This guest post comes courtesy of Jonathan Hoffman, a Senior Partner at MB Law Group LLP, in Portland, Oregon.  Jon, a long-time member of the Product Liability Advisory Council (“PLAC”), originally circulated a version of this post to PLAC members.  Bexis, also a long-time PLAC member, saw it, thought blog readers would be interested, and successfully importuned Jon to submit a longer version here.  Access to these kinds of alerts are one reason, among many, why we encourage drug and medical device manufactures confronted with product liability litigation to join PLAC.

As always our guest bloggers deserve 100% of the credit (and any blame) for their posts.  Onward to the Hague Convention.

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Although most drug and medical device litigation is purely among domestic individuals and defendants, many manufacturers of these products are based outside the United States or are domestic subsidiaries of overseas companies.  In recent years, the US Supreme Court has trimmed many excessive impositions of personal jurisdiction in suits brought against foreign and other non-local defendants, most recently, in BNSF Ry. Co. v. Tyrrell, No. 16-405, 2017 WL 2322834 (U.S. May 30, 2017).

[editor’s note − see our BNSF post here]

However, it may have become easier for plaintiffs to invite foreign manufacturers to the party here in the US based on the Court’s recent liberal interpretation of the Hague Service Convention, 20 U. S. T. 361, T. I. A. S. No. 6638 (1965), which governs service of process on foreign entities.  Until now, effecting service upon a defendant based in another country has been an inconvenience, if not an outright impediment.  Many US courts held that the only proper means of service under the Convention was to serve the complaint upon the “central authority” of that country, requesting that central authority to then serve the complaint upon the defendant in the manner under which service is customarily performed under that country’s laws.  The Convention also provided that the Convention “shall not interfere with—(a) the freedom to send judicial documents, by postal channels, directly to persons abroad.”  Many US courts concluded that this provision, Article 10(a) of the Convention did not authorize service of process by mail because it only referred to the right to “send” documents, not to “serve” them.

But the Supreme Court disagreed late last month.  Water Splash, Inc. v. Menon, No. 16-254, 2017 WL 2216933 (U.S. May 22, 2017), arose from a seemingly simple dispute between the manufacturer of playground equipment and a former employee.  The employee was allegedly working for one of Water Splash’s competitors while still employed by Water Splash.  Water Splash sued in Texas state court, but the former employee lived in Canada.  Water Splash served her by mail, in accordance with Texas law.  She did not appear.  The trial court entered a default judgment.  She then moved to set aside the judgment, but the court denied her motion.

The Supreme Court held that, as long as service by mail is performed in compliance with the forum’s law, Article 10(a) of the Hague Service Convention permits such service by mail on foreign defendants unless the country in which service was made has objected to this type of service.  Article 10(a) provides that the Convention will not interfere with “the freedom to send judicial documents, by postal channels, directly to persons abroad,” but does not expressly refer to “service.”  For decades, the lower courts had split over whether this provision extends to service of process or is limited to service of other documents and pleadings.  Compare, e.g., Bankston v. Toyota Motor Corp., 889 F. 2d 172, 173-74 (8th Cir. 1989) (holding that sending summons and complaint to defendant in foreign country does not constitute valid service under Hague Convention) with Brockmeyer v. May, 383 F. 3d 798, 802 (9th Cir. 2004) (holding that the meaning of “send” in Article 10(a) includes “serve.”).

The question whether the Hague Convention permits service by mail has now been answered.  The answer is a qualified “yes,” as long as such service complies with the forum’s service requirements and that the country where the defendant is located did not object to Article 10(a).  This broader acceptance of international service via mail may, by lowering procedural barriers to entry, have the unfortunate effect of haling more foreign manufacturers or foreign parent companies into US Courts.

Water Splash does not eliminate all opportunities for defendants to avoid claims brought against foreign manufacturers, however.  A variety of other remedies are still available to a foreign defendant.  Most notably, Plaintiffs may mistakenly try to extend this ruling to effect mail service on a defendant in a country that has not ratified the Convention, or that has objected to such service.  Or, the plaintiff may fail to effect mail service in compliance with forum law.  The Hague Convention does not render such service sufficient.

Moreover, even if a US Court upholds service against a foreign defendant under the US’s liberal interpretation of the Hague Service Convention, a judgment might be unenforceable in the courts of the foreign defendant’s domicile.  Foreign courts may refuse to enforce a judgment entered in the US by deciding that the American court lacked personal jurisdiction over the local defendant.  Or, in some signatory countries (most notably Japan), that did not object to the Hague Service Convention, courts may not enforce a foreign judgment where service did not comport with the Hague Service Convention by including a copy of the summons and complaint in Japanese.

More traditional errors, too, can still render mail service on foreign companies ineffective to sustain a lawsuit in the US.  For example, a plaintiff serving a foreign entity may underestimate the time required to serve that entity, even if the service is performed by mail.  If the complaint is not properly served within the time provided by the forum state’s state statute of limitations and whatever state-law tolling provision allows for relation back of service, the claim can be dismissed.  See Walker v. Armco Steel Corp., 446 U.S. 740, 750 (1980); Bancorp Leasing & Fin. Corp. v. Agusta Aviation Corp., 813 F.2d 272, 274 (9th Cir. 1987).

But in significant cases, where the stakes are high and the plaintiffs’ counsel is more competent, the Water Splash decision suggests that more foreign manufacturers may have to learn to swim in American waters.

To keep the DDL blog up and running even through the dog days of Summer, your trusted correspondents try to stagger their vacations.  Bexis recently got back from his typically Hemingway-esque adventure, and now it’s our turn.  Unlike Bexis, if we go hiking anywhere, it is more likely in pursuit of beer or chocolate, not vistas or grizzly bears.  Here are some legal clues to help you play the game of Where in the World is Stevie Mac:

  • An entity that calls itself the World Justice Project purports to rank national legal systems in terms of clarity, effectiveness, accessibility, judicial independence, absence of corruption, etc.  Their rankings place mostly Nordic countries at the top (Denmark is number 1).  Venezuela is number 102 out of 102, edging out Afghanistan for the honor of being the very worst legal system under consideration.  The United States is ranked a not-so-impressive number 19.  Folks, on our vacation, we will be walking the cobbled streets of a top 5 country.
  • Where we are headed, civil law, not case law, governs.
  • Judges are appointed civil servants with life tenure.
  • There is not much opportunity to argue forum non conveniens, but, given the other aspects of this eminently rational system, that is probably not a big deal.
  • Class actions are unheard of, though some groupings of actions are occasionally available.
  • There are no juries.
  • Repeat:  there are no juries.
  • There are no punitive damages.
  • Repeat … well, you get it.
  • Judges, not parties, determine whether expert testimony is needed.  (Thus, the opportunities for unscrupulous experts to sell their result-driven opinions are minimized.  That is kind of surprising, considering how this country is otherwise amazingly tolerant of prostitution.)
  • This country is one of the two most liberal on the planet when it comes to allowing euthanasia.  You have probably heard how some American states, such as Oregon and Vermont, are way ahead in permitting people with terminal diseases to end their lives with dignity. But our vacation destination occupies a whole other moral-legal universe when it comes to suicide.  It gives the okay to people who want to exit this vale of tears simply because they are really, really depressed.  If that were the rule in our home Commonwealth of Pennsylvania, the hearses would be constantly rolling during baseball season.  Plus, the ranks of defense hacks would be decimated after every latest high court babbling on product liability.

Given all those legal goodies in this happy land (yes- it is also top 10 in the world happiness ranking; the USA is number 15), it makes us feel feckless here for begging for punitive damages caps, reminding courts to apply Daubert, and pining for Lone Pine orders.  And even with those modest goals, we feel we
are tilting at windmills.

Anyway, those clues should be more than enough for you.  Whether or not your Summer vacation took or takes you to a venue blessed by the World Justice Project, we trust that it was or will be splendid.

We don’t know how to mind our own business.
‘Cause the whole world’s got to be just like us.
Now we are fighting a war over there
No matter who wins, you know we can’t pay the cost.

Steppenwolf, “Monster.”

Some might say that John Kay’s musical biopic of American history is as true today as it was back in 1969 – only the location of “over there” having changed. But something else changed yesterday.   The Supreme Court unanimously (albeit with diverse reasoning) cut back on the hubris reflected in the lower courts’ dramatic hyperextension of the Alien Tort statute, 28 U.S.C. §1350. See Kiobel v. Royal Dutch Petroleum Co., No. 10–1491, slip op. (U.S. April 17, 2013).

We’re the Drug and Device Law Blog. Why should we give a damn about Kiobel and the Alien Tort statute?

We care because among the hubristic applications of the Alien Tort statute has been to the overseas activities of American drug companies. Back in 2009, we blogged about Abdullahi v. Pfizer, 562 F.3d 163 (2d Cir. 2009), an absurd application of the Alien Tort statute to a Nigerian drug trial involving an investigational antibiotic drug used to treat meningitis in children. The court allowed the plaintiff to equate allegations of deviations from the study’s protocols with violations of the “law of nations.” Those purported violations were:
  • The informed consent documentation was not read aloud to the study subject.
  • The subjects or their guardians were not “alerted” to the drug’s risks and side effects (it’s an experimental drug; that’s what studies try to discover).
  • The alleged availability of alternative treatments was not disclosed.
  • The drug was administered orally even though oral absorption is difficult for sick children.
  • Failure to conduct “regular blood tests” to identify side effects that warranted switching to alternative treatments.
  • Not independently verifying whether this particular strain of meningitis was responsive to the drug before beginning the study.

    Id. at 169-70 & n.2.  While we agree that most, if not all, of these steps sound like good ideas, we hardly think that their absence equates a major drug company’s clinical trial of a potentially lifesaving product to Nazi war crimes. The court, however, had no trouble doing just that.   Id. at 177-79. Throw in broad allegations of conspiracy with the Nigerian government, and presto – foreigners allegedly injured in a foreign country can bring suit in the United States under admittedly “nonbinding” platitudes that supposedly established the “law of nations.” Id. at 181-82. We awarded Abdullahi the number two position on our bottom ten decisions for 2009.

    Not anymore.

    Kiobel brings these fantastical uses of a 1789 statute directed against piracy on the high seas to a screeching halt. The statute can no longer be used to force the “whole world” to be “just like us” – as Steppenwolf might have put it. Instead, it does not apply to activities “occurring in the territory of a foreign sovereign.” Kiobel, slip op. at 4. Rather, there’s a presumption that federal statutes are not intended to apply extraterritorially:

    [W]hen a statute gives no clear indication of an extraterritorial application, it has none, and reflects the presumption that United States law governs domestically but does not rule the world. This presumption serves to protect against unintended clashes between our laws and those of other nations.


    Id. (citations and quotation marks omitted). Hmmm. We remember blogging about  similar presumptions in the context of state consumer fraud statutes. The same general principle also prohibits states from imposing punitive damages on conduct that took place solely in other states. Kiobel will provide useful reinforcement of those other applications of the presumption against extraterritoriality.

    There wasn’t any way to rebut the presumption. Indeed, trying to do so was almost as absurd as the application of the statute in Abdullahi. The statute was passed in 1789. The Founding Fathers’ jaws would drop at the way the Alien Torts statute has been used to meddle in the affairs of, potentially, every other nation on earth.
    No nation has ever yet pretended to be the custos morum of the whole world. It is implausible to suppose that the First Congress wanted their fledgling Republic − struggling to receive international recognition − to be the first.


    Kiobel, slip op. at 12 (citations and quotation marks omitted). Back then, there were precisely three recognized “offenses against the law of nations:” piracy, violations of “safe conducts,” and infringements on the “rights of ambassadors” – and the last two didn’t necessarily involve extraterritoriality. Id. at 8.

    Thus, where “all the relevant conduct took place outside the United States,” there is no basis for allowing foreign nationals to litigate foreign claims here. Id. at 14. “Corporations are often present in many countries, and it would reach too far to say that mere corporate presence suffices.” Id.

    That’s a bright line – and a good one. If alleged foreign violations, allegedly injuring foreigners, are to be prosecuted, they should be prosecuted (as serious human rights violations already are) in international courts. The game of suing American corporations as “aiders and abettors” of the actions of the really guilty parties (although in Abdullahi any “human rights violation” worthy of the name was lacking) thus comes to an end. As John Kay might say, no more “stuffing [the statute] just like a hog.”

    Back in 2009, we named an Alien Tort Claim case, Abdullahi v. Pfizer, 562 F.3d 163 (2d Cir. 2009), to our “bottom ten” list of the worst cases of the year.   We were offended that any court would allow a pharmaceutical company to be prosecuted for irregularities in overseas clinical trials under a law meant for crimes against humanity.  We expressed hope that the Supreme Court would grant certiorari in Abdullahi and reverse, but that didn’t happen.

    Well, today the Court granted certiorari in a case that, if favorably decided, would eliminate cases like Abdullahi.  The case is Kiobel v. Royal Dutch Petroleum, 10-1491 (U.S., cert. granted Oct.17, 2011).  The question presented does not directly address our personal gripes with Abdullahi, but would get rid of all Alien Tort Claim cases against corporations on jurisdictional grounds – achieving the same result on different grounds.

    Question 2 of the Kiobel certiorari petition asks, in pertinent part:  “Whether corporations are immune from tort liability for violations of the law of nations [under the Alien Torts Claim statute].”  If the Court gives a “yes” answer (as we think it should), then cases like Abdullahi go away – and not a moment too soon.  For more on Kiobel (and the companion Mohammed v. Rajoub case raising similar questions under the Torture Victim Protection Act), see the ever-informative SCOTUSblog.

    The Alien Torts Claims Act has a laudable purpose, but like all too many things in our legal system, that purpose has been systematically distorted in recent years by plaintiffs looking for ever more ways to expand liability to ever more ridiculous lengths.  While this jurisdictional basis was not exactly the relief we were looking for when we criticized Abdullahi, we’ll take what we can get – if we can get it.

    So put this one on your watch list.

    Our first ever overseas guest post comes all the way from Thailand, where Douglas Mancill of the Deacons law firm reports on new Thai laws on product liability and their possible impact on/creation of product liability claims involving drugs and medical devices.

    Needless to say neither Bexis nor Herrmann had anything to do with the substance of this post, as neither of them knows much about Thailand beyond liking the food.

    Take it away Doug.

    Damage awards in Thailand for defective goods claims have traditionally been very low compared to the U.S., but two new laws aim to change or, at the very least, tighten this gap. On 21 February 2009, the Unsafe Product Liability Act, B.E. 2551 (the Product Liability Act) came into force. Six months earlier, in August of 2008, a procedural law which supports many of the new concepts introduced by the Product Liability Act, the Consumer Case Procedures Act, B.E. 2551 (the CCPA), came into force. These two laws, together, stand poised to materially change the tort law terrain of Thailand.

    One issue of great significance to drug and device maker is that plaintiffs in Thailand will not carry the burden of proving a product is defective. Product liability laws in the U.S. and the EU dispense with the negligence requirement and impose strict liability once a product is established to be “defective”, but the plaintiff still carries the burden of proving that a product is, in fact, defective. Not so in Thailand.

    Section 6 of the Thai Product Liability Act provides that the plaintiff only carries the burden of proving that damage was caused by a product in “ordinary use or storage”. Once a plaintiff makes this bare minimum showing, the burden shifts to “business operators” (a defined term, but for purposes of this discussion, suffice to say that it clearly covers drug and device manufacturer) to prove the product was “not unsafe”. Stated more directly without the diplomatic double negative, business operators carry the burden of proving a product was safe if an injury occurs from that product.

    This is an intentional feature of the new legal terrain created by the Product Liability Act and the CCPA. The CCPA and the Product Liability were passed at the same time by the same appointed legislative body (although the Product Liability Act did not come into force until six months later), and the CCPA contains an evidentiary burden provision which dovetails with and reinforces Section 6 of the Product Liability Act. Section 29 of the CCPA provides that if the Court believes that facts relating to “production, assembly, design or mixtures of the goods, the provision of services or other undertakings” are exclusively known by a business operator, that business operator carries the burden of proof relating to such matters. The Product Liability Act expressly recognizes design defects, meaning that a drug or device manufacturer carries the burden of proving that the design of a medical device or the formulae of a drug is safe when a product liability case is filed in a Thai Court.

    The Product Liability Act is a thin law – consisting of 16 clauses and about four pages of text – and in some ways the issues it does not address may be more significant than those that are addressed. There is, for example, no test or stated principle for determining what constitutes a defective product (e.g., the reasonable consumer test, the risk utility test) and in a civil law system where the burden is on the manufacturer to prove a product is a safe, this could be problematic, particularly for drug and medical device makers. Nor does the Act mention the learned intermediary rule.

    Although drugs and medical devices have indisputably improved the quality of our lives immensely, they can also cause very real injuries. In Thailand, this means that every time a consumer suffers an injury – perhaps, say, from a drug that otherwise saves millions of lives – she or he will have a potential product liability claim against the manufacturer of that drug or device. And more important, drug and device makers will carry the burden proving that a formula or design was safe. Complicating matters further, the law sets no standards or even provides any guidance on what constitutes a safe design. And because the principle of ratio decidendi does not exist under Thai law, even Thai Supreme Court decisions may not be able to fill this gap.

    If a business operator fails to convince a Thai court that the formula of a drug or the design of a device was safe, that determination can be used against the manufacturer in future cases by other plaintiffs pursuant to CCPA Section 30. Section 30 permits factual findings against a defendant in one case to be used against that same defendant in another case. Once the design of a drug or device is found to be defective in one case, it could be used against that same manufacturer by other plaintiffs in other cases. For Thai law, which also doesn’t have a concept of stare decisis (or class actions), this is a major change. And these findings only cut one way – new plaintiffs are not bound by prior findings that the product was safe. This means that every time a design defect claim is filed, manufacturers must aggressively defend that design lest one court decides the design was defective. A finding by one court that the formulae of a drug or the design of a medical device is defective opens up the maker of that drug or device to claims by every person who claims to have been injured by the drug or device.

    The CCPA also permits Thai Courts to issue orders requiring business operators to make announcements about and recall unsafe products. These are essentially mandatory injunctions, and because it is generally difficult to procure injunctions of any kind in Thailand (including prohibitory ones enforcing intellectual property rights), it is unclear how the courts will exercise this specific grant of power in practice.

    These problems have not gone unnoticed. A proposal to exempt drugs, medical devices and medical professionals from these laws has been put forward. You may be wondering why it includes the medical profession. While the Product Liability Act only applies to products (drugs and devices), the CCPA extends to “services”, including the services rendered by physicians, and it contains many provisions very similar to the Product Liability Act.

    Moreover, although the CCPA is not yet six months old, it has been employed very effectively in a number of cases and garnered popular support in a country not well known for US or EU safety standards. For example, an airline passenger used the CCPA to recover emotional distress damages when an airline failed to use a metal detector to screen airline passengers. The metal detector was apparently “on loan” to a local university. (Don’t ask – it doesn’t make sense to us either.) A lawyer plaintiff is now using the CCPA in a high profile case where a fire on New Year’s Eve at a popular Bangkok nightclub fire claimed 66 lives. The lawsuit essentially claims the pub was a fire trap and seeks recovery directly against 33 directors and owners of the pub. This latter aspect of this case is significant because of the alleged identity of some of those owners (say, a high official in an organization responsible for policing the pub) and because the CCPA contains a provision allowing claimants to pierce the corporate veil, something that is otherwise virtually impossible to do in Thailand. All of this, of course, has little to do with medical drugs or devices, but it does help explain the popularity of these new laws, and why proposals, at least at this time, to reduce their scope or exempt certain products might not receive a warm reception in the Land of Smiles.

    Is that title a mouthful, or what?

    On January 30, the Second Circuit decided Abdullahi v. Pfizer, No. 05-4863-cv(L), 05-6768-cv(CON), slip op. (2d Cir. Jan. 30, 2009) (link here). In a nutshell, plaintiffs pleaded that Pfizer, “working in partnership with the Nigerian government, failed to secure the informed consent” of children (or their guardians) who were enrolled in an allegedly dangerous clinical trial of the drug Trovan. The trial court dismissed the complaints for lack of subject matter jurisdiction under the Alien Tort Statute. On appeal, the Second Circuit panel majority (with Wesley, J., dissenting) held that Nigerian residents can sue a U.S. drug company under international law in a U.S. court.

    Let’s step way back.

    Suppose the Ugandan government engages in genocide. A resident of Uganda is unlikely to have much luck suing the Ugandan government in a Ugandan court for damages. The plaintiff would probably do much better if he or she could sue a private actor (rather than a government, which may have some form of sovereign immunity) in a more favorable court (let’s say, one in the United States) under a more generous legal theory (say, international law).

    Enter the Alien Tort Statute, which gives federal courts in the U.S. “original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.” 28 U.S.C. Sec. 1350.

    Presto! If our poor Ugandan can find an American company that supposedly aided the Ugandan government in violating the law of nations, then our Ugandan can present his or her claim to an American jury. That’s a switch in defendant (private actor), law (the “law of nations” instead of the law of Uganda), and forum (American jury instead of whoever the heck decides cases in Uganda) that could do a plaintiff a world of good.

    In a very narrow set of circumstances, allowing these types of claims may make good sense. But if the Alien Tort Statute is loosened from its mooring, American companies will be in a heap of trouble awfully fast.

    “As a moth is drawn to light, so is a litigant drawn to the United States.” Smith Kline & French Labs v. Bloch, 2 All E.R. 72, 74 (1983). If American courts are opened to litigants from around the world, our courts will quickly spend much of their time resolving disputes that properly belong in the courts of other countries.

    If, for example, a large American company has a factory in China, then a class of tens of thousands of Chinese plaintiffs might sue that company in an American federal court for conspiring with the Chinese government to deny the plaintiffs their political rights. It’s American-style litigation for everyone!

    That’s why the Abdullahi decision is so dangerous. When courts properly read “the law of nations” narrowly, they limit the number of claims by foreigners that can be brought in American courts. But, in Abdullahi, the Second Circuit read the “law of nations” broadly. The court found that the duty to obtain informed consent for clinical trials is not simply a matter of U.S. (or other countries’) domestic law, but rather is customary international law. To reach that conclusion, the panel majority relied on the International Covenant on Civil and Political Rights (which does not create privately enforceable rights), non-binding ethical guidelines of private organizations (which hardly constitute “the law of nations”), the Nuremberg Code (which applied only in the context of a “war crime”), and assorted other directives (all of which post-dated the 1996 clinical trial involved in the lawsuit).

    This expansive interpretation of the Alien Tort Statute is bad news for drug companies, as well as all other companies that do business internationally. Although Abdullahi arises in the context of a clinical trial (and many drug companies conduct clinical trials overseas), the case is not limited to that context. Abdullahi will surely be cited by many future foreign plaintiffs trying to obtain access to American courts and generous American juries.

    Here’s the good news: Pfizer has petitioned for a rehearing or rehearing en banc in Abdullahi and, since Judge Wesley dissented, that petition will have some support within the court. If that route fails, many justices on the U.S. Supreme Court have expressed their concerns about grafting foreign laws or the customary law of nations into causes of action that are recognized by American courts.

    Although our crystal ball is cloudy, we’re guardedly optimistic that the expansive view of the Alien Tort Statute espoused by Abdullahi will be be rejected by either the en banc Second Circuit or the U.S. Supreme Court. If that happens, we’ll be there to report on the development.

    Once upon a time, the phrase “global coordinating counsel” was a bluff. It meant that a firm was defending hundreds of cases for a client in the United States and had recently been asked to kibbitz on one little case filed in Belgium. The guys with a marketing bent seized on this opportunity, replacing the phrase “national coordinating counsel” with “global coordinating counsel” to make the role sound bigger and badder.

    That’s no longer true.

    As we’ve noted before, the world is becoming a more litigious place. Class actions are now a routine feature of Canadian law. American class actions have been exported to Australia. The EU is now considering proposals for “collective actions” of various types. With those changes, the phrase “global coordinating counsel” has taken on new meaning.

    For several decades, sophisticated defense counsel have had to have a general sense of the laws of all fifty states, which permitted them to navigate in an environment of slightly inconsistent laws.

    Today, sophisticated counsel must increasingly develop a sense of the laws of many countries, to advise clients in a changed world and to minimize the expense of truly global litigation.

    Consider just a couple of examples. When a mass tort starts in the United States, counsel is likely to oversee a massive document (and e-document) collection and review process. To minimize costs, that document review should be performed just once, for use in all later cases.

    In a global environment, that’s easier said than done. The law of attorney-client privilege, for example, is very different in the United States, Canada, and the European Union. If the junior associates (or staff attorneys, or contract lawyers) performing the privilege review when the first cases are filed are told only the American rules of privilege, then documents may be tagged in a way that’s useful domestically. But when documents must be produced in other countries, big chunks of the review process might have to be re-done to ensure that the production complies with the laws of other countries.

    So, too, for the law of trade secrets, which is not uniform around the globe.

    And the rule protecting data privacy in some countries may forbid the production of information that American lawyers would routinely produce domestically. Or those rules may forbid producing in American courts data that were generated or maintained in Europe.

    We’re not the first to notice that the world is becoming flat. But “global coordinating counsel” must take care to avoid having clients be flattened by the cost of re-doing document reviews that were first conducted only with an eye to American law.

    As we’ve said before, we don’t do Canadian law here. We posted once on that subject, about a year ago, and we were quick to confess our ignorance.

    But we were startled by what we heard about Canadian class action law at the ACI conference in New York City last month. One speaker said that, to date, no Canadian court has ever denied a motion to certify a class in a drug or device case. The accompanying course materials tell us that, in the past, “Class actions involving breast implants, diet drugs, pain medications, gastrointestinal medications, antipsychotics, cholesterol reducing drugs, pacemaker leads, tainted blood, TMJ implants, heart valves, and defibrillators, have all been certified in Canada.”

    As you would anticipate in this environment, these types of claims are becoming increasingly popular. The course materials go on to tell us that, “In the past two years, pharmaceutical and medical class actions that await a certification hearing have been commenced in Canada with respect to an ever widening range of medications and medical devices including ICD and pacemaker leads, pain medications, anti-inflammatories, children’s cold medications, purgatives, a variety of contraceptive products, more antipsychotics, bisphosphonates, antibiotics, medications for irritable bowel syndrome and restless leg syndrome, epilepsy medication, and diabetes medication.”

    That raises our question: How should a drug or device company respond to a consumer complaint about a product liability issue in Canada?

    In the United States, responding to a consumer complaint is pretty easy: If the consumer may have a point, you engage in a discussion with the consumer, perhaps agreeing to pay what that particular complaint is worth. But if the consumer is a nutcase, you reject the claim, because the claim has no value. Respectable plaintiff’s counsel wouldn’t agree to file a lawsuit, and there’s basically no chance that a court would certify a class, so you’re on pretty safe ground.

    If, in Canada, all putative classes to date have been certified, that changes the calculus. Any consumer complaint basically threatens the possibility of a certified class action. That’s a tough environment in which to operate.

    We actually asked a Canadian lawyer how Canadians handle these issues, and we didn’t find much comfort there. We were told, first, that Canadians are generally less litigious than Americans. That might be true, but we suspect that opportunistic Canadian plaintiffs’ lawyers, guaranteed that their putative classes will be certified, will be overcoming their historical reticence pretty quickly.

    We were told, second, that Canadian plaintiffs often misplead their cases, messing up the Canadian “waiver of tort” doctrine or otherwise pleading themselves out of a claim. Again, we’re not getting that warm and fuzzy feeling. Surely, over time, plaintiffs’ lawyers will figure out how to plead their claims correctly, and then the deluge will begin.

    We understand that there are a fair number of Canadian drug and device cases now approaching trial. Although most American class actions settle before trial (because defendants generally prefer not to run even a small chance of a huge loss), we hope that some Canadian company will stand firm. Perhaps an industry victory at trial will convince courts that these cases should not routinely be certified, or will show plaintiffs’ counsel that these cases are not without substantial risk.

    Otherwise, we suspect that the class action litigation environment in Canada will soon begin to resemble that of its southern neighbor.

    Oy vey, Canada.

    When American courts hand down important decisions, we try to act quickly. We link to the decisions as soon as we hear about them, and we try to publish an analytical post within 24 hours.

    That’s the life of a blogger.

    When stuff comes from Europe, we’re a little slower.

    We don’t hear about those decisions quite as quickly and, even after we read them, we’re not always sure what they mean.

    But ignorance has never stopped us before, and we won’t let it get in the way now!

    It looks to us as though two fairly important decisions came down in Europe last Fall.

    On September 17, 2007, the Court of First Instance (don’t even think of asking what that entity is; we’re bluffing here) seemingly held, in line with existing case law, that only communications between corporations and outside counsel are protected by the attorney-client privilege. Communications between corporations and their own in-house counsel are generally not privileged. Joined Cases T-125/03 and T-253/03 Akzo Nobel Chemicals and Akcros Chemicals v. Commission. In lieu of a legitimate citation (which would send us scurrying back to a Bluebook, and we’re way too old for that), here’s a link to the opinion.

    The case involved a governmental antitrust investigation. The defendants asserted attorney-client privilege. So far as we can tell, the money quotes (we assume they’re valued in euros) appear in paragraphs 166 to 169 of the opinion. The Court of Justice had previously held that privilege applies only “to the extent that the lawyer is independent, that is to say, not bound by a relationship of employment.” (Para. 166.) “It follows that the Court expressly excluded communications with in-house lawyers, that is, legal advisers bound to their clients by a relationship of employment, from protection.” (Para. 167.) The Court of First Instance therefore held “that the correspondence exchanged between a lawyer bound to Akzo Nobel by a relationship of employment and a manager of a company belonging to that group is not covered.” (Para. 169.)

    We had long been aware that the attorney-client privilege skated on thinner ice in Europe than it does in the United States. To our untrained eyes, this decision makes the ice thinner still.

    The second European news that finally sailed its way over the Atlantic is a ruling by the European Court of Justice deciding the enforceability of German advertising laws that were more stringent than a directive on the same subject issued by the European Parliament. The case is Gintec International Import-Export GmbH v. Verband Sozialer Wettbewerb eV. , Case C-374/05, and we’re again providing this link in lieu of a decent cite.

    There, the court held that the European Community Code is meant to remove barriers to trade between members. To that end, the Community Code enumerates when Member States may adopt stricter legislation than that enacted by the Community as a whole. Unless the Community creates an option for member States to impose more restrictive terms, the standard set by the Community creates both a minimum and a maximum standard. Member States may not impose limitations on pharmaceutical advertising that is more restrictive than the Community’s law.

    There will surely be disputes in the future about how that ruling by the European Court of Justice applies in particular Member States, so don’t go hog-wild with your advertising campaigns based on what we’ve written here.

    But, from where we sit, it looks as though Europe is gradually creating uniform advertising standards that will make it much easier for drug companies to do business overseas.

    We share an awful lot of our thoughts with readers of this blog. (Yeah, yeah. We heard you mutter, “Too many.”)

    But here’s one we’ve never shared: We’ve often thought that someone should write a book about class actions worldwide. Like Linda Mullenix’s treatise on class actions in state courts, the book would have one chapter devoted to the class action (or other aggregate litigation) procedures available in each country around the globe.

    We never shared that thought, because we had half a mind to actually write that book, if we ever found the time.

    We’ve seen three items recently that made us realize that the book would no longer be worth the effort.

    First, Stanford has created the Global Class Actions Clearinghouse, which contains essays and materials about class actions in many countries around the world. That’s an awfully useful resource, and we’ve created a permanent link to that site over in the right-hand column of this blog.

    So much for writing the book. We’ll just have to stick to blogging instead.

    Second, we recently stumbled across this SSRN description of Richard Nagareda’s recent article (doesn’t that guy ever put down his pen?) about the problems posed by the internationalization of class actions. Nagareda argues that the growth of class actions in individual countries will tend to recreate the difficulties seen in the context of nationwide class action litigation within the United States. That’s an interesting thought, and it seems as though people are already considering solutions to the problem that our little book would only have begun to identify.

    Finally, we noticed that the ABA is trying to design a protocol to coordinate class actions that are pending simultaneously in the United States and Canada.

    Our book may be too late, but overseas class actions have plainly come of age.