C.D. Cal. Bids Arrivederci to Civil RICO Claim

By Stephen McConnell on January 11, 2023

Last week, in the course of discussing a vaccine case, we mused over the misuse of the due process clause of the fourteenth amendment. Just for a moment we were back at U. of Chicago Law (and, as Dan Fogelberg sang, “felt that old familiar pain”). In 1984, our waist and forehead seemed smaller and our noggin seemed larger, full of Big Thoughts on how the Law Should Be. What we believed then, and still believe, is that “process” should mean, you know, process. But that term has been stretched well beyond its literal meaning because SCOTUS eviscerated the privileges and immunities clause in the Slaughterhouse cases.

The same thing happened with equal protection, a concept meaning that states would protect crime victims by prosecuting criminals, no matter the race of the criminal or victim. (This view belongs to the author of this particular post and no other member of the Blog. We have been told that we are impossibly retrograde.) As a result of the High Court’s terpsichorean stumble, we the people got rights based on a structure of due process, equal protection, and “penumbras, formed by emanations” — and we learned recently how rickety that structure was.

It was not inevitable that the mistaken curtailment of privileges and immunities would lead to the expansion of due process and equal protection. But once one mistake was printed in the U.S. reporter, instead of fixing the first mistake, which would have required overturning a bad precedent, SCOTUS made more mistakes. (We saw one legal scholar’s estimate that SCOTUS has reversed itself in approximately 0.5% of its decisions.)

Sometimes courts are brave enough to undo errors (e.g., reversing Plessy), but more often they don’t. Korematsu has not been reversed. Neither has Buck v. Bell. To be sure, the fact scenarios inspiring those cases have not cropped up again, and maybe they won’t. But you cannot say that about Citizens United or Heller, and we are probably stuck with them for a bad long while. The participants in the justice system spend a lot of time pretending that prior court decisions are correct, even when they are manifestly absurd. Mind you, that’s a feature, not a bug, of the law.

One of the courses we took our first year in law school was Elements of the Law, taught by the great Edward Levi. The Elements class covered jurisprudence. It was more philosophical than, say, secured transactions or commercial paper. We got a big dose of Bentham, Dworkin, and several cases with a plaintiff named Regina. There was a lot of legal history packed into the course, and there were a lot of mistakes packed into that history. Take a look at the case law on juries, obscenity, or, so help us, tomatoes. Good luck finding a logical through-line.

As interesting as it is to examine why courts made certain mistakes, it is just as interesting to examine why some mistakes get corrected and others do not. And here’s one of the more interesting theories we learned from Professor Levi: when a court mucks up statutory interpretation, that is an especially hard error to fix. Perhaps courts think that if they really misinterpreted a statute, the legislature would amend the statute. Failure to amend the statute means the court got it right, right?

Wrong. There are all sorts of reasons why legislatures don’t race in to fine tune legislation. Have you heard of legislative paralysis? Have you been awake at all over the past two weeks of low comedy in the House of Representatives? Are you a sentient being?

All of which brings us to the Frankenstein monster known as civil RICO. (Bexis proposed this musical link. We also offer this cinematic one.) As you no doubt know, that R in RICO stands for racketeering. The Racketeering Influenced and Corrupt Organizations (RICO) was passed in 1970. It was originally intended to assist in the prosecution of mafia leaders, as it permitted them to be tried for crimes they ordered others to do rather than committed themselves. It had a criminal component (that’s the one that always had Tony and Uncle Junior fretting in The Sopranos) and, unfortunately, a civil component. That’s the one that has led to an avalanche of abuse. Instead of being used against truly nefarious enterprises, civil RICO became an all too often add-on to ordinary tort cases.

We once met the author of the RICO law, G. Robert Blakey, a professor at Notre Dame Law School. Blakey has had a remarkable and distinguished career. Among other things, he was an investigator of the JFK assassination. But if you ran into Blakey at a conference, he was almost certainly there to talk about RICO. And perhaps we are biased, because we were among the many defense hacks in the audience stewing over RICO’s promiscuity, but it seemed to us that Blakey was delighted that his legislative creation had become so ubiquitous. Let’s face it, if some governmental body was silly enough to pass a law we wrote, we’d probably want to see it everywhere, too.

Too many courts smiled upon civil RICO’s application to all sorts of ordinary business disputes where it was not intended. A RICO count upped the stakes, upped the expense, and upped the temperature. News flash: business people do not enjoy being called racketeers. A RICO claim almost demands scorched earth litigation. But once enough courts endorsed (that is, failed to dismiss) civil RICO causes of action, some plaintiff lawyers seemed to think that including a RICO claim was de rigueur.

The expansion of civil RICO was a mistake. But, as Professor Levi taught us, that was a mistake not easily rectified. Thus, the best defendants can hope for is that courts will test civil RICO pleadings with rigor. Thankfully, that happens occasionally, as it did in MSP Recovery Claims, Series Inc. v. Avanir Pharmaceuticals Inc., 2022 WL 17220647(C.D. Cal. Oct. 20, 2022). The plaintiff was the assignee of claims arising from the payments of prescription drugs on behalf of several Medicare beneficiaries. If the shark in Jaws was the perfect eating machine, the plaintiff in MSP appears to be the perfect litigating machine. It claimed that the defendant promoted a drug for off label uses, causing the drug to be placed on formularies, and causing lots of allegedly improper Medicare payments. The plaintiff’s complaint contained causes of action for unjust enrichment, fraud, conspiracy to commit fraud and, inevitably, violations of civil RICO.

The defendant filed a motion to dismiss. The first defense argument, lack of standing, worked for some of the assigned claims, but not others. The second argument, statute of limitations, raised issues of timeliness that the court believed required factual development. But the defendant fared better with its arguments against unjust enrichment and common law fraud. The former failed because unjust enrichment makes sense only if monetary damages would be an inadequate remedy, and there was no hint of that here. The fraud claim failed because the plaintiff had failed to plead any misrepresentation. Off label promotion is not necessarily false in any way.

That last point is of more than a little interest to us. Liability — criminal, civil, or regulatory — for truthful statements about off-label use has serious first amendment issues that we have blogged about here repeatedly (here, for instance). The government, having been bitten in the Caronia and Amarin cases, is now careful to allege falsity. Private plaintiffs, as this case indicates, not so much. Thus, if progress is going to be made on the first amendment front, it is more likely to be in the “private AG” cases such as this one.

And that brings us to the RICO claim. To establish liability under 18 U.S.C. Section 1962(c), a plaintiff must prove that the defendant (1) conducted or participated in the conduct of (2) an enterprise (3) through a pattern (4) of racketeering activity (5) causing injury to the plaintiff’s business or property. While the RICO enterprise “is an entity separate and apart from the pattern of activity in which it is engaged,” “an associated-in-fact enterprise under RICO does not require any particular organizational structure, separate or otherwise” and need not have an ascertainable “structure beyond that necessary to carry out its racketeering activities.” Got that? What a mess.

But the court in MSP sorted out the mess and held that the defendant failed to plead RICO predicate acts of mail or wire fraud, as it did not identify any false or misleading statements by the defendant. The plaintiff generally alleged “deceptive off-label promotion” via kickbacks. But kickbacks, by themselves, are not RICO violations, and the plaintiff could not point to any statement that was actually false. Fraud must be pled with particularity. Here there was not only no particularity, there was no fraud at all. The plaintiff offered no facts tending to show that the defendant misrepresented the drug’s risks for the off-label use.

We will be the millionth lawyer writing about RICO to quote the final words of the main character in Little Caesar (the 1931 gangster movie, not the pizza place). In fact, there are prior examples on this selfsame blog. A mortally wounded Edward G. Robinson whimpers, “Mother of Mercy, is this the end of Rico?” Alas, we have not seen the end of civil RICO, but at least it was shot down in this case.

A Minor Decision About a Major Change

By Michelle Yeary on January 10, 2023

“Don’t major in minor things.” A wise professor once shared those words and they’ve always stuck. As a general approach to life, it makes a lot of sense. Learning to let go of the small stuff is easer said than done, but it is usually well worth the effort. But the same does not generally apply to the DDL blog. We pride ourselves in collecting the major, the minor, and everything in between. That’s because there is value in knowing that yet another court dismissed pharmaceutical design defect claims as preempted. So, Ortega v. Merck & Co., Inc., — F. Supp. 3d –, 2023 WL 35358 (D. Mass. Jan. 4, 2023), may not break new ground, but we will add it to the pile of “minor” decisions that make up a “major” area of positive preemption law.

Singulair was approved by the FDA in 1998 and its active ingredient is montelukast. Plaintiff was prescribed and took Singulair to treat his asthma from 2000 to 2009 and alleges he now suffers from depression and social anxiety as a result. Plaintiff’s lawsuit makes two design defect claims – strict liability and negligence. Plaintiff claims that the drug was defectively designed because defendant could have either modified the montelukast or modified the Singulair to make it less likely to contribute to adverse neuropsychiatric events. Id. at *3.

But federal law requires “major changes” to a drug product to be submitted to the FDA for approval prior to distribution. Therefore, applying First Circuit precedent that we discussed here, the court found that “a pharmaceutical company cannot unilaterally implement ‘major changes’ to the chemical formulation of a medication that the FDA has previously approved.” Id. Because plaintiff’s proposed changes are “major changes” to Singulair, plaintiff’s design defect claims are preempted. While the court did not directly address Mensing, it is Mensing impossibility preemption that is being applied. As the Mensing Court explained, “[t]he question for ‘impossibility’ is whether the private party could independently do under federal law what state law requires of it.” PLIVA v. Mensing, 564 U.S. 604, 620 (2011). When the answer to that question is no, the claim is preempted.

That’s it. Claim dismissed with prejudice as any amendment would be futile. Just a minor decision in an otherwise major area of the law that pushes forward favorable Supreme Court and First Circuit precedent. Maybe not so minor after all.

A Painful Preemption Decision

By Bexis on January 9, 2023

The flimsy decision in In re Acetaminophen − ASD-ADHD Products Liability Litigation, 2022 WL 17348351 (S.D.N.Y. Nov. 14, 2022), leaves us scratching our heads. First, it claims to find “helpful guidance,” id. at *7, in Wyeth v. Levine, 555 U.S. 555 (2009), a prescription drug preemption case, despite the relevant drug(s) being over-the-counter (“OTC”), and thus approved under an entirely different FDA regulatory process. Since Levine is probably the worst prescription medical product liability decision to occur during the now 15-year lifespan of this Blog, when a citation like that appears, the result is not likely to be any good. Then, the decision makes a hash of the relevant administrative record, ignoring what the preemptive FDA regulations said in favor of material from the Federal Register that never actually made it into the regulations themselves.

Shameless Plug − CLE Webinar on the Best and Worst Drug/Medical Device Decisions of 2022

By Bexis on January 7, 2023

As 2022 has come to an end, our loyal readers have joined us in reviewing our worst decisions of the past year and our best decisions of the past year.

As we do each year, we’re pleased to announce that three of your bloggers – Bexis, Steven Boranian, and Rachel Weil – will be presenting a free 90-minute CLE webinar on “The good, the bad and the ugly: The best and worst drug/medical device decisions of 2022” on Thursday, January 19^th at 1 p.m. EST to provide further insight and analysis on these cases.

This program is presumptively approved for 1.5 CLE credit in California, Connecticut, Illinois, New Jersey, New York, Pennsylvania, Texas, and West Virginia. Applications for CLE credit will be filed in Delaware, Florida, Ohio, and Virginia. Attendees who are licensed in other jurisdictions will receive a uniform certificate of attendance, but Reed Smith only provides credit for the states listed. Please allow 4-6 weeks after the program to receive a certificate of attendance. Additionally, please note that CLE credit for on-demand viewing is only available in California, Connecticut, Illinois, New Jersey, New York, Pennsylvania, Texas, and West Virginia. Credit availability also expires two years from the date of the live program.

The program is free and open to anyone interested in tuning in, but you have to sign up in advance here.

Res Judicata Bars Second Suit in E.D. La., Notwithstanding “New” Claim

By Rachel B. Weil on January 6, 2023

Today we ponder “do-overs,” a timely topic as the House of Representatives struggles, over and over, to elect a speaker. As we write, the seventh unsuccessful vote has just concluded. We have learned that the record stands at 22 votes before the beleaguered candidate finally prevailed. This was in 1820, as John W. Taylor, an outspoken abolitionist, ran against a pro-slavery opponent for the seat vacated by Henry Clay, who resigned after shepherding the Missouri Compromise to victory. All kinds of things are “done over” when first attempts fail. In a horse race, if someone breaks early from the gate, everyone is loaded back in and the race is re-started. We discarded our too-salty potato latkes in favor of a less-freehanded batch. And a former elected official apparently believes that he can re-brand himself through virtual superhero trading cards for a do-over of a resounding defeat.

It is our fervent hope that this last meets the same fate as the attempted do-over in today’s case. In Reddick v. Medtronic, Inc., 2022 WL 17903708 (E.D. La. Dec. 23, 2022), the plaintiff sued, in the Eastern District of Louisiana, for injuries allegedly caused by the defendant’s implantable cardiac defibrillator, asserting claims under Louisiana’s Product Liability Act. The defendant won summary judgment in March 2022, and the Fifth Circuit affirmed the ruling shortly thereafter. In April 2022 – only one month later – the plaintiff filed suit in Louisiana state court, asserting claims that were identical except for one claim (more about that in a moment). The defendant removed the case to the Eastern District of Louisiana, and the defendant moved to dismiss for failure to state a claim, arguing that the doctrine of res judicata barred the plaintiff’s claims. (The defendant asserted other bases for dismissal as well, including preemption and limitations, but the court did not need to reach these.)

The court explained that Louisiana’s res judicata statute bars a suit when the judgement is valid and final, the parties are the same, the causes of action in the second suit existed at the time of the final judgment in the first suit, and the causes of action in the second suit arose out of the occurrence that was the subject matter of the first suit. The defendant argued that it had established all of these elements. In opposition, the plaintiff argued that a “new cause of action ha[d] arisen” out of the defendant’s “defect” admissions to the FDA about the product’s battery life and an April 2021 recall of the product. Reddick, 2022 WL 17903708 at *3.

The court disagreed, holding that the FDA recall did not create a new cause of action for purposes of res judicata. As the court explained, “[a]n FDA recall does not, in and of itself, create a ‘cause of action’” under the LPLA; rather, it is “mere evidence that may be used to support the elements of a cause of action.” Id. “Moreover,” the court continued, “nothing barred plaintiff from soliciting expert testimony regarding the battery life of the device in the first suit as a claim under the LPLA, and the FDA recall does nothing more than potentially provide additional evidence as to a new theory of liability – one that plaintiff could have raised in his first suit.” Id. at *4 (emphasis in original). The court concluded the plaintiff was unable to change the “critical fact” that he had had “the opportunity to litigate and investigate these exact claims” in his first lawsuit. This, the court emphasized “is the quintessential circumstance in which Louisiana’s broad application of res judicata steps in to foster judicial efficiency and protect litigants from duplicative litigation.” Id.

Next, the court considered the legislative history of Louisiana’s res judicata statute. The statute was broadened in 1990 to “embrac[e] the notion of extinguishment of a cause of action” even if not identical to those asserted in the previous suit, when it arises out of the occurrence that was the subject matter of the earlier suit. In this case, the court held that the “new” claim arose out of the same occurrence that was the subject of the plaintiff’s earlier claims, so the doctrine of res judicata barred the second lawsuit. Finally, the court denied the plaintiff leave to amend, finding that amendment would be futile because “no amendment would cure the deficiency” in the plaintiff’s res judicata-barred second suit.

Just imagine where defendants would be if every product recall created a new cause of action for every previously-defeated plaintiff/user of that product. We like this decision, in bites-of-the-apple terms. And, in the time it took us to draft this post, an eighth unsuccessful speaker vote transpired. Stay tuned, and stay safe out there.

Two Out of Three Ain’t Bad

By Michelle Yeary on January 5, 2023

Today we bring you another generally favorable Essure preemption decision. Plaintiff brought three causes of action against the manufacturer and the court dismissed two of them. So, in the immortal words of Jim Steinman as belted out by Marvin Lee Aday, we shouldn’t be sad because two out of three ain’t bad. And one of the two is actually quite good. So, we certainly aren’t crying icicles like Meat Loaf. More like when we went looking for a ruby in a mountain of rocks, we came up with a sapphire instead.

We’ve written about Essure cases over the years, like here and here. And in many ways Ortiz v. Bayer Corp., 2022 U.S. Dist. LEXIS 226472 (E.D.N.Y. Dec. 13, 2022), is not much different. Plaintiff alleged injuries from a permanent contraceptive device and brought claims for failure to train, manufacturing defect, and breach of express warranty. The types of claims that sometimes skirt around the twin guards of PMA preemption—Riegel express preemption and Buckman implied preemption. The court dismissed the training and warranty claims but ruled plaintiff did enough at the pleadings stage to keep her manufacturing defect claim.

The failure to train warning took a double hit as both expressly and impliedly preempted. First, to the extent plaintiff demanded training beyond what the FDA requires, they were asking the state to impose an obligation on defendants that was “different from or in addition to” federal requirements and therefore was expressly preempted. Id. at *10. That left plaintiff’s argument that they were pursuing a “parallel” claim that defendants breached a purported duty to train under New York law. But the court ruled that a general negligent undertaking claim under state law falls short of any “clearly articulated state law duty or cause of action to parallel the federal training requirements.” Id. at *11. That’s a useful aspect of the preemption argument that negligent undertaking claims are too broad to be genuinely equivalent to a specific FDA physician training obligation.

Court Upholds Washington State Covid-19 Vaccine Mandates

By Stephen McConnell on January 4, 2023

Our doctor advised it would not be a good idea for us to get Covid-19. We already wheeze after ascending the stairs or rolling the garbage bin to the curb or opening the mail, so any further respiratory burden seems like a bad idea. Thus, even though some have declared the pandemic over, we remain cautious. Good luck inviting us to any public place. Pascal may have said that all of humanity’s problems stem from man’s inability to sit quietly in a room alone, but he wasn’t talking about us. We’re quite happy to avoid the madding and infectious crowds by sitting home with a good book or mediocre tv show, or by planting a nose against the kitchen window, watching the red shouldered hawk wait for dinner to show up at the pond. You might even say that we live deliberately.

Our doctor also advised us to get every Covid booster vaccination as soon as possible, and we have done so. Some of our Twitter acquaintances and frenemies have told us that the boosters will kill us or will permit Melinda Gates to spy on our every movement. Those threats do not bother us. If anyone is going to go through all the trouble to plant a chip in our arm, they’re probably not looking to bump us off any time soon. And, as mentioned above, we don’t actually engage in a lot of movement, so fair play to anyone who chooses to spy on us. We’ll be a stationary dot on the screen, reading The New Yorker or glaring outside at the geese.

So, yes, we are unabashedly pro-vax. Bring on the hate emails. We’ll toss the virtual missives into the virtual fireplace. And we’ll wish you good luck.

But we do not wish good luck to litigants challenging vaccine mandates. When governments or employers insist that public-facing employees must be vaccinated in order to perform their jobs, we are relieved and grateful. If employees decide to give up their jobs rather than be vaccinated against Covid, we shake our heads at their tenacity and grieve for their health, but so be it. We might call it a remarkable sacrifice, or a stupid sacrifice. Or a remarkably stupid sacrifice. And yet, in truth, some employees do not want to sacrifice anything. They want to remain unvaxxed “truebloods,” inflicting their viral silliness on the rest of us. Luckily, pretty much every time the antivaxxers sue to get their way, they lose.

Are You a Geography Nerd?

By Bexis on January 3, 2023

We don’t do many “frivolous” posts anymore on the DDL Blog, unlike our earlier days. We used to do music posts and the like, but as the pandemic got serious, so did we.

But here’s a post that has nothing to do with drug and device product liability litigation, and everything to do with Bexis being an inveterate geography nerd. Since the Internet can be all things to all people, there is a site for geography nerds called “Worldle.” Yes, a not-too-subtle play on the much more famous “Wordle” gamesite.

Fallacious FDA Reporting Claim Finally Falls

By Eric Alexander on December 30, 2022

Product liability litigation over Class III medical devices is an interesting creature. Absent something unusual, cases and litigations should not get past motions to dismiss. That is pretty clearly what Congress intended when an express preemption provision was added to the Medical Device Amendments of 1976. We understand that each plaintiff may think her case is exceptional in that it should meet the exception to the rule of preemption. (We do not really think the plaintiff lawyers think that, although they sure argue it enough.) But the usual is more common than the unusual by definition. When you hear hoof beats, you should look for a horse not a zebra, unless you happen to be in a part of the world where zebras are endemic or end up in a zebra enclosure in a zoo. When you hear Class III medical device product liability case, you should look for all claims to be dismissed unless there is something as unusual as a basis to claiming the plaintiff’s particular device deviated from its FDA-approved specifications.

In 2001, the Supreme Court made getting past motions to dismiss harder when it held in Buckman that plaintiffs could not recover claims predicated on violations of FDA regulations. An unfortunate fiction developed post-Buckman—particularly after Riegel v. Medtronic, Inc. 552 U.S. 312 (2008)—that plaintiffs could assert “parallel claims” that were neither expressly preempted by the provisions of the MDA nor impliedly preempted under Buckman. We, and others, have described the purported path of a parallel claim as being like navigating between Scylla and Charybdis, a monster and whirlpool on opposite sides of a narrow strait per ancient Greek mythology. Without claiming that mythology is the same as fiction—we are not touching that with a twenty foot sarissa—we can say that a true parallel claim is as rare as a striped unicorn or perhaps a flying horse. The unfortunate fiction of which we spoke above has taken shape with particularly egregious appellate decisions like Bausch such that some trial courts are advised, when they hear the hoof beat of a Class III medical device product liability case, to expect Pegasus or his stripy, horned pal to gallop around the corner.

Viewed over the course of more than five years and many decisions, three of which have featured in prior posts (here, here, and here, which drew honorable mention honors in 2018), we think Bausch delayed the inevitable in Gravitt v. Mentor Worldwide, LLC, __ F.Supp.3d __, 2022 WL 17668486 (N.D. Ill. Dec. 14, 2022), by insisting that parallel claims for failure to report adverse events to FDA exist. After an unnecessary odyssey, the manufacturer of a Class III breast implant won summary judgment on the last of plaintiffs’ claims, alleged failure to report adverse events to FDA. (We say “plaintiffs,” but the decision referred to the plaintiff with the implant—who we will call the “plaintiff”—by her first name and the consortium plaintiff by his first name. In terms of whether the last claim was supported, the court referred the female plaintiff only and somehow omitted any reference to “burden.” These are usually signs that at least one claim will survive summary judgment.) A shout out to Dustin Rawlin and his colleagues for sticking it out on this case and sending us this decision.

The Thrill of Victory – The Ten Best Prescription Drug/Medical Device Decisions of 2022

By Bexis on December 29, 2022

So, another year has passed. 2022 is in the books and the republic still stands, even if Roe v. Wade (and, soon, Twitter) do not. The COVID-19 pandemic – if not COVID-19 itself, which has instead become endemic – is largely over, except for some probably PREP Act preempted shouting.

For the Blog, the end of the year means that it’s time for our annual celebration of the Drug & Device Law Blog’s top ten decisions of the year. Some of these cases establish important legal principles, such as preemption, Rule 702 expert exclusion (don’t say Daubert), or the learned intermediary rule. Others are important because they affect large numbers of cases gathered in the increasingly dysfunctional federal multi-district litigation system. Some do both. In either event, these decisions make the legal world at least somewhat less dangerous for our clients and (not incidentally) more favorable for us defense lawyers.

Drug & Device Law