training may allow her to make general findings regarding what injuries may occur from a cage collapse, but offering opinions that connect the cage collapse to plaintiff’s specific injuries crosses into medical causation on which this expert was not qualified to opine.

In the end, it was the exclusion of plaintiff’s medical causation expert that led the court of award summary judgment for the defendant.  Oregon law requires expert testimony where causation involves complex medical questions. Without a causation expert, plaintiff could not meet his burden of proof which is just a tad more onerous than gut feelings and basic instincts.

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The Granuflo/Naturalyte MDL (“G/N”) was created a decade ago, in 2013.  In re Fresenius Granuflo/Naturalyte Dialysate Products Liability Litigation, 935 F. Supp. 2d 1362 (J.P.M.L 2013).  Notwithstanding a settlement in 2016, it’s still up and running, it appears.  Over the past decade, the G/N MDL had distinguished itself for – not much, really.  We wrote a grand total of one post about it during that time, which collected several one-off state-law rulings, but zero preemption, expert admissibility, or core product liability issues decided.

Until a little while ago.

Continue Reading GranuFlo/NaturaLyte MDL Substantive Rulings – Better Late Than Never
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We write today with an update on a case applying the defense of illegality (or “in pari delicto”) to cut off product liability claims under Kansas law.  Messerli v. AW Distributing, Inc. is the sad case of someone who passed away, allegedly as a result of inhaling intoxicating fumes (or “huffing”) from computer dusters, those cans of compressed air you use to blow away dust.  As we wrote here, a federal district court in Kansas granted one defendant’s motion to dismiss on the basis that the decedent had engaged in illegal conduct, which supported a complete defense.  To summarize, Kansas’s illegality defense bars claims arising from a plaintiff’s illegal conduct, and huffing is a crime in Kansas under laws against “the unlawful abuse of toxic vapors.”

This was the first court to rule that Kansas’s illegality defense applies in a product liability case, so the plaintiff asked the federal court to certify questions to the Kansas Supreme Court.  The other defendants predictably filed “me too” motions seeking the same result for themselves. 

The court’s order on those motions is Messerli v. AW Distributing, Inc., No. 22-2305, 2023 U.S. Dist. LEXIS 188974 (D. Kan. Oct. 20, 2023), and the defense again came out on top.  First, the district court denied the plaintiff’s request to certify questions.  This is the most interesting part of the order because, after all, this was a federal court, and it was the first to apply Kansas law in this manner.  Heck, that was one of the major points of our last post and partly what made the case blogworthy in the first place.  Regular readers also know that we often bemoan federal courts who make unfounded Erie predictions of state law. 

This Erie prediction, however, was exceptionally well supported, and a certified question requires much more than what the plaintiff had to offer.  The issue of whether illegality bars product liability claims met the bare criteria for certification:  It was both (1) outcome determinative and (2) unprecedented in the Kansas appellate courts.  Even so, “[a] federal court needn’t certify ‘every time an arguably unsettled question of state law comes across [its] desk.’”  Id. at *10.  It is within a federal court’s discretion to make an Erie prediction, rather than certify, and that is what this court did.  It considered, for example, decisions from multiple other jurisdictions, as well as Kansas decisions recognizing the illegality defense generally.  The “weight and trend” of the authorities supported the court’s prediction, which the plaintiff only reinforced by citing dissenting opinions urging a different result.  Id. at *11-*13.  Plaintiffs were also unable to provide any signal that the Kansas courts considered the question at all unsettled.  Id. at *16. 

In the end, “[t]he questions at play here aren’t as novel and important as plaintiff would have the court believe.”  Id. at *17.  The district court also noted that requests to certify are particularly disfavored after the requesting party has received an adverse ruling.  Indeed, the plaintiff here was basically asking the federal court to submit its order to a state court for review.  That pathway typically runs through the United States Court of Appeals, not a state court.  And if the plaintiff really thinks the Kansas Supreme Court needs to weigh in here, it can renew its certification request on appeal.  Id. at *17-*20.  The plaintiff’s request for certification was too little, too late.

Second, the district court dismissed the claims against the other defendants.  The complaint did not distinguish between the various defendants.  To the contrary, the plaintiff alleged that all the defendants’ products were “identical in composition,” and it brought claims against the defendants indiscriminately.  The illegality defense therefore barred the claims against the other defendants, too. 

This order terminated all claims in the case, so we the suppose the next stop may be the Tenth Circuit, and maybe even another motion to certify questions.  We will keep you posted. 

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Recently, within the course of a couple of weeks, two different courts reached the same conclusion – that a plaintiff’s negligence per se claims, largely based on purported violations of the Food, Drug & Cosmetic Act (“FDCA”), failed to state a claim.  See Disarro v. Ezricare, LLC, 2023 WL 6619445 (M.D. Fla. Oct. 11, 2023), and Alcozar v. Orthopedic & Sports Medical Center, ___ N.E.3d ___, 2023 WL 6302337 (Ind. App. Sept. 28, 2023).  Another thing that these two opinions share is that neither of them relied on federal preemption in disposing of the FDCA-related negligence per se claims.

Continue Reading Beating FDCA-Based Negligence Per Se Claims on Non-Preemption Grounds
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Our best college era summer job was working as a staffer for the New Jersey State Senate. The Abscam investigation was ongoing, and it seemed that every week there’d be another empty seat in the Senate chamber courtesy of the FBI. Good times.  We doubt we personally performed any services that were useful for Garden State taxpayers.  It was mostly an eye-opening experience for us.  Every week was a journey down some policy worm-hole. One day was spent with a representative of the state consumer affairs agency.  We were fiddling with proposed legislation. We don’t remember what the legislation was about, but we do remember the consumer affairs guy regaling us with stories about how easy it was for state investigators to find all sorts of violations of consumer fraud regulations.  Weigh any packaged meat at a grocery store, and there’s a decent chance the weight will be wrong.  That isn’t necessarily the result of anything nefarious.  Evaporation is a fact of life. Or show up at a stereo store (do they still exist?) and wait for the haggling – which was contrary to rules requiring accurate listed prices.  Haggling is a form of price discrimination.  Why should timid souls pay more?

Fast forward to our current career as a tort defense attorney/hack, and it’s still true that anyone can gin up an alleged consumer fraud. They can even file a class action lawsuit. The recipe is easy-squeezy.  Stir in semantic stuffiness (what really is “organic” or “natural” or “vanilla”?) with speculative goo, then baste with paranoia.  Bon appetit.  But the cases are mostly nonsensical and are sheer money plays by plaintiff lawyers who look for back-end fees while the ostensible clients get “settlements” roughly equal to a diner breakfast or, if one really strikes the mother lode, a one-month cable payment.  Sadly, we have become as cynical as that consumer agency official from decades ago.

But every once in a while, a court will see through the consumer fraud case as itself being phony, and will throw the case out as if it was a package of spoiled meat.

Wilson v. Colourpop Cosmetics, LLC, 2023 U.S. Dist. LEXIS 185688 (N.D. Cal. Sept. 7, 2023), is a defense-favorable cosmetic opinion with good implications for drug/device consumer fraud cases. The plaintiff brought a class action suit against the manufacturer of eye cosmetic products (eyeshadow, eyelid primer, eyebrow pencils, etc.) because there were color additives in those products that allegedly made them unsafe for use around the eyes.  Granted, that sounds a tad problematic. The plaintiff said that she would not have purchased the cosmetics or would have paid less if she knew they were unsafe. At issue in the Wilson opinion was the second amended complaint, which included seven causes of action: (1) common law breach of implied warranty, (3) breach of implied warranty under California Civil Code section 1790, (3) unjust enrichment, (4) false advertising under notorious California Business & Prof. Code section 17500, (5) the California Consumers Legal Remedies Act, (6) California Unfair Competition Law, and (7) fraud.  

So many claims, so little merit. The defendant moved to dismiss for lack of jurisdiction/standing, failure to state a claim because of federal implied preemption, and lack of specificity under Federal. R. Civ. P. 9(b).  The defendant’s arguments prevailed.  The plaintiff – or, really, the plaintiff’s lawyers – ended up with black eyes.

To begin with, the Wilson court undertook a careful and useful standing analysis concluding that the plaintiff could not claim any actual or imminent injury. The plaintiff could not assert that additives that the FDA has not banned could make a product unreasonably dangerous. The Wilson court found “that Plaintiff’s amended claims ultimately depend on the existence of violations of federal law — the Court can’t make a decision the FDA itself did not make”  The Wilson court saw its hands as being “tied,” and held that the plaintiff’s claims “—that the purchased makeup is unsafe for use in the eye area – falls squarely out of this Court’s jurisdiction.”  The plaintiff “lacks Article III standing because she cannot establish an injury that plausibly corroborates her assertion that the Products she purchased are ‘unreasonably dangerous.’ And without reasonably affirming the products are unsafe, the Court cannot say an actual misrepresentation occurred.”  That lack of standing applies to both the request for compensation and the request for injunctive relief.  It is hard to support an injunction “when the threat of injury was speculative to begin with.” 

That reasoning pretty much kills the entire case, right?  Aye. You’ll probably notice that the court’s discussion of why standing is lacking also clobbers the plaintiff on substantive fraud theories and preemption, as well. For example, the Wilson court rejected the plaintiff’s benefit of the bargain theory. The plaintiff’s claims rest upon certain assumptions about what should and should not be in the eye cosmetics, but those assumptions “were not included in the bargain.”  Moreover, “without a showing of actual harm related to the Products use, the apparent need for disclosure is a moot proposition.  Although Plaintiff’s personal expectations of the makeup she purchased are unmet, the Court finds she was not denied the benefit of the bargain.”   

Then we get to implied preemption.  It turns out that this is the second go-around in this case on preemption.  The Wilson court had dismissed the first amended complaint because the plaintiff’s claims were impliedly preempted by the Food, Drug and Cosmetic Act (FDCA).  Wilson applied Nexus Pharmaceuticals, Inc. v. Central Admixture Pharmacy Services, Inc., 48 F.4th 1040 (9th Cir. 2022), which we identified as our third best case of last year, precisely because it enforced preemption against CA claims of this sort that sought to usurp FDA authority. What did the plaintiff do to fix the preemption problem?  The plaintiff had carefully scrubbed out of the second amended complaint any reference to the FDCA.  But a “plaintiff cannot plead around FDCA preemption if the existence of the claim arises from violation of the FDCA.”  The plaintiff’s claims that certain ingredients are harmful and should not be used in eye cosmetics are the same whether she mentions the FDA or not, since the FDA undisputedly regulates cosmetic ingredients. The claims ultimately depend on safety of the additive, which is a decision for the FDA. Thus, the plaintiff’s crafty omission of the FDA or FDCA from the second amended complaint could not make preemption principles vanish.

Normally, courts are quick – all too quick – to permit plaintiffs to amend their complaints to fix any deficiencies identified by the court.  But there was no fixing the problems with the complaint in Wilson, plus there had already been two prior attempts to fix the standing, injury, harm, and preemption problems, and the fixes did not work.  It was plain to see: enough is enough. 

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Plaintiffs love sales representatives.  They love to use them to try to keep cases in state court—naming them as non-diverse defendants.  They love to try to use them to get around preemption—claiming a direct duty from the rep to the plaintiff.  And they certainly love making sales representative statements and conduct a focal point of their cases.  That’s because plaintiffs try to argue that liability attaches any time a sales rep makes a statement that is “inconsistent” with the label.  Defining “inconsistency” liberally, plaintiffs try to use sales reps to get around the learned intermediary doctrine often without much more evidence than that the sales rep visited the prescribing doctor.  In reality, however, failure to warn claims in prescription drug and device cases frequently are thwarted by knowledgeable physicians who apply their independent medical judgment in deciding whether a course of treatment is in the best interests of their patients.  Therefore, if courts keep the attention on the physician, where it should be, the learned intermediary doctrine should relegate the role of the sale rep in most cases to the back burner. 

That’s precisely what the court did in Gulledge v. Depuy Orthopaedics, Inc., 2023 U.S. Dist. LEXIS 187267 (S.D. Ala. Oct. 17, 2023).  Taking its cue from both the Pinnacle Hip Implant MDL and a N.D. Illinois decision in another case remanded from that MDL, the court in Gulledge denied plaintiff’s request to depose the sales reps who were present in the operating room at the time of her implant surgery and her revision surgery.

First, while the case was in the MDL, plaintiffs generally requested permission to depose sales reps arguing that the reps who were in the operating room “would see where the device caused significant harm to the patient” and “hear the surgeon discuss his or her findings during the surgery.”  Id. at *3.  The MDL Special Master deferred the appropriateness of sales rep depositions until after the surgeons had been deposed.  Id. at *4.  A step in the right direction of keeping the doctors in the foreground of the analysis.

Second, this issue was raised in Baldwin v. DePuy Orthopaedics, Inc., 2023 U.S. Dist. LEXIS 54471 (N.D. Ill. Mar. 30, 2023), which we discussed here, where the court found that “the mere fact that the sale representatives were present for the implant surgeries” did not make their testimony relevant.  Id. at *5.  Rather, plaintiff needed to establish a “nexus between the sale representatives’ presence at the surgeries and the plaintiff’s claims.”  Gulledge, at *10-11.  Strike another note for keeping the attention appropriately on the healthcare providers. 

Third, utilizing the decisions of the MDL and Baldwin, the Gulledge court looked at the testimony of plaintiff’s surgeons in this case:  (i) sales reps have no clinical involvement in the operating room and are primarily there to make sure the medical devices are available during surgery; and (ii) the surgeons do their own “due diligence” which included reading publications, attending courses, and speaking to peers about the hip implants.  So, plaintiff had no evidence that either of plaintiff’s surgeons actually relied on information from the sale reps.  The surgeons’ testimony also made it clear that they were better positioned to testify about plaintiff’s condition or the condition of the implants—not the sales reps.  Finally, the court noted that voluminous document discovery had taken place in the MDL where thousands of pages of marketing, sales, and product communications were produced.  Adding that up, the court found the testimony of the sales reps would not be relevant.

This decision has multiple points of impact for this case and others like it.  First, the evidence cited by the court in denying the depositions should also serve as the basis for summary judgment on failure to warn.  If plaintiff’s surgeons did their own research and analysis and used their independent medical judgement in deciding to use the hip implant, plaintiff’s failure to warn claim should be barred by the learned intermediary doctrine.  Second, defendants should be using Gulledge and Baldwin in MDLs to urge courts to do exactly what the Pinnacle Hip Implant Special Master did—defer sales rep depositions until after prescriber depositions—and to only allow sales rep depositions where plaintiff has the nexus evidence described above.  In MDLs with hundreds or thousands of plaintiffs, just one or two sales rep depositions per case can be a significant time and resource drain on defendants. To what end if no reliance?  The better course is to keep the focus where it ought to be, on the prescriber.

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Back in 2008, the United States Supreme Court held, in Riegel v. Medtronic, Inc., 552 U.S. 312 (2008), that essentially all product liability claims against manufacturers of FDA pre-market approved (“PMA”) medical devices were preempted.  After all, PMA “is in no sense an exemption from federal safety review − it is federal safety review.”  Id. at 323.  Thus, by a 7-2 margin the Court held, per Justice Scalia, that all state-law liability claims before it – “strict liability; breach of implied warranty; and negligence in the [product’s] design, testing, inspection, distribution, labeling, marketing, and sale,” id. at 320 – were expressly preempted:

Continue Reading PMA Preemption Decision Slides to the Bottom of the “Parallel Claim” Slippery Slope

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