Private plaintiffs love to scream “fraud on the FDA”!  Agency fraud is their magic potion for dissolving any FDA action that they don’t like.  Just assert that the FDA was bamboozled and invite some jury somewhere to ignore what the FDA actually did.  Unfortunately for the other side, Buckman Co. v. Plaintiffs Legal Committee, 531 U.S. 341 (2001), precludes private plaintiffs from bringing such allegations bases on state tort law.  The FDCA is quite clear, in 21 U.S.C. §337(a), that only the government – not private plaintiffs – may seek to enforce the Act.

In Buckman, the Court held (unanimously), first, that “fraud-on-the-FDA claims inevitably conflict with the FDA’s responsibility to police fraud consistently with the Administration’s judgment and objectives.”  Id. at 350.  That’s rather obvious, because the logic of any agency fraud claim is that “fraud” allows a factfinder to conclude that, if not defrauded, the agency wouldn’t have done what it did.  That presents a rather raw conflict with whatever the agency actually did, which (unless revoked by the affected agency) is a federal decision presumably still in effect.

Second, in the context of the FDCA specifically, the Court recognized that Congress did not want private individuals running around purporting to enforce any of the many requirements imposed by the FDA under the Act.  That’s the §337(a) aspect:  “The FDCA 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:  ‘[A]ll such proceedings for the enforcement, or to restrain violations, of this chapter shall be by and in the name of the United States.’”  531 U.S. at 349 n.4 (quoting §337(a)). “[W]e have clear evidence that Congress intended that the MDA be enforced exclusively by the Federal Government.”  Id. at 352 (again citing §337(a)).

But Buckman involved only state-law claims and thus preemption was easily invoked to prevent both the inherent conflict and the private enforcement problems identified by the Court.  So Buckman does not directly prohibit private litigants from using a federal statute to assert purported fraud-on-the-FDA claims.  One federal statute does not preempt another.  POM Wonderful LLC v. Coca-Cola Co., 573 U.S. 102, ___, 134 S. Ct. 2228, 2236 (2014) (“the alleged preclusion of a cause of action under one federal statute by the provisions of another federal statute” “is not a pre-emption case”).  There are at least four types of federal statutes that we expect plaintiffs to use to attempt private enforcement of fraud-on-the-FDA claims:  the False Claims Act (“FCA”), the Lanham Act, RICO, and antitrust statutes.  Most of the action, particularly recently, has involved the FCA.

There are other types of wanna-be private FDCA enforcement than fraud on the FDA – that’s what POM Wonderful was about (FDA-permitted food labels that allegedly deceived the public, not the FDA) – but we’re more interested in Buckman than anything else, so we wanted to see how fraud-on-the-FDA claims specifically have fared, when asserted under these other federal statutes.

Most recently, in a FCA decision that we discussed here, the First Circuit rejected allegations that were little different, substantively, from those that had produced Buckman itself.  Plaintiff alleged that the defendant “made a series of false statements to the FDA . . ., but for which the FDA would not have approved the [product] or would have withdrawn that approval.”  United States ex rel. Nargol v. DePuy Orthopaedics, Inc., 865 F.3d 29, 31 (1st Cir. 2017).  Based on those allegations, the Nargol plaintiffs claimed the every use of the product was as false claim – without the FDA’s (allegedly fraudulently obtained) approval, “doctors would not have certified the devices for government reimbursement.”  Id.  The First Circuit held, in effect, “hell, no.” The FDA was aware of all the mud the plaintiffs threw against the wall and did not rescind its decision:

Such very strong evidence [of immateriality] becomes compelling when an agency armed with robust investigatory powers to protect public health and safety is told what Relators have to say, yet sees no reason to change its position.  In such a case, it is not plausible that the conduct of the manufacturer in securing FDA approval constituted a material falsehood capable of proximately causing the payment of a claim by the government.  Ruling otherwise would “turn the FCA into a tool with which a jury of six people could retroactively eliminate the value of FDA approval and effectively require that a product largely be withdrawn from the market even when the FDA itself sees no reason to do so.”  [T]here is no allegation that the FDA withdrew or even suspended product approval upon learning of the alleged misrepresentations.

Id. at 35 (citations omitted).  Thus, “the FDA was paying attention,” but the Agency “viewed the information . . . differently than [plaintiffs] do.”  Id.

The government, having heard what [plaintiffs] had to say, was still paying claims not because of what was said to or by the doctors, but because the government through the FDA affirmatively deemed the product safe and effective.  And, absent some action by the FDA, we can see no plausible way to prove to a jury that FDA approval was fraudulently procured.

Id. at 36.  So, rather than preemption, Nargol disposed of fraud on the FDA-based FCA claims on materiality grounds, as long as the FDA (as is 95%+ the case) did not act on the purported fraud.  That’s basically Buckman modified by that decision’s two-justice concurrence that a different result might occur had the FDA itself found fraud.  531 U.S. at 353-55 (Stevens & Thomas, JJ. concurring).

The omitted citations in our quote from Nargol were to an earlier First Circuit decision that reached a similar result, D’Agostino v. ev3, Inc., 845 F.3d 1 (1st Cir. 2016).  In D’Agostino (which we previously discussed here), the First Circuit saw FCA-based fraud-on-the-FDA claims for what they really were, an attempt to hijack the FCA and turn it into a vehicle for second-guessing FDA decisions:

To rule otherwise would be to turn the FCA into a tool with which a jury of six people could retroactively eliminate the value of FDA approval and effectively require that a product largely be withdrawn from the market even when the FDA itself sees no reason to do so.  The FCA exists to protect the government from paying fraudulent claims, not to second-guess agencies’ judgments about whether to rescind regulatory rulings.

Id. at 8 (citation omitted).  Thus, the same policy reasons the Supreme Court gave for preemption in Buckman all counseled against recognizing agency fraud claims under a federal statute:

The collateral effects of allowing juries in qui tam actions to find causation by determining the judgment of the FDA when the FDA itself has not spoken are akin to those practical effects that counsel in favor of not allowing state-law fraud-on-the-FDA claims.  See Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341, 349-51 (2001).  If jurors in a single qui tam case could determine precisely what representations were essential to approval, which experts to believe, and how the FDA interpreted submissions made to it, some potential applicants who would otherwise seek approval for new products might be deterred, others might swamp the FDA with more data than it wants, and the “FDA’s responsibility to police fraud consistently with the Administration’s judgment and objectives” might be undercut.  Id. at 350.

Id. at 8-9.

Additionally, as already mentioned in connection with Nargol, the D’Agostino decision also relied upon the “demanding” materiality standard for “implied certification” FCA claims.  Id. at 7.  That agency fraud supposedly “could have” influenced FDA approval wasn’t enough.  “[C]ould have . . . falls short of pleading a causal link between the representations made to the FDA and the [false claim] payments.”  Id.

If the representations did not actually cause the FDA to grant approval it otherwise would not have granted, [the government] would still have paid the claims. In this respect, [relator’s] fraudulent inducement theory is like a kick shot in billiards where the cue ball “could have” but did not in fact bounce off the rail, much less hit the targeted ball.

Id.  Moreover, the D’Agostino fraud-on-the-FDA allegations failed for lack of causation.  If the FDA’s response to the fraud allegations is “doesn’t impress me much,” and the FDA thus doesn’t rescind its decision, then causation is impossible – and that’s what happened in D’Agostino:

In the six years since [relator] surfaced the alleged fraud, the FDA has apparently demanded neither recall nor relabeling of [the product] − this notwithstanding the agency’s [list of enforcement options].  The FDA’s failure actually to withdraw its approval . . . in the face of [plaintiff’s] allegations precludes [plaintiff] from resting his claims on a contention that the FDA’s approval was fraudulently obtained.

Id. at 8.  “[C]ausation is an element of the fraudulent inducement claims [plaintiff] alleges and . . . the absence of official action by the FDA establishing such causation leaves a fatal gap.”  Id. at 9.

In Southeast Laborers Health & Welfare Fund v. Bayer Corp., 444 F. Appx. 401, 410 n.2 (11th Cir. 2011), the court held that plaintiffs could not pursue a fraud on the FDA-based RICO causation theory.  However, the court’s discussion of RICO simply referred back to its prior discussion of why a similar state-law claim could not survive:

A theory of causation relying solely on an allegation that the medication in question would not have been on the market absent the alleged fraudulent conduct is no more than a state law “fraud on the FDA” theory, a theory that has been specifically rejected by the Supreme Court. . . .  Accordingly, [our prior decision] could not have implicitly approved of a state law “fraud on the FDA” theory of causation . . . whereby a third-party payor is permitted to state a causal nexus between the alleged fraudulent conduct and the payor’s ascertainable loss by simply asserting that absent the allegedly fraudulent conduct, the FDA would not have approved the medication to be on the market.

Id. at 407 (Buckman discussion omitted).

Those are all the appellate cases having anything to do with agency fraud that cite Buckman in the same paragraph as one of the four federal statutes we earlier identified.  As for district courts, United States ex rel. v. Medtronic, Inc., 2017 WL 4023092 (C.D. Cal. Sept. 11, 2017), likewise rejected a fraud on the FDA-based FCA claim:

[C]laims of fraud are disfavored if made by third parties who seek to second guess a decision by the FDA to certify a device.  Relator’s claims are in effect such a challenge as to the decision of the FDA to grant §510(k) clearance for the Subject Devices. Alleged fraudulent conduct directed to the FDA, without more, is inadequate to support an FCA claim.  [discussion of Buckman omitted]

Given the resources available to the FDA to investigate and approve medical devices, and to pursue remedies for alleged violations that arise in connection with the process, the policy concerns expressed in [Buckman] are material here.  The premise of the alleged fraud in the FAC is that Defendants misled the FDA during the §510(k) certification process.  However, an FCA action is not the proper way to bring such a claim.

Id. at *7 (citing inter alia the district court opinion in D’Agostino, 153 F. Supp.3d 519).

On the other side, we have also found a couple of district court FCA cases that have allowed the sort of fraud on the FDA-based allegations that Nargol and D’Agostino reject.  See United States ex rel. Brown v. Pfizer, Inc., 2016 WL 807363, at *9 (E.D. Pa. March 1, 2016) (“The claims in Buckman were state law tort claims, not claims brought under the FCA.  Defendant has provided no authority, and we are aware of none, that has extended the holding in Buckman to FCA claims.”); United States ex rel. Krahling v. Merck & Co., 44 F. Supp. 3d 581, 593 (E.D. Pa. 2014) (“alleg[ations] that Defendant consistently and deliberately withheld pertinent information as to the safety and efficacy of a medication from the government . . . is [a] grounds for FCA liability.”).  Neither of these cases had the benefit of Nargol or D’Agostino, and neither addressed causation/materiality, so it is questionable whether they would be decided in the same fashion today.

Beyond the FCA, we found a magistrate’s opinion, Meijer, Inc. v. Ranbaxy Inc., 2016 WL 4697331 (Mag. D. Mass. Sept. 7, 2016), that the case “present[ed] an issue of apparent first impression: whether Sherman Act claims . . . may be predicated on an underlying fraud on the [FDA].”  The Magistrate effectively gave antitrust plaintiffs free rein to assert fraud-on-the-FDA claims:

The FDA’s enabling statute does not entrust it with policing antitrust or RICO; therefore, Plaintiffs’ claims do not usurp the agency’s statutory right to… calibrate a measured response to alleged fraud committed against it.  The question of whether or not particular acts of regulatory gaming harm competition is and should be an antitrust question

Id. at *11 (citations and quotation marks omitted).  See Id. at *19 (“these claims sound in antitrust, not violations of the FDCA”).  We note that Meijer evidently differs from the vast majority fraud-on-the-FDA pleadings, in that the plaintiffs allege that the FDA actually did determine that it had been misled and took affirmative corrective action.  Id. at *5, 13.  Perhaps that is the reason that Meijer nowhere cited the otherwise extremely pertinent D’Agostino district court decision.  Also of interest, permission for an interlocutory appeal has been granted, Meijer, Inc. v. Ranbaxy Inc., 245 F. Supp.3d 312 (D. Mass. 2017), and that appeal in pending in the First Circuit.  In the interim, of course, the First Circuit has decided both Nargol and D’Agostino since the district court originally decided Meijer.

Finally, we expected to find agency fraud claims brought under the Lanham Act, but didn’t.  There are certainly enough other types of attempted private FDCA enforcement that have been asserted under the Lanham Act.  But our search (which required the term “Lanham” to appear in the same paragraph as “Buckman” or several variants of “fraud on the FDA”) didn’t produce anything directly on point.  The closest approximation was Intra-Lock International, Inc. v. Choukroun, 2015 WL 11422285 (S.D. Fla. May 4, 2015), which alleged the sale of a “medical device” without getting any form of FDA pedigree.  There was no fraud on the FDA, because there were no interactions with the FDA at all. The Lanham Act claim in Intra-Lock was dismissed because plaintiff’s theory of selling a medical device without a license was purely a violation of the FDCA.  Id. at *7.  But the case wasn’t – at least overtly – a true agency fraud claim.  Cf. Organ Recovery Systems, Inc. v. Preservation Solutions, Inc., 2012 WL 116041, at *7-8 (N.D. Ill. Jan. 16, 2012) (allowing non-FDA-related Lanham Act claims while making clear that plaintiff’s preempted agency fraud claims were not based on the federal statute).

So far, there hasn’t been an appellate court in the country that has allowed a private plaintiff to avoid Buckman by bringing a fraud-on-the-FDA claim disguised as a federal statutory claim.  While we’re not out of the woods, yet, the current trend can be described as favorable.

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.