Monday, January 26, 2015

Deflate-Gate Wasn’t the Only Blowout Last Week

This past week you probably heard the low monotone sound that emanates from Patriot head coach Bill Belichick’s mouth whenever he’s explaining deflate-gate and trying to muster up the energy to drool out words that ultimately reveal only that he’s not interested in saying them.  His barely operating mouth doesn’t tell you what his eyes so clearly communicate: “This is stupid.  It was a blowout.  It’s stupid, stupid, stupid.  Really stupid.”  His eyes make a better point than his mouth.  It was a blowout and was always going to be. 

The same is true of Becker v. Smith & Nephew, Inc., 2015 U.S. Dist. LEXIS 6853 (D.N.J. Jan. 20, 2015).  Like most blowouts, you knew it early on.  Before the court even began analyzing the defendant’s motion to dismiss, it said this, which we describe as foreshadowing with a mallet:

Plaintiffs did not timely respond to the motion.  On December 3, 2014, after their response to the motion was due, Plaintiffs mailed the Court a short letter asking the Court to deny the motion.  Citing no case or other authority, the letter attached what it alleged were medical records of Deborah Becker and an earlier letter from Plaintiffs’ counsel to Defendant’s counsel describing those records.  Plaintiffs later filed the letter and attachments on ECF.

Id. at *3.  Uh-oh.  This was a mismatch from the start.  On one side, we have no cases, no authority, an almost fact-less complaint, and a letter to the opponent that attaches some medical records that was later filed with the court in lieu of a brief, amended complaint or something legal sounding like that.  On the other side, we have TwIqbal and New Jersey product liability law.  If you deflated defendant’s brief by removing half the authorities, you’d still get a blowout. 

Plaintiff, who had revision surgery after her hip implant device was recalled, relied on six claims, all based in negligence.  The negligence theory and breach of implied warrant went away quickly.  New Jersey’s Product Liability Act subsumed such theories and claims long ago:

The PLA “no longer recognizes negligence or breach of warranty (with the exception of an express warranty) as a viable separate claim for harm, including personal injury, caused by a defective product or an inadequate warning.”  Plaintiffs’ causes of action for negligence and breach of implied warranty must be dismissed.

Id. at *4-5 (quoting Koruba v. American Honda Motor Co., Inc., 935 A.2d 787, 795 (N.J. App. Div. 2007); citing Fidelity and Guar. Ins. Underwriters, Inc. v. Omega Flex, Inc., 936 F. Supp. 2d 441, 447 (D.N.J. 2013)).

The court proceeded to dismiss the rest of plaintiffs’ claims with reasoning that reads like a check-list of the items that a product liability plaintiff must plead with actual facts to survive TwIqbal.  For the manufacturing defect claim, here’s what plaintiffs left out:

Plaintiffs do not allege facts to indicate that this particular implant deviated from the manufacturer’s specifications or otherwise identical units.  The complaint does not allege that a defect existed when the product left the manufacturer’s control, specify how the defect proximately caused injuries to Deborah Becker, or identify her as a reasonably foreseeable end user of this particular device.  The specific name of the implant does not appear in the complaint, nor does the medical condition which it was intended to treat.  Though alleging “high levels of cobalt toxicity in [Deborah Becker’s] system,” the complaint does not allege that the product was the proximate cause of this condition, or that the high levels caused a specific injury.  Apart from labeling the product a “Smith & Nephew hip implant,” Plaintiffs do not expressly identify Defendant’s relationship to the product or role in the chain of commerce, vaguely stating that either Smith & Nephew or a fictitious defendant did one of a number of activities, including and potentially limited to “own[ing]” or “packag[ing]” the product.
Id. at *6-7 (citations omitted). 
For the design defect claim, plaintiffs left a lot out too:

The complaint . . . neither addresses the seven factors [used for a risk-utility analysis in New Jersey] nor specifies a defect in the product’s design.  As with a manufacturing defect theory, a design defect theory cannot be maintained without allegations that the defect existed when the product left the manufacturer’s control, the particular defect was the proximate cause of injuries to Deborah Becker, and Deborah Becker was a reasonably foreseeable or intended user.

Id. at *8-9. 

It was the same story for failure to warn:

There is no identification of the latent danger, assertion that the danger is not obvious, or allegation that Defendant knew or should have known about it at a particular time.  The complaint is silent as to whether Defendant gave a warning that did not reveal a particular danger, gave a warning that was untimely, or gave no warning at all.  Plaintiffs do not assert that the inadequacy of the warning was the proximate cause of Deborah Becker’s injuries.  The complaint does not identify Deborah Becker as an intended user of the product, or state how the warning was inadequate in light of the ordinary knowledge common to intended users.

Id. at *11.  The court then dismissed plaintiffs’ loss of consortium and punitive damages claims as derivative and, with that, all of plaintiffs’ claims were gone.  Id. at *12. 

Unlike the Indianapolis Colts, though, plaintiffs will get a rematch.  The court noted that the complaint had originally been filed in state court under a more lenient pleading standard, and so it gave plaintiffs, in the interest of “fairness and justice,” a chance to fix their pleading (though plaintiffs had to have been fully aware that the complaint had been removed to federal court).  Id. at *13-14. 

They’d better do better next time around, because the initial complaint never stood a chance.  The court left nothing out in explaining everything that the complaint left out.  You can almost hear Belichick reading the words of the court’s opinion with that same dead-eyed, “what are you kidding me” look on this face.  It was a blowout. 

Friday, January 23, 2015

Putting Ascertainability into Rule 23

Following the completion of its overhaul of Rules 26(b)(1) and 37(e) (see our most recent post here), the federal Advisory Committee on Civil Rules is set to take up Fed. R. Civ. P. 23, concerning class actions.  Sadly, our preferred outcome abolishing Rule 23 altogether and allowing Congress and state legislatures to determine the availability of class actions on a subject-by-subject basis – is not on the table.  One thing that is on the agenda (in addition to cy pres, which we’ve discussed a lot lately) is ascertainability.

Ascertainability is the subject of this post.

“Ascertainability” is the radical proposition that the definition of the class in a class action ought actually to specify who is in the class.  After all, no individual action would be allowed to proceed without the defendant knowing who was suing s/he/it.  First, Rule 23 is not supposed to change substantive legal requirements.  Second, the federal rules do not (except in rare cases involving threats or humiliation) allow John Doe pleadings.  Third, any certification order “must define the class.”  Fed. R. Civ. P. 23(c)(1)(B).  A class action has no business being certified if nobody can tell who will be bound by a judgment or who the defendant will have to pay.

Unfortunately, all too many class action plaintiffs fail to follow this seemingly simple principle, and sue on behalf of classes similar to “everybody who was uncomfortable while riding the Broad Street Line during” some particular time.  Particularly where the claim purports to seek damages, that’s ridiculous.  How can membership be proven, other than by each would-be class member’s bald, ipse dixit say-so?  This combination of need for individualized proof of class membership and lack of any conceivable kind of documentary proof comes up all the time.

And gets shot down most of the time.  Hence, the “implicit” ascertainability requirement under Rule 23.

It’s time to make it explicit.  That’s why the Advisory Committee will be considering a proposal to add a new Rule 23(a)(5):

(5) the court can readily identify the class members in reference to existing objective criteria

This change would largely ratify existing case law.  As stated in Moore’s Federal Practice, “The identity of class members must be ascertainable by reference to objective criteria.”  5 James W. Moore, Moore’s Federal Practice, §23.21[1] (2001).  The case law is overwhelmingly in favor of an ascertainability requirement under Rule 23.  Leading the charge is the Third Circuit, with its Carrera v. Bayer Corp., 727 F.3d 300 (3d Cir. 2013), and Marcus v. BMW of North America, LLC, 687 F.3d 583, 593 (3d Cir. 2012), decisions.  We discussed Carrera here.  “[A]n essential prerequisite of a class action . . . is that the class must be currently and readily ascertainable based on objective criteria.”  Carrera, 727 F.3d at 305.  “If class members are impossible to identify without extensive and individualized fact-finding or ‘mini-trials,’ then a class action is inappropriate.”  Marcus, 687 F.3d at 593 (3d Cir. 2012).  The rationale for ascertainability is: 

First, [the ascertainability requirement] eliminates serious administrative burdens that are incongruous with the efficiencies expected in a class action by insisting on the easy identification of class members.  Second, it protects absent class members by facilitating the best notice practicable . . . .  Third, it protects defendant by ensuring that those persons who will be bound by the final judgment are clearly identifiable.

Carrera, 727 F.3d at 305-06 (quoting Marcus, 687 F.3d at 593).

Thus, ascertainability, as applied in the Third Circuit has two primary attributes:

[A]scertainability entails two important elements. First, the class must be defined with reference to objective criteria.  Second, there must be a reliable and administratively feasible mechanism for determining whether putative class members fall within the class definition.

Hayes v. Wal-Mart Stores, Inc., 725 F.3d 349, 355 (3d Cir. 2013).  Cf. Shelton v. Bledsoe, ___ F.3d ___, 2015 WL 74192, at *5 (3d Cir. Jan. 7, 2015) (“a judicially-created implied requirement of ascertainability − that the members of the class be capable of specific enumeration − is inappropriate for (b)(2) classes”).

But support for a “threshold ascertainability test” under Rule 23 is hardly limited to the Third Circuit.  Berger v. Home Depot USA, Inc., 741 F.3d 1061, 1071, n.4 (9th Cir. 2014).  A few months ago, the Ninth Circuit (which has an annoying habit of putting important statements in unpublished decisions) affirmed denial of class certification because “central criterion of class membership” could not be ascertained in an “administratively feasible manner”:

Because [plaintiff] has not demonstrated that it would be administratively feasible to determine which individuals used personal, and not business, credit cards to purchase parking, the district court did not abuse its discretion in concluding that the proposed class was not ascertainable.

Martin v. Pacific Parking Systems, Inc., 583 F. Appx. 803, 804 (9th Cir. 2014).  Nobody was going to keep 4-year-old parking receipts, so there was no way to ascertain class membership save plaintiff “self-identification.”  Id. at 804 & n.3.  See Bruton v. Gerber Products Co., 2014 WL 2860995, at *10 (N.D. Cal. June 23, 2014) (plaintiff “failed to propose a class definition that is precise, objective, and presently ascertainable . . . so that it is administratively feasible to determine whether a particular person is a class member”); In re POM Wonderful LLC, 2014 WL 1225184, at *6 (C.D. Cal. March 25, 2014) (“where purported class members purchase an inexpensive product for a variety of reasons, and are unlikely to retain receipts or other transaction records, class actions may present such daunting administrative challenges that class treatment is not feasible”; finding class unacertainable); Sethavanish v. ZonePerfect Nutrition Co., 2014 WL 580696, at *5-6 (N.D. Cal. Feb. 13, 2014) (absent receipts, “[p]laintiff has yet to present any method for determining class membership. . . .  Without more, the Court cannot find that the proposed class is ascertainable”); Astiana v. Ben & Jerry's Homemade, Inc., 2014 WL 60097, at *3 (N.D. Cal. Jan. 7, 2014) (“the class must be adequately defined and clearly ascertainable before a class action may proceed”); Xavier v. Philip Morris USA Inc., 787 F. Supp. 2d 1075, 1089, (N.D. Cal. 2011) (“for a proposed class to satisfy the ascertainability requirement, membership must be determinable from objective, rather than subjective, criteria”). Because class actions are out of control in California, there are lots more ascertainability cases in Ninth Circuit district courts that we haven't cited. 

The other circuits agree.

In a relatively old decision, the First Circuit has recognized ascertainability (the “precise definition of the members of the suggested class”) as “important to certification of a subdivision (b) (3) class” but not for an injunctive class under Rule 23(b)(2).  Yaffe v. Powers, 454 F.2d 1362, 1366 (1st Cir. 1972).  A class whose “members [are] impossible to identify prior to individualized fact-finding and litigation . . . fails to satisfy one of the basic requirements for a class action,”  Crosby v. Social Security Administration, 796 F.2d 576, 580 (1st Cir. 1986).  More recently the court held that “objective criteria” are necessary to “overcome[] the claim that the class in unascertainable.”  Matamoros v. Starbucks Corp., 699 F.3d 129, 139 (1st Cir. 2012).  “The ascertainability requirement is not satisfied when the class is defined simply as consisting of all persons who may have been injured by some generically described wrongful conduct allegedly engaged in by a defendant.”  Van West v. Midland National Life Insurance Co., 199 F.R.D. 448, 451 (D.R.I. 2001).

In the Second Circuit, “ascertainability of the class is an issue distinct from the predominance requirement for a (b)(3) class.”  In re Initial Public Offerings Securities Litigation, 471 F.3d 24, 45 (2d Cir. 2006).  “Although Rule 23(a) does not expressly require that a class be definite in order to be certified, Second Circuit courts have implied a requirement that a class be identifiable before it may be properly certified.  This requirement is often referred to as ‘ascertainability.’”  Friedman-Katz v. Lindt & Sprungli (USA), Inc., 270 F.R.D. 150, 154 (S.D.N.Y. 2010).

Whether a proposed class is ascertainable is fundamental to certification.  Class membership must be readily identifiable such that a court can determine who is in the class and bound by its ruling without engaging in numerous fact-intensive inquiries.

Bakalar v. Vavra, 237 F.R.D. 59, 64 (S.D.N.Y. 2006) (citations omitted).  See Enea v. Bloomberg, L.P., 2014 WL 1044027, at *3 (S.D.N.Y. Mar. 17, 2014) (“many courts have read an implicit requirement of class definiteness and ascertainability into the Rule”); Weiner v. Snapple Beverage Corp., 2010 WL 3119452, at *13 (S.D.N.Y. Aug. 5, 2010) (absent receipts, plaintiffs “failed to show how the potentially millions of putative class members could be ascertained using objective criteria that are administratively feasible”); Charron v. Pinnacle Group LLC, 269 F.R.D. 221, 229 (S.D.N.Y. 2010) (“courts recognize an implied requirement of ascertainability, which turns on the definition of the proposed class”); Hnot v. WillisGroup Holdings Ltd., 228 F.R.D. 476, 481 (S.D.N.Y. 2005) (“[t]he requirement of ascertainability, though not expressly mentioned in Rule 23, is fundamental”); People United for Children, Inc. v. City of New York, 214 F.R.D. 252, 256 (S.D.N.Y.2003) (“courts should ensure that the class definition is precise, objective, and presently ascertainable”).

The Fourth Circuit likewise recognized ascertainability as a prerequisite to class certification.  “Rule 23 contains an implicit threshold requirement that the members of a proposed class be readily identifiable.  Our sister circuits have described this rule as an “ascertainability” requirement.  EQT Production Co. v. Adair, 764 F.3d 347, 358 (4th Cir. 2014).  Thus, “if class members are impossible to identify without extensive individualized fact-finding or ‘mini-trials’, then a class action is inappropriate.”  Id. (quoting Marcus, 687 F.3d at 593).  See In re A.H. Robins Co., 880 F.2d 709, 728 (4th Cir. 1989) (“Though not specified in [Rule 23], establishment of a class action implicitly requires . . . that there be an identifiable class”); Kingery v. Quicken Loans, Inc., 300 F.R.D. 258, 264 (S.D.W. Va. 2014) (“[t]he proposed class definition must not depend on subjective criteria or the merits of the case or require an extensive factual inquiry to determine who is a class member”); Rhodes v. E.I. du Pont de Nemours & Co., 253 F.R.D. 365, 370 (S.D.W. Va. 20080 (“there is an implied requirement that the proposed class be ascertainable”).

In the Fifth Circuit, it has long been “elementary that in order to maintain a class action, the class sought to be represented must be adequately defined and clearly ascertainable.”  DeBremaecker v. Short, 433 F.2d 733, 734 (5th Cir. 1970); accord Union Asset Management Holding A.G. v. Dell, Inc., 669 F.3d 632, 639  (5th Cir. 2012) (quoting and following DeBremaecker).  “A precise class definition is necessary to identify properly ‘those entitled to relief, those bound by the judgment, and those entitled to notice.’”  In re Monumental Life Insurance Co., 365 F.3d 408, 413 (5th Cir. 2004) (quoting 5 Moore’s Federal Practice §23.21[6]).  “The existence of an ascertainable class of persons to be represented by the proposed class representative is an implied prerequisite of [Rule 23].”  John v. Nat’l Security Fire & Casualty Co., 501 F.3d 443, 445 (5th Cir. 2007).  See Johnson v. Kansas City Southern, 224 F.R.D. 382, 389 (S.D. Miss. 2004) (no ascertainability where determining class membership “would require individualized review” and analysis of title documents”), aff’d, 208 Fed. Appx. 292 (5th Cir. 2006).

Class certification in the Sixth Circuit requires:

[T]he class definition must be sufficiently definite so that it is administratively feasible for the court to determine whether a particular individual is a member of the proposed class. . . .  [A] class must not only exist, the class must be susceptible of precise definition.  There can be no class action if the proposed class is amorphous or ‘\imprecise.

Young v. Nationwide Mutual Insurance Co., 693 F.3d 532, 537-38 (6th Cir. 2012) (citations and quotation marks omitted).  “[T]he existence of an ascertainable class of persons to be represented by the proposed class representative is an implied prerequisite of [Rule 23].”  Romberio v. Unumprovident Corp., 385 F. Appx. 423, 431 (6th Cir. 2009) (citation and quotation marks omitted).  See In re Skelaxin (Metaxalone) Antitrust Litigation, 299 F.R.D. 555, 567 (E.D. Tenn. 2014) (“the identity of class members must be ascertainable by reference to objective criteria.”).

The Seventh Circuit has likewise recognized the “implicit” threshold Rule 23 requirement that the class definition must be “sufficiently definite that its members are ascertainable.”  Jamie S. v. Milwaukee Public Schools, 668 F.3d 481, 493 (7th Cir. 2012).  “[M]any courts have held that there is a ‘definiteness’ requirement implied in Rule 23(a).”  Alliance to End Repression v. Rochford, 565 F.2d 975, 977 (7th Cir. 1977).  In Oshana v. Coca-Cola Co., 472 F.3d 506 (7th Cir. 2006), the court affirmed refusal to certify based on the class’ ascertainability:

Such a class could include millions who were not deceived and thus have no grievance. . . .  Countless members of [plaintiff’s] putative class could not show any damage, let alone damage proximately caused by [defendant’s] alleged deception.

Id. at 514.  See Balschmiter  v. TD Auto Finance LLC, ___ F.R.D. ___, 2014 WL 6611008, at *5 (E.D. Wis. Nov. 20, 2014) (“[a]scertainability is inexorably tied with the plaintiff’s class definition”); Bridgeview Health Care Center Ltd v. Clark, 2011 WL 4628744, at *2 (N.D. Ill. Sept. 30, 2011) (“To be ascertainable, a class must be identifiable as a class and membership within it must be determined by application of precise, objective criteria.”).

In the Eighth Circuit, certification cannot be granted where the plaintiff “could not show . . . the existence of any identifiable class.”  Thompson v. Sun Oil Co., 523 F.2d 647, 648 (8th Cir. 1975).  “It is elementary that in order to maintain a class action, the class sought to be represented must be adequately defined and clearly ascertainable.”  Ihrke v. Northern States Power Co., 459 F.2d 566, 573 (8th Cir.), vacated as moot, 409 U.S. 815 (1972).  See Sandusky Wellness Center LLC v. Medtox Scientific, Inc., 2014 WL 3846037, at *3 (D. Minn. Aug. 5, 2014) (“[b]efore considering the explicit requirements set forth in Rule 23, however, the court must be satisfied that the proposed class is ascertainable”); Eastwood v. Southern Farm Bureau Casualty Insurance Co., 291 F.R.D. 273, 289 (W.D. Ark. 2013) (“in addition to Rule 23’s explicit requirements, there is an implicit requirement that class membership be ascertainable by some objective standard”); Barfield v. Sho-Me Power Electric Co-op., 2013 WL 3872181, at *12 (W.D. Mo. July 25, 2013); Brown v. Kerkhoff, 279 F.R.D. 479, 496, 2012 WL 987591 (S.D. Iowa 2012) (“whether the class is ascertainable” is an “implicit factor” of Rule 23(a)); In re Teflon Products Liability Litigation, 254 F.R.D. 354, 360 (S.D. Iowa 2008) (“numerous courts also have recognized [the] “implicit” prerequisite[] . . .: that the class definition is drafted to ensure that membership is capable of ascertainment under some objective standard”); Powell v. Nat’l Football League, 711 F. Supp. 959, 966 (D. Minn. 1989) (“[f]or implicit requirements of Rule 23(a), the Court must find . . .  the existence of a precisely defined class”).

The Tenth Circuit recognizes that “lack of identifiability is a factor that may defeat Rule 23(b)(3) class certification,” although not injunctive (23(b)(2)) classes.  Shook v. El Paso County, 386 F.3d 963, 972 (10th Cir. 2004).

A class definition should be precise, objective and presently ascertainable. . . .  Thus, the class must meet a minimum standard of definiteness which will allow the trial court to determine membership in the proposed class.  If the court must undertake individualized inquiries in order to determine whether a person is a member of the class, the class is not appropriate.

Warnick v. Dish Network LLC, 301 F.R.D. 551, 556 (D. Colo. 2014).  “The “rigorous analysis” applicable to Rule 23’s [formal] requirements apply to the ascertainability requirement.”  Id.

“[A]scertainability entails two important elements.  First, the class must be defined with reference to objective criteria.  Second, there must be a reliable and administratively feasible mechanism for determining whether putative class members fall within the class definition.

In re Cox Enterprises, Inc. Set-Top Cable Television Box Antitrust Litigation, 2014 WL 104964, at *2 (W.D. Okla. Jan. 9, 2014).

Likewise the Eleventh Circuit has held, “[o]ne threshold requirement is not mentioned in Rule 23, but is implicit in the analysis: that is, the plaintiff must demonstrate that the proposed class is ‘adequately defined and clearly ascertainable.’”  Little v. T-Mobile USA, Inc., 691 F.3d 1302, 1304 (11th Cir. 2012).  “[A]n identifiable class exists if its members can be ascertained by reference to objective criteria.”  Bussey v. Macon County Greyhound Park, Inc., 562 Fed. Appx. 782, 787 (11th Cir. 2014).  See Walewski v. Zenimax Media, Inc., 502 F. Appx 857, 861 (11th Cir. 2012) (“the district court did not abuse its discretion by concluding that the class was not adequately defined or clearly ascertainable and denying class certification”); Randolph v. J.M. Smucker Co., ___ F.R.D. ___, 2014 WL 7330430, at *3 (S.D. Fla. Dec. 23, 2014) (“[i]f a plaintiff fails to demonstrate that the putative class is clearly ascertainable, then class certification is properly denied”); Hurt v. Shelby County Bd. of Education, 2014 WL 4269113, at *5 (N.D. Ala. Aug. 21, 2014) (“[a]nother threshold requirement Rule 23 implies is that the plaintiffs’ proposed class be adequately defined and clearly ascertainable”); Bryant v. Southland Tube, 294 F.R.D. 633, 635 (N.D. Ala. 2013) (“the first essential ingredient to class treatment is the ascertainability of the class”); Grimes v. Rave Motion Pictures Birmingham, L.L.C., 264 F.R.D. 659, 664 (N.D. Ala. 2010) (“the named plaintiff must define the proposed class in a manner that adequately identifies its members.  Who, exactly, are they, and how can they be located?”); Conigliaro v. Norwegian Cruise Line Ltd., 2006 WL 7346844, at *2 (S.D. Fla. Sept. 1, 2006) (“[w]here it is not administratively feasible for the court to identify class members, no class will be deemed to exist”); Adair v. Johnston, 221 F.R.D. 573, 578 (M.D. Ala. 2004) (“Because [plaintiff’s] putative class is not adequately definite and ascertainable . . . [t]he court need not reach” any “other requirements of [Rule 23]”); Pottinger v. City of Miami, 720 F. Supp. 955, 957 (S.D. Fla. 1989) (class definition must be “sufficiently definite” and “clearly ascertainable”).

Finally, district judges in the DC Circuit have also recognized ascertainability.  “Definiteness is not mandated by Rule 23 but is a judicial creation requiring that the class be (1) ‘adequately defined;’ and (2) ‘clearly ascertainable.’”  DL v. D.C., 302 F.R.D. 1, 16, (D.D.C. 2013) (“precise ascertainability” not required for (b)(2) injunctive classes).  “While Federal Rule of Civil Procedure 23 does not contain a requirement that a class be ‘ascertainable’ or ‘clearly defined,’ such a requirement has been ‘routinely require[d]’ in order to ‘help the trial court manage the class.’”  Lightfoot v. D.C., 246 F.R.D. 326, 334 (D.D.C. 2007) (quoting Pigford v. Glickman, 182 F.R.D. 341, 346 (D.D.C. 1998)).

Given that ascertainability is recognized by courts in every circuit as an “implicit” requirement under Rule 23, it only makes sense to amend the rule after all these years to make that requirement explicit.  We’re hoping that this happens during the upcoming consideration of amendments to the rule.

Thursday, January 22, 2015

Homeopathic Drugs – Eh, We Don’t Know

It’s difficult to draw concrete conclusions in the world of homeopathic drugs.  It seems that we don’t know exactly what they are, why they work or whether they even do work.  We’re not exactly sure why we take them, but our friend at the yoga studio said they worked and so did Dr. Oz.  So we take them, hoping that they’re more fix than fairy dust.

In the preemption and FDA world, it’s even more difficult to draw concrete conclusions when homeopathic drugs are involved.  The FDA recognizes these drugs and has in fact devoted a section of its Compliance Policy Guide (“CPG”) to them.  CPG § 400.400, “Conditions Under WhichHomeopathic Drugs May be Marketed."  But after reading it, it’s not entirely clear how much the FDA is regulating these drugs.  For OTC homeopathic drugs, it’s even less clear.  For the most part, these drugs must comply with labeling requirements, meaning that their labels must include directions for use, ingredients, the dilution and the indication.  Id.; see also 21 C.F.R. §§ 201.5, 201.10, 201.61, 201.62.  Depending on certain particulars, homeopathic drugs must also be recognized by and comply with requirements of the Homeopathic Pharmacopeia of the United States, the United States Pharmacopeia, or the National Formulary.  But none of that means that the drugs will perform as indicated or are not misbranded.  CPG § 400.400.

Given this almost half-hearted regulation, it’s not all that surprising that certain courts see a way around preemption when it comes to state-law claims against homeopathic drugs.  In Forcellati v. Hyland’s, Inc., 2015 U.S. Dist. LEXIS 3867 (C.D. Cal Jan. 12, 2015), a putative class sued the manufacturer of homeopathic cold medicines, seeking financial damages under the usual trio of claims based on the California Legal Remedies Act, False Advertising Law and Unfair Competition Law, as well as warranty claims and a claim for violation of the Magnusson-Moss Act.  The FDCA has an express preemption clause for OTC homeopathic drugs that applies if the claims touch upon the same subject matter as FDA regulations and seek to impose a requirement that is “different from or in addition to, or that is otherwise not identical with” FDA regulations.  21 U.SC. §379r(d)(1).  It’s similar to the FDCA preemption clause that applies to medical devices.  While there is an exception to preemption for product liability claims, that preemption exception doesn’t apply to claims like these seeking only financial damages.

So in Forcellati, the plaintiffs’ claim was that the homeopathic drugs didn’t work and that plaintiffs could prove it through clinical trial results and other evidence.  Forcellati, 2015 U.S. Dist. LEXIS 3867 at *13-18.  Defendants argued that such a claim is expressly preempted because the FDA doesn’t require clinical trials for OTC homeopathic drugs.  And so, the defendants argued, plaintiffs’ claims would improperly impose a requirement different from and in addition to those imposed by the FDA.  Id. at *8.  At first blush, that certainly seems right.  The FDA doesn’t require clinical trials, yet plaintiffs are seeking financial damages for the failure of the drugs to successfully complete a clinical trial.  

But the court saw a way around that, explaining that the plaintiffs were not arguing that the manufacturer should have conducted a clinical trial and that its failure to do so constitutes the basis for their claim.  Rather, they were claiming that the manufacturer’s claim that the drugs were effective is disproved by clinical trial results: 

Defendants’ argument fails from the outset because Plaintiffs are not making a substantiation claim.  Plaintiffs are not arguing that Defendant’s use of the word “effective” is false or misleading because Defendants did not conduct tests to substantiate their claim before marketing their product.  Rather, Plaintiffs claim that using the word “effective” is false because Defendants’ products are not effective, period. 


Okay.  The more we think about it, the more we get it.  The state law claim isn’t imposing a requirement that manufacturers of homeopathic drugs conduct clinical trials.  It simply asserts that, if the manufacturer make a claim that the drugs are effective, plaintiffs may try to prove that they aren’t effective (through clinical trials and other evidence) and collect financial damages if they do.  

Further supporting this notion is the FDA’s statement in its Compliance Policy Guide that, even if a homeopathic drug’s label satisfies labeling requirements, it can still be misbranded.  And so, we guess, these state law claims are more akin to parallel claims than preempted claims.  

Maybe.  We can't help but think, though, that this decision was somewhat influenced by the product involved and came with a bit of fairy dust sprinkled on top.  Okay.  We get it.