Imagine a conspiracy so vast that it includes not only your usual plaintiff-side fantasy of the FDA conspiring with a drug company, but also high FDA officials, President Obama, Robert Mercer (noted Trump supporter and reputed Breitbart financier), a number of other investors, and just for good measure President and Hillary Clinton.

Larry Klaman could, and thus brought the lawsuit that recently resulted in Aston v. Johnson & Johnson, ___ F. Supp.3d ___, 2017 WL 1214399 (D.D.C. March 31, 2017).

Nobody else did, though.

In particular, and fortunately for everyone on the defense side, the judge in Aston could not.  Reading the Aston opinion, it is evident that the court is beyond skeptical of the vast, or even half-vast, conspiracy claims.  In a nutshell, five plaintiffs who claimed a great many personal injuries (the opinion lists 74 separate alleged injuries, 2017 WL 1214399, at *1) from their use of the drug Levaquin, brought suit alleging that the drug’s manufacturer and the FDA were in cahoots to cover up the drug’s risks, in order to increase the value of the manufacturer’s stock, to the advantage of various investors.  As for the political officials, according to the opinion:

Amazingly, former presidents Barack Obama and Bill Clinton also make cameo appearances in plaintiffs’ alleged scheme, together with former Secretary of State Hillary Clinton, and the Clinton Foundation; these actors are alleged to have solicited, or received, “gratuities” from defendants in exchange for securing [another alleged conspirator’s] appointment as FDA Commissioner.

Id. at *2.  We admit, this is an extreme oversimplification – the opinion took two Westlaw pages just to sort through the Aston plaintiffs’ labyrinthine conspiracy allegations.

Plaintiffs’ legal theories were almost as numerous as their injury allegations – twenty-two counts, including RICO, state-law (Arizona (?)) RICO, strict product liability, negligence, fraud, express and implied warranty, unjust enrichment, Lanham Act, and a bunch of state consumer fraud claims (D.C., New York, Maryland, Pennsylvania, Illinois, Arizona, and California). Id. at *3.

Aston threw everything out on the many defendants’ motions to dismiss. The half-vast conspiracy, and all its subsidiary theories of liability went down in a hail of defense-friendly rulings, and that’s why – aside from its humor value – the Aston opinion is well worth reading.  We’ll list the rulings so our readers will have an idea of what this goodie basket contains.

RICO – The deficiency in the RICO counts was rather basic. RICO does not allow recovery for personal injuries.  “The overwhelming weight of authority discussing the RICO standing issue holds that the ‘business or property’ language of Section 1964(c) does not encompass personal injuries.” Aston, 2017 WL 1214399, at *4 (citation and quotation marks omitted).  For a compilation of that authority, see Bexis’ Book, §2.15, footnote 3.  Further, “as plaintiffs’ counsel is well aware, courts in this District and elsewhere have consistently rejected the argument that pecuniary losses derivative of personal injuries are injuries to ‘business or property’ cognizable under RICO.”  Aston, 2017 WL 1214399, at *4 (citing, inter alia, Klayman v. Obama, 125 F. Supp.3d 67, 88 (D.D.C. 2015)).  Aston also distinguishes “tobacco litigation [RICO] precedents” because those cases arose from a federal prosecution that was not limited by the “business or property” requirements of RICO’s private cause of action.  2017 WL 1214399, at *5.

Nor did the Aston plaintiffs satisfy RICO’s causation requirements – for another very basic reason.  Even the most recent of the five plaintiffs’ injuries arose before the conspirators allegedly acted:

Barring some sort of temporal paradox, there is no way that suppression of an FDA report in 2013 could have caused plaintiffs to be injured in 2012 or earlier.  Because plaintiffs’ allegations, taken as true, are insufficient to establish proximate causation, their federal RICO counts must be dismissed.

Id. (citing H.G. Wells, The Time Machine, 22–23 (1895)) (other citation omitted).  On this basis alone, we’re rooting for the defendants to obtain recovery of their counsel fees, since the underlying premise of the entire litigation was physically impossible.

Arizona RICO – Same basis:  “[P]laintiffs have failed to plead facts that make possible − let alone plausible − the conclusion that the alleged cover up by defendants was the proximate cause of plaintiffs’ injuries.”  Id. at *6.  Unfortunately, the relatively terse dismissal of does not answer the burning question − Why Arizona?

Lanham Act – Another fundamental basis for dismissal.  “[T]o come within the zone of interests in a suit for false advertising under [the Lanham Act], a plaintiff must allege an injury to a commercial interest in reputation or sales.”  Id. (quoting Lexmark International, Inc. v. Static Control Components, Inc., 134 S. Ct. 1377, 1390 (2014) (emphasis original in Aston).

Now comes the most useful stuff – dismissal of the common-law claims.  For the record, Aston applies the law of the District of Columbia rather than the law of the plaintiffs’ (Maryland, Pennsylvania, Arizona, Illinois, California) or defendants’ (New Jersey) domiciles.  Aston, 2017 WL 1214399, at *6.

Product Liability (both strict liability and negligence) – Manufacturing defect is TwIqballed.  For all its factual prolixity, the Aston complaint was utterly devoid of any allegations that the drug wasn’t made precisely as intended.  Id. at *7 (“for all these recitals of the term ‘manufacture’ and its derivatives, plaintiffs plead no facts that would appear to relate to manufacturing defects”) (citation and quotation marks omitted).

Warning related claims were also dismissed, in a usefully rigorous application of TwIqbal.  Dismissal in Aston occurred because plaintiffs failed to plead:  (1) “the contents of the warning label” when the drug was taken (2) “how the contents of the label were inadequate,” (3) “the timing of each plaintiffs use of” the drug, including “when each individual plaintiff was prescribed,” (4) “the onset of [plaintiffs’] injuries,” (5) “how the alleged distinctions in the warnings would have had a causal effect,” (6) “what injuries each individual plaintiff experienced,” (7) “why [plaintiffs] think [the drug] was the cause of the[ir] injuries,” and (8) “why [plaintiffs] think inadequate warnings contributed to their injuries.”  Id. (various quotations omitted).  That’s a spicy TwIqbal – without even having to get into the learned intermediary rule.

As to warnings, we also note that the court held that all warnings publicly available on the FDA’s website are subject to judicial notice.  Id. at *2 n.1.

Design defect claims were preempted under Mutual Pharmaceutical Co. v. Bartlett, 133 S.Ct. 2466 (2013), and Aston rejected the well-worn plaintiff argument that, for some reason, implied preemption is different in generic, as opposed to branded (as in Aston) drugs:

Plaintiffs are mistaken.  [Bartlett] expressly found that “[o]nce a drug − whether generic or brand-name − is approved, the manufacturer is prohibited from making any major changes to [its formulation]” by federal law.  133 S. Ct. at 2471.  Thus, even though [Bartlett] arose from a state-law design-defect claim against a manufacturer of a generic drug, its holding applies to both types of drugs, and plaintiffs’ design-defect claim must be dismissed.

Aston, 2017 WL 1214399, at *8. Preemption is “fully consistent with the well-established tort law principle, ‘especially common in the field of drugs,’ that an unavoidably unsafe product is ‘not defective, nor is it unreasonably dangerous’ where it is ‘properly prepared, and accompanied by proper directions and warning.’”  Id. at *8 n.7 (quoting Restatement (Second) of Torts §402A, comment k (1965)).

Fraud/Misrepresentation – Perhaps predictably, plaintiffs’ fraud-based claims failed under Fed. R. Civ. P. 9(b).  Id.  Allegations broadly “span[ning] the more than twenty-year period” alleged could not possibly allow defendants to file a response.  Id.  Plaintiffs “do not even specify which corporate entity they believe was responsible.”  Id.  Nor did any of the five plaintiffs allege their own circumstances with the required specificity.  Id.  “In sum, plaintiffs fall woefully short of pleading any specific allegations that would support a claim of fraud or misrepresentation.”  Id.

Warranty – Again, perhaps predictably, plaintiffs’ express warranty claims failed for not “plead[ing] any express promises.”  Id. at *9.  Here, Aston made another good TwIqbal ruling:

[T]o state a claim for breach of express warranty in cases involving prescription drugs, Plaintiffs must allege facts demonstrating that Defendants’ affirmations formed the basis of the bargain, i.e., facts regarding how the warranties were made to Plaintiff’s physician, and that Plaintiff’s specific physician relied on them.

Id. (citations and quotation marks omitted).  Implied warranty claims “cannot be independently maintained in a case involving prescription drugs.”  Id.

Unjust Enrichment – As against the investor defendants, merely “earn[ing] profits” from allegedly more valuable stock was “far too remote and speculative to support an unjust enrichment claim.”  Id. at *9.  As against the drug manufacturer defendants, the plaintiffs did not allege “that they conferred a benefit” on those defendants.  Id. at *10 (emphasis original).

[Plaintiffs] do[] not allege that [they] paid any money for [the drug], rather than relying on an insurer, as most patients do.  This omission is significant because there is no authority demonstrating that benefits received from third-parties can be the proper subject of an unjust enrichment claim.

Id. “Because plaintiffs have not pleaded any facts showing that they paid for [the drug], I must dismiss their unjust enrichment claim.”  Id.

Obamacare to the rescue.

Readers should remember this point; we don’t remember ever seeing an individual (as opposed to TPP) unjust enrichment claim that contains the allegations – personal, as opposed to third party payer – required by Aston and the precedent it follows.

Consumer Fraud Claims

Seven states’ laws were implicated − D.C., New York, Maryland, Pennsylvania, Illinois, Arizona, and California. “Each count fails to state a claim.” Id.

Six of the states (all but Arizona) did not recognize consumer fraud claims involving prescription drugs.  Some states’ statutes did not allow personal injury damages (Pennsylvania, California, D.C.).  Others did not consider prescription drugs to be “consumer” goods (Maryland, New York).  Still other statutes simply had been held inapplicable to prescription drugs (California, Pennsylvania, Illinois).  Id.  Beyond that, all of the consumer fraud claims were dismissed as inadequately pleaded under Rule 9(b), which Aston applied to all consumer fraud claims.  Id. at *11.  In prescription drug cases, Rule 9(b) required specific pleading of prescriber reliance:

[T]he circumstances of those prescription decisions, and plaintiffs’ reliance on them, are particularly important − yet plaintiffs allege no information about them. The absence of detail about Plaintiffs experiences leads to the conclusion that Plaintiffs have not pleaded these claims with the requisite particularity.

Id. (citations and quotation marks omitted).

Finally, none of the plaintiffs resided in D.C. or New York.  Thus, claims under those two states’ consumer fraud statutes were also “dismissed because neither statute applies extraterritorially.”  Id. at *10 n.9.  We’ve always been interested in extraterritoriality.

So that’s Aston for you – an example of really poor facts (for the plaintiffs) making some quite excellent law for our side of the “v.”  Our only quibble with Aston is grammatical – in a couple of places, “principle” is used where “principal” is meant.  Id. at *2 (“principle role”); *6 (“principle place of business”).  But apart from a law clerk needing to repeat fifth grade English, the legal rulings in Aston are truly vast, and not half-vast at all.  In Ashton all too many defendants were made to spend all too much money to hire all too many of us lawyers.  With Aston now dismissed in its entirety, we certainly hope that all the defendants so inconvenienced seek to recover their fees as a sanction against such frivolous litigation.

The very name “intellectual property law” suggests it’s not for us.  There are episodes of The Simpsons that seem too complicated for our pretty little heads.  Anything deemed “intellectual” scares us away.  We usually race right past the intellectual property section of Lexology, as those cases are seldom relevant to our practice.

Except sometimes they are.  Innovative Health Solutions, Inc. v. DyAnsys, Inc., 2015 WL 2398931(N.D. Cal. May 19, 2015), is a Lanham Act/unfair competition case, but it makes a respectful nod in the direction of one of our favorite Supreme Court cases, Buckman, so we will make a respectful nod in its direction today.  The plaintiff, Innovative Health Solutions (IHS) sells a medical device called P-STIM.  According to IHS’s second amended complaint (the SAC), the defendants include a California corporation “engaged in a business that competes with IHS and which … has passed itself off as the source of P-STIM, and has deliberately endangered and continues to endanger patients throughout the United States by distributing and selling an Indian-made medical device that is not approved by, and has never been approved by, the FDA and for which the FDA has issued an import alert preventing its importation into the United States.”  There is some fine, fiery rhetoric in that allegation, and it gives you an idea of the high quality of lawyering in this case.  From what we can tell, it appears that both sides have exceptionally good lawyers.

The legal theories behind the claims focused on the federal Lanham Act as well as various provisions of California’s Bus. & Prof. Code, mostly involving allegations of unfair business practices, false advertising, etc.  The plaintiff alleged that the defendants did not have FDA clearance to sell the “knockoff” P-STIM devices, that the defendants misrepresented to the public that their product was cleared under the same FDA 510(k) number assigned to IHS’s P-STIM medical device, and that the defendants “otherwise misbranded their product in violation of federal regulations.”  The issue is whether the plaintiffs were alleging that the defendant had lied to the public or the FDA.  Presumably, the plaintiffs wanted to get the benefit of both allegations.  But not all of those allegations could make it through the Buckman sieve.  There is also another interesting regulatory angle in the case.  According to the SAC, in May 2014, the defendants appeared before the Centers for Medicare and Medicaid Systems (“CMS”) and “falsely claim[ed] standing as the ‘manufacturer’ and seller of the P-STIM medical device.”

The defendants move to dismiss the plaintiff’s claims on several grounds.  One was that IHS could not bring its claims on
its own, because the trademark owner and other licensees were necessary parties. The issue of party joinder is not wholly foreign to what we do, though usually we are issuing a Jeremiad against fraudulent joinder.  But in the IHS case the joinder issue did not go very far.  The court held that joinder of the absent parties was not warranted.  That decision turned on fact-specific issues that made our eyes glaze over.  If you want to explore them, read the opinion.  As for us, we will head to the main event in the case, the preemption defense. It turns out that some of the claims were preempted and some were not.  The court drew the line in a way that is hard to fault.

The defendant contended that the Lanham Act and state law claims should be dismissed to the extent they were based upon the defendants’ alleged misuse of an FDA clearance number or violations of the Federal Food, Drug and Cosmetic Act (“FDCA”).  The court concluded that to the extent the plaintiff alleged that the defendants falsely represented that they obtained FDA approval for their products, those claims are not precluded or preempted.  That alleged fraud was directed at the public, not the FDA.  But the SAC said a few other things, as well.  Amended complaints always do.  Here, the SAC also contained allegations that the defendants’ P-STIM device: (i) “undercuts the FDA regulatory framework,” (ii) is “unsafe and hazardous,” (iii) is “mislabeled,” (iv) is “ineffective,” (v) contains “numerous health risks,” and (vi) endangers patients and the consuming public.

The court recognized that Buckman “leaves no doubt that it is the federal Government rather than private litigants who are authorized to file suit for noncompliance with the medical device provisions [of the FDCA].”  Buckman would preempt any state law claims alleging that the defendant duped the FDA.  Federal claims, such as those under the Lanham Act, would not technically be preempted, but they would still be precluded.  The plaintiff apparently did not put up much of a fight on this issue, making it relatively easy for the court to grant the defendants’ motion to dismiss those causes of action that smelled like fraud on the FDA. While the court was in a granting mood, it also granted the plaintiff leave to amend to clarify the nature and scope of its claims.  Thus, it is hard to predict how this case will turn out and, given the subject matter, it is not inevitable that we will pay attention all that closely to its subsequent meanderings.  But it is always nice when a court takes Buckman seriously.

The defendants also mounted another defense – one that we do not often see in our neck of the jurisprudential woods.  The defendants argued that IHS’s claims should be dismissed to the extent that they are based upon the defendants’ petitioning of CMS and related communications with the government agency, as these are constitutionally-protected activities.

That is the Noerr-Pennington doctrine.  That doctrine originally arose in the context of an antitrust case, but it is not limited thereto.  The Noerr-Pennington doctrine is grounded on the first amendment rights of free speech and petitioning the government.  There is a “sham” exception to the Noerr-Pennington doctrine.  The court held that the defendants’ petitioning of the CMS was a constitutionally-protected activity because the defendants were seeking relief from a government agency.  The court further held that the plaintiff had not shown that the defendants’ petitioning constituted a sham: it did “not appear that plaintiff could allege that defendants’ petitioning of CMS and related communications were objectively baseless.”

We’re not saying that any and every drug and device law defendant could “knock-off” these Buckman and Noerr-Pennington arguments, but one does not need to be an intellectual to see how they will be useful in more than a few of our cases.

Although the Supreme Court’s recent decision in POM Wonderful, which we blogged about here, didn’t involve preemption, we were worried that, at least in Lanham Act cases, it might erode the protection afforded prescription medical products (POM was a food case) by 21 C.F.R. §337(a), granting exclusive enforcement authority to the FDA.

After the first post-POM Lanham Act decision, Catheter Connections, Inc., v. Ivera Medical Corp., 2014 WL 3536573 (D. Utah July 17, 2014), all we can say is “so far so good.”  A lot of Catheter Connections concerned claims that only affected the “attractiveness” of the defendant’s product in the marketplace (the Lanham Act does not allow recovery for personal injury; it applies solely to commercial competitors), but one claim did more than that.  It challenged the FDA’s approval of the product.  That kind of private enforcement attempt concerns us, no matter what the source.

Continue Reading POM Doesn’t Seem to Have Changed Much

Today the United States Supreme Court ruled in POM Wonderful v. Coca-Cola Co., No. 12-761, slip op. (U.S. June 12, 2014), that at least in food cases – where “the FDA does not preapprove [product] labels,” id. at 5 – the FDA’s food regulations do not preclude competitor lawsuits under another federal statute, the Lanham Act.  The opinion (by Justice Kennedy) was unanimous.

We’re mostly interested in prescription medical products, and in preemption of state product liability litigation, so what does POM mean for our clients?  Not a whole lot, at least directly.  The Court made sure, right off the bat, to explain what POM was not.  Here’s the second paragraph of the legal analysis portion (Part II) of POM:

First, this is not a pre-emption case.  In pre-emption cases, the question is whether state law is pre-empted by a federal statute, or in some instances, a federal agency action.  This case, however, concerns the alleged preclusion of a cause of action under one federal statute by the provisions of another federal statute.  So the state-federal balance does not frame the inquiry.  Because this is a preclusion case, any “presumption against pre-emption,” has no force.

POM, slip op. at 7 (citations omitted).  So anybody worried that the Court would damage the preemption arguments of either side can rest easy.  Nor is the status of the presumption against preemption changed.

Half our readership now clicks away.

Continue Reading Breaking News: No FDCA Preclusion of Lanham Act Food Cases

It’s Memorial Day weekend, and it’s time for barbeques.  While many of us will choose an alcoholic drink to enjoy during the festivities, there may be non-alcoholic drinks involved too.  Maybe a nice juice drink.  That usually means grape, apple or cranberry juice, or some combination of them.  Lately some people are even choosing pomegranate juice.  Yeah, we know, but some people are drinking it.  But when those people pick their pomegranate juice, do they always know what they’re getting? 
That’s what the plaintiff complained about in Pom Wonderful LLC, v. Coca-Cola Co., 2012 U.S. App. LEXIS 9921 (9th Cir. May 17, 2012).  The plaintiff claimed that the defendant misled consumers with the naming and labeling of its juice product, “Pomegranate Blueberry” a/k/a “Pomegranate Blueberry Flavored Blend of 5 Juices,” because the drink actually contained only 0.3% pomegranate juice and 0.2% blueberry juice, with the vast majority of the juice being apple and grape.  Id. at *2-3. 
Now, this was a business dispute.  The plaintiff was a rival juice distributor.  But it has broader implications because it addresses what can happen when two federal statutes clash. 
The plaintiff brought its claim under the Lanham Act, which broadly prohibits false advertising and authorizes a lawsuit by anyone who believes that s/he will likely be damaged by the false advertising.  Id. at *7 (citing 15 U.S.C. § 1125(a).  The FDCA, as we know, broadly regulates food and beverage labeling.  But, while the Lanham Act authorizes private plaintiff lawsuits, the FDCA does not.  It is solely enforced by the FDA.  Id. 

The plaintiff’s Lanham Act allegations at issue in the appeal were that (i) the name “Pomegranate Blueberry” misrepresented the actual contents of the drink, and (ii) the phrase “Flavored Blend of 5 Juices” was misleadingly smaller and less conspicuous than the name “Pomegranate Blueberry.”  

But FDA regulations and the FDCA itself address naming beverages, the words and statements that must or may be included in labeling, and their prominence and conspicuousness.  Id. at *11-14 (citing 21 U.S.C. §§343(f), (i); 21 C.F.R §§102.33 (c), (d)).  That’s a conflict between plaintiff’s claims under the Lanham Act and the FDCA. 
So which applies?  The court noted that courts should “try to give as much effect to both statutes as possible.”  Id. at *8 (citing Schering–Plough Healthcare Prods., Inc. v. Schwarz Pharma, Inc., 586 F.3d 500, 508 (7th Cir. 2009)).  But when it comes to the FDCA, courts have focused on the fact that Congress entrusted the FDA with enforcement, not private plaintiffs.  Under that reasoning, courts have held that the FDCA limits all sorts of Lanham Act claims:
A plaintiff may not, for example, sue under the Lanham Act to enforce the FDCA or its regulations because allowing such a suit would undermine Congress’s decision to limit enforcement of the FDCA to the federal government.  Nor may a plaintiff maintain a Lanham Act claim that would require a court originally to interpret ambiguous FDA regulations, because rendering such an interpretation would usurp the FDA’s interpretive authority.  Where the FDA has not concluded that particular conduct violates the FDCA, we have even held that a Lanham Act claim may not be pursued if the claim would require litigating whether that conduct violates the FDCA.
Id. at *8-9 (citations omitted). 
Not surprisingly, then, the court held “that the FDCA and its regulations bar pursuit of both the name and labeling aspects of [plaintiff’s] Lanham Act claim.”  Id. at *11.  The Court reasoned, properly, that Congress and the FDA have already spoken to such naming and labeling and that the FDA, not litigants and the courts, should impose any further restrictions or, if it so finds, declare defendant’s label misleading:
Congress and the FDA have . . .  considered and spoken to what content a label must bear, and the relative sizes in which the label must bear it, so as not to deceive.  . . . [T]he FDA has not (so far as we can tell) required that all words in a juice blend’s name appear on the label in the same size or that words hew to some other standard that [plaintiff] might have us impose.  If the FDA thought such a regulation were necessary . . .  it could have said so.  If the FDA believes that more should be done to prevent deception, or that [defendant’s] label misleads consumers, it can act.
Id. at *13-14 (citations omitted).
The Court finished by explaining that it is not the place of litigation to displace the expertise of the FDA:
[W]e must respect the FDA’s apparent decision not to impose the requirements urged by [plaintiff].  And we must keep in mind that we lack the FDA’s expertise in guarding against deception in the context of juice beverage labeling. In the circumstances here, “the appropriate forum for [plaintiff’s] complaints is the [FDA].”
Id. at *16. 
That is a nice way to finish.  So enjoy your Memorial Day weekend and, if you want, your Pomegranate Blueberry juice.  But know that there might be a lot of apple and grape in that drink.  Maybe a beer or mojito  is simpler.