Tuesday, February 27, 2007

Williams v. PM and the Passing of Punitive Damages Class Actions

Upon additional reflection, it seems likely that the recent Supreme Court decision concerning the constitutional pitfalls of punitive damages awards, Philip Morris USA v. Williams, 127 S.Ct. 1057 (2007), signals the end of class actions for punitive damages.

Even before Williams, the great bulk of recent precedent had concluded that aggregation of punitive damages was an unconstitutional violation of Due Process, mostly on the strength of State Farm Mutual Auto Insurance Co. v. Campbell, 538 U.S. 408, 416-417 (2003). See In re Simon II, 407 F.3d 125, 139 (2d Cir. 2005); Beck v. Boeing Co., 60 Fed. Appx. 38, 40 (9th Cir. 2003); Allison v. Citgo Petroleum Corp., 151 F.3d 402, 417-18 (5th Cir. 1998); Johnson v. Ford Motor Co., 113 P.3d 82, 94-95 (Cal. 2005) (rejecting “aggregate disgorgement”); Engle v. Liggett Group, Inc., 945 So.2d 1246, 1265 (Fla. 2006); In re Chevron Fire Cases, 2005 WL 1077516, at *14-15 (Cal. App. May 6, 2005) (unpublished); Colindres v. QuitFlex Manufacturing, 235 F.R.D. 347, 378 (S.D. Tex. 2006); O’Neal, v. Wackenhut Services, Inc., 2006 WL 1469348, at *22 (E.D. Tenn. May 25, 2006).

Of the two contrary cases, Dukes v. Wal-Mart, Inc., 474 F.3d 1214, 1239 (9th Cir. 2007), and In Re Tobacco Litigation, 624 S.E.2d 738, 741-42 (W. Va. 2005), the latter was highly preliminary – almost advisory – and will undoubtedly be subject to much additional jousting in the trial court, and the former was decided only a week or so before Williams, and is subject to reconsideration and/or further appeal.

Due Process limits both punitive damages procedures and the amounts of such awards. Williams, 127 S.Ct. at 1062. The Williams court was not concerned with substantive due process and limited itself to procedural aspects. The procedural ruling, however, was a doozy, an unequivocal holding that Due Process prohibits a defendant from being punished for harm to others. Id. at 1065 (“We did not previously hold explicitly that a jury may not punish for the harm caused others. But we do so hold now”).

That’s bad news for class action advocates, because representative litigation necessarily involves harm to others who are not individually present before the court. While Williams wasn’t itself a class action, it made pretty clear that it was discussing litigation where one plaintiff purported to “represent" others:
[T]he Constitution’s Due Process Clause forbids a State to use a punitive damages award to punish a defendant for injury that it inflicts upon nonparties or those whom they directly represent, i.e., injury that it inflicts upon those who are, essentially, strangers to the litigation.

127 S.Ct. at 1063 (emphasis added). Class actions are inherently “represent[ative]” litigation. Their only reason for existence is to adjudicate the claims of persons not formally before the court. If “strangers to the litigation” can’t recover punitives, that pretty well shuts down the logic of class actions in this area.

Further, class actions are often bifurcated (or worse) so that “individual” issues are tried separately. Not so with punitive damages after Williams. The Court held, “the Due Process Clause prohibits a State from punishing an individual without first providing that individual with an opportunity to present every available defense.” Id. (emphasis added). Thus Williams’ conception of Due Process gives defendants the right to “every available defense” before being held liable for punitive damages.

Not only that, but it’s crystal clear that Williams had in mind the sort of individualized defenses that class-action types usually try to hold until “phase II” – and hopefully never if a settlement can be extracted during (or before) a class trial. Williams specifically mentions inherently individualized defenses: that the absent “victim[s]. . .knew that smoking was dangerous or did not rely upon the defendant’s statements.” Id.

In general Williams holds that aggregate punitive awards (including those encompassing “nonparties” who are “directly represent[ed] by parties) are necessarily “standardless” and “speculative” in violation of Due Process:

To permit punishment for injuring a nonparty victim would add a near standardless dimension to the punitive damages equation. How many such victims are there? How seriously were they injured? Under what circumstances did injury occur?. . . The jury will be left to speculate. And the fundamental due process concerns to which our punitive damages cases refer – risks of arbitrariness, uncertainty, and lack of notice – will be magnified.
Id. (citations omitted). While a jury may hear evidence about harm to others it “may not go further. . .and use a punitive damages verdict to punish a defendant directly on account of harms it is alleged to have visited on nonparties”. Id. at 1064. Ask not for what the bell tolls, it tolls for punitive damages being assessed through “representative” litigation such as class actions. This is really good stuff. We’ll keep thinking about it.

A further implication of Williams is what does having “an opportunity to present every available defense,” id. at 1063, mean? A lot of things that were either matters of substantive law, or even evidentiary, are now presumptively constitutionalized (precisely the fear of Scalia, et al.). Even in a purely individual action, did the trial court’s arguable misinterpretation of the scope of a state-law defense, deprive the defendant of its “opportunity”? How about exclusion of evidence of the plaintiff’s assumption of the risk? It’s impossible to state any firm answers, but it’s safe to say that a great variety of otherwise mundane trial rulings now come tinged with a constitutional patina when they occur in a case in which the plaintiff is seeking punitive damages.

From now on, we’ll certainly be viewing anything in the trial of cases involving punitive damages context with an eye towards preserving constitutional objections that might not have previously existed. We recommend that other defense counsel do the same.

Monday, February 26, 2007

Nagareda (implicitly) on preemption case selection

We did a short post on December 14, 2006, noting Professor Richard Nagareda's new article, "FDA Preemption: When Tort Law Meets the Administrative State," in the first issue of the new Journal of Tort Law. We agree with some parts, and disagree with others, of the article. But here's a suggestion implicit in the article that practitioners might want to consider.

Nagareda notes that some prescription drugs are approved by the FDA and never again the subject of public FDA activity; the FDA, for example, never convenes an Advisory Panel to consider some aspect of the drug's safety. Other drugs -- Nagareda uses SSRI antidepressants as an example -- are both approved and then later the subject of public activity and pronouncements by the FDA. In the case of SSRI antidepressants, the FDA repeatedly convened Advisory Panels during the 1990s, and filed amicus curiae briefs since 2000, all concluding that this class of antidepressants did not cause adult patients to develop suicidal thinking or behavior.

Compare two hypothetical lawsuits: One involves a drug that was approved in 1990, and never again considered publicly by the FDA. The plaintiff claims to have ingested the drug and been injured in 2000, and pleads that the manufacturer should have warned of a certain risk associated with use of the drug.

The second case involves a drug that was approved in 1990, and the FDA
repeatedly thereafter -- up through, say, 2005 -- publicly stated that the
manufacturer should not warn of a certain risk. Again, the plaintiff claims to have ingested the drug and been injured in 2000, pleading that the manufacturer should have given the warning that the FDA repeatedly considered and rejected in public.

Given what we do for a living, it's no surprise that we think the manufacturer should win in both of those situations. Whether or not the FDA is convening Advisory Panels and filing amicus briefs, the Agency is always privately evaluating data about risks and deciding what warnings are appropriate, and society is surely better served by having an expert agency assess risks and mandate warnings than having juries -- after-the-fact, and in cases involving injured plaintiffs -- make those decisions.

But Nagareda suggests that the second hypothetical case may be stronger than the first. When the FDA has publicly expressly considered and rejected a request to give a certain warning as of the year 2000, judges might more easily find that the manufacturer was forbidden to give that warning (and thus rule in favor of preemption).

If that's true, it has two implications. First, drug companies should try to
create preemption precedents in cases that resemble the second hypothetical -- where the FDA has repeatedly, and publicly, considered and rejected warnings proposed after the time the drug was originally approved. After establishing those "easier" precedents, manufacturers should move on to what Nagareda implicitly views as the harder cases -- drug approval followed by public silence. (The cases Nagareda expressly identifies may not be his only preferred cases for manufacturers. We can imagine cases, for example, where a manufacturer privately asked the FDA to allow a specific warning, and the FDA forbade giving the warning. Nagareda might view that case, too, as a particularly attractive candidate for finding preemption.)

Second, if Nagareda's right, then industry has lucked out. By sheer
coincidence, the drug preemption cases that are currently closest to appellate resolution -- Colacicco and McNellis in the Third Circuit -- involve SSRI antidepressants and thus present, according to Nagareda, the more compelling case for preemption.

Time will tell.

Sunday, February 25, 2007

The Bridges From Madison County

Consider an under-utilized vehicle for changing venue in state court cases.

Suppose your client faces two individual product liability cases filed in state court in Cook County, Illinois. The client is then named in a class action raising similar claims filed -- and properly venued -- in one of the downstate courts that the American Tort Reform Association has labeled a "judicial hellhole." (We're not really picking on Madison County in particular; we just couldn't resist using it for the title of this post. As readers of this blog know, we're practicing lawyers; we never pick on any judges or court systems, because we may someday appear before those judges. We love you guys in downstate Illinois. Really.)

Anyway, two individual cases upstate; one class action properly venued downstate. If the class action is not removable, how can the defendant escape from what is perceived to be an undesirable forum?

Some, but by no means all, states have implemented state court analogues to the federal multidistrict litigation system. Those mini-MDL rules or statutes generally permit cases that share common questions of fact to be transferred to a single judge for pretrial (and, in some states, trial) proceedings. Illinois is one of the states that has this type of system.

Illinois Supreme Court Rule 384 permits a party to file a motion with the Illinois Supreme Court to transfer and consolidate in one court cases that raise one or more "common questions of fact or law" pending in different counties. Thus, one possible "bridge from Madison County" would be to ask the Illinois Supreme Court to transfer the downstate class action to Cook County for consolidation with the previously pending individual cases.

We realize that this is high-stakes poker. First, there's a chance that, despite your request, your up-state cases will instead be transferred downstate for consolidated proceedings. Not good.

Second, in the federal system, we're quite reluctant to seek MDL treatment of product liability cases. One of us (Herrmann) claims to be the only guy on the planet who tells MDL riddles. For example: "What's the similarity between an MDL and the Field of Dreams?" The answer, of course? "If you build it, they will come." (Yeah, yeah. If you want to know the other riddles, you'll have to ask.)

Anyway, we often advise against seeking federal MDL treatment of product liability claims for fear that creating an MDL will attract the eye of the plaintiffs' bar and prompt the filing of more cases.

State court MDLs, however, aren't as prominent as federal ones, so the risk of drawing new cases is somewhat reduced. And, if a particularly dangerous case has been filed in a particularly dangerous court, defense counsel should consider every possible way of improving the venue. Seeking to create a statewide coordinated proceeding is one possible bridge from Madison County; counsel should at least consider (even if they eventually reject) that possibility as a way to escape.

Thursday, February 22, 2007

The Illinois Jensen Case - A Class Action Cautionary Tale

Illinois, the Land of Lincoln, is also quite well known for abusive class action practice, including though by no means limited to certification of “drive by” class actions in certain downstate counties. We’ve also practiced in Cook County, and that venue can be tough on defendants too.

But things have been looking up in Illinois lately, and the state’s most recent pharmaceutical class action decision, Jensen v. Bayer AG, ___ N.E.2d ___, 2007 WL 313320 (Ill. App. Feb. 2, 2007), continues the trend. We can’t talk too much about the Baycol specific aspects because we (one of us, anyway) are involved in this mass tort. Jensen, however, contains lots of nuggets to mine without mentioning any particular drug’s name.

Jensen was a opportunistic class action filed under the legal theory that any time a manufacturer withdraws a drug, there must be a tort somewhere. The plaintiff looked high and low and came up with three of them that he thought would tempt a court into certifying a class action and thus putting him (or his counsel) on the fast track to a fat settlement – consumer fraud (which seems to be becoming the cause of action of choice of the 21st century), implied warranty, and of course, the tort that doesn’t exist without a class action, medical monitoring.

It didn’t turn out that way. A funny thing happened on the way to the bank.

Class certification was denied. What happened after that is a cautionary tale

Dismissal of the consumer fraud claim is probably the most important nugget. Plaintiff didn’t bother with evidence (this was supposed to be a class action after all), rather his position was essentially “because you withdrew the drug, you must have misled people before when you were marketing it.” Thankfully, the court had none of it. There is at least some proof of bad conduct, even in consumer fraud:

Plaintiff’s sole piece of evidence, defendant’s announcement that it intended to remove Baycol from the market, does not indicate an intent to conceal. The most natural and unstrained interpretation of defendant’s statement, in our view, indicates that defendant’s ongoing monitoring of Baycol revealed that Baycol may no longer be safe to the public. This is not an admission, either implicitly or explicitly, that defendant concealed the safety of its product from the public.
Jensen, 2007 WL 313320, at *5 (emphasis original). The court then kicked the theory while it was down. “Under plaintiff’s interpretation of the [consumer protection] Act, any recall announcement. . . would provide a prima facie case for concealment. This result, in our view, constitutes an unsupportable and unreasonable extension of the Act.” Id.

“Evidence? – I don’t need no stinkin’ evidence!” Well for once, the plaintiff was wrong in that assertion. I suppose it’s a measure of the state to which pharmaceutical product liability law has fallen that we think it’s worth trumpeting to the world a court’s rejection of an argument that, before consumer fraud became the product liability theory du jour, would have been laughed out of any fair-minded court in the country.

The dismissal of the breach of warranty claim in Jensen is a fine example of a class action plaintiff being hoist by his own petard (a phrase that originally meant having something blow up in one’s face). The basis of the dismissal was rather anachronistic – privity – but entirely avoidable had the plaintiff been willing to plead a personal injury claim.

This being the class action world, however, personal injury is almost anathema, since few, if any personal injury class actions are likely to be certified any longer. In warranty cases, Illinois has dispensed with so-called “vertical privity” in personal injury litigation. Since plaintiff shied away from any class-busting personal injury allegations, he pleaded himself right back into the old privity rule – and his claim was dismissed as a result. Id. at *6. As a public service, we also note that many states have also done away with the UCC’s notice requirement in personal injury warranty actions, while retaining notice in other types of cases, thus presenting another opportunity for eliminating personal injury-averse class actions.

The medical monitoring claim failed because of another all-too-common characteristic of class actions – if the class is not certified, then all interest in proving the plaintiff’s original claims vanishes. The court was able to take a pass at the novel question of whether Illinois would permit a medical monitoring claim brought by an uninjured plaintiff, because the plaintiff was left high and dry. He had no expert opinions, in fact nothing but his own say-so as a layperson, to support the medical monitoring allegations. In particular, he had no medical proof of the likelihood of future harm. Id. at *8. Hasta la vista.

As for the class action itself, the court said, in effect, “why bother?” The plaintiff, after getting a conditional right to file an amended class action complaint, couldn’t be troubled with meeting those conditions. The only pleading changes were “conclusory and by no means illuminative,” and the bushes were not even beaten to drum up a new class representative, as ordered. Id. at *9.

If we thought this plaintiff had any plausible claim to start with, we might even feel sorry for him. But he didn’t, so we don’t.

We feel sorry for the defendant, though. It undoubtedly spent hundreds of thousands of dollars (at least) to defend what the opinion makes clear was a suit based upon a wing and a prayer (we're being charitable here). At least in this instance there was not one cent spent on tribute.

Another Stray Thought on Williams v. PM

We don't know where it will go - if anywhere - but the majority's discussion of due process and the right to present available defenses potentially could sweep much more broadly than just in the punitive damages context. On page 5 the majority state:
[T]he Due Process Clause prohibits a State from punishing an individual without first providing that individual with "an opportunity to present every available defense." Lindsey v. Normet, 405 U.S. 56, 66, 92 S.Ct. 862, 31 L.Ed.2d 36 (1972) (internal quotation marks omitted). Yet a defendant threatened with punishment for injuring a nonparty victim has no opportunity to defend against the charge.

Taking a look at the Lindsey case reveals that it's not a "punishment" case at all, but rather a civil landlord-tenant dispute, in which the Court stated "Due process requires that there be an opportunity to present every available defense."

So what does the Due Process right to "present every available defense" mean in the context of a claim that a "nonparty victim" was injured? It can't be limited just to "punishment" because the source of the right wasn't a punishment case. In particular, we're intrigued because a "nonparty" could be read to mean non-representative member of a class action.

We've complained for years about how class-action litigation leads to bizarre and prejudicial trial plans at which defendants are denied precisely what Williams says that "due process" requires - the right to present individual defenses before being held liable for something. We'd love to see the Williams due process right to present individual defenses applied in the class action context.

If at first we don't succeed, we'll try, try again.

Wednesday, February 21, 2007

Proposed Fed. R. Evid. 502

The recent amendments to the Federal Rules of Civil Procedure added several provisions to address electronic discovery issues. One provision -- Rule 26(b)(5)(B) -- allows a party that produces privileged or protected information to notify the opposing party of the claim and, after that notification, the receiving party must "promptly return, sequester, or destroy the specified information ... and may not use or disclose the information until the claim is resolved." Fed. R. Civ. P. 26(b)(5)(B) (as amended Dec. 1, 2006). On its face, Rule 26(b)(5)(B) appears to preserve claims of privilege or protection for inadvertently-produced materials. The accompanying Advisory Committee Notes explain, however, that Rule 26(b)(5)(B) "does not address whether the privilege or protection ... was waived by the production" and, instead, merely "provides a procedure for presenting and addressing these issues."

The evidentiary counterpart to Rule 26(b)(5)(B) is proposed Federal Rule of Evidence 502. That rule would provide a substantive basis for asserting that some inadvertent productions do not waive otherwise applicable claims of attorney-client privilege and work product protection. Prop. Fed. R. Evid. 502(b). The proposed rule also (1) prohibits subject matter waivers based upon nothing more than disclosure of a privileged or protected communication; (2) includes a provisional paragraph permitting selective waivers for disclosures of privileged or protected communications to federal agencies; and (3) provides that, if the parties agree that producing privileged or protected communications will not result in a waiver and have that agreement incorporated in a federal court's order, the resulting order is binding in "all state or federal proceedings." Prop. Fed. R. Evid. 502(a), (c)-(e).

The subject matter waiver and inadvertent production paragraphs of the proposed rule, however, create nearly as many questions as they answer. One comment submitted about the proposed rule notes that production issues often are litigated simultaneously in federal and state courts and, in that context, the application of the subject matter waiver and inadvertent production paragraphs of proposed Fed. R. Evid. 502 is unclear. The proposed rule also does not fully explain how it applies in diversity actions, where state privilege law generally governs. Here's a link to the comment addressing those issues in more detail.

The comment period for proposed Fed. R. Evid. 502 closed last week. With luck, the Advisory Committee will address and clarify these issues before recommending that proposed Fed. R. Evid. 502 be adopted.

Tuesday, February 20, 2007

Send Them a Message

Now we've read it, and we're applauding. The Supreme Court spoke loud and clear today in Williams v. Philip Morris USA, No. 05-1256 (U.S. Feb. 20, 2007). It ruled that for a jury “to base that award [of punitive damages] in part upon his desire to punish the defendant for harming persons who are not before the court. . .would amount to a taking of property without due process.” Op. at 1. That’s a bright line rule – the first in the constitutionalization of punitive damages. The rationale (for once) is crisp and clean:


[T]he Constitution’s Due Process Clause forbids a state to use a punitive
damages award to punish a defendant for injury that it inflicts upon nonparties or those whom they directly represent, i.e., injury that it inflicts upon those
who are, essentially, strangers to the litigation.

Op. at 5. Thus, “[a] defendant must have an “opportunity to present every available defense.” Id. That opportunity does not exist where the defendant is being punished for injuring a nonparty. Id. at 5-6.

The broad questions that injury to persons not before the court present – How many victims? How badly injured? Under what circumstances? – all are likely to produce “standardless” awards violative of due process. Id. at 6. While the court is discussing an individual award – the implications of Williams for the already sputtering proposition that punitive damages can be decided in class-wide, representative litigation are obvious. The nails are on the coffin.

The Court found “no authority supporting the use of punitive damages awards for the purpose of punishing a defendant for harming others.” Id. at 6. The concept of “potential harm,” the Court clarified, means only harm potentially caused the plaintiff. Id. (emphasis original). While harm to others is relevant to reprehensibility, that fact does not permit counsel to argue or a court to charge that a jury may award punitive damages in part to rectify harm to others. “A jury may go no further. . .and use a punitive damages verdict to punish a defendant directly on account of harms it is alleged to have visited on nonparties.” Id.

It’s about time that plaintiffs were sent a message that they can’t use punitive damages as a weapon to bring before a single jury all the harm that a product might have done to everybody in the world. That’s not what civil litigation is for. Tort suits have always been a poor substitute – and now an unconstitutional one – for equally applied administrative action.

Philip Morris v. Williams decided

We don't often try to "scoop" news sources in this blog. We're not reporters, and we have the practice of law competing with this blog for our time.

But the U.S. Supreme Court handed down this morning, within the last hour or so, its decision reversing and remanding a $79.5 million punitive damage award against Philip Morris. We haven't yet read the opinion, so we have nothing to say about it. But here's the link; happy reading.

Punitive damages make the news

Yesterday's New York Times offers this article questioning whether juries should be empowered to award punitive damages in civil cases. The article highlights a recent case in which a jury awarded $246 million to a woman who was paralyzed in an accident involving a Ford Explorer.

We're delighted to see this topic once again making headlines in the lay press. The topic surely merits public debate.

We've seen the statistics, and we understand that juries award punitive damages relatively infrequently. And monstrous, headline-grabbing punitive damage awards are rarer still. But isn't that the point?

If society wants to deter corporate misbehavior, then that misbehavior should be punished consistently, fairly, and predictably. Corporations would understand the rules, and they would generally obey them. Punishment should not be imposed completely unpredictably, depending on the performance of a lawyer, the nature of a jury pool, or random chance.

We'd like to see regulation by design, not regulation by lightning bolt.

Can that possibly be wrong?

Monday, February 19, 2007

A Note on FDA Politics

FDA insiders have aptly described the agency as a large, slow-moving animal that bleeds profusely when injured. That's why the FDA so frequently finds itself in the public eye.

But who injures the animal, and why?

For a fairly long time now, the FDA had not been particularly visible. Recently, that changed.

The Democrats in Congress have now held hearings during which they castigated the FDA for approving drugs too readily, failing to monitor drugs after they're on the market, and muzzling professionals within the agency for political reasons.

But wasn't it just ten years ago when Republicans in Congress put the agency under seige, complaining, among other things, about the agency's failure to approve drugs promptly?

That had us scratching our heads. Just who dislikes the FDA -- the liberals or the conservatives?

The answer seems to be that politicians on both sides of the aisle dislike the agency -- when it's politically convenient to do so. When the Democrats held the White House in the late 1990s, the Republican-led Congress took potshots at the administration by complaining about the conduct of one of the agencies in the Executive Branch -- the FDA.

From 2000 through 2006, the Republicans held the White House and majorities in both houses of Congress. The FDA got off easy -- few high-profile public hearings.

Government is now divided again. With the Republicans holding the White House and the Democrats in control of Congress, it's open season again for those who want to criticize the FDA. Now it's the Democrats taking potshots at a Republican administration by complaining about the conduct of one of its Executive Branch agencies -- the FDA.

Life is never easy for an agency that plays a central role in protecting the public's health. But the FDA generally stays off the front pages when a single party controls both the Executive and Legislative Branches of government. When government divides, the FDA quickly becomes a symbol of the incompetence of the administration -- the party that holds the White House -- and the slow-moving, profusely-bleeding animal becomes a target that's just too hard to resist.

We're all in favor of legislative oversight of government agencies, and we certainly think agencies should be criticized when they perform their roles poorly. And, Lord knows, we have plenty of gripes with how the FDA has treated some of our clients. But wouldn't it be nice if the criticism were just a touch more uniform and rational, and not so plainly motivated by political opportunism?

Thursday, February 15, 2007

HIPAA Does Not Preempt State Litigation Practice

Prescribing doctors – in our business you have to love them. Almost all of the cases we handle are governed by the learned intermediary rule, meaning that there’s no duty to warn a patient directly, and all warnings about prescription medical products are directed to the prescribers. When the prescribing doctor says “I knew all that already,” or “I never read your warning but relied upon my experience instead,” we win. If the extra warning our clients supposedly should have given wouldn’t have changed how the prescriber treated his or her patient, there’s no causation. No causation = summary judgment.

Thus we really like to talk to the prescribers – as early in the case as possibly and as informally as possible – to find our just how defensible our cases really are. We also like to talk to them to prevent the various abusive tactics that plaintiffs’ counsel employ when they’re allowed sole and unrestricted access to prescribers except through depositions. These tactics have included threats to sue the prescriber for malpractice unless s/he gives favorable testimony for the plaintiff, payment of “expert fees” if s/he gives favorable testimony for the plaintiff, providing the prescriber with collections of one-sided “information” about the product, and inducing prescribers to sign form affidavits that they later disavow when deposed, among other things.

The plaintiffs’ bar is pretty smart. They know how valuable informal prescriber interviews are to defendants in personal injury cases. They have waged a fairly successful decade-long fight to prevent defense counsel from having equal access to these critical witnesses. Their latest tactic, however, is just plain wrong. In places where they have been unsuccessful in changing state-law practices, they now claim that state law allowing defense counsel to talk to prescribers informally is preempted by the Health Insurance Portability and Accountability Act of 1996, 42 U.S.C. §§1320-d, et seq. (“HIPAA”). That’s just not so. HIPPA always intended to leave state civil procedure to the states.

There’s simply no basis for preemption. HIPAA enacted to ensure the security of electronic health information while it was stored and when it was exchanged between entities health-care providers, insurers, and the like during routine business. It was not intended to restrict anything that occurred during litigation. HIPAA says so explicitly.

The problem is that HIPAA’s preemption clause is quite broad and easy to find, while the exceptions are less apparent. When these preemption arguments have been made in mass tort litigation – where defense counsel have the resources to rebut them – they have been rightly rejected. However, these same arguments have been pressed in “one-off” malpractice cases and the like where defense counsel are not so well prepared. In that situation, some courts have been deceived by what is a statutorily fatuous argument.

HIPAA is not a substitute for the physician-patient privilege; it created no federally enforced privilege of any sort. Northwestern Memoriall Hospital v. Ashcroft, 362 F.3d 923, 926 (7th Cir. 2004). Nor does HIPAA create any private cause of action – so litigants aggrieved by purported HIPAA violations have no federal right to sue. Poli v. Mountain Valleys Health Centers, Inc., 2006 WL 83378, at *2 (E.D. Cal. Jan. 11, 2006); Runkle v. Gonzales, 391 F. Supp.2d 210, 237 (February 2, 2006 D.D.C. 2005); Bradford v. Semar, 2005 WL 1806344, at *3 (E.D. Mo. July 28, 2005); Gaul v. Hughes Pharmacy Services, Inc., 2005 WL 1491216, at *3 (N.D. Iowa Jun. 23, 2005); Rigaud v. Garofalo, 2005 WL 1030196, at *3 (E.D. Pa. May 2, 2005); Johnson v. Quander, 370 F.Supp.2d 79, 99-100 (D.D.C. 2005). Rather, HIPAA provides its own administrative remedies. See 145 C.F.R. §160.306.

The physician-patient privilege was “unknown to the common law,” and where created by statute “is subject to many exceptions and to waiver for many reasons.” Whalen v. Rose, 429 U.S.589, 602 n.28 (1977). Almost everywhere, once somebody files suit over some sort of medical condition, all privileges are waived as to that condition. Alcon v. Spicer, 113 P.3d 735, 740 (Colo. 2005); Henricksen v. State, 84 P.3d 38, 48-49 (Mont. 2004); Willoya v. State Dept. of Corrections, 53 P.3d 1115, 1124 n.38 (Alaska 2002); Laznovsky v. Laznovsky, 745 A.2d 1054, 1067 (Md. 2000); Doe v. Orangeburg County School Dist. No. 2, 518 S.E.2d 259, 261 n.7 (S.C. 1999); Rodriguez v. Suzuki Motor Corp., 996 S.W.2d 47, 63 (Mo. 1999); Marsh v. Wenzel, 732 So. 2d 985, 990 (Ala. 1998); Donovan v. Bowling, 706 A.2d 937, 940 (R.I. 1998); Maynard v. Hereen, 563 N.W.2d 830, 837 (S.D. 1997); Steinberg v. Jensen, 534 N.W.2d 361, 368 (Wis. 1995); Stigliano v. Connaught Laboratories, Inc., 658 A2d 715, 718 (N.J. 1995); Nelson v. United States, 649 A.2d 301, 308 (D.C. 1994); Carson v. Fine, 867 P.2d 610, 618 (Wash. 1994); Vredeveld v. Clark, 504 N.W.2d 292, 300 (Neb. 1993); Pearce v. Ollie, 826 P.2d 888, 903 (Idaho 1992); Owen v. Owen, 563 N.E.2d 605, 608; State v. Valley, 571 A.2d 579, 586 (Vt. 1989); Dillenbeck v. Hess, 536 N.E.2d 1126, 1135 (N.Y. 1989); Nelson v. Lewis, 534 A.2d 720, 722 (N.H. 1987); State v. Berry, 324 So. 2d 822, 827 (La. 1976); State v. Campbell, 500 P.2d 21, 33-34 (Kan. 1972); City & County of San Francisco v. Superior Court, 231 P.2d 26, 28 (Cal. 1951); Wright v. Wasudev, 1994 WL 642785 at *5 (Tenn. Ct. App. Nov. 16, 1994); Moses v. McWilliams, 549 A.2d 950, 956 (Pa. Super. 1988); Orr v. Sievert, 292 S.E.2d 548, 550 (Ga. App. 1982).

HIPAA doesn’t change any of this. It was not enacted to address how state-law litigation impacts upon state-law privileges. Rather HIPAA was primarily enacted to require the government to create national standards for the routine electronic transmission of health care information. See 42 U.S.C. §1320d-2; In re Diet Drug Litigation, 895 A.2d 493, 497 n.11 (N.J. Super. 2005) (“[t]he Act’s first objective was not to protect privacy”). Congress wanted to promote the efficiencies that came with increased use of electronic data management technology in the medical area while preserving patient privacy. As a consequence, Congress mandate the adoption of federal privacy protections for individual health information. See Pub.L. 104-191 §264(a, c) (uncodified).

The administrative response was the so-called HIPAA Privacy Rule (“Privacy Rule”), effective April 14, 2003. 68 Fed. Reg. 8334 (Feb. 20, 2003). As a general proposition, the Privacy Rule requires covered entities, (health care providers, health plans and health care clearinghouses) to follow specified procedures to prevent improper or inappropriate disclosure of a patient’s individually identifiable health information. There are exceptions to these procedures – and one of these exceptions concerns litigation.

The HIPAA Privacy Rule does not confer federal privacy rights on state-law personal injury plaintiffs. Instead health care providers “may disclose protected health information in the course of any judicial. . .proceeding.” 45 C.F.R. §164.512(e). This regulation states, in pertinent part:


(e) Standard: Disclosures for judicial. . .proceedings.

(1) Permitted disclosures. A covered entity may disclose protected health
information in the course of any judicial. . .proceeding
:. . .

(i) In response to an order of a court. . .provided that the covered entity discloses only the protected health information expressly authorized by such order; or

(ii) In response to a subpoena, discovery request, or other lawful process, that is not accompanied by an order of a court. . .if:

(A) The covered entity receives satisfactory assurance. . .from the party seeking the information that reasonable efforts have been made by such party to ensure that the individual who is the subject of the protected health information that has been requested has been given notice of the request. . .

(iii) . . .[A] covered entity receives satisfactory assurances. . .if the covered entity receives from such party a written statement. . .that:

(A) The party requesting such information has made a good faith attempt to provide written notice to the individual. . .

(B) The notice included sufficient information about the litigation. . .to permit the individual to raise an objection to the court. . ., and. . .

(1) No objections were filed;

or

(2) All objections filed by the individual have been resolved by the court...

(Emphasis added).

That’s the only protection HIPAA provides in the litigation context – any “lawful process that is not accompanied by an order of a court” simply requires “notice” and “satisfactory assurance” prior to production of individual medical information Id. §164.512(e)(ii)(A). Whatever state-law litigation procedure that was legal before HIPAA remains legal afterwards. Thus the governing federal regulation under HIPAA neither prohibits informal physician interviews nor requires them – and the same is true as to any other form of litigation-related information gathering permitted by state law. The regulation simply provides for resolution of “objections. . .by the court.” Id. §164.512(e)(iii)(C)(2).

In light of the applicable HIPAA regulation, a claim that the Act preempts state civil practice makes no sense. Nothing in HIPAA purports to prohibit any method of gathering personal medical information about a personal injury plaintiff in the context of litigation initiated by that plaintiff. To the contrary, the language of §164.512(e) demonstrates that the HIPAA Privacy Rule contemplated and specifically addressed the issue of discovery in civil litigation – and preserved state law practice, whatever that practice might be. See E.E.O.C. v. Boston Mkt. Corp., 2004 WL 3327264, at *5 (E.D.N.Y. Dec. 16, 2004) (HIPAA “does not expressly prohibit ex parte communications with health providers for an adverse party, but neither does it authorize such communications”; declining to find preemption).

In promulgating the Privacy Rule, the government confirmed that HIPAA was not intended to interfere with litigation discovery as permitted by state law. The Final Rule promulgating the Rule directly addressed the issue of state litigation practice.

[T]he provisions in this paragraph are not intended to disrupt current practice whereby an individual who is a party to a proceeding and has put his or her medical condition at issue will not prevail without consenting to the production of his or her protected health information. In such cases, we presume that parties will have ample notice and an opportunity to object in the context of the proceeding in which the individual is a party.

65 Fed. Reg. 82462, 82530 (emphasis added). Where a plaintiff-patient has voluntarily placed his or her medical condition at issue by filing suit, informal physician interviews thus remain proper whenever allowed by state law.

The Federal Register and the Final Rule confirm that the government took particular care to ensure that, in the context of civil litigation, health care providers such as treating physicians could continue to disclose patient-plaintiffs’ health care information as a matter of course. For this reason, in the litigation context, notice is “presumed” for purposes of §164.512(e)(ii) based upon “ample notice and the opportunity to object” in the lawsuit “in which the individual is a party.” See 65 Fed. Reg. 82462, 82530. Thus the government made clear that the HIPAA Privacy Rule was not intended to affect current state-law litigation practice in any way.
Because HIPAA does not even purport to reach state-law litigation practices, there is no real reason to reach preemption as such. But even if express HIPAA preemption is considered, the preemption claim fails because preemption under HIPAA is expressly limited to “contrary” state law.

HIPAA contains an express preemption clause that limits preemption to situations involving direct conflict between the Act and state law. Any federal standard resulting from HIPAA’s implementation “shall supersede any contrary provision of State law.” 42 U.S.C. §1320d-7(a)(1) (emphasis added). A “contrary” state law is defined as one that would make it “impossible [for a covered entity] to comply with both the State and federal requirements,” or that would stand “as an obstacle to the accomplishment and execution of the full purposes and objectives of [the Act].” 45 C.F.R. §160.202.

Unless prohibited by statute, administrative agencies may delineate the preemptive scope of the statutes they administer. Medtronic, Inc. v. Lohr, 518 U.S. 470, 496 (1996). As already discussed, under HIPAA state practice concerning informal treater interviews is preserved in 45 C.F.R. §164.512(e), and HHS has explicitly stated its intention “not. . .to disrupt current practice” concerning “a party to a proceeding [who] has put his or her medical condition at issue.” 65 Fed. Reg. at 82530. That defeats any claim of statutory preemption because, compliance with both state law and the Privacy Rule is not impossible, nor do informal interviews stand as an obstacle to the accomplishment of HIPAA’s objectives. The Privacy Rule itself expressly carved out an exception to maintain the free flow of information in judicial settings.

Congress provided three exceptions to the HIPAA’s conflict-based preemption clause – where the state law: (1) is designed to prevent fraud and abuse in insurance; (2) concerns controlled substances; or (3) more stringently protects patient privacy than HIPAA. See 42 U.S.C. §1320d-7(a)(1). The preemption claim raised against informal interviews is that they do not fall under these three exceptions. That puts the cart before the horse, because it assumes a conflict when in fact there is none – since preemption is expressly limited only to “contrary” state law. The exceptions become irrelevant because there is nothing “contrary” to state law allowing informal physician interviews. HIPAA simply doesn’t purport to restrict state-law litigation practice in personal injury litigation in any way.

Even if some argument could be made that there was some sort of conflict, the “presumption against preemption” would apply to a preemption claim involving construction of an express preemption clause. See Our Post on “Heedless Use of Heeding Presumptions” of December 8, 2006. In construing a federal preemption clause, courts “start with the assumption that the historic police powers of the States were not to be superseded by the Federal Act.” Medtronic v. Lohr, 518 U.S. at 485. Well, physician/patient questions are squarely within the states’ historic powers. Not only is there is no federal physician/patient privilege. Whalen, supra, but even in federal litigation, privileges are governed by state law. Fed. R. Evid. 501. The presumption against preemption thus applies with full force in this case.

The HIPAA preemption clause does not permit – let alone mandate – preemption here. On its face, §1320d-7 demands that state law be “contrary” to the Act. Since the Privacy Rule contains a specific exemption for litigation-related discovery, informal treater interviews permitted under state practice cannot possibly be contrary to the terms of HIPAA. “All that [the Privacy Rule] should be understood to do, therefore, is to create a procedure for obtaining authority to use medical records in litigation.” Northwestern Memorial Hospital, 362 F.3d at 925-25 (disapproving lower court preemption analysis). Accord Harris v. Whittington, 2007 WL 164031, at *2 (D. Kan. Jan. 19, 2007) (“plaintiff objects to the “ex parte” nature of interviews based on the enactment of HIPAA. . . . HIPAA rules and regulations contemplate the disclosure and use of medical information in a judicial proceeding”).

Thus, in Hawes v. Golden, 2004 WL 2244448 (Ohio App. Sep. 22, 2004), appeal denied, 822 N.E.2d 811 (Ohio 2005), the appellate court disagreed with the contention that a state statute waiving the physician-patient privilege upon the filing of certain personal injury litigation was preempted by HIPAA. The exceptions in 45 C.F.R. §164.512(e), preserving state discovery procedures, precluded the existence of any preemptive “conflict”:

Whether [the state statute] is preempted by HIPAA depends on whether it is “contrary” to federal law. “Contrary” is defined. . .as the impossibility of complying with both state and federal requirements. In this case, it is not impossible for the medical provider/covered entity to comply with both federal and state law. Under state law, the patient/physician privilege is waived upon filing a wrongful death action such that medical evidence is discoverable from a medical provider/covered entity. . . . HIPAA likewise permits disclosure of medical evidence either pursuant to a court order, discovery request or subpoena. Consequently, there is no conflict.

Appellant claims that HIPAA does not contain any provisions. . .regarding waiver of her decedent’s privacy rights. . .[but] does not, however, cite 45 C.F.R. §164.512(e), regarding judicial and administrative proceedings, discussed above, which clearly apply to this case. These provisions specifically authorize release of medical records pursuant to a court order, subpoena, or discovery request. This Court finds that these provisions permit discovery of medical evidence relevant to wrongful death cases. They are not superseded or preempted by HIPAA.

Hawes, 2004 WL 2244448, at *2-3 ¶¶12-13 (citations omitted).

The HIPAA preemption issue has also been extensively litigated in New Jersey. There, the courts have concluded that “[n]owhere in HIPAA does the issue of ex parte interviews with treating physicians, as an informal discovery device, come into view. The court is aware of no intent by Congress to displace any specific state court rule, statute or case law on ex parte interviews.” Smith v. American Home Products Corp., 855 A.2d 608, 622 (N.J. Super. 2003). “HIPAA, by its own terms, does not exclusively dominate the field of protecting individual privacy interests in health information.” Diet Drug, 895 A.2d at 502 n.26. Concerning judicial proceedings generally:

As for this state’s informal discovery practices, congressional intent seems not to intrude on New Jersey’s general authority over its judicial and administrative proceedings. HIPAA. . .allows a covered entity to disclose protected health information without written authorization of the patient or an opportunity for the patient to agree or object to the disclosure during judicial proceedings under certain circumstances such as a court order, discovery request, or subpoena.

Smith, 855 A.2d at 622. Thus “[b]ecause informal discovery is not expressly addressed under HIPAA, the courts should be governed by state law. . . . Because the disclosure is limited in scope, the [informal] interviews do not conflict with the general principles of HIPAA.” Id. at 623.

[P]rivacy protection, while of national importance, is being balanced with discovery issues, which would suggest that it is an area of traditional tort litigation, and therefore within the State's control.

Diet Drug, 895 A.2d at 502 n.26 (invoking the “presumption” in Buckman Co. v. Plaintiffs’ Legal Comm., 531 U.S. 341, 347 (2001), “against finding federal preemption where the field is one traditionally occupied by the states”).

Likewise, a court in New York ruled that HIPAA does not preempt that state’s discovery practices permitting informal treater interviews:

HIPAA is not a barrier to the relief sought by defendants. . . . Contrary to plaintiff's assertions, HIPAA itself provides no impediment to the relief sought by defendants. The regulations promulgated under HIPAA provide that under certain conditions, “A covered entity may disclose protected health information in the course of any judicial or administrative proceeding”. . . . [I]n order to foster the truth seeking function of a trial and in order to ensure fundamental fairness and a level playing field, a plaintiff should not be allowed to simply refuse to provide an appropriate authorization to defendants yet seek to interview these same health care providers for potential trial testimony.

Steele v. Clifton Springs Hospital & Clinic, 788 N.Y.S.2d 587, 589-90 (N.Y. Sup. 2005) (citing 45 C.F.R. §164.512(e)). See Anderson v. City of New York, 2006 WL 1134117, at *1 (Mag. E.D.N.Y. April 28, 2006) (applying New York law).

Contrary cases are not persuasive. Law v. Zuckerman, 307 F. Supp.2d 705 (D. Md. 2004), for example, stated “[i]f a state law can force disclosure without a court order, or the patient’s consent, it is not ‘more stringent’ than the HIPAA regulations.” Id. at 711. Law thus ignored (or the parties did not bring to the court’s attention) 45 C.F.R. §164.512(e)(1)(ii), which expressly exempts from preemption state-law discovery without a court order as long a there is “notice” and an opportunity to be heard. Further Law, 307 F. Supp. 2d at 710, and Croskey v. BMW of North America, Inc., 2005 WL 1959452, at *5 (E.D. Mich. Feb. 16, 2005), both relied on the district court opinion in National Abortion Federation v. Ashcroft, 2004 WL 292079 (N.D. Ill. Feb. 6, 2004), which was disapproved on this precise point by the Seventh Circuit in Northwestern Memorial Hospital, 362 F.3d at 925-26.

Wednesday, February 14, 2007

Chaining the Muse

We're not fond of court rules that dictate the structure of briefs.

We understand why courts adopt these rules. It's partially for self-preservation; if courts didn't impose page limits on briefs, for example, many litigants would inflict tomes on courts. And some rules make it easier for the court to find certain essential information, such as the requirement that federal appellate briefs contain a jurisdictional statement.

But we suspect that many other rules are desperate efforts to improve the quality of legal writing, and we don't think those rules can work. To the contrary, we think courts will still receive plenty of bad briefs, and the rules will reduce the quality of some briefs that might otherwise be truly exceptional.

Many court rules dictating the form of briefs simply try to force incompetent counsel to include in their submission the topics that concern the court. Some court rules require, for example, that a brief begin with a "summary of argument." A good lawyer, however, is likely to have a few sexy explanatory sentences that would be a better way to start the brief than with a pure summary of the legal argument. Some court rules require a movant to isolate the controlling authority for the relief sought. That's a tough row to hoe for a litigant trying to make new law. Some court rules require separate sections titled "statement of the case" and "statement of the facts," even though a gifted writer could almost surely merge the two with grace. And so on.

We doubt that court rules can make bad lawyers good. A disorganized writer is just as capable of producing a rambling, formless screed within these rules as without. Bounded by the rules, the screed will be broken up by subheadings; unbounded, it may not be. Either way, the screed is the screed, the writing is poor, and the court will suffer.

Worse than the rules' inability to improve bad writing is their pernicious effect on good writing. An able writer knows that the best approach to a complex written communication will vary with the nature of the communication. Not all histories are written in strict chronological order. Not all novels follow the same organizational structure. Not all poetry rhymes. And not all briefs are at their most persuasive, or even their most comprehensible, when chopped up and arranged in precisely the way the various rules mandate.

Judges who are good writers know this. Judges Easterbrook and Posner, both of the Seventh Circuit, are among those who are legendary for the clarity and punch of their opinions. Whatever one thinks of the merits of any given decision, it is impossible to come away from a Posner or Easterbrook opinion without deep admiration for the brilliance of the writing. And both Judge Easterbrook and Judge Posner routinely violate, often flagrantly, the opinion-writing rules laid down at judges' schools about how to structure decisions. Recommendations to judges about how to structure their opinions can help the uncertain writer accomplish his or her goals; fine writers can often accomplish them much better by abandoning the recommendations.

Why, then, are lawyers' briefs chained to a Procrustean structure? We understand the pervasive despair of courts that find themselves awash in badly-written briefs and cling to structural rules as a life-preserver. But their hope is misplaced for two reasons.

First, rule-imposed structures will not make bad writing good. Period.

Second, rule-imposed structures can make good writing worse. A skillful brief-writer left unfettered might well produce a better brief than the same writer bound into a rigid structure. Procrustes' bed did not fit all travelers, and Procrustes' rack and sword badly hurt some of them.

We know that courts will never eliminate the constraints they place on briefs, and perhaps that refusal makes good sense. But courts should recognize that those rules constrain excellence as surely as they constrain mediocrity, and we must all live with the results.

Tuesday, February 13, 2007

Keeping the Label out of the Case

Virtually all physicians prescribe drugs and medical devices for off-label uses. The pace of FDA approval of new drugs and devices (or of new indications for existing drugs) necessarily lags behind the pace of medical research. Physicians will therefore always be aware of a recent study showing that a drug offers hope to a patient long before the drug's manufacturer completes a clinical trial and asks the FDA to approve the drug when labeled for that new use.

The FDA acknowledges this reality: It does not purport to regulate the practice of medicine.

Medical malpractice law acknowledges this reality: The "standard of care" is the standard of care, not the status of a drug's package insert. A physician commits malpractice if he or she falls beneath the standard of care; a physician does not commit malpractice by prescribing a drug off-label for an accepted medical use.

Here's our question: If labeled indications do not limit the uses for which a physician can prescribe a drug, why is a drug's package insert admissible evidence in a malpractice case involving routine off-label use?

Don't get us wrong: If a drug is contraindicated for a certain use and the physician overlooks or ignores the contraindication, that fact may well be relevant in a malpractice case; the insert would be admissible. And there may be other situations where information contained on the drug's labeling informs the decision whether the physician met the standard of care.

But we're thinking about routine off-label use. The drug is labeled for use in treating one type of cancer. Studies published in peer-reviewed medical literature suggest that the drug may be useful as part of a drug cocktail to treat a different type of cancer. The physician prescribes the drug for that off-label use. The package insert is silent about that use -- no contraindication, no warning, no precaution, no nothing.

In that situation, why should the package insert be admissible evidence in a malpractice case brought against the physician? The insert says nothing about the standard of care. It says nothing about the propriety of prescribing the drug for the off-label use. And there's at least a chance that jurors will be confused by the FDA's approval of a drug for one purpose and believe that prescribing a drug for an off-label use is somehow improper.

We're products lawyers, not med mal lawyers, so don't expect us to beat this idea to a pulp. But it seems to us the argument is worth pursuing. Shouldn't physicians regularly be asserting that, in cases of routine off-label prescribing, the rules of evidence should keep the label out of the case?

Sunday, February 11, 2007

Approaches to coding documents

Wake up! Wake up!

We know we put you to sleep with the title of this post, but we promise: The post will be a short one, and you might actually be interested.

For large corporations that are repeat litigants, the cost of litigation document management is a big issue. Defense counsel must identify, gather, and then objectively and subjectively code a gazillion documents to be able to find the relevant ones for use in witness preparation, hearings, and trial. Here's the question: What are companies doing to reduce the overwhelming cost of reviewing documents and coding them objectively (date, author, recipient, copies, etc.) and subjectively (to correspond to issues in the litigation)?

In our completely unscientific inquiry, we've learned of three approaches that companies are taking to avoid the cost of having a warehouseful of law firm associates spend endless hours (at law firm rates) coding documents:

1. Have document coding performed offshore. English-speaking personnel in India and elsewhere now offer coding services at prices that compare favorably to rates available in the United States. Some companies now ship their coding tasks offshore.

2. Have document coding performed inhouse. Some companies now employ full-time staff whose task is simply to code documents for litigation purposes. For companies involved in sufficiently large (or sufficiently frequent) litigation, the task of coding documents is like the task of painting the Golden Gate Bridge: It never ends.

3. Have document coding performed by contract lawyers. Some companies now set a fixed (and relatively low) hourly rate that outside counsel may charge for coding documents. Outside counsel then select appropriate contract lawyers, oversee the coding process, and charge the client the fixed hourly rate. Outside counsel's profit is the difference between the amount paid to the contract lawyers (plus any administrative costs) and the fixed hourly rate paid by the client.

There you have the results of our survey. If you're aware of any other cost-saving measures being adopted in this area, we're all ears.

Note that we haven't passed judgment on the wisdom of these approaches to coding documents. We're confident that some folks would argue (maybe correctly; we're agnostic on the issue) that the only way to assure quality control of document coding is to have the work performed by law firm employees.

Oh, yes -- we promise: Our next post will have a catchier title.

Friday, February 09, 2007

Making Book on the MDL Panel

An interesting new article just appeared in print, if we do say so ourselves.

One of your cohosts (Herrmann) and one of his colleagues at Jones Day (Pearson Bownas) published "Making Book on the MDL Panel" in today's issue of BNA's Class Action Litigation Report. Here's a link.

The article identifies every motion ever filed before the MDL Panel to centralize product liability cases. There are too few of those cases to do a true statistical analysis of the results, but it's possible to identify the factors relevant to coordination (number of cases; existence of putative class actions: which, if any, of the parties oppose centralization; etc.) and see which factors appear to matter most.

We didn't find anything earth-shattering. The Panel appears to consider the factors that its rules and precedents say are relevant. Centralization is more likely as the number of involved cases increases, parties agree that centralization is desirable, or overlapping putative classes have been pled. As has been noted elsewhere, centralization of product liability cases has also grown more common over time; motions to centralize product liability cases that would likely have been denied a couple of decades ago are more likely to be granted today.

We thought this article would be a useful resource, because clients often ask the odds that a motion to centralize their cases will be granted. Now you have something more than an experienced practitioner's best guess to share with those clients. Please put it to good use.

Thursday, February 08, 2007

31 (or More) Reasons to Watch ALI's Principles of the Law of Aggregate Litigation

You’d probably expect that two guys whose idea of recreation includes commenting on drug and medical device product liability litigation would be members of the American Law Institute – and you’d be right. We both are ALI members, and it’s an outstanding organization through which many really smart and really dedicated people to donate huge amounts of time and effort to the advancement of the law. We’re both relatively new ALI members, since we only turned fifty not all that long ago.

The ALI is best known as the folks who bring you the Restatements of the law, but that isn’t all this august group does. Over the last decade or so, when ALI (or some subset of it) has wanted to go beyond the constraints of what the law actually is, it commissions projects to examine what it calls “Principles” of the law. That’s what it’s doing now with a project called “Principles of the Law of Aggregate Litigation.” We’ve both signed up for what’s called the Members’ Consultative Group for this project. Being a member of a MCG is sort of like being a plaintiff’s lawyer – we get to come in and second-guess what’s been done by people who’ve specialized and thus usually know far more about a particular field than we do. Bexis says it’s like buying a ticket to a baseball game – but what would you expect from a Philly boobird.

Well, we just got the notice for the next ALI annual meeting, and the aggregate litigation “principles” are on the agenda again. They were on it last year, and their reception at the 2006 meeting was decidedly frosty. It wasn’t hard to see why. At that point, it appeared that there was only one guiding principle to these principles – to change the law in numerous ways to facilitate the creation of ever more class actions and other forms of mass litigation. In its wisdom, the ALI membership said “back to the drawing board” after a full debate that provided a forum for criticism from our (and other) points of view. ALI wasn’t close to adopting the prior draft of the “Principles,” and it probably isn’t much closer to adopting the current draft.

Why do we say that? Because we’ve studied the latest draft of the Principles of Aggregate Litigation that came out (September 21, 2006) after the roasting the prior draft received at the 2006 meeting. This is “Preliminary Draft No. 4,” and from our defense-oriented perspective it seems to add little more than window dressing to the controversial sections of the prior draft that drew so much fire.

We’d like to invite you to read this draft as well (and the transcribed debate from the 2006 ALI meeting if you’re really interested), but we can’t post a public link to it. One of the ways the ALI supports all of the fine work it does is through the revenue it receives from the sale of its publications. Anyone can purchase a copy of the draft, though, and as legal publications go they’re not all that expensive. If you’d like your own, go here: http://www.ali.org/index.cfm?fuseaction=publications.ppage&node_id=80

By our count, there are at least 31 instances in which Preliminary Draft 4 proposes to change or add to existing law – and as with the prior draft, each and every one of those 31 changes encourages and expands the availability of class actions and other forms of aggregate litigation. If you like class actions, mass torts, and other aggregated litigation, then the current draft Principles are for you. If like us, you don’t, then you might want to consider what you can do about this. Take a look, and make up your own mind:
  1. 1. §1.01, Comment a: Right at the beginning, the Principles are “consciously breaking” with the terminology found in almost all applicable class action rules – dispensing with “predominance,” “superiority,” and the rest of the familiar analytical framework in favor of terms used in a 2005 law review article. However, those terms do not track any Rule enacted by any jurisdiction, state or federal. By jettisoning the legal requirements of the applicable rules, and the mature and well-developed body of case law that has grown up around those rules, the principles are profoundly destructive of existing law.
  2. 2. §1.05 – This section lists the “objects” of aggregate proceedings. These “objects” are those of the plaintiffs – “maximizing the net value” of the claims and “stopping challenged conduct” by defendants. This section is entirely one-sided, with no consideration given the “objects” of aggregated proceedings from the defense point of view.
  3. 3. §2.03, Comment a – The comment creates a circular test for issue aggregation by defining “material advancement” as the “resolution of common issues in the aggregate proceeding” – so that “material advancement,” by virtue of the definition, would always exist. This definition puts rabbit in hat, since any issue decided commonly obviously need not be revisited. Under this test, issue aggregation would become the norm rather than the rare exception. Individualized issues that remain – no matter how extensive – are essentially ignored. The draft looks to isolate common issues by “carving at the joint” (Reporters notes to §2.03, comment c), but we think there should be at least as much consideration given to the partially dismembered causes of action that would be left behind.
  4. 4. §2.03, Comment b – The draft takes the position (contrary to most courts, most recently, Blain v. Smithkline Beecham Corp., 2007 WL 178564, at *9 (E.D. Pa. Jan. 25, 2007)) that single-issue class certification should be available even though the action as a whole is not certifiable due to the predominance of individualized issues. In an earlier draft, the “Principles” had advocated abolishing the predominance test altogether. After intensive criticism of that position, the current draft has adopted a version of issue certification that effectively abolishes predominance sub silentio.
  5. 5. §2.03, Comment e – This comment endorses “creative” procedural arrangements and hypothetical “trial plans” over actually trying cases to see whether and to what extent a trial would involve individualized issues. We’d much rather see actual trials, since practice makes perfect.
  6. 6. §2.04 – The circular “material advancement” test discussed in item 3 is applied in this section to a new form of single-issue dividing line – between “liability” and “remedy.” The result is, again, that issue certification would become the norm. Of nine illustrations in §2.04, eight of them allow issue aggregation.
  7. 7. §2.04, Illustration 1 – All single-point pollution cases would be certifiable as class actions under this illustration, even though this type of case is a classic situation where proof as to one (lead) claimant is not proof as to all. To prove that any one person’s property is contaminated does not require any proof concerning the contamination of any other property – particularly non-adjacent property. This example is at cross-purposes with what the draft elsewhere calls the “ideal form” of aggregation: “that the determination of a common issue as to one claimant should resolve the same issue as to all other claimants.” §2.03, comment a.
  8. 8. §2.04, Illustration 6 – At least part of every product-related mass tort litigation would be certifiable as a single-issue class action under this illustration, which uses a product’s “merchantability” for purposes of implied warranty as an example of an independently certifiable “common issue.”
  9. 9. §2.04, Reporter’s Notes to Comment b – This note exemplifies the pro-aggregation slant of the draft’s Reporter's Notes. For the proposition that “in mass tort litigation, courts have certified issue classes on particular liability elements,” the notes cite only pre-Ortiz/Amchem cases, while omitting the much larger body of post-Ortiz/Amchem law (not to mention prior law to the same effect) that almost uniformly rejects class certification in mass tort litigation. A subset of that law – concerning prescription medical products – is cited in our post of January 26, 2007.
  10. 10. §2.05 – This section treats medical monitoring as an “indivisible” remedy. Under the draft’s jargon that means that – not only would any medical monitoring claim be automatically certifiable as a class action – but monitoring claims would be subject to no-opt-out, mandatory class certification. That’s just not the substantive law. Even in the minority of jurisdictions where such claims are recognized, medical monitoring includes several individualized elements, such as that monitoring must be “different” from that otherwise recommended, that there must be a “significant” increased risk, and that monitoring must be likely to actually help cure disease. E.g., Barnes v. American Tobacco Co., 161 F.3d 127 (3d Cir. 1998). It could get even worse. ALI has before it a separate draft of the Third Restatement of Torts that would recognize a medical monitoring cause of action generally. See Sean Wajert’s guest post of Jan. 19, 2007.
  11. 11. §2.05, Illustration 1 – The draft states that the reason medical monitoring is an “indivisible” remedy is because it involves “other than the distribution of money to individual claimants.” Medical monitoring, however, involves “the quantifiable costs of periodic medical examinations.” Redland Soccer Club, Inc. v. Department of the Army, 696 A.2d 137, 144 (Pa. 1997). That’s a form of monetary loss if we’ve ever seen it. Medical monitoring is all about money; the limit is that the money is to be spent only for a specific purpose. The draft abandons Rule 23’s current legal/equitable distinction in favor of declaring all monitoring classes to be the equivalent of “equitable” under existing definitions. That’s another controversial issue resolved in favor of promoting aggregation.
  12. 12. §2.05, Reporter’s Notes to Comment b – Here, one finds the statement that payment of money becomes “indivisible” if “claimants do not simply receive money that they might use in whatever way they choose.” Think of the implications of that. This language invites an explosion of mandatory, non-opt-out class action claims demanding payments of money for any number of limited purposes (such as research funds).
  13. 13. §2.06, Comments a & f – Contrary to current law, which requires the proponent to prove that the aggregation being sought is warranted, the draft would shift the burden of proof to defendants as to choice of law variations. A law review article, but no precedent, is cited as support for this change in the Reporter’s Note to comment f.
  14. 14. §2.06, Comment c – This comment gives textual treatment to the novel choice of law argument (almost never seen outside of class action litigation) that the governing law for every claim should be the law of a defendant’s principal place of business. The draft never grapples with the constitutional (extraterritoriality) and practical (corporate migration – think Delaware and corporate law) implications of this largely rejected approach to choice of law.
  15. 15. §2.06, Reporter’s Notes to Comment b –Several pre-Ortiz/Amchem cases are cited as examples of a permissible “patterns in substantive law” approach to choice of law. One of the few post-Ortiz/Amchem product liability class certifications was reversed precisely on choice of law grounds. In re St. Jude Medical, Inc., 425 F.3d 1116 (8th Cir. 2005). The Notes cite a prior district court opinion in St. Jude, but not the many courts that have found insuperable obstacles to class certification in mass tort actions. See Cases cited in our post of January 26, 2007 (limited to prescription medical product cases).
  16. 16. §2.08, Comment j and Accompanying Reporter’s Notes –The draft advocates overturning Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998), and allowing aggregate trials in the MDL context. There is some merit to this suggestion, but it’s another pro-aggregation change.
  17. 17. §2.08, and Reporter’s Notes to Comment i – Contrary to almost all recent precedent, the draft advocates deciding punitive damages on an aggregate, classwide basis. Recent (post-State Farm) cases rejecting this approach include: In re Simon II, 407 F.3d 125, 139 (2d Cir. 2005); Engle v. Liggett Group, Inc., 2006 WL 3742610, at *9 (Fla. Dec. 21, 2006); Johnson v. Ford Motor Co., 113 P.3d 82, 94-95 (Cal. 2005); Colindres v. QuitFlex Manufacturing, 235 F.R.D. 347, 378 (S.D. Tex. 2006); O’Neal, v. Wackenhut Services, Inc., 2006 WL 1469348, at *22 (E.D. Tenn. May 25, 2006); In re Chevron Fire Cases, 2005 WL 1077516, at *14-15 (Cal. App. May 6, 2005) (unpublished).
  18. 18. §2.08, Comment k – The due process rights of defendants are reduced to a mere “admonition” or “reminder,” while the due process protections afforded claimants remain unchanged (compare: §1.06, comment b, §3.03, mandatory language of black letter law about plaintiffs’ rights to notice and approval).
  19. 19. §2.09(b) – The draft elevates to black letter law the controversial proposition that courts in MDL consolidations not involving binding forms of aggregation can nevertheless order non-consenting plaintiffs to pay “common costs” to lawyers they have not retained. This kind of arrangement has never received appellate approval, and the In re Diet Drugs, 401 F.3d 143, 149 (3d Cir. 2005), citation is only to description in the statement of facts.
  20. 20. §2.10, Comment a – Here the draft breaks from existing law to authorize creation of opt-in class actions. Whether or not this is a good idea, it would require the sort of statutory or rules change that the draft states it is avoiding. See §2.03, reporter’s notes to comment b.
  21. 21. §2.11, Comments a and c – The draft rejects Seventh Amendment precedent that precludes aggregate trials involving more than one jury. Once again the circular “material advancement” test raises its head, this time to support “pragmatic” limits on the Seventh Amendment’s prohibition against reconsideration. The intent is to reduce this prohibition to a “historical artifact.” §2.11, comment c.
  22. 22. §2.12, and Comment a – The draft rejects existing precedent and allows class action plaintiffs repeated bites at the certification apple. Class action plaintiffs who have sought certification, failed, appealed, and failed on appeal would be able to repeat the process for identical classes in other jurisdictions. The draft rejects the collateral estoppel effect of an appealed denial of class certification under In re Bridgestone/Firestone, Inc., Tires Products Liability Litigation, 333 F.3d 763 (7th Cir. 2003), and would limit estoppel to the extremely rare instance of constitutional grounds for denial of class certification. The rationale – that other jurisdictions might construe even identical certification rules differently – is in sharp contrast to the “patterns of state law” approach the draft takes (§2.06) to state-law differences that would limit aggregation.
  23. 23. §2.13 – The draft would give great weight to “trial plans” in determining the manageability/feasibility of classwide trials. Trial plans are whatever the advocate wants them to be. As mentioned in Point 5, above, a less manipulable method would be actual trials of enough individual cases to determine whether proof is in fact common and whether all juries are likely to reach the same result.
  24. 24. §3.05 – The draft abandons, as too expensive, current constitutional principles that require individual notice to all claimants who can be identified through reasonable effort.
  25. 25. §3.07 – The draft would alter current law and allow settlement class actions even where individual issues predominate.
  26. 26. §3.08 – The draft departs from current law, and encourages uneconomic litigation, by allowing “cy pres” settlements – where claimants receive money without proof of injury. The draft would allow courts to give a defendant’s money to charities selected by plaintiffs’ counsel.
  27. 27. §3.09(c) – Although not addressing the massive filing of frivolous or worthless claims in solicitation-driven mass torts, the draft would change existing law to assess counsel fees against settlement objectors. Frivolous is frivolous. The same standards should be applied to anyone filing claims, whether plaintiffs or objectors.
  28. 28. §3.10, Comment b – The draft takes the position that guardians ad litem are enough to allow aggregated disposition of future claims, but nowhere addresses the implications of Ortiz/Amchem that tort claims involving only prospective injury might not even be cognizable under the Article III case-or-controversy requirement.
  29. 29. §3.11 – The draft endorses a previously rejected amendment to Rule 23 that would allow a second right to opt out in class settlement situations.
  30. 30. §3.12 – The draft would change appellate procedure to permit interlocutory appeals as of right where courts reject aggregate settlements.
  31. 31. §3.18(f) – The draft would hold settling defendants liable for the ethical lapses of opposing counsel. If a settlement were later found to be improper, the settling defendant (not the unethical plaintiff’s attorney) would be required to pay the counsel fees of the successful objector. No precedent is given for a defendant being responsible for its adversary’s ethical violations.

That’s 31 changes in the law – and 31 changes aimed at increasing the frequency of class actions and other forms of aggregated litigation. We haven’t left out (intentionally, anyway) any countervailing changes that would restrict aggregation. There just aren’t any. Why is this happening? It certainly doesn’t reflect any seismic shift in the law. If anything, the opposite is true. Since Ortiz in 1999 and Amchem in 1997, the federal court system has essentially shut the door on class actions in personal injury and product liability actions (what we know most about). In the decade since these Supreme Court decisions, only a smattering of such classes have even been certified, and none – not one – has yet survived a contested appeal. After the 2003 State Farm decision, as discussed in Point 17, aggregated treatment of punitive damages has been widely rejected. Not only that, but the old Eisen rule that once precluded courts from considering the merits of claims on class certification is on its last legs. See In re Initial Public Offering Securities Litigation, 471 F.3d 24 (2d Cir. 2006).

Congress has concurred in this federal trend away from class actions. In 2005 it passed the Class Action Fairness Act, designed to force a wide range of putative class actions into the federal system, with the expectation that these class actions would be governed by increasingly restrictive federal precedents.

States are also joining this trend. State class actions have been pruned significantly in Texas (Southwest Refining), and Illinois (Avery). The notorious Mississippi joinder rule that used to allow mass aggregations in lieu of class actions (which Mississippi does not recognize) has been abolished.

In trying to make sense of why the ALI’s Aggregation Project takes so many positions that are so manifestly at odds with current legal trends, we have to consider the project’s guiding light, the primary ALI reporter, Prof. Samuel Issacharoff. Professor Issacharoff’s a smart guy (we’ve said so here before), and he comes with a proud civil rights pedigree. We’ve seen him in action at the MCG meetings; we’ve made some of these same points to him; and we respect the huge commitment of time and effort that he’s putting into this project – along with the three associate reporters. On the other hand, unlike most ALI reporters, Prof. Issacharoff has rather more irons in the fire than the average law professor. He’s very well respected, evidently quite in demand, and has quite often represented litigants in court.

We can only go on what the computerized searches tell us – but what they tell us is that, for the last five years or so, Prof. Issacharoff seems to have limited his practice to representing plaintiffs in class actions (at least those are the cases that show up). These representations include product liability class actions. In re Diet Drugs Products Liability Litigation, 431 F.3d 141 (3d Cir. 2005); In re Simon II Litigation, 407 F.3d 125 (2d Cir.2005) (which the draft Principles would overturn); In re Bridgestone/Firestone, Inc., Tires Products Liability Litigation, 333 F.3d 763 (7th Cir. 2003) (which the draft Principles would overturn). They extend to various class actions of other sorts. In re Flat Glass Antitrust Litigation, 385 F.3d 350 (3d Cir. 2004); Parker v. Time Warner Entertainment Co., 331 F.3d 13 (2d Cir. 2003); ABC Arbitrage Plaintiffs Group v. Tchuruk, 291 F.3d 336 (5th Cir. 2002); Wyble v. Gulf South Pipeline Co., 308 F. Supp.2d 733 (E.D. Tex. 2004); Montgomery v. New Piper Aircraft, Inc., 209 F.R.D. 221 (S.D. Fla. 2002).

Where one stands depends upon where one sits (at counsel table). We know that. We accept it. That’s what we do in this blog. This blog, however, is just the views of a couple of gadflies who can’t shut up. It isn’t a formal undertaking of what’s probably the most prestigious legal organization in the country. Everyone who defends against aggregate litigation of any sort has good reason to be concerned about the current form of the ALI’s “Principles of the Law of Aggregate Litigation” – because it does not reflect legal principles that the defense community shares. Those who work the “D” side of the “versus” need to pay attention to this development, and get (or stay) involved. Otherwise we and our clients could one day be in for a most unpleasant (and for our clients, expensive) surprise.

We’ve even heard that plaintiffs’ lawyers are unhappy with the current draft Principles. We have trouble understanding why, so perhaps we’re missing something. If anyone cares to defend the other point of view, feel free to comment below. We like comments – they make us feel that we’re doing something more than preaching to the choir. Freewheeling debate is, after all, part of what makes blogging fun.

Tuesday, February 06, 2007

Pediatric suicide rates

The popular press picked up yesterday on a news item that folks defending antidepressant cases have known for a while. First, the backstory: A couple of years ago, the FDA required pharmaceutical manufacturers to add warnings about pediatric suicidality to the labels of their prescription antidepressants. Now, yesterday's news: Adding those warnings may have discouraged physicians from prescribing antidepressants and thus actually increased the rate of suicide among American youths. Here's a link to that report.

There's more than a little irony here. This litigation involves allegations that a "small, vulnerable subpopulation" of people who ingest a certain class of antidepressants -- selective serotonin reuptake inhibitors -- may develop suicidal thoughts. Plaintiffs thus assert that warning labels should say, essentially, that "some unidentifiable tiny fraction of people who take this drug may become suicidal." That warning would serve no purpose. Even the plaintiffs concede that it's not possible to identify the people who will become suicidal (if that group exists at all) in advance, so the warning won't help physicians prescribe antidepressants to a more targeted group of patients. But warning that a person who takes a drug may become suicidal might discourage some physicians from prescribing, or some patients from taking, the drug. In the case of antidepressants, that would mean that some depressed patients would not be treated for their depression.

The plaintiff's bar got what it asked for. The FDA required a warning about pediatric suicidality on the labels of antidepressant drugs, and fewer kids are now taking the drugs. With what effect on public health? More kids are committing suicide.

For readers of this blog only, here's next year's headline today. The FDA is now considering requiring a warning that the risk of developing suicidality from ingesting an antidepressant is not limited to children under the age of 18, but extends to young adults up to age 25. If the FDA decides to require that warning, what do you suppose we'll be reading about in 2010?

Monday, February 05, 2007

(b)(1)(A) Begone!

If a statute or rule serves no purpose, then the statute or rule should be abolished. That's how we feel about Federal Rule of Civil Procedure 23(b)(1)(A) -- the provision allowing a class action to be certified if "the prosecution of separate actions . . . would create a risk of . . . inconsistent or varying adjudications . . . which would establish incompatible standards of conduct for the party opposing the class." This provision serves no purpose, and it should be eliminated.

Rule 23(b)(1)(A) does not provide a remedy unavailable under the other class action provisions. If the named plaintiff in a class action wants to seek an injunction or declaratory relief, that remedy is available under Rule 23(b)(2). There's no need for (b)(1)(A) there.

If the named plaintiff in a class action wants to recover money damages, that remedy is available under Rule 23(b)(3). There's no need for (b)(1)(A) there.

Moreover, most of the case law holds that complaints seeking to recover money damages cannot properly be certified for class treatment under Rule 23(b)(1)(A). See, e.g., In re Dennis Greenman Sec. Litig., 829 F.2d 1539 (11th Cir. 1987); La Mar v. H&B Novelty & Loan Co., 489 F.2d 461 (9th Cir. 1973); In re Copley Pharm., Inc., "Albuterol" Prod. Liab. Litig., 158 F.R.D. 485 (D. Wyo. 1994). That rule makes good sense: If classes seeking damages could be certified under Rule 23(b)(1)(A) because of a risk of creating incompatible standards -- a defendant might win one case and lose another -- then Rule 23(b)(1)(A) would displace Rule 23(b)(3), which is the traditional route for seeking damages in class actions. Rule 23(b)(3), however, accords absent class members more protection than does Rule 23(b)(1)(A); Rule 23(b)(3) requires that absent class members be given notice and and the opportunity to opt out of the class. Rule 23(b)(1)(A) thus should not be read to render Rule 23(b)(3) superfluous.

If Rule 23(b)(1)(A) doesn't provide a remedy unavailable elsewhere, the Rule might nonetheless serve a purpose. Perhaps it protects the interest of some litigant not otherwise protected. But we don't see that either.

(b)(1)(A) doesn't protect defendants. Although the Rule says that it is protecting the interest of the "party opposing the class" (which is almost always the defendant), we don't see defendants begging to have classes certified against them. Typically, the defendant opposes plaintiff's motion for class certification; the court certifies a class, if at all, over the defendant's objection. Thus, (b)(1)(A) is not protecting defendants in any way that defendants care to be protected.

Rule 23(b)(1)(A) is also not protecting the named plaintiff in the (b)(1)(A) complaint. If the named plaintiff in a class action wants to obtain classwide declaratory relief that cannot be upset by a later plaintiff seeking different declaratory relief, the named plaintiff has a vehicle for doing so. The named plaintiff can proceed under Rule 23(b)(2) and obtain a declaration that binds all similarly situated people.

If (b)(1)(A) does not protect the named plaintiff filing the first complaint for declaratory relief, perhaps it protects later potential plaintiffs. Perhaps (b)(1)(A) protects later litigants who might want to sue for different declaratory relief than that recovered by the first plaintiff. But (b)(1)(A) isn't aimed at that problem, either. To the contrary, the Rule is meant to undercut later litigants. The Rule prevents later plaintiffs from undoing declarations obtained by earlier litigants.

If (b)(1)(A) serves no independent purpose, why keep it?

We have two thoughts. First, courts could interpret (b)(1)(A) to protect the "party opposing the class" -- typically, defendants. If a plaintiff moves for class certification under (b)(1)(A) and the defendant opposes the motion, then the court should deny class certification -- because the party "opposing the class" has chosen not to invoke the protection of the Rule. If, however, a defendant wants a class to be certified against it -- to protect the defendant from being subject to "incompatible standards" -- then the court could grant certification. That interpretation at least gives the language of the Rule some meaning.

If, however, courts choose not to read Rule 23(b)(1)(A) to protect defendants, the Rule serves no purpose. Rules that have no meaning should be abolished. So long as Rule 23(b)(1)(A) exists, plaintiffs will move for certification on (b)(1)(A) grounds, parties will waste time and money briefing (b)(1)(A) certification issues, courts will waste time thinking about (b)(1)(A) issues, and some courts will (mistakenly, we think) grant (b)(1)(A) certifications. Why permit this mischief?

Unless someone can identify an independent purpose served by Rule 23(b)(1)(A), we propose to abolish it.

(b)(1)(A) begone!

Sunday, February 04, 2007

Bone Screws and Informed Consent

As readers of this blog know, your two cohosts met more than a decade ago, when they were toiling side by side in the Orthopedic Bone Screws wars. We hope you'll forgive a moment's reflection about what those cases taught us about the informed consent process.

In 1993, the FDA-approved labels for "bone screws" indicated the devices for use in the "bones," but not specifically for use in the "bones of the spine." Although the surgical standard of care required using bone screws in spinal surgery, that constituted an off-label use of a medical device.

Spine surgery was, before 1993 (and to some extent remains today), a problematic medical procedure. Spinal fusion surgery was a last-ditch effort to help patients who didn't benefit from less drastic treatments. For some patients, fusion surgery worked like a charm and cured what ailed them; for others, the surgery achieved nothing or actually made things worse. This was no surprise; everyone knew this going into the surgery.

After Barbara Walters did her thing on 20/20 (on December 17, 1993, the day we became conservatives), the mass tort bar filed thousands of Bone Screw lawsuits on behalf of patients who claimed that spinal fusion surgery had not cured their ills. One key piece of the claims rested on a supposed lack of informed consent: "My doctor never told me that the FDA had not approved using bone screws in spinal fusion surgery. If I had only been warned, I would never have consented to the operation!"

This is ridiculous, of course, for endless reasons. Here are a few:

1. Everyone puts medical devices to off-label uses. Q-tips ("cotton-tipped swabs") are not labeled for removing wax from ears; does that give anyone a moment's pause?

2. People consenting to spine surgery signed consent forms that said things like, "The risks of surgery include paraplegia, quadriplegia, brain damage, and death." The patients consented. How many people would have refused consent if they had only been told that, "The risks of surgery include paraplegia, quadriplegia, off-label use of bone screws, brain damage, and death"?

3. If a physician explained that the off-label use of bone screws had not been approved by the FDA, but the technique was widely used, recognized as the standard of care, and the most likely cure for the patient's ills, would any patient truly have rejected the treatment?

And so on.

Happily, we won the bone screw wars, and the case law now overwhelmingly holds that off-label use of a drug or device is not a "risk" of medical treatment that must be disclosed during the informed consent process.

But what would have happened if the plaintiffs had won? Anything useful? We see only two results.

First, there would have been a massive transfer of wealth from medical device companies, physicians, and insurance companies to plaintiffs' lawyers and to people with bad backs who had knowingly undergone a dangerous last-choice therapy.

Second, health care providers across the country would have re-written their informed consent forms to tell every patient undergoing any treatment that off-label use is always a possibility. The long, dense, informed consent form would then have included another sentence explaining that "standard of care medical treatment often requires that medicines or medical devices be used for indications not approved by the FDA. As part of your medical treatment, you hereby consent to undergo off-label treatment."

How could we have spent the better part of a decade battling over that?

Thursday, February 01, 2007

Deconstructing the Duty to Test

Even with the rise (and fall) of new and unusual theories of liability, the bulk of what we defend against still consists of inadequate warning claims. We’ve been down this road so often that we know in our sleep when we’ve got a slam dunk defense to one of these. We’re ready to file our summary judgment motions when one of two things – preferably both – have been established: (1) our client’s warnings specifically discuss the risk the plaintiff claims and state everything that was known about it at the time, and/or (2) the prescribing doctor already knew all that information and didn’t bother to review our package insert anyway.

When that happens, we usually win. We like to win. What we don’t like particularly is to get something bizarre from a trapped plaintiff that tries to change all the rules of the game, such as adequacy as a matter of law, warning causation under the learned intermediary rule, and the state of the art defense. One of those things is an allegation that the defendant violated a “duty to test” the product, and that if the defendant had tested “properly” additional information would have been discovered sooner. You can see where this is heading. The plaintiff wants to use the duty to test to defeat the adequacy of the warnings and the physician’s personal knowledge.

Well, we’re happy to tell you that there’s no such thing as an independent duty to test. It doesn’t exist – at least not separately – not any more. There are some mostly older cases where courts used loose language about “testing duties, but those courts did so in the context of the standard product liability claims for warning/design/manufacturing defects, not as a claim standing separate and apart. See Hoffman v. Sterling Drug, Inc., 485 F.2d 132, 140-41 (3d Cir. 1973); Parke-Davis & Co. v. Stromsodt, 411 F.2d 1390, 1399-1402 (8th Cir. 1969); Hawkinson v. A.H. Robins Co., 595 F. Supp. 1290, 1307 (D. Colo. 1984); Taylor v. Wyeth Laboratories, Inc., 1362 N.W.2d 293, 296-97 (Mich. App. 1984), Ferrigno v. Eli Lilly & Co., 1420 A.2d 1305, 1320 (N.J. Super. Law Div. 1980). Those cases didn’t really deal with the existential question either, being more concerned with whether the claims had been proven.

The first case that really came to grips with whether a separate and independent cause of action for duty to warn case was even logical was Kociemba v. G.D. Searle & Co., 707 F. Supp. 1517 (D. Minn. 1989). The judge, while otherwise making a variety of really awful rulings, did get this one right. He concluded that the idea of an independent duty to text just didn’t make sense. Rather, “[t]he duty to test is a subpart of duties to design a product non-negligently, manufacture a product non-negligently, and provide adequate warnings.” Id. at 1528. The problem is that the alleged breach – failure to test – just doesn’t cause injury by itself. Something that isn’t done can’t be causal unless and until it is combined with something that does happen – such as a product later marketed with inadequate warnings, an untested design, or a manufacturing problem that escapes detection because it wasn’t adequately tested. In short, lack of a test only causes harm when it gives rise to one of the three well-established categories of defect. Thus, in Kociemba, the supposed duty to test was just became part of the underlying duty to warn claim:


Defendant argues. . .that this duty [to test] is subsumed in one of the three [usual product liability] causes of action. . . . The Court finds defendant’s argument persuasive. Presumably, the reason that manufacturers are under a duty to test their products is to discover defects or dangers associated with use of the products. Once the manufacturer has discovered a defect or danger the manufacturer should either change the product’s design or manufacturing process, or warn consumers of the danger associated with using the product. Thus, unless the manufacturer’s breach of its duty to test leads the manufacturer to produce a product that is defective in design, manufacture, or warning, no injury can result. If the manufacturer designs the product safely, manufactures the product safely, and provides an adequate warning of dangers inherent in the use of the product, then a failure to test the product cannot, standing alone, cause any injury. The duty to test is a subpart of the other three duties because a breach of the duty to test cannot by itself cause any injury.
Id. at 1527-28.

The result of this view is that once the traditional (usually warning) claim is defeated for whatever reason, the testing claim evaporates. Fortunately this is the view that has prevailed in almost every prescription drug and medical device litigation over the last decade and a half – the defendant manufacturer cannot independently be held liable for failure to test. Vassallo v. Baxter Healthcare Corp., 428 Mass. 1, 696 N.E.2d 909, 921 (Mass. 1998); Adams v. G.D. Searle & Co., 576 So. 2d 728, 730-31 (Fla. App. 1991); Valentine v. Baxter Healthcare Corp., 81 Cal. Rptr.2d 252, 264-65 (Cal. App. 1999); Theriot v. Danek Medical, Inc., 168 F.3d 253, 256 (5th Cir. 1999); Fane v. Zimmer, Inc., 927 F.2d 124, 130 (2d Cir. 1991); Graham v. Medtronic, Inc., 2006 WL 2194012, at *2 (M.D. Fla. Aug. 2, 2006); In re Prempro Products Liability Litigation, 2006 WL 1897267, at *4 (E.D. Ark. July 11, 2006); Miller v. Pfizer Inc., 196 F. Supp.2d 1095, 1124 n.97 (D. Kan. 2002); Linsley v. C.R. Bard, Inc., 2000 WL 343358, at *6 (E.D. La. Mar. 30, 2000); Harris v. Danek Medical, Inc., 1999 WL 1117106, at *3 (M.D. La. July 22, 1999); Clark v. Danek Medical, Inc., 1999 WL 613316, at *3 n.4 (W.D. Ky. Mar. 29, 1999); Barrow v. Bristol-Myers Squibb, 1998 WL 812318, *28 n.248 (M.D. Fla. Oct. 29, 1998); In re N Phenylpropanolamine Litigation, 2002 WL 244858, at *1 (Pa. C.P. Feb. 5, 2002).

Duty to test claims don’t just arise in the kind of cases we normally do. Rather, the claim pops up now and then in all sorts of product liability cases. The theory hasn’t fared much better in those areas. Claims asserting independent testing duties have generally been rejected across the board. Here’s a representative sample of cases: Mercer v. Pittway Corp., 616 N.W.2d 602, 627 (Iowa 2000); American Tobacco Co., v. Grinnell, 951 S.W.2d 420, 437 (Tex. 1997); Viguers v. Philip Morris USA, Inc., 837 A.2d 534, 540-41 (Pa. Super. 2003); Lambert v. General Motors, 79 Cal. Rptr.2d 657, 661 (Cal. App. 1998); Oddi v. Ford Motor Co., 234 F.3d 136, 143-44 (3d Cir. 2000); Skotak v. Tenneco Resins, Inc., 953 F.2d 909, 912 n.5 (5th Cir. 1992); Anderson v. Owens Illinois, Inc., 799 F.2d 1, 5 (1st Cir. 1986); LaBelle v. Philip Morris, Inc., 243 F. Supp.2d 508, 519 n.12 (D.S.C. 2001); Dahlman Farms, Inc. v. FMC Corp., 240 F. Supp.2d 1012, 1019 (D. Minn. 2002); Bergfeld v. Unimin Corp., 226 F. Supp.2d 970, 981 (N.D. Iowa 2002); Messer v. Amway Corp., 210 F. Supp.2d 1217, 1234 (D. Kan. 2002); McClain v. Metabolife International, Inc., 193 F. Supp.2d 1252, 1257 (N.D. Ala. 2002).

Another major conceptual problem with the idea of a separate testing duty is that it nullifies the state of the art defense by letting plaintiffs argue that more testing would have discovered sooner (always soon enough to save the plaintiff in the case) that the drug or medical device had some sort of unexpected risk (always the risk that the plaintiff suffers from). Most courts – and all the recent ones – recognize and do not tolerate this subterfuge. After all, no duty to test could be broader than the legal duty of a defendant to warn about what the testing would have discovered:


In calling for an independent duty to test, appellant posits that appropriate testing for long term effects would have revealed different information from what was known or knowable in the scientific community. . . . Appellant forgets that [defendant] was charged with an ongoing duty to warn of side effects known or knowable in the scientific community. In this light, imposition of liability for breach of an independent duty to conduct long-term testing, where the causal link to the known harm to plaintiff is the unknown outcome of testing that was not done, would be beyond the pale of any. . . tort doctrine we can identify.
Valentine, 81 Cal. Rptr.2d at 265. Other courts rejecting claims that testing duties can embrace otherwise unknowable risks include. Vassallo, 696 N.E.2d at 921, 923; Richter v. Limax International, Inc., 45 F.3d 1464, 1467-68, 1471 (10th Cir. 1995); Miller, 196 F. Supp.2d at 1124 n.97; Cipollone v. Liggett Group, Inc., 683 F. Supp. 1487, 1499 (D.N.J. 1988).

As defense attorneys it’s our job to keep the system as rational as we can – because where the law is rational, we’ll usually win. An independent duty to test just isn’t rational, which is why so many courts have rejected it. It’s one of those theories that tries to move the goalposts. With some amorphous, open ended common-law testing duty, no warning would ever be good enough, and no doctor learned enough, since every presently unknown risk could always be discovered sooner with tests that 20-20 hindsight say should be done.