Bexis has lots of opinions on what’s wrong with mass-tort (especially drug/device) MDLs.  Heck, Bexis has even proposed amendments to the MDL statutes to correct the many severe problems that exist.  Now, Congress has before it possible statutory changes (not holding our breath) and Civil Rules Committee is looking into the same problems.  Maybe something will happen, although rules changes are notoriously protracted, and the cadre of MDL judges (15 judges control 18 MDLs that account for some 47% of the entire federal civil docket) and their plaintiff-side enablers will fight any attempts to curb MDL discretionary excesses.

In the midst of all this, the Duke Law School’s ongoing MDL best practices project held an invitation-only meeting recently, and Bexis was invited as one of the defense-oriented participants. This meeting was conducted under so-called “Chatham House” rules that preclude attributing particular statements to particular persons, so this post summarizing the meeting will not be of the “he said, she said” variety.

Early Dismissal of Meritless Cases

Defense-side participants produced a plethora of statistics that, in MDL after MDL, anywhere between 20% and 45% (eliminating outliers both ways) of all filed MDL cases are ultimately dismissed because the plaintiffs do not have evidence of the most basic information imaginable:  (a) that they actually encountered the product of the defendant being sued; (b) that they suffered one of the injuries that the MDL was about; and (c) that that the timing and amount of the plaintiff’s exposure was plausible under the plaintiffs’ own causation theories.  The missing information that was discussed was not anything expert-related, just product identification, injury, and plaintiffs fitting within whatever might be the plaintiffs’ own asserted parameters of causation.

Somewhat surprisingly, the plaintiff-side participants did not dispute the basic point – that meritless plaintiffs are widespread, running into the thousands of bogus plaintiffs in the larger MDLs.  Indeed, most of the plaintiff-side speakers professed not just their recognition of the meritless claim problem, but their own annoyance at this phenomenon.  The presence of large numbers of meritless cases artificially skewed who had what say on plaintiff steering committees, which partially depend on numbers of cases.  At the back end, meritless cases produced a bunch of left-over plaintiffs, abandoned by their counsel (who never intended to try cases), bumbling around pro se.

Not one plaintiff-side speaker denied that numerous meritless cases existed in MDLs, or that the absence of effective Rule 8/12/TwIqbal procedures encouraged meritless filings.  Evidently, the “park and ride” plaintiff-side lawyers who pump and dump cases into MDLs don’t attend conferences like this, or if they do, they keep quiet.  At most, the plaintiff-side speakers tolerated bad cases because they would “all work out in the end.”

The defense side vehemently rejected that no-harm, no-foul approach.  Defense participants argued that meritless cases weren’t harmless, but rather skewed MDL litigation from beginning to end – driving up discovery costs, forcing defendants to vet cases that plaintiffs should have done before filing, complicating random plaintiff selection for bellwether trials (more about such trials, below), and inflating settlement demands.  Artificially inflated plaintiff numbers increase the psychological impact of MDLs, given how those numbers find their way into press descriptions and plaintiff solicitations.  Masses of bogus plaintiffs also prevent proper resolution of “proportionality” issues in discovery, since they inflate P-side discovery arguments.

Further, FDA regulations do not contain any “bogus” case exception that would give defendants leeway not to report such cases in their adverse event filings.  Phony cases lead to phony “signals,” since even though adverse event reporting is (according to the FDA) not supposed to establish causation, plaintiff-side experts routinely try to misuse them − and sometimes get away with doing so.  When that happens, it’s garbage in, garbage out.  Inflated plaintiff numbers lead directly to inflated reports, so that meritless cases end up supporting junk science.  This effect is magnified by pleading that would be barred by TwIqbal in non-MDL cases that, such as use of “and/or,” that purport to sue multiple defendants when they could only have used one product, so that each defendant is obligated to report the “adverse event” to the FDA.

Matters livened up a bit further, with that morning’s report from 360 on the extreme position taken by plaintiffs in the Zofran MDL were taking on discovery – that discovery rules in MDLs only apply to defendants.  They were demanding that only 8 of over 400 plaintiffs should submit to any discovery at all – giving bogus Zofran cases a free ride all the way to remand.  The Zofran plaintiffs were so over the top that they even claimed an MDL judge lacked jurisdiction to order discovery.  That’s what Joe Biden would call “malarkey,” and not a single plaintiff-side speaker defended, let alone took, that position.

The problem of widespread filing of bogus cases received the most support for (or the least opposition to) a rules change to facilitate early dismissal of meritless cases.  A rules amendment would have to be simple – not a “Lone Pine” order, but rather something much more basic.  A plausible version could be along the lines of mandatory initial discovery, which exists in “pilot project” form in both the District of Arizona and the Northern District of Illinois.  The local rules could be adapted easily enough to require production of all evidence of product identification/exposure, diagnosis of an injury, and their relative timing within a relatively short fixed period (60-90 days would seem reasonable) after filing of a complaint.  If a plaintiff couldn’t produce any facts or records that plausibly establish a claim, then the meritless action would be dismissed with prejudice.  Maybe a mandatory initial disclosure rule would be limited to MDLs above a certain threshold (100? 500? 1000?) number of plaintiffs.

Defendants might have to compromise – giving something to get something.  MDLs are notorious for imposing onerous discovery obligations on defendants, anyway, so frankly our side wouldn’t be giving up much, except for possibly timing.  One possibility, discussed at the conference in a different context, could involve early technology-assisted review of some categories of electronic documents.  We like predictive coding anyway, so as long as the timing is doable, there might be the basis of a workable compromise here.

Another possibility would be to amend Rule 20 to prohibit joinder of plaintiffs in the same complaint who have nothing in common except suing over the same product.  These multi-plaintiff, misjoined complaints are the primary way that the “park and ride” lawyers file their cases, with practically no factual information about any of the plaintiffs.  Not only do these improper plaintiffs cheat courts out of filing fees, but they burden defendants with the expense of vetting the plaintiffs’ cases.  In addition to forbidding the practice, each misjoined plaintiff could also be required to make a non-refundable deposit into the MDL plaintiffs’ common benefit fund.

Finally, the issue of statute of limitations tolling agreements came up.  There could be a legitimate problem, when a plaintiff’s lawyer finds him/herself up against the statute of limitations with a new client.  We don’t have problems with tolling agreements, as long as they’re one-off, and not an excuse for further abuse.  Tolling agreements cannot be an excuse for rampant failure to vet claims – the example given being “I have 2000 new cases, can I have a tolling agreement for two years.”  Tolling agreements are only appropriate for a short period of time.  We think that the same 60-90 day period mentioned above should be long enough to accommodate counsel who would otherwise have a legitimate need for a tolling agreement.

Interlocutory Appeal of Significant MDL Rulings

Another candidate for a rules change – one meeting with significantly more opposition from our colleagues on the other side of the “v.’ – is the interlocutory appeal of the resolution of certain “significant” motions typically made in MDLs.  Such appeals would correct an imbalance in current practice in that, if defendants win a dispositive motion, it’s an appealable final order, but if defendants lose the same motion, no appeal is available because the denial isn’t final.  Thus, the litigation continues, and the dispositive issue is appealed, if at all, years later – after a bellwether trial or a remand (in the rare event that happens).

That imbalanced access to appellate review is acceptable in an individual case, because delay caused by piecemeal appeals isn’t offset by the need to get things right, right away.  What’s acceptable in a single case, becomes a much bigger problem when the downside of an erroneous denial of a dispositive motion could dispose of hundreds or thousands of cases, particularly an appeal much further down the road adds extraneous pressure to affirm, or else a great deal of MDL activity, based on the resolution defendants contend is erroneous, goes down the drain.

Attorneys on the plaintiffs’ side – as was the case throughout the conference – were content with the status quo.  They pointed to existing certification procedures, but current procedures require the assent of the trial judge that denied the motion in the first place.  If denial is intended to force settlement, which is often the case, that assent won’t be forthcoming.  Plaintiffs pointed to the New Jersey Accutane litigation which has (in)famously been around for some fifteen years.  But that analogy is poor.  Most, if not all, of the delay in Accutane is not due interlocutory appeals, but rather from an prior judge’s extremely poor bellwether trial performance (almost every trial verdict was been reversed), or from appeals concerning the grant of dispositive motions – neither of which have any bearing on the current proposal for a Rule 23(f)-like equivalent permitting interlocutory appeals from motion denials in MDLs whether or not the MDL judge wants to allow it.

Ironically, the Rule 23(f) analogy was attacked by the plaintiff side as a bad analogy, because class actions were mostly “negative value” cases that, unlike mass torts, would go away without certification.  We think the analogy, while not perfect, is better than the other side will admit, for reasons discussed in more detail when we turn to bellwether trials.  Lawyers are, by nature, competitive, and the raised stakes of mass tort MDLs only exacerbates that tendency.  Thus, both sides – but in particular the plaintiffs – pour more money into bellwether trials than the individual cases could possibly be worth.  In that way, bellwethers become “negative value” cases, too.

Once again, a bit of serendipity strengthened the defense arguments.  Just the day before, the Fifth Circuit reversed the bellwether trial verdict in the first of several consolidated trials in the Pinnacle Hip MDL. See In re DePuy Orthopaedics, Inc., Pinnacle Hip Implant Product Liability Litigation, ___ F.3d ___, 2018 WL 1954759 (5th Cir. April 25, 2018).  This was the same MDL where the defendants had tried everything to obtain appellate review of the trial court’s erroneous rulings, including mandamus.  Now, something like seven years of MDL activity in Pinnacle Hip has come to just about naught, largely because no interlocutory appeals process existed to provide timely review of repeated erroneous rulings.

We have to admit, though, the other side has a point that it would be difficult to create a one-size-fits-all interlocutory appeal rule defining exactly what “significant” MDL rulings would be subject to its purview.  Preemption, for sure − nobody on either side disputed that a single preemption motion could be dispositive of so much (up to and including “all”) of an MDL to qualify.  Everything else was subject to considerable debate.  Some Daubert motions can have the same MDL-wide preclusive effect; our 2016 top ten cases post discusses two (Mirena and Lipitor) of these (three (Zoloft) if you count the honorable mentions), but lots of other Daubert motions in MDLs would not come close.

Then there’s everything else. Choice of law was mentioned, so were punitive damages.  The jurisdictional issue in Pinnacle Hip was critical, but most MDL judges aren’t that overreaching.  So defining “significant” for the purposes of a rules change could well pose complex problems.

Having thought about all that, however, se say, “why bother?” Let defense lawyers in the particular MDL decide.  Call it the “upon further review” rule if you want.  In the NFL, the rules allow coaches a set number of challenges to just about any on-field calls, and if the team wins a challenge they get another one, up to some absolute limit.  NFL coaches get to pick what calls they consider important enough to challenge.  Let counsel do the same for MDL interlocutory review.  Preemption orders should be appealable, and a set number (probably two or three) of other orders could be subject to interlocutory review at each separately represented defendant’s option.  If the defendant wins the appeal, it gets another challenge.

We don’t think that approach will result in an undue number of appeals – especially since the Supreme Court just reduced the appellate courts’ workload by throwing out Alien Torts Claims Act cases against corporations, creating some give.  Delay might be a more serious concern, but as with Rule 23(f), the MDL isn’t being stayed, so discovery and other activity would continue in the meantime.

Another issue raised, which would be beyond the control of the federal rules, is whether interlocutory appeals would sufficiently delay MDLs so as to encourage plaintiffs to file in state court.  News flash – plaintiffs have been avoiding federal court for as long as we can remember.  In one of Bexis’ first MDLs, some 1500 Bone Screw plaintiffs tried to hide out in state court in Tennessee (where the target defendant was “at home” jurisdictionally).  They might even have gotten away with that, had Tennessee not had an unusually short one-year personal injury statute of limitations, which tripped up plaintiffs after they agreed to a universal discovery date that was more than a year before they filed all those multi-plaintiff complaints.  See Maestas v. Sofamor Danek Group, Inc., 33 S.W.3d 805 (Tenn. 2000) (plaintiffs lose on cross-jurisdictional class action tolling; all 1500 cases dismissed).  One more reason for plaintiffs to stay out of federal court doesn’t mean anything.  If anything, avoiding federal court is harder now than before because the Supreme Court decided to enforce constitutional limits on personal jurisdiction.

Bellwether Trials

There was considerable discussion of bellwether trials, but we have doubts that rules could solve the problems that were mentioned.  Our view is to interpret the MDL statute as written, and restrict MDLs to “coordinated or consolidated pretrial proceedings.”  28 U.S.C. §1407(a) (emphasis added).  A textualist approach to the MDL statute would, and we think should, mean no trials, “bellwether” or otherwise, in the MDL transferee court.  Simple.  No rules change needed.

But totally contrary to decades of MDL practice.  Don’t hold your breath – although if someone wants to preserve it for appeal, this issue could be the next Lexecon.

There was some discussion of how bellwether plaintiffs are selected.  The Manual for Complex Litigation favors random selection.  MCL §22.315.  We also lean towards random selection, although we recognize that the other side can game even a random system by either filing, or not filing, certain types of cases in the MDL.  So even random selection needs to be policed to prevent plaintiffs from attempting to skew the result.

We also think that, if the rules were changed to facilitate the early dismissal of facially meritless claims, that would go a long way to solving the problems with random selection.  Right now, any random selection process necessarily exposes the prevalence of meritless cases, so that plaintiffs are loathe to agree to what, abstractly, is the most statistically valid method of yielding a representative selection of cases.

Ensuring “representativeness” was also discussed, but we frankly think that’s futile.  As someone pointed out, “random does not necessarily mean representative.”  Even what might at the beginning be the most representative of cases ceases to be representative once both sides pour more resources into preparing and trying that case than it could possibly be worth if being tried outside of the MDL.  We agree with the comment of one of the plaintiff-side speakers that “spending a million to win $500,000 is not an economic business model.”  Both sides committing extraordinary resources to a bellwether trial is a sure way to ensure that the case for that reason alone ceases to have any representative value.

On the plaintiff side, keeping the business model economic, under MDL circumstances, only encourages the reduction of representativeness.  Instead, we see plaintiffs focused on “ringing the bell” – adding punitive damages or consolidated plaintiffs to the mix to make the case harder to defend.  That’s the practical (as opposed to the textual) reason we oppose bellwether trials.  At minimum, as we’ve discussed before, defendants should take care to craft any Lexecon waivers to exclude punitive damages or consolidations.  We didn’t hear any proposed rules changes that would meaningfully improve the bellwether trial system.

Third-Party Litigation Funding

The group discussed a proposal, pending in Congress, requiring automatic disclosure of third-party funding agreements.  Interestingly, plaintiff-side speakers admitted that they demand disclosure of that kind of information themselves when setting up their steering committees, because their membership must be able to “take the heat,” and lawyers controlled by a “hedge fund” can’t be shaping their strategy.  To at least some plaintiffs’ speakers, third-party funding meant “a dummy in the room and a ventriloquist outside.”  One of the judges in attendance likewise thought that disclosure of third-party funding was a good idea to prevent conflicts.  If both plaintiffs and the judiciary favor disclosure is necessary to prevent conflicts, then it is hard to justify not routinely disclosing it to all sides, as insurance is disclosed.

Proponents of such funding stated that it was only a “professionalization” of activities that had long gone on the plaintiff side of litigation.  Perhaps, but that justification brings the response of “what, then, do you have to hide?”  If third party litigation funding is truly professionalized, then again, it resembles insurance, which is subject to automatic disclosure.  To be considered “mainstream,” third-party litigation funders need to act the part.

Proponents also raised the issue of disclosure of confidential work product if funding agreements are discoverable.  This concern seems like a red herring to us, as the contracts are easily drafted to omit any attorney evaluations of litigation.

Proponents also distinguished two uses of litigation funding. The first, which is more similar to corporate litigation funding arrangements, involves loans to plaintiff-side law firms, secured either by their interests in specific litigation or by interests in their entire pending litigation inventory.  These tend to have lower interest rates and involve less influence over litigation strategies or settlement decisions.  Disclosure of such funding is, however, essential to gauging the relative resources of both sides in determining who is going to pay for what discovery in MDL situations.  Plaintiffs should not be able to play at being David when their funding lines of credit are actually Goliath-sized.

The flip side is what was sometimes referred to as “payday lending” litigation funding − where the plaintiff is receiving what amounts to an advance on possible recoveries.  A lengthy discussion was had of claimed abuses – covering the NFL concussion litigation and the recent New York Times exposé of what has gone on in the Pelvic Mesh litigation.  In either case, immediate disclosure of litigation funding agreements would have prevented, or at least reduced, improper conduct, as transparency in funding would have raised red flags about the terms and timing of the agreements in question.  Suspicious agreements could then have brought to the court’s attention, or been the subject of additional discovery into their provenance.

Additional discovery was another aspect of the third party litigation funding debate.  Proponents argued, with some force, that disclosure of agreements would not be the end of matters.  They raised potential use of discovery into litigation funding as a means of opening yet “another front” in MDL litigation and attempting to disrupt the opposing side’s ability to finance itself.  We think that concern could be valid, but is easily addressed.  Disclosure of insurance hasn’t (except in Louisiana) led to insurance companies being sued directly by opponents of their insureds.  The work product issue raised above provides a useful analogy with, anything beyond the contract subject to a similar “good cause shown” and “otherwise unavailable” standard.  There is no inherent reason that such funding should be the source of additional discovery, but requiring prior court approval serves as another check.

Finally, just as plaintiffs want a look at their opponent’s insurance to know how much defendants have available for settlement, or whether the other side has sufficiently deep pockets, defendants should be able to make similar judgments based on plaintiffs’ third-party litigation funding.  A plaintiff who has to satisfy a funder is unlikely to take in settlement an amount that the defendant believes is reasonable if that means zero dollars in the plaintiff’s pocket.  In this respect, discovery of litigation funding is justifiable for the same reason as third-party litigation liens.  Very few plaintiffs would argue that insurance, health care, and other liens can be kept secret from the other side.  Anyone who has a piece of the potential recovery is, in practice a real party in interest who should be at the table and whose identity should be known to all.  All sides should know who is the ventriloquist and who is the dummy.

*          *         *         *

Several other topics were also discussed at the Duke conference, but they overwhelmingly involved the plaintiff side − composition of a plaintiff-side steering committee, judicial efforts to increase diversity on such steering committees, and common fund assessments.  But this post is already quite long, and these other topics are of less interest to our defense-oriented audience.

A multidistrict litigation (MDL) can be a sound way of managing a mass tort.  Efficiencies are available (e.g., deposing company witnesses only once) and the U. of Chicago part of us dreams of economies of scale.  Then again, an MDL can be vexing, as plaintiff lawyers park their weak cases in the MDL and find ways to push their relatively few strong cases up front.  Think of the MDL as a vast kennel, with all of the associated dangers and bad smells.  Then again, an MDL can be an out-and-out disaster, as the old If-you-build-it-they-will-come model oft-described by blogger emeritus Mark Herrmann takes hold.  The very existence of the MDL itself makes the mass tort massive.  The MDL becomes a magnet for the meritless.  Plaintiff lawyers resist any discovery of individual cases – there are too many! – and insist on dedicating the MDL to endless discovery of company conduct, as that is common to all cases and, viewed through the MDL lens, is always proportional, no matter how intrusive or expensive.  (At least that is the plaintiff argument.  But now some courts have finally grown weary of MDLs becoming festivals of discovery about discovery, and decided that proportionality applies even when the MDL case inventory has reached four or five digits.  See here, for example.)

We have gone through this evolution of thought in the course of a single MDL, watching good intentions morph into an extortion racket.  We have also seen courts gradually catch on to what has gone wrong with the MDL system.  Is this an instance of phylogeny recapitulating ontogeny? Legislation has been revived in Congress that aims to cabin the insanity of MDLs and class actions. And, mirabile dictu, some MDL judges have started to rein in asymmetrical discovery and have even demanded that plaintiff lawyers furnish evidence of such niceties as usage of the product and medical causation.  We’re not saying let’s make MDLs great again, but can we at least make them less miserable?  Or maybe just make them less.  Perhaps we don’t need an MDL every time there’s an alarming study or an uptick in adverse events.

Continue Reading JPML Refuses MDL for Proton Pump Inhibitor Kidney Injury Cases

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

We suggested in our most recent post on the Pinnacle Hip Implant MDL that, the sooner the Fifth Circuit weighs in on the evidentiary and procedural concerns being raised by the defense, the better. The defense is trying for sooner.

On Thursday, the defense filed in the Fifth Circuit a Petition for a Writ of Mandamus to the MDL court. This isn’t a petition asking the Fifth Circuit to review the evidentiary and procedural rulings that the defense has been raising since the second bellwether trial was scheduled. It couldn’t do that. But the petition does ask the Fifth Circuit to order the MDL court to do the things that are necessary to allow the Fifth Circuit to conduct that review. And it asks that, in the meantime, the Fifth Circuit stop the bellwether process:

Petitioners seek a writ from this Court directing the district court to: (1) vacate its Order on Bellwether Trials, dated June 10, 2016, which scheduled a trial for September 6, 2016 (Exhibit A); (2) rule promptly on petitioners’ pending post-trial motions in the last bellwether trial; and (3) enter judgment in those cases so that an appeal may follow, see Fed. R. Civ. P. 58(b).

Petition at 1.

It seems that a significant amount of paperwork has been piling up on the MDL court’s desk. The MDL court hasn’t entered final judgment on the first bellwether trial, even though that verdict will soon be two years old. The MDL court has also not ruled on the post-trial motions from, or entered judgment on, the second bellwether trial, the one that raised so many procedural and evidentiary concerns and resulted in a half-billion dollar verdict.

Continue Reading Hello Fifth Circuit: The Pinnacle Hip Implant MDL Finally Introduces Itself to the Appellate Court

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

It landed with a concussing thud that surprised no one. The $498 million verdict came last Thursday after weeks of evidence that included suicide, racism, tobacco pseudo-science, cancer, the proliferation of pelvic mesh litigation, Saddam Hussein, and alleged fraudulent practices in foreign countries. You might be wondering what type of case the jury was considering. That evidentiary line-up might make you think it was a wrongful death civil rights trial, or something worse. But it wasn’t. It was a Pinnacle hip implant trial. Really.

Before the verdict came, we were worried that something like this could happen. We wrote about it just as the jury was beginning deliberations. And then it happened, which should have been no surprise given the grouping of five separate plaintiffs for one bellwether trial and the noise that defendants were making about evidentiary rulings.

The question now is, what does it mean? Will it promote the ultimate resolution of the mass tort? Well, there’s little to suggest that it will. In fact, it seems more likely to do the opposite.

Continue Reading Trouble in Texas II

Here’s a significant post-rules-amendments discovery decision out of the Xarelto MDL.  In In re Xarelto (Rivaroxaban) Products Liability Litigation, 2016 WL 311762 (E.D. La. Jan. 26, 2016), the court (Fallon, J.) cited both new Rule 26’s heightened proportionality emphasis, as well as privacy issues, in rejecting the plaintiffs’ discovery demand for the personnel files of a large number of the defendant’s employees. This was not a demand for custodial files, call notes or anything peculiarly relevant to the litigation – but for personnel files.

No way, José.  Not after December 1, 2015.

A personnel file, unlike a work-related custodial file, is not the kind of thing that any company wants its litigation opponents rummaging through:

[T]he personnel file is not maintained by the employee.  The personnel file is maintained by the Human Resources department of an employer, and is likely to contain confidential employer evaluations which the employee may have never seen.  The personnel file also may include other sensitive information, such as salary, information concerning physical or mental health issues, alimony and child support garnishment, tax records, and drug test results.

Xarelto, 2016 WL 311762, at *1 (citations and quotation marks omitted).

Continue Reading Disproportionate Discovery, Even in an MDL

What?  You were expecting another of our insensitive blogpost headlines?

Nope, we’re playing this one straight down the middle.  In In re Testosterone Replacement Therapy Products Liability Litigation, 2015 WL 6859286 (N.D. Ill. Nov. 9, 2015) (“TRT”), the court ruled that all claims against all makers of generic testosterone replacement drugs were preempted.  Indeed, except for those generic manufacturers who were also designated by the FDA as “reference listed drugs,” the plaintiffs did not even contest dismissal.  Id. at *1.

Maybe the word is getting through to the other side that the Supreme Court meant what it said in PLIVA v. Mensing, 131 S. Ct. 2567 (2011), and Mutual Pharmaceutical Co. v. Bartlett, 133 S. Ct. 2466 (2013).

The main issue in TRT was whether a generic manufacturer somehow lost the protection of impossibility preemption because the FDA designated that manufacturer’s product as a “reference listed drug” (“RLD”) after the original branded drug left the market.  This issue has been out there for some time, and we discussed in detail in our post on the aberrant Pennsylvania Superior Court metoclopramide-related decisions.  Indeed, we noted that that the FDA had confirmed – on the very day that we wrote that post – that designated generic RLDs remained generic drug manufacturers and were unable to use the preemption-destroying “changes being effected” process to modify their labels.  Id. (citing and quoting “FDA, Guidance for Industry, Safety Labeling Changes − Implementation of Section 505(o)(4) of the FD&C Act, at 7 n.10 (FDA July 30, 2013)).

Continue Reading Generic Preemption Prevails in Testosterone MDL

A couple of weeks ago we discussed the latest entry in the “the saga of Cymbalta plaintiff lawyers who keep pushing the litigation up a hill in an effort to create a class action, mass action, MDL, or whatever will allow them to park as many meritless cases in one place, only to have that litigation roll back down the hill, resulting in crushed toes, directed verdicts, and jury findings of no liability.”  That was the Hill case in Indiana, where the judge granted a motion to sever plaintiffs from various states who had been joined in a transparent effort to create a mini-MDL.  In discussing that decision, we alluded to the persistence of the Cymbalta plaintiffs’ counsel in trying to cobble together some sort of aggregated proceeding to maximize leverage and reduce their own expenses. The only thing more remarkable than plaintiffs’ counsel’s persistence was the way they lost persistently.  As so memorably encapsulated in our deathless prose: “Plaintiffs tried to certify a class in C.D. Cal.  They failed.  Plaintiffs petitioned for creation of a Multi-district Litigation.  They failed.  Plaintiffs’ counsel then filed six Cymbalta lawsuit in S.D. Indiana, all but one involving multiple plaintiffs from different states.  Other plaintiffs’ counsel pursued the same strategy.  Some plaintiffs who had filed their cases in other federal districts moved to transfer those cases to S.D. Indiana, mostly, though not always, without success.  Then plaintiffs’ counsel showed their hand by again seeking creation of an MDL, this time in S.D. Indiana.”

Well, guess what?  Now plaintiffs’ counsel lost their latest effort to MDL the Cymbalta litigation.  In re Cymbalta Prods Liability Litigation, 2015 WL 5936936 (Oct. 9, 2015).  For the Judicial Panel on Multidistrict Litigation, it was an exercise in deja vu.  An MDL had been rejected back in December 2014 in Cymbalta I because, even though the different cases involved similar claims that Cymbalta withdrawal could lead to “brain zaps” and other alleged maladies, coordination would have been pointless because the procedural posture of the cases varied significantly, because most of the common discovery had already occurred, and because only a limited number of plaintiffs’ counsel were involved.  All of those same factors still existed in October 2015, only more so.  Common discovery has advanced even further, with production of millions of pages of documents and with multiple 30(b)(6) depositions, all available to all plaintiffs’ counsel.   And let’s not forget that four cases have gone to trial – though it would be understandable if plaintiffs’ counsel tried hard to forget that.  Finally, “the record does not show a significant increase in the number of unique counsel.”  

Hmmmmmm.   Care to hazard a guess as to why that would be?

Centralization denied.  Again.  One gets the distinct sense that the Judicial Panel is getting tired of this.

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

Today’s case is a simple and straightforward message to plaintiffs – you can’t use §1404 transfers to create an MDL after the Judicial Panel on Multidistrict Litigation (“JPML”) has said no.  That is precisely what plaintiffs were asking the court to do in Krupp v. Eli Lilly and Co., 2015 U.S. Dist. LEXIS 83762 (M.D. Fla. Apr. 6, 2015).  Apparently two plaintiffs’ firms had filed 47 Cymbalta cases in 29 different federal courts around the country (presumably plaintiffs’ home jurisdictions) and then petitioned the JPML for the creation of an MDL, alleging an additional 2700 claims in the pipeline.  The JPML declined finding that the cases were in different procedural postures, the bulk of the common discovery had already taken place and with only 2 plaintiffs’ firms, coordination should not prove burdensome.  Id. at *3.

Not happy with that result, plaintiffs appear now to be asking the 29 federal courts with pending Cymbalta cases to transfer them to the Southern District of Indiana – defendant’s home jurisdiction.  Plaintiffs allege that they will then also file the rest of their cases there to create “a de facto MDL.”  Id. at *4.  Plaintiffs argue that transfer of all cases (i) will allow plaintiffs to share costs, (ii) will be more convenient to defendant, and (iii) will promote judicial efficiency.  Id.  Even assuming these are true assertions – they don’t justify a plaintiff’s request for a §1404 transfer.

Continue Reading MDL Shenanigans Disallowed

Multidistrict Litigation – the name says it all.  It is an amalgamation of related cases from multiple federal district courts across the country.  Think about the journey a single case in an MDL may take.  Plaintiff files in state court.  Defendants remove the case to federal court based on diversity.  But as soon as the case is assigned a new docket number, defendants file a notice of tag-along with the Judicial Panel on Multidistrict Litigation and the case moves again – this time to whatever district has been assigned the MDL.  Now the case probably gets a little time to rest while pre-trial discovery and motion practice and maybe even a few bellwether trials take place.  But, if that isn’t the end of the litigation, the case may get remanded back to the district court from whence it came.  Now multiply that by a few hundred or a few thousand cases and it’s a whole lot of paperwork (or probably more accurately,
a whole lot of keystrokes).

So, it has become a more common practice for MDL courts to enter orders allowing plaintiffs to file their cases directly into the MDL – an option that would normally be foreclosed to most plaintiffs because venue would be improper.  It is a case management tool.  Once an MDL is established and it is apparent which cases belong in it, the parties and the court recognize that the tag-along process simply adds another unnecessary layer of red tape and delay.   Plaintiffs, however, usually aren’t willing to give up home court advantage and so issues of proper venue and forum convenience are typically reserved until the time of remand.  At that time the parties usually try to agree to which federal district court a directly filed MDL case should be sent for further proceedings and most often it is the district where the plaintiff resided at the time of filing.

In either the tag-along scenario or the direct filing scenario, MDLs are a breeding ground for choice of law questions.  At a minimum, there are at least two different jurisdictions involved and that is just considering where the case itself was filed or transferred.  That doesn’t account for other things like defendant’s state of residence or whether plaintiff’s current state of residence is different than the state where the injury occurred.  And choice of law can be a big issue – like in two recent MDL cases:  Wahl v. General Electric Co., 2015 U.S. App. LEXIS 8477 (6th Cir. May 22, 2015) and   In re Tylenol (Acetaminophen) Mktg., Sales Prac. and Prods. Liab. Litig., 2015 WL 2417411 (E.D. Pa. May 20, 2015) (Terry v. McNeil-PPC, Inc.).

Wahl, at issue was whether Tennessee’s rather unique statute of repose applied and therefore barred plaintiff’s claims.  In that case, the district court had already concluded that it did and we discussed that decision here.  In the Tylenol case, Terry, the question was whether Alabama’s wrongful death statute (which only provides punitive damages) or New Jersey’s punitive damages and wrongful death statutes applied.  With New Jersey’s preclusion of punitive damages for FDA approved drugs, the choice of law could have a significant impact on plaintiff’s potential recovery. Unfortunately, the court held that Alabama law applied.

Terry involved a litigation tourist, a plaintiff-resident of Alabama, who filed suit the “new-fashioned” way in state court in Pennsylvania against Johnson & Johnson, a New Jersey corporation, and McNeil, which plaintiff argued was a Pennsylvania corporation and defendant argued was a New Jersey corporation.  Terry, 2015 WL 2417411 at *2.  Whichever was correct, there was complete diversity and so defendants removed the case to federal court where it was then tagged to the MDL which also happened to be pending in the Eastern District of Pennsylvania.  Id.  While the general rule is that a federal court sitting in diversity must apply the choice of law rules of the state in which the court sits, MDL courts typically “apply the choice of law rules of the court from which the case was transferred.”  Id.  Here those two are one and the same, so it is hardly controversial that the court applied Pennsylvania’s choice of law rules.

However, it is worth noting the very attenuated relationship Pennsylvania has to the underlying case.  Defendants cited numerous decisions in which courts had held that McNeil was a New Jersey resident for purposes of diversity jurisdiction.  While the Terry court did not have to decide that issue because the plaintiff was from neither New Jersey nor Pennsylvania, maybe it should have.  Maybe the bigger question was whether the case was properly venued in Pennsylvania at all.  And that’s important because the Terry court acknowledged that in an almost identical case, Lyles v. McNeil-PPC, 12-CV-7263 (D.N.J.), that court ruled that New Jersey law rather than Alabama law applied.  Instead, the Pennsylvania judge found that because he was “sitting in a federal court in Pennsylvania applying Pennsylvania choice of law principles, New Jersey’s interests in this case hold less weight that they did in Lyles.”  Id. at *7.  So, if the case had reached the MDL by way of transfer from New Jersey, it seems like defendants might have had a slightly better chance of arguing for application of New Jersey law because the MDL court would not have also been the transferor court.  A bit confusing admittedly, but worth a second thought about venue right before removal.

Wahl presents the choice of law question in a direct filing case.  Plaintiff, a resident of Tennessee, opted to file her complaint directly in the gadolinium MDL in the Northern District of Ohio.  When it came time for remand, the parties agreed that this case should be transferred to the Middle District of Tennessee, “the district court of proper venue.”  Wahl, 2015 U.S. App. LEXIS 8477 at *3.   The Tennessee court applied Tennessee’s choice of law rules and as noted above, concluded that Tennessee law required dismissal of plaintiff’s claims.  On appeal, plaintiff argued that the court should have applied Ohio’s choice of law rules which it contends would have barred application of the Tennessee statute of repose.

Plaintiff’s argument was based on the standard rule that “when a diversity case is transferred from one federal district court to another, substantive law governing the jurisdiction of the transferor court controls.”  Id. at *5-6.  In what appears to be the first
appellate decision on this issue, the Sixth Circuit held that:

This ordinary rule appears strict and inflexible. But it
does not apply to cases of direct-filed, later-transferred MDL suits such as
the present case.

Id. at *6.  After a detailed discussion of the case law that led to the development of the standard rule, the court noted that in those cases, “plaintiff’s choice of initial forum was appropriate as to both jurisdiction and venue.”  Id. at *10.  Plaintiff’s choice in a direct-filed MDL case is based on an “accident of bureaucratic convenience.”  Id. Therefore, there must be an exception to the general rule for direct-filed MDL cases that are then transferred to a more convenient forum, otherwise that “accident” would “elevate the law of the MDL forum.”  Id.  at *11.

The court found two bases for its decision that direct-filed MDL cases warranted an exception.  First, the court looked to the order governing direct filing in the MDL which specifically stated that the “fact that a case was file directly in MDL 1909 pursuant to this order will have no impact on the choice of law to be applied.”  Id. at *16-17.  Further, plaintiffs conceded both in their complaint and in agreeing to the transfer, that the Middle District of Tennessee was the proper venue for this case.  Id. at *17.  Given all those things, the court concluded that plaintiff “did not subject herself to the jurisdiction of the district court where she filed.  Instead, she took advantage of the procedural mechanism the MDL made available to increase efficiency of filings.” Id. at *17-18.

Second, the court found that transfer of a direct-filed MDL case to the district with proper venue was more like a transfer under 28 U.S.C. §1406(a) rather than a §1404(a) transfer.  A §1404(a) transfer is one that is granted for convenience following plaintiff’s choice of an appropriate forum.  It is because plaintiff’s choice was appropriate that the standard rule applying the law of the transferor court was adopted.  A §1406(a) transfer however, applies when plaintiff files suit in an improper venue, and rather
than dismiss the case, the court transfers it to a district in which it could have been brought.  Under Sixth Circuit precedent,

if the law of the transferor forum were applied following
a § 1406(a) transfer, the plaintiff could benefit from having brought the action in an impermissible forum. Reasoning that [s]uch forum-shopping was what the Supreme Court sought to eliminate . . . we concluded that, following a transfer under §1406(a), the transferee district court should apply its own state law rather than the state law of the transferor district court.

Id. at *14.  Plaintiff Wahl’s case was transferred from the Northern District of Ohio “because that district was not a proper venue.”  Id. at *18.   It would be equally improper to apply Ohio law where Ohio’s only connection to the case was its administrative designation as the home for the MDL.  While we find ourselves straddling the fence on choice of law issues on a case by case basis, we do think the Sixth Circuit got this one right.

We should also note that plaintiff’s choice of law arguments were all for naught anyway  because the court also held that even if Ohio choice of law rules were applied, Tennessee substantive law would also still apply.

Appealability issues in multi-district litigation can  present knotty problems.  While we (that is, Bexis) came up with the preemption argument that killed off fraud on the FDA claims, the realities of MDL practice meant that, even after winning, there was no appeal.  Only when a peripheral defendant – an FDA consultant facing no other claims – filed a “me too” motion was an appealable order created. The consultant’s name was Buckman.

Thus we read with interest the resolution of the MDL appealability issue in Gelboim v. Bank of America Corp., 135 S. Ct. 897 (2015).  Gelboim has nothing to do with drugs and devices; it was an anti-trust case.  The substantive issue was “anti-trust injury,” which doesn’t matter here except to the extent that the district court held that the plaintiffs didn’t have any cognizable injury.  Since the plaintiffs in question didn’t have any other claims, that meant their action was kaput.  Time to appeal, right?  The district court thought so.  135 S. Ct. at 903-04 (discussing procedural history).  In addition, the MDL court issued an order under Fed. R. Civ. P. 54(b), allowing certain other plaintiffs to appeal, even though they had other claims remaining.  (A use of Rule 54(b) also produced the Buckman appeal.)

Not so fast!  The court of appeals said no. Based on a “strong presumption” that appeals in “consolidated cases” were not final, the Second Circuit (the appeal was from the S.D.N.Y.) dismissed the appeal.

Continue Reading Supreme Court Clarifies MDL Appealability Issues