We’ve blogged a number of times about the Dormant Commerce Clause (“DCC”) as an additional basis for bolstering both preemption and Due Process arguments.  Here’s another prescription drug-based example.

The state of New York decided to impose a special tax on opioid manufacturers to finance various responses to the so-called “opioid epidemic.”  The tax came in the form of an “a $600 million ‘stewardship fund.’”  Healthcare Distribution Alliance v. Zucker, ___ F. Supp.3d ___, 2018 WL 6651682 (S.D.N.Y. Dec. 19, 2018).  There was a problem with that, however.  What happens with business taxes?  They get passed along (like tort verdicts do) in the form of higher retail prices based on increased costs of doing business.  So the New York legislature, to paraphrase Dr. Seuss, “got an idea.  An awful idea.  They got a wonderful, awful idea.”  No, they didn’t steal Christmas, but they decided to prohibit the manufacturers subject to the tax from passing it along to consumers:

In the provision defining stewardship payments, the [New York statute] states, “No licensee shall pass the cost of their ratable share amount to a purchaser, including the ultimate user of the opioid, or such licensee shall be subject to penalties pursuant to subdivision ten of this section.”  Later, in the penalties provision, the Act notes that “[w]here the ratable share, or any portion thereof, has been passed on to a purchaser by a licensee, the commissioner may impose a penalty not to exceed one million dollars per incident.”

Id. at *3 (quoting N.Y. Pub. Health Law §§3323(2), 3323(10)(c)).

New York, however, is only one state.  The taxed manufacturers, by contrast, sell their products nationwide, as authorized by those products’ multiple FDA approvals.  New York has no power, and the statute had no mechanism, to enforce the prohibition against passing along the cost of “ratable shares” of tax liability in any place other than New York.

Enter the DCC.  What New York did, whether by intent or default, was to pass a tax, to the benefit of in-state “opioid stewardship” programs that would inevitably be paid for solely by opioid consumers in other states, as to whom the statute’s no-pass-through prohibition did not operate.

That arrangement, the court in Healthcare Distribution held, is a burden on interstate commerce that is unconstitutional under the DCC.  First, neither New York, nor any other state, can enact extraterritorial burdens on interstate commerce:

The absolute constitutional prohibition on state regulation of commerce occurring beyond the state’s borders is clear. . . . A statute that directly controls commerce occurring wholly outside the boundaries of a State exceeds the inherent limits of the enacting State’s authority and is invalid regardless of whether the statute’s extraterritorial reach was intended by the legislature. The Constitution is concerned with the maintenance of a national market for interstate commerce. Therefore, even if a statute may not in explicit terms seek to regulate interstate commerce, it can do so nonetheless by its practical effect and design.

Id. at *16 (citations and quotation marks omitted).  Second, states may not discriminate against interstate commerce – such as by imposing taxes that exempt in-state commerce:

The Dormant Commerce Clause also contains an antidiscrimination principle. . . .  [S]tates are aware of the obvious constitutional problems of tariffs. . . .  Instead, the cases are filled with state laws that aspire to reap some of the benefits of tariffs by other means. . . .  [The DCC] examin[es] whether the challenged action shifts the costs of regulation onto other states, permitting in-state lawmakers to avoid the costs of their political decisions. If a regulation unambiguously discriminates in its effect, it almost always is invalid per se.

Id. (citations and quotation marks omitted)

Imposing burdens solely on interstate commerce is precisely what New York’s tax on opioids – combined with the no-pass-through provision limited to New York – did:

[When the statute’s] provisions are given their clearest meaning, the Dormant Commerce Clause violation is clear.  An opioid manufacturer based in Maine that wished to pass on the surcharge it paid on New York transactions by selling opioids at a markup to a pharmacy in New Mexico could face a million-dollar penalty from New York State.  While the statute may not in explicit terms seek to regulate interstate commerce, that it does so nonetheless by its practical effect and design” is abundantly clear.

Id. at *17 (citation and quotation marks omitted).  That’s the regulatory part.  If, however, the statute were construed not to apply to interstate commerce so as to avoid the Scylla of extraterritoriality, it falls directly into the Charybdis of discrimination:

If the [New York statutory] pass-through prohibition applies only to in-state purchasers, New York would clearly reap some of the benefits of tariffs by other means.  New York opioid customers would be protected from any price increases in their purchases, and New York would receive a source of funding subsidized by the out-of-state purchasers of opioids. . . .  [O]ut-of-state drug purchasers, with no representation in New York’s legislature or executive, would bear the cost of New York’s policy program.  This shifting of burdens and benefits is antithetical to the idea of intra-national free trade and demonstrates why the Dormant Commerce Cause exists, i.e., to prohibit discrimination as to “any part of the stream of commerce − from wholesaler to retailer to consumer.

Id. (citations and quotation marks omitted).

There were a lot of other issues that the court in Healthcare Distribution had to plow through between page *3 and *16, but they were all ultimately invalid procedural roadblocks thrown up by New York in order to protect the unconstitutional windfall it was attempting to confer upon itself (and its citizens) at the expense of the rest of the country – justiciability, the Tax Injunction Act, tax comity, abstention, ripeness, and standing.  If any of those interest you, be our guest.  We’re satisfied with the unconstitutionality of state attempts to tax interstate commerce in prescription drugs.

Our last post talked about carbohydrate-rich Thanksgiving food. Today, we are talking about a putative class action on the labeling of certain diet foods, particularly in regard to “net carbs” and sugar alcohols. This was not planned. Colella v. Atkins Nutritionals, Inc., No. 17-cv-5867 (KAM), 2018 WL 6437082 (E.D.N.Y. Dec. 7, 2018), on the other hand, has all the hallmarks of a case brought for no reason other than to reward the lawyer. The same lawyer brought multiple cases in multiple courts raising the same allegations. The purported class representative in this one claimed to have bought only three of the thirty-one products he sued over and it is hard to imagine how he sustained any harm, let alone a harm that continues. Two of the other cases produced decisions on similar issues, which the Colella court cited frequently, so this was not really new ground. We will just cite those now and cut back on internal cites later: Fernandez v. Atkins Nutritionals, Inc., No. 3:17-CV-1628, 2018 WL 280028 (S.D. Cal. Jan. 3, 2018); Johnson v. Atkins Nutritionals, Inc., No. 2:16-CV-4213, 2017 WL 6420199 (W.D. Mo. Mar. 29, 2017). That will also be the last of our references to dieting, a subject with which we stubbornly deny knowledge.

Plaintiff centered his consumer fraud and warranty claims on the allegations that sugar alcohols in a number of the defendant’s products should count toward any tally of net carbohydrates and their consumption does affect blood sugar levels. Sugar alcohols are used as sweeteners in a number of foods and, as it turns out, FDA has a fairly developed history of addressing them in connection with labeling. Predictably, especially if you have read other posts on lawsuits over food labeling, the defendant’s motion to dismiss the amended complaint teed up express preemption under the FDCA and primary jurisdiction, along with TwIqbal and substantive state law. The end result was that plaintiff lost most of his claims, but will get a third chance to plead a consumer fraud claim as to a portion of his apparent issues with the labeling for defendant’s products. As we have noted before, we do think it is better to assess whether viable state law claims have been supported by factual pleading (with or without the heightened standard applicable for fraud-based claims like the plaintiff here was asserting) before turning to whether express preemption or primary jurisdiction would apply. The Colella court flipped the order of analysis, so something is left at least for now.

We will follow the court’s order of analysis in our discussion after a little more on the claims. The products’ labeling, and the company’s website, made clear that all counts of “net carbs” excluded sugar alcohol (like they excluded fiber). They further touted the low number of net carbs and explained that sugar alcohols could be ignored because they do not impact blood sugar like other carbohydrates that count toward the net carbs total. Plaintiff claimed this was a misrepresentation of the available science and that sugar alcohol consumption did have an impact on blood sugar. He also claimed FDA agreed that sugar alcohol should be counted toward total carbohydrates (but not net carbs). Lastly, he claimed he had relied on the labeling’s statements about net carbs and sugar alcohol in buying three products (once, apparently). Based on this, he wanted a range of damages for a purported class of purchasers of a bunch of products.

The express preemption analysis was fairly thorough and technical, because non-identical state law claims as to nutrient content labeling and health-related claims are expressly preempted but the regulations are complicated on those issues. What was not complicated was the rejection of plaintiff’s call to a presumption against preemption. Bexis should be happy with the quotation of Puerto Rico v. Franklin California Tax-Free Tr., 136 S. Ct. 1938, 1946 (2016), for the proposition that where a statute includes an express pre-emption clause, “[the court] do[es] not invoke any presumption against pre-emption but instead ‘focus[es] on the plain wording of the clause, which necessarily contains the best evidence of Congress’ pre-emptive intent.’” It was also acknowledged that there is express preemption of “state law requirements regarding nutrient content claims” under the FDCA and POM Wonderful. Statutes and regulations require labeling of nutrients in food, including “[t]otal fat, saturated fat, cholesterol, sodium, total carbohydrates, complex carbohydrates, sugars, dietary fiber, and total protein contained in each serving size or other unit of measure.” The regs also spell out how sugar alcohols should be handled and we will just repeat what the Colella court wrote:

Relevant to the instant case, “§ 101.9(c)(6) …. requires that food labels include … a statement of the number of grams of total carbohydrate in a serving, and a statement of the number of grams of total dietary fiber in a serving.” Fernandez, 2018 WL 2128450, at *4. Dietary fibers and sugar alcohols are considered carbohydrates for the purpose of calculating “total carbohydrates,” and the FDA provides extensive guidance regarding the treatment of sugar alcohols. 21 C.F.R. § 101.9(c)(6)(i)-(iv). Disclosure of sugar alcohols and their weights in the nutrition facts panel of a label is voluntary, however, if a claim is made about the grams of sugar alcohol on the label, disclosure must be made in accordance with 21 C.F.R. § 101.9(c)(6). Section 101.9(c)(6)(iv) states: “[a] statement of the number of grams of sugar alcohols in a serving may be declared voluntarily on the label, except that when a claim is made on the label or in labeling about sugar alcohol or total sugars, or added sugars when sugar alcohols are present in the food, sugar alcohol content shall be declared.” 21 C.F.R. § 101.9(c)(6)(iv); see also Fernandez, 2018 WL 2128450, at *4.

Statements about nutrients, however, do not necessarily have express preemption.

Under § 101.13(i)(3), “the label or labeling of a product may contain a statement about the amount or percentage of a nutrient if … [t]he statement does not in any way implicitly characterize the level of the nutrient in the food and it is not false or misleading in any respect.” Thus, “A nutrient content claim governed by § 343(r)(2) is …any claim outside of the nutrition-facts box that the manufacturer has chosen to make about the same kind of nutrients discussed inside the … nutrition information box.” Id.

With that backdrop, the court came to different conclusions about express preemption as to claims based on simply listing the number of net carbs or explaining how calculated them, on the one hand, and claims based on characterizing the number of net carbs as “Only Xg Net Carbs” and discussing the impact of sugar alcohols on blood sugar, on the other. Much of the analysis related to plaintiff’s argument that statements about net carbs cannot be preempted because they are not explicitly mentioned in the regulations. “Plaintiff’s argument that Section 343(q) of the NLEA and its implementing regulations, do not specifically list Net Carbs as a nutrient nor require the inclusion of Net Carbs in the Nutrition Facts panel is unavailing. The broad language in Section 343(r)(1) includes claims regarding nutrients, and relationships of nutrients, ‘of the type’ required by paragraph (q)(1) or (q)(2), obviating the need for specific categorical references to nutrients and nutrient relationships . . . ” The court also did not require that the FDA had to have expressly permitted the challenged labeling language. Here, there was ample evidence that FDA considered the language without prohibiting them. Among that evidence was the rejection of a citizen petition on the net carbs description in one of the products, noting “The agency has not generally objected to the use of ‘net carbohydrate” type information on food labels if the label adequately explains how the terms are used. If [the] FDA determines that such statements or their explanations are false or misleading, we will take appropriate action.” Thus, the court concluded that, “while the FDA may not have considered the exact language addressed …, it had clearly addressed the substance of the claims at issue.”

Statements about the products having “only” a certain number of grams of net carbs and explaining whether sugar alcohols have an effect on blood sugar levels did not have the same record and were not preempted. Implied nutrient claims—the implication of “only” is the net cabs in these products was low—are subject to misbranding unless FDA has set a criteria and it has been met. That has not happened with net carbs yet. As to explaining blood sugar impact, the court did not consider that to be a claim about nutrient content or a health related claim. We get the former, but the explanation of the latter was lacking. At least in the lay sense, saying nutrients in the food do not impact blood sugar does seem like a claim about health.

Getting past preemption did not mean plaintiff was done. Primary jurisdiction was looming. As would be expected, every claim that was preempted was also subject to primary jurisdiction. The net was cast a little broader, though.

Upon consideration of plaintiff’s claims and application of the four factors, primary jurisdiction applies with regard to plaintiff’s Net Carbs figures and calculations, and the “Only Xg Net Carbs” statements, as “[i]t is clear that it is the FDA’s role to decide what calculation methods manufacturers may use, not the courts.” Johnson, 2017 WL 6420199, at *9. Primary jurisdiction does not apply to plaintiff’s claims as to whether the labeling statements on the impact of sugar alcohols on blood sugar are false or misleading, as that is a factual issue within the traditional real of judicial competency.

Boiling it down, the distinction seemed to be that it is for FDA to determine the criteria for low net carbohydrate food, which is closely related to a number of issues it already decides. While there was not much analysis as to the discussion of blood sugar impact, the court clearly felt that was the sort of thing that it could decide as misleading or not without treading on regulatory toes.

Only after addressing preemption and primary jurisdiction did the court turn to whether New York state law claims for consumer fraud and warranty had been stated on the face of the complaint. Consumer fraud was not and it was not very close. Facts were not asserted that the challenged labeling was deceptive in a material way, which should require extra facts under Fed. R. Civ. P. 9(b). Nor did asserted facts establish any injury. Even with a reduced bar for economic injury from an allegedly over-priced product, “plaintiff only conclusorily asserts that Atkins Nutritionals charges a premium for its products and provides no facts regarding what the premium was, what price he paid for the products, or the price of non-premium products.” So, plaintiff did not assert any consumer fraud claim, regardless of what defense might apply.

He also did not have a warranty claim, because New York requires timely notice and that was not alleged. The court declined to adopt an exception to this rule for consumer products. This defect could not be cured with re-pleading. The plaintiff would get a third shot at pleading facts for some consumer fraud claim not subject to express preemption or primary jurisdiction. We have a hard time seeing a claim based solely on sugar alcohols and whether the amounts in these products affect blood sugar levels. Plaintiff can claim this information was material to his decision to buy this manufacturer’s Chocolate Chip Cookie Dough Bar, Sweet & Salty Trail Mix, and Chocolate Peanut Candies over other items at his local Wal-Mart, but it is hard to imagine facts supporting that convenient assertion.

 

We maintain a number of “scorecards” on legal issues where we judge the defense advantage is sufficiently great that including all cases, even if adverse, does not violate our injunction against doing the other side’s research for them.  Three of the scorecards – PMA preemption, generic preemption, and innovator liability, pretty much update themselves from the results of the case alerts we run.

The fourth – cross-jurisdictional class action tolling – is different.  That’s something we’ve been interested in since the Bone Screw litigation.  Back in the early 1990s, the idea of class actions in product liability/personal injury hadn’t become nearly as risible as it is today.  The Bone Screw plaintiffs filed a purported nationwide class action, which lingered in the MDL a while before certification was denied.  See In re Orthopedic Bone Screw Products Liability Litigation, 1995 WL 273597 (E.D. Pa. Feb. 22, 1995) (in our federal class action denial cheat sheet).  Plaintiffs then claimed that this bogus class action tolled the statute of limitations of every state in the country.  That set off a nationwide fight over cross-jurisdictional class action tolling, culminating in victories in Maestas v. Sofamor Danek Group, Inc., 33 S.W.3d 805 (Tenn. 2000), and Wade v. Danek Medical, Inc., 182 F.3d 281 (4th Cir. 1999) (applying Virginia law); amicus victories in Portwood v. Ford Motor Co., 701 N.E.2d 1102 (Ill. 1998), and Ravitch v. Pricewaterhouse, 793 A.2d 939 (Pa. Super. 2002), and a loss (by a different Bone Screw defendant) in Vaccariello v. Smith & Nephew Richards, Inc., 763 N.E.2d 160 (Ohio 2002).

Since cross-jurisdictional class action tolling involves many kinds of litigation – not just prescription medical product liability litigation – it requires a special effort to update.  We did that the other day for the last couple of years, and in so doing we discovered the hijacking effort against the New York statute of limitations mentioned in the title of this post.  As is obvious from the scorecard, for many years New York courts have considered, and rejected, cross-jurisdictional class action tolling in decisions involving state law (federal law involves the execrable American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974) decision).

The first New York case to consider if there should be cross-jurisdictional class action tolling in state-law actions was Singer v. Eli Lilly & Co., 549 N.Y.S.2d 654 (N.Y. App. Div. 1990), in which plaintiffs relied on prior, never-certified class actions to extend a special one-year statutory revival of time-barred DES cases.   Singer relied on Jolly v. Eli Lilly & Co., 751 P.2d 923 (Cal. 1988), to reject cross-jurisdictional tolling. Class action tolling “must not be regarded as encouragement to lawyers in a case of this kind to frame their pleadings as a class action, intentionally, to attract and save members of the purported class who have slept on their rights.”  Singer, 549 N.Y.S.2d at 660 (citation and quotation marks omitted).

Plaintiffs, like the plaintiff in Jolly, had ample opportunity to assert timely claims, but did not. . . .  [T]he mere commencement of the [other] class action did not alert defendants as to the kind of claims alleged by plaintiffs here.  Thus, whether viewed as a failure to give the requisite notice or to satisfy the class membership requirement of the earlier action, the American Pipe tolling doctrine should not be applied here.

Id. (discussion of Jolly omitted).

Likewise, in New York Hormone Replacement Therapy Litigation (Ansley), 2009 WL 4905232 (N.Y. Sup. Nov. 30, 2009), an unsuccessful West Virginia class action could not toll the New York statute of limitations.

[T]his court finds defendants’ arguments persuasive to conclude that the tolling remedy authorized under the American Pipe doctrine is inapplicable here and does so relying on case law from the federal courts sitting in New York.  As defendants note, American Pipe . . . involve[s] limitations periods derived from federal statutes, whereas here only New York law is implicated. . . .  The wisdom of adopting the American Pipe rule in mass tort cases is, to say the least, highly debatable.

Id. at *? (citations and quotation marks omitted).  New York Hormone relied on prior New York precedent involving other state’s statutes of limitations.  See In re Agent Orange Products Liability Litigation, 818 F.2d 210, 213 (2d Cir. 1987) (no cross-jurisdictional class action tolling under Hawaii law); In re Rezulin Products Liability Litigation, 2005 WL 26867, at *3 (S.D.N.Y. Jan. 5, 2005) (same, applying New Mexico law).  See Kaufman v. Sirius XM Radio, Inc., 980 N.Y.S.2d 276 (table), 2013 WL 5429364, at *4 (N.Y. Sup. Sept. 17, 2013) (“well established that American Pipe did not affect state law”; rejecting several arguments for class action tolling under state law) (state court decision).

Soward v. Deutsch Bank AG, 814 F. Supp.2d 272 (S.D.N.Y. 2011), was the first of a string of federal court decisions likewise declining to extend class action tolling to unsuccessful state law class actions brought in other jurisdictions.  Soward – a non-personal injury case − recognized that “the question of ‘whether, and to what extent, the statute of limitations should be tolled by the filing of a putative class action in another jurisdiction’ is purely a question of state law.”  Id. at 281 (quoting Casey v. Merck & Co., 653 F.3d 95, 100 (2d Cir. 2011) (applying Virginia law)).  Finding no basis to “import” an expansion of tort law into New York jurisprudence, Soward held:

Predicting how New York courts would rule on the issue of cross-jurisdictional tolling would be difficult.  The few states that have considered the issue have been split in both their acceptance of cross-jurisdictional tolling and the rationale for their decision.  Furthermore, little authority exists as to how a federal court in this Circuit decides whether a state would allow cross-jurisdictional tolling when that state has not addressed the issue.  Of the federal courts that have considered this issue, most have refused to extend the doctrine into a state that has yet to consider it. . . .  In the face of these overwhelming precedents, I cannot say that New York would adopt cross-jurisdictional tolling and decline to import the doctrine into New York’s law.  This Court will therefore not toll New York’s statute of limitations for the period when the . . . class certification status was pending.

Id. at 281-82 (citations and footnotes omitted).

In Adams v. Deutsche Bank AG & Deutsche Bank Securities, Inc., 2012 WL 12884365 (S.D.N.Y. Sept. 24, 2012), meritless class actions failed to toll the New York statute of limitations on the strength of Soward and the lack of any contrary New York precedent:

Neither party has identified any decision in which a court applying New York law has applied cross-jurisdictional tolling.  However, in a thorough and comprehensive survey of the issue, [Soward] recently declined to import the doctrine of cross-jurisdictional tolling into New York law because it is unclear whether New York courts would adopt this principle Significantly, Plaintiffs acknowledge the decision in Soward, and provide absolutely no argument as to why the Court should apply cross-jurisdictional tolling to the facts of this case or why New York courts would adopt this theory.  Therefore, the Court declines to import this novel and complex feature into New York law, and finds that Plaintiffs are not entitled to tolling of the limitations period based on either [of] the . . . Class Actions.

Id. at *5 (citation omitted).

Similarly, in In re Bear Stearns Cos. Securities, Derivative, & ERISA Litigation, 995 F. Supp.2d 291 (S.D.N.Y. 2014), the court extensively discussed cross-jurisdictional class action tolling in concluding that no such thing was recognized under New York law:

[Plaintiff’s] common law fraud claims are not tolled by the pendency of the Class Action as a matter of New York law.  American Pipe tolling does not apply to [plaintiff’s] state claims because it only applies to federal law causes of action.  In certain circumstances, a New York statute of limitations may be tolled by the pendency of a class action, but New York currently does not recognized tolling where that class action is filed outside New York state court (so-called “cross-jurisdictional tolling”).  Cross-jurisdictional tolling is at issue whenever a court considers the timeliness of state law claims originally filed outside that state’s courts.

Judges in this district have declined to recognize cross-jurisdictional tolling under state law, because such tolling can be applied only if it is clearly recognized by authoritative state court decisions.

Id. at 311 (citations omitted).  Bear Stearns agreed with the “compelling policy reasons against such tolling” expressed in Vincent v. Money Store, 915 F. Supp.2d 553, 569-70 (S.D.N.Y. 2013), a case applying California law:

[U]nless all states simultaneously adopt the rule of cross-jurisdictional class action tolling, any state which independently does so will invite into its courts a disproportionate share of suits which the federal courts have refused to certify as class actions after the statute of limitations has run.

995 F. Supp.2d at 312 (quoting Vincent, 915 F.Supp.2d at 569-70).  “[M]ost [federal courts] have refused to extend the doctrine into a state that has yet to consider it.”  Id. (quoting Soward, 814 F. Supp.2d at 281-82).  With no dispute that “New York courts have not yet spoken authoritatively on this issue,” the Bear Stearns court refused to expand the scope of New York tort law by permitting cross-jurisdictional class action tolling.  995 F. Supp.2d at 312.  Bear Stearns was ultimately affirmed, but without any discussion of cross-jurisdictional class action tolling.  SRM Global Master Fund Limited Partnership v. Bear Stearns Cos., 829 F.3d 173 (2d Cir. 2016).

In Gould v. Helen of Troy Ltd., 2017 WL 1319810 (S.D.N.Y. March 30, 2017), the plaintiff attempted to argue that American Pipe tolled a New York state-law class action by pointing to prior unsuccessful class actions in other states.  Id. at *4.  The Court responded with Kaufman’s observation that “[i]t is well established that American Pipe did not affect state law.”  With no New York law supporting cross-jurisdictional tolling, “[p]laintiff’s New York . . . claims are not tolled by American Pipe.  Id.

Several non-New York courts have likewise recognized that state’s rejection of cross-jurisdictional class action tolling. See In re Cathode Ray Tube CRT Antitrust Litigation, 27 F. Supp.3d 1015, 1022 (N.D. Cal. 2014) (“the Court follows the Southern District of New York in declining to import American Pipe into New York state law”; citing Soward); Romig v. Pella Corp., 2014 WL 7264388, at *5-6 (D.S.C. Dec. 18, 2014) (“there is no indication that New York recognizes cross-jurisdictional class action tolling and the court declines to establish such a rule in the first instance”); Coe v. Philips Oral Healthcare Inc., 2014 WL 5162912, at *5 (W.D. Wash. Oct. 14, 2014) (“Cross-jurisdictional tolling may be permitted where a class action is filed in New York and makes claims under New York state law; it is not, however, permitted where the class action was filed outside of New York and make no New York claims.”).

But after 2014, the attempted hijacking begins.  It occurred in the context of parallel state class action antitrust claims in the LIBOR MDL litigation – demonstrating once again why defendants quite rightly hate MDLs because transferee judges contort the law to expand liability as a tool to force settlement.  There are two LIBOR decisions that recklessly predict that many states – even those with contrary appellate precedent – would allow cross-jurisdictional class action tolling.  See In re LIBOR-Based Financial Instruments Antitrust Litigation, 2015 WL 6243526 (S.D.N.Y. Oct. 4, 2015) (“LIBOR II”); In re LIBOR-Based Financial Instruments Antitrust Litigation, 2015 WL 4634541 (S.D.N.Y. Aug. 4, 2015) (“LIBOR I”).

Contrary to what prior New York decisions held, LIBOR I stated that “States generally recognize some form of class-action tolling.”  2015 WL 4634541, at *127.  That’s simply false, as our scorecard amply demonstrates.  LIBOR I purported to conduct a perfunctory “Erie analysis” without any focus on prior New York law, concluding generally that:

Absent state-specific considerations, we believe the best prediction is that a state would recognize cross-jurisdictional tolling.  The most salient consideration is that the reasoning of American Pipe and analogous state-court cases applies with equal force regardless of whether a class action is filed in the same jurisdiction as the subsequent individual action or in a different jurisdiction.

*          *          *          *

Some federal courts seem to have applied a presumption against cross-jurisdictional tolling out of a concern over federal interference with state policy.  But a proper respect for state judiciaries does not require such timidity.

2015 WL 4634541, at 129-30, citing nothing supportive of these propositions, omitting citations to Erie decision LIBOR I refused to follow.  The same Erie “analysis,” if it can be called that, was followed, verbatim, in LIBOR II.  See 2015 WL 6243526, at *139-40.  As a result, these blatantly result oriented opinions simply refused to follow prior New York precedent on cross-jurisdictional class action tolling:

Soward . . . concluded, “I cannot say that New York would adopt cross-jurisdictional tolling and decline to import the doctrine into New York’s law.”  Relying on Soward (and on other federal cases dealing with non-New York law), Judge Sweet more recently found “compelling” the concern that a state “will invite into its courts a disproportionate share of suits which the federal courts have refused to certify as class actions” by accepting cross-jurisdictional tolling.

We respectfully disagree with our fellow judges’ predictions of New York law.  Specifically, we disagree with our colleagues’ prediction that New York would reject cross-jurisdictional tolling to the extent that those decisions are predicated on floodgate concerns.

LIBOR I, 2015 WL 4634541, at *133-34; LIBOR II, 2015 WL 6243526, at *145 (citations omitted).

The LIBOR decisions thus violated the most fundamental aspect of Erie – that “[a] federal court in diversity is not free to engraft onto those state rules exceptions or modifications which may commend themselves to the federal court, but which have not commended themselves to the State in which the federal court sits.”  Day & Zimmerman, Inc. v. Challoner, 423 U.S. 3, 4 (1975).  The Second Circuit in particular has long cautioned:

[T]he proper function of this Court is to ascertain what New York law is, and not to speculate about what it will be, or in Learned Hand’s felicitous phrase, “to embrace the exhilarating opportunity of anticipating a doctrine which may be in the womb of time, but whose birth is distant.” Spector Motor Service v. Walsh, 139 F.2d 809, 823 (2d Cir. 1943) (dissent), vacated 323 U.S. 101 (1944).  It is certainly not our function to apply the rule we think better or wiser.

Garland v. Herrin, 724 F.2d 16, 17 (2d Cir. 1983) (emphasis added).  In more modern terms, this same inherent Erie conservatism has been expressed as an admonition that “we are mindful that our role as a federal court sitting in diversity is not to adopt innovative theories that may distort established state law.”  Travelers Insurance Co. v. Carpenter, 411 F.3d 323, 329 (2d Cir. 2005) (citation and quotation marks omitted).

Thus the current attempt to hijack the New York statute of limitations through cross-jurisdictional class action tolling began with two essentially identical decisions that ignored prior precedent and made an Erie prediction while turning Erie on its head.

The hijacking continued in Famular v. Whirlpool Corp., 2017 WL 2470844 (S.D.N.Y. June 7, 2017), a purported economic loss class action.  First, the court in Famular claimed “not [to be] aware of a New York state court that has addressed whether New York recognizes tolling based on a case filed outside New York.”  Id. at *7.  Well, we’ve cited three such decisions in this blogpost – Singer, New York Hormone, and Kaufman – so somebody didn’t look very hard.  Second, Famular opted to follow LIBOR, including its subversion of the Erie doctrine:

[Defendant] argues the Court should follow a line of federal cases refusing to apply cross-jurisdictional tolling because New York courts have not recognized cross-jurisdictional tolling. . . .  [T]he bulk of the contrary authority relies on a presumption against cross-jurisdictional tolling.  But the reasoning underlying this presumption is unpersuasive.

First, some courts have suggested that a federal court should not impose a legal doctrine where the state courts have not determined an uncertain issue.  This is sometimes explained by “a concern over federal interference with state policy.”  But this reasoning is unsound because it ignores the federal courts’ duty in these cases.  As the Second Circuit has repeatedly instructed, when New York’s courts have not decided an issue of state law, it is the federal court’s “job to predict how the New York Court of Appeals would decide the issue[]”. . . .  Thus, the Court would be ignoring its duty by adopting a presumption against imposing a legal rule the state courts have not addressed without a reasoned basis for doing so.

Second, [defendant] argues the Court should not recognize cross-jurisdictional tolling based on docket-control concerns.  In [LIBOR], the court convincingly explains that the justification for rejecting cross-jurisdictional tolling − namely, “a risk that a state will attract individual out-of-state plaintiffs after a failed federal class action” − is unpersuasive, at least in New York.

Id. at *7-8 (citations omitted).

That rationale simply not the law – it’s the opposite of the law.  Erie does not give federal courts applying state law a blank check to write on a blank slate.  So we thought we’d take a look at what courts in the Second Circuit have actually “repeatedly instructed.”  For example, how often has the injunction in Travelers v. Carpenter against Erie predictions of “innovative” liability theories been cited?  How about:

[W]e must apply the statute as it has been interpreted and applied by New York’s highest court.  As we have previously explained, “our role as a federal court sitting in diversity is not to adopt innovative theories that may distort established state law.  Instead we must carefully predict how the state’s highest court would resolve the uncertainties that we have identified.”

Runner v. New York Stock Exchange, Inc., 568 F.3d 383, 386 (2d Cir. 2009) (citations omitted); accord National Union Fire Insurance Co. v. Stroh Cos., 265 F.3d 97, 106 (2d Cir. 2001); City of Johnstown, N.Y. v. Bankers Standard Ins. Co., 877 F.2d 1146, 1153 (2d Cir. 1989); Avedisian v. Quinnipiac University, 387 F. Appx. 59, 60 (2d Cir. 2010); Shillingford v. Astra Home Care, Inc., 293 F. Supp.3d 401, 416 (S.D.N.Y. 2018); In re General Motors LLC Ignition Switch Litigation, 2016 WL 3996243, at *2 (S.D.N.Y. July 22, 2016); Versatile Housewares & Gardening Systems, Inc. v. Thill Logistics, Inc., 819 F. Supp.2d 230, 236 (S.D.N.Y. 2011); In re Methyl Tertiary Butyl Ether (MTBE) Products Liability Litigation, 274 F.R.D. 106, 112 (S.D.N.Y. 2011); Empire City Capital Corp. v. Citibank, N.A., 2011 WL 4484453, at *2 (S.D.N.Y. Sept. 28, 2011); Musaji v. Banco do Brasil, 2011 WL 2507712, at *3 (S.D.N.Y. June 21, 2011); Travelers Casualty & Surety Co. v. Dormitory Authority, 735 F. Supp.2d 42, 88 (S.D.N.Y. 2010); Liddle & Robinson, LLP v. Garrett, 720 F. Supp.2d 417, 424 (S.D.N.Y. 2010); Hunt v. Enzo Biochem, Inc., 471 F. Supp.2d 390, 412 n.140 (S.D.N.Y. 2006); Cooper Industries, Inc. v. Agway, Inc., 987 F. Supp. 92, 104 (N.D.N.Y. 1997) (adding, “this Court will not create or extend New York law to recognize such a novel duty; that is the bailiwick of New York’s courts and legislature”). That’s five Second Circuit cases and twice that number of New York district court cases.

And before that formulation, we had the more colorful version originally penned by Judge Learned Hand, and quoted, above, in Garland, 724 F.2d at 17.  The distinctive language makes that proposition particularly easy to search for.  Several additional Second Circuit and New York District Courts have used Judge Hand’s terminology to embrace the principle that Erie precludes the sort of expansive predictions of state law consciously engaged in by the courts in LIBOR and Famular.  See, in addition to Garland:  Hausman v. Buckley, 299 F.2d 696, 704 (2d Cir. 1962); Katt v. City of New York, 151 F. Supp.2d 313, 335 n.17 (S.D.N.Y. 2001), aff’d in pertinent part, 372 F.3d 83 (2d Cir. 2004); Levesque v. Kelly Communications, Inc., 1993 WL 22113, at *6 (S.D.N.Y. Jan. 25, 1993); Eskimo Pie Corp. v. Whitelawn Dairies, Inc., 284 F. Supp. 987, 993 (S.D.N.Y. 1968).

But on the question of cross-jurisdictional class action tolling under New York law, the hijacking of the New York statute of limitations by federal courts determined to facilitate class actions has proceeded apace in 2018.  Chavez v. Occidental Chemical Corp., 300 F. Supp.3d 517, 530 (S.D.N.Y. 2018), reconsideration denied, 2018 WL 620488 (S.D.N.Y. Jan. 29, 2018), became the first case purporting to apply cross-jurisdictional class action tolling in a personal injury action.  Perhaps emboldened by current political practices, Chavez falsely stated that “Courts in this District have split, 2–2, on in their predictions as to whether the New York Court of Appeals would apply cross-jurisdictional tolling as a matter of New York law.”  Id. at 530 (omitting Gould and Adams decisions discussed above).

Fake precedent!

Chavez then followed the Erie error that LIBOR began, also characterizing the refusal to predict “expand[ing]” state-law liability – the position embraced in the seven Second Circuit cases just discussed − as “timidity.”  Id.  “[L]argely for the reason stated in LIBORChavez predicted that that an unsuccessful class action, filed anywhere (the plaintiffs weren’t even Americans), would trump the New York statute of limitations even though more than 17 years had elapsed.  Id. at 532.  At least Chavez agreed to certify the issue to the Second Circuit.  Id. at 538 (“Whether New York law permits cross-jurisdictional class action tolling is both a disputed question of law in this District and an issue whose resolution in plaintiffs’ favor is a necessary predicate to the continued survival of this complex and important multi-national litigation”).  That appeal is pending.  See Chavez v. Occidental Chemical Corp., No. 18-1120 (2d Cir.).

Most recently, Hart v. BHH, LLC, 323 F. Supp.3d 560 (S.D.N.Y. 2018), reconsideration denied, 2018 WL 5729294 (S.D.N.Y. Nov. 2, 2018), described Chavez as “the most recent and persuasive case law in this District.”  Id. at 556.  Following Chavez, Hart needed only one paragraph to conclude that cross-jurisdictional class action tolling, arising from failed Ohio class action, trumped the New York statute of limitations in a warranty class action brought in New York.  Id.

We can only hope that the Second Circuit continues its decades of insistence on Erie conservatism in the Chavez appeal.  However, there’s a possibility that the court won’t even have to reach the question – and for the best of reasons.  In June of this year, while the Chavez appeal was pending, the Supreme Court decided that American Pipe tolling does not allow stacking of one class action after another.  See China Agritech, Inc. v. Resh, 138 S. Ct. 1800, 1811 (2018) (“the Rules do not offer . . . a reason to permit plaintiffs to exhume failed class actions by filing new, untimely class claims”).  Without ever having to consider state law, the Court rejected the perverse practice of seriatim class actions, all based on American Pipe, tolling statute of limitations effectively forever:

[Plaintiffs’] proposed reading would allow the statute of limitations to be extended time and again; as each class is denied certification, a new named plaintiff could file a class complaint that resuscitates the litigation. . . .  [T]he time for filing successive class suits, if tolling were allowed, could be limitless. . . .  Most statutory schemes provide for a single limitation period without any outer limit to safeguard against serial relitigation.  Endless tolling of a statute of limitations is not a result envisioned by American Pipe.

Id. at 1808-09 (citations and footnotes omitted).

All of the recent New York Erie-offending cross-jurisdictional class action tolling decisions − LIBOR, Famular, Chavez, and Hart − were, like China Agritech, class actions seeking to take advantage of the purported tolling effect of an earlier, unsuccessful class action (or, in Chavez, multiple, successive failed class actions).  Thus, they should all independently fall under China Agritech – unless the purveyors of class actions are now going to argue that hypothetical New York cross-jurisdictional class action tolling (not affirmatively recognized by any New York court) is even broader than the federal American Pipe doctrine.  A fortiori, we don’t think that any possible reading of New York law would extend American Pipe to this absurd extreme.  With class action stacking now prohibited under the American Pipe doctrine, assertion of cross-jurisdictional class action tolling on the same theory should decrease considerably.

Finally, the fact that all recent New York cross-jurisdictional class action tolling decisions (including the favorable Bear Stearns and Gould decisions) have involved plaintiffs attempting to stack one class action on another in contravention of American Pipe, should open the eyes of those courts that tend to exhibit almost blind faith in the class action mechanism and seek to extend it in various and sundry ways. This includes similar, concurrent attempts being made to carve out class actions from constitutional Due Process constraints on personal jurisdiction under Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017) (most recently discussed just last week), as well as proponents of cy pres distributions.

Frankly, class actions, at least those seeking money damages, are no longer (if they ever were) instruments for pursuit of social good.  Rather they are tools that the lawyers bringing them use for personal enrichment.  They can bring big, scary-looking lawsuits without even the bother of dealing with real clients.  Rather than benefiting society, they extort huge fees for themselves, and little if anything for the supposed classes, by bringing litigation that, without class actions, would be too trivial for anybody to bother with.  This kind of bottom-feeding litigation is of no benefit to anyone but lawyers.  The kind of “enforcement” these class actions purport to pursue, if needed, can be brought far more efficiently and equitably by law enforcement and/or administrative agencies.  The abusive litigation and legal gamesmanship on a grand scale that Rule 23, and similar state rules, have engendered is why we believe that Rule 23(b) should simply be done away with, and that Congress and other legislative bodies should decide whether (and under what standards) any particular statute, or common-law claim, should support representative litigation.

 

Not terribly long ago, we had a series of posts—too many to link—that recounted court decisions rejecting efforts to impose liability on a generic manufacturer for the standard design and labeling claims and/or on an NDA holder for injuries allegedly caused by the use of the generic version of its drug. When the conjunctive held, we called it a one-two punch. We cannot say that we coined the term as used here, but we repeated it more than a few times. It has since become fairly standard for most claims against generic manufacturers to be held preempted by the frightful duo of Mensing and Bartlett. Save abominations like the T.H. case, the concept of innovator liability has largely been put to bed like a kid crashing after a sugar high. Still, plaintiffs sometimes try to impose liability on both the generic manufacturer whose drug they took and the branded manufacturer whose drug they did not.

When they do and a court rules, we pull the one-two punch from the back of our metaphor closet and see how it lands. In Preston v. Janssen Pharms., Inc., No. 158570/17, 2018 WL 5017045 (N.Y. Sup. Ct. Oct. 12, 2018), the plaintiff claimed vision loss from her off-label use of the generic version of Topiramate, a well-established anti-convulsive. For more than a decade before she began her three year course, the label for the branded version contained warnings and precautions about ocular conditions that could result in permanent vision loss if untreated. After waiting more than two years to sue, she sued both the branded and generic manufacturers, claiming the records were unclear as to which drug she took for three years.

The branded manufacturer moved to dismiss, contending the complaint only asserted claims based on the generic drug that it did not make. It is not clear that the plaintiff tried to assert innovator liability in addition to claiming that the branded dug might have been used, but the court looked at the evidence and ruled on the merits. Because the evidence was clear that only the generic drug had been used, the next step to first punch was whether New York recognizes innovator liability. Citing the same cases we have before, the Preston court held that “named-brand drug manufacturers . . . cannot be held liable to the user of the generic form of that drug, since the manufacturer of the brand named drug owes no duty to the user of the drug’s generic form.” Id. at *3.

That takes us to the motion to dismiss of the generic manufacturer, the potential second punch. Plaintiff conceded, and the court accepted, that design claims are preempted because the generic manufacturer cannot change the drug’s design. Id. at *6. The plaintiff disputed that the warnings claim was preempted based on an alleged failure to update the generic label to match the branded drug’s label. For about eight months after the plaintiff started the generic drug, its label allegedly did not match. When the plaintiff alleged suffered her injuries, it did. A few years later, it allegedly did not match again. Plaintiff claimed that the later mismatch knocked out preemption for any warnings claim, but the court parried that argument. Following Mensing, the court held preempted claims based on any period when the warning of the generic drug matched, but allowed at the pleadings stage any claim based on the pre-injury period when there was an alleged failure to update. Id. at *5. So, the second punch did not quite land flush. It may be difficult for the plaintiff to sustain a claim about the warning when the plaintiff was first prescribed the drug when she kept receiving it when the warning was updated and her injuries allegedly developed during this later period. We suppose the warning claim might get kicked at the summary judgment stage. Preston also addressed the adequacy of pleading of various other claims that tend to be thrown into a product liability complaint, but she will have a chance to try to correct what was inadequately pled. Nothing too decisive or interesting about that, at least to us and at this stage.

There was a time when we paid quite a bit of attention to the circumstances under which a participant in a clinical trial could impose liability on the sponsor of the clinical trial. We even tried a case to a defense verdict for the sponsor of a clinical trial in a case where the plaintiff claimed, as to our client and the investigator defendant, that his HIV misdiagnosis should have been reversed during the clinical trial, which involved a medication switch for patients well controlled under an existing treatment regimen. Leading up to that trial and after it, we gained a pretty good understanding of the law on liability related to clinical trials. For instance, cases have looked at whether the learned intermediary doctrine is somehow disrupted when the prescription is written by a clinical trial investigator.  (Like here and here)  Cases have also looked at whether participants in a clinical trial can compel the sponsor to continue providing them the study drug after the trial ends.  (Like here and here)  (Legislative efforts to encourage drug manufacturers to sponsor clinical trials for rare conditions have been discussed before, like here.)

For some reason, and with one recent exception, it seems like there have been fewer of these cases in the last few years. There are certainly lots of clinical trials going on and, presumably, patients in them who might claim some injury, physical or otherwise, from their participation. Could it be that the putative plaintiffs have backed off of trying to sue clinical trial sponsors? Could it be that the plaintiff lawyers have read the rulings and decided these cases are not worth bringing? Could it be that the cases still exist, but we are not seeing decisions from them caught in the net Bexis uses to find blogworthy decisions?

We may never know the real answer, but we did see an appellate decision from New York last week in Wholey v. Amgen, Inc., — N.Y.S.3d –, 2018 WL 4866993 (N.Y. App. Div. Oct. 9, 2018). Wholey involved claims of injury from the use of a well-known and often-studied FDA-approved prescription drug both during and after a clinical trial. The defendants filed motions to dismiss, which were granted in part and denied in part, and an appeal ensued. This is the part we care about:

As the sponsors of a clinical trial, defendants owed no duty to the plaintiff Lauren Wholey, as enrollee in the trial (see Sykes v. United States, 507 Fed. Appx. 455, 462 (6th Cir. 2012); Abney v. Amgen, Inc., 443 F.3d 540, 550 (6th Cir. 2006)). Thus, her claims concerning the drug Enbrel must be limited to those that allegedly arose after she stopped participating in the trial and was prescribed the drug as a patient.

Id. at *1. When we said that was the part we care about, we meant it. That is the full discussion of the issue of liability for the sponsors of a clinical trial. No duty means no liability. We appreciate the finality and brevity of the analysis. We emulate the brevity here.

 

If a court acknowledges that no state or federal appellate courts in the jurisdiction have addressed the question before it, we think at a minimum there also should be an acknowledgement of the Erie doctrine. Yet, in the case of Fogel v. Sorin Group USA, Inc., 2018 WL 4680022 (S.D.N.Y. Sep. 28, 2018) you get the former without the latter. Fogel is one of our least favorite types of decisions, one that claims to be a prediction of state law but instead over reaches to create new liability where it did not previously exist. That is not the job of federal courts interpreting state law.

Under the Erie doctrine, in the words of the Supreme Court:

[a] federal court in diversity is not free to engraft onto those state rules exceptions or modifications which may commend themselves to the federal court, but which have not commended themselves to the State in which the federal court sits.

Day & Zimmerman, Inc. v. Challoner, 423 U.S. 3, 4 (1975). And, not surprisingly, the Second Circuit agrees. See Runner v. New York Stock Exchange, Inc., 568 F.3d 383 (2d Cir. 2009) (“our role as a federal court sitting in diversity is not to adopt innovative theories that may distort established state law”). But Fogel disregarded Erie and then disregarded that New York has not recognized a failure to warn claim based on failure to report adverse events to the FDA.

Here are the facts. Defendant manufacturers a heart valve that underwent pre-market approval by the FDA. Fogel at *1. Plaintiff’s child underwent surgery in which her pulmonary heart valve was replaced with defendant’s valve. Two years later, the valve failed and plaintiff’s child had to undergo revision surgery during which complications occurred that caused permanent injuries. Id. at *2.

In deciding defendant’s motion to dismiss, the court found several of plaintiff’s claims were preempted. A fraud allegation that defendant concealed information from the FDA during the PMA process was preempted under Buckman as fraud-on-the-FDA. Id. at *4. Design defect was preempted under Riegel because the valve’s design was approved by the FDA and any challenge to that design would impose state law requirements that are “different from or in addition to” FDA requirements. Id. Manufacturing defect failed because plaintiff “failed to plausibly allege a manufacturing defect that violated FDA requirements.” Id. at *5. A conclusory allegation of a deviation was insufficient.

That leaves failure to warn – where the decision goes astray. As with Stengel v. Medtronic Inc., 704 F.3d 1224 (9th Cir., 2013) (en banc) and Hughes v. Boston Scientific Corp., 631 F.3d 762 (5th Cir. 2011), the Fogel court recognizes that a traditional state law failure to warn claim must be preempted under Riegel. “To the extent Plaintiff[] claim[s] that the [device’s] warning label was inadequate . . ., like the design-defect claim, must fail because the warning was approved by the FDA.” Fogel at *5. That should be the end of the story. Because “any attempt to predicate the [] claim on an alleged state law duty to warn doctors directly would have been expressly preempted.” Stengel, 704 F.3d at 1234. So let’s call failure-to-report claims what they really are – a sidestep around preemption. Frankly, they shouldn’t even get that far because what they really are are attempts at private enforcement of FDA reporting requirements which should be impliedly preempted under Buckman and 21 U.S.C. § 337(a).

That’s certainly the case in New York where a failure-to-report claim has not been recognized under state law. In fact, had the district court engaged in an Erie analysis it would have found that in other contexts New York has actually rejected state-law tort claims predicated on failure to report something to a governmental body. See Heidt v. Rome Memorial Hospital, 724 N.Y.S.2d 139, 787 (N.Y. App. Div. 2007) (“Plaintiff has cited no authority to support the proposition that a physician has a common-law duty to report actual child abuse, let alone suspected child abuse. There are good reasons for the absence of such a duty.”); Diana G-D v. Bedford Central School Dist., 932 N.Y.S.2d 316, 329 (N.Y. Sup. 2011), aff’d, 961 N.Y.S.2d 305 (N.Y. App. Div. 2013) (“there is simply no evidence that defendants’ failure to make such a report was knowingly and willful,” which was required for civil liability under child abuse reporting statute); In re Agape Litigation, 681 F. Supp.2d 352, 360-61 (S.D.N.Y. 2010) (rejecting private cause of action premised on federal reporting requirements in Bank Secrecy Act). A more fulsome discussion of these analogous cases in other states can be found in our post here.

District courts faced with an undecided state law question are not allowed to create liability where it did not previously exist. It was not the district court’s job to expand New York’s duty to warn the medical community to include the FDA.

The federal requirements require that adverse events and other reports be made to the FDA. While New York law may require manufacturers to warn the medical profession, that is not the same as a duty to report to the FDA.

Pearsall v. Medtronics, Inc., 147 F. Supp.3d 188, 201 (E.D.N.Y. 2015)(rejecting failure-to-report claims as preempted and not valid under NY law). So, under existing New York law, failure to warn physicians imposes an obligation different from and in addition to the FDA’s requirement to report adverse events. Making the claim both preempted as non-parallel and as purely FDCA-based.

 

We’ve written about a lot of Risperdal summary judgment wins. No medical causation, no warnings causation (learned intermediaries aware of risks), no alternative design, no fraud. So, when we see an opinion that overturns a plaintiff’s verdict on the grounds of (1) impossibility preemption; (2) clear evidence preemption; and (3) no evidence of general causation, we can’t help but wonder how it got to trial in the first place. So we decided to do a little digging. From our review of the case, it appears these issues were all raised at the summary judgment stage but denied. What changed before and after trial? Not the facts that support these arguments. The regulatory history hasn’t changed. The experts’ opinions haven’t changed. Yet, defendant had to go through an amateur-hour trial (we’ll tell you more about that later) and then wait over a year for these post-trial rulings granting judgment as a matter of law. Sure, better a late win then no win at all – but it certainly feels like this could have been avoided.

The case is Byrd v. Janssen Pharm, Inc., No. 1:14-cv-0820, slip op. (N.D.N.Y. Sep. 21, 2018) and, as mentioned above, involved Risperdal, an antipsychotic drug prescribed to treat serious mental conditions – schizophrenia, manic depression, and autism. Plaintiff alleged that his use of Risperdal caused him to develop abnormal breast tissue growth. The two claims that went to trial were negligent design, manufacturing, and warning defect and strict liability design, warning, and misrepresentation. Id. at 3.

The opinion methodically sets out both defendant’s arguments and plaintiff’s responses, but we’re going to jump right to the conclusions. First up was preemption. Standard plaintiff argument: defendant unilaterally should have changed its warning to include gynecomastia and was able to do it via the Changes Being Effected (“CBE”) regulations. Standard impossibility preemption defense: federal law prohibited defendant from changing the FDA-approved labeling and/or there is “clear evidence” that the FDA would have rejected the proposed labeling change. Id. at 12. The court was persuaded as to both impossibility and clear evidence. Defendant presented “clear evidence” that the FDA had rejected its request to add safety and dosing information for pediatric use of Risperdal. Id.

But the court spent most of its analysis on whether a CBE label change even was permissible under federal law. A CBE labeling change can only be made on the basis of new information concerning a serious risk. “[H]ere, the relationship between antipsychotics and [abnormal breast development] was not new information because it had been discussed in basic psychiatry textbooks for decades, and the FDA does not consider gynecomastia a serious adverse event.” Id. at 9. A “serious” adverse event is defined by federal regulations to be an event that either “resulted in inpatient hospitalization or required surgical intervention to prevent inpatient hospitalization.” Id. at 15. And, both plaintiff’s and defendant’s regulatory experts agreed that gynecomastia “would not be a serious adverse event.” Id. at 16-17. Now, plaintiff’s expert was Dr. Plunkett and she was quick to voice her personal disagreement with the FDA on this point – but that’s irrelevant (both to us and to the court). Id. at 17.

The court didn’t stop there. Defendant also argued that plaintiff had failed to satisfy his burden of proof on causation. While defendant made arguments regarding both proximate and medical causation, the court focused its attention on the latter and specifically the lack of general causation evidence. Id. at 26. Starting with Dr. Plunkett who “admitted to not being a causation expert,” but opined on it anyway – the court found her opinion unsupported by the literature. Id. None of the three pieces of literature relied on by Dr. Plunkett included a control group, so at best they were evidence of an association, not a correlation. Dr. Plunkett’s reliance on this literature demonstrated a “disregard for the difference between an association between two things and a causal relationship between those two things.” Id. at 29; see id. at 30 (“a correlation between Risperdal and gynecomastia cannot be drawn without a control group”). The fact that these studies lack a control group was likely not “new” information at trial and again begs the question why this issue is only being properly addressed post-trial.

Plaintiff’s other causation expert likewise had no support for a general causation opinion. His conclusion was that plaintiff’s gynecomastia was “secondary at least in part to prolonged use of Risperdal.” Id. at 31. But, putting aside reliance on the same literature relied on by Plunkett, the only basis plaintiff’s second expert had for his general causation opinion was his differential diagnosis. A differential diagnosis, however, “generally does not prove general causation.” Id. at 33. It assumes general causation has already been proven. Without general causation, defendant was entitled to judgement as a matter of law.

Still, the opinion continues. The remainder of the decision addressed defendant’s alternative request for a new trial based on the inappropriate conduct of plaintiff’s counsel. The court did not need to decide this issue having already found two grounds to overturn the verdict and award judgement in defendant’s favor. Based on the description of plaintiff’s trial antics, however, we can only assume that the court wanted this opportunity to admonish plaintiff’s counsel. Defendant pointed out 23 separate incidences of plaintiff’s attorney’s misconduct in front of the jury. Id. at 34. In concluding that plaintiff’s counsel’s behavior did warrant a new trial, the court relied on:

(1) Plaintiff’s counsel’s self-deprecating tone of voice and posture when referring to his lack of professional skills and/or experience, (2) his helpless tone of voice and posture when referring to the fact that he was bullied as a child, (3) his alternating innocent and defensive tones of voice in response to an admonishment by the Court, (4) the sympathetic facial expressions of the jurors following the aforementioned acts and/or accompanying comments, (5) the credulous expressions of the jurors following Plaintiff’s counsel’s acts of asserting the truth of Plaintiff’s case and/or vouching for his witnesses, and (6) the jurors’ reactions following Plaintiff’s counsel’s acts of offering his personal opinions about the evidence and/or testifying when he could not otherwise introduce evidence.

Id. at 37-38. While this behavior more than justified a new trial – it wasn’t necessary because no childish antics could overcome the fact that plaintiff had failed to prove general causation and that defendant had clear evidence to support impossibility preemption. Both of those things were true a year ago too. But better late than never.

On the same day the Seventh Circuit overturned the verdict in Dolin v. GSK, the court handling the coordinated New York state court Plavix Litigation dismissed the claims of all remaining plaintiffs on the grounds of conflict preemption. Oh happy day!

Plavix is a drug prescribed to inhibit the formation of blood clots. As such, ever since it has been on the market, its label has included warnings regarding the risk of bleeding. In re: Plavix Products Liability Litigation, 2018 WL 4005859, at *2 (N.Y. Sup. Aug. 22, 2018). It is that same risk which plaintiffs in the litigation allege was insufficient. Defendants moved for summary judgment arguing plaintiffs’ failure to warn claims were preempted because defendants could not independently have changed the Plavix warning and plaintiffs’ design defect claims were preempted because defendants could not have changed the design (i.e., the chemical composition) of an FDA approved drug. Id. at *3.

Since we led with the result, you know already that defendants’ arguments held the day. So, usually at this point in our posts we comment on plaintiffs’ arguments and why they failed. In this instance, however, plaintiffs didn’t make any substantive arguments. They instead only made a procedural argument about whether the New York plaintiffs’ generally had designated Dr. Randall Tackett and Dr. Lemuel Moyé as generic experts for all cases. It really isn’t worth delving into other than to say that the court wasn’t swayed by plaintiffs’ counsel’s attempt to disassociate themselves from the “the “Dynamic Duo” since they relied on the experts’ reports and defended them at deposition. Id. at *6.  And, since now was the time for plaintiffs “to either prove it or lose it,” id., relying on a “mere procedural technicality” was insufficient to meet a substantive challenge to all of plaintiffs’ remaining claims. Id.

So, we’ll get right to the court’s analysis which starts with the holding that “federal preemption presents a question of law.” Id. at *7. We like checking off that box. The court then dove into whether the plaintiffs’ failure to warn claims were preempted under Wyeth v. Levine. Wyeth said no preemption where a defendant can unilaterally, without the permission of the FDA, change its label via CBE regulations. When is that possible? When the manufacturer has “newly acquired information.” But,

NY Plaintiffs have not produced any evidence that Defendant was in possession of “newly acquired information” after the FDA approved Plavix in 1997 which would have enabled Defendant to make any unilateral changes to the Plavix warning label without further FDA approval.

Id. at *8. The court also observed that plaintiffs did not challenge that defendants fully complied with FDA regulations in obtaining the approval of Plavix. Id. at *7. In other words, there is no allegation that defendants concealed any information from the FDA when it submitted its New Drug Application (“NDA”) or at any time thereafter during the course of the drug approval process. Id. at *6. FDA had all available information in 1997 and nothing new has developed since. And post-approval label changes, if they are based on information known to the FDA prior to approval of the label are preempted. For more on this issue see our posts on In re Celexa & Lexapro Marketing & Sales Practices Litigation, 779 F.3d 34 (1st Cir. 2015) and Utts v. Bristol-Myers Squibb Co. here, here, and here.

As to design defect, the court looked at the opinion of plaintiffs’ expert, Dr. Moyé which was essentially that Plavix was defectively designed from its inception and that defendants either had to re-design the drug post-FDA approval or stop selling it. Id. We already know the Supreme Court has rejected these arguments as the answers to conflict preemption.   Mutual Pharm. Co., Inc. v Bartlett, 570 US 472 (2013). Which the court summed up nicely here:

If Defendant did the former to avoid state tort liability, it would be creating a new drug requiring an NDA and FDA approval. Moreover, to have stopped selling Plavix, as this generic expert suggests, to “escape the impossibility of complying with both its federal and state law duties . . . [would be] incompatible with . . . [US Supreme Court] pre-emption jurisprudence.

Id. (citations omitted).

As if preemption wasn’t enough, the court also pointed out that Dr. Moyé’s conclusion that Plavix does more harm than good had to be excluded as it “achieved no consensus in relevant medical and scientific communities.” Id. at *9. His opinion was “grounded on a consensus of one.” Id.

 

Every now and then, the Reed Smith powers that be make seats in the firm’s skybox at the Phillies’ (first place – who woulda thunk?) stadium available to folks like us.  As a result we attended back-to-back concerts by the Eagles and Billy Joel last weekend.  Yes, we know that dates us – that was obvious from crowd demographics – but we don’t mind.  Joel (who according to Wikipedia, caught his first big break in Philly back in 1972) played until nearly midnight after the show’s opening was delayed by a cloudburst.  He made sure to perform “Allentown” with its Pennsylvania themes, but Joel being Joel, he also played “New York State of Mind.”

Our immediate Philadelphian chip-on-our-shoulder reaction was, “Don’t bring that New York %@#&*! down here.  If you have to sing about New York City, at least play “Miami 2017” (he didn’t).”  But then we got back to work, and we ended up thinking, actually there is at least one good recent reason for us to look to New York.

TwIqbal.

Over the last few weeks, New York courts have produced two of the best TwIqbal decisions that we’ve ever seen: Quintana v. B. Braun Medical, Inc., 2018 WL 3559091 (S.D.N.Y. July 24, 2018), and Oden v. Boston Scientific Corp., ___ F. Supp.3d ___, 2018 WL 3102534 (E.D.N.Y. June 4, 2018).  If more courts applied TwIqbal as faithfully as this duo, you know what?  Lawyers on the other side might actually have to comply with Rule 11 and actually investigate their cases before filing them.

Both cases involve Class II medical devices (IVC filters), so their TwIqbal application is not related to federal preemption and so-called “parallel” violation claims.  They’re just straight-out TwIqbal fundamentalism.  So, for those of you who file TwIqbal motions in order to force plaintiffs to plead what the heck their cases are about (most of us D-siders these days), and who use our TwIqbal Cheat Sheet to find good cases in your jurisdiction to cite, here’s a rundown of the relevant rulings.

Warning Defect

Given the nature of a warning-based product defect claim, “a claim premised upon a failure to warn theory should be dismissed in the event a plaintiff fails to plead facts establishing how or why the warning provided was inadequate.”  Oden, 2018 WL 3102534, at *6.  “[C]onclusory” warning allegations that failed TwIqbal are:

  • “Defendant failed to provide sufficient warnings and instructions”
  • “Defendant knew or should have known, and adequately warned that its product created a risk of serious and dangerous side effects, including but not limited to. . . .”
  • “The warnings given did not accurately reflect the risk, incidence, symptoms, scope or severity of such injuries to the consumer”
  • Defendant “only provides limited information [concerning] possible complications”
  • “Defendant’s warnings page on their website . . . fails to address the full extent of complications [and] magnitude of risks involved”

Id. None of this boilerplate, individually or collectively, survived TwIqbal.  “[T]he Complaint fails to provide facts identifying how or why the included warnings were inadequate.”  Id. at *7.  Given the warnings referenced in the complaint (labeling, product brochure, instructions for use, website), the complaint came nowhere near meeting TwIqbal requirements:

[T]he Complaint fails to provide facts identifying how or why the included warnings were inadequate.  Although Plaintiff claims that Defendant failed to warn or otherwise provided inadequate warnings of all of the aforementioned risks, the Complaint is silent as to how the warnings that were indisputably provided . . . were inadequate.  Moreover, Plaintiff has failed to provide the necessary factual nexus showing how the warnings that were provided were insufficient since merely asserting that warnings were not “adequate” or “sufficient” are nothing more than legal conclusions.  Without facts setting forth what the warnings stated and how and/or why the warnings were inadequate, Plaintiff’s failure to warn claim is insufficiently pleaded.

Id. at *7 (citations and quotation marks omitted).

Another pleading deficiency was the complaint’s failure to distinguish between “actual injuries Plaintiff experienced versus those complications which potentially could result from implantation of the [device].”  Id. (emphasis original).  “Nor does the Complaint contain any nonconclusory allegations that Plaintiff’s treating physician was not adequately informed or apprised of the potential risks.”  Id.  In a learned intermediary case, “to the extent Plaintiff’s failure to warn claim is premised upon Defendant’s alleged failure to warn ‘consumers’ . . . such a claim is not viable in the first instance.”  Id.  Thus a plaintiff must plead “facts to suggest that [the] physician did not possess independent knowledge about the risks associated with” the device.  Id.

Likewise, in Quintana, “Plaintiff’s allegations of inadequate warnings” were “for the most part, conclusory.”  2018 WL 3559091, at *6.  Plaintiff “fails to identify how those warnings were inadequate.”  Id.  Further, plaintiff failed to plead warning causation under the learned intermediary rule:

To this point, Plaintiff alleges, “as a direct and proximate cause of the wrongful acts and omissions of Defendants, Plaintiff suffered economic damages, severe injuries, and emotional distress.”  This conclusion, however, is not sufficient to plausibly show that the failure to warn Plaintiff’s physician caused Plaintiff’s injuries because we know nothing about what caused her [injury] – i.e., what about the device failed or what was Plaintiff’s diagnosis – nor anything about whether Plaintiff would have heeded an appropriate warning.

Id.

Design Defect

Oden held that a design defect claim is properly TwIqballed where it “fails to identify a particular problem in the design of [the device] and . . . merely plead[s] that the [device]  is ‘defective.’”  2018 WL 3102534, at *4.  A mere “list of allegedly unreasonable risks” “does not identify a specific component or particularized issue with the design itself.”  Id.  Similarly, describing a product as “unreasonably dangerous” when it “left the hands of the Defendant” does not adequately allege a defect.  Such descriptions “lack[] any facts indicating the particular component that was defective or otherwise identifying a specific problem.”  Id.  “Without such facts, Plaintiff’s design defect claim fails.”  Id.  Moreover, a design defect claim must allege an alternative design:

Plaintiff’s design defect claim also fails on the independent ground that the Complaint does not plead the existence of a feasible alternative design. . . .  [A] plaintiff must plead facts alleging the existence of a feasible alternative design.  The only paragraph in the Complaint specifically referring to this element merely states that “safer, reasonable alternative designs existed and could have been utilized,” but fails to identify what feasible alternative designs are available.

Id. at (citations and quotation marks omitted).  Pleading the availability of a “different” product (“retrievable,” as opposed to “permanent[]”) doesn’t hack it, “since the design and purpose of these two products is different.”  Id.

In pleading design defect, Quintana required plaintiffs to allege “a specific defect” as well as “facts about the “circumstances of the purported failure of the [device] that would give rise to the inference of proximate cause.”  2018 WL 3559091, at *4.  “A boilerplate reference to a design defect” that the product was “unable to withstand . . . normal” conditions failed TwIqbal.  Id.  As to product “risks,” a complaint must “state [] facts to indicate how those risks resulted from a specific design defect” and “how that defect was a substantial factor in causing [plaintiff’s] injuries.”  Id.  “[T]he assumption that [a] device must have failed because of reports of failures or complications by other consumers is plainly inadequate” to plead a design defect.  Id.  As in Oden, alleging a product to be “unreasonably dangerous” doesn’t adequately allege a defect.  Id.  A plaintiff must plead “how [a] problem rendered the product defective, whether it affected his [device], [and] how it caused [the] alleged injuries.”  Id. (citation and quotation marks omitted).  Further, “res ipsa loquitur is an evidentiary principle and does not apply to pleading requirements.”  Id. at *5.  Even if res ipsa were appropriate, it is insufficient when “Plaintiff fails to provide sufficient factual exposition to account for the possibility that other factors caused [the] injury.”  Id.  Finally, “[i]t also appears that Plaintiff’s design defect claim fails for failure to allege a feasible design alternative.”  Id. at 5 n.5.

Manufacturing Defect

The plaintiff’s “conclusory” allegations in Oden failed to plead a manufacturing defect “since they fail to allege a specific manufacturing defect affecting the [device] implanted in Plaintiff as compared to other [devices] that were produced by Defendant.”  2018 WL 3102534, at *5 (emphasis original).  “[A] claim devoid of allegations that a particular unit differed when compared to others in the same product line will be dismissed.”  Id.  “[A]lleg[ing] that some ‘condition or conditions’ existed that ultimately caused Plaintiff’s injuries” is a “vague assertion” that “fails to place Defendant on notice as to what the particular error in the manufacturing process was.”  Id.

Quintana did not involve a manufacturing defect claim.

Express Warranty

Oden reiterated that, to pursue a claim for breach of express warranty, “plaintiff must allege that there was an affirmation of fact or promise by the seller, the natural tendency of which was to induce the buyer to purchase and that the warranty was relied upon to [Plaintiff’s] detriment.”  2018 WL 3102534, at *8 (citation and quotation marks omitted).  An allegation that, somewhere in the defendant’s “literature, advertisements, promotions and . . . representations by their marketing team and sales agents,” a promise was made that the device was “safe, effective and fit for implantation” in various ways didn’t cut the mustard.  Id.  Even assuming these were “material statements amounting to a warranty,” no reliance was pleaded:

[T]he Complaint merely alleges Plaintiff’s purported “reliance” without providing any underlying factual details concerning when, where and how such reliance arose. Even assuming that Plaintiff was provided with a brochure . . ., the Complaint is devoid of any facts that would permit the inference that Plaintiff actually read these statements and directly relied upon them when making the decision to utilize Defendant’s product.  In addition, there are no facts illustrating that Plaintiff’s physicians ever reviewed the statements contained on Defendant’s website or those set forth in the product brochure prior to making the decision to recommend use of the [device].  Without such allegations, any purported claim that such reliance existed is implausible.

Id. at *9 (citations and quotation marks omitted).

In Quintana express warranty claims failed equally miserably.  “Plaintiff has failed to adequately plead reliance because her amended complaint lacks details regarding whether and how Plaintiff or her physicians reviewed and relied upon these warranties.”  2018 WL 3559091, at *7 (citations omitted).

Implied Warranty

Quintana did not involve implied warranty claims, but Oden did – two claims, for both merchantability and fitness for a particular purpose.  2018 WL 3102534, at *9-10.  Merchantability claims were TwIqballed, for lack of a proper defect claim, as already detailed.  Id. at *9.  Fitness claims failed because they were “altogether conclusory.”  Id. at *10.  “Where a plaintiff fails to plead that a defendant knew of the particular purpose for which that plaintiff was buying a product, a complaint will be dismissed.”  Id. at *9 (citation and quotation marks omitted).  This complaint didn’t so plead.  Id. at *10.  “[A] product’s intended or ordinary purpose is not necessarily equivalent with a particular purpose for which Plaintiff seeks to purchase a product.”  Id.  “Moreover, the Complaint does not contain any factual allegations leading to the inference that Defendant was aware that Plaintiff and/or his physicians were directly relying upon Defendant’s skill and judgment when the determination was made to purchase the” device.  Id.

Other

Both the Oden and Quintana complaints also contained the usual litany of fraud, fraudulent concealment, negligent misrepresentation, and consumer fraud claims.  These were all dismissed as well.  Oden, 2018 WL 3102534, at *10-15; Quintana, 2018 WL 3559091, at *7-10.  The fate of these claims was mostly decided under the particularity standards of Fed. R. Civ. P. 9(b) rather than TwIqbal.  Oden was of the view that the consumer fraud claims were subject only to TwIqbal standards, 2018 WL 3102534, at *14, and dismissed them on that basis:

[T]his cause of action fails because Plaintiff has not sufficiently pleaded causation.  Although Plaintiff sets forth certain statements contained on Defendant’s website and in its product brochure, these allegations neither explicitly state nor permit the plausible inference that Plaintiff actually saw these statements prior to making the determination (in conjunction with his physicians) to purchase the [device]. . . .  [T]he relevant factual background to support the above [allegations] is simply lacking.  As a result, Plaintiff has failed to sufficiently plead the third element of this claim.

Id. (citations omitted).

Quintana dismissed consumer fraud claims on the same basis, 2018 WL 3559091, at *10, although it is unclear whether the dismissal was under Rule 8 or Rule 9(b).  Unlike Oden, Quintana also applied TwIqbal to the plaintiff’s negligent misrepresentation claim, out of an abundance of caution, id. at *9 and held the claim inadequately pleaded under the learned intermediary rule.

[E]ven under the more lenient standards of Rule 8(a), Plaintiff’s negligent misrepresentation fails because she has not plausibly alleged reliance. . . .  [Plaintiff’s] allegation indicates only that Plaintiff relied on her physician’s advice and leaves open the question whether the physician relied on Defendants’ representations when giving Plaintiff that advice.  Because Plaintiff fails to plausibly allege what misrepresentation her physician relied on, her negligent misrepresentation claim is dismissed.

Id.

Finally, remember that we’re very picky on our TwIqbal Cheat Sheet.  We only include cases where a motion to dismiss was granted in its entirety.  In none of our 200+ drug/device TwIqbal cases did a single claim survive dismissal (sometimes on grounds other than TwIqbal).  New York has always been a productive source for TwIqbal Cheat Sheet cases:

Black v. Covidien, PLC, 2018 WL 573569 (W.D.N.Y. Jan. 26, 2018); Rincon v. Covidien, 2017 WL 2242969 (S.D.N.Y. May 22, 2017); Teixeria v. St. Jude Medical S.C., Inc., 193 F. Supp.3d 218 (W.D.N.Y. 2016); Morrison v. Hoffmann-La Roche, Inc., 2016 WL 5678546 (E.D.N.Y. Sept. 29, 2016); Adams v. Stryker Orthopaedics, 2016 WL 2993213 (S.D.N.Y. May 23, 2016); Ortiz v. Allergan, Inc., 2015 WL 5178402 (S.D.N.Y. Sept. 4, 2015); Rodman v. Stryker Sales Corp., 2014 WL 5002095 (S.D.N.Y. Oct. 7, 2014), aff’d, 604 F. Appx. 81 (2d Cir. 2015); Cordova v. Smith & Nephew, Inc., 2014 WL 3749421 (E.D.N.Y. July 30, 2014); Burkett v. Smith & Nephew GMBH, 2014 WL 1315315 (E.D.N.Y. March 31, 2014); Simon v. Smith & Nephew, Inc., 990 F. Supp.2d 395 (S.D.N.Y. 2013); Bertini v. Smith & Nephew, Inc., 2013 WL 6332684 (E.D.N.Y. July 15, 2013); Goldin v. Smith & Nephew, Inc., 2013 WL 1759575 (S.D.N.Y. April 24, 2013); In re Pamidronate Products Liability Litigation, 842 F. Supp.2d 479 (E.D.N.Y. 2012); Reed v. Pfizer Inc., 839 F. Supp.2d 571 (E.D.N.Y. 2012); Bowdrie v. Sun Pharmaceutical Industries Ltd., 2012 WL 5465994, (E.D.N.Y. Nov. 9, 2012); Desabio v. Howmedica Osteonics Corp., 817 F. Supp.2d 197 (W.D.N.Y. 2011); Gelber v. Stryker Corp., 752 F. Supp.2d 328 (S.D.N.Y. Sept. 14, 2010); In re Fosamax Products Liability Litigation, 2010 WL 1654156 (S.D.N.Y. April 9, 2010); Ilarraza v. Medtronic, Inc., 677 F. Supp.2d 582 (E.D.N.Y. 2009); Horowitz v. Stryker Corp., 613 F. Supp.2d 271 (E.D.N.Y. 2009); Lewis v. Abbott Laboratories, 2009 WL 2231701 (S.D.N.Y. July 24, 2009).

But you will find a couple of citations in Quintana and Oden to TwIqbal cases that we don’t include because they only dismissed complaints in part.  See Parillo v. Stryker Corp., 2015 WL 12748006 (N.D.N.Y. Sept. 29, 2015); DiBartolo v. Abbott Laboratories, 914 F. Supp.2d 601 (S.D.N.Y. 2012).  That’s OK – it’s a matter of legal judgment what to cite for any particular proposition.  Our philosophy is that we want to be picky, so we don’t give anyone a bum steer with a case citation that may be harmful on some other TwIqbal point.  As Billy Joel would say, “It’s no big sin to stick your two cents in if you know when to leave it alone.”

A few weeks ago, we reported on another in a line of Missouri appellate decisions rejecting the ability of Missouri courts to try the claims of non-Missouri residents against non-Missouri manufacturers of baby powder not used in Missouri.  The next day a jury in the same trial court awarded billions in a trial of 22 baby powder users. This was all part of a long saga of litigation tourism to the Show Me State.

It turns out that some plaintiffs prefer to go ever upwards with their baby powder claims in New York state court. We are not talking about New York residents suing in their friendly neighborhood court, we are talking about litigation tourists coming to the Big Apple with hopes of big awards. The problem–for them–is that New York state courts are supposed to apply personal jurisdiction according to the same standards that the Missouri appellate courts and the United States Supreme Court have been lately. We received two very similar decisions from a friend of the blog, Thomas Kurland of Patterson Belknap, that address personal jurisdiction for claims against the manufacturers of baby powder by people with no particular connection to where they were suing. The difference from the baby powder cases from Missouri and New Jersey that we have discussed before is that these plaintiffs claimed mesothelioma from asbestos allegedly in baby powder they had used.

The first case, Hammock v. Avon Prods., Inc., No. 190215/2016, 2018 WL 3601393 (N.Y. Super. Ct. July 27, 2018), has been published and came out a few days before the second, Crozier v. Avon Prods., Inc., No. 190385/2016 (N.Y. Super. Ct. July 31, 2018). The issues and analyses were almost identical, so we will discuss them together and skip pinpoint cites. The plaintiff in Hammock claimed exposure to the decedent from use of baby powder on herself, her children, and patients where she worked over the span of more than 35 years. All of the exposure, and any purchasing the decedent did, occurred in Virginia, where she lived. The plaintiff in Crozier claimed use of baby powder and a related cosmetic product when she was an infant and a teenager.  All use and purchasing of the products was in Texas, Oklahoma, and Kansas.

Both plaintiffs brought suit in New York state court against a number of defendants. We report on the motion in each case of the manufacturer and distributor of the baby powder, Johnson & Johnson Consumer Inc., and its holding company parent. Neither of those entities was incorporated in New York, had its principal place of business in New York, or was registered to do business in New York. The subsidiary did not manufacture or develop the baby powder in New York. Despite these facts, the plaintiff in each case claimed the court could exercise general personal jurisdiction over both entities or, at least, should allow jurisdictional discovery to proceed.

Based on a straightforward application of Bauman, Walden, and BMS, the court rejected both general and specific personal jurisdiction in each case. On general jurisdiction, each plaintiff pointed to “several isolated events that Johnson & Johnson was involved in (including industry meeting that Johnson & Johnson employees attended in the 1970s, four (4) letters sent from Johnson & Johnson representatives to New York-based scientists, and two statements make to the New York Times).” This was clearly not enough, as “isolated” is not a synonym for “continuous” or “systematic,” both of which are required for contacts to establish general personal jurisdiction. While it is not clear that either plaintiff even offered an argument on specific jurisdiction, the court went ahead and addressed that issue anyway. With all alleged exposure in each case hundreds of miles away from New York, “there is no articulable nexus or substantial relationship between the J&J Entities’ New York conduct and the claims asserted.” Holding off on dismissal to allow for jurisdictional discovery was also not in the cards as any discovery either plaintiff could seek would be futile.

We say the plaintiffs were sent packing, but the truth is that we do not know about the substance or disposition of any claims against other defendants—as there appear to be based on the captions. There may be other defendants, maybe even ones over which New York could exercise general personal jurisdiction, who are alleged to be liable for some separate asbestos exposure that allegedly caused the respective plaintiffs’ alleged injuries. While we may be accused of being defense hacks—we were so labeled just yesterday—we do see the difficulty of picking the right place to sue multiple defendants who are not residents of the plaintiff’s state. Suing in New Jersey, for instance, would have allowed the court to exercise jurisdiction over the New Jersey defendants, but maybe not over defendants from New York or somewhere else. Of course, if there really were acts by the defendants that arguable created liability in the states where these plaintiffs used products and live(d), then a Hammock case in Virginia and a Crozier case in Texas might not have been caught in jurisdictional snags. They probably would have been removed to federal courts, however, and been subject to substantive law and procedures the plaintiff lawyers wished to avoid. So, before you say we have something against New York or some other litigation tourism destination, think about whether the plaintiffs who hit the road are looking for a fair venue or a favorable one.