Thursday, June 28, 2007

Striking Back at Strike Suits

OK class, for today’s lesson, assume you are a major, sophisticated drug company. That means you have to have at least one (actually, a bunch) FDA-approved drug that’s safe and effective for its indicated use. So assume that, too – let’s say your drug alleviates muscular inflammation from over-exercise.

There being at least some reality to this hypothetical, assume as well that your drug also has a significant off-label use. With some 50% of all prescriptions being off-label, that's quite the usual situation. For the purposes of the hypothetical, it doesn’t matter what the off-label use is. Let’s say it cures Alzheimer’s Disease.

As a drug company you have to collect and report adverse events, so you know about the off-label use. It would be difficult not to know, since the patient population is so different. Your marketing people talk to the docs. The docs are telling you that new use is safe and effective. You agree, but you can’t tell anybody that, because even if it’s true, it would be promoting an off-label use – which is illegal (unless you’re asked, then you can respond with certain materials….) Bexis, stop it, this lesson’s not about that.

So you evaluate the situation. It’s an off-label use, but one that’s not extensive enough (at least not yet) to be the medical standard of care. That means two things: (1) it’s still ethical to do the type of double-blinded controlled studies that the FDA requires (because that doesn’t involve withholding standard of care treatment from study subjects, which is a no-no), and (2) there’s more patients to be cured – and money to be made – if you could only say what you knew. You also look at the status of the drug itself. You conclude there’s enough time left on the patent, not by a lot but enough, to justify spending the money for those studies.

So unlike a lot of manufacturers and a lot of off-label uses, you the drug company undertake the time and expense of a supplemental new drug application for this use. Because of the brouhaha about drug companies supposedly “concealing” their research results, you’re careful to make sure that you provide timely updates on your research, which is showing promise, not only to the FDA but to the medical community and public as well.

As the hypothetical just posited, the results are positive and the FDA approves the new, previously off-label, use. You can now state openly what you though all along – that it’s safe and effective to cure Alzheimers. So what happens next?

In an ideal world, the new use becomes the standard of care, lots of people are cured of Alzheimers, you make a lot of money, you receive the FDA’s Peter Barton Hutt Golden Placebo Award for outstanding compliance with regulatory requirements, and Congress, with its committee chairmen now cured…. Stop! Even an ideal world isn’t that ideal.

In the real world, well, the FDA doesn’t give you awards (let alone protection from suit) just for doing what you’re supposed to do. Oh, and by the way, you get sued.

Sued you say? But how? Didn’t the hypo posit that the use was safe and effective all along, so who could have been hurt?

Nobody. It doesn’t matter. In our bizarre tort system, you get sued anyway.

Hell, if I knew that, I wouldn't have bothered with the supplemental NDA, and left everything off-label. The cost of defending the suit is probably enough to wipe out any profit I might have made from the newly-labeled use.

And thus ends the prologue for the case we want to discuss today – actually two recent opinions in the same case: Prohias v. Pfizer, Inc., ___ F. Supp.2d ___, 2007 WL 1682515 (S.D. Fla. May 29, 2007) (Prohias II), and Prohias v. Pfizer, Inc., 485 F. Supp.2d 1329 (S.D. Fla. 2007) (Prohias I).

The Prohias case involves allegations of promotion of an off-label use that was later approved by the FDA as safe and effective. It also seems to us a classic example of a strike suit based upon the misuse of state consumer fraud statutes to police compliance with federal regulations.

How to tell. OK try this three-part test. First, was there anyone hurt by the product? In Prohias, no. No personal injury damages are even claimed. Apparently the drug was safe for both its original and subsequently approved uses. Second, was anybody cheated? Did the product not work? Again the answer is no. There are no allegations that either the on-label users or the off-label users didn’t get the effective drug they paid for. Third, is this a class action? Yes, of course.

That’s it. Three strikes and your out. This has all the facial attributes of a strike suit. Actually, “strike suit” is being kind. We describe this kind of litigation in much more colorful terms in private.

So what’s going on, then? Well, the plaintiffs are some otherwise satisfied users of the drug, together with some third-party payers with their hands (typically) out. The essence of the claim is that the defendant jumped the gun and illegally promoted the drug for the off-label use that the FDA later approved. This promotion allegedly increased the overall demand for the drug, which, plaintiffs claim, raised the price that the defendant could charge for it. Supposedly everybody, both the on-label and the off-label users, ended up paying more than they “should” have.

Nowhere in either Prohais opinion is are there any mention of allegations that anyone, on- or off-label, got a drug that was not medically appropriate for his/her condition – only that there was promotion of an off label use, which is (gasp) illegal.

We’re pleased to say that in the two opinions, most of this rubbish has been dismissed for failure to state a claim. That means, for your non-lawyers, that even taking everything the plaintiffs claimed as the Gospel truth, there was nothing actionable. Thus, in reading the opinions take the plaintiffs’ allegations with a grain of salt. There’s no reason to believe (beyond a lawyer’s willingness to put it in a complaint – which, believe us, ain’t much) that the defendant (Pfizer) actually did any of the things with which it is charged.

Pfizer’s one of the biggest drug companies around. It’s got equally top quality legal representation – Sheila Birnbaum and her group at Skadden. The resulting opinions are a primer in how to slice, dice, and fricassee bogus litigation. We'd expect nothing less.

The first fascinating issue is the plaintiffs’ purported “damages.” This supposed “price inflation” damages theory (that wrongfully generated demand inflated the price for everyone, and that this differential can be recovered on a classwide basis) has been widely peddled in consumer fraud cases and just as widely shot down as entirely speculative – after all, every person took a medically-indicated drug, and who’s to say they wouldn’t have done so anyway. Prohias I sticks just to the drug cases and cites Heindel v. Pfizer, Inc., 381 F. Supp.2d 364, 379 (D.N.J. 2004), and N.J. Citizen Action v. Schering-Plough Corp., 842 A.2d 174, 178 (N.J. Super. A.D. 2003), as authority for rejecting “price inflation” as speculative. Prohias I, 2007 WL 1228784, at *6. It also found the supposed damages too attenuated even to qualify as an Article III case or controversy in federal court, citing Rivera v. Wyeth-Ayerst Laboratories, 283 F.3d 315, 321 (5th Cir. 2002), and Williams v. Purdue Pharma Co., 297 F. Supp.2d 171, 177-78 (D.D.C. 2003). Prohias I, 2007 WL 1228784, at *7. Prohias I aptly questioned the reasoning of the only court arguably to find that such damage could support a cause of action. Id. at *7-8 (distinguishing and criticizing International Union of Operating Engineers Local # 68 Welfare Fund v. Merck & Co., 894 A.2d 1136 (N.J. Super. A.D. 2006)).

To the cases Prohias I cites, we would add Oliveira v. Amoco Oil Co., 776 N.E.2d 151, 163-64 (Ill. 2002); Weinberg v. Sun Co., 777 A.2d 442, 446 (Pa. 2001) (full disclosure, Bexis briefed that case), and Fink v. Ricoh Corp., 839 A.2d 942, 959-60 (N.J. Super. L.D. 2003), none of which are pharmaceuticals cases.

So lack of a viable theory of damages is the first – and to us the most obvious – way to deal with a lawsuit seeking to find fault with the medically indicated uses of a safe and effective drug.
But there’s more.

Another way the claims failed is that, because the drug itself was safe and effective, the individual plaintiffs did not stop using it once they purportedly found out “the truth.” Prohias I, 2007 WL 1228784, at *4-5. That’s a rather elementary causation principle, it seems to us. It did to the court as well. One would think that, at least, class counsel would recruit better plaintiffs (itself a good thing to investigate, as we argue here), but we’re glad they didn’t. Although it is doubtful that the Prohias litigation will ever get anywhere near class certification, these plaintiffs’ conduct demonstrates the individualized nature of the inquiry, even in stripped-down consumer fraud litigation.

From our perspective Prohias II, gets into even jucier defenses, since it’s more specific to the pharmaceutical industry. There, the court goes after the substantive law relating to the consumer fraud claims. The first thing that caught our eye – and probably what’s most responsible for this post – is the triple whammy the court gave to the plaintiffs’ consumer fraud claims concerning the defendant’s promotion of the drug after the new use was approved by the FDA.

First, the court held that promotion of the FDA-approved use was sanctioned by the FDA, and that meant that the consumer fraud statutes’ (the court was dealing with Florida and Massachusetts) safe harbors for government-authorized activities precluded any liability, Prohias II, 2007 WL 1682515, at *5. That’s not only correct, but incredibly timely in our estimation, since we had posted on the same topic – use of CFA safe harbors to defeat liability – only four days before Prohias II was decided. We had found only five cases applying any of these safe harbors to FDA regulated activity. Bober v. Glaxo Wellcome PLC, 246 F.3d 934, 942 (7th Cir. 2001) (applying Illinois law); Scott v. Glaxo Smith Kline Healthcare, 2006 WL 952032, at *2 & n.1 (N.D. Ill. Apr. 12, 2006); Pennsylvania Employee Benefit Trust Fund v. Zeneca, Inc., 2005 WL 2993937, at *4 (D. Del. Nov. 8, 2005); American Home Products Corp. v. Johnson & Johnson, 672 F. Supp. 135, 144-45 (S.D.N.Y. 1987); and Duronio v. Merck & Co., 2006 WL 1628516, at *7 (Mich. App. June 13, 2006). Now there’s another. We'll take it, gladly.

We had called that post “Preemption Lite.” Well, one of the plaintiffs in Prohias II was from Pennsylvania, which doesn't have any such statutory exception (there’s a list of all the statutes that do in our previous post). So in addition to preemption lite, the court – relying in part upon the FDA’s oft-maligned (and unjustly so) Final Rule – brought out preemption heavy as well:
Although I recognize that [the drug] was not approved to reduce the risk of heart attacks in all patients, the alleged advertisements derive from, and largely comport with, the approved label. For this reason, the plaintiffs efforts to hold [defendant] liable for the advertisements conflicts with the FDA’s jurisdiction over drug labeling, and specifically its approval of [the drug] to reduce the risk of heart disease in some patients. Those claims are therefore preempted by federal law.
Prohias II, 2007 WL 1682515, at *5.

To us this ruling is manifestly correct. It’s the simplest conflict in the world – where the FDA has said “yes,” no state law (common law or statutory) should be heard to say “no,” and vice versa. We think that’s a universal principle and should be applied whether the issue is warnings, approval (as here), or testing – a plaintiff should not be able to use a failure to test claim (which doesn’t exist independently in any event, see here) to say that the FDA should have required more pre-approval tests than the Agency decided were necessary.

Covering all the bases, the court in Prohias II also held that the post-approval statements could not possibly be “misleading” so as to constitute consumer fraud. Once again, the FDA’s approval was dispositive:

The information included in the labeling of a new drug reflects a determination by the FDA that the information is not “false or misleading.” [citing 21 C.F.R. §314.125(b)(6)]. Thus, even if the advertisements did not comport precisely with [the drug’s] approved label by claiming that [it] reduces the risk of coronary heart disease, the alleged advertisements generally comport with the approved label, and are therefore not misleading as a matter of law.
Prohias II, 2007 WL 1682515, at *5. The opinion cites Cytyc Corp. v. Neuromedical Systems, Inc., 12 F. Supp.2d 296, 301 (S.D.N.Y. 1998), to which we would add analogous Lanham Act precedent: Mylan Pharmaceuticals, Inc. v. Proctor & Gamble Co., 443 F. Supp.2d 453, 460 (S.D.N.Y. 2006); SmithKline Beecham Consumer Healthcare, L.P. v. Johnson & Johnson-Merck Consumer Pharmaceuticals Co., 1996 WL 280810, at *13 (S.D.N.Y. May 24, 1996), as well as Adamson v. Ortho-McNeil Pharmaceutical, Inc., 463 F. Supp.2d 496, 502 (D.N.J. 2006), which made an similar ruling about statements drawn verbatim from FDA regulations.

After the triple whammy, the court took on the plaintiffs’ claim for “unjust enrichment.” The court held that there was no injustice because the plaintiffs got what they paid for – an effective drug. Indeed, some of the class got more than what they paid for because the drug had more benefits than the FDA allowed the defendant to talk about at the time. Prohias II, 2007 WL 1682515, at *7. While the court doesn’t cite anything for this manifestly common-sense holding, other prescription drug cases coming to the same conclusion are: Adamson, 463 F. Supp.2d at 505; Heindel, 381 F. Supp.2d at 380; In re Rezulin Products Liability Litigation, 210 F.R.D. 61, 68-69 (S.D.N.Y. 2002).

The court buttressed its conclusion about unjust enrichment by holding that it’s an equitable claim and where, as here, the plaintiffs simply hang it onto the identical facts they pleaded for their legal claims, the equitable claim necessarily fails because there’s an adequate remedy at law. Prohias II, 2007 WL 1682515, at *7. That’s a dicier proposition. While there are other cases that reach similar results, In re Guidant Corp. Implantable Defibrillators Products Liability Litigation, 2007 WL 1725289, at *19 (D. Minn. June 12, 2007) (applying California law); In re Guidant Corp. Implantable Defibrillators Products Liability Litigation, 484 F. Supp.2d 973, 985 (D. Minn. 2007); Adamson, 463 F. Supp.2d at 505; In re Lupron Marketing & Sales Practices Litigation, 295 F. Supp.2d 148, 182 (D. Mass. 2003), there are a fair number of cases that have refuse to dismiss unjust enrichment claims against drugmakers on this ground (cases that anyone interested will have to find independently, since we don’t do pro-plaintiff research on this blog).

Finally, the court went on to address some Pennsylvania peculiar issues. We’d ordinarily pass on these, except that Bexis insists this is the one place where the court got something plainly wrong – and he demands to be heard. That’s on page *9 of Prohias II, where the court cites Weiler v. SmithKline Beecham Corp., 53 Pa. D. & C.4th 449, 452-55 (Pa. C.P. 2001), for the proposition that a 1996 amendment to the Pennsylvania consumer fraud statute, called into question whether reliance remained an essential element of a Pennsylvania “catch-all” consumer fraud claim. That’s what Weiler holds, but it’s only a trial court opinion, and has been overruled by subsequent Pennsylvania appellate authority upholding the post-1996 reliance requirement. See Yocca v. Pittsburgh Steelers Sports, Inc., 854 A.2d 425, 438-39 (Pa. 2004) (post-1996 facts); Drelles v. Manufacturers Life Insurance Co., 881 A.2d 822, 840 (Pa. Super. 2005); Commonwealth v. TAP Pharmaceuticals Products, Inc., 868 A.2d 624, 637 n.9 (Pa. Cmwlth. 2005); Toy v. Metropolitan Life Insurance Co., 863 A.2d 1, 9-11 (Pa. Super. 2004), appeal granted, 882 A.2d 462 (Pa. 2005); Debbs v. Chrysler Corp., 810 A.2d 137, 156 (Pa. Super. 2002); Sexton v. PNC Bank, 792 A.2d 602, 607 (Pa. Super. 2002); Booze v. Allstate Insurance Co., 750 A.2d 877, 880 (Pa. Super. 2000); and Tran v. Metropolitan Life Insurance Co., 408 F.3d 130, (3d Cir. 2005). Bexis wrote an amicus brief in the pending appeal to the Pennsylvania Supreme Court on this issue in Toy, and presumably knows what he’s talking about.

Anyway, what’s left of Prohias after these two opinions? As far as we can tell the sole surviving claim is that the defendant somehow caused damage to somebody by virtue of its supposed pre-approval promotion of an off-label use that the FDA eventually approved. The ordinary way to go about finishing off that kind of allegation is to demonstrate that the plaintiffs are wrong – by means of an summary judgment motion that pierces mere allegations and puts the plaintiffs to their proof (should they have any). Pfizer’s a big company undoubtedly with a skillful regulatory affairs section, so we’re as positive as we can be without being in the case ourselves that they must have dotted every regulatory “i” and crossed every “t” with what they actually did. A win is a win is a win, and a summary judgment motion demonstrating that all necessary disclaimers accompanied every promotional statement is undoubtedly the most cost-effective way of closing the door on this meritless suit over nothing.

That being said, these peculiar facts – the subsequent FDA approval – scream out “First Amendment” to us. As we’ve posted before, we don’t think that the FDA can ban truthful promotion of off-label use consistently with the First Amendment. Truthful commercial speech is protected unless there’s no other way to pursue a substantial government interest, and there are lots of other ways to regulate promotion of off-label use with out banning such speech. For more, read Bexis’ amicus brief that’s linked to in our First Amendment post.

The problem is, where the First Amendment actually gets raised, the facts are usually less than pristine, because some of the promotional statements aren’t true, or there’s bad conduct, or there’s something else out there that smells. In Prohias we know to a certainty that the allegedly illegal off-label promotion (if there was any) has to be true – because the FDA subsequently approved the drug for the exact use in question. There’s likewise no question that the off-label use at issue was safe and effective, again because of the subsequent FDA approval.

We’ll never, ever begrudge Pfizer or its counsel for seeking to kill Prohias off in the simplest, cheapest, least controversial ground possible. Vince Lombardi could have been a lawyer when he said “winning isn’t everything, it’s the only thing.” We’ve been in this position ourselves and made the same decision. But we look at those facts and salivate. Pfizer could do the whole industry – and we think doctors and patients, too – a big favor if it could use those good facts to make good First Amendment precedent. We’d gladly toss an amicus brief its way.

News from NJ HRT Litigation

Under the Vioxx rule, stated previously here here, the blame - or credit - for this post goes entirely to Bexis, as Herrmann this time takes a pass due to client representation.

We've learned that Judge Garruto, who's apparently clearing his docket before a bellwhether HRT (hormone replacement therapy) trial and his September 1 transfer to Middlesex County Family Court, issued a bunch of orders recently in the HRT litigation. You can read them here.

Basically he finds that none of the plaintiffs' HRT claims are preempted because Judge Weinstein said so in Zyprexa and Judge Higbee said so in Vioxx. We think that's pretty thin reasoning, because, in the first instance, preemption analysis needs to consider whether the facts of the case fall within the six preempted types of claims the FDA listed in the Final Rule. We can't even tell from the order whether that's the case, so we can't say how badly wrong we think this decision is.

There's another order holding that a consumer fraud claim isn't subsumed by the "exclusive" remedy provided by the NJ Product Liability Act because Judge Higbee didn't think so in Vioxx. As we (well, Mark, because Bexis was muzzled) already posted here, we don't think that rationale holds water anymore after what the NJ Supreme Court had to say about the scope of the Product Liabilty Act in its Lead Paint decision. To us it's rather obvious that, if the NJ legislature had intended to revolutionize product liabilty litigation by allowing huge attorneys fee awards and treble damages in such suits, it would have at least said something about it in the legislative history of the CFA. It didn't and finding the PLA subsumes all such claims seems to us to be far more in keeping with what the legislature contemplated. Fortunately, however, the plaintiff failed to prove "ascertainable loss" under the CFA. Thus, the claim ultimately failed, and this plaintiff won't be able to try for an attorneys fee award that's six orders of magnitude more than any recoverable damages.

There's also a third order, stating that a "heeding presumption" will apply in HRT because Judge Walsh said so in fen-phen. See a pattern here? We've already posted here on why the heeding presumption doesn't make any sense in a claim involving an inherent risk, because it becomes a presumption that nobody "properly" warned would choose to use the product at all - and that shouldn't be a permissible argument concerning a product that the FDA approved as having benefits that outweighed its risks.

We'll be back later with a post that involves independent analysis.

Tuesday, June 26, 2007

Danger From Another Corner: Third Party Claims Against Pharmaceutical And Medical Device Companies

This guest post was written by Edward J. Sebold and Ashlie E. Case. Mr. Sebold is a partner and Ms. Case is an associate, both resident in the Cleveland office of Jones Day. This post is entirely their work. It of course represents only their views and not the views of their clients or firm.


As if drug and device companies did not have enough to worry about. They are already heavily regulated by the FDA. They face regular scrutiny by Congress. Trial lawyers are always waiting in the wings – looking for the next big thing. And, State Attorneys General have jumped on the bandwagon lately seeking to challenge a variety of company practices. Drug and device companies must now also contend with lawsuits from health plans whose members use drugs and devices and physicians who prescribe these products for their patients. In this environment, the Second Circuit recently recognized limits on the use of state consumer protection statutes as a ground for suing drug and device makers.

Based on common adversaries or common concerns, drug and device makers might well expect to share some affinities with prescribers and health plans. After all, many physicians look unfavorably on trial lawyers as generators of frivolous malpractice claims and drivers of high insurance premiums. One might also expect drug and device companies to share some common interests with health insurance plans because they face close regulatory and litigation scrutiny from many of the same sources. In addition, health plans have access to sophisticated resources for assessing the risks and benefits of prescription drugs and devices.

Nonetheless, lawsuits against drug and device companies by non-consumer, third parties seem to be on the rise. When physicians bring the cases, they often assert: (1) the risk of a drug or device was undisclosed or minimized; (2) this alleged lack of disclosure prevented the doctor from properly assessing the risks, causing the doctor to prescribe or use the product improperly or to prescribe it instead of another purportedly safer product; and (3) these actions by the drug or device company damaged the physician’s practice because the doctor had to perform corrective surgeries, faced malpractice claims from his patients or suffered other harm.

The causes of action asserted by physicians may include breach of contract, fraud, and violation of consumer protection or deceptive trade practice statutes. Barnett v. Mentor Corp., 133 F. Supp. 2d 507 (N.D. Tex. 2001), aff’d 31 Fed. Appx. 156 (5th Cir. Dec. 13, 2001), is an example of a physician generated suit against a device company. For a broader discussion of these physician lawsuits, see Edward J. Sebold and John Q. Lewis, Physician Suits Against Pharmaceutical & Medical Device Manufacturers: Friend Turned Foe?, 7-12 Mealey’s Emerg. Drugs & Devices (2002).

Similar to these physician cases, suits by health insurance plans against drug and device makers frequently focus on a misrepresentation angle. For instance, a plan sponsor may argue that but for a manufacturer’s alleged misstatements about the safety and efficacy of a drug, the drug would not have been included in the sponsor’s prescription benefit plan. Instead, the plan would have arranged for the purchase of a cheaper and/or safer alternative drug. The health plan may seek to recover the difference between the more expensive, problematic product and the cheaper alternative, as well as damages associated with treating plan members prescribed the challenged product.

These suits may assert claims for breach of warranty, unjust enrichment, restitution, RICO, fraud, misrepresentation, and violation of consumer protection or deceptive trade practice statutes. Cases of this sort often arise as part of a larger scale products liability attack on a drug or device, frequently on the heels of a product recall or withdrawal from the market. Drugs and devices that have been targeted in these suits include Rezulin, Bextra and Celebrex, Lipitor, Vioxx, Guidant defibrillators, and Zyprexa. These actions may also follow in the wake of government investigations, such as into off-label promotion of a product. See, e.g., Commonwealth of Pennsylvania v. TAP Pharmaceutical Prods., 885 A.2d 1127 (Comm. Ct. Penn. 2005) (claims arising from average wholesale pricing investigation); Ironworkers Local Union No. 68 v. AstraZeneca Pharmaceuticals, L.P., Case No. 3:07-cv-02313-FLW-TJB (D.N.J. filed May 16, 2007) (asserting claims associated with alleged off-label promotion).

Given the variety of claims asserted, they are subject to a wide range of defenses. We focus here on the use, really the misuse, of consumer protection and deceptive trade practice statutes by third parties. These statutes are frequently in play because many of them are amorphously worded, often do not specifically require direct evidence of reliance on alleged misrepresentations, and tend to provide for exemplary damages and attorneys’ fees.

Many state consumer protection statutes, like the federal Magnuson-Moss Warranty Act, limit claims to products used “for personal, family, or household purposes.” Similarly, many state consumer protection statutes, or the judicial gloss on them, require proof of consumer-oriented deceptive conduct. Some statutes provide a “safe harbor” for government approved advertising or warnings. See, e.g., Bober v. Glaxo Wellcome PLC, 246 F.3d 934, 942-43 (7th Cir. 2001).

Where these laws govern, third parties have a tough time prevailing against drug and device companies on consumer fraud or deceptive trade practice claims. For instance, in Balderston v. Medtronic Sofamor Danek, Inc., 285 F.3d 238 (3d Cir. 2002), the Third Circuit dismissed a physician’s claims against the manufacturers of bone screws because he was not a “purchaser” of the devices for purposes of Pennsylvania’s consumer protection statute. See also In re Rezulin Prods. Liab. Litigation, 392 F. Supp. 2d 597, 614-617 (S.D.N.Y. 2005) (holding that group health plans did not qualify as a “consumer” under the consumer protection or deceptive trade practice statutes of Louisiana or New Jersey).

Courts have construed the consumer protection statutes of other states, however, as potentially providing wiggle room for third parties seeking to use them against drug and device companies. In In re Dow Corning Corporation, No. 95-20512, 2000 Bankr. LEXIS 1579 (Bankr. E.D. Mich. Nov. 3, 2000), the court held that doctors who purchased implants had standing to sue the manufacturer under the Texas Deceptive Trade Practices Act, but doctors who obtained implants through a hospital or professional association did not. In Washington State Physicians Insurance v. Fisons Corporation, 858 P.2d 1054 (Wash. 1993), the Supreme Court of Washington ruled in favor of a physician on his cross-claim against a drug manufacturer under Washington’s consumer protection statute because the law permitted recovery to “[a]ny person who is injured in his or her business or property by a violation” of the statute.

While many of these third party cases have been percolating in the federal district courts, they have received little attention from the United States Courts of Appeals. Earlier this year, the Second Circuit addressed a physician’s effort to use New York’s consumer protection statute, General Business Law § 349, against a medical device maker in Vitolo v. Mentor H/S, Inc., 426 F. Supp. 2d 28 (E.D.N.Y. 2006), aff’d, 213 Fed. Appx. 16 (2d Cir. Jan. 3, 2007). When some of the plaintiff surgeon’s patients experienced deflations of their breast implants — an inherent and unavoidable risk about which every manufacturer warns — he replaced the implants and sued the implant manufacturer, claiming, inter alia, a violation of § 349.

Plaintiff took some comfort in his ability to proceed under § 349 because he had done it once before against another implant manufacturer. Vitolo v. Dow Corning Corp., 166 Misc.2d 717 (N.Y. Sup. Ct. 1995) (finding that physician had standing to proceed under § 349). Also, in the same federal district, Judge Weinstein had allowed third party payor claims to proceed under § 349, noting the state court’s decision in Vitolo as an example of a permitted suit by a physician under consumer protection law. Blue Cross & Blue Shield of N.J. v. Phillip Morris USA, 178 F. Supp.2d 198, 240-41 (E.D.N.Y. 2001).

The district court recognized, however, that applying the consumer protection statute was a poor fit because the gravamen of the complaint was not consumer injury or harm to the public interest; it was harm to the surgeon and his business. The district court distinguished the decisions allowing suits by physicians as dealing only with the issue of standing, and not with the proof required to show harm to the public interest.

The Second Circuit affirmed because the surgeon had not shown that “‘the challenged act or practice was consumer-oriented.’” The question of whether this requirement was met centered on the doctor’s allegation that a Mentor representative told him that the specific model of implant he wanted to purchase had a certain deflation rate. The court reasoned:

The misrepresentation, if it did occur, had no “broader impact on consumers at
large” than it did on Vitolo, and it did not have the potential to “affect
similarly situated consumers” because the alleged misrepresentations regarding
the MLV deflation rate were made to Vitolo in person, and Vitolo failed to
produce evidence that Mentor’s personnel made such representations to other
doctors or to end users.

The Second Circuit rejected a motion for rehearing, holding that the “District Court properly found that Vitolo’s dispute with Mentor was a private contractual dispute, and therefore not within the ambit of § 349.”

Drug and device makers have enough to worry about without physicians and health plans wielding state consumer protection and deceptive trade practice statutes against the companies. As the Vitolo court and others have recognized, these statutes are not intended to redress claims by sophisticated third parties who are not the consumers of prescription drugs or devices.

Monday, June 25, 2007

Cert granted in Riegel

The United States Supreme Court today granted certiorari in Riegel v. Medtronic.

We'll know next Term (certainly before the end of June 2008, and probably long before then) whether the Federal Food, Drug, and Cosmetic Act preempts state law claims involving medical devices that came on the market through the premarket approval process.

As always, you'll know more when we know more.

Saturday, June 23, 2007

$3.7 Million in Fees for a $4000 Recovery (Vioxx Fee Award)

On this issue, Beck can't speak. (Stop cheering, "Thank God for small favors.") His firm, Dechert, is in the thick of the Vioxx litigation.

So this post is pure, unadulterated Herrmann. (Stop shouting, "We'd rather have Beck.")

We're thinking today about Judge Higbee's recent decision awarding plaintiffs $3.7 million in attorneys' fees (and costs) for their $4045 recovery under the New Jersey Consumer Fraud Act.

You won't be surprised to hear that we're not happy.

The decision came down on June 15 in the New Jersey coordinated Vioxx litigation. The opinion is written in letter format, so it probably has some funky cite form; in any event, it governs the case of Cona and McDarby v. Merck. We're once again not able to upload the decision from where we're blogging this weekend, but, on Monday morning, click here for a link to the decision.

Cona and McDarby tried their "Vioxx caused our heart attacks" product liability cases. They went one and one, sort of. McDarby won his product liability claim, and also recovered the purchase price of his Vioxx under the Consumer Fraud Act. Cona lost his product liability claim (for lack of causation), but won his CFA claim. The recoveries on the CFA claims were $45 and $4000, for a total of $4045 between the two plaintiffs.

The CFA has a mandatory attorneys’ fees provision. So the Weitz and Luxenburg firm submitted its fee petition for roughly $2 million (plus two enhancements), and the Lanier firm submitted its petition for roughly $2.6 million (but, generously, seeking no enhancements) -- for fees attributable to the $4045 CFA recovery. (Plaintiffs sought almost another million in costs, too.)

Judge Higbee thought that awarding attorneys’ fees was mandatory. She analyzed the eight factors used to decide whether a statutory fee application is reasonable. She decided not to award any enhancements and to award only 80 percent of the requested fees and 80 percent of the requested costs. Plaintiffs’ counsel surely cried all the way to the bank.

Judge Higbee said that determining “reasonable counsel fees” was not easy. But, she said, “Merck could have settled the CFA claims at any time to avoid the potential counsel fee issue but chose not to do this.” Slip op. at 13. (We’re not as confident about this as Judge Higbee is. Plaintiffs’ counsel surely wouldn’t have accepted a $4045 offer, knowing that the CFA claim put a gazillion dollars in attorneys’ fees on the table. Perhaps a defendant in New Jersey can make an offer of judgment for one cause of action (not including attorneys’ fees) and thus eliminate any recovery of attorneys’ fees if the plaintiffs’ recovery at trial does not exceed the offer? We doubt it, but we’re not New Jersey lawyers, and we can’t say we’ve looked it up.)

Judge Higbee also recognized that the “plaintiffs may not have invested the time and money in pursuing the CFA claims if they did not also pursue the personal injury claim.” Id. Film at 11.

But consumer fraud is a serious problem (even if utterly unmoored to anything the legislature had in mind when it wrote the statute), and it cost a bunch of dough to sue Merck to prove the claim, so Judge Higbee ruled that an award of roughly $3.7 million in attorneys’ fees and costs for a recovery of $4045 on Consumer Fraud Act claims was appropriate.

We object to this result for five reasons.

First, we’re sane.

Second, the result threatens to permit the recovery of attorneys’ fees in every product liability case. Failure-to-warn product liability claims and Consumer Fraud Act claims will often be indistinguishable. If plaintiffs’ counsel plead correctly, they will henceforth put attorneys’ fees on the table in every product liability case in New Jersey. And it won’t be two-way, loser pays, attorneys’ fees. The New Jersey Consumer Fraud Act operates in one direction, mandatng the recovery of attorneys’ fees by a prevailing plaintiff only. That result can’t be right in the product liability context.

Third, when overlapping product liability and consumer fraud claims are tried together, plaintiffs’ counsel are already compensated by receiving a one-third contingent fee on the product liability claim. Surely counsel will agree to take those cases without the added carrot of millions of extra dollars in attorneys’ fees for the two-bit Consumer Fraud Act recovery.

Fourth, we don’t think that prescription drugs, such as Vioxx, are “consumer” products, so we don’t think “consumer fraud” statutes should cover sales of those products. (We win that argument in some states and lose it in others. The folks defending Merck are pretty smart, so we assume that argument is a loser in New Jersey.)

Finally, on the same day that Judge Higbee was handing down her Vioxx decision, the New Jersey Supreme Court decided In re Lead Paint Litigation, __ A.2d __, 2007 WL 1721956 (N.J. June 15, 2007). There, the court held that claims brought against lead paint manufacturers seeking to recover abatement costs cannot be brought under the rubric of “public nuisance,” but instead would “be cognizable only as products liability claims.” Id. at *17. The New Jersey Product Liability Act created “one unified, statutorily defined theory of recovery for harm caused by a product.” Id. (citation omitted). “The language chosen by the Legislature in enacting the PLA is both expansive and inclusive, encompassing virtually all possible causes of action relating to harms caused by consumer and other products.” Id. “In light of the clear intention of our Legislature to include all such claims within the scope of the PLA, we find no ground on which to conclude that the claims raised by plaintiffs . . . are excluded from the scope of that Act.” Id.

Wouldn’t it make sense to extend that logic to consumer fraud claims that are actually product liability claims in disguise?

Friday, June 22, 2007

Congressional Preemption Watch - Good News

We're pleased to report that the ATLA anti-preemption language was stripped out of the FDARA legislation before that legislation was voted on favorably by the House Energy and Commerce Health Subcommittee. Our post and the vote apparently occurred on the same day.

That's good news, but it doesn't mean it's over. We'll keep watching.

Thursday, June 21, 2007

Informed Consent and FDA Regulatory Status - Oil and Water Still Don't Mix

The recent law review article, Johns, “Informed Consent: Requiring Doctors To Disclose Off-Label Prescriptions & Conflicts Of Interest,” 58 Hastings L.J. 967 (May, 2007), came to our attention because it cited Buckman (we at least glance at anything citing Buckman). It kept our attention because it advocated what has to be one of the most widely discredited tort claims around – that doctors should be liable in informed consent for not telling patients about the FDA regulatory status of the drugs/medical devices they use (i.e. that off-label use is not “FDA approved”).

Huh? Is there something new that we missed? We thought we’d driven a stake through the heart of that one years ago. Bexis wrote his own law review article on that subject back in 1998 and explained in excruciating detail why this was a very bad idea. Ultimately the courts agreed (he's a persuasive guy) . They agreed with unanimity that’s rare in the law.

After we picked our collective jaws off the floor, we took a look at the article. Right out of the box, we’re pleased to report that there’s nothing new out there. The cases are still virtually unanimous in holding that FDA regulatory status – as opposed to the medical risks and benefits of a particular course of treatment – is not something that doctors are legally required to discuss with their patients. See Southard v. Temple University Hospital, 781 A.2d 101, 107-08 (Pa. 2001); Earle v. Ratliff, 998 S.W.2d 882, 891-92 (Tex. 1999); Hansen v. Universal Health Services, 974 P.2d 1158, 1159-60 (Nev. 1999); Packard v. Razza, 927 So.2d 529, 534 (La. App. 2006); Sita v. Long Island Jewish-Hillside Medical Center, 803 N.Y.S.2d 112, 114 (A.D. 2005) Blazoski v. Cook, 346 256, 787 A.2d 910 (N.J. Super. A.D. 2002); Osburn v. Danek Medical, Inc., 520 S.E.2d 88, 92 (N.C. App. 1999), aff’d, 530 S.E.2d 54 (N.C. 2000); Alvarez v. Smith, 714 So. 2d 652, 654 (Fla. App. 1998); Klein v. Biscup, 109 3d 855, 673 N.E.2d 225, 231 (Ohio App. 1996); Balderston v. Medtronic Sofamor Danek, Inc., 285 F.3d 238, 239 n.2 (3d Cir. 2002) (applying Pennsylvania law); Bogle v. Sofamor Danek Group, Inc., 1999 WL 1132313, at *7 (S.D. Fla. Apr. 9, 1999); In re Orthopedic Bone Screw Products Liability Litigation, 1996 WL 107556, at *3-5 (E.D. Pa. Mar. 8, 1996), reconsideration denied, 1996 WL 900351 (E.D. Pa. May 21, 1996).

Even California, home of the Hastings Law School, rejects tort claims for FDA-related informed consent unless FDA regulations – limited to sanctioned clinical trials – require it. Daum v. Spinecare Medical Group, 61 Cal. Rptr.2d 260, 271-73 (App. 1997) (informed consent obligation includes FDA regulatory status only if applicable FDA regulations require it; FDA regulatory status not required by common law).

The only cases that ever entertained an FDA-regulatory-status-based cause of action, however briefly, are Reetz v. Jackson, 176 F.R.D. 412, 415 (D.D.C. 1997), which ultimately dismissed the claim on causation grounds, and Corrigan v. Methodist Hospital, 869 F. Supp. 1202, 1207 (E.D. Pa. 1994). Corrigan’s purported interpretation of Pennsylvania law was specifically repudiated by the Pennsylvania Supreme Court. Southard, 781 A.2d at 108 n.9. Gaston v. Hunter, 588 P.2d 326, (App. 1978), which the article cites as “requiring disclosure” of FDA regulatory (“investigational”) status, in fact did nothing of the sort. Rather the court held the entire issue “simply irrelevant,” since “FDA status” had “no tendency to prove negligence on the part of the doctors or the drug companies,” did not concern “causation,” and did “not tend to prove that [the drug] was a defective, unreasonably dangerous product.” Id. at 335.

OK, you ask – but why should anybody care about this now? Aren’t you guys just engaging in a Bone Screw nostalgia trip?

We don’t think so, for two reasons. First, any attempt to inject regulatory issues into informed consent is a back door (and in the case of this article – a not so back door) attack on our manufacturer clients. Second, the cause of action that Prof. Johns advocates is really a form of strict liability, and we think that’s a really bad idea for medical care.

On the first point, we’re in luck because so much of the article just a blatant attack on the supposed marketing practices of the pharmaceutical and medical device industries. Pages 980-1008 are devoted to a litany of attacks on “industry” marketing practices. It’s the usual kind of thing – pick one or two bad examples (the prime “example,” pp. 985-87, is Neurontin, but the only cited case, Franklin v. Parke-Davis, 147 F. Supp. 2d 39 (D. Mass. 2001), decided a motion to dismiss and thus had to assume the truth of all the plaintiff’s allegations). Then tar the entire industry by implying that “everybody does it.” We see that kind of thing in our cases all the time, and we’re disappointed (although not particularly surprised) to see the same sort of anecdotal attack bubbling up from academia. But then, every cause of action, no matter how widely scorned, seems to have a friend somewhere.

The Hastings article also claims that industry promotional practices exaggerates product benefits and conceals their risks (primarily pp. 980-82). We’re told that the industry bribes doctors in various ways (pp. 984-85, 996-97 999-1001). We’re told that industry finances research into new uses for existing drugs – and that this is bad (pp. 988-93). We’re told that industry supports continuing medical education concerning new uses for existing drugs – and that this is bad (pp. 993-95). We’re told that the industry shouldn’t give away free samples of drugs (pp. 997-98).

The trouble is that these complaints are just as applicable to on-label, as well as off-label, uses (if not more so). Giving physicians all sorts of paraphernalia with drug names and logos on them hardly seems peculiarly conducive to off-label use. Giving them free samples allows them to provide these samples to patients at little or no cost, whether for on- or off-label use. Thus the article's extensive treatment of supposedly (and some definitely) dodgy marketing practices when the main premise is about off-label use immediately leads us to wonder what’s really going on.

We think our own position is clear enough. (1) Our opinion is that truthful promotion of off-label use is First Amendment protected, and not even the FDA (let alone private tort actions) has any business trying to suppress truthful speech about scientific and medical issues, even if it is in some sense “commercial” speech. We've said so before at some length, here. (2) In contrast, untruthful promotion of off-label use (or anything else) isn’t in any way protected, and will expose a manufacturer to liability.

Aside from the First Amendment, our basic response to a lot of these supposedly "abusive" marketing practices is, “If the manufacturers don’t do this, who will?”

For instance, if research into new uses for old drugs is a good thing, and we think it is, there isn’t anyone out there besides industry with an interest in doing it. The government certainly doesn't fund such research, nor for the most part do universities (except in collaboration with industry). Full-blown "gold-standard" clinical trials are hideously expensive and time consuming, so we think the article’s criticism of the industry for conducting smaller, or un-controlled, or whatever, kinds of studies is unfair. It's a classic example of the perfect becoming the enemy of the good. There’s no law that forces manufacturers to bring off-label uses on label, and a lot of the drugs involved are off-patent anyway. Demanding double-blinded, case controlled studies or nothing, as the article seems to do, will likely result in nothing – and nothing helps nobody.

Much the same can be said with continuing medical education. If drug and device manufacturers didn’t subsidize it, CME would cost a lot more than it does now. The result would be less CME, more expensive CME, or both. Limiting CME to only on-label uses puts medical practice into a regulatory straitjacket, because the FDA is rarely proactive, and only passes upon uses that somebody in the industry finds profitable enough to pursue. The present CME system’s like democracy. There’s plenty to criticize about it, but it’s better than any other system that’s yet been tried. We don’t think having the government dictating CME content would work any better – not after the way government has treated science with respect to stem cells, global warming, and morning-after pills, to name a few recent examples.

But for present purposes, the even more fundamental problem is that all of this has next to nothing to do with informed consent and off-label use. All the article’s criticism, even if it were valid, doesn't support the premise that informed consent should include the FDA regulatory status of off-label use. The FDA does not regulate off-label use, and almost everyone (save former commissioner Kessler) recognizes that off-label use is a good thing – that advances in medical care should not be held hostage to the often glacial pace of FDA regulatory approvals.

Not only does the Hastings article contain a direct, and we’d say gratuitous, attack on our clients, but the regulatory informed consent claim it advocates poses an even broader indirect threat. That’s because of the learned intermediary rule. Under the learned intermediary rule doctors are responsible for warning patients about the risks of the drugs they prescribe. Manufacturers, conversely, owe no such direct warning duties. The rule does not let manufacturers off the hook, however. Our clients can still be liable if they don’t tell the prescribing doctors what they need to know. FDA regulatory status is something pretty uniquely within a manufacturer’s, rather than a doctor’s bailiwick, because our clients are FDA regulated and doctors aren’t. In fact, Congress has expressly forbidden the FDA from regulating off-label use as part of the practice of medicine. 21 U.S.C. §396.

What the role of the learned intermediary rule means is that, if it ever became a tort for doctors not to tell patients about off-label use, then the next shoe to drop would be plaintiffs suing doctors over not getting the right (or enough) information about off-label use. Faced with those claims, the docs would inevitably push back against the manufacturers, because the most logical source for FDA-related information is the FDA-regulated party. We’ve seen this happen (that's what Bone Screw was all about), so we view FDA-related informed consent claims as stalking horses for a wave of state-law litigation attacking what federally-regulated manufacturers should say about the regulatory status of their products.

This is what we strongly suspect is the real motivation for the Hastings article’s affinity for FDA-based informed consent. The intent is to use tort law, and specifically suits against physicians, as a blunt instrument to force manufacturers to do less promotion (both on- and off-label) than the FDA lets them do. In a telling point, the article concedes that it would really be "preferable" to “prohibit” the promotional practices about which it complains: “Although I agree that prohibition [of various marketing practices] is preferable, disclosure is a feasible step in the right direction.” 58 Hastings at 1022.

Thus what's really at work is another thinly veiled attempt at using state tort law to overcome perceived inadequacies in federal regulation. The author thinks that off-label use is bad – or at least inadequately regulated – therefore, the solution is to let everybody sue over it (there’s a lot of off-label use, after all). The manufacturers, however, are largely protected by their compliance with FDA regulations. No problem! Sue the unregulated doctors, and their resultant discomfort with liability will trickle back up the chain of sale and ultimately force the manufacturers to change what they do.

In this respect, we think that the article combines the worst attributes tort triumphalism (lawsuits can solve anything), with a chilling disrespect for science and medicine – especially the ability of doctors to exercise their professional judgment independently in the best interests of their patients.

Number two. We also don’t like the idea strict liability for doctors practicing medicine. And make no mistake about it, strict liability is what FDA-based informed consent is all about. A central, undeniable fact is that off-label use is very widespread. Back before blogs, when Bexis wrote law review articles, he found estimates of off-label use that ran as high as 60% overall. Beck & Azari, "FDA, Off-Label Use, and Informed Consent: Debunking Myths and Misconceptions," 53 Food & Drug L.J. 71, 80 (1998). The Hastings article suggests that by 2007 little has changed. 58 Hastings at 978 (also citing 60%).

These fifty and sixty percent figures tell us that a lot of off-label use – probably most of it – is standard of care medical practice. Unusual or experimental practices simply won't drive the numbers that high. As the article mentions all too briefly, in a lot of cases, “if you didn't use the drug in the off-label way you’d be guilty of malpractice.” 58 Hastings at 968-69. So the bulk of what we're talking about is standard of care medicine. We just don’t think that, assuming a doctor follows the medical standard of care, s/he should nevertheless be subject to liability.

The article’s informed consent theory would do just the opposite, and hold a lot of doctors liable whose treatments represented the standard of care. Why? Because the treatments also in some way involved the 50-60% of all prescriptions that are off-label use, and the doctor didn't bother to tell that to the patient. We ask, why should they? Informed consent already requires doctors to tell patients about all material medical risks and benefits of treatments, and in many jurisdictions, things like treatment alternatives.

So if a patient is: (1) already receiving standard of care treatment and (2) is accurately informed of all the material risks and benefits of that treatment, what benefit is there to telling that patient, “Oh, by the way, the FDA hasn’t approved using this or that drug for this treatment”?

Nada. Zip. Zilch.

In the great majority of cases, the new cause of action could only serve to harm to patient treatment – by driving a patient away from standard of care medicine in the mistaken belief that, because the FDA hasn’t passed on the treatment, there must be something wrong with it. It encourages more lawsuits, and higher costs for everything, without increasing patient safety one iota, since the standard of care is precisely what the law otherwise encourages doctors to maintain.

What ends up happening is that doctors providing standard of care treatment are made into insurers for anything that might go wrong because they don’t recite that some of what they are doing uses drugs or medical devices in ways that the FDA has not reviewed - not that the FDA has rejected, just not reviewed. The upshot? There will be windfall recoveries as doctors are held liable to patients who received medically proper treatment. After a few of those, another couple of boilerplate lines get typed into standard informed consent forms. They recite something like “some of the medical treatment that you receive may involve the use of prescription drugs or medical devices in ways that have yet to be approved by the FDA.”

Satisfied?

We didn’t think so. So then what? Maybe the original informed consent duty gets expanded to require “specific” discussions. Thus, a lot of doctors have to spend a lot of time remembering which of thousands of possible prescriptions are on label and which aren’t. The Hastings article admits that the flood of new medical information already threatens to swamp doctors. 58 Hastings at 981. If that’s the case, don’t we want doctors spending their limited time learning about things that are medical, not things that are regulatory?

And what might these “specific” FDA-related informed consent discussions look like? Many courses of medical treatments, especially the more serious ones, involve a dozen or more prescriptions of one thing or another. There’s a limit to how much information most people can process, especially in stressful, tell-it-to-me-straight,-doc situations. A lot of physician time would be spent explaining “well, [blank] is approved for that, but not for this.” That's worse than a waste of time. If such extraneous regulatory information is thought by the patient to be more important than medical considerations, the result would be downright harmful, to patients. See our previous post, here.

Our bottom line is this. There are good reasons why every jurisdiction in the country that's considered whether to expand informed consent to include FDA approval status has said "no." The law of informed consent already requires patients to be told about medical risks and benefits – regardless of FDA regulatory status. If the situation is so dire that some experimental treatment with unknown risks is indicated, then patients should be told about that medical uncertainty. Do off-label uses have medical risks? Of course they do. But patients should be (and are) told about those medical risks directly. They should not be bothered with an FDA legal status that often means only that research into new drugs is more profitable than research into drugs with little or no patent protection left.

Medical information – risks, benefits, and alternatives – is what patients need to know to give true informed consent. That’s the kind of information that medical doctors are trained to be able to convey, and that's what the law requires. Forcing medical professionals to go beyond medical information and to bother with FDA approval information that may be years behind the times does neither the patient nor the doctor any good.

The only people who profit from injecting legal information such as FDA regulatory status into medical informed consent discussions are lawyers. For anyone needing medical care, we think that's a truly lousy idea.

Tuesday, June 19, 2007

The FDA Bill - More on what Congress Might Do with Preemption

The day after we ran our post alerting readers to the threat suddenly being posed by House language concerning preemption, "The Hill" blog ran a much more detailed piece on the same subject. Here's their post:

The Hills' report provides the exact text of the anti-preemption language that's been circulating in the draft House of Representatives bills:
"Nothing in this act or the amendments made by this act may be construed as having any legal effect on any cause of action for damages under the law of any state (including statutes, regulations, and common law)."
According to The Hill, ATLA - the plaintiffs' trial lawyers' group that now goes by the more politically correct (or at least more ambiguous) name of "American Association for Justice" - says they are responsible for this little addition. Both the language of the amendment and its source leave no doubt that the intent is to roll back well-established preemption precedent with respect to pre-market approved medical devices and to prevent the development of a more favorable preemption environment in the prescription drug area.

This is definitely anti-preemption language. Similar language in OSHA reads:
Nothing in this chapter shall be construed. . .to enlarge or diminish or affect in any other manner the common law or statutory rights, duties, or liabilities of employers
and employees under any law with respect to injuries, diseases, or death of employees arising out of, or in the course of, employment.
29 U.S.C. § 653(b)(4). That OSHA language has been interpreted as restricting the preemptive effects of OSHA regulations in tort suits. E.g., Lindsey v. Caterpillar, Inc., 480 F.3d 202, 209 (3d Cir. 2007); Pedraza v. Shell Oil Co., 942 F.2d 48, 53 (1st Cir. 1991); In re Welding Fume Products Liability Litigation, 364 F.Supp.2d 669, 686 (N.D. Ohio 2005). The trial lawyers are smart guys. They're hardly ignorant of the OSHA example. We're equally aware that this seemingly innocuous language in the House version of FDARA would open the door to similar arguments being made against preemption under the FDCA.

The timing is significant as well. The trial lawyers stealth amendment came into being shortly after: (1) the solicitor general advised the Supreme Court not to hear the appeal in Riegel v. Medtronic, a case in which the Second Circuit had followed the majority rule recognizing extensive PMA preemption (see our post here on Riegel); and (2) the Supreme Court asked for the SG's views on whether to accept an appeal in Levine v. Wyeth, a case presenting the prescription drug preemption issue that involves the FDA's final rule (see our post here on Levine). Because the SG almost always advocates the position of the affected federal agency, it is not at all unlikely that the SG might recommend that the Court take and reverse Levine.

The Supreme Court's a pretty pro-business court at the moment, as yesterday's antitrust/securities decision suggests:
We believe it fair to conclude that, where conduct at the core of the marketing of new securities is at issue; where securities regulators proceed with great care to distinguish the encouraged and permissible from the forbidden; where the threat of antitrust lawsuits, through error and disincentive, could seriously alter underwriter conduct in undesirable ways, to allow an antitrust lawsuit would threaten serious harm to the efficient functioning of the securities markets.
Credit Suisse Securities (USA) LLC v. Billing, 2007 WL 1730141, at *13 (U.S. June 18, 2007). It's entirely possigle that Court could issue a similar opinion substituting "FDA" for "securities regulators," "drugs/devices" for "securities," and "tort" for "antitrust."

Thus the trial lawyers' anti-preeemption poison pill. This is serious business because the FDA has recognized that tort suits undermine industry's ability to comply with regulatory mandates - and would equally (if not worse) complicate industry's ability to comply with the new regulatory authority that FDARA would confer.

What does this tell us? To us it demonstrates that ATLA's pretense that they're seeking to protect consumer "safety" is nothing more than that. If they want to sink the Senate's carefully crafted FDA-strengthing bill - which would increase safety-related review of drugs (and secondarily devices) in real, concrete ways, this will do it.

As the Hill's post makes clear, the anti-preemption language will cause both industry and the FDA itself to walk away from what otherwise seems to be a major increase in FDA oversight powers, particularly for newly-approved products. Obviously the trial lawyers and their fellow travelers don't really care about increasing safety - they care about increasing lawsuits. Preemption restricts lawsuits, so preemption must go.

Minnesota -- On The Road To Recovery

This guest post was written by Sean P. Costello. Mr. Costello is an associate resident in the Atlanta office of Jones Day. This post is entirely his work. It, of course, represents only his views, and not the views of his clients or firm:


On June 2, Beck and Herrmann posted about the “Anatomy of a Mass Tort,” telling the story of how a mass tort grows from start to finish. The post raised provocative issues along the way, and it generated quite a bit of interest.

One part of the post addressed how savvy plaintiffs’ lawyers try to revive lawsuits that would be time-barred in every state having an actual connection to the lawsuit – the plaintiff’s home state, the defendant’s home state, or the state where the plaintiff was actually injured – by filing them in a state with a more generous statute of limitations. Beck and Herrmann singled out Minnesota, joking that their readers might one day encounter a post titled, “Minnesota, Heal Thyself!”

This is that post. Well, not exactly. The proposed title doesn’t quite fit. It turns out that Minnesota is already healing itself. Minnesota courts – both trial and appellate – have quietly begun curing the forum-shopping problem that its traditional approach to statute of limitations created. Minnesota hasn’t completely healed. But it is getting there, and that’s good news for those of us on the defense side of things.

Historically, Minnesota had the malady that Beck and Herrmann diagnosed on June 2. Its choice-of-law rules dictated applying Minnesota’s statute of limitations to every case litigated in a Minnesota court, no matter where the injury occurred or where the plaintiff or defendant resided (assuming, of course, the existence of personal jurisdiction). That rule has a couple of things going for it. It is predictable. And it is easy to apply. But add to the equation the fact that Minnesota has very generous statutes of limitations compared with other states – six years for negligence and four years for products liability, compared with two years in most other states – and the result is forum shopping, big time. Minnesota had become a very popular place for products liability lawsuits. That Minnesota is a wonderful place with nice people and smart judges doesn’t entirely explain why so many products liability cases have been filed there.

The root of Minnesota’s problem grew out of a 1940 case called In re Estate of Daniel, 294 N.W. 465 (Minn. 1940). In Daniel, the Minnesota Supreme Court held that statutes of limitations are procedural, not substantive, except where the statute of limitations concerns a right created by statute. This procedure-substance distinction was important, because matters of procedure (and remedies) are governed by the law of the forum, while matters of substance are governed by a more complex choice-of-law analysis that examines the significance and connection of the action to the forum and the forum’s interest in the action. See Milkovich v. Saari, 203 N.W.2d 408 (1973) (adopting “modern,” “choice-influencing considerations” approach to substantive laws). Every so often the Minnesota Supreme Court would announce its renewed commitment to the rule it announced in Daniel. See, e.g., Am. Mut. Liab. Ins. Co. v. Reed Cleaners, 122 N.W.2d 178 (Minn. 1963). Thus, an Ohio resident injured in Ohio by a product he bought in Ohio but manufactured by a California company could evade the shorter statutes of limitations of Ohio and California and find relief in Minnesota’s generous limitations periods simply by filing suit in Minnesota, even though the substantive law to be applied would be the law of a state other than Minnesota.

In the years since Daniel, developments elsewhere began chipping away at its underlying rationale. First, in 1974, the Minnesota Supreme Court applied the “choice-influencing considerations” analysis to a statute-of-limitations issue in Myers v. Gov’t Employees Ins. Co., 225 N.W.2d 238 (1974). The court, however, did not explicitly overrule or even question Daniel.

Then, in 1988, the Restatement (Second) of Conflicts of Laws came out. Section 142 provides that the forum:

(1) should apply its own statute of limitations if it will bar the claim;

(2) should apply its own statute of limitations allowing the claim, unless doing so would serve no substantial interest of the forum” and (not or) “the claim would be barred under the statute of limitations” period of the forum that has a more significant relationship to the parties and the occurrence.”
As the commentary to Section 142 explained, “[t]he view that statutes of limitations should . . . be characterized as procedural has been abandoned in many recent decisions,” and, in most places, “the forum will no longer entertain a claim with which it has otherwise no contact simply because the claim is not barred by its own statute of limitations.” Restatement (Second) of Conflicts of Laws § 142, cmt. G (1988).

Bingo. Shazam. Amen. Bye, bye, Daniel. Well, almost. In Minnesota, at least, the Second Restatement was met with, well, the sound of chirping crickets. Nothing much happened right away.

It took another 15 years for a significant decision on the statute-of-limitations issue. In 2003, the Minnesota Court of Appeals – sorry, but the Minnesota Supreme Court hasn’t weighed in yet – decided Danielson v. National Supply Co., 670 N.W.2d 1 (Minn. Ct. App. 2003). Danielson was a Minnesota resident (oddly enough) who bought a ladder made by the defendant (a company incorporated in Delaware with its principal place of business in Colorado) at a store in Texas. Danielson fell from the ladder while using it in Arizona and filed a products liability lawsuit against the defendant in, of course, Minnesota. You may be saying to yourself, “I bet Arizona and Texas have shorter statutes of limitation than Minnesota, and the plaintiff blew those deadlines.” You’d be right. Arizona and Texas have two-year statutes of limitation, compared to Minnesota’s six-year limitations period. Danielson was injured on February 13, 2000 but didn’t file suit until sometime after February 13, 2002.

Danielson called into question whether Minnesota’s traditional approach of treating statutes of limitations as procedural announced in Daniel could be reconciled with the modern approach to conflicts of interest represented by cases like Myers, the Second Restatement and the approach of the majority of states. The court even went on to apply the “choice-influencing consideration” approach. Daniel, however, did not go as far as we defense lawyers would have liked. First, it did not go so far as to apply the “choice-influencing considerations” approach instead of the traditional approach. (Because this is a blog, and not a treatise, I’m not going into detail about those several factors, but, at bottom, they seek to identify the forum with the greater connection to and interest in the lawsuit.)

The court played it safe and applied both approaches, concluding that it was bound to do so until the Minnesota Supreme Court expressly changed the rule. Second, the court hedged its bets and said that, regardless of the approach, under the facts there, Minnesota’s statute of limitations would apply. While Danielson did not dispose of the traditional rule, it at least acknowledge the problem, questioned whether the old rule had any place in modern tort litigation, and paved the way for the modern approach.

Apparently, other Minnesota judges were paying attention. Shortly after Danielson, a Minneapolis trial judge applied the “choice-influencing considerations” approach instead of the traditional approach, taking its cue from the court of appeals’ decision. In Hernandez v. Crown Equipment Corp., 2004 WL 5326627 (4th Judicial Dist., Hennepin Cty., Minn. May 5, 2004), the court was clearly troubled by the obvious forum shopping that resulted in the case being filed in Minnesota. The plaintiff, Hernandez, was a California resident. He was injured in California by a forklift manufactured by a company based in Ohio. Hernandez apparently never set foot in Minnesota. The only connection with Minnesota was that the forklift manufacturer happened to sell its products in the state. If ever there were a case that warranted abandoning the traditional rule, this was it. The court agreed. It applied the “modern” approach, found that California’s shorter statute of limitations applied because California had a more substantial connection to the lawsuit (and that Minnesota had a minimal connection). Because the plaintiff had blown that deadline, the court entered judgment for the defendant.

The end result is, obviously, welcome, at least to defense lawyers and their clients. But it is the getting there that is most interesting and, potentially, helpful for any lawyers defending against what should – and would – be stale claims anywhere else. In its detailed opinion, the trial court surveyed the history of the traditional and modern approaches. Like Danielson, the court observed that cases like Milkovich and Myers and the commentary to the Restatement called into question whether the old, traditional rule had anything left to recommend it. As the court explained, “Minnesota law has evolved such that the appropriate method for resolving conflicts between statutes of limitation is now open to application of the ‘modern’ approach.” Id. at 6.

The trial court concluded that there wasn’t much left to recommend the traditional (read: old) rule. The trial judge in Hernandez went a step further than the Danielson court and concluded that, not only was Minnesota open to the modern approach, but that it was high time to adopt it. The court noted that there was “good law” – from the state’s highest court – on both sides of the question. Couple that with the fact that the Restatement, the majority of courts, and most commentators agree that the old approach of treating statutes of limitations as procedural is a dusty relic of the pre-mass tort era, and it was obvious to the court that it was time to start taking a harder look at which state’s statute of limitations should apply based on the state’s interest in and connection to the claims.

Hernandez represents the future of Minnesota’s approach to statutes of limitations. Minnesota might not be 100 percent cured – a definitive Minnesota Supreme Court decision is the only medicine for that – but it is in the process of healing itself thanks to decisions like Danielson and Hernandez.

Saturday, June 16, 2007

The Week That Was -- To Z (Zyprexa Preemption Decision)

It's hard to find a political constituency for the preemption defense. Liberals want to permit plaintiffs to sue; conservatives believe in federalism, and so don't think the federal government should lightly override state law. What's a defense lawyer to do?

Be smart, and be careful. We've recently posted on the need for defendants to pick their fights carefully when litgating the preemption defense.

So why raise this defense in the Zyprexa litigation? Judge Jack Weinstein has built a reputation over the decades for using the judicial system to try to solve broad social problems. (Some people love him for that and some hate him for that -- but it's his reputation, and everyone knows it.) Judge Weinstein would be about the last guy on the planet to hold that it's the job of the FDA -- not judges and juries -- to protect patients from the dangers associated with prescription drugs.

What were the defense lawyers thinking? Are our friends Tony Vale and Rachel Weil at Pepper Hamilton nuts?

We're pleased to report that they're not nuts. But we're less pleased to report on the preemption decision that Judge Weinstein handed down in the Zyprexa MDL on Monday.

Eli Lilly raised preemption only gently in the Zyprexa litigation, in the context of federal question removal. Judge Weinstein then entered a series of orders over time, requiring Lilly to brief more and more preemption-related issues. When the judge orders, you listen, so preemption eventually came to the fore.

Judge Weinstein's preemption decision is a long one. In re Zyprexa Prods. Liab. Litig., No. 04-MD-1596, 06-CV-1729, 2007 U.S. Dist. LEXIS 42641 (E.D.N.Y. June 11, 2007). And, as usual, we have to tread lightly here. If we try to distinguish a case in one direction today, we're sure to regret those words when we're representing some new client tomorrow.

But here's what Judge Weinstein thinks. First, he fundamentally agrees with us that preemption is a good idea:

"Were the courts in a position to rely on the adequacy and candor of
representations to the FDA and of robustness of inquiry and decisions of the FDA, a desirable result would be to apply preemption, excluding the state tort law relied upon by present plaintiffs."

Id. at *14. Eureka! He gets it!

Sadly, however, the judge thinks that "the FDA's own research is limited and that it relies heavily on self-motivated representations and studies by the pharmaceutical industry." Id. In that world, says the judge, tort law serves a purpose.

But if Judge Weinstein's right, wouldn't the answer be to fix the FDA? If the FDA is underfunded, fund it. If the FDA must do research, enable it. If the FDA needs more power to obtain information from drug companies, empower it.

But what's not the answer? Create a world in which, first, the experts at the FDA dictate the contents of drug labeling and, later, lay juries sitting in courtrooms with injured plaintiffs second-guess those decisions, declare warnings to be inadequate, and award money damages. That's nuts.

Nuts it is. Judge Weinstein notes a strong presumption against federal preemption. Id. at *102. (As we've posted previously, Supreme Court precedent doesn't compel the finding of a presumption against preemption in the context of implied preemption. But no one's listening to us yet.)

Judge Weinstein does not think the Preemption Preamble is entitled to Chevron deference, and he thinks the FDA's purportedly inconsistent views on preemption undercut the authority of the Preamble. Id. at *107. (We've posted on that, too, and the FDA has been far more consistent than the plaintiff's bar gives it credit for.)

Judge Weinstein doesn't see a clear finding of legislative intent to preempt state tort law. Id. at *110. He's persuaded by the dictum in Desiano that dismisses the Preemption Preamble. Id. He sees no actual conflict between plaintiff's claims and federal law. Id. at *115. (There's lots of room for commentary here, but whatever we write would come back to haunt us. In your cases, think hard about the existence of actual conflict.)

And, remarkably, "a jury verdict finding Lilly negligent for failure to warn of Zyprexa's risks would not compel the company to do anything." Id. at *116. (We thought that had been decided in Cipollone. Since about 1970, jury verdicts have expressly been meant to be regulatory, compelling defendants to act. And a verdict that a warning is inadequate would be paraded, rightly or wrongly, as offensive collateral estoppel in later cases. Sane defendants do not ignore the compulsion of jury verdicts.)

Judge Weinstein will, however, presumably allow the FDA's assessment of drug labeling into evidence at trial, since the "jury may be guided by the parties' experts as well as the more neutral expert opinion of the FDA, which approved the warning." Id. at *128. (Small comfort there.)

The Zyprexa decision also grapples with statute of limitations and learned intermediary issues under the laws of Florida, Pennsylvania, and North Carolina. But you're on your own to read that stuff. We've spent way too long at the computer, typing, today.

That was the week that was, from A to Z.

Happy Father's Day, gents!

The Week That Was, From A -- (Accutane Daubert Decision)

We have some good news and some bad news.

Okay, if you insist.

First, the good news: It's Judge Moody's decision granting the defendants' Daubert motion to exclude plaintiffs' general causation expert in the Accutane MDL.

You gotta love America. Just last week, the big news was that a New Jersey state court jury had socked Hoffman LaRoche with a $2.62 million verdict because Accutane caused a plaintiff's inflammatory bowel disease. Now, a federal judge looks at the science, and it turns out -- who'd a thunk it? -- that there's no evidence that Accutane causes IBD. "One can live greatly in the law."

But we digress.

Yesterday afternoon, Judge Moody granted defendants' motion to exclude the general causation testimony of Dr. Ronald Fogel. In re Accutane Prods. Liab. Litig., MDL 1626 (M.D. Fla. June 15, 2007). (We can't find the decision on-line, and we can't upload a copy from where we're blogging. But, as of bright and early Monday moring, you'll be able to click here for a link to the opinion.)

On paper, Dr. Fogel appears to be a real expert. He's the Head of the Division of Gastroenterology at Henry Ford Hospital in Detroit, and he's been a practicing board certified gastroenterologist for 25 years. Dr. Fogel had four bases for his expert opinion that Accutane is capable of causing IBD: (1) animal and cell culture studies, (2) biologically plausible mechanisms of action, (3) defendants' own internal documents, and (4) case reports.

The doctor went 0 for 4.

First, the animal and cell culture studies. The beagle study showed only temporary intestinal irritation at high doses of drug. Dr. Fogel didn't account for the temporary nature of the condition or the possible existence of a dosage below which no response would occur.

The rat studies were done in an animal that may not correlate to humans, used vitamin A rather than Accutane as the test substance, and administered drugs at a very high does (ignoring the possibility of a threshold dose below which there would be no response).

And the cell culture studies were done in laboratory conditions; the results may not apply to live human beings.

0 for 1.

Second, the biologically plausible mechanisms of action. Although Dr. Fogel hypothesized three possible biologically plausible mechanisms of action, none had been tested or proven.

0 for 2.

Third, the defendants' own internal documents. Internal documents that supposedly contain "causality assessments" (about which Judge Moody has ruled and we have posted before) in fact reflect only the reporter's own opinion whether ingesting the drug caused the injury. They cannot support a finding of causation.

0 for 3, but he's not out yet.

Finally, adverse event reports and case reports in the medical literature. These descriptions must be viewed with "great caution . . . . [M]erely because symptoms occur a short time after a person takes a drug does not mean the drug caused the symptoms." Slip op. at 21.

0 for 4, and he's out.

The Accutane decision also shows one of the (few) advantages to a defendant of having cases coordinated in a multidistrict litigation. In individual litigation, a "flexible" plaintiff's expert may reveal his willingness to opine that a drug caused everyone's problems only slowly over time, and the testimony will be taken in cases pending in multiple courtrooms. In an MDL, that process may be accelerated, and a judge may be offended when many increasingly preposterous expert opinions are offered in his or her own courtroom.

In the Accutane MDL, Dr. Fogel opined that Accutane caused Mary Farr's symptoms even though she had not taken the drug for nearly three years before their onset. And Dr. Fogel thought the drug caused Andrew Messick's problems even though he had been off Accutane for over seven years before his symptoms appeared. The defendants' ability to point to those opinions may have helped the judge to realize that the good doctor did not actually have science on his side.

Congratulations to Paul Schmidt and Michael Imbroscio of Covington & Burling for the result in that case (and a hat tip for having sent us the opinion so promptly).

Sadly, we must now go on to the bad news for the week, in a post titled:

"The Week That Was -- To Z (Zyprexa Preemption Decision)."

That post will probably be up in a couple of hours.

We know, we know: You can hardly wait.

How Lawyers' Ads Hurt Patients

We don't try to provide breaking news on this blog. It's beyond our capacity -- if we want to keep our day jobs, as practicing lawyers.

But we sure do like to kibbitz.

Here goes.

On Wednesday, Eli Lilly & Co. released the results of a survey of 402 psychiatrists who treat patients with bipolar disorder or schizophrenia. More than half of the psychiatrists believed that their patients who stopped taking medication or reduced their dosage did so after seeing lawyers' advertisements disparaging anti-psychotic drugs. (Click here for the report about the study on law.com and here for commentary from PointOfLaw.com.) Patients' medical care thus suffered because of lawyers' advertisements.

We're not surprised. Some patients will be convinced when they read about the supposed ill effects of drugs and will stop taking the drugs. Film at 11.

Here's what we want to add to the debate: We don't think that the damage stops there. Yes, lawyer ads may cause patients to stop taking medications that they need. But we think plaintiffs' lawyers also sometimes actually cause their clients to suffer pain.

We're thinking about cases where plaintiffs' lawyers suggest to their clients that they may be in pain:

Did you receive breast implants? They can cause your joints to ache. Do your joints ache?

Were pedicle screws used in your spinal fusion surgery? They can cause people's backs to hurt. Does your back hurt?

We're big believers in the power of suggestion. When electric streetlights were first installed (at the turn of the last century), rumors were rampant that exposure to the lights caused illnesses. And people became ill because of the power of suggestion.

An elementary school teacher of one of your humble scribes had our sixth grade class run an experiment. At the teacher's suggestion, on one day we each asked one particular classmate whether she felt okay, because she didn't look so good.

Before lunch, she went to the nurse's office and was sent home ill.

We suspect -- although we can't prove it -- that many people read lawyers' ads disparaging a certain medical treatment, visit lawyers, and then legitimately become convinced (through the power of suggestion) that they're ill.

What of it?

First, we'd like to know if we're right. Perhaps some scholar can figure out a way to test our thesis.

Second, if it turns out that we're right, then aggressive defense counsel might consider impleading plaintiffs' counsel as third party defendants in certain injury cases. The defendant's product did not in fact cause the harm, the third party complaint would say. Rather, plaintiff's counsel's suggestive comments caused the plaintiff to believe that he or she was hurt; plaintiff's counsel is thus the true cause of the injury.

Oh, brave new world that hath such concepts in it.

Thursday, June 14, 2007

Preemption Finally Surfaces in FDA-Related Legislation

Shortly after the Senate passed its version of the FDA Revitalization Act (“FDARA”) last May, we sat down and read the whole thing – all 500 pages of it – looking for anything nefarious that might have been slipped into the legislation touching on preemption. We never blogged on the subject because we never found anything. Here’s a link to the Senate Bill itself, so you can check for yourselves if we missed anything. We don’t think we did.

That's not to say that everything was copacetic. There's a stain or two in the bill's legislative history, but the bill itself came out clean. And our view of legislative history – especially in the absence of any affirmative language to support it – parallels that of Justice Scalia.

Anyway, happy reading.

Frankly, the Senate's silence on preemption surprised us. Given the salience of preemption to what we do, and especially the attacks that plaintiffs have leveled on the FDA’s position on preemption-related issues, we were expecting something a lot worse than the vaccuum we found – particularly since the FDA is part of a Republican administration and the Senate is controlled (albeit narrowly) by the Democrats.

We applaud the Senate for, on the whole, sticking to actual improvements in FDA procedures – rather than sticking it to our clients.

Now the other shoe has dropped. We aren’t lobbyists and have no direct knowledge at this time, but we saw a report today that the plaintiffs’ buddies in the House of Representatives are not contenting themselves with letting FDA-related preemption litigation take its course. According to the Medical Devices Today Blog (maintained by the Gray Sheet people), the early drafts of FDA legislation in the House contain a provision seeking to wipe out the express preemption the protects manufacturers of the most heavily regulated medical devices – those that are premarket (“PMA”) approved. Here’s the link. As far as we're concerned, it's hearsay, but in our experience the FDC folks almost always know what they're talking about.

We’ve blogged on PMA preemption a number of times, here, here, and here, so this is something near and dear to our hearts.

It’s also a topic that doesn’t warrant another exegesis at this time. Right now, we just want to let our readers know ASAP that this threat has arisen so that they can organize themselves to combat it. When we have something more substantive to say, rest assured we’ll say it. For now:

To arms!

Watson - Sifting Through The Rubble

When we heard the other day that Watson v. Philip Morris had been handed down, we weren’t expecting miracles. Watson was one of those cases that you can pretty well tell what’s going to happen from the oral argument – and the oral argument hadn’t given those of us who live on the right side of the “v.” much to cheer about. And so it turned out to be. The defendants got skunked, 9-zip.

Now that we’ve read it, here’s our mea culpa – we did it. The Court all but came out and said that we’re responsible for the result being what it was. By “we,” we mean prescription drug and medical device defendants. The Court knew what we’d do with an affirmance. At the end of the opinion, the Court stated:


We are left with the FTC’s detailed rules about advertising, specifications for testing, requirements about reporting results, and the like. This sounds to us like regulation, not delegation. If there is a difference between this kind of regulation and, say, that of Food and Drug Administration regulation of prescription drug marketing and advertising (which also involve testing requirements), that difference is one of degree, not kind.
2007 WL 1660910, at *11 (emphasis added).

That’s us – the folks regulated by the FDA. As big as tobacco litigation can sometimes get (something we’re both personally familiar with), that’s a minuscule number of cases compared with the amount of state-court litigation involving products that the FDA regulates. The Court knew – and if they didn’t, plaintiff-oriented amici certainly told them – that recognizing federal officer subject matter jurisdiction based upon the Federal Trade Commission’s superintendence of the tobacco companies would mean that FDA-regulated defendants could make many of the same jurisdictional arguments.

They were right. We would have. In fact, we already were. C’est la vie. It was worth the shot – long though it was – to get our clients out of the Madison and Miller Counties, the Valleys, and the “Banks” of this country where it’s difficult if not impossible to get a fair trial. For why that is, see this discussion of judicial hellholes.

The question now becomes, after Watson, is there anything left? Are there any circumstances under which an FDA-regulated manufacturer might be able to assert federal question jurisdiction based upon its being a federal officer of some sort? Well, were sad to say that there’s not much. The Supreme Court made sure to close as many doors as it could.

The purpose of statute is to protect what the government itself does. “[T]he removal statute’s ‘basic’ purpose is to protect the Federal Government from the interference with its ‘operations.’” 2007 WL 1660910, at *6. In and of itself, that’s not all that bad a holding. After all the Court had previously held fraud on the FDA claims preempted on the same grounds – because they interfere with FDA operations. Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341, 351 (2001) (the “incentive to submit a deluge of information that the Administration neither wants nor needs [would] result[] in additional burdens on the FDA’s evaluation of an application”). As we’ve already discussed here, despite Buckman, plaintiffs remain addicted to these sorts of arguments, and all too many courts still act as enablers of that addiction.

So there has to be more than just statutory purpose at work, and there is. The primary obstacle lies in the character of a “federal officer.” The Court said over and over that mere “regulation” wasn’t enough – there needs to be “affirmative” assistance provided to the government:

  • “a private person acts as an assistant to a federal official in helping that official to enforce federal law,” 2007 WL 1660910, at *6.
  • “the statute authorize[s] removal by private parties only if they were authorized to act with or for federal officers or agents in affirmatively executing duties under federal law.” Id.
  • “the private person’s ‘acting under’ must involve an effort to assist, or to help carry out, the duties or tasks of the federal superior.” Id. at *7.
  • “differences in the degree of regulatory detail or supervision cannot by themselves transform. . .regulatory compliance into the kind of assistance that might bring [the case] within the scope of the statutory phrase “acting under.” Id. at *11.
Conversely, the Court took pains to point out that regulation, no matter how complicated or intrusive, isn’t going to be enough:

When a company subject to a regulatory order (even a highly complex order) complies with the order, it does not ordinarily create a significant risk of state-court “prejudice”. . . . [A] highly regulated firm cannot find a statutory basis for removal in the fact of federal regulation alone. . . . And that is so even if the regulation is highly detailed and even if the private firm’s activities are highly supervised and monitored.

Id. at *8. That pretty much does it.

If there’s any saving grace in Watson for defendants, it comes in the discussion of the defendants’ “contrary” arguments. Id. First of all, a government contractor – say a drug or vaccine maker paid to deliver specially made products to the military for use in defending against a biological warfare attack – probably could still remove as a federal agent. Id. The Court didn’t delve deeply into facts not before it, but government contractors represent a limited universe of cases that the Court seemed willing to tolerate in the federal court system.

Second, and possibly a little more broadly applicable, the Court suggests that an express “delegation” (which the Watson defendants unfortunately could not establish as a factual matter) of governmental authority to a person then sued in state court over its exercise of that delegated power may well result in federal officer jurisdiction. Id. at *10-11. “[F]ormal delegation. . .might authorize [a defendant] to remove the case.” Id. at *10. Implicit delegation isn’t going to be enough. “[N]either Congress nor federal agencies normally delegate legal authority to private entities without saying that they are doing so.” Id. There would have to be “some such special relationship” to trigger the statute. Id. at *11.

So we guess that’s what an FDA-regulated manufacturer will have to shoot for to reach the promised land of federal officer jurisdiction – an express delegation by the FDA for the manufacturer to do something above and beyond mere regulatory compliance. At least after Watson a manufacturer asked for such extraordinary performance knows to get the “delegation” in writing. The Watson defendants could only show their own attorney’s confirming letter. Id. at *10. The court, in effect, said, “sorry, not good enough.” Id.

Engaging in our favorite pastime of unbounded speculation, what could such “delegation” entail? We’re not entirely sure, but it would probably involve something already so heavily intertwined with FDA authority that a good preemption argument would likely arise from the same facts. It would have to be something that the FDA, for its own reasons, really wanted a private company to do – but couldn’t just order done as a matter of regulatory compliance.

All this brings to mind the crash program to develop a diagnostic test for AIDS that supported the preemption ruling in R.F. v. Abbott Laboratories, 745 A.2d 1174 (N.J. 2000). That kind of a program, where the FDA positively encouraged development and submission of a product, may well constitute FDA “delegation,” since the FDA’s relationship with the defendant went well beyond the defendant’s mere compliance with regulations applicable to FDA submissions for approval.

We recall from our Bone Screw days another possible scenario out of which a defendant, if savvy enough to “get it in writing” from the FDA, might be able to establish “delegation.” The basic problem in Bone Screw was that the FDA allowed itself to get cross-wise with the medical standard of care. It was a situation where, because an off-label use had become the standard of care, the FDA’s usual way of bringing about a label change wouldn’t work. It simply wasn’t ethical to run the kind of clinical trial that the FDA ordinarily requires because that would have involved withholding standard-of-care treatment from patients – and doctors rightly wouldn’t do that.

So the FDA decided that the manufacturers were going to run a special retrospective (as opposed to prospective, controlled and double-blinded) study. The FDA specified many of the protocols for the study and signed off on the rest before the study was performed. Once the study was completed, the FDA told the manufacturers to submit reclassification petitions concernin gthe off-label use, which was done. Given the amount of litigation that surrounded bone screws at the time, the manufacturers were predictably sued for undertaking the FDA-mandated retrospective study. The FDA was sued as well.

After Watson, we’re afraid that to establish federal officer subject matter litigation in subsequent tort litigation, a defendant will to have to be able to show extraordinary FDA involvement on the order of the R.F. and Bone Screw examples. We wish it were otherwise, but the Supreme Court just isn’t prepared to open the proverbial floodgates and allow mass removal of prescription medical product liability litigation from state to federal courts – at least not without express congressional authorization.