Friday, November 30, 2007
We saw room for mischief there. (Indeed, folks on the other side of the "v." might say that we encouraged mischief there.)
Under New Jersey state procedure, a plaintiff cannot serve a complaint until the state court assigns a docket number and Track Assignment Notice ("TAN") to a case. Defendants can subscribe to a service that provides the docket number before the court has assigned a TAN. Defendants can thus remove a case before plaintiff has any possible chance to effect service on any defendant, in-state or otherwise.
The defendants in the Accutane litigation were doing just that. As soon as they received a docket number, they removed each case, thus using Thomson to side-step the prohibition on removing cases in which an in-state defendant has been properly joined and served.
Judge Higbee, who oversees the Accutane state court mass tort proceeding was, shall we say, not amused.
She has sua sponte entered an order relaxing the TAN rules to permit a plaintiff to serve a defendant as soon as the clerk assigns a docket number; there will be no need to wait for a TAN. This will prevent defendants from removing cases before the in-state defendants are served.
Judge Higbee says that she plans to raise this issue with the Administrative Office of the Courts and the proper committees of the Supreme Court of the State of New Jersey.
Here's a link to the four-page order on this issue that Judge Higbee entered earlier today.
A British hedge fund has hired a former litigator to invest $100 million to fund plaintiff's-side litigation in Europe.
Read and weep here.
On Tuesday, December 4, Ted Olson of Gibson, Dunn & Crutcher takes center stage in D.C., arguing Riegel v. Medtronic in the Supreme Court. That case should tell us the scope of express preemption of claims brought against manufacturers of PMA-approved medical devices.
And the following Monday, December 10, all eyes turn to Philadelphia, where Chilton Varner, of King and Spalding, and Mal Wheeler, of Wheeler, Trigg and Kennedy, will argue the Colacicco/McNellis consolidated appeal in the Third Circuit. That case can't avoid deciding whether there's implied preemption of claims brought against manufacturers of SSRI antidepressants.
Good luck to all!
By the time we report on all of that stuff, we'll be out of breath.
This brave new world is way too complicated for us.
Thursday, November 29, 2007
Here’s a link to the SG’s Riegel merits amicus brief. As regular readers probably recall, the SG also filed an amicus brief at the petition stage as well. In our post about that earlier brief we mentioned (among others) the following arguments made by the government. Rather than repeat ourselves (and because we’ve already dissected the Kent amicus brief today, and we’re getting tired) we’ll simply give the new citations (if any) to the merits brief after the prior bullet points:
- FDA pre-market approval (“PMA”) of a Class III device imposes preemptive federal “requirements” as meant by §360k(a) of the Medical Device Amendments (“MDA”) to the FDCA. Riegel SG/FDA Merits br. at 6, 11 (“FDA’s premarket approval gives specific content to those general requirements as applied to a particular device”), 24 (requirements “include the specific design and labeling requirements imposed as part of the PMA process”).
- PMA is in no way comparable to the less rigorous form of marketing clearance at issue in Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996). Riegel SG/FDA Merits br. at 3, 7-11, 13, 22-23.
- Lohr recognized the FDA’s “significant role” in defining the preemptive scope of the MDA and gave “significant weight” to the Agency’s construction of the statute (so the Court should listen to the government just as much here). Riegel SG/FDA Merits br. at 23-24.
- PMA is the Agency’s judgment about the safety and efficacy of the device, and once PMA is granted, the manufacturer cannot make any safety-related changes to its device without a supplemental application requiring further FDA approval. Riegel SG/FDA Merits br. at 3, 13 (“respondent could not have lawfully marketed a product that deviated from the approved version nor made any changes affecting the safety or efficacy of the device, including labeling changes, without first submitting a supplemental application to FDA”), 15.
- Common law product liability claims can impose “requirements” under §360k(a), Riegel SG/FDA Merits br. 16-19 (rejecting various arguments that would exclude state tort claims, generally, from preemption), and claims alleging that the PMA device is “defective,” would impose requirements “inconsistent’ with the FDA’s requirements imposed via PMA. Thus the conflicting tort claims are expressly preempted. Id. at 4-5, 7, 20-22.
- FDA PMA involves rigorous review of the adequacy of product labeling/warnings. Riegel SG/FDA Merits br. at 12-14, 22.
- FDA’s “current judgment” reflects the withdrawal of the proposed rule that was the basis for the Agency’s contrary position in an amicus brief (Kernats) filed with the Court in 1998. Also, the FDA has adopted different risk-management principles since 1998. Riegel SG/FDA Merits br. at 24.
Contrary to petitioners’ contention that FDA reviews devices only for “minimum standards” of safety and effectiveness, the MDA directs FDA to weigh any probable benefit to health from the use of the device against any probable risk of injury or illness from such use. Under that standard, FDA conducts a risk-benefit analysis to determine whether safety risks (whatever their magnitude) are warranted in light of the potential benefits. FDA’s risk-benefit balancing for devices is parallel to the risk-benefit balancing it undertakes pursuant to 21 U.S.C. 355(d) as part of the pre-market approval process for drugs.
Riegel brief at 11 (emphasis added). Of course, this isn’t anything that the FDA hasn’t said directly about the plaintiffs’ “minimum standard” canard in the Final Rule, but if the Supreme Court were to accept the analogy while deciding Riegel, that would go a long way to interring the drug regulation as “minimum standards” point once and for all.
There’s another area where the government has offered views, that if analogized to the drug area, would be exceedingly helpful to defendants’ preemption positions. Probably the most commonly advanced argument against preemption is that the FDA’s “changes being effected” regulation (21 C.F.R. §314.60(c)(6)) defeats preemption because it allows manufacturers to strengthen warnings in advance of any FDA approval. Well, government in Riegel construes (in a regulatory construction that’s entitled to considerable deference from the courts) a similar regulation governing devices (21 C.F.R. 814.39(d)) narrowly – but we believe properly – as involving only “new” information:
While petitioners argue that applicants may make some changes without prior FDA approval, that is true only in very limited circumstances that do not appear to apply here. Some changes in labeling. . .may go into effect before FDA review if they enhance the safety of the device. [citing regulation] As FDA recently explained. . ., however, even those types of changes may be made without prior FDA approval only if the manufacturer has newly acquired safety-related information that was not previously considered by the FDA. Unilateral changes based on information available at the time of FDA’s approval could upset FDA’s balance of health risks and benefits, and thus undermine the PMA process. Indeed, it would make little if any sense to permit unilateral changes immediately following FDA’s approval based on the same information that FDA had already considered.
Riegel br. at 13-14 (citations and quotation marks omitted) (emphasis added). The government goes on to argue that changes affecting both safety and efficacy can’t be made without pre-approval, id. at 14, but the citation suggests that this particular point is device-specific.
We’ve previously advocated precisely this type new/emergent-information limitation on the drug CBE regulation, and we’re pleased to see the government making basically the same argument in the device field. We think this point is precisely right, because CBE-type regulations should not be construed so that the minor exception they provide to the FDA pre-approval requirement of 21 U.S.C. §355(a) is not misconstrued to swallow the rule.
Also as to pre-approval changes, the government strongly asserts that they do not affect the FDA’s ultimate control about what goes into the label:
[I]n any event, the statute and regulations vest in FDA, not States or juries, the authority to accept or reject the changes, whether or not the manufacturer has put them into effect in the meantime.
Riegel br. at 14.
Along the same lines, the government makes the same overwarning/overdeterrence arguments in Riegel that we’ve come to know and love on the drug side since the 2006 Final Rule. Br. at 12-13. Again, since the government specifically analogizes to drugs, any adoption of the argument by the Supreme Courts helps out on the drug side as well.
More generally, the government makes useful statements about the effect of state tort litigation upon FDA safety and effectiveness determinations – the same standard used by the Agency to approve drugs:
Riegel br. at 21. While the language is wonderful for makers of PMA devices, drug defendants need to be careful, because it’s rather broader than the six specified preemption areas that the FDA identified in the 2006 Final Rule – probably due to the difference between express preemption in devices and implied preemption in drugs.
Permitting a state jury to impose liability on the basis that a device FDA found to be safe and effective is not safe or effective would clearly interfere with the agency’s ability to utilize the premarket approval process to balance the risks and benefits of Class III medical devices. . . . [P]remarket approval reflects FDA’s expert determination that a device is on balance beneficial to human health, and therefore should be on the market. In such circumstances, a jury’s imposition of liability based on a device’s FDA-approved design or label would interfere with the balance struck by Congress in the MDA, and by FDA in approving the particular device.
We’ve also seen in some litigation (especially in states that require alternative design as an element of a products claim), claims that seek to compare a particular drugs unfavorably to others in their class – and arguing that they’re “defective” because other drugs are “safer.” There’s a discussion in the government’s brief that gives some indication that the FDA’s approval process already takes such comparisons into account, and thus correspondingly implies that FDA approval means that such negative comparisons to other drugs were necessarily considered and rejected by the FDA:
In determining whether benefits outweigh risks, FDA may also consider the availability of other drugs, devices, or courses of treatment, as well as their safety profiles. . . . FDA “must determine if each new drug or device is safe enough in view of its anticipated benefits and the comparative benefit of other available treatments. . . . If similar, safer products are on the market, the agency requires a heightened health benefit to justify the heightened risk.Riegel brief at 12. It’s a bit of a stretch, but since there was very little along these lines before….
Useful device-specific preemption points include: (1) The FDA does more than just rubber-stamp approve submitted designs, but rather can (and frequently does) “condition” approval on specific design changes being made.” Id. at 14-15. (2) The evolution of the MDA’s express preemption provision suggests that it was expanded from types of “requirements” that would not include common law, to “any requirement” that does encompass state tort claims. Id. at 19. (3) Why PMA preemption is different from Bates v. Dow Agrosciences LLC, 544 U.S. 431 (2005) – because of the express safety and effectiveness determinations made by PMA. Riegel br. at 25-26. (4) Arguments that state law escapes preemption when it applies to things other than just devices incorrectly read the statute, are “illogical” in practice, and cannot be reconciled with Lohr. Id. at 26-30. (5) The presumption against preemption does not defeat preemption. Id. at 30.
As you can tell, we’re quite in agreement with the government’s arguments in Riegel. No real surprise there. As for why it’s important enough to devote an entire relatively long post to what’s after all just a brief, read our earlier post, where we explain a little bit about administrative deference principles and agency amicus briefs. When the government does it, it’s more than just a brief.
Now, on to Kent. For the same reason, to satisfy those of you who’d rather read the Kent brief yourselves than wait for us yak things up, right up front, here’s a link to the Warner-Lambert/Kent amicus brief.
Everybody who read us by now knows that we like preemption as a defense. Where preemption applies, it’s relatively clean and it doesn’t get us too deeply involved the ins and outs of the peculiar facts of the case. Most important of all, though, preemption is an absolute defense, entitling our clients to summary judgment (it’s dangerous to raise preemption on less than a full record, as we’ve discussed before) and dismissal from the case – regardless of the merits of the underlying claims under state law.
That’s why after reading the federal government’s amicus briefs in Kent and Riegel, we feel a bit like Christmas came early this year. But why are we making such a big deal of these briefs, you might ask (especially if you’re not a litigator). Isn’t a brief just a brief?
No, not if the brief is by the government – especially if the government brief is on behalf of the administrative agency charged with running a particular regulatory scheme, as the FDA is with the FDCA.
This gets into an arcane field generally called “administrative deference.” Lawyers and judges, being the inveterate hair-splitters that we are, have created a bunch of gradations of deference – Chevron (the best), Skidmore (also pretty good), Auer (not quite as good, but nothing to sneer at, either), and more – but it all boils down to the same thing. An administrative agency’s (read “FDA” here) say-so about how it interprets the statute and regulations it is charged by Congress with administering (read “FDCA” and “MDA” here) is entitled to deference from the courts.
Yes, even the Supreme Court gives deference – although typically not all nine justices agree on what deference is due in what situations, even (especially) in preemption cases. “Chevron,” “Skidmore,” and “Auer” are the names of the Supreme Court cases recognizing various formulations of administrative deference applicable in different situations.
Anyway, what deference means as a practical matter is that these SG/FDA amicus briefs have independent significance. They command attention/deference not only from the Supreme Court in the cases in which they are filed, but also from any other court in the country, state or federal (although, realistically, federal courts institutionally tend to be more willing to grant deference to the views of a federal agency than state courts). Anyway, deference is one big reason why we think that these briefs are a big deal.
The other is what they say. So enough prologue you guys. What exactly did the government say?
Kent, as we’ve discussed at some length here, here, here, here, here, and here (we’re obsessive, aren’t we?) raises questions about how broadly allegations of “fraud on the FDA” are preempted.
We don’t like fraud on the FDA – we so much don’t like it that over ten years ago we invented the preemption arguments that percolated up in the Bone Screw litigation and eventually became Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341 (2001), in the Supreme Court. Buckman, as most of you probably know (otherwise, why are you here?) is where the Supreme Court unanimously held that claims of fraud on the FDA – which were designated as such by the Bone Screw plaintiffs – were preempted, because (and this is greatly simplified) allowing state courts to ignore FDA actions because supposedly they were fraudulently pretty much unavoidably conflicts with those very actions (which, by definition, are still in effect). Also this type of claim would put state-law courts in the position of second-guessing federal agencies, cause cautious manufacturers to inundate the Agency with unwanted information, and generally muck up the administration of the FDCA.
We also don’t like fraud on the FDA because we don’t like plaintiffs being able to call our clients fraudsters, criminals, and the like before juries.
Anyway, enough nostalgia. The Second Circuit comes along in Desiano/Kent and basically neuters Buckman. It held that, as long as the plaintiff isn’t so stupid (after Buckman) to call a claim “fraud on the FDA,” it can make all the FDA fraud allegations it wants in the context of “traditional” tort claims, and there will be no preemption. In this particular context, a Michigan statute basically immunized FDA-approved drugs from product liability unless there was fraud on the FDA. Desiano/Kent thus created a loophole big enough to drive the largest mass tort litigation through.
You can see why the Supreme Court might be interested in that case.
You can see why we’re interested in it, too.
The precise question presented that the government addressed in Kent (from now on, no more double case name business) is:
Whether federal law preempts state law to the extent that it requires a court to determine whether a drug manufacturer committed fraud on FDA and whether FDA would have denied or withdrawn approval of a drug but for that fraud.
Kent SG brief at I.
Under the Michigan law, unless the plaintiff proves fraud on the FDA, s/he’s out of court on everything – all traditional tort claims. It’s that simple. Well it wasn’t (nothing ever is in the law), but Michigan courts had already held that preemption of this exception didn’t invalidate the whole statute (that it was “severable,” in legalese), and even the Second Circuit couldn’t go against that. Also along these lines, the government drops a helpful footnote that the general incorporation of FDA approval as the fact giving rise to immunity is not itself preempted because it raises no conflict. Kent br. at 13 n.2.
Basically the government agrees with the defendant, Warner-Lambert (manufacturer of the withdrawn diabetes drug Rezulin), that these fraud on the FDA claims masquerading as elements of “traditional” torts should be preempted. Because it’s the government, under deference, courts have to pay attention.
First, the government goes through all (or at least a lot of) the ways that the FDA and regulated manufacturers interact – both before and after a drug is approved. Kent br. at 1-3. After all, any time the FDA receives (or should receive) information from a manufacturer, that’s a point at which some plaintiff somewhere might later claim that information was fraudulently misrepresented or withheld. At any one of those points, a manufacturer, fearing a common-law fraud claim, might be tempted to give the FDA more than the Agency, in its discretion, really wants or needs.
Second, the government goes through all (or at least a lot of) the nasty things that the FDA can do to a regulated manufacturer if the Agency concludes that the manufacturer has, in fact, misrepresented or withheld information that the Agency really wanted and needed. Basically, the company (or those responsible) can go to jail or be fined lots of money, and the product can be removed from the market. The FDA can impose a lot of lesser penalties as well.
You don’t want to go there – believe us – so don’t even think of defrauding the FDA.
What there isn’t, however, is any direct private right to enforce the FDCA. Private citizens, like anybody else, can file citizen’s petitions with the FDA if they think that the Agency’s been defrauded. Such a petition requires the FDA to investigate and reach a conclusion. Kent br. at 4.
What you can’t do is just waltz into any state-law court and sue.
That’s just what these plaintiffs did. They claimed that the defendant “knowingly concealed material facts from FDA about the safety and efficacy of Rezulin. . .which would have prevented approval. . .or resulted in its earlier removal from the market.” Kent br. at 5. The FDA, of course, had never reached any such conclusion. Id.
Third, the government says outright that fraud on the FDA is fraud on the FDA, and it doesn’t matter a bit whether it’s a stand-alone claim or a part of some other, purportedly more “traditional” tort. As long as a finding that the FDA has been defrauded is a prerequisite to liability (however framed under state law), that liability is preempted.
Basically, the government thinks that preemption of all fraud on the FDA allegations is controlled by Buckman, which it’s brief discusses for several pages. It’s an excellent synopsis of Buckman, for those who aren’t familiar with the case, but not ground-breaking, so we’ll leave it that. Kent br. at 9-11.
None of the purported distinctions between a fraud on the FDA claim as such and a state statutory exceptions makes a difference to preemption, the government argues. The statutory exception is every bit as liability-threatening as the stand alone claim, since the statute “makes liability turn on the very same determination that Buckman held to be preempted as a predicate to liability under state law. Kent br. at 11. Because it threatens liability, it produces the same “extraneous pull” on FDA activities that supported preemption in Buckman. Id.
The government finds “no material difference” in the nature of the claims. Fraud on the FDA, after all, is just a variant of common-law fraud. Id. at 12. The novelty is not found in the labels attached to the underlying common-law claims, but rather in the nature of the duty being alleged – “premising liability on proof of fraud on the FDA.” Id. The Michigan statute did exactly the same thing that the plaintiffs did in Buckman. Id. at 13 (“[t]hat provision requires a court entertaining a state-law tort suit to make the same determination that was required and found preempted in Buckman”). Fraud on the FDA claims are inherently untraditional, and hiding them inside claims that “sound traditional” does not change their essential nature. Id. at 25-26. “[T]he question is not whether a claim relies on a traditional-sounding duty, but whether the particular suit interferes with a federal prerogative.” Id. at 26.
That the fraud on the FDA inquiry is mandated by statute, rather than a novel common-law theory, in the government’s view, “only strengthens the case for preemption.” Kent br. at 13. That the statute makes fraud on the FDA a limit to immunity rather than an affirmative claim “is not material” because the threat of liability would induce the same protective behavior by industry that supported preemption in Buckman. Id.
In both Buckman and the Kent case, the government had the same panoply of enforcement measures available to protect itself against fraud. Kent br. at 15-16 (if anything, now it has more after passage of the 2007 FDAAA amendments to the FDCA). Both situations give rise to the same disincentives against submitting new products, and to the same incentives to provide more information than the FDA wanted. Id. at 17. The impingement on the FDA’s discretion to determine what information it wants about a particular product is the same. Id. at 17-18. The intrusion of state-law discovery into the operation of the FDA remains the same. Id. at 21-23. Perhaps most importantly, both situations would put state courts in the position of speculating – contrary to actual fact – about what steps the FDA might have taken had it determined (which it had not in Kent) that it had been defrauded. Id. at 16-17. Even if there was fraud, the product might still be beneficial enough that it should remain on the market. Id. at 18.
The basic point of Buckman – that FDA is charged with striking a balance between keeping unsafe products off the market and making efficacious products available to patients and doctors that should not be skewed by state law – applies to all of FDA’s approval processes under the FDCA.
Id. at 17 n.3 (in a government brief, you gotta look at the footnotes). No state could invest one of its own administrative agencies with the power to investigate fraud on the FDA, so neither can state common law. Id. at 19.
Fourth, the government also reiterates Buckman’s ban against “second-guessing” the FDA by a state’s purporting to adjudicate “contrafactual situations” – allegations of fraud that the FDA has never found to exist in the first place. Kent br. at 19-20. That makes a great deal of sense, since a state cannot ignore in-force federal determinations. “Preemptive effect” must be accorded to “a federal administrative decision that has neither been rescinded by the agency nor set aside by a federal court in accordance with the procedures for review established by Congress.” Id. at 20. That means plaintiffs should have to sue in federal court for injunctive relief under the Administrative Procedures Act rather than in state court for damages under state law. To award damages “based on a determination of what [a federal agency] might have done. . . usurp[s] a function that Congress has assigned to a federal regulatory body.” Id.
Hear, hear. We think this principle should apply to every federal administrative agency, from NHTSA (that’s cars) to EPA (various chemicals), not just the FDA.
There’s preemption, the government argues, because under Michigan law liability turns on a finding that the FDA would have “withdrawn approval” on the basis of a fraud that the FDA has never found even to exist. Kent br. at 21. Here, Rezulin was ultimately withdrawn, but for reasons entirely unrelated to any purported fraud. Id.
[F]ederal law precludes a state rule – whether as an element of a claim or of a defense – that turns on whether FDA would have denied approval or withdrawn it sooner if it had received accurate information.Id.
Fifth, along the way the government shreds the Second Circuit’s attempt to interpose one of our bugaboos – the “presumption against preemption” – where Buckman had already held that no such presumption could possibly apply. While states can create and limit tort immunities, that doesn’t automatically give rise to that presumption. The relationship between a federal agency and those it regulates remains “inherently federal” whether or not a state chooses to incorporate some aspect of that relationship into state law:
[T]hat presumption is not triggered when the State regulates in an area where there has been a history of significant federal presence, or where the interests at stake are uniquely federal in nature. Because the relationship between a federal agency and the entity it regulates is inherently federal, Buckman held that no presumption against pre-emption obtained in that case.
Kent br. at 14 (citation and quotation marks omitted). That the state might be regulating “health and safety” doesn’t matter, since its decision to do so by resorting to an inherently federal standard is hardly “traditional”:
[T]he question here is not whether traditional tort claims are preempted; it is whether the portion of the Michigan statute that requires a finding of fraud on FDA is preempted. Under Buckman, the presumption against preemption has no application to that non-traditional feature of the statute.
Id. Neither is there any basis for assuming that, because the presumption against preemption might apply to some portion of a claim, it necessarily applies to the entire lawsuit, since the Supreme Court held the opposite in Boyle v. United Technologies Corp., 487 U.S. 500 (1988). Kent br. at 14-15.
Sixth, the government finishes with its critique of the other reasons the Second Circuit gave for distinguishing Buckman. That “traditional tort claims” are not an attempt to police fraud on the FDA is irrelevant, since “the Michigan statute, not traditional tort claims,. . .is the proper focus of the preemption inquiry.” Kent br. at 27. That plaintiffs have to prove other elements in addition to fraud on the FDA doesn’t make the inherent conflict that fraud on the FDA claims raise somehow go away. Rather “the problem in Buckman was that the plaintiffs’ theory required them to prove fraud on the FDA, not the happenstance that plaintiffs’ theory required them to prove little else.” Id. at 29.
Next, the government disputes that fraud on the FDA evidence would be routinely admissible under Restatement (Third) of Torts: Products Liability §4(b), comment e (1998), pointing out:
In practice, however, relatively few reported cases have involved evidence of fraud on an agency under the Restatement approach (and the court of appeals cited none). And the Restatement emphasizes that “questions of federal preemption are beyond [its] scope.”
Kent br. at 30. At most the conflict becomes less “sharp” where agency fraud evidence is “not dispositive,” id., and in any event the Restatement was not describing the Michigan statute, where fraud on the FDA is an expressly mandated prerequisite. Id.
Finally, the government argues that whether state law labels something a “claim” or a “defense” doesn’t “matter for conflict preemption purposes.” Id. at 31. The effect of the required state-law determination of fraud on the FDA is the same. “Whatever label Michigan might place on the inquiry, courts would have to engage in the same intrusive inquiry which is forbidden.” Id. at 31-32 (citation and quotation marks omitted).
What other juicy nuggets are there in the Kent brief? Well, we like the teaser in footnote one. There the government points out that “[t]he petition does not present the question whether or when FDA’s approval of a drug impliedly preempts traditional state tort claims, and this brief expresses no view on that question.” That question, the government reminds the Court, “is presented in Wyeth v. Levine, petition for cert.,” which is still pending. Kent br. at 12, n.1. That reference suggests to us that: (1) the government wants the Court to take Levine, (2) so that will happen, the government is likely to file its long-awaited amicus brief in Levine sometime (in December) before it becomes practically impossible to get Levine on this Term’s Supreme Court docket, and (3) that the government’s position in Levine will support both review and preemption.
We also like the discussion of punitive damages on pages 18-19 and footnote 4, since as we’ve pointed out, there are even more state statutes predicating punitive damages on fraud on the FDA than there are general immunity statutes. The FDA suggests that punitive damages might even be more disruptive of its regulatory oversight than the (typically) lesser amount of compensatory damages at issue in Kent. Assuming (perhaps a big “if”) that the same state-law severability analysis applies, such an argument could effectively abolish punitive damages in prescription medical product cases in those states with such statutes.
Also, we posted not too long ago about a case in which the court allowed a fraud on the FDA claim to proceed because the FDA had made a finding of fraud. Well, the government suggests that there may well be preemption in that situation as well – because state tort litigation would “interfere” with FDA discretion to set the penalty for fraud, and would create incentives for would-be plaintiffs to try to game the system:
The federal government alone has responsibility to determine the appropriate remedy under the FDCA when it approved a product and later learned of misrepresentations that might have led it not to approve the product. The addition of potential damages liability in an uncertain amount under state law to the consequences ensuing from FDA’s own remedy under the FDCA would skew FDA’s exercise of its discretion under the FDCA. In addition, if FDA were the gatekeeper for private tort liability, it could anticipate numerous petitions filed by prospective tort plaintiffs urging the agency to make a finding of fraud.
Kent br. at 23. Interestingly, in this discussion, the government drops a “cf.” (that’s for an analogous, but not directly on point case) cite to Credit Suisse Securities (USA) LLC v. Billing, 127 S. Ct. 2383, 2396 (2007). Regular readers of this blog, of course, are already aware of the potential analogy of Credit Suisse in prescription medical product litigation.
Lastly, there’s the government’s parting shot at the result-oriented flavor of the Second Circuit’s decision.
The court of appeals appears to have been influenced by the fact that [the statute], as a whole, benefits drug manufacturers by providing a defense to an otherwise traditional tort claim. . . . [T]he preemption inquiry does not turn on whether the law is “pro-defendant” . . . Preemption does not exist to help particular parties; it exists to protect the federal sphere from interference by the States.Kent br. 32. Result-oriented decision-making is a recurrent problem, particularly but not exclusively in preemption cases, and it’s refreshing (for once) to see this point made explicitly.
And, if we agree with a plaintiff's lawyer, that's news that's fit to print.
(The issue has to do with a list of top legal blogs. Click through here only if that issue -- a bit removed from drug and device law -- interests you.)
Wednesday, November 28, 2007
The Civil Procedure Prof Blog saw our post and agreed that the issue was unusual.
Apparently, however, the issue won't be unusual for long. We received this note from a reader:
I read your post from Sunday (as I read your posts every day) on the Thomson case and removal before service on the forum defendant. There are remand motions presently pending before Judge Ackerman in the New Jersey federal court in actions consolidated under Brown, 07-3092, and Eriksen, 07-3456 that might result in another opinion on the issue. In most of the cases, the primary basis for removal was federal question (New Jersey Product Liability Law re: punitive damages requires proof of fraud on FDA). However, in a number of cases, pre-service removal by the forum defendant (defendant Organon is a New Jersey Corporation) was also used as a basis for removal. Organon is represented by Spriggs & Hollingsworth, who were counsel to Novartis in Thomson.
Thanks for sharing that information with us. We'll watch with interest.
Also, the word on the street is that the Solicitor General is filing his amicus curiae brief in Warner-Lambert v. Kent today, so we expect to find it on-line no later than tomorrow.
We'll look, but if one of our readers has a copy of either brief, please pdf it to both of us. We're lazy, and it will save time.
We'll read it to prepare for our own upcoming arguments, and we'll share it with the world.
Tuesday, November 27, 2007
As sure as we're typing here, those instructions have prompted countless counsel to scramble to East of the Rockies to see what the Panel views as the relevant criteria.
We have two reactions: First, the Procedures document is slightly misleading. Counsel often argue issues that are not strictly limited to the "appropriate criteria," and the judges on the Panel themselves sometimes ask questions that aren't so limited. Reading East of the Rockies and thinking about how it applies to your case is not sufficient preparation.
But, second: Why not save the world some time? These are the twenty questions identified in East of the Rockies as being factors appropriate for counsel to argue before the MDL Panel:
1. How many common questions of fact are there?
2. What is their nature?
3. How many cases are presently and prospectively involved?
4. What is the geographical location of the districts in which the cases pend?
5. If it is anticipated that further cases will be filed, in what districts?
6. Who are the principal witnesses in the cases and where do they reside?
7. What detriment, financial or otherwise, will be imposed upon any of the parties by ordering transfer?
8. Will transfer result in a substantial saving of duplicative work?
9. Will transfer usefully avoid conflicting rulings in the pretrial proceedings of the cases involved?
10. Can many of the advantages of transfer be worked out by cooperation among counsel without transfer?
11. Are pretrial proceedings already far along in any one or more of the cases?
12. Will transfer hasten or delay progress in the cases?
13. What is the availability of a judge in the proposed transferee court or courts?
14. Will the advantages of transfer overcome the normal desirability of having the same judge who conducts the trial also conduct pretrial proceedings?
15. Will transfer impede or promote the prospect of settlements?
16. Will transfer serve any ulterior motive of any party or parties, such as forum-shopping?
17. If class actions are involved, will transfer make for complexity or for simplification?
18. Will transfer unjustly delay or deny any party's right to provisional remedies such as injunctive relief?
19. What is the status and possible effect of any appeals pending in any of the cases?
20. Will transfer operate to eliminate or avoid an undesirable multiplicity of appeals on similar issues?
That's our good deed for the day. Now you won't have to look them up again the next time you're appearing before the Panel.
Sunday, November 25, 2007
Here's the backstory: Removal jurisdiction based on diversity of citizenship is in some ways narrower than diversity jurisdiction itself. For example, suppose plaintiffs are citizens of Georgia and defendants are citizens of Delaware, New Jersey, New York, and two foreign countries. Diversity of citizenship exists -- all defendants are citizens of states other than Georgia -- so (assuming the amount in controversy is satisfied) plaintiffs can sue in any federal court in which venue is proper. If plaintiffs cared to, they could sue in federal court in New Jersey.
But, as we said, removal jurisdiction based on diversity of citizenship is narrower in some ways than diversity jurisdiction itself. Under the removal statute, if a plaintiff sues in state court, then a case is not removable -- even if diversity exists -- if a party "properly joined and served as [a] defendant is a citizen of the State in which" the action is brought. 28 U.S.C. Sec. 1441(b).
People refer to that as the "resident defendant" exception; if you're sued in your home state court, you can't remove. There's a certain logic to that. One reason for permitting removal is to avoid having defendants get home-towned. If a plaintiff sued BigCo in the plaintiff's parochial state court, local judges or juries might favor the local plaintiff over the foreign defendant. To protect foreign defendants from local prejudice, Congress authorized removal.
But, if plaintiff sues BigCo in BigCo's home state court, there's no danger of local prejudice against the defendant. So Congress prohibited removal.
Thus, if our hypothetical Georgia plaintiffs chose to sue their Delaware, New Jersey, New York, and foreign defendants in New Jersey state court, the defendants could not remove the case. Even though diversity exists, a New Jersey defendant cannot remove a New Jersey state court case.
But what's that "properly joined and served" stuff in the removal statute? One might think that it exists to prevent plaintiffs from gaming the system. Our Georgia plaintiffs might have no possible claim against the supposed New Jersey defendant, and might name that defendant -- with no intention of ever serving it with the complaint or pursuing a case against it -- solely to prevent the other defendants from removing. The statutory language requiring proper joinder and service makes good sense in that context: If the resident defendant has been fraudulently joined, or if the plaintiff has no intention of serving it, then the mere naming of the defendant in the complaint should not bar removal. Only the presence of a resident defendant "properly joined and served" should leave the defendants in state court.
The statutory language, however, reaches further than that situation, as Thomson v. Novartis shows. In Thomson -- you guessed it -- Georgia plaintiffs sued defendants from Delaware, New Jersey, New York, and two foreign countries in New Jersey state court. And the New Jersey defendants did not appear to be sham: They were Novartis Pharmaceuticals Corporation and Novartis Corporation, which presumably played a significant role in manufacturing or selling the drug that allegedy killed the plaintiffs' child.
And the plaintiffs seemingly made good faith efforts to serve the complaint on Novartis Pharmaceuticals Corporation. Plaintiffs tried to serve the company on December 22, 26, 27, 28, and 29, 2006, but were told that nobody was present to accept service; only security personnel were on the premises. (Given the time of the attempted service -- the holiday season -- that seems entirely plausible.) On January 2, 2007, the first day Novartis reopened after the holidays, the company accepted service.
Here's the good part: Defendants removed the case to federal court on December 29 -- at a time when no defendant (yet) "properly joined and served" was a citizen of New Jersey. Under the express statutory language, the case was removable. (Judge Simandle noted the policy arguments in favor of remand in cases such as this, but found these arguments insufficient to overcome "the plain language of the statute.") Motion to remand denied.
Remember that the removal here would be permanent. Everyone agrees that diversity jurisdiction existed in the case; serving Novartis Pharmaceuticals would not destroy diversity. Nor does the removal statute require (or, indeed, permit) remand simply because the resident defendant is later served; the law doesn't mention that situation. So, after Novartis Pharmaceuticals removed the case, the case would stay in federal court through final judgment.
We're not mentioning this case only because it's curious. It also has practical implications for drug companies. If your company is facing mass tort litigation -- and non-resident plaintiffs are running to sue you in your home state court, to prevent removal -- monitor your state court dockets. Remove diverse (but otherwise non-removable) cases before the plaintiffs serve the company. Presto! Federal jurisdiction in seemingly nonremovable cases.
Do be careful. Judge Simandle notes that the law on this point is not uniform, and one never knows how judges will react when a defendant insists on a very literal interpretation of the law.
On the other hand, also be smart. In the right situation, this new wrinkle in removal law may be just what a situation calls for.
We'll be curious to see how the law on this issue plays out over time.
And Herrmann doesn't really have much to say, either. (No surprises there.)
If you're trying to read the tea leaves for the upcoming Colacicco/McNellis appellate argument in the Third Circuit, consider these tidbits about the judges on the panel:
1. Judge Ambro cast the second vote in favor of medical device (PMA) preemption in Horn v. Thoratec, 376 F. 3d 163 (3d Cir. 2004), a two to one decision.
2. Judge Sloviter was part of the panel that unanimously ruled in favor of preemption when the Third Circuit decided Cipollone v. Liggett Group, Inc., 785 F.2d 1108 (3d Cir. 1986) (before cert. was granted), lo those many years ago.
3. We don't have anything to say about the third judge on the Colacicco panel, Judge Restani. We're still trying to figure out what type of appeal goes to the Court of International Trade. (It's a good thing we've never had an argument there; we wouldn't have been able to find the courthouse.)
Beyond those few morsels, you're on your own to speculate about the likely result in Colacicco.
Wednesday, November 21, 2007
Plaintiffs say that the CBE labeling regulation gives companies a blank check to strengthen any warning at any time – even with no scientific proof of causation (we kid you not) – thereby showing that FDA approved labeling is only a “minimum standard.” As for the subsequent FDA approval requirement, to the extent plaintiffs bother with it at all, they claim that the FDA’s a rubber stamp and never disapproves this kind of label change, or they call the argument “speculative” because the manufacturer never submitted a CBE change (or if it did, didn’t risk FDA prosecution when the FDA said “no”).
Some courts have come out on our side. Tucker v. SmithKline Beecham Corp., 2007 WL 2726259, at *9-10 (S.D. Ind. Sept. 19, 2007); Colacicco v. Apotex, Inc., 432 F. Supp. 2d 514, 527-28, 535-36 (E.D. Pa. 2006); In re Bextra & Celebrex Marketing Sales Practices & Product Liability Litigation, 2006 WL 2374742, at *8 (N.D. Aug. 16, 2006), to name three. Others have bought the plaintiffs’ arguments. Those you can go find yourself – we’ve said before we don’t do plaintiffs’ research on this blog – but the universe of recent cases is in our preemption scorecard.
In short, we’re in a run for our money. We’ve got a federal court of appeals. Pennsylvania Employees Benefit Trust Fund v. Zeneca, Inc., 499 F.3d 239 (3d Cir. 2007). So do they. We’ve got a state appellate court. Prohias v. AstraZeneca Pharmacerticals, L.P., 958 So. 2d 1054 (Fla. App. 2007). So do they. We’ve got the FDA on our side at the moment. They might later. Basically, there’s law out there for just about any proposition either side wants to argue.
That’s what keeps us lawyers employed.
So, let’s think the unthinkable here. What happens if the good guys (for us, that’s our clients, the pharmaceutical companies) lose? Suppose the Department of Justice doesn’t get off its duff (come on guys, time’s a-wasting) and file the requested amicus brief on the Levine certiorari petition, and as a result the Supreme Court doesn’t get around to deciding the implied preemption issue until after – say, President Edwards takes office and appoints some notorious plaintiffs’ expert witness as FDA Commissioner. The FDA promptly reverses all of its preemption positions and, for good measure, determines that plaintiffs should be able to file negligence per se suits against regulated companies despite the FDCA’s exclusive enforcement provision. 21 U.S.C. §337(a).
In short, the world goes to hell in handbasket. So what do we recommend that the pharmaceutical industry do – short of relocating to China or South Korea? Well, we think that, at that point it probably becomes a matter of “be careful what you ask for, you just might get it.”
If the FDA becomes of the view that manufacturers can unilaterally “strengthen” their warnings at will, then that’s probably what it will get. Although there would undoubtedly be some internal resistance from not only the marketing folks, but also doctors worried about unduly alarming patients and deterring use of beneficial medicine, the cost of product liability being what it is, we’d expect to see a lot more CBE filings at the drop of an anecdotal adverse reaction report. If the system decides it’s liability uber alles, then so what if, say, putting suicide warnings on antidepressants increase the number of unmedicated depressed patients who go on to commit suicide?
If that’s how the law gets interpreted, drug manufacturers will follow the law.
If the courts hold that there’s no preemption because the defendant’s argument is “speculative” in that it never submitted a CBE application to the FDA and had it rejected – then we’d once again expect to see the FDA inundated with CBE requests. Only this time, we wouldn’t be surprised if some of these changes are really scantily supported. If it’s the rejection that does the trick on preemption, then the courts will have created a really perverse incentive structure. If rejections prompt preemption (as well as keep scientifically unsupported risk claims off the label) then we’d have to expect rational companies to respond to the incentives that are out there. To us that would seem rather like a charade. But that’s the logical effect of accepting the plaintiffs’ argument on the point.
Finally, if even the FDA’s flat “no” to a CBE labeling change isn’t enough to ward off litigation, then the industry’s really pushed into a corner. It’s damned if it does and damned if it doesn’t. At that point, liability could have one of several effects. One possibility is anarchy. The industry (or pieces of it), driven by fears of possible multi-billion dollar liability for doing exactly what the FDA orders, might decide to risk FDA prosecution. Plaintiffs like to claim that the FDA is understaffed and underfunded and thus has to rely largely on voluntary industry compliance. Well, they ain’t seen nothing yet. If the industry were to be driven to prefer battling the FDA to battling plaintiffs, the current system of drug regulation would probably break down completely in rather short order.
Now, we may be Luddites, but we’re not nihilists. We doubt we’d ever advise a client to ignore an FDA refusal to permit a label change and fight a misbranding prosecution instead. If the law were to evolve so that plaintiffs can sue a company for not disobeying the FDA, we’d probably advise them: (1) You’re going to have to fight the suits on whatever grounds you have and hope most juries have good sense. (2) Unfortunately, not all juries will show good sense (and there are a lot of really persuasive plaintiffs’ lawyers out there), so you’re going to get hit with some frequency – therefore raise your prices to cover those instances when you’re held liable because you obeyed the FDA. (3) Liability for not disobeying the FDA is something like being that proverbial fish in the barrel that’s getting shot at. If the hits get too bad, then you’ll have to make a business decision. A pharmaceutical company is not a charity. If litigation makes it impossible to make a profit selling the drug, then stop selling it.
Our clients make medicines that save lives and improve people’s health. Because of that, we wouldn’t like being in a position to advise a client that its only sensible economic choice would be to pull the plug on a drug that we know is beneficial to a lot of people. But the basic problem is that it’s a really bad idea (“crazy” would not be too strong an adjective) to make pharmaceutical manufacturers pay plaintiffs because the companies did exactly what the FDA told them to do – or didn’t do what the FDA told them not to do – or the other situations in which the FDA says these days that there should be preemption. For courts to accept the snake oil that the plaintiffs are peddling about preemption would have real, adverse, and concrete effects on the delivery of health care in this country. And those effects wouldn’t be pretty.
That’s why we don’t want to be forced to think the unthinkable.
Happy Thanksgiving to all!
Tuesday, November 20, 2007
The argument is scheduled for Monday, December 10, in Philadelphia.
The appellate panel consists of Third Circuit judges Ambro and Sloviter and visiting judge Restani from the Court of International Trade.
Not think about it, mind you. Just read it.
Here's the story:
Pfizer moved to prevent plaintiffs' experts from providing the following 6 opinions:
(1) 200 mg/d of Celebrex causes heart attacks and strokes;
(2) 400 mg/d of Celebrex causes heart attacks and strokes;
(3) Celebrex causes heart attacks or strokes more than 3 days after discontinuation;
(4) Celebrex causes strokes;
(5) Celebrex causes strokes after less than 33 months of daily use; and
(6) Celebrex caused any individual plaintiff's heart attack or stroke absent epidemiology evidence that demonstrates a relative risk greater than 2.0.
The opinion has a brief discussion of epidemiology that includes some generally helpful stuff (e.g., epidemiology "can ... be probative of specific causation, but only if the relative risk is greater than 2.0, that is, the product more than doubles the risk of getting the disease" (at 7); and a brief discussion of confidence intervals with no pithy gems (at 9-10)).
As to opinion (1) - Celebrex at 200 mg/d -- the court noted that "there are no randomized controlled trials or meta-analyses of such trials or meta-analyses of observational studies that find an association between Celebrex 200 mg/d and a risk of heart attack or stroke. And most observational studies, indeed, the observational studies that include 97 percent of the reported adverse cv events, also find no statistically significant association. It is thus unsurprising that most of plaintiffs' experts agree that the available evidence at 200 mg/d is inadequate to prove causation." (At 12 (citation omitted)).
As to the two experts who opined that general causation had been established at that dosage, Judge Breyer rejected their opinions in detailed, fairly lengthy discussions. One, Dr. Neil Doherty, "reaches his opinion by first identifying his conclusion -- causation at 200 mg/d -- and then cherry-picking observational studies that support his conclusion and rejecting or ignoring the great weight of the evidence that contradicts his conclusion. Dr. Doherty's opinion does not reflect scientific knowledge, is not derived by the scientific method, and is not 'good science;' it is therefore inadmissible." (At 13). The other, Dr. Marilyn Rymer, "as does Dr. Doherty, ignores the vast majority of the evidence in favor of the few studies that support her conclusion." (At 17).
Then, Judge Breyer considers and rejects plaintiffs' experts' "extrapolation theory" -- that epidemiology from studies of Celebrex at 400 mg/d can be extrapolated to 200 mg/d. (At 19-21). Although another court had permitted extrapolating female data to males, Judge Breyer finds doing so inappropriate for different dosages given the volume of testimony that dose matters. (Id.) Responding to plaintiff's claim that "evidence of harm at 200 mg/d does not exist because Pfizer did not initiate long term randomized trials at such dose," Judge Breyer responds that "[p]laintiffs cite no case ... that suggests that they can satisfy their burden of proof based on lack of evidence; plaintiffs filed these lawsuits and plaintiffs carry the burden of proving today based on currently available scientifically valid evidence that Celebrex can cause heart attacks or strokes at 200 mg/d." (At 20-21).
As to opinions (2) and (4) through (6), the court denied the motion. (At 21-25). For the 400 mg/d dosage, the court found that one "large, long-term, randomized, placebo-controlled, double-blind, multi-center clinical trial" reporting statistically significant results sufficed, even though other studies had inconclusive results. (At 21-22). As to opinion (3) -- whether Celebrex causes heart attacks or strokes more than 3 days after discontinuation -- the plaintiffs offered no expert testimony, so the motion was granted. (At 24).
There will be no slouching towards Thanksgiving for us. We're just too !**!* compulsive.
It did, indeed, with Judge Breyer rejecting as junk science plaintiffs' proffered expert testimony that Celebrex is capable of causing heart attacks or strokes at the 200mg/day level.
Here's a link to the opinion, courtesy of Pharmalot.
We may have more to say after we have a chance to think about this decision.
On the other hand, we may do a couple of short, easy posts, before the holiday, and then settle back into too much turkey and stuffing.
You'll know either way within 48 hours.
UPDATE: This news is now raging around the web. Here's Legal Pad, the Wall Street Journal Law Blog, Torts Prof (who reports that the metadata in the copy of the opinion to which we linked above, courtesy of Pharmalot, shows that Lieff Cabraser supplied the copy -- ick!), and the Wall Street Journal On-Line.
Hypothesize this: Defendant files a motion for coordination with the MDL Panel. Some plaintiffs file briefs in favor of coordinating. Another plaintiff group (we'll call them the cons) file a joint brief opposing coordination. (That's "con" as in the opposite of "pro," not as in the short-form of "convict." We'll have no one suing us for group libel.)
Before the MDL Panel has its hearing, federal courts remand to state court all -- 100 percent -- of the cases in the "con" group. Does a representative of the con group, which has no pending federal cases that could be affected by the MDL Panel's ruling, have the right to argue before the Panel?
We would have guessed no. If you don't have any cases that could be affected by the decision, you lack standing. Why would you get to speak?
Shows (yet again) what we know.
Faced with this situation, the MDL Panel ruled that a representative of the con group would be permitted to argue, even though the group had no pending federal cases. (This is not a published order. It's just a notation on the top of a page granting a request to argue despite not having any pending federal cases. You surely can't find the order on-line. But, as we said, if you need a copy for some reason, just whistle. Since Bexis is in Philadelphia and Herrmann's in Chicago, whistle real, real loud.)
Saturday, November 17, 2007
We posted last week about the Vioxx settlement. The aspect of the settlement that interested us most was finality: After AmChem and Ortiz, how can a defendant buy global peace?
The issue is slippage. If a defendant enters an opt-out class action settlement, plaintiffs with strong cases predictably opt out. No global peace there.
If a defendant permits new claims to be filed under the terms of a settlement agreement, thousands of new claimants can appear out of nowhere. No global peace there.
What's a defendant to do?
Merck's approach was to enter a settlement agreement that required plaintiffs' counsel to recommend that their clients accept, and the settlement is effective only if 85 percent of specific plaintiff groups agree to participate.
In last week's post, we noted three possibilities for slippage from this settlement. First, the non-participants. If a full 15 percent of the plaintiffs choose not to participate in the settlement, and those are plaintiffs with the strongest claims, then Merck would still be facing roughly 7500 comparatively tough lawsuits despite having entered the settlement. That's better than the current 47,000 claims, but it's nothing to sneeze at -- and it is, by hypothesis, selectively the toughest cases.
Second, latency claims. Later courts (despite, apparently strong science to the contrary) could decide that people who stopped taking Vioxx many years before they had heart attacks or strokes should be permitted to take their claims to trial. If claims for latent injuries are permitted, that's a huge bodies of claims not barred by the current settlement.
Third, statutes of limitations. Merck took Vioxx off the market three years ago. Eight states have statutes of limitations for product liability claims that are longer than three years. Plaintiffs in those states can still sue.
And plaintiffs from other states -- the 42 states where claims are time-barred -- may choose to file lawsuits in one of the eight states with more generous limitations periods. Merck is counting on those eight states acting properly -- applying the statute of limitations of the state of the plaintiff's residence, rather than the statute of limitations of the state where the complaint was filed -- to the lawsuit. If any one of the eight states makes the wrong choice, that could be bad news.
But here's the possibility for slippage that we completely overlooked: cross-jurisdictional class action tolling. On Thursday, we posted about the decisions from the Vioxx MDL court denying cross-jurisdictional tolling. That was Herrmann's "duh!" moment. It would be even harder to settle mass torts if courts accepted cross-jurisdictional class action tolling.
Here's why: Suppose, the day after a product recall, a plaintiff files a putative nationwide class action in any court anywhere -- let's say state court in North Dakota. Although there's occasional room for argument, the general rule is that the simple filing of that class action tolls the statute of limitations for every member of the putative class. The limitations period begins to run again only after the court denies a motion to certify the class.
So that class action is filed. Suppose the North Dakota court doesn't decide class certification for two or three years. If courts accept cross-jurisdictional tolling, later plaintiffs can file lawsuits in, say, Ohio, not just two years after the date of injury (as Ohio law would dictate) but two years after the date the North Dakota court denied class certification -- which could be four, five, or more years after the date of injury. Happily, as we noted on Thursday's post, most courts reject cross-jurisdictional class action tolling. But every court that accepts the doctrine makes it yet harder to settle mass torts.
That's yet another issue courts should consider when asked to adopt cross-jurisdictional class action tolling.
(Although we think the issue presented by this post is both true and important, it will almost never find its way into court. When parties are briefing and arguing cross-jurisdictional class action tolling, the distant policy implications -- upsetting the possibility of future mass tort settlements -- won't even make it onto the radar screen. Parties won't waste precious pages of their briefs explaining the issue, and courts won't address the issue. Decisions made in cross-jurisdictional tolling cases will thus unknowingly effect mass tort defendants in later cases.)
Friday, November 16, 2007
Blogger permits folks to publish "comments" reacting to what we've written, although Blogger automatically (so far as we can tell) postpones publishing a comment until one of the co-hosts of the blog "moderates" it. (We're given the choice of either "publishing" or "rejecting" any comment.)
That raises two issues. First, you won't get instant gratification when you post a comment. The comment won't immediately appear on the screen (as comments do on some blogs), and we're unlikely to prompt a serious discussion among our readers. (We don't check Blogger regularly to moderate comments, so there may be a delay of a day or two between the time someone submits a comment and when it appears on-line. That's not an environment well-suited to the rapid exchange of ideas.)
That's okay; we'll live with that.
Second, however, is the question which comments we'll choose to publish and which we'll reject. We're not journalists, so we don't worry about journalistic ethics. But we're people, and so we worry about human ethics.
Our policy has generally been to publish every post that doesn't strike us as maniacal.
You disagree with us? Lord knows, that's rational; we'll publish.
You think we're jerks? Eminently rational, too; we'll publish.
You have some rant that appears to be spam, or tries to sell drugs, solicit clients, or accuse us of conspiring with the CIA on some issue or other? We unilaterally declare you to be a nutcase; we don't publish.
But we got one yesterday that troubled us: A perfectly sane comment that urged plaintiffs' counsel to begin a new mass tort against a major pharmaceutical company. We thought long and hard about that one, but we've decided not to publish it. We defend drug companies for a living, and we simply can't let folks use this blog as a forum for fomenting litigation.
Ultimately, we feel bad about "censoring" this comment, but not so bad that we'll publish it.
We're sorry, but we just can't.
Everything else, of course, remains fair game.
1. Bexis has had nothing to do with any post commenting on the settlement (including this one). And he'll have nothing to do with any future posts on this subject. His firm is involved in the Vioxx litigation, and he cannot speak on the topic.
2. Herrmann's earlier post said absolutely nothing about the ethics of the settlement. Nothing. And, if you call and ask, he'll still say nothing on that point.
Among other things, he refuses to answer these questions: (1) Is it ethical for plaintiffs' counsel to threaten to withdraw from representing clients if the clients don't agree to participate in the Vioxx settlement? (2) Does the settlement agreement actually compel plaintiffs' counsel to withdraw in that situation? (3) Is any alleged ethical issue avoided by adding language that plaintiffs' counsel must always act within the bounds of the rules of legal ethics? (4) If someone wanted to use the alleged ethical issue to attack the settlement, what should that person do? (He can't "object," since this is not a class action settlement; there's no Rule 23 fairness hearing in this context. So how does an "objector" speak? Threaten lawsuits? File lawsuits? File ethics grievances? Against whom?)
Not our department.
Bexis isn't talking. And Herrmann represents drug companies. When drug companies reach satisfactory settlements, he's happy. He is not going to hypothesize about how people could try to disrupt things. So please stop asking. From what we've seen, Richard Nagareda at Vanderbilt appears to defend the ethics of the settlement, and Deborah Rhode of Stanford is more skeptical. For comments on the ethics points, please call one of them.
3. Finally, there's been a ton of ink spilled (and a bunch more electrons activated -- is that what happens when people publish blog posts?) over this issue, and this topic is sure to remain hot for weeks or months to come. If you want to pursue this issue, it's awfully easy. You'll find food for thought at the Mass Torts Litigation Blog, Pharmalot (here and here), Legal Pad, Point of Law, Overlawyered, the Wall Street Journal Law Blog, and the Wall Street Journal itself. (If you thought this topic was hot yesterday, just watch what happens today, after the Journal hits the newsstands.)
If you want a commentator on legal ethics, however, please call an ethicist. And, if you're looking for someone to hypothesize how to attack this settlement, it ain't me, babe. (On all other topics, of course, you know the name, look up the number.)
That was cute, wasn't it? Dylan lyrics followed by The Beatles, separated by only six words. (We're taking pleasure in mighty small things this morning.)
Thursday, November 15, 2007
Anyway, because we’re interested in preventing unsuccessful class actions in one jurisdiction from stopping the statute of limitations from running against people suing our clients in different jurisdictions, we’ve already blogged about what we knew on this dangerous (and thankfully not widely accepted) topic.
We’re happy to report that the judge handling the multi-district federal Vioxx litigation has recently issued three decisions that refuse to expand the scope of cross-jurisdictional class action tolling: In re Vioxx Products Liability Litigation, 2007 WL 3332708 (E.D. La. Nov. 8, 2007); In re Vioxx Products Liability Litigation, 2007 WL 3334339 (E.D. La. Nov. 8, 2007); and In re Vioxx Products Liability Litigation, 2007 WL 3353404 (E.D. La. Nov. 8, 2007) .
Now, whenever the word “Vioxx” raises its head, we have to tread carefully. Bexis is involved in that litigation, but he has a limited special dispensation that allows him to discuss legal issues that arise in it, as long as nothing specific to Vioxx is mentioned. So that’s what we’re going to do here.
The problem with cross-jurisdictional class action tolling it that a single meritless class action filing – anywhere in the country – would stop the running of the statute of limitations in any other jurisdiction cold. That’s a mere filing, not a decision or anything else ruled on by a judge.
We think: (1) that’s crazy, and (2) it invites the filing of meritless class actions by providing a significant benefit that doesn’t depend on merit. It’s bad enough within the same jurisdiction, but intolerable when one state’s courts purport to affect a different state’s statute of limitations.
Fortunately Judge Fallon in the three Vioxx decisions agreed. As we pointed out in the prior post, only two states (Ohio (at a time when its Supreme Court favored plaintiffs 4-3 in everything) and NJ) have decided to allow cross-jurisdictional class action tolling after a full discussion of the pros and cons. Two more states (W. Va. and Mo.) did so on cursory review. As for federal courts, such as the Vioxx MDL, our biggest concern is that, case specific reasons of administrative convenience and uniformity, a judge will decide to run roughshod over Erie principles mandating state control over development of state law.
That concern certainly never happeed in Vioxx. The key to the three Vioxx decisions isn’t really their analysis of the various states’ laws at issue – but rather the court’s attitude towards the judicial restraint principles that inherent in the Erie doctrine. As to that overarching issue, the court stated, “[a]bsent clear guidance. . ., the Court will not expand [a state’s] class action tolling doctrine.” 2007 WL 3332708, at *7; 2007 WL 3334339, at *3; 2007 WL 3353404, at *3. In all three instances the court properly cited Wade v. Danek Medical, Inc., 182 F.3d 281, 286-88 (4th Cir. 1999), for the judicial restraint proposition. We’re more than happy with that, because Wade, a bone screw case, is one of Bexis’ prides and joys.
The Wade principle – that courts exercising federal diversity jurisdiction (if you want to know more about what that is, go here) must refrain from “expand[ing]” liability where there’s no “clear guidance” from the relevant state courts – isn’t just applicable to statute of limitations issues. Rather, it’s a fundamental proposition that extends to all aspects of diversity cases.
Needless to say, as defense lawyers we’re 100% in favor of anything that keeps federal judges from boldly finding liability where no state court judge has done before. That’s why we devoted one of our earliest posts to this precise topic.
The next interesting topic deals with the status (if any) of the statute of limitations of the state where the multi-district litigation happens to be located. Again taking a position that we generally agree with (if by chance an MDL we were involved in landed in a jurisdiction with a peculiarly short statute of limitations, we might look for a loophole), the Vioxx court held that there’s no basis for applying the statute of limitations of the forum state for the MDL to claims involving out-of-state plaintiffs – even if the MDL judge allowed such foreign plaintiffs to file directly in that state. This is one manifestation of a question we flagged as important a while back, so we’re graciously accepting accolades for our prescience.
That ruling makes sense because, as we’ve also discussed before, MDLs are assigned for a variety of reasons, but the law of the assigned jurisdiction isn’t supposed to be one of them:
[T]he Court is convinced that it has been amply demonstrated that [no MDL forum state] policies are actually implicated in cases directly filed in this MDL. . . As the Court previously noted, [the MDL forum state’s] only interest in these cases arises from the fact that this MDL Court sits in [this state]. In fact, [the MDL forum state’s] only interest is more tenuous than that because it is not the mere presence of an MDL in this District that has allowed foreign plaintiffs to file suit in this forum against a foreign defendant, but rather this Court’s experimentation with direct filing. . . . [Direct filing] was crafted to eliminate part of the expense and delay associated with this aspect of traditional MDL practice, not to alter the substantive rights of foreign litigants. Thus, [the MDL forum state’s] interest in providing a longer [statutory] period is in no way adversely affected by the dismissal of these particular actions as untimely under [other states’] law. . . . [The] status as the forum state in these cases is somewhat fictional.
2007 WL 3332708, at *10-11 (lots of citations and quotation marks omitted) (emphasis added).
There’s enough game playing in the selection of MDL locations such as it is – not just which state is which plaintiffs’ lawyer’s backyard, but more substantive issues such as what is the law of the state’s circuit on federal issues such as preemption. We’d hate to see the forum state’s statute of limitations or choice of law rules get thrown into that already overfull hopper.
So we think that the Vioxx judge got it as right as he could when he ruled that the statute of limitations of the MDL forum state has no role to play in choice of law analysis as it pertains to cross-jurisdictional class action tolling. But having said that, we must note our puzzlement with the footnote in the court’s opinion which states “the plaintiffs’ claims may potentially be timely under Louisiana's expansive class action tolling doctrine.” 2007 WL 3332708, at *10 n.12.
In that footnote, Judge Fallon cites a case, Smith v. Cutter Biological, 770 So.2d 392, 408-10 (La. App. 2000), for the proposition that Louisiana (the forum state for the Vioxx MDL) “recognize[es] cross-jurisdictional class action tolling.” We’ve never put Louisiana in that small group of states that permits cross-jurisdictional tolling. That’s hardly conclusive, since we’ve been wrong before, but we’re sure going to have a look for ourselves.
So when we read the cited case, we’re really confused. First, the Louisiana statute that’s discussed in Smith, §3462, doesn’t mentions class-action tolling, and a comment to the statute says that “[i]t does not change the law.” Smith itself declined to affirm on the trial court’s rejection of cross-jurisdictional class action tolling, but also stayed well away from actually adopting this kind of tolling:
[T]his Court  agree[s] with the result reached by the trial judge more because of what we view as plaintiff’s attempt to “stack” class actions rather than a reliance by this Court on a rejection of theories of class action cross-jurisdictional interruption of prescription [that’s Louisianan for tolling the statute of limitations].
770 So.2d at 408. Smith then analyzed the “stacking” question at some length, always careful to address class-action tolling as a hypothetical situation. Id. at 409 (“to the extent that rescription may have been interrupted”) (“Assuming for purposes of argument that [the other class action] suspended the running of prescription”). We’d say that this rather equivocal stance is a lot less than the “clear guidance” that the Erie doctrine requires – although Judge Fallon’s “may potentially be timely” statement is hardly a ringing endorsement in and of itself.
Anyway, Louisiana was irrelevant because, as at most a nominal forum state, none of its interests were affected. As to the plaintiffs’ actual home states, we think that the Vioxx court hit all the right nails right on the head.
Pennsylvania – The court found that Pennsylvania affirmatively rejected cross-jurisdictional tolling, 2007 WL 3332708, at *7, and cited the same case we cited in our post for that proposition.
Puerto Rico – The court determined that no Puerto Rico court had ever “explicitly adopted” cross-jurisdictional tolling. Id. at *9. That’s pretty much what we thought, since we’d not found any cases from this jurisdiction either. Under Erie lack of precedent either way was the kiss of death for liability-expanding arguments.
Illinois – The court stated that that Illinois “has explicitly rejected cross-jurisdictional tolling.” Id. at *13. If anything that’s an understatement, since we quote from the relevant Illinois Supreme Court opinion in our post at some length. With the possible exception of Tennessee, Illinois has more forcefully rejected cross-jurisdictional class action tolling than any other state.
Texas – In the first companion Vioxx case, Judge Fallon rules that all the available authority has Texas rejecting cross-jurisdictional tolling. 2007 WL 3334339, at *3. That’s how we peg Texas as well in our post, since there’s no definitive supreme court ruling, but lower court rulings hostile to this sort of tolling.
California – Judge Fallon called California right as well – catching the nuance that the supreme court rejection of such tolling was limited to the mass tort context. Id. at *5. Our post said pretty much the same thing about this state.
Indiana – This is another “not explicitly adopted” state. Id. at *6. That’s where we think it goes too, since we don’t know of any Indiana case that addresses cross-jurisdictional class action tolling one way or the other.
Kentucky – In the second companion Vioxx decision, the court held that: (1) Kentucky had never recognized any form of class action tolling, (2) there were never any in-state Vioxx class actions, and (3) without any guidance in either direction the court would not make an Erie prediction that would increase liabilty by tolling the statute of limitations. 2007 WL 3353404, at *3. That accords with what we thought, since we know of no precedent on cross-jurisdictional tolling from Kentucky.
Tennessee – The court also found that Tennessee affirmatively rejected cross-jurisdictional tolling, id., at *5, and cited the same case we cited in our post for that proposition.
We’re not at liberty in this post to say anything Vioxx specific, so we won’t. Our view of these three decisions is: (1) they’re exemplars of the proper exercise of judicial restraint in the Erie context – something that’s been particularly problematic in mass torts, and (2) Judge Fallon got the substantive cross-jurisdictional class action tolling call right in every state where it mattered.
Tuesday, November 13, 2007
If the class is not certified, the plaintiffs go home. If the class is certified, the defendant has no choice but to settle.
There may be an exception or two that prove that general rule. But that's the general rule. Period.
This means that defendants typically want to address as many potentially dispositive (or class certification avoiding) issues as possible before the court rules on class certification. (We understand that winning before a class is certified provides a binding victory only against the named plaintiff, and winning after a class is certified provides a victory that binds the entire class. We understand, but we generally don't care. Beat the named plaintiff, or defeat class certification, and you're home free as a practical matter, no matter what the legal theorists say.)
The question, then, is what defendants can do to accelerate resolution of legal issues -- so the issues are decided at or before the class certification hearing, rather than after.
One technique -- and we use it often -- is to file a motion for summary judgment to be heard concurrently with the plaintiff's motion for class certification. This has two benefits: It offers a chance of victory on the merits, of course. But it's also a vehicle to show the trial judge vividly why the named plaintiff should lose for issues that are unique to him -- which is one basis for denying a motion for class certification. A judge who reads a "statute of limitations" or "absence of reliance" summary judgment motion aimed at the named plaintiff may be less inclined to certify a class, even if the judge denies the dispositive motion because it raises disputed issues of fact. (Please note that we don't always recommend filing summary judgment motions along with oppositions to class cert. We always recommend thinking about this idea; we often end up employing it.)
But that's old news. Courts are now increasingly permitting another defense issue to be accelerated to the class certification stage: Daubert motions.
Federal appellate courts have come to realize that trial courts must carefully analyze at the class certification stage how plaintiffs will prove their claims at trial, even if that proof overlaps with the likely proof on the merits at trial. The Second Circuit, for example, belatedly came around to this understanding last year, in In re IPO Sec. Litig., 471 F.3d 24 (2d Cir. 2006).
Before IPO came down, the Second Circuit had suggested that full Daubert review at the class certification stage was not appropriate, because that review would require a district court impermissibly to consider the merits of the lawsuits. See In re Visa Check/Mastermoney Antitrust Litig., 280 F.3d 124 (2d Cir. 2001). After IPO, trial courts should be willing to conduct a full Daubert review of the reliability of expert testimony introduced to support plaintiff's motion for class certifcation, and courts may go even further, considering the admissibility of other expert tesimony, too.
Outside of the Second Circuit, even before IPO, at least three courts had applied a full Daubert analysis to expert testimony at the class cert stage. See, e.g., Bell v. Ascendant Solutions, Inc., No. 3:01-CV-0166, 2004 U.S. Dist. LEXIS 12321 (N.D. Tex. July 1, 2004), aff'd, 422 F.3d 307, 313 (5th Cir. 2005); McNamara v. Bre-X Minerals Ltd, No. 5:97-CV-159, 2002 U.S. Dist. LEXIS 27473 (E.D. Tex. Sept. 30, 2002); Sanneman v. Chrysler Corp., 191 F.R.D. 441 (E.D. Pa. 2000). (Do we perform a public service when we write this blog, or what? If we hadn't cited those cases here, you'd be wondering how the heck you would find that precedent, or you'd be rummaging through a bunch of old photocopies over there in that pile on your floor.)
Defendants should plainly encourage this trend.
One way to encourage the trend is to raise this issue early and often. Courts frequently ask counsel to propose scheduling orders in class actions that permit appropriate discovery followed by prompt resolution of the class certification issue. Defendants should propose that courts build into those schedules sufficient time to designate, prepare reports for, and depose experts on class certification issues, and then to allot time for Daubert hearings at or before the class certification hearing. Those scheduling orders would ensure that Daubert issues are raised early in the litigation and treated with the respect they deserve before the court resolves class certification.