Not long ago we published, as a guest post, a 50-state survey of state tolling statutes that governed whether, and under what circumstances, actions dismissed on a non-merits basis could be refiled notwithstanding the running of the applicable statute of limitations in the interim.

Bexis had never really thought much about these kinds of statutes before – but in preparing the post for publication, he did. That led to an idea.

Bexis being Bexis, he looked up the Delaware statute cited in the post, Del. Code Ann. tit. 10 §8118. That statute provides:

(a) If in any action duly commenced within the time limited therefor in this chapter, the writ fails of a sufficient service or return . . . by any unavoidable accident, or by any default or neglect of the officer to whom it is committed; . . . , or for any matter of form; or if after a verdict for the plaintiff, the judgment shall not be given for the plaintiff because of some error appearing on the face of the record which vitiates the proceedings; or if a judgment for the plaintiff is reversed on appeal or a writ of error; a new action may be commenced, for the same cause of action, at any time within 1 year after the abatement or other determination of the original action, or after the reversal of the judgment therein.

(Emphasis added).

There’s nothing specific, but the highlighted phrase, “in this chapter,” suggests that the original action, as to which tolling is subsequently allowed, had to have been filed in a Delaware court, since statutes of limitations are generally procedural, and an action filed in a different state’s court would not be “commenced within the time limited therefor in this chapter.”

It turns out there are actually cases addressing that issue.  Back in 1956 (the year Bexis was born), a Delaware court interpreted a statutory predecessor in precisely this fashion. That statute, like the current §8118(a), “state[d] if an action brought within the period prescribed by law is dismissed for any reason other than upon the merits, a new action may be commenced within a specified time.”  Sorensen v. Overland Corp., 142 F. Supp. 354, 362 (D. Del. 1956), aff’d, 242 F.2d 70 (3d Cir. 1957).  As to the scope of tolling, Sorenson held that it did not reach cases not originally filed in a Delaware court (state or federal):

The argument made to embrace all courts within a state − that the theory of [the statute] mitigates against the harshness of the statute of limitation and thereby requires a liberality of approach − does not encompass prior actions arising out of foreign courts, state or federal.  Where a difference is one of kind and not degree, liberality of construction is not an absolute tool.  The Delaware statute from its plain meaning leads me to believe its provisions were not intended to cover actions commenced beyond the boundaries of the state.  I find therefore, under §8117 the bar of limitation is not avoided by another action failing other than upon the merits in another jurisdiction between the same parties on the same cause of action.

Id. at 363 (footnote omitted) (emphasis added).  See Salsburg v. Pioneer Gen-E-Motor Corp., 1962 WL 69576, at *2 (Del. Ch. June 13, 1962) (“It has generally been held under similar savings statutes that they are not applicable in cases where the original action is brought in a foreign jurisdiction.”).

That this statute applies to actions originally brought in Delaware federal court was confirmed in Howmet Corp. v. City of Wilmington, 285 A.2d 423, 426 (Del. Super. 1971)

This is not a situation where the first action was intentionally brought in the wrong court. . . .  As a result, the error in bringing the action in the Federal District Court for the District of Delaware, which lacked jurisdiction, did not prevent the action from being “duly commenced.”

Id. at 426.  Another relevant Delaware case is an exception that distinguished Sorenson and Howmet and allowed tolling where an action had originally been filed in Pennsylvania “in the belief that [an automobile] accident occurred in Pennsylvania” when in fact “the accident occurred in Delaware.”  Leavy v. Saunders, 319 A.2d 44, 45 (Del. Super. 1974).  The accident had occurred on I-95 at the Pennsylvania-Delaware border.  Id.  Because the plaintiff’s attorney “apparently in good faith believed that the accident occurred in Pennsylvania,” id. at 48, the court cut the plaintiff a break under the Delaware tolling statute and allowed refiling.

Get to the point.  Why should anybody care about this obscure legal issue?

Here’s the reason:  personal jurisdiction under Daimler AG v. Bauman, 571 U.S. 117 (2014), and Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017).

Because of Bauman and BMS, lots of litigation tourists – whose lawsuits are, as Howmet put it, “intentionally brought in the wrong court” – will be finding themselves out of court on jurisdictional grounds.  More of our clients are incorporated, and are thus “at home,” in Delaware than in any other state.  Litigation tourists that Bauman/BMS will be putting out of the courts in which they erroneously filed will probably be looking to refile somewhere else, and will often have to assert one of these tolling statutes to avoid the statute of limitations in the new courts where they file.  While such jurisdictionally-driven refilings could occur in any state, Delaware is a particularly likely forum.

Interpreting state tolling statutes – as Delaware has – not to apply to actions initially (and deliberately) misfiled in other states by litigation tourists can be another powerful deterrent to litigation tourism.

Right now, the law we cited above means that all the litigation tourists who filed actions against Delaware corporations in California, Missouri, or Illinois, can’t refile in Delaware.  Maybe they can refile in their home states, where they should have filed in the first place, but only if their home states’ tolling statutes apply (or are interpreted to apply) to dismissed actions that were deliberately filed in an incorrect forum.

Unless a particular state’s tolling statute specifically provides for extraterritorial application, defense counsel should argue – vociferously – against such an interpretation.  A litigation tourist who deliberately filed in an erroneous jurisdiction, seeking some sort of tactical advantage, is not the sort of innocent victim of some non-merits circumstance that such statutes were intended to help.

Going forward, interpretation of tolling statutes to preclude extraterritorial effect could serve as a powerful disincentive to still more litigation tourism.  A Delaware-style interpretation removes the net from any plaintiff considering a stroll on the tightrope of litigation tourism.  Such plaintiffs would find themselves in the same position as litigation tourists who currently reside in Alabama, Florida, Hawai’i, North Dakota, South Carolina and South Dakota – not having any home-state tolling to fall back on in the event of a personal jurisdictional misadventure.

Needless to say, we would also look favorably on efforts to amend tolling statutes to provide expressly that they do not extend any benefit to litigation tourists.

In any event, defense counsel who succeed in defeating litigation tourist plaintiffs should be ready to examine tolling statutes for extraterritorial effect whenever such plaintiffs refile.  Those plaintiffs’ deliberately bringing their actions initially in an incorrect state may mean they are barred even by their home state’s statute of limitations, depending on how the relevant tolling statute applies.

We’ve always been against the concept of class action tolling:  that merely by filing a class action – the class action does not have to have any merit – a class action lawyer magically stops the running of the statute of limitations for everybody in the class.  To us, this gives Fed. R. Civ. P. 23 a substantive effect, which violates the Rules Enabling Act (you can read more about that, here, and here, in other contexts).  It also confers an automatic one-way benefit on putative class members, although in other circumstances the class action lawyers perpetrating this sleight of hand will cheerfully tell courts that “no class exists before certification.”

The Supreme Court first allowed class action tolling in American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974), an antitrust case, ostensibly to “further[] the purposes of litigative efficiency and economy,” so that no “protective litigation” (by plaintiffs fearing their own claims would be time barred) would clog up the federal courts.  Id. at 553-54.  The impact on defendants would be minimal, suggested the majority, because “[d]uring the pendency of the [certification] determination . . ., which is to be made ‘as soon as practicable after the commencement of an action,’ potential class members are mere passive beneficiaries.”  Id. at 552 (quoting former Rule 23(c)(1)).

We had hopes that this rule, being “specifically grounded in policies of judicial administration,” Smith v. Bayer Corp., 564 U.S. 299, 314 n.10 (2011), would be abolished after its encouragement of inequitable gamesmanship became clear, and once other, less prejudicial methods of judicial administration to address protective filings – such as the inactive dockets widely used in asbestos litigation – were invented.  However, the Court dodged abolition in California Public Employees’ Retirement System v. ANZ Securities, Inc., 137 S. Ct. 2042 (2017), holding only that American Pipe did not apply to statutes of repose . Id. at 2052-53.  The Court did, however, point out that concern about protective filings was much “overstated.”  Id. at 2054 (“courts, furthermore, have ample means and methods to administer their dockets and to ensure that any additional filings proceed in an orderly fashion”).

In any event, all of the Supreme Court’s class action tolling cases, American Pipe, supra, Crown, Cork & Seal Co. v. Parker, 462 U.S. 345 (1983), and Chardon v. Soto, 462 U.S. 650 (1983), involved successive suits in the same jurisdiction – federal-question cases brought in federal court.  So-called “cross-jurisdictional” class action tolling, is much worse, and has intruded at times directly into our sandbox (although thankfully, class action have largely gone extinct in personal injury cases).  As we said in an earlier post:

“Cross-jurisdictional” tolling, on the other hand, refers to allowing a failed class action filed in jurisdiction “A” to toll the statute of limitations on an individual action later filed by a putative class member in jurisdiction “B.”  In a lot of cases that means a state court action filed after a failed federal court class action.  In other cases it means filing an individual action in one state after class certification is denied in a different state.  In either case, the policy of avoidance of protective filings doesn’t work.  In fact, the opposite is true.  A liberal tolling rule only invites more suits to be filed in the jurisdiction that has it.  Thus, even on its own terms, cross-jurisdictional tolling based upon meritless class actions doesn’t make sense.

Thus, going back to the Bone Screw litigation, we have vehemently criticized cross-jurisdictional class action tolling.  Back then plaintiffs asserted that statutes of limitations all over the country were tolled by a baseless class action, In re Orthopedic Bone Screw Products Liability Litigation, 1995 WL 273597 (E.D. Pa. Feb. 22, 1995), in which certification was denied and no appeal even attempted.  Even this relatively quick adjudication took almost 14 months (from 12/30/93, when the class action was filed until denial of certification on 2/22/95).  We litigated cross-jurisdictional tolling to favorable results in Maestas v. Sofamor Danek Group, 33 S.W.3d 805, 808-09 (Tenn. 2000), and Wade v. Danek Medical, Inc., 182 F.3d 281, 287-88 (4th Cir. 1999), while also appearing as amicus curiae in Portwood v. Ford Motor Co., 701 N.E.2d 1102, 1104 (Ill. 1998).  Given that cross-jurisdictional class action tolling inherently involves litigation in one state attempting to toll the statute of limitations in another state, this issue can also be framed as one implicating states-rights, and where one of the courts is federal, federalism.

Over time most states have recoiled from cross-jurisdictional class action tolling.  Largely because of our Bone Screw experience, we maintain a scorecard on the issue.  According to our list, 35 jurisdictions (Alabama, Alaska, Arizona, Arkansas, California, Colorado, DC, Florida, Idaho, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Mexico, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, Puerto Rico, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, Wyoming) reject cross-jurisdictional class action tolling; one state (Michigan) allows it where the original class was certified; and six or seven states (Delaware, Hawaii, Montana, New Jersey, Ohio, West Virginia, and maybe Connecticut) allow tolling even for meritless, out-of-state class actions.  We do not credit a couple of LIBOR decisions in which that court blatantly ignored state law.

One of the states that does recognize cross-jurisdictional class action tolling is Delaware.  See Blanco v. AMVAC Chemical Corp., 67 A.3d 392, 398-398 (Del. 2013).  A recent Delaware Supreme Court decision throws into sharp relief why such tolling is a bad idea, and offensive not only to the statute of limitations, but also to the very judicial efficiency considerations that such tolling purports to further.  See Marquinez v. Dow Chemical Co., ___ A.3d ___, 2018 WL 1324178 (Del. March 15, 2018).  Marquinez is a poster child for delay – the very sort of stale and desultory litigation that is why statutes of limitations exist in the first place.  “The plaintiff-appellants (“the plaintiffs”) worked on banana plantations in Costa Rica, Ecuador and Panama at various times in the 1970s and 1980s.”  The first purported class action wasn’t filed until 1993, in Texas.  Marquinez, 2018 WL 1324178, at *2.  Then the following things happened:

  • Removal to federal court on the basis of the Foreign Sovereign Immunities Act (one defendant was owned by a foreign government).
  • MDL consolidation in federal court.
  • Dismissal on forum non conveniens in 1995, with a “return jurisdiction” caveat – if any foreign country ruled no jurisdiction, then plaintiffs could come back to Texas.
  • The forum non conveniens ruling denied as moot all pending motions, including class certification.

Id. at *1-2.  That’s two years of post-litigation delay – between 1993 and 1995 class certification was never ruled upon.  Don’t forget that the “1970s and 1980s” claims were already at least 13 years old before the initial suit was filed.

Plaintiffs really didn’t want to be in federal court – a sure sign of substantively weak litigation.  They appealed the exercise of Foreign Sovereign Immunities jurisdiction all the way to the United States Supreme Court.  Id. at *2.  that appeal took until 2001.  Id.   Then the plaintiffs, accompanied by their lawyers, reluctantly went home.  “[T]hey were unable to prosecute their claims in other countries” so they returned to Texas, where they sought to resurrect their claims under the “return jurisdiction” caveat.  Id.  While that was going on, the Supreme Court rejected Foreign Sovereign Immunities jurisdiction in another case involving identical litigation in another state.  See Dole Food Co. v. Patrickson, 538 U.S. 468 (2003).

So in 2003 – ten years after the original class action was filed, and between 23 and 33 years after the actual events claimed in the suit, the case was remanded to Texas state court.  Then the following things happened:

  • Defendants sought to have the case thrown out due to plaintiffs’ failure to comply with prerequisites to their exercise of “return jurisdiction” rights.
  • The “return jurisdiction” provision, along with the entire forum non conveniens ruling, was declared void for want of subject matter jurisdiction.
  • Plaintiffs again moved for class certification, this time under Texas state law.
  • Defendants removed to federal court a second time, under CAFA.
  • CAFA removal failed because the litigation pre-dated CAFA.

Marquinez, 2018 WL 1324178, at *2-3.  Finally, “[o]n June 3, 2010, class certification was denied in Texas state court.” Id. at *3.

At this point plaintiffs had had enough of Texas.  They started creating satellite litigation.  In mid 2011 one plaintiff filed an individual action in Delaware state court and others filed a class action in federal court in Louisiana.  Id.

Finally, less than a week before two years elapsed after the Texas denial of class certification – on May 31, and June 2, 2012 – two new class actions were filed in Delaware federal court.  Id.

But….

Plaintiffs had screwed up, or so it appeared.  The identical suit being already pending for a year in Louisiana, the Delaware federal court dismissed the Delaware action under the “first filed rule.”  Id.  That was appealed, and eventually reversed by the Third Circuit sitting en banc.  See Chavez v. Dole Food Co., 836 F.3d 205 (3d Cir. 2016) (en banc).

While that was going on, the remaining plaintiffs (those not already litigating in Louisiana (after fleeing Texas)) were dismissed on the statute of limitations.  The District Court in Delaware “h[e]ld[] that class action tolling stopped in July 1995 when [the original court] dismissed the case for forum non conveniens.”  Id. That was in 2014.  Those plaintiffs appealed.  The Third Circuit punted the matter, on certification, to the Delaware Supreme Court.

As in Blanco, the Delaware Supreme Court seemed unduly frightened by the prospect of “placeholder” suits:

If members of a putative class cannot rely on the class action tolling exception to toll the statute of limitations, they will be forced to file “placeholder” lawsuits to preserve their claims. This would result in wasteful and duplicative litigation.

Marquinez, 2018 WL 1324178, at *4 (quoting Blanco, 67 A.3d at 395).

Did the court not look at its own description of this litigation’s ridiculously long procedural history?  Between 1993 when the action was first filed, and denial of class certification in mid-2010 not a single “placeholder” suit was filed in Delaware state or federal court.  That was despite plaintiffs’ extended lack of success in advancing the litigation.

Although nowhere mentioned in Marquinez, the Delaware statute of limitations for tort cases is two years.  10 Del. C. §8119.  Making a mockery of that legislative judgment, Marquinez held that the pendency of a meritless class action can toll the statute of limitations for many multiples of that two-year period – here 17 years, or 8½ times the statutory period – because a “clear and unambiguous” rule is necessary:

[A] clear and unambiguous rule avoids uncertainty over the starting and ending dates for statutes of limitation in cross-jurisdictional class action tolling cases.  Thus, we adopt a rule that furthers the certainty interest − cross-jurisdictional class action tolling ends only when a sister trial court has clearly, unambiguously, and finally denied class action status.

Marquinez, 2018 WL 1324178, at *5.

The mind boggles.  Seventeen years hardly corresponds to the assumption in American Pipe that class certification will be decided “as soon as practicable after the commencement of an action,” and indeed those words don’t even appear in Rule 23 any longer.  Justice Stewart, who wrote American Pipe, would no doubt be appalled.  Seventeen years is more than half the time of Justice Stewart’s tenure on the Supreme Court.

The Delaware statute itself imposed a “clear and unambiguous” rule – two years.  Is the Delaware Supreme Court going to abolish the discovery rule, fraudulent concealment and all the other factbound doctrines that toll the statute of limitations in certain situations, and thus have created uncertainty?  Defendants argue for “clear and unambiguous” rules all the time (e.g., product identification, affirmative prescriber warning causation testimony, relative risk of two).  Why here, in a situation that is certain to make Delaware the dumping ground for Latin American toxic tort litigation.

And is this rule even “clear and unambiguous”?  The Texas plaintiffs never appealed the 2010 class certification denial.  What if they had?  Does “sister trial court” then morph into an further need for certainty, tolling the statute of limitations until the first state’s denial has been “clearly, unambiguously, and finally” been affirmed on appeal?

Marquinez demonstrates why courts should never start down the slippery slope of cross-jurisdictional class action tolling.  Right after proclaiming its “clear and unambiguous” rule, the decision plunges into the minutiae of the Texas litigation, spending seven paragraphs parsing through what the Texas court’s “return jurisdiction” language – in an order void for lack of subject matter jurisdiction – must have meant.  Marquinez, 2018 WL 1324178, at *6-7.  In so doing Marquinez ended up disagreeing with two other courts also forced into that exercise by plaintiffs’ satellite litigation.  Id. at *8-9 (“respectfully disagree[ing] with the Fifth Circuit’s and the Hawai’i Supreme Court’s application of class action tolling”).  If Delaware had rejected cross-jurisdictional class action tolling in the first place, none of that Talmudic exercise would have been necessary.

Judicial efficiency is hardly furthered by forcing the courts of one state to comb through the proceedings of litigation filed elsewhere in an effort to figure out when exactly plaintiffs should not be required to rely on an arguably meritless class action filing for fear that it won’t be certified.  As Marquinez demonstrates, that exercise itself can lead to disparate results.  And now what happens?  The litigants get to engage in the costly, and probably impossible, task of piecing together what happened in the forests and fields of Latin America 40-some years ago when Nixon was president and we though Watergate was as bad as things could get.  There are some cases where no litigation is the correct answer.  If the courts of these plaintiffs’ home countries weren’t willing to entertain this litigation, there is no good reason for Delaware, or any other state, to become the dumping ground for the Third World’s unwanted lawsuits.  Like Justice Stewart, we know a bad result when we see it.

Maybe it doesn’t matter.  Maybe, between Bauman and BMS, would-be non-resident class-action plaintiffs won’t be able obtain personal jurisdiction to file the same lawsuit over and over again in different jurisdictions (here, at least Texas, Louisiana, and Hawai’i before Delaware).  Maybe courts will resort to forum non conveniens to throw these Latin American cases out for good.  See Aranada v. Philip Morris, USA, Inc., ___ A.3d ___, 2018 WL 1415215 (Del. March 22, 2018) (similar overseas chemical exposure case pitched for inconvenience, even though another forum not available).  Maybe the Supreme Court will again re-examine American Pipe, and at least do away with piling meritless class actions on top of other meritless class actions.

But conversely, Bauman and BMS also mean that Delaware, as the “home” of many large corporations, will be assuming outsized importance in the litigation landscape.  Delaware courts are going to have enough to do without being required to sift through the detritus of other jurisdictions’ failed class action litigation.

Finally, there’s a message here for any other jurisdiction considering cross-jurisdictional class action tolling – don’t go there.  Don’t go anywhere near there.

 

 

From our prior personal jurisdiction posts concerning Daimler AG v. Bauman, 134 S. Ct. 746 (2014), and the plaintiff-side dodge of “general jurisdiction by consent,” regular blog readers were aware that one of the few jurisdictions where the consent theory appeared to have some traction was Delaware. Those adverse decisions were based on pre-Bauman Delaware state law, Sternberg v. O’Neil, 550 A.2d 1105 (Del. 1988), which had allowed general jurisdiction by consent.

No longer.

In an asbestos mass tort case, the Delaware Supreme Court has just overruled Sternberg – on the basis that general jurisdiction by consent merely by means of registration to do business is incompatible with Bauman:

We conclude that after [Bauman], it is not tenable to read Delaware‘s registration statutes as Sternberg did. Sternberg[] . . . rested on a view of federal jurisprudence that has now been fundamentally undermined by [Bauman] and its predecessor Goodyear Dunlop Tires Operations, S.A. v. Brown. . . . Sternberg represented just one plausible way to read a statute that on its face does not refer explicitly to personal jurisdiction, much less to consent to personal jurisdiction.

Genuine Parts Co. v. Cepec, No. 528, 2015, slip op. at 2 (Del. April 18, 2016) (footnote omitted). Thus, “Delaware‘s registration statutes must be read as a requirement that a foreign corporation must appoint a registered agent to accept service of process, but not as a broad consent to personal jurisdiction in any cause of action, however unrelated to the foreign corporation‘s activities in Delaware.” Id. at 3. That means, “[i]n most situations where the foreign corporation does not have its principal place of business in Delaware, that will mean that Delaware cannot exercise general jurisdiction over the foreign corporation.” Id. (footnote omitted).

Continue Reading Breaking News – No General Jurisdiction by Consent in Delaware

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

We are going to break from the traditional communal persona for just a minute because today’s case made me think of something my nine-year old son said just the other day.  He was watching a video with me on the evolution of dance music.  I take great pride in that his musical likes include the Beatles and Bruce Springsteen and run the gamut to Zac Brown and Imagine Dragons.  That said, I wasn’t surprised by his snickering while watching flappers do the Charleston or bobby-soxers do the Twist.  But when we arrived at the 1980s, he simply looked at me and said “Yuck.”  With a slight cringe at the jab to the music/dance/style of my youth, I tried to look at it through his eyes.  That is, with a view not clouded by the fond memories that the songs provoked.  And, yep, I had to admit – yuck was pretty accurate.

And yuck is certainly an accurate description for today’s case – Barba v. Carlson, 2014 Del. Super. LEXIS 198 (Del. Super. Apr. 8, 2014).  It’s bad on learned intermediary.  It’s bad on design defect.  It’s bad on breach of warranty.  In other words, if we were Dick Clark, we’d say it’s got a lousy beat and you can’t dance to it either.

Plaintiff underwent surgery involving implantation of pelvic mesh medical devices. Id. at *1.  She filed products liability claims against the manufacturer and medical malpractice claims against her surgeon.  Her surgeon testified, and it was undisputed, that he did not recall reading the warning label or package insert that came with the pelvic mesh devices.  Id. at *2.  It was also undisputed that plaintiff’s surgeon attended training courses provided by the manufacturer on implanting pelvic mesh.  Id.

The court begins its substantive analysis with the learned intermediary doctrine.  The court appears to start down the right path, but then gets tripped up by three little letters.   There are two steps to a failure to warn analysis at the summary judgment stage. The first question is whether the warning was adequate as a matter of law.  Id. at *7.  If there is a genuine dispute on adequacy, the next issue is proximate cause — “whether additional information or warnings would have made a difference to a reasonable learned intermediary.”  Id. (emphasis in original). A failure of proof on either issue is sufficient to end plaintiff’s failure to warn claim.  Either plaintiff couldn’t establish that the warning was inadequate or plaintiff couldn’t demonstrate that any inadequacy caused her injury.

We’ve seen the necessary causal link broken in many ways, such as by evidence that a physician would not have changed his treatment of plaintiff even if a different warning had been provided.  Or, evidence that any additional warning would not have made a difference because the physician would never had seen it. Defendant argued the latter here based on the doctor’s testimony that he doesn’t recall reading the product’s warnings. The court, however, focused on the surgeon’s attendance at the defendant’s training sessions.  Since there was a genuine dispute regarding whether the warnings provided at those sessions were adequate, there was also a genuine dispute regarding whether different information provided at the training would have made a difference in such a way as to have prevented plaintiff’ s injury. Id. at *11-12.  Since the court was also unwilling to determine that the defendant’s warnings in its labeling were adequate as a matter of law, the whole thing got rolled up in a question of fact for the jury.

While we don’t like the outcome, our real problem is with the court’s statement of the law.  When the court put step one and step two together, its analysis changed:

If the warnings and information are found to be adequate, and additional warnings or information would not have affected the medical decisions of a reasonable physician, then the learned intermediary insulates the manufacturer from liability.

Id. at *7-8.  Plaintiff has to fail both prongs of the test?  Shouldn’t the “and” have been an “or”?  If the warning is found to be adequate, that’s the end of the story.  What difference does additional information make?  On the flip side, if the warning was allegedly inadequate but plaintiff’s physician opted not to read it, how can the failure to warn have been the cause of plaintiff’s injuries?  In application in this case, the court’s use of “and” didn’t matter because it found that there was an issue regarding the adequacy of at least some information which plaintiff’s surgeon did review and apparently rely on.  But, in other cases, the seemingly small difference between “and” and “or” could be huge.

Moving on to negligent design defect (no strict liability in Delaware), the court first sets forth the test:

The proper test is whether the design has created a risk of harm which is so probable that an ordinarily prudent person, acting as a manufacturer, would pursue a different available design which would substantially lessen the probability of harm.

Id. at *13 (emphasis added).  Then, the court strips out the alternative design element of the claim.  Without citation to any legal support, the court finds that evidence of an alternative design while relevant, is not necessary to prove a design defect claim.  But, it’s right in the test itself.  Based on the language cited by the court, we consider Delaware a state that has adopted alternative design as a prerequisite to a design defect claim.  We’ve been wrong before, but this one seems obvious to us.

The example given by the court demonstrates the nonsensicality of its position:

For example, if a mask designed to protect miners from coal dust did not filter out any harmful particles, then the design would be defective, even if the alternative would be for the miners to work without any protective apparatus.

Id. at *15.  Not only is the court’s example based on an absurd extreme – a filter that doesn’t filter anything – it bears no connection to an FDA approved medical device which does in fact provide a medical benefit.  Moreover, it is simply a different way of articulating the “stop selling” argument that the Supreme Court shot down in Mutual Pharmaceutical Co. v. Bartlett.

Finally, the court essentially nullifies Delaware’s warranty notice requirement.  Under Delaware law, “the buyer must notify the seller of the breach within a reasonable time after discovery of the breach.”  Id.  In this case, plaintiff didn’t provide notice before filing her lawsuit.  The court determined it was a question for the jury.  Id. at *16. There is no analysis, no discussion.  Just a straight forward punt, which to us reads like if you timely file a lawsuit, you’ve timely given notice.  The two are not the same and courts should at a minimum have to conduct the appropriate analysis.

The court also punted on plaintiff’s fraud claims finding that because “the evidence is so intertwined with other claims, it does not appear that permitting fraud to remain as an issue for trial will prolong or complicate the proceedings unnecessarily.”  Id. at *19.   We thought the relevant inquiry was whether plaintiff had met her burden on the elements of her claim, not whether tacking on a few additional claims would protract the trial.  Under that rationale, once any claim survives is there much justification for dismissing the others?  We don’t have a lot of confidence that a full blown analysis would have resulted in a dismissal, but it would have been better than the “sure, why not” we got here. Oh, and the court allowed the punitive damages claim too.  Why not?

Distance, time and perspective may make you look back on times gone by with a changed attitude.  Cool may become lame.  Boring may become inspiring.  Exciting may become foolish.  But we don’t think any amount of time will allow us to look on this case as anything but yucky.

This post comes only from the Dechert side of the blog since Reed Smith was involved in the appeal that is the subject of the post.

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Usually plaintiffs’ lawyers have the simpler story to tell.  They’ll tell you that they drive on the highway while defense lawyers wander about on side roads.  If this is true, however, it’s usually because the defense is responding to accusations tossed out by plaintiffs, and responding is rarely simple.  But the roles were reversed in the diversity jurisdiction dispute addressed by the Third Circuit in Johnson v. SmithKline Beecham Corporation, Slip Op.(3d Cir. June 7, 2013).  The defense had the much simpler argument, an argument that won at the district court level (before two judges, losing before one other) and, as we discuss below, just won before the Third Circuit.

The plaintiffs originally filed suit in the Philadelphia Court of Common Pleas, naming a number of defendants, including GlaxoSmithKline’s operating company, GlaxoSmithKline LLC (“GSK LLC”) and GSK LLC’s sole member, GlaxoSmithKline Holdings (“GSK Holdings”).  The defendants believed that there was complete diversity and removed the lawsuit to federal court.  Plaintiffs believed otherwise, and moved to remand.  The key issue was the citizenship of the operating company, GSK LLC.  Plaintiffs argued, among other things, that GSK LLC was a citizen of Pennsylvania, the forum state, and was not diverse from one of the plaintiffs, a Pennsylvania citizen.  The defense argued that GSK LLC was a Delaware citizen, making the case removable.

The defense’s argument was simple.  GSK LLC is a limited liability company, and such non-corporate business organizations are citizens of the state or states in which each of their members are citizens.  Slip. Op. at 21 (citing Carden v. Arkoma Assocs., 494 U.S. 185, 195-96 (1990)).  GSK LLC had only one member: GSK Holding, a corporation.  So what was its citizenship?  By statute (21 USC 1332 (c)), a corporation is a citizen of both the state in which it’s incorporated and the state in which it has its principal place of business.  In both instances, that’s Delaware for GSK Holdings.  Accordingly, GSK Holdings is a Delaware citizen and so is GSK LLC.  Done.  Fairly simple.  There’s diversity.

Continue Reading Third Circuit on Diversity Jurisdiction: Keep It Simple

We can’t comment on the cases because of our involvement, but we wanted to pass along this new opinion granting summary judgment on statute of limitations grounds in the Seroquel litigation.  Burrell v. AstraZeneca LP, slip op. (Del. Super. Sept. 20, 2010).

It’s worth a read.  The court concluded, for purposes of determining when the statute of limitations began running, that the three plaintiffs were chargeable with knowledge of their claims for alleged diabetes injuries as of January 2004, when the FDA mandated a label change to include a classwide diabetes warning for all atypical antipsychotics.  The court concluded:

In this case, the latest date that any of the Plaintiffs was diagnosed with diabetes was February 2, 2004….   As of that date, not only had the scientific community discovered a possible link between Seroquel® and diabetes, AZ itself had specifically warned of the potential risk in its new label and in its ‘Dear Doctor’ letters. Had Plaintiffs engaged in a reasonable investigation of publicly available sources as of January 30, 2004, each of them would have discovered facts that would have provided ‘notice of a potential (as opposed to a guaranteed) tort claim’ against AZ.”

Slip Op. at 20-21 (emphasis added).

We wish we could say more, but we can’t.

We say it often: tragic facts lead to bad law. And the case we ranked #4 on our list of worst drug/device decisions of 2009 was definitely a case of tragic facts (and, as you can guess, we didn’t like the law too much). In that case, an infant who was born with Down Syndrome and a combination of heart defects went to a children’s hospital in Delaware, where the infant underwent a procedure that included the implantation of a stent (this stent had not been approved by the FDA). Unfortunately, the infant developed two rare and life-threatening conditions: protein losing enteropathy (PLE) and plastic bronchitis (PB). The infant’s guardians sued the hospital, the doctors, and the device manufacturer on a host of common-law negligence, strict liability, fraud, and warranty claims, and threw in a “medical monitoring” claim for good measure. The District Court judge in ED Pa. allowed the Delaware-law medical monitoring claim to proceed against the defendants – even though the Delaware Supreme Court had never ruled on the issue. In fact, the District Court allowed that medical monitoring claim to proceed at the same time it dismissed all those other common law causes of action. In other words, medical monitoring “in the air.” Totally novel (you can read more about the case here and here)….and so the case landed at #4.

Now that you know the back story, here’s the latest chapter. A couple days ago, the 3rd Circuit affirmed in part and reversed in part the district court. See M.G. v. A.I. duPont Hospital For Children, 2010 WL 3310720 (3d Cir. Aug. 24, 2010). Affirmed in part and reversed in part sounds like splitting the difference, but in this case, it means a total defense win. The 3rd Circuit affirmed the District Court’s grant of summary judgment as to all the standard common law claims, on the unsurprising ground that the plaintiffs had to prove, by expert testimony, a causal link between the defendants’ conduct and the injuries. Id. at *4-5. The plaintiffs’ expert failed to testify that the harm would not have occurred “but for” the alleged deviation in the standard of care. Id. at *5. In fact, the expert conceded that PLE and PB can develop even absent negligence, and that he did not know whether the stent or the procedure caused the injuries. Id.

But that’s not the part that really interests us. We are locked in on the second part of the opinion – the 3rd Circuit’s reversal of the decision to allow the medical monitoring claim to proceed. And in the interest of full disclosure, we should tell you that Bexis not only wrote an amicus brief on behalf of the Product Liability Advisory Council in this appeal, but came up with a winning argument: The district court overstepped its bounds in “predicting” a novel expansion of Delaware law. Id. at *5-6. In fact, it’s something that we’ve written about in this blog. So yeah, we’re pretty happy to see the 3rd Circuit agree with us. Here’s the problem, as we, and the 3rd Circuit, see it. We have no guidance from the Delaware Supreme Court about whether medical monitoring is a stand-alone tort, or whether it is instead a remedy (in other words, is it a claim or is it a measure of damages). Id. at *5. In the absence of guidance, the District Court should have done the safe thing and dismiss the claim. It’s called federalism. Instead, the 3rd Circuit agreed that “the District Court erred in extending Delaware law beyond the bounds of the recognized medical monitoring claim in which a plaintiff alleges long-term exposure to a proven toxic substance with known tendencies to produce serious future medical injuries.” Id. at *6. Not only did the District Court recognize a stand-alone cause of action for medical monitoring – something neither the Delaware Supreme Court nor the Delaware legislature has done – but the District Court then took the further leap of predicting that Delaware would in fact recognize a standalone medical monitoring cause of action outside the “toxic tort” context where medical monitoring claims usually arise (think chemical spills or plant explosions). Id. This was a few leaps too many for the 3rd Circuit:

[T]he District Court’s prediction that the Delaware Supreme Court would permit a claim for medical monitoring on this record requires several “leaps” from the current state of the law, generally, let alone Delaware law. Here, there is no toxic or hazardous substance, as such. While unapproved devices are termed “adulterated,” they are not necessarily harmful, and certainly not toxic. Moreover, the risk here is not a risk of “contracting a serious latent disease.” Rather, it is a risk of the need for further care. Further examinations are not to “monitor” the risk of disease, but to perform routine oversight.

Id. at *7. So we can erase #4 from our bottom 10 list of 2009. The medical monitoring claim here was a real stretch: (1) not a toxic tort, but a device/malpractice case; (2) not a claim for monitoring a latent disease, but a claim for medical checkups; (3) not a claim tethered to a viable negligence or strict liability theory, but a standalone claim; and last but certainly not least (4) not a claim that had EVER BEEN RECOGNIZED IN DELAWARE.

We understand the desire for compassion, to throw this poor family something. It’s tragic what happened, and it will surely be expensive to get the injured infant the care she needs. At the same time, the 3rd Circuit decision in M.G. confirms once again that tragic facts should not lead us to ignore the rule of law, or the principles of federalism.

Most lawyers’ eyes light up when they talk about the big, bold, flashy pieces of judicial work. Justice Scalia’s opinions, especially his dissents. Judge Posner’s exercises in legal scholarship. Judge Kozinski’s witty amalgamations of law and pop culture.

We like those works well enough, but we also appreciate finely tuned but less flashy opinions that methodically work through the issues with clear, step-by-step analysis. Although such opinions, unlike Justice Scalia’s dissents, will not be published in book form outside of the Federal Reporter or the regional reporters, they are nice examples of the judicial craft. These opinions often prove more useful to practicing lawyers than their showier counterparts.

Pennsylvania Employee Benefit Trust Fund v. Zeneca, Inc., 2010 WL 1816234 (D. Del. May 6, 2010), is a good example of a well-crafted opinion. This case has been kicking around for five years: the district court found the plaintiffs’ claims preempted, the Third Circuit affirmed, the Supreme Court GVR’d the preemption decision in light of Wyeth v. Levine, and the Third Circuit sent the case back to the district court for further proceedings in light of Wyeth. We have followed this case as it went up and down the judicial ladder.

With preemption unfortunately out of the picture, the court considered the more meat-and-potatoes questions whether plaintiffs had adequately pleaded consumer fraud, unjust enrichment, and negligent misrepresentation claims. The plaintiffs were individuals and health benefits providers who alleged that defendants committed consumer fraud by marketing Nexium even though, according to plaintiffs, the defendants’ older drug Prilosec supposedly worked as well as Nexium in most patients. We have real problems with this theory and would love to see a good judge wrestle it to the ground. But Judge Robreno’s careful dissection of the plaintiffs’ individual claims works just as well.

Come to think of it, there must also be a story behind how Judge Robreno, who usually sits in the Eastern District of Pennsylvania, ended up with this case in the District of Delaware – but we don’t know it, so we’ll just have to let it pass.

The court started with choice of law analysis because the case was filed in Delaware; plaintiffs were from Pennsylvania, New York, and Michigan; and the defendants’ principal place of business was Delaware. Choice of law isn’t all that interesting to most people, and many judges blow through choice of law to get to the meat of the case. This opinion, however, provides a comprehensive explanation of Delaware’s choice of law approach (the “most significant relationship” test in the Restatement (Second) of Conflict of Laws) and then applies that test to each of the three states. 2010 WL 1816234 at *3-14. As we have told you before, we are noncommittal about most choice of law questions, so we will just tell you without comment about the interesting steps in the analysis.

The first step in the choice of law analysis requires a court to decide if a conflict exists between the laws of the two states. Judge Robreno looked at the consumer protection laws of each relevant state and held that Delaware’s consumer protection law conflicted with the consumer protection laws of the other three states: Pennsylvania law requires reliance and Delaware law does not; New York law requires a plaintiff to show the defendant’s deceptive act caused plaintiff’s injuries and Delaware law does not; and Michigan law is limited to transactions concerning goods for personal, family or household purposes and Delaware law does not contain this limitation. Id. at *7-12. As we will see when we get to the merits, these differences were critical because the conflicting elements in Pennsylvania, New York, and Michigan law provided the basis for dismissing the consumer fraud claims. (The court also found no relevant differences in the law of unjust enrichment and negligent misrepresentation in the four states.)

The next step in the choice of law analysis is assessing the various individual factors in the most significant relationship test, and the court did that in detail. Id. at *7-13. The court found that the alleged misrepresentations were made in Delaware because “that is the place where the substance of the factual statements comprising the alleged misrepresentations emanated.” Id. at *7. But the alleged misrepresentations were received and relied upon by plaintiffs in the plaintiffs’ home states. Id. at *8. This choice arises frequently in choice of law cases: should a court apply the law of the defendant’s home state, which usually has an interest in regulating the defendant, or of the plaintiff’s home state, which usually has an interest in protecting its citizens? Which state has the most significant interest, the state where the defendant supposedly took tortious acts or the state where the plaintiff allegedly felt the effects of those acts? Judge Robreno held that the plaintiffs’ home states had the most significant interest and applied the consumer fraud law of Pennsylvania, New York, and Michigan. Id. at *9-13. Our noncommittal stance on choice of law questions does not stop us from cheering that result solely because the defense wanted the plaintiffs’ home state law to apply. We are not noncommittal in our pro-defense stance.

Having spent many pages on questions most judges address in paragraphs or even footnotes, the court took equal care in considering whether the plaintiffs stated claims under the consumer protection laws of the three states. Pennsylvania was easy: its Unfair Trade Practices and Consumer Protection Law requires a plaintiff to establish justifiable reliance, and plaintiffs’ complaint did not plead that the Pennsylvania plaintiffs relied upon or were even aware of the marketing and advertising claims that formed the basis of plaintiffs’ claims. Id. at *16. Bye bye, Pennsylvania claims.

The New York plaintiffs put up more of a fight. The New York plaintiffs claimed their law does not require them to prove justifiable reliance and therefore it did not matter that their complaint lacked any allegation that they purchased Nexium in response to defendants’ representations about the quality of Nexium compared to Prilosec. Id. at *17. Wrong, the court said, because New York law required plaintiffs to prove causation, and “a plaintiff must allege some awareness of a defendant’s misrepresentations prior to purchasing the product in order to establish the element of causation.” Id. Plaintiffs did not plead any such awareness and therefore did not state a claim under New York law. Fuhgeddaboudit, New Yorkers.

The court then considered the Michigan plaintiffs. If you were paying attention to the foreshadowing in the choice of law section, you would suspect that their claims would be dismissed for failure to allege purchases for personal, family or household purposes, and you would be right. The Michigan plaintiff was the Rehabilitator of The Wellness Plan, a third party payor, and the complaint lacked any allegations that this plaintiff’s purchase of Nexium was for personal, family or household purposes. Id. at *20. See ya, Michiganians.

These rulings made it easy to dispose of the unjust enrichment and negligent misrepresentation claims. Unjust enrichment requires a connection between the enrichment and the impoverishment – in other words, a causal connection between defendants’ alleged misrepresentations and plaintiffs’ decision to purchase Nexium over Prilosec – which plaintiffs did not plead. Id. at *20. And the negligent misrepresentation claim was dismissed because it requires reliance and plaintiffs did not plead that, either. Id. at *21-22.

The only sour note in this otherwise melodious opinion is that the court dismissed the claims without prejudice and granted plaintiffs leave to amend. Id. at *22. In our minds, five years is enough time to get it right, but we understand that careful judges sometimes bend over backwards to give plaintiffs one more chance to replead their claims. If the court rules on whether their new complaint states a claim, we’ll let you know what happens.

Yesterday we were pleased to bring you news that the Indiana Supreme Court reversed a case we had previously criticized on precisely the grounds that we had raised.

Perhaps lighting will strike twice. Earlier this year, we criticized a federal district court decision predicting that Delaware would adopt an independent medical monitoring cause of action despite contrary-tending, if not dispositive, law from the Delawere Supreme Court, and the Erie principle that federal courts should not predict expansion of state tort law. We were particularly concerned about medical monitoring in the air, because the court had dismissed all negligence or strict liability claims. We didn’t think medical monitoring could exist without actionable tortious conduct either.

Well, we’re pleased to report that the trial judge, if not exactly seeing the error of his ways, has at least agreed that the medical monitoring issue is a controlling issue of law on which reasonable minds may differ. In Hess v. A.I. DuPont Hosp. for Children, 2009 U.S. Dist. Lexis 77589 (E.D. Pa. Aug. 28, 2009), the court certified the issue for immediate appeal to the Third Circuit. From there, it could end up where it belongs – before the Delaware Supreme Court.

We expect we’ll have more to say about this case before all is said and done.

Awhooooo!

The fascinating, and ultimately frustrating, pair of decisions in Guinan v. A.I. duPont Hospital for Children, ___ F. Supp.2d ___, 2009 WL 307019 (E.D. Pa. Feb. 6, 2009) (“Guinan I“), and Guinan v. A.I. Dupont Hospital for Children, ___ F. Supp.2d ___, 2009 WL 311113 (E.D. Pa. Feb. 6, 2009) (“Guinan II“), demonstrate how judicial sympathy for a plaintiff attempting to pound a square liability peg into a round legal hole can cause serious damage to the law. If there had been a third opinion, maybe we’d call this a trilogy. As it is, we’ve only got a parody.

Guinan is another of those lawsuits in which what are really malpractice or informed consent cases have been stretched to try to make out product liability claims. Levine and Riegel come to mind as other examples, as we’ve discussed here (Levine) and here (Riegel). To some extent this phenomenon comes from plaintiffs’ lawyers looking to involve deeper pocketed defendants, something that’s been around since the beginning of legal time. But to a large extent we see it as something more recent – an unintended consequence of tort reform efforts that have made it more difficult and less remunerative for plaintiffs to pursue actions against medical professionals.

We don’t bear any grudges against the docs for that, but this does make things more difficult for our clients at times, and Guinan is one of those times.

Guinan involved some innovative surgery designed to correct a set of congenital heart defects (“tetralogy of Fallot,” “complete common atrioventricular canal defect,” and “severe pulmonary stenosis” – don’t ask us about these, we’re simply reporting what we’re reading) that frequently accompany Downs Syndrome. Guinan I, 2009 WL 307019, at *1. The patient was a new born. To deal with resultant circulatory problems, the doctors who ultimately ended up as defendants tried something called a “Fontan procedure.” That required two rounds of open heart surgery to complete. Unfortunately it couldn’t be completed because “severe leakage of [the] atrioventricular valves.” Id.

There was a dispute (decently prepped plaintiffs always deny informed consent) whether the parents were informed about this complication or the change in surgical plans that resulted. Id.

Instead of the normal method of surgical completion, the doctors inserted a medical device – a “covered stent” – via catheter. This “relatively new” procedure avoided a second open-heart procedure. Id. at *2. Once the device gets involved, we get interested.

And it does get interesting.

For one thing, the device that was implanted wasn’t FDA-approved – for anything. Id. The manufacturer had been making these stents available under a number of (it thought) exceptions to FDA approval: (1) as a “humanitarian use device” (for treatment of rare conditions), (2) as an “investigational” device for use in clinical trials, and (3) as a “custom device” made to fit the patient-specific “order of an individual physician.” Guinan II, 2009 WL 311113, at *2-3. This particular stent was supplied as a custom device. Id. at *3.

However the docs got their hands on this unapproved stent, it was supposed to be used in accordance with procedures overseen by the defendant’s hospital’s institutional review board (“IRB”). Remember, this is pediatric surgery, and very few companies sell either drugs or devices specifically intended and approved for use in children. Guinan I, 2009 WL 307019, at *2.

So in went the stent. It seemed to work for a little while, but the “cold” that the infant got about a month later turned out not to be a cold at all, but the onset of two more “rare and potentially life-threatening conditions”: “protein losing enteropathy” and “plastic bronchitis.” Id. at *2 (again, just because we blog about this stuff, don’t assume we know what it is).

At this point, plaintiffs changed doctors and hospitals – ending up at the best children’s hospital in the country. The new doctors decided they couldn’t risk removing the stent. But to do what they thought needed to be done (lower the venous blood pressure), they had to punch a hole in the stent, something called “fenestration” (not to be confused with “defenestration” of the sort the Czechs practiced in the Middle Ages). The new docs also found stenosis (narrowing) in another artery and implanted a second stent. Guinan I, 2009 WL 307019, at *2.

But the hole that the second set of doctors punched in the stent wasn’t big enough, because the plastic covering on the stent (the first one) started covering it back up. To deal with that, the docs (second set) decided to implant another stent (the third one) at the hole in the first stent. Id. at *3. Got that?

Didn’t work. The plastic bronchitis persisted. That’s where things stood at the time of the litigation. The only thing left to do, if anything could be done, would be to remove everything (except maybe the second stent, we’re not sure) and start over – something called a “take-down Fontan procedure.” Id. at *3.

So plaintiffs sue everybody. There are factual disputes all over the place, as the plaintiff parents claimed they weren’t told anything, and the defendant doctors swore they told the parents everything. One of these disputes was whether the doctors used an informed consent form provided by the defendant manufacturer, which explained what the first stent was all about. Id.

After the inevitable winnowing down of the plaintiffs’ extravagant pleading, including dismissal of class action allegations, id. at *4, all the defendants moved for summary judgment. The judge wrote two opinions, one involving the medical defendants (Guinan I) and the other involving the medical device manufacturer and its CEO (Guinan II). The court threw out a lot of claims but not all of them.

We’re going to go through Guinan I first, but quickly (yeah, right, we know you guys), because it’s necessary to understand Guinan II – the one we’re most interested in.

The remaining claims in Guinan I were malpractice (medical negligence), informed consent, fraud/misrepresentation, and medical monitoring.

The first question was choice of law. Plaintiffs were residents of New Jersey, and the complained-of surgery occurred in Delaware. That would be too easy, so plaintiffs sued in the Eastern District of Pennsylvania, making for a three-ringed circus. Guinan I, 2009 WL 307019, *5. There were bunches of real conflicts that we won’t bore our readers or ourselves with because they involve the medical claims. Suffice it to say that, if plaintiffs had wanted either Delaware or New Jersey law to apply, they would have sued there.

Because the state where the complained-of medical treatment occurred had the most meaningful contacts, the court applied Delaware law. Id. at *6-8.

That caused big problems with plaintiffs’ medical monitoring claim, because while New Jersey and Pennsylvania recognized medical monitoring in some situations, no Delaware court ever had. Worse than that, the Delaware Supreme Court more or less rejected medical monitoring as a separate cause of action in Mergenthaler v. Asbestos Corp., 480 A.2d 647, 651 (Del. 1984), an asbestos case (obviously), but that was as much because of lack of exposure as due to any evaluation of the viability of the underlying claim.

Moreover, Guinan I stated that not only was medical monitoring itself uncertain under Delaware law, but plaintiffs advocated a “novel theory that a tort claim for medical monitoring can be applied to medical procedures and devices.” 2009 WL 307019, at *7 (emphasis added).

We’ll skip over the lengthy discussion of the Delaware Health Care Malpractice Insurance and Litigation Act. Suffice it to say that the vague report filed by plaintiffs’ expert didn’t come close to supporting a claim for medical negligence. Id. at *9-14. Next up was informed consent. Because the plaintiff parents signed an informed consent form, their claims sounded in negligence. To prove negligence they needed the expert whose report had already been thrown out. Bye-bye informed consent. Id. at *14-15. Plaintiffs didn’t even get close to establishing fraud. Id. at *15.

So that left medical monitoring, and that’s where things go off the rails.

Plaintiffs had some good facts. Once they found out the first stent hadn’t been approved, they complained to the FDA. The FDA got on the IRB’s case and demanded a report. The IRB concluded that, in violation of procedures, the defendant doctors “had implanted an unapproved device in several patients, and had handled Plaintiff’s parents’ complaints poorly.” Id. at *16. After that, the FDA went to the device manufacturer (which it directly regulated) and “urged” (the court’s word) it to tell similarly situated patients that they should “seek long-term medical follow-up.” Id. The manufacturer not only did what the FDA suggested, but sent a letter to every doctor and hospital that had ever used one of its devices.

That letter (which came back to haunt everyone) stated that “[t]he safety and effectiveness of the C.P. stent is unknown at this time; therefore [the manufacturer] is concerned that patients receive appropriate follow-up care.” It went on to suggest that patients who had these stents implanted should be evaluated on an annual basis “until full growth is reached” and that the evaluation should “include a history and physical exam, a chest x-ray, an echocardiogram, an EKG, and an MRI or spiral CT.” Guinan I, 2009 WL 307019, at *16. There was no evidence (at least none mentioned in either opinion) that the manufacturer had any idea that the defendant doctors weren’t following the procedures established by their own hospital’s IRB.

So in the hallowed tradition that, in litigation, no good deed goes unpunished, Guinan I used this recommendation as the jumping off point in concluding that plaintiffs had a viable claim for medical monitoring.

Even though the Delaware Supreme Court had never recognized such a claim in any context.

Even though application of medical monitoring to medical procedures and products was admittedly “novel.”

The court, of course, had to make an Erie prediction (that means take a guess at what a state court might do with an undecided issue under principles first established in Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938)). We lawyers like to name our shorthand jargon after cases.

First, it reviewed the Mergenthaler decision and quite correctly determined that the Delaware Supreme Court’s dismissal of that particular monitoring claim wasn’t conclusive on whether such a claim could ever be brought. Guinan I, 2009 WL 307019, at *17-18. The court didn’t bother to delve further into Delaware precedent, thus it did not consider a second dismissal of a medical monitoring claim by a Delaware trial court. See Alderman v. Clean Earth, Inc., 2007 WL 1930664, at *2 (Del. Super. June 26, 2007).

Instead, Guinan I found “several considerations” that “militate[d] in favor” of medical monitoring in the case:

  • “Plaintiff has a Class III medical device in her body.”
  • “[I]t is undisputed that the device did not have premarket approval from the FDA at the time the Medical Defendants implanted it in Plaintiff and was thus considered an ‘adulterated’ device.”
  • “Plaintiff had contact with the adulterated device[, which] remains in her body.”
  • “[T]he FDA, [the manufacturer], and the Institutional Defendants have all suggested that Plaintiff should receive follow-up care to monitor the CP stent.”

2009 WL 307019, at *18. Relying on a number of decisions from other jurisdictions, the court concluded that “considerations of fairness, efficiency, and deterrence favor recognizing a cause of action for medical monitoring here.” Id.

It looks like there was simply no way that this injured baby was getting thrown out of court – not when one of the defendants’ own IRBs had admitted there was a screw up.

There’s just one little, slight problem with that.

It’s not allowed.

Not only haven’t Delaware state courts recognized medical monitoring, but expansion of medical monitoring to the use of prescription medical products is admittedly “novel.” Guinan I, 2009 WL 307019, at *7.

Under universally accepted Erie principles, it’s beyond the proper power of a federal court exercising diversity jurisdiction to predict a novel expansion of state-law liability because, as in Guinan I, the court thinks such an expansion is a better approach. We’ve discussed this before, but Guinan I is the most egregious violation of this principle we’ve seen, at least since the decisions that prompted our earlier post.

It’s also against the Third Circuit’s repeated admonitions to the district courts. Lexington National Insurance Corp. v. Ranger Insurance Co., 326 F.3d 416, 420 (3d Cir. 2003):

[A] federal court in a diversity case should be reluctant to expand the common law. . . . [T]here has to be a limit somewhere. Our duty here is to predict how the [state] Supreme Court would view this case and we will discharge that duty by holding that it would reject [plaintiff’s] claims.

Werwinski v. Ford Motor Co., 286 F.3d 661, 680 (3d Cir. 2002):

[E]ven if we were torn between two competing yet sensible interpretations of [state] law. . ., we should opt for the interpretation that restricts liability, rather than expands it, until the Supreme Court of [the state] decides differently.

City of Philadelphia v. Beretta U.S.A. Corp., 277 F.3d 415, 421 (3d Cir. 2002):

[I]t is not the role of a federal court to expand state law in ways not foreshadowed by state precedent. Instead, a federal court follows the precedents of the state’s highest court and predicts how that court would decide the issue presented. [State] precedent does not support the. . .claim plaintiffs advance here, and we cannot predict that the [state] Supreme Court will choose to expand state. . .law in the manner plaintiffs urge.

Camden County Board of Chosen Freeholders v. Beretta, U.S.A. Corp., 273 F.3d 536, 541-42 (3d Cir. 2001):

[This] is a matter of state law, and the role of a federal court ruling on a matter of state law in a diversity case is to follow the precedents of the state’s highest court and predict how that court would decide the issue presented. It is not the role of a federal court to expand or narrow state law in ways not foreshadowed by state precedent. . . . While it is of course conceivable that the Supreme Court. . .may someday choose to expand state [] law in the manner that the County urges, we cannot predict at this time that it will do so.

Northview Motors, Inc. v. Chrysler Motors Corp., 227 F.3d 78, 92 n.7 (3d Cir. 2000):

[W]e have stated that a federal court in a diversity case should be reluctant to expand state common law. . . . [R]egardless of the source of its jurisdiction, the principle is valid because a federal court is applying state law.

Leo v. Kerr-McGee Chemical Corp., 37 F.3d 96, 101 (3d Cir. 1994):

[F]ederal courts may not engage in judicial activism. Federalism concerns require that we permit state courts to decide whether and to what extent they will expand state common law. . . . Our role is to apply the current law of the jurisdiction, and leave it undisturbed.

City of Philadelphia v. Lead Industries Ass’n, 994 F.2d 112, 123 (3d Cir. 1993):

A federal court in a diversity case is not free to engraft onto those state rules exceptions or modifications which may commend themselves to the federal court, but which have not commended themselves to the State in which the federal court sits. . . . In a diversity case. . .federal courts may not engage in judicial activism. Federalism concerns require that we permit state courts to decide whether and to what extent they will expand state common law. Our role is to apply the current law of the appropriate jurisdiction, and leave it undisturbed.

Bottom line, if plaintiffs in Guinan had wanted to argue for this sort of doubly novel expansion of Delaware law, they shouldn’t have played games with choice of law by filing in a federal forum having nothing to do with their cause of action. They should have filed in a Delaware state court. Basically, the Guinan plaintiffs played forum-shopping games – and the court ended up rewarding them for it.

So Guinan I leaves the plaintiffs hanging on by their fingernails against the medical defendants, able to pursue only a medical monitoring claim that has no basis in relevant state law. In Guinan II, the court decided to visit the sins of the medical defendants upon the device manufacturer.

But not before making some interesting and useful rulings concerning the plaintiffs’ other claims.

The rulings are interesting because the manufacturer was also investigated by the FDA. Even though undisputed evidence established that the manufacturer had not affirmatively promoted the use that supposedly injured the plaintiff, see Guinan II, 2009 WL 311113, at *3 (the doctors “approached” the manufacturer), the FDA charged it with “marketing an adulterated device” – presumably because it had run afoul of the “custom device” process by which it sold the device. Id. at *4. In the end, both the company and its principal officer pleaded guilty to misdemeanors. Id.

The stent, however, wasn’t found to be unsafe. Quite the contrary. As part of the manufacturer’s plea agreement, the FDA required it to fund a clinical trial for another pediatric use of the stent, and on top of that “to supply it to health care providers who request it for [the studied] treatment . . . free of charge.” Id.

The Agency would never have demanded, as part of a legal settlement, that the manufacturer distribute the device for free if it thought the device was actually dangerous. So from a product liability perspective, Guinan deals with claims brought against a convicted violator of the FDCA over the unapproved use of a safe product.

As to the manufacturer as well, the plaintiffs played the same choice-of-law games, only this time there was a fourth state involved – New York, where the manufacturer was incorporated.

So the possible choices were: (1) New Jersey, where the plaintiffs lived, (2) Delaware, where the doctors used the device in surgery, (3) New York, the state of incorporation (and presumably principal place of business), and Pennsylvania, where suit was filed. We’ll spare you the details, but the court held that the place where the medical treatment using the device occurred, rather than either the plaintiffs’ residence or the defendant’s principal place of business, had the greatest interest in the application of its laws. Guinan II, 2009 WL 311113, at *5. That is, except for plaintiff’s attempt at piercing the corporate veil, which, being a matter of corporate law, was governed by the state of incorporation. Id. at *6.

So that’s the first interesting and useful ruling – on choice of law. It’s yet another rejection of principal place of business as a dispositive contact, something we’ve denounced before.

Plaintiffs brought three types of negligence claims against the manufacturer: “failure to test, failure to warn, and negligence per se based on violation of the FDCA.” Id. at *6. They’re all interesting, but regular readers know of our near obsession with FDCA based negligence per se. Rather than clutter up the post with links, we direct your attention to the “negligence per se” label at the bottom of this post. By clicking on that, you’ll get a list of each and every one of our prior posts on that subject (even us Luddites recognize the value of these labels).

But unfortunately, Guinan II doesn’t get into the really juicy stuff.

That’s because, once again, the plaintiffs’ experts let them down. The first ground on which plaintiffs’ negligence claims failed was lack of expert testimony on causation. The expert “offers no opinion regarding the causal connection between” the “stent and Plaintiff’s claimed injuries.” Id. at *7. A win is a win is a win, but that’s not a rationale we find very interesting.

But things look up from there. The next cause of action is for fraud/misrepresentation. The first issue is whether the learned intermediary rule applies to fraud. The court held that it does:

This reasoning [for the learned intermediary rule] certainly makes sense in the context of this case, where Plaintiff could not have obtained independent access to the [device], where the Medical Defendants had to order the [device] from [the manufacturer] by prescription, and where the Medical Defendants inserted the [device] into Plaintiff during a medical procedure.

Guinan II, 2009 WL 311113, at *9.

Interesting and useful ruling number 2: the learned intermediary rule applies to fraud claims.

Plaintiffs then claimed that, because the manufacturer didn’t give the doctors any information at all about the safety of the device for use in the Fontan procedure, it was necessarily liable. Id. at *10. But that mistated the facts. Instead, the manufacturer (through its principal) “did not assure the doctors that the [device] was safe to use in the Fontan completion.” Id. The device was unapproved (with evidence establishing that its FDA status was stated on the informed consent form the company gave the doctors, id. at *11), and the doctors, not the manufacturer chose to it for this purpose. Therefore, no fraud.

We’ll skip the battery (informed consent) discussion in Guinan II because it dodged the interesting question (whether a manufacturer’s provision of an informed consent form could be a voluntary undertaking to obtain informed consent), and dismissed the claim for the same reasons as Guinan I. We’ll also skip strict liability, which was dismissed on the very Delaware-specific ground that the state’s law has never adopted the doctrine. 2009 WL 311113, at *13-16.

Delaware never adopted strict liability because the legislature had already provided warranty causes of action. Express warranty is usually the weak sister of the two, and was so here as well. That claim was dismissed because, while plaintiffs claimed they relied on the device being “custom” when in fact it was unapproved for anything, there was no evidence that they even knew of that description:

[W]e will grant summary judgment in favor of [the manufacturer] for the same reason: Plaintiff has not proffered evidence that the nature of the stent was “part of the basis of the bargain” to constitute an express warranty. To the extent that [the manufacturer] made any representations about the stent prior to the sale of the stent, Plaintiff was not aware of them. . . . Plaintiff’s argument that she relied on [the manufacturer’s] description of the stent as “custom” is without merit.

Guinan II, 2009 WL 311113, at *20.

Interesting and useful ruling No. 3: In express warranty, if the plaintiff was not told about the alleged express warranty by the prescribing doctor, the claim fails for lack of reliance/benefit of the bargain.

Implied warranty is where the real action is, since that claim substitutes for strict liability in Delaware. To establish a product defect, plaintiffs hauled out an FDA expert – not a design expert – who testified essentially that the device was “not safe for use in humans” because it had “not been shown to be safe.” Guinan II, 2009 WL 311113, at * 21. That, of course, was a blatant attempt to use FDA-speak to flip the common-law burden of proof from the plaintiff to the defendant. Whatever a manufacturer’s burden might be before the FDA, in a product liability action, it’s the plaintiff’s job to produce evidence affirmatively establishing a defect:

The expert testimony on which Plaintiff relies fails to support an inference that the stent was defective. . . . Plaintiff maintains that [expert] testimony that the [device] was not “shown to be unsafe” supports an inference that [it] was unsafe or defective. Plaintiff therefore relies on an absence of evidence of defect as support for the proposition that a defect exists. Plaintiff commits the logical fallacy of argumentum ad ignorantiam, that is, an argument from ignorance. . . . Plaintiff mistakenly assumes that an absence of evidence to support its proposition establishes the proposition. However, an absence of evidence that the [device] was defective does not establish defectiveness. Plaintiff’s logical fallacy underscores her failure to carry her burden of proffering evidence that allows an inference of defect.

Id. at *21 (emphasis added) (citations to five Bone Screw cases omitted).

And there’s more along these lines. The Guinan II court similarly rejects the proposition that lack of FDA approval for a use means that a product is not “fit” for that unapproved use:

Implicit in Plaintiff’s argument is the proposition that Fontan completion is an “ordinary purpose” for which the [device] is used. Plaintiff therefore relies on the [device’s] lack of FDA approval as evidence of its defective design or manufacture. A lack of FDA approval is not a per se defect of design or manufacture under Delaware law. . . .[T]he lack of FDA approval of the [device] here does not constitute a defect under the applicable UCC provision. Plaintiff has identified issues regarding FDA approval. . ., but Plaintiff has not pointed to evidence of a manufacturing or design defect in the stent itself . . . . The lack of FDA approval, without more, is not enough to create an inference of a manufacturing or design defect.

Id. at *22 (emphasis added) (citations to three more Bone Screw cases and a footnote citing one of Bexis’ articles omitted).

Interesting and useful ruling No. 4: Resolved: Lack of FDA approval is neither evidence of, nor supports an inference of, a defect.

To us that’s the most interesting and useful ruling in Guinan. We’ve seen plaintiffs try to flip the burden of proof like that quite a bit over the years, mostly in litigation over off-label uses, and the devastating refutation in Guinan II is as thorough and well-reasoned as we’ve ever seen – and we’ve done this issue to death.

We’ll pass over the discussion of the implied warranty of fitness for a particular purpose, id. at *23, and piercing the corporate veil, id. at *24-15, because they’re both dependent upon the case-specific factual record in the case. Also, we’re getting tired.

That brings us back to the kicker – medical monitoring. Once again, the court denies summary judgment. There’s no independent review of the claim, only a reference to the discussion in Guinan I, and a statement that the Erie prediction is “based. . .in large part on the fact that. . . the FDA [and all the defendants] have advised that medical monitoring is necessary because, inter alia, the safety of the [device] is unknown.” Guinan II, 2009 WL 311113, at *23.

Sorry, we don’t buy that in Guinan II any more than in Guinan I. We’ve already addressed the infirmity of the court’s Erie prediction, so we’ll close with the other question we have.

Where’s the tort?

There’s no negligence – that claim was dismissed for lack of any viable expert opinion on either liability or causation. There’s no product defect either. There’s no fraud. Despite the defendant’s regulatory transgressions, the FDA didn’t order the product off the market, and instead required the manufacturer to make it even more available than it had been.

There’s just no tortious conduct upon which to predicate medical monitoring – even if the court had the power to recognize such a novel cause of action in the first place.

And there’s no such thing as medical monitoring in the air. Every state we know of that allows medical monitoring requires, as an element of the claim, proof of tortious conduct. Between them, Guinan I and Guinan II cite medical monitoring cases from Pennsylvania and New Jersey. In Pennsylvania one of the seven essential elements of medical monitoring is an increased risk “caused by the defendant’s negligence.” Redland Soccer Club, Inc. v. Department of the Army, 696 A.2d 137, 145 (Pa. 1997). In New Jersey, medical monitoring is not allowed at all in product liability actions. Sinclair v. Merck & Co., 948 A.2d 587, 594-95 (N.J. 2008). See also, e.g., Potter v. Firestone Tire & Rubber Co., 863 P.2d 795, 823 (Cal. 1993) (“as a result of a defendant’s tortious conduct”); Meyer v. Fluor Corp., 220 S.W.3d 712, 717 (Mo. 2007) (“consequences of the defendant’s tortious conduct”); Hansen v. Mountain Fuel Supply Co., 858 P.2d 970, 979 (Utah 1993) (“which exposure was caused by the defendant’s negligence”); Bower v. Westinghouse Electric Corp., 522 S.E.2d 424, 432 (W. Va. 1999) (“through the tortious conduct of the defendant”); Petito v. A.H. Robins Co., 750 So.2d 103, 106 (Fla. App. 1999) (“caused by the defendant’s negligence”).

Thus, in the end, we have to conclude that the pair of Guinan decisions produced a parody of established medical monitoring law. Delaware hasn’t recognized medical monitoring at all, and certainly hasn’t applied it to drug/device product liability cases. A federal court sitting in diversity has no business making that kind of decision for a state. Beyond that, even if Delaware were to recognize this very controversial tort – it’s still a tort. Medical monitoring isn’t free health insurance – the law doesn’t make a product manufacturer pay for somebody’s medical tests simply because it admits that those tests might be a good idea. There has to be a tort – some form of wrongful conduct – and in Guinan there simply wasn’t. The court recognized that, by dismissing every other cause of action that the plaintiffs had, whether based on negligence, strict liability, warranty, or fraud, but decided to let the plaintiffs proceed anyway.

We think Justice Cardozo said it best:

The judge, even when [s/]he is free, is still not wholly free. [S/]He is not to innovate at pleasure. [S/]He is not a knight-errant roaming at will in pursuit of [her/]his own ideal of beauty or of goodness. [S/]He is to draw his[/her] inspiration from consecrated principles. [S/]He is not to yield to spasmodic sentiment, to vague and unregulated benevolence.

Benjamin N. Cardozo, “The Nature of the Judicial Process,” at 141 (1921) (sexist language from the period cleaned up).

Simply stated, the tort law should not give away defendants’ money like Christmas presents, and judges should not play Santa Claus.