Class actions hold our interest, even though we do not see them all that often anymore in the drug and medical device space. Maybe we are the rubbernecking motorists who can’t resist slowing down to gaze at someone else’s fender bender.  Maybe we are the children at the zoo who rush to the reptile house to gawk at creatures charitably described as unsightly.  Or maybe it’s because class actions are such odd ducks.  Our civil litigation system is conceived around concepts of due process.  Yet, a class action defendant can be compelled under threat of state authority to pay money to people who have never proved a claim or an injury, and an absent class member can be bound to the result of a proceeding in which he or she has never appeared.  What could possibly go wrong?

We expect many of you are like us, so we have gathered here a trio of significant class action opinions that caught our eye over the last few weeks. All hail from California.  All are important for unique reasons.  None involves drugs or medical devices, but the opinions are relevant generally to class settlements, expert opinion, and standing to appeal—topics that readily cross over.  So, without further delay, here we go.

Nationwide Class Settlements and Choice of Law: In re Hyundai and Kia Fuel Economy Litig., No. 15-56014, 2018 WL 505343 (9th. Cir. Jan. 23, 2018).  We will start with the opinion that has received the most attention and is probably the most important—the Ninth Circuit’s opinion reversing a nationwide class settlement because the district court did not consider the impact of varying state law. Id. at **12-13.  The procedural history for these multiple class actions resulting in a nationwide settlement is long and dizzying.  The important point is that the district court certified a settlement class that offered benefits to class members (automobile purchasers allegedly defrauded by representations regarding fuel mileage) and substantial fees to class counsel.

However, in certifying the class, the district court overly relied on a well-worn principle—that the inquiry on whether common issues of law predominate is relaxed with a settlement class.  Because the district court was certifying a class for settlement only, it ruled that a choice-of-law analysis was unnecessary. Id. at *11.

That was the district court’s mistake. As the Ninth Circuit explained:

Because the Rule 23(b)(3) predominance inquiry focuses on “questions that preexist any settlement,” namely, “the legal or factual questions that qualify each class member’s case as a genuine controversy,” a district court may not relax its “rigorous” predominance inquiry when it considers certification of a settlement class.  To be sure, when “[c]onfronted with a request for settlement-only class certification, a district court need not inquire whether the case, if tried, would present intractable management problems, for the proposal is that there be no trial.” But “other specifications of the Rule—those designed to protect absentees by blocking unwarranted or overbroad class definitions—demand undiluted, even heightened, attention in the settlement context.

Id. at *5 (emphasis added, citing Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997)).  The district court’s error therefore was threefold.  First, it failed to conduct a choice-of-law analysis to determine the controlling substantive law. Id. at *12.  Second, the district court failed to acknowledge that laws in various states materially differed from California law.  Third, the district court did not consider whether material variations in state law defeated predominance under Rule 23(b)(3).

This is not to say that the district court lacks discretion on remand to certify another nationwide settlement class. We do know, however, that the district court will have to subject any newly proposed nationwide settlement to choice-of-law analysis and will have to decide whether state laws differ and whether any differences defeat the predominance of common legal issues.

Class Certification and Admissibility of Expert Opinions: Apple, Inc. v. Superior Court, No. D072287, 2018 WL 579858 (Cal. Ct. App. Jan. 29, 2018). Our second case held that a trial court can consider only admissible expert opinion evidence submitted in connection with a class certification motion and that California has only one standard for admissibility of expert opinion, Sargon Enterprises, Inc. v. University of So. Cal., 55 Cal. 4th 747 (2012).  In other words, Sargon applies at the class certification stage, a point about which we have often wondered, but for which we never had a clear answer.

Until now.  We wrote about Sargon here when it came out in 2012.  The opinion moved California away from its unique “Kelly/Leahy” test and toward a more Daubert-like standard.  In the new California Court of Appeal case, the trial court certified a class of consumers, but expressly refused to apply Sargon to the declarations of the plaintiffs’ experts. Id. at *1.  You will not be surprised to learn that the experts in question were damages experts who offered the opinions that damages could be calculated on a classwide basis.  Id. at **2-5.  Over multiple rounds of briefing, the defendant objected to the opinions and urged the trial court to apply Sargon.  The plaintiffs resisted.

In the end, the trial court ruled that “[t]he issues [the defendant] raises with respect to the materials Plaintiffs’ experts will rely upon in forming their opinions and whether Plaintiffs’ experts’ analyses rely on accepted methodologies and whether the analyses are correct are issues for trial.” Id. at *6.  The court therefore certified the class. Id.

In reversing, the California Court of Appeal issued a very straightforward holding:

[T]he court may consider only admissible expert opinion evidence at class certification.  The reasons for such a limitation are obvious.  A trial court cannot make an informed or reliable determination on the basis of inadmissible expert opinion evidence.  And certifying a proposed class based on inadmissible expert opinion evidence would merely lead to its exclusion at trial, imperiling continued certification of the class and wasting the time and resources of the parties and the court.

Id. at *8 (internal citations omitted). The Sargon case involved expert opinion presented at trial, but the Court of Appeal saw “no reason why Sargon should not apply equally in the context of class certification motions.” Id. at *9.

Moreover, although the plaintiffs argued that the result would have been the same even if the trial court had applied Sargon, the Court of Appeal disagreed.  The experts’ opinions were crucial to the trial court’s order, and there were significant individual issues for each consumer that the experts attempted to brush over. Id. at *11.  The Court of Appeal found that if the trial court had applied Sargon to these opinions, “there is a reasonable chance it would have excluded these declarations and found plaintiffs’ showing to be lacking.” Id. The Court of Appeal found similar deficiencies with the experts’ estimate of the size of the class, making it “difficult to see on the current record how plaintiffs’ formula could be found reliable.” Id. at *12.

Class Actions and Standing to Appeal: Hernandez v. Restoration Hardware, Inc., No. S233983, 2018 WL 577716 (Cal. Jan. 29, 2018). Our final class action opinion for today is Hernandez v. Restoration Hardware, where the issue was whether an unnamed class member has standing to appeal from a class action judgment under California procedure.  The California Supreme Court decided that an unnamed class member does not have standing to appeal without first intervening as a party in the trial court.  In Hernandez, the plaintiff sued a retailer for violating credit card laws, and after several years of litigation, the trial court certified a class and held a bench trial resulting in a substantial award.  An unnamed class member received notice of the class action, but she neither intervened as a party nor opted out.  Instead, her attorney filed a notice of appearance on her behalf. Id. at *1.

The controversy began when class counsel requested a 25 percent fee. Again the absent class member did not formally intervene, but instead appeared through counsel at the fairness hearing and argued mainly procedural points. Id. at *2.  The trial court nonetheless granted the fee request, and the unnamed class member appealed. Id. at *3.

In holding that the unnamed class member was not a “party aggrieved” and had no standing to appeal, a unanimous California Supreme Court followed Justice Traynor’s 75-year-old decision in Eggert v. Pacific Sales S&L Co., 20 Cal. 2d 199 (1942).  The Court’s main point was that absent class members have ample opportunity to become parties of record in class actions, either by filing a complaint in intervention or by filing an appealable motion to set aside and vacate a class judgment. Id. at *4.  This appellant did neither, making her neither a “party” nor “aggrieved.”  The Supreme Court also rejected the invitation to follow Rule 23 of the Federal Rules of Civil Procedure, which gives class members who informally object to settlement the right to appeal. Id. at *5.  The federal approach does not address California’s statutory requirement for appeal, and it cannot be reconciled with the controlling authority, Eggert.  As the California Supreme Court concluded,

Following Eggert and requiring intervention does not discourage unnamed class members from filing a meritorious appeal.  Rather, it continues a manageable process under a bright-line rule that promotes judicial economy by providing clear notice of a timely intent to challenge the class representative’s settlement action.  Formal intervention also enables the trial court to review the motion to intervene in a timely manner. . . .  By filing an appeal without first intervening in the action however, [the appellant] never became an “aggrieved party” of record to the action as our law requires.

Id. at *7. According to the California Supreme Court, this absent class member made the strategic decision to wait and see if she agreed with the result in the trial court, and that was not sufficient to perfect the right to appeal. Id. The Court also reasoned that the prevailing rule protects against wasteful and meritless objections, recognizes the fiduciary duties of class representatives and their counsel, and respects the doctrine of stare decisis. Id. at **7-8.

There you have it—all you need to know about three important decisions. Someday you might need them.

This year’s Academy Award nominations came out last week. That means that we have spent the past few days setting a schedule for seeing all of the Best Picture nominees (well, most – we don’t do war movies and tend to opt out of love stories involving semi-animate objects) and scouring recipe blogs for perfect Oscar party buffet items.  We have also reminisced, with amusement, about the climactic moments of last year’s show, during which the presenters announced the wrong Best Picture winner before an Academy official shoved them out of the way and corrected the error.  As we recall, it turned out (not surprisingly) that the mistake was caused by sloppiness.  The Academy’s accountant handed the presenters a duplicate envelope for an award that had already been presented, starting the embarrassing domino cascade.  We recall that heads rolled in the ensuing days.

Today’s case also involves the consequences of sloppiness, along with a couple of interesting legal rulings. In its unpublished decision in Small v. Amgen, Inc., et al., 2018 WL 501354 (11th Cir. Jan 22, 2018), the Eleventh Circuit considered the plaintiff’s appeal of two summary judgment orders:  a grant of partial summary judgment for the defendants, and a later grant of summary judgment on all of the remaining claims.

The plaintiff was prescribed the defendants’ drug to treat her rheumatoid arthritis. She took the drug for nearly six years then suffered a perforated bowel and a diverticulitis infection, for which she underwent multiple surgeries.  She sued the drug’s manufacturers, asserting all of the usual claims. In 2014, the district court granted summary judgment on the plaintiff’s failure-to-warn claims, holding that Florida’s learned intermediary doctrine precluded the claims.  Later, when the plaintiff’s expert disclosures revealed her sloppy omissions — although she identified five treating physicians she intended to use as non-retained experts, she had no expert to testify to general or specific causation — the defendants moved for summary judgment on the plaintiff’s remaining claims.  In 2017, the district court granted the defendants’ motion.

On appeal, the plaintiff did not dispute or even address the 2017 summary judgment order. Instead, she argued that the 2014 dismissal of her warnings claims was improper because there were factual issues “regarding the district court’s treatment of [her prescriber] as a learned intermediary.” Small, 2018 WL 501354 at *2.  She also argued that “the district court incorrectly decided that the direct ‘patient labeling requirement’ in the FDA medication guidelines did not preempt Florida’s learned intermediary doctrine.” Id.

With respect to the prescriber-as-learned-intermediary argument, the court explained that the plaintiff’s prescribing physician had 22 years of experience in rheumatology and “intentionally selected [the drug] for [the plaintiff], despite the risk of possible infections, because other forms of rheumatoid arthritis therapy had failed.” Id. What’s more, the prescriber was involved in clinical trials with the drug, and the plaintiff was a participant, giving the prescriber “more reason to know of and discuss possible side-effects or concerns” associated with the drug.” Id. The prescriber “knew that infections were possible but prescribed the drug anyway . . . because the benefits outweighed the risks.” Id. As such, because “the prescribing physician had substantially the same knowledge as an adequate warning from the manufacturer should have communicated,” the plaintiff could not prove warnings causation and her warnings claims failed as a matter of law. Id. (internal punctuation and citation omitted).   In other words, “the failure of the manufacturer to provide the physician with an adequate warning . . . is not the proximate cause of a patient’s injury if the prescribing physician had independent knowledge of the risk that the adequate warning should have communicated.” Id. (citation omitted).

Next, the plaintiff argued that Florida’s learned intermediary doctrine was preempted by the FDA’s requirement that the manufacturers provide patients with a “medication guide” for the drug. The court emphasized that “the historic police powers of the State [were] not superseded unless that was the clear and manifest purpose of Congress.” Id. at *3 (internal punctuation and citation omitted).   To discern such “clear and manifest purpose” in cases of implied preemption, the court explained that it considered “the promulgating agency’s contemporaneous explanation of its objectives as well as the agency’s current views of the regulation’s preemptive effect.” Id. (internal punctuation and citation omitted).

In the case of the medication guide regulation, the FDA had specifically addressed concerns that the regulation would alter the framework for manufacturers’ liability by abrogating the learned intermediary doctrine.  In response, the agency stated that “the written patient medication information provided did not alter the duty, or set the standard of care for, manufacturers [or] physicians . . . .” Id. (citation omitted).   Given this “contemporaneous explanation” from the FDA, coupled with the reality that “courts have not recognized an exception to the learned intermediary defense in situations where the FDA has required patient labeling . . . ,” the court held that there was no preemption.  We love this holding, and we believe this is the first time that an appellate court has so held.

No preemption, no warnings causation – summary judgment on warnings claims affirmed. And, because the plaintiff did not address her inexplicable failure to identify causation experts, the court held that she had waived any appeal of the 2017 summary judgment order.   Case (tidily) dismissed, in a no-nonsense decision we like very much.  We’ll let you know if we are similarly pleased by this year’s Oscars.

Discovery regarding expert witnesses can be tricky.  In our neck of the woods, the great Commonwealth of Pennsylvania, state courts almost never permit depositions of experts.  If you want to ask the expert questions – and you will – you must wait until trial.  The flip side of that restriction is that expert reports in Pennsylvania must really and truly and completely disclose the expert’s opinion.  If an expert at trial strays a millimeter past the four corners of the expert report, the court will shut such testimony down.  By contrast, in most court systems, including the federal system, discovery regarding expert witnesses is extensive, and the deposition of the other side’s expert is usually one of the most consequential moments in the litigation.

 

Mind you, we are talking about testifying experts.  Parties can retain experts who will testify at trial, but they can also retain experts who serve purely as consultants.  Those consulting experts work behind the scenes, furnishing facts and ideas.  They might, for example, help us prepare to depose the other side’s experts.  These consulting experts are usually not subjected to the discovery maw. 

 

But what if an expert transforms from consultant to testifier in the course of a litigation?  What and how much is discoverable?  That interesting scenario arose in In Re: Abilify (Aripiprazole) Prods. Liab. Litig.,  2017 U.S. Dist. LEXIS 73847 (N.D. Fla. May 15, 2017).  The plaintiff lawyers talked to an expert “informally,” then later retained him.  That expert had conducted research, resulting in an article, upon which the plaintiffs then relied.  The defendants sought to depose that expert about the article, including whether the plaintiff lawyers influenced the study.  The defense did not want the plaintiffs’ expert to point proudly to a peer reviewed study if the plaintiff lawyers had done as much reviewing as the peers.   

 

As you can imagine, the plaintiff lawyers resisted.  They argued that questions about the inputs into the article would have a chilling effect on scientific research.   The plaintiffs object to any discovery into communications between the expert and plaintiffs’ counsel because Fed. R. Civ. P. 26(b)(4)(D) protects informal consultation with experts: “Ordinarily, a party may not, by interrogatories or deposition discovery facts known or opinions held by an expert who has been retained or specially employed by another party in anticipation of litigation or to prepare for trial and who is not expected to be called as a witness at trial”  except on a “showing [of] exceptional circumstances under which it is impracticable for the party to obtain facts or opinions on the same subject by other means.”  The plaintiffs also objected because communications with the expert were protected opinion work product under Fed. R. Civ. P. 26(b)(3): the court “must protect against disclosure of mental impressions, conclusions, opinions, or legal theories of a party’s attorney or other representative concerning the litigation.”   

 

The court allowed some discovery, but within limits.  The court held that the defendants could question the expert about the plaintiffs’ influence on the study, as it is an aspect of bias.  Even if the influence occurred during the “informal” consultant period, it was fair game.  Thus, the defendants were permitted to inquire whether the expert “made any changes to the timing, methodology, or other relevant aspect of the study following communications with Plaintiffs’ counsel.”  Further, to the extent that the expert “initiated contact with Plaintiffs’ counsel, Defendants are free to inquire into his motive and the timing of such contact.”  But the court also held that the defendants could not inquire into work product (“regarding any opinions or case strategies shared by Plaintiffs’ counsel, or any other inquiries made by plaintiffs’ counsel that related to the preparation of their case”) unless the deposition established that the plaintiffs influenced the conduct of the study.  If evidence of the plaintiffs’ lawyers inputs into the study surfaces during the deposition, the parties would need to contact the Judge to determine whether a waiver of work product had taken place. 

 

This case is not really a ‘win’ for plaintiffs or defendants, because the court’s decision threads the needle fairly carefully, and because, considering the rule from an ex ante perspective, both plaintiffs and defendants might retain consulting experts who later become testifiers.  Rather, the case represents an unusual, but not impossible, situation where both sides must be especially careful.

 

 

No one can be all that happy with how the Accutane mass tort proceeding has played out in New Jersey. We have no involvement in that proceeding, but we have monitored it from afar, and it has been extraordinarily contentious.  The rub is that the parties have very little to show for the effort.  The latest shoe dropped last week when the New Jersey Appellate Division vacated (again) a jury verdict in favor of an Accutane plaintiff.  The unpublished opinion in McCarrell v. Hoffmann-La Roche, Inc., No. A-4481-12T1, 2017 WL 1683187 (N.J. App. Div. May 2, 2017), is interesting, both in its treatment of expert opinion and evidence on causation under Alabama law.

But before we get to that, let’s review very briefly what has come before. When plaintiffs first started suing in earnest over Accutane, they alleged a variety of injuries, including psychiatric conditions, birth defects, kidney disorders, vision problems, and musculoskeletal problems.  There has been some litigation on these issues, but the proceedings in New Jersey and elsewhere have focused largely on gastrointestinal disease, including inflammatory bowel disease.  IBD can be every bit as bad as the name makes it sound, and we can see why patients who experience IBD can garner substantial sympathy.  But the warnings on gastrointestinal disorders are robust, and a federal court in Florida ruled in 2012 and 2013 that the Accutane warnings as to IBD were adequate as a matter of law.

But not in New Jersey, where several cases have proceeded to trial. We have not surveyed the New Jersey verdicts lately, but the last time we did, we counted about half a dozen verdicts—all of which were vacated, with others pending on appeal.  There certainly are others that we are not counting here, but the trend is unmistakable:  Multiple trials presided over by a New Jersey mass tort judge who was championed by some as a hard-working jurist and vilified by others for placing a thumb firmly on one side of the scale.  Substantial verdicts in favor of the plaintiffs.  All of them vacated.  In the mass tort context, vacated verdicts represent a massive waste of both sides’ time and money.

Which is what happened again last week in McCarrell.  The case was first tried to a jury in 2007, resulting in a verdict for the plaintiff.  But the Appellate Division vacated that award and remanded for a new trial because of erroneous evidentiary rulings. McCarrell, 2017 WL 1683187, at *1.  The parties therefore tried the case again in 2010, which resulted in a larger verdict for the plaintiff.  On appeal from the second verdict, the Appellate Division reversed again and held that the claims were time barred.  But the New Jersey Supreme Court disagreed and remanded the case back to the Appellate Division to address the remaining issues on appeal. Id. at **1-2

That remand resulted in last week’s opinion, and the Appellate Division reversed again.  First, the trial judge ordered that it would not allow duplicate expert testimony.  As a result, the defense had its expert gastroenterologist address certain studies, but was prohibited from having an epidemiologist corroborate that testimony. Id. at *2.  The rubber hit the road in closing argument when plaintiff’s counsel emphasized to the jury that the defense gastroenterologist’s opinion stood alone.  That was a problem, particularly once the Appellate Division ruled in 2013 that “trial courts should not prohibit overlapping expert testimony in complex matters on a ‘central issue of liability.’” Id. at *2 (citing McLean v. Liberty Health System, 430 N.J. Super. 156 (App. Div. 2013)).  Under that ruling, the trial judge’s decision to disallow overlapping expert testimony about scientific studies was error. Id. at *3.  And in light of counsel’s emphasis in closing on the defendants’ expert as a “lone outlier,” the error was prejudicial.

Second, the court held that the plaintiff had not met his burden of proving causation. This was a failure-to-warn case, but no one asked the prescribing physician whether her decision to prescribe Accutane would have been different if the drug had come with a stronger warning. Id. at *4.  Regular readers of the blog know this is warnings causation 101, and because the plaintiff bears the burden of proof under the applicable law (Alabama in this case), the absence of this essential evidence caused his warnings-based claims to fail as a matter of law. Id. We agree wholeheartedly with this ruling, although we are somewhat puzzled that the Appellate Division suggested going out and deposing the doctor again.  Sure, the doctor was deposed in 2007, but the burden of proving warning causation is not obscure now and was not obscure then.  It is not obvious to us that a second bite at the apple is warranted, nor do we know if the prescriber can even be re-deposed, after another decade has passed.

So what do we mean when we say that no one can be happy with this? The opinion gives parties on both sides more leeway in presenting expert testimony, and we have guidance on proving failure to warn under Alabama law.  But in the larger scheme, this case is apparently heading for a third trial, having first b een tried ten years ago.  Other verdicts from New Jersey have met the same fate.  Plaintiffs are left empty handed, and the defendants continue to bear the burden of vigorous litigation in New Jersey, whereas the federal MDL wrapped up in the defendants’ favor years ago.  In the end, McCarrell is a defense win, but the cost has been high.