Friday, October 30, 2009
We've been on the road a lot recently, so we've stayed in a lot of hotels. We've stayed in fancy hotels (the del Coronado in San Diego and the Hay-Adams in DC) and we've stayed in Holiday Inn Expresses in little towns.
We're bloggers. That means we carry our laptops with us when we travel.
The internet access at hotels has been generally improving. It's usually free, now - a change from even just a year ago. The hotels are also doing better with the hardware (plugs and ethernet cable connections) than they used to.
But no mouse pads.
Almost every hotel we've stayed at provides us some sort of glass-topped desk. That's fine, except that kind of surface doesn't generate enough friction to work a computer mouse very well.
We need mouse pads. We've used newspapers, magazines, room service menus, etc. to get suitable friction.
We wonder if our readers share our frustrations. It would be so easy for hotels to supply mouse pads in their rooms - they could even put their logos on them.
So this is a plea, and a question, to all you hoteliers out there. Help us out here. If you're going to provide internet access, and a glass-topped table for our computers, please stick a mousepad in the desk drawer along with the Gideons and the stationery.
End of rant.
Consider taking a look at these two items recently posted on other blogs:
First, the Civil Procedure & Federal Courts Blog collects in one place scholarship analyzing the Supreme Court's decision in Wyeth v. Levine. Whether or not you have a taste for scholarship generally, if you play in our sandbox, you should be aware of that literature.
Second, Point of Law collects in one place the abstracts of three papers discussing whether third parties should be permitted to finance litigation. That was once called "champerty;" today, it's called "business as usual."
Wait! That was a joke! If one of us is ever opposing you in litigation, we believe that having a third party finance your litigation -- whether litigation costs, attorneys' fees, or expert witness fees -- is probably wrong, and we are not waiving our rights in that regard by publishing this blog post. (See? Three years of blogging and we've turned paranoid. What will we look like at four?)
The two of us -- Beck and Herrmann, the blogging fools -- started the Drug and Device Law Blog three years ago today, on October 30, 2006.
Here's how we celebrated on October 30, 2007.
We turned philosophical on October 30, 2008.
And today, at three, we're just old.
Here's how old:
Nearly 500 readers subscribing by our Google group (that is, by typing their e-mail addresses in the blank over in the right-hand column of the blog).
Just north of 250 subscribing by RSS feeds. (That's "really simple syndication," although it doesn't seem so simple to us. If you don't understand RSS feeds, we're surely not the ones to explain.)
Roughly 350 subscribing by Twitter. (They receive only the headlines of our posts and must then choose to read the bodies.)
And 20,000 to 30,000 more pageviews each month from non-subscribers who just come to take a look.
We can no longer tell how many folks have visited our blog, because people who subscribe by the Google group (and thus receive every post by e-mail) don't show up in the tracking system. But we've surely had more than 600,000 pageviews since we started this gig, and it's possible we're pretty far north of that figure.
That's many more readers than we anticipated would come when we started typing three years ago, and we're gratified by the response.
We particularly appreciate the many folks who contact us off-line to pass on breaking news, share strategies, and otherwise help us to keep our ears close to the ground. (With our ears on the ground and our fingers on the keyboard, we're a sight to be seen.)
Thanks for visiting -- and have a piece of cake, on us!
Thursday, October 29, 2009
Today, we’re going to look at certain aspects of the decision (now also available at 2009 WL 3417867). Specifically, we want to go over the non-preemption aspects of the decision.
Why? you ask. Aren’t we supposed to be “all preemption, all the time”?
Well – no. For one thing, as we mentioned in the quickie post, the state court Sprint Fidelis preemption analysis largely tracked the earlier federal court decision on the same subject. In re Medtronic Sprint Fidelis Leads Products Liability Litigation, 592 F. Supp.2d 1147 (D. Minn. 2009). We already analyzed that preemption analysis at quite some length, here, shortly after the federal decision came down. Except for citing some newer precedent, most notably Covert v. Stryker Corp., ___ F. Supp.2d ___, 2009 WL 2424559 (M.D.N.C. Aug. 5, 2009) (which we told you about here), it’s not so much different on preemption to warrant a new long post on that subject.
Second, since the Supreme Court has decided the basic preemption framework for both drugs and devices, there’ve been other things in the drug/device universe than the FDA and preemption.
Like Twombly/Iqbal, for instance?
Yeah, that’s a good start. Maybe we’ll become all pleading all the time.
Anyway, one of the more interesting things that we noticed in what we’ll call “state Sprint Fidelis” or SSF for short, is footnote 9 (slip op. pp. 16-17). It’s not even about anything the court decides.
So what’s up?
Footnote 9 contains news we didn’t know – specifically that the Minnesota Supreme Court has a pending appeal in which it will consider whether to interpret the Minnesota state version of Fed. R. Civ. P. 8 in accordance with Bell Atlantic v. Twombly, 550 U.S. 544 (2007). We don’t know how that Minnesota appeal (having nothing to do with drugs/devices) will turn out, but just the fact that it exists points to an important issue:
A lot of states’ rules of civil procedure mirror the federal rules. Thus, these states could – although they don’t have to – apply the Supreme Court’s improved pleading standards to their own state court litigation. As good as Twombly/Iqbal is, our clients face at least as many (and often more) suits in state court as in federal court. We'd like for Twombly/Iqbal to apply in state court, too.
Being the compulsive types we are, we decided to see if there were any states where any appellate court had adopted Twombly/Iqbal. We're in luck. There are some.
In addition to the Minnesota intermediate appellate court decision now under review, Bahr v. Capella University, 765 N.W.2d 428, 437 (Minn. App. 2009), Twombly/Iqbal has made inroads in several other states.
Most notably, the Supreme Judicial Court in Massachusetts specifically “t[oo]k the opportunity to adopt the refinement” to the pleading standards that Twombly enunciated:
We agree with the Supreme Court's analysis of the Conley language. . ., and we follow the Court’s lead in retiring its use. The clarified standard for rule 12(b)(6) motions adopted here will apply to any amended complaint that the plaintiffs may file.
Iannacchino v. Ford Motor Co., 888 N.E.2d 879, 890 (2008). That’s one.
The South Dakota Supreme Court has also followed Twombly/Iqbal. See Gruhlke v. Sioux Empire Federal Credit Union, Inc., 756 N.W.2d 399, 409 (S.D. 2008); Sisney v. State, 754 N.W.2d 639, 643 (S.D. 2008); Sisney v. Best, 754 N.W.2d 804, 80809 (S.D. 2008) (“adopt[ing] the Supreme Court’s new standards”). That’s two.
The Maine Supreme Court, noting that the state’s relevant rule was “practically identical” to Fed. R. Civ. P. 8, followed Twombly in Bean v. Cummings, 939 A.2d 676, 680 ¶ 10 (Me. 2008). That’s three.
And, perhaps reflecting its federal roots, the highest court in the District of Columbia has applied Twombly/Iqbal pleading standards several times, in Murray v. Motorola, Inc., ___ A.2d ___, 2009 WL 3459991, at *_ & n. 32(D.C. Oct. 29, 2009) (that’s today folks – presumably why there’s no page number); Grayson v. AT & T Corp., ___ A.2d ___, 2009 WL 2957812, at *4 nn.16-21 (D.C. 2009), and Clampitt v. American University, 957 A.2d 23, 29 (D.C. 2008). That’s four.
The Georgia Supreme Court cited Twombly with approval in Charles H. Wesley Education Foundation, Inc. v. State Election Board, 654 S.E.2d 127, 132 n.7 (Ga. 2007). That may be five, but we haven’t seen anything since out of the Peach State on this subject, so we’re reluctant to call that one on the basis of a single footnote.
Intermediate appellate courts in some other states also have followed Twombly/Iqbal. In Tennessee, the Middle Division of the state’s intermediate appellate court found Twombly “consistent with” state law, and therefore followed it, in Hermosa Holdings, Inc. v. Mid Tennessee Bone and Joint Clinic, P.C., 2009 WL 711125, at *3 (Tenn. App. Mar. 16, 2009). It’s kept it up ever since: Western Express, Inc. v. Brentwood Services, Inc., 2009 WL 3448747, at *9-10 (Tenn. App. Oct. 26, 2009); Deja Vu, Inc. v. Metropolitan Government, 2009 WL 3270195, at *5 (Tenn. App. Oct. 12, 2009). A Louisiana appellate court adopted Twombly in a state antitrust action in Tuban Petroleum, L.L.C. v. SIARC, Inc., 11 So.3d 519, 523 (La. App. 2009). Ohio joined the parade in Gallo v. Westfield National Insurance Co., 2009 WL 625522, at *2 ¶9 (Ohio App. Mar. 12, 2009), applying several aspects of the Twombly pleading standards.
All in all, we're pleasantly surprised by the degree of acceptance of Twombly/Iqbal by state courts. On the merits, significantly more states have adopted it than have declined. Indeed, almost all of the state courts not following the new federal standard have done so only because they were intermediate courts, and the existing standard were set by their supreme court’s interpretation of the state’s equivalent to Rule 8 (usually following Conley), which they were obliged to follow.
Anyway, that’s one interesting non-preemption point raised in SSF. There are others relating to violation claims that bear discussion.
On page 40 of the SSF slip opinion, the court addressed a claim that, supposedly, the defendant violated some FDA regulation that required it to submit a supplemental PMA application for each and every modification to the device, no matter how trivial. After holding that there was no such regulation, the court said something else of interest: “claims predicated upon the alleged failure to submit PMA Supplements do not seek to enforce any common-law duty.” Id.; see also id. at 42 n.28.
That’s important not only as a statement of a preemption principle (that a claim isn’t “parallel” if there’s no analogous state law claim), but also as an interpretation of the common law itself. The common-law principle is that mere lack of a government-mandated license does not create a common-law “violation” claim for all injuries suffered by anyone as a result of the defendant’s unlicensed activities. This comes up most often where unlicensed auto drivers are sued. Failure to have a license does not make non-negligent driving into a tort.
Before most of our readers had ever heard of us, we discussed this proposition at more length in one of our earlier posts on “Defenses to FDCA-Based Negligence Per Se.” We’re glad (but not surprised) to see that Medtronic recognized and raised the licensing point as an alternative, non-preemption based way of disposing of this sort of allegation. It's an argument we've been trying to popularize ever since we more or less invented it (in the FDCA context) in the Bone Screw litigation.
For a complete discussion of why failure to obtain FDA approval – the equivalent of an FDA license to market a particular product – isn’t a valid claim under state law, we invite you to take a look at that earlier post. Another good post to review is here, where we discuss Iacangelo v. Georgetown University, 595 F. Supp.2d 87 (D.D.C. 2009), which holds quite explicitly that:
As a result, it is no more logical to infer a causal connection between [the drugs’] unapproved status and [plaintiff’s] injuries than it is to infer a causal connection between a driver’s lack of a drivers license and injuries he causes while driving.Id. at 93.
Additional (non-drug/device) cases for the proposition that mere failure to have a government license does not establish negligence per se as to injuries suffered as a result of the unlicensed activity include: Cousin v. Enterprise Leasing Company-South Central, Inc., 948 So.2d 1287, 1290 (Miss. 2007) (driver’s license); State v. LaFlam, 965 A.2d 519, 522-23 (Vt. 2008) (commercial driver’s license); Mousseau v. Schwartz, 756 N.W.2d 345, 352-53 (S.D. 2008) (medical license); Florida Marine Transporters, Inc. v. Sanford, 255 Fed. Appx. 885, 888 (5th Cir. 2007) (admiralty law) (shipmaster’s license); State v. Smith, 771 N.W.2d 151, 155 (Neb. App. 2009) (child care facility license); West v. Levee Lift, Inc., 2009 WL 2192746, at *5 (Ky. App. July 24, 2009) (driver’s license); Vanalkemade v. Hitsman, 2009 WL 1864055, at *4 (Ohio App. June 30, 2009) (commercial driver’s license); Bell v. American Traffic Solutions, Inc., 633 F. Supp.2d 305, 314-15 (N.D. Tex. 2009) (investigator’s license); Garrett v. Land West Ventures, Inc., 2007 WL 2071615, at *3-4 (D. Colo. July 19, 2007);. All of these cases have been decided since our January, 2007 post on this subject.
So the second point that defense counsel should draw from SSF is that you don’t need preemption to beat a negligence per se/violation claim where the claim is based on an allegation that the product did not have the necessary FDA approval. That kind of claim fails for separate, independent reasons of state law: a defendant doesn’t commit a tort just because it doesn’t have a license required by the government – including the FDA.
Our third interesting non-preemption point gleaned from SSF is on page 42 of the slip opinion, where the court states: “Where a statute expressly precludes a private right of action to enforce its provisions, litigants cannot avoid these limits by crafting negligence per se claims for violation of the statutory scheme.” This is yet another way to defeat negligence per se claims without preemption. Many states – not all, but a lot – do not permit negligence per se claims where doing so would be contrary to the intent of the legislature. Since Congress specifically stated, in the FDCA (21 U.S.C. §337(a)), that only the government could enforce it, negligence per se claims cannot lie due to their conflict with congressional intent. E.g., Miller v. DePuy Spine, Inc., 638 F. Supp.2d 1226, 1231 (D. Nev. 2009).
Again we're proselytizers on this, since it's something else we invented in Bone Screw. Legislative intent is another of the state law defenses to negligence per se that we discussed at length in the early 2007 post. SSF is important as another case recognizing this defense specifically in the FDCA context.
As the previous post explains in great detail, conflict with legislative intent is a defense to negligence per se that isn’t found in the black letter law of the Second Restatement of Torts. It’s out there, though, in the law of most states. Here are some more cases that have been decided on this point since our January, 2007 post: Lombard v. Colorado Outdoor Education Center, Inc., 187 P.3d 565, 574 (Colo. 2008) (premises liability statute); P.S. v. San Bernardino City Unified School District, 94 Cal.Rptr.3d 788, 793 (Cal. App. 2009) (child abuse reporting statute); Young v. Carran, 289 S.W.3d 586, 589 (Ky. App. 2008) (HIPAA); In re Carter, 653 S.E.2d 860, 866-67 (Ga. App. 2007) (sickle cell anemia reporting statute); Chilcutt v. Ford Motor Co., ___ F. Supp.2d ___, 2009 WL 3259418, at *6 (S.D. Ohio Oct. 7, 2009) (OSHA); Deacon v. Metro North Railroad Co., 2009 WL 3059128, at *4-5 (D. Conn. Sept. 22, 2009) (OSHA); Mazzeo v. Gibbons, ___ F. Supp.2d ___, 2009 WL 1872978, at *14-15 (D. Nev. June 29, 2009) (various statutes criminalizing assault); Lee v. K&P Brothers, Inc., 2008 WL 839791, at *1-2 (N.D. Ohio March 27, 2008) (false imprisonment statute); Innis Arden Golf Club v. Pitney Bowes, Inc., 514 F. Supp.2d 328, 335-36 (D. Conn. 2007) (state water pollution statute); Garrett v. Land West Ventures, Inc., 2007 WL 2071615, at *3 (D. Colo. July 19, 2007) (federal firearms statute). Every one of these cases holds, with respect to whatever statute is at issue, that because the legislature didn't intend for there to be private claims, negligence per se is precluded as a matter of law.
SSF demonstrates that the legislative intent argument can be a winner with or without preemption. SSF also demonstrates that savvy defense counsel raise this argument when they’re dealing with FDCA-based negligence per se claims. All readers should make sure to have this arrow in their quivers the next time they confront one of these. In other words, don’t be like the defense lawyers, here.
Tuesday, October 27, 2009
1. The following witnesses will testify this afternoon at the hearings on whether Congress should overturn the result in Twombly and Iqbal:
Arthur R. Miller
New York University School of Law
New York, NY
Former Assistant Attorney General, Civil Division
U.S. Department of Justice
Senior Litigation Counsel and Vice President
Center for Constitutional Litigation
Debo P. Adegbile
Associate Director of Litigation
NAACP Legal Defense and Educational Fund
New York, NY
(Hat tip to Civil Procedure & Federal Courts Blog.)
2. Walter Olson is a wise and sagacious man.
Adam W. Mason had won a $7 million jury verdict in Florida state court on a claim that Hoffman-La Roche had not adequately warned about the alleged link between ingesting Accutane and developing inflammatory bowel disease.
This morning, in a per curiam decision, the Florida First District Court of Appeal reversed. Hoffman-La Roche Inc. v. Mason, slip op., No. 1 D08-2032 (Fla. Ct. App. Oct. 27, 2009) (link here).
The decision goes off on warnings causation under the learned intermediary doctrine. At the time of the relevant prescription, the package insert warned of a temporal association between Accutane and IBD. The treating physician testified that he understood this warning to mean "that there was at least a possibility of a causal relationship between Accutane and IBD." Id. at 5. The treater "would still be willing to prescribe Accutane to his patients [today] even if there was evidence showing that it could cause IBD in rare cases." Id. And "even if the warning label contained all of the information suggested by Appellee's expert, he would still have prescribed the medication for Appellee." Id.
Given that testimony, the allegedly inadequate warning could not have caused any injury to the plaintiff, and the judgment entered on the jury verdict in favor of plaintiff was reversed.
Kudos to the gang at Covington & Burling (and their local counsel in Florida) for obtaining this result.
Two months ago, we raised an electronic eyebrow when we stumbled across In Re NuvaRing Prods. Liab. Litig., slip op., No. 4:08MD1964 RWS (E.D. Mo. Aug. 6, 2009). There, after the MDL Panel created a coordinated proceeding in Missouri for all of the NuvaRing cases, Judge Sippel ordered the plaintiffs to file a master consolidated complaint.
But when the defendants moved to dismiss that complaint, Judge Sippel demurred, saying that the master complaint was "simply meant to be an administrative tool . . . to place in one document all of the claims at issue in the litigation." Id. at 3. Judge Sippel thus refused to rule on the motion to dismiss the master complaint.
In our typically classy way, we asked: "Really? Then why have plaintiffs file the thing? Isn't that its primary use?"
Our class (or maybe the defendants' briefs) paid off; on Friday, Judge Sippel came around. He wrote: "Because the master complaint was never intended to be the subject of motion practice I will vacate my order directing plaintiffs to file the master complaint and will strike the master complaint from this action." In re NuvaRing Prods. Liab. Litig., slip op., No. 4:08MD1964 RWS (E.D. Mo. Oct. 23, 2009) (link here).
That's an improvement.
There are two possible paths to take in an MDL: (1) Order the filing of a master complaint, and then use motion practice directed at that master complaint to try to resolve some issues, or (2) Do not order the filing of a master complaint, and deal with motion practice on an individual case-by-case basis. Most judges these days tend to the former; Judge Stippel chose the road less traveled by. But at least he's now chosen an extant path, rather than hacking through inscrutable woods with a machete.
With the master complaint stricken, the defendants will now predictably file motions to dismiss each of the hundreds of individual cases pending in the NuvaRing MDL. Plaintiffs will have to defend each of the complaints under applicable state law and in light of the pleading standards articulated in Twombly and Iqbal. And the court will have to do a fair amount of work: It will have to analyze each complaint under the relevant state law and, to the extent the complaints pleaded under one state's laws are not carbon copies of each other, will have to look at the individual allegations to decide whether each complaint satisfies the pleading standards.
As we said, that's not necessarily an easy road. But at least it's a road.
And we're pleased to see that Judge Sippel's earlier order, hinting that defendants cannot direct motion practice at master complaints, has effectively been taken off the books.
Litigating MDLs is tricky enough without having odd decisions create unnecessary procedural ambiguities.
Monday, October 26, 2009
Thus: An Alabama physician prescribes a drug to an Alabama resident. The resident uses the drug in Alabama and is allegedly injured by the drug there. Alabama law recognizes the learned intermediary doctrine, for its own sound policy reasons. But the plaintiff sues in West Virginia, which is the only state that rejects the learned intermediary doctrine. A recent case says that the drug company does not get the benefit of the learned intermediary doctrine because the doctrine is repugnant to West Virginia public policy.
Hence the title of this post: Why Drug Companies Should Beware Of Doing Business In West Virginia.
The rest of this post is not for laymen.
(Mom: You can stop reading now.)
The facts that we described above are from Woodcock v. Mylan, No. 2:09-cv-00507, 2009 U.S. Dist. LEXIS 95403 (S.D.W. Va. Oct. 14, 2009). The case came up on Mylan's motion to dismiss. Chief Judge Joseph Goodwin held that Alabama law governed the substantive issues in this case, except for the failure-to-warn claim: "Because West Virginia has rejected the learned-intermediary doctrine on public-policy [we disagree with the judge's hyphenation in addition to his legal conclusion] grounds and applying Alabama law to the marketing defect claims would violate that public policy, West Virginia law applies to that claim." Id. at *16.
As we've noted before, West Virginia stands basically alone among the states in rejecting the learned intermediary doctrine. So drug companies don't want to get sued in West Virginia.
But if you do business there, you can arguably be sued there.
There's only one solution: Drug companies shouldn't do business in West Virginia.
There are actually several other possible solutions.
Our first alternative would take a while to work its way through the courts. Even if West Virginia "public policy" rejects the learned intermediary doctrine as to West Virginians treated in West Virginia, it's not clear that West Virginia public policy would have the same interest in governing the relationship between an Alabama resident treated in Alabama by an Alabama doctor.
We haven't researched this issue, so take our speculation for what it's worth, but we suspect there's an argument that West Virginia has very little public policy interest in regulating the relationship between Alabamans and their doctors. (Mylan made this argument in Woodcock, but the judge was not impressed.)
Another alternative would be to take the "reverse-comity" approach. Instead of imposing West Virginia's public policy on relationships that occurred in other states, how about recognizing that other states have an interest in governing relationships centered in those other states? We've previously discussed at length the public policy concerns that give rise to the learned intermediary rule. Why should the public policies of 49 other states all become subordinate to the public policy of West Virginia?
We have a third alternative, but we're beginning to make ourselves nervous: Intrepid lawyers might look at the various constitutional issues that arguably arise from choice-of-law rules that unilaterally favor the forum over every other state in the country. One place to start is Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 822-23 (1985). Other constitutional problems arise when states try to regulate out-of-state conduct. We discussed some of those issues before with reference to punitive damages, but these sort of federalist/territorial considerations aren't limited to that context. We think that there must be -- or at least there should be -- constitutional implications to having choice of law rules as forum-favorable as the one adopted in Woodcock.
Or perhaps a solution here lies in the meaning of the words "public policy" in choice of law determinations. Almost every major common-law doctrine has "public policy" implications. Can a North Carolina plaintiff sue outside the state (which doesn't recognize strict liability) to recover under some other state's "strict liabilty" doctrine as a matter of public policy? How about a Michigan or Texas plaintiff trying to escape those state's FDA-approval presumptions? We're struggling to put our finger on it right now, but what the Woodcock court did can't possibly be right. "Public policy" must mean more than just the justifications given by a court for a common-law decision. Perhaps declarations of "public policy" must involve, at minimum, determinations concurred in by the other branches of government.
We're going to think about this much, much harder.
For the time being, all we know for sure is that Woodcock is nasty news and that drug companies should beware of West Virginia.
Friday, October 23, 2009
- Apparently the Minnesota Supreme Court has an appeal currently pending that presents the question whether to adopt the Twombly/Iqbal pleading standard. Slip op. at 16-17 n.9 (discussing Barr v. Capella University, No. A08-1367).
- Claims involving PMA supplements are preempted to the extent as claims involving an original device PMA. Slip op. at 20 n.11.
- A product recall does not invalidate either a device's pre-market approval or that approval's preemptive effect. Slip op. at 21-22.
- The changes being effected provisions for devices don't preclude express preemption, because for state law to mandate what is a voluntary process under state law would be "different from or in addition to" federal warning requirements. Slip op. at 26.
- Express warranty claims predicated on the safety or effectiveness of a PMA device are preempted. Slip op. at 30-31.
- Fraud, misrepresentation, and consumer fraud claims would "retroactively question the soundness" of the FDA's approval, and are therefore preempted. Slip op. at 31-32.
- "Derivative" claims for loss of consortium, medical monitoring, unjust enrichment, and Medicare Secondary Payer are preempted. Slip op. at 32-33.
- Plaintiffs haven't alleged any unpreempted "parallel" claims because: (1) they are disguised private attempts to enforce the FDCA, which are impliedly preempted under Buckman; (2) there is no parallel state law claim for failure to follow the conditions of an FDA PMA; (3) there is no federal requirement to submit a CBE (it's strictly voluntary); (4) claims challenging the sufficiency of a defendant's submissions to the FDA are disguised fraud-on-the-FDA claims; (5) plaintiffs' design claims would impose rigid specificity that FDA regulations do not; (6) nothing in the FDA's regulations requires withdrawal of a device because an allegedly "safer" model was later approved; (7) there is no obligation to submit a PMA supplement immediately after learning of problems with an existing device; (8) certain alleged violations were not causally connected to any plaintiff's injuries; (9) adulteration claims are disguised private attempts to enforce the FDCA; negligence per se claims are disguised private attempts to enforce the FDCA; (10) a statute that does not authorize a private cause of action cannot be the basis of a negligence per se claim under state law; and (11) the regulations subject to plaintiff's negligence per se claims are only administrative requirements and do not prescribe standards of care owed to any individual. Slip op. at 33-42.
In case you were wondering about the slant of the hearing, the proceeding is titled: "Access to Justice Denied -- Ashcroft v. Iqbal."
The hearing will begin at 2:30 p.m. in room 2237 of the Rayburn House Office Building.
(Hey, Chairman Nadler: Invite us! We'll take the "con" side of this discussion.)
Hat tip to Point of Law.
The webinar will begin at 1 p.m. Eastern on Thursday, October 29, and will last for roughly 90 minutes.
The panel will be:
Herrmann: An introduction to the MDL process and its state court analogues.
Elizabeth Cabraser: Plaintiffs' perspective on these types of proceedings.
Crews Townsend: Defense perspective on these types of proceedings.
Here's a link to a registration page that reflects the discount for readers of the Drug and Device Law Blog. If the subject interests you, feel free to join us.
Our next post, up momentarily, will revert to substance.
Thursday, October 22, 2009
The first case Bexis found was Gilmore v. DJO Inc., ___ F. Supp.2d ___, 2009 WL 3352859 (D. Ariz. Oct. 15, 2009). It’s a pain pump case, but the beneficiary of the Twombly/Iqbal ruling wasn’t the pain pump manufacturer. Rather the motion was brought by defendants alleged to have supplied the analgesic drug used in the pump. The plaintiffs had simply substituted the word “products” for “pain pump” in one paragraph of the complaint and then alleged, in rote fashion, the identical allegations against the drug companies who supplied a at most a component as against the pump manufacturer itself. Id. at *4.
Sorry plaintiffs, you can’t get away with that kind of tripe after Twombly/Iqbal. The same boilerplate allegations can’t be repeated against differently situated defendants.
[L]ike so many of plaintiffs’ allegations, these are conclusory allegations that lack the requisite factual information to suggest that plaintiffs’ claims are facially plausible. Plaintiffs’ amended complaint is little more than blanket recitations of legal conclusions, which is not sufficient under the Twombly/Iqbal standard.
2009 WL 3352859, at *4 Plaintiffs in Gilmore made the lame argument, “defendants have not complained about similar complaints in other pain pump suits.” Id. That got nowhere, because each case is a separate suit. Id. They also claimed, unsuccessfully, that because they gave the defendant a courtesy copy of some medical records, that somehow excused them from pleading their claims. Id.
Another very interesting case is Williams v. Allergan USA, Inc., 2009 WL 3294873 (D. Ariz. Oct. 14, 2009). It’s a device preemption case (see the entry in our device preemption scorecard for details of the preemption ruling), and the plaintiff tried to go the “parallel” violation claim route. Trouble was, there were no facts in the complaint supporting a violation. Under Twombly/Iqbal, just saying “the defendant broke the law” doesn’t hack it:
Even construing the Complaint broadly, however, Plaintiffs alleged no facts regarding FDA requirements, the premarket approval process, the study, or [plaintiff’s] consent. The Complaint also did not assert any of these arguments in either the count for strict liability or for negligence. This is insufficient to assert a justiciable claim based on Defendants' noncompliance with the MDA and FDA.2009 WL 3294873, at *5 (citing Twombly). Williams is one more nail in the coffin of the unsupported violation claim. Here’s another. ADT Security Services, Inc. v. Swenson, ___ F. Supp.2d ___, 2009 WL 3069733, at *7 (D. Minn. Sep. 28, 2009) (Twombly/Iqbal require negligence per se claims to “specifically state-with reference to specific, numbered provisions, which regulation or statute they are relying on”) (not a drug/device case).
We’ve already discussed Central Regional Employees Benefit Fund v. Cephalon, Inc., 2009 WL 3245485 (D.N.J. Oct. 7, 2009), and its use of Twombly/Iqbal to hold that boilerplate class action allegations were insufficiently pleaded:
To the extent that the plaintiffs state in the “Class Action Allegations” section of the Complaint that one of the issues to be determined in the case is whether the defendants misrepresented the efficacy and/or cost effectiveness and/or economic efficiency of the drugs, that statement contains no factual allegations, which are required under Twombly and Iqbal.2009 WL 3245485, a *4. We won’t go any further than to re-emphasize the point that the Twombly/Iqbal requirements apply to every allegation governed by Rule 8(a) – which includes class action allegations, but presumably not affirmative defenses governed by Rule 8(c), which doesn’t contain the same “short and plain statement” language. See, e.g., Davis v. Indiana State Police, 541 F.3d 760, 763 (7th Cir. 2008) (Twombly inapplicable to affirmative defenses).
In Dittman v. DJO, LLC, 2009 WL 3246128 (D. Colo. Oct. 5, 2009), another pain pump case, the plaintiffs couldn’t be bothered with determining which of several possible analgesic drugs (both branded and generic) might have been given to the plaintiff. So plaintiffs sued them all, stating simply that the defendant’s drug “may” have been involved. Id. at *1. Well, the attitude “sue ‘em all and let discovery sort ‘em out” (apologies to the Albigensian Crusaders) doesn’t cut it after Twombly/Iqbal:
I agree with [defendants] that Plaintiff has not sufficiently alleged that any of their products were actually used in Plaintiff’s pain pump and therefore could have caused his injury. This deficiency is fatal to the claim. Plaintiff has no facts, only speculation, on which to base his claim that defendants’ products caused or contributed to his injury. This mere possibility, i.e., that the medicine used could have been made by2009 WL 3246128, at *3. Failure to identify the manufacturer led to failure of all product claims.
these defendants, rather than by any number of other manufacturers of anesthesia drugs, is not adequate to state a claim under the prevailing standards as set forth by Twombly and Iqbal.
Southern Illinois Laborers’ & Employers Health & Welfare Fund v. Pfizer, Inc., 2009 WL 3151807 (S.D.N.Y. Sep. 30, 2009), is yet another third-party payer case. Twombly/Iqbal came into play with the court holding that the complaint failed to plead any prescriber reliance upon any false statement, or any use of formularies influenced by misrepresentations. Id. at *5-6. These criticisms will probably be fatal to this type of claim, because the TPPs aren’t likely to bother investigating the prescribing habits of any doctors or the development of particular formularies.
Remember how we flagged the Twombly/Iqbal issue in our recent post on removal? We recommended that defendants consider seeking Twombly/Iqbal dismissal of inadequately pleaded claims against non-diverse sham defendants as an alternative to attacking such allegations under the relatively tough legal standard for fraudulent joinder. Well, Braden v. Tornier, Inc., 2009 WL 3188075 (W.D. Wash. Sep. 30, 2009), directly addressed which court system’s pleading standard applies to a removed complaint, and came down squarely on the side of the Federal Rules:
Contrary to Plaintiffs’ assertions, it is well-settled that the Federal Rules of Civil Procedure apply in federal court, irrespective of the source of the subject matter jurisdiction, and irrespective of whether the substantive law at issue is state or federal. Accordingly, the Federal Rules of Civil Procedure and the U.S. Supreme Court’s holding regarding pleading requirements announced in [Twombly/Iqbal] apply. The Court understands Plaintiffs’ plight – being held to one pleading standard in state court, where they chose to file their case, and being held to another after the case is removed. However, the law is clear, Fed. R. Civ. P. 81(c)(1) states that the Federal Rules of Civil Procedure “apply to a civil action after it is removed from a state court.” This action has now been removed and the federal rules apply.2009 WL 3188075, at *2 (citations and quotation marks omitted). There it is – that’s probably our side’s best argument (and it’s a good one) that looser state pleading requirements can’t save a complaint from Twombly/Iqbal in federal court.
As to the merits of the defendants’ Twombly/Iqbal arguments, Braden was a mixed bag. The court found that the products claims against the implant manufacturer defendant were adequately pleaded, but that the consumer fraud claims weren’t. Id. at *3-4. The consumer fraud claims failed, however, because Washington state did not allow personal injury damages to be recovered. Id. at *4. Dismissal was without prejudice to plaintiffs amending to allege proper damages. Id.
Finally, Ivory v. Pfizer Inc., 2009 WL 3230611 (W.D. La. Sep. 30, 2009), allowed most of the plaintiff’s claims to survive Twombly/Iqbal, except where the complaint omitted essential elements of the causes of action. See Id. at *3 (design claim dismissed because complaint was “completely devoid of any reference to an alternative design”); at *6-7 (emotional distress claim dismissed for failure to allege contemporaneous perception).
Thus, we’re pleased to see that Twombly/Iqbal continues to be employed by the courts to remedy a host of long-standing pleading sins – from vague class action allegations, to glomming defendants together, to our personal bête noire, the fact-free FDCA violation claim. Still, there are fifty years of unwarrantedly loose interpretation of Rule 8 that needs cleaning up.
But to paraphrase President Obama, it’s high time for defendants to grab the Twombly/Iqbal mop and get to work.
The plaintiff filed a snap motion under a peculiar Florida statute (§69.081) to have a product declared a "public hazard" and not incidentially to avoid a federal court protective order. In a kangaroo-court type proceeding - with the defendant confronted with evidence it had never seen and forbidden from putting on its own evidence - the Florida trial court entered the order. Ford Motor Co. v. Edwards-Hall, slip op., at 3-5 (describing numerous procedural failings in the state trial court "hearing").
Yesterday, the appellate court (the Third DCA, for all you Florida procedure jocks) unanimously rejected not just the order, but the plaintiff's attempt to use the statute in this fashion.
The statute applies only to pending requests to keep litigation materials confidential under Florida state law. Slip op. at 6-7.
The statute can't be used to subvert federal court protective orders - especially without any notice to the relevant federal court. Slip op. at 7.
The statute cannot be invoked without "a formal, trial-like evidentiary hearing at which each side was permitted to offer evidence, make objections, and create a traditional evidentiary record" - in short, everything the trial court failed to do. Slip op. at 8.
The statute applies only to the product at issue in litigation, not other allegedly related products (such as different model years). Slip op. at 8.
Application of the "public hazard" label is derogatory and justifies an immediate appeal. "The label 'public hazard' is not to be affixed to an allegedly-dangerous product like you would buckle a collar on a bird dog or paste a tag on an express package that is being forwarded to a friend.... Such a label has significant and far reaching consequences." Slip op. at 8-9. That's especially so since counsel who initiated the procedural farce "wasted no time in disseminating the order. Id. at 9.
The court did not reach the "substantial" arguments that the statute was unconstitutional. Slip op. at 9.
Wednesday, October 21, 2009
But fortunately we've not really had to go beyond annoyance, because our opponents haven't actually attempted to rely on that kind boilerplate when push comes to shove on the appeal.
Seems we've been lucky.
Still, it's nice now to have some precedent right on point. In In re Insurance Brokerage Antitrust Litigation, 579 F.3d 241 (3d Cir. 2009), the court put the kebosh on the practice of "preservation" of issues by incorporation. IBA involved an appeal by objectors to a class action settlement, but it could have been any kind of reasonably complex case. One of the appellants, in addition to raising specified issues, also attempted to argue points made only by other parties - claiming that it could "incorporate the motions, responses, briefs, declarations and exhibits filed by the Plaintiffs and Defendant" in connection with the relevant proceedings. 579 F.3d at (who knows, Lexis copy at *43).
Thankfully the Court of Appeals said "no." An appellant can't preserve issues without raising them itself, and (equally importantly) doing so "with at least a minimum level of thoroughness." Id. at *47.
Absent exceptional circumstances, this Court will not consider issues raised for the first time on appeal. For an issue to be preserved for appeal, a party must unequivocally put its position before the trial court at a point and in a manner that permits the court to consider its merits. A fleeting reference or vague allusion to an issue will not suffice to preserve it for appeal, so the crucial question regarding waiver is whether defendants presented the argument with sufficient specificity to alert the district court.
Id. at *46 (lots of citations and quotation marks omitted).
We've seen this kind of language before, but this time it's in the specific context of an attempt at blanket incorporation of legal issues raised by other parties. So now it's clear, at least in the Third Circuit, that an appellant can't try to hedge its bets with boilerplate references to God knows what.
So remember IBA the next time you're faced with an unprepared appellant who wants to throw in the proverbial kitchen sink. We will.
Tuesday, October 20, 2009
(1) The defendant's negligence (2) caused (3) the plaintiff to become exposed to a hazardous substance that produced, at least, subcellular changes that substantially increased the risk of serious disease, illness, or injury (4) for which an effective medical test for reliable early detection exists, (5) and early detection, combined with prompt and effective treatment, will significantly decrease the risk of death or the severity of the disease, illness or injury, and (6) such diagnostic medical examinations are reasonably (and periodically) necessary, conformably with the standard of care, and (7) the present value of the reasonable cost of such tests and care, as of the date of the filing of the complaint.
Donovan, SJC-10409, at ??? (there's no pagination - look for footnote eleven).
Element 3 is why we say that Donovan only "sort of" recognized medical monitoring. The court required "at least" what it calls "subcellular changes" as a form of present physical injury. At least linguistically, that's different than a lot of medical monitoring formulations, which don't require any physical injury at all. Indeed the Donovan court "leave[s] for another day consideration of cases that involve exposure [where] . . . no symptoms or subclinical changes have occurred." Whether this element actually requires anything more than a formulaic pleading of "subcellular changes" remains to be seen, but at least for now it's a different approach to medical monitoring than we've seen in most other states that (we believe wrong-headedly) have allowed such claims.
Otherwise: Element 1 makes clear that medical monitoring in Massachusetts is a negligence cause of action, and not any sort of strict liability. Element 4 means that there actually has to be a form of effective medical monitoring. Element 5 tells us that there must be some sort of cure or treatment that will improve the condition. Element 6 states that the monitoring must actually be necessary to a particular plaintiff's treatment, in which (we think) also lurks the requirement that the monitoring be something more than what every person should do regardless of any exposure.
Anyway, for a state with as liberal a reputation as Massachusetts, as medical monitoring claims go, this one is at least somewhat limited. That's not to say that we like it - but that it could have been worse. And, as we've discussed elsewhere, the existence of a medical monitoring cause of action hardly mean that this sort of relief can be obtained through class actions.
Today's post is an oh-fer: It addresses two topics, neither of which matters to us.
(The "us" is actually a "royal us" today. Since this post does not speak to drug or device law, Bexis bowed out of participating in this one, leaving Herrmann alone at the keyboard.)
Here's the first issue we don't care about: We got a free book in the mail!
Actually, we do care about this: We love free books. We're avid readers! We bribe easily! We'll write just about anything on our blog -- even a book review -- if you'll send us a free book! Keep 'em coming!
It's the related legal issue we don't care about: As Walter Olson has reported (here and here, among other places) at Overlawyered, new FTC guidelines require bloggers to disclose freebies they've received when they endorse products. In the words of the FTC's press release: "The revised Guides specify that while decisions will be reached on a case-by-case basis, the post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement. Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service."
We're lawyers, and we're just barely aware of those new rules. The FTC had better launch a pretty big publicity campaign to let ma-and-pa bloggers know what's up.
(For the record: We do a lot of legal work for drug and device companies. Would we have sinned it we hadn't disclosed that? They never send us free samples.)
And what of the book that came in the mail?
That's the second thing we don't care about: We don't write book reviews on this blog. Reviews wouldn't typically have anything to do with drug and device law. And writing a review is so hard: You have to read. And think. And gin up something worth saying.
What a pain.
So we're not actually going to review David Schmahmann's new book, Nibble & Kuhn (which we received free in the mail, because some publisher foolishly thought we could do him some good).
Instead, we're just going to steal Schmahmann's good lines.
The book is actually a novel about a senior associate up for partner at a big law firm. He's saddled with an unwinnable case going to trial, falling in love, blah, blah, blah.
But enough of that. We actually just wanted to share with you a couple of Schmahmann's observations about law firms and judges.
Mind you, we don't think any of this stuff is funny. To the contrary: It's insulting to say these things about law firms and libelous to say them about judges.
We just wanted to share, so that you could, er, join our outrage. First, Schmahmann has this to say about Nibble & Kuhn:
"I did not know then that for firms like Nibble, courtrooms are mythic and abstract places. Nibble lawyers do not try cases. Nibble lawyers threaten to try cases, and then they settle."
"What matters at the firm really isn't how good a lawyer you are, though I suppose it does count for something, nor how hard you work. Rather, the determinant of success at Nibble, which means, as it does everywhere, money and power, is whether you have your own clients."
And about judges:
"Margaret Kelly is leaving to become, God help the poor people of Massachusetts, a judge. The only real beneficiaries of this . . . are the lawyers at Nibble & Kuhn. Conflict of interest rules require that we never appear before her in court."
"I suppose . . .that if you aren't a lawyer and know very little about the system, Margaret may seem to be someone you would go to with a [legal problem]. I mean, if lawyering skills were somehow a function of how many panels you sit on and how many charities you support, Margaret would be at the front of the line."
As we said, we're not amused; we're outraged.
And we promise that our next post will discuss an issue that actually matters to us.
Monday, October 19, 2009
Today's thought was prompted by the recent decision granting without prejudice a motion to dismiss in Wright v. General Mills, No. 08cv1532 L(NLS), 2009 U.S. Dist. LEXIS 90576 (S.D.Cal. Sept. 30, 2009). Russell Jackson already described this case over at his blog, so we'll describe the case only in a nutshell before getting to our perspective.
Here's the nutshell: Plaintiff filed a putative class action complaint accusing General Mills of falsely advertising "Nature Valley" granola bars and trail mix as "100% Natural" even though the products contained high fructose corn syrup.
(We were curious, and so did our usual two-bit research to find out precisely what the heck "high fructose corn syrup" is. Wikipedia tells us that the stuff "is produced by milling corn to produce corn starch, then processing that corn starch to yield corn syrup, which is almost entirely glucose, and then adding enzymes that change the glucose into fructose." Wikipedia also give a little insight into the litigation: "Some allege that HFCS is in itself more detrimental to health than table sugar (sucrose); others claim that the low cost of HFCS encourages over consumption of sugars. The Corn Refiners Association has launched an aggressive advertising campaign to counter these criticisms, claiming that high-fructose corn syrup 'is natural' and 'has the same natural sweeteners as table sugar'. Both sides point to studies in peer reviewed journals that allegedly support their point of view.")
Anyway, General Mills asserted, and lost, arguments that the Nutrition Labeling and Education Act preempted plaintiff's claims -- either by occupying the field of food labeling or through implied conflict preemption. Id. at *4-*8. GM also lost on a primary jurisdiction defense. Id. at *8-*9.
But then Twombly and Iqbal came to the rescue. Plaintiff pleaded her economic injury in one sentence: "As a direct result of its misleading . . . advertising . . . , Defendant caused Plaintiff and other members of the Class to purchase, purchase more of, or pay more for, these Nature Valley products." Id. at *14. The Court was not impressed: "This sparse allegation of injury-in-fact does not meet the Twombly and Iqbal pleading standard. . . . '[A] formulaic recitation of the elements of a cause of action will not do' in order to 'raise a right to relief above the speculative level.'" Id. at *15, quoting Twombly.
What do you think? Is this a fair way to weed out bogus claims, or is this unfairly slamming the courthouse doors on worthy plaintiffs?
You know what we think: Long live Twombly!
The evidence supporting plaintiff's claims, if it exists, is available to plaintiffs: If people are really buying "Nature Valley" products because the ads call them "100% Natural," rather than because, say, people like the taste of the products, then that's easy enough to determine. Do a survey; ask people why they bought the stuff. If a big percentage of the public is saying, "I understand the difference between high fructose corn syrup, cane sugar, beet sugar, and honey, and I never would have bought (or paid as much for) Nature Valley granola if I'd only known the actual sweetener," plaintiff might have a point.
But we doubt it.
We've just spent too much of our lives deposing class representatives who claim to have been misled into overpaying for products but, when asked, didn't know squat.
Plaintiff: "I never would have paid full price for those tires if I only knew they were prone to fail!"
"Let's talk about non-defective tires. How many miles do they last on average? Out of every 100,000 manufactured, how many have flats?
No clue, huh?
Okay, let's talk about the supposedly defective tires: How many miles do they last on average? Out of every 100,000 manufactured, how many have flats?
No clue about that, either, huh?
If you have no clue what you expected when you were buying the tires, or what you received when you paid for them, how do you know you would have paid less if you'd only 'known they were prone to fail'?"
We suspect that a little probing would yield the same result for General Mills:
"What is it you don't want to eat? Fructose? Or is it glucose? Or maybe sucrose? Do the percentages matter?
Is corn okay? Suppose it's turned into syrup? Suppose naturally-occurring enzymes are added to the syrup?
Do you eat other products that contain high fructose corn syrup? Do you pay less for them because of the way they're sweetened?"
If the claims asserted in Wright have any potential merit, the plaintiffs should do a little homework and then plead something that makes the claim plausible.
But if the claims could be pled with some meaningful detail, but have not been, then future courts should do the Wright thing.
Friday, October 16, 2009
We've just received a copy of the opinion, courtesy of one of our readers. Here it is. Press reports say that the Alabama Supreme Court today reversed the judgments entered on those three jury verdicts. Here's a piece of what's on the AP wire:
"The Alabama Supreme Court on Friday threw out jury decisions awarding the state more than $274 million from three pharmaceutical companies, ruling they did not defraud the state in pricing Medicaid prescription drugs.
The court overturned jury verdicts against the drug companies AstraZeneca, Novartis and GlaxoSmithKline, accused by the state of fraudulently manipulating prices of drugs for Medicaid recpients.
The court ruled 8-1 that the state did not have to rely on the drug companies' information in deciding what prices to pay pharmacists for prescription drugs for Medicaid recipients. The justices said state officials could have done their own research and determined the correct price."
Thursday, October 15, 2009
Seriously, we’re not alone either, others don’t like cy pres either. And we don't mean because of pronunciation problems.
We’ve been goaded into action, mostly, by a brand new article out of the Northwestern Law School: Redish, Julian & Zyontz, “Cy Pres Relief And The Pathologies Of The Modern Class Action: A Normative And Empirical Analysis,” that you can find here. This article articulates in academic terms a lot of our own gut reactions to the use – and we’d say misuse – of cy pres in the modern legal system.
First of all, there’s probably quite a few of our readers still scratching their heads about what we’re talking about. A little primer: “Cy pres” is legal French (only a little more modern than legal Latin) standing for “as close as possible” (in full: “cy pres comme possible”). It started out in the estates and trusts area as a solution for what to do about an old bequest that no longer corresponded to changed circumstances – such as a donation to something that no longer exists (some wills can sit around for a long time) – that a court had to make sense of. See here and here.
So far so good. One of the many things we’re not is T&E lawyers. It may well be that, dealing with limited funds in estates, some sort of quick and dirty way of getting things done is preferable (at least for everyone but the lawyers) to spending all of the money in the estate on legal proceedings purporting to psychoanalyze a deceased donor to figure out what s/he’d want to do in a situation that s/he never thought about.
The shenanigans started when this concept was exported to the class action field in the 1970s. The Redish Article (at pp.10-23) describes this history in detail, so we won't. Suffice it to say that the analogy is about as close as apples and moonrocks, but that hasn’t stopped it from being accepted by courts that start out favorably inclined towards class action litigation. For their part, plaintiffs’ class action lawyers always want to cut corners on their way to a juicy fee award, so they helped twist the meaning of cy pres into a justification for taking defendants’ money without knowing – or caring – to whom (other than to themselves in fees) it goes, or who else might actually have a claim to the money, and giving the money to entities that didn't even purport to be members of the relevant classes.
Thus the modern meaning of cy pres: the defendant was (allegedly) a bad person in some way, but it’s too hard – that usually means “too expensive” – to figure out who if anyone was actually hurt by the defendant’s depredations, so let’s take the defendant’s money anyway, but instead of giving it to anyone actually hurt, let’s give it to some deserving charity.
A clarification. In this post, we’re talking only about cy pres in situations where there’s no extant statutory or regulatory authority for such disgorgement. As products lawyers, we're not aware of any statute that authorizes a civil remedy that takes a defendant's money and gives it to a charitable entity that wasn't injured by the claimed wrongdoing, but we can't rule it out.
The cy pres we know and definitely don’t love is a naked exercise of judicial power in the absence of any writ to do so from one of the co-equal branches of government.
So why don’t we like it? Let us count the ways.
Cy Pres Is An Admission That Causation/Damages Can't Be Proven
Any time that a court resorts to cy pres, it constitutes an admission that the suit – at least in class form – cannot be proven, and thus should be dismissed. Causation and damages are essential elements for every cause of action that we know of (since California changed its bizarre consumer fraud laws, anyway).
But the whole justification for cy pres is that proof of causation and damages is either outright impossible or just too darned expensive, given the overall stakes of the litigation. In both cases, that’s an admission that the plaintiffs can’t prove the essential elements of their cases. In the settlement context, it’s even worse. Resort to cy pres is an admission that, even with no opposition, plaintiffs can’t prove their cases.
When plaintiffs admit that they can’t prove their cases, they should have their cases dismissed. They should not be rewarded with the defendant’s money to hand out, essentially, to whomever they can get away with giving it to. Nor should attorneys who admit that they can’t prove their clients’ cases be awarded with fees despite that admitted failure.
Cy Pres Is An Admission That A Damages Class Can’t Be Certified
For a class action that seeks to take the defendant’s money to proceed, common issues must “predominate” over case-specific ones. Fed. R. Civ. P. 23(b)(3). Resort to cy pres is inherently inconsistent with any notion that common issues can predominate. Putting liability issues entirely to one side, the excuse for cy pres is – once again – that it’s impossible or unduly expensive to prove causation and damages as to the class members. By definition, then, causation and damages can’t be proven on a class-wide basis with proof as to the class representatives serving as proof as to all. If that were possible, then there'd be no need for cy pres in the first place. Thus, any case given cy pres treatment, due to the expense or impossibility of proving causation and damages individually, necessarily can’t qualify as a class action for money damages under Rule 23(b)(3) because the individual issues of causation and damages "predominate." They have to, if just to prove them renders the entire litigation uneconomic.
Cy Pres Is A Judicial Usurpation Of Power
Under our tripartite system of government, the legislature is supposed to make the laws and the executive to enforce them. Where is the law or regulation allowing, as a consequence of some legal violation, one private person's money to be taken away and given to some other private person(s) whom the violator didn’t injure? There isn’t any. If there were, there’d be no need to resort to cy pres, because the statute or rule (assuming it were constitutional – which is a stretch) itself would provide the distribution scheme, not some vague notion of "equity." The government can impose civil or criminal fines for conduct that’s illegal, without regard to causation or damages, but the money in those situations goes to the government as the sovereign enforcer of the laws.
Courts by themselves have no power to redistribute money between private persons in the absence of causation and damages. At least at the beginning, courts resorting to cy pres were forthright enough to admit that what they were doing was without precedential or statutory support:
As to any legal prohibition, while neither counsel nor the Court has discovered precedent for the proposal – at least in a case such as this where distribution to the class of plaintiffs was theoretically possible if not in a practical sense feasible – nor have we been made aware of any precedent that would prohibit it . . . . The Court is troubled by the prospect of either conclusion to what has been a protracted and undoubtedly expensive lawsuit. But in view of the fact that plaintiff's chance of prevailing at trial became less and less likely as the defense pressed on, no alternative is realistically possible.Miller v. Steinbach, 1974 WL 350, at *2 (S.D.N.Y. Jan. 3, 1974) (giving residual funds to a non-plaintiff retirement plan).
Basically, the first case allowing cy pres did so on the rationale, “if nobody says I can’t, I can.” We have a fundamental problem with that, in that we have a system of limited government. Thus, the reverse should be true – of judges, as well as presidents and legislators: unless there’s a basis for an exercise of power, that power should not exist.
Cy Pres Encourages Uneconomic Litigation
The effects of cy pres on the litigation system itself are pernicious. One of the fundamental constraints upon litigation is that some supposed violations just aren’t worth the candle to sue over. In those situations, the system wisely leaves enforcement to the state as sovereign. Class actions under Rule 23 were intended to encourage aggregation as one way of addressing small-claims litigation. But class actions were intended only to make additional litigation cost effective – not to encourage lawsuits that, given their elements of proof, weren’t economical to bring even when aggregated. Cy pres allows plaintiff lawyers essentially to generate fees out of nothing, that being causes of action they can't prove, encouraging litigation that has no business ever being brought.
Cy Pres Encourages Judicial Triumphalism
Conversely, cy pres has pernicious effects on the judiciary. It encourages courts to think they can “fix” things that they have no business fixing. Again, inherent in our system of checks and balances is the notion of limited government. By allowing courts to give away money on a standardless basis in uneconomic litigation, cy pres facilitates judges becoming what Justice Cardozo once called “knights errants,” believing that through litigation they can solve all of society’s problems:
A judge, even when he is free, is still not wholly free. He is not to innovate at pleasure. He is not a knight-errant roaming at will in pursuit of his own ideal of beauty or of goodness. He is to draw his inspiration from consecrated principles. He is not to yield to spasmodic sentiment, to vague and unregulated benevolence.
Benjamin N. Cardozo, Nature of the Judicial Process, at 141 (1921). Or to put it more bluntly – cy pres allows judges to see litigation as a hammer and the rest of the world as a nail.
Cy Pres Is Punishment, Not Compensation
Most civil litigation is based upon the notion of compensation for injury suffered. Some statutory claims add a punitive element to the mix, say, by awarding treble damages, but they’re still tied to the concept that the plaintiff has been damaged in some way.
The primary justification for cy pres, however, is not compensation but punishment – that the defendant allegedly did something bad and shouldn’t be allowed to profit from the wrongdoing, or some variant of that argument.
The causes of action under which private litigation is brought, however, don’t work that way. There’s no such thing as a qui tam actions for damages suffered solely by private parties. Moreover, pure punishment is a creature of the criminal law or less frequently of administrative oversight. There, we’re talking fines, not compensation. Fines, however, go to the government.
Thus, in cy pres situations, there’s a total disconnect between the claims being made and the relief being requested. The only way, in civil litigation, to receive an award under a purely punitive rationale is to meet the very onerous standards for proof of punitive damages. And as we’ve gone into at length elsewhere, even punitive damages are constrained (both constitutionally and as a matter of the substantive law) by the requirement of a ratio between compensatory and punitive damages.
But cy pres plaintiffs by definition aren’t able to prove any actual damages, let alone punitive damages. Thus, there can't be any ratio. Thus, such plaintiffs hardly in a position – legally, anyway – to argue that because the defendant is somehow evil, it should have to give up money to somebody who, under the causes of action that have been asserted, hasn’t proven that it belongs to them.
Cy Pres Exacerbates Conflicts Of Interest (I)
Class counsel are no different from the rest of us. They want to get paid, and they want to make a profit. That also means that they want to get the largest possible recovery/paycheck with the least amount of work. Cy pres, however, divorces the “recovery” to the clients from the “paycheck” that the clients' lawyer receives. For that reason, such distributions create inherent conflicts of interest. Why would class counsel want to spend a huge amount of time, effort and expense to figure out exactly which class members lost how much in the defendant’s alleged nefarious scheme when s/he can get paid the same amount by collecting a cy pres settlement and not having to bother with all of that? Or, as an appellate court put it:
Would it be too cynical to speculate that what may be going on here is that class counsel wanted a settlement that would give them a generous fee and [defendant] wanted a settlement that would extinguish 1.4 million claims against it at no cost to itself? The settlement that the district judge approved sold these 1.4 million claimants down the river. Only if they had no claim – more precisely no claim large enough to justify a distribution to them – did they lose nothing by the settlement, and the judge made no finding that they had no such claim.Mirfasihi v. Fleet Mortgage Corp., 356 F.3d 781, 785 (7th Cir. 2004) (rejecting cy pres award because it took the class’ recovery and gave it to other people).
When viewed unsentimentally, the conflict of interest in cy pres distributions is quite blatant. Cy pres creates significant financial incentives for class counsel not to spend money on proving causation and damages, but rather to claim that it’s too hard to prove these elements. Thus, cy pres amounts to counsel’s taking money that ostensibly “belongs” to his/her clients and giving it to third-party charities (or “selling the clients down the river,” as the case may be) – that aren’t clients at all.
Cy Pres Exacerbates Conflicts Of Interest (II)
One popular use of cy pres is as a means of distributing money left over (“residual” or “reserve” funds) after all individual claims in a settlement have been dealt with. It’s either that, or give it back to the “evil” defendant, we hear. Trouble it, it’s also less expensive to dole out large blocks of cash to charities than to run a claims program. The availability of cy pres thus creates financial incentives for class counsel to make the proof required in claims programs as onerous as possible so that very few supposedly “injured” persons will submit claims. That way, the claim program is cheaper to run, since it won’t have to hire as many referees, doctors, etc. Mirfasihi, 356 F.3d at 783 (recognizing that “many people won't bother to do the paperwork necessary”).
It’s an increasing problem, too. According to data in the Redish Article (Fig. 2 at p. 50), since 2000, there have been more cy pres distributions just in purely settlement classes than there were total cy pres distributions of any sort in the prior quarter century since the notion of cy pres was first imported into the class action context.
Trouble is, if there’s left over money because nobody cares enough (or has enough evidence) to submit claims, than it’s not really different than the would-be plaintiffs never suing at all. When a defendant isn’t sued, it doesn’t have to pay money to anybody. That means that the money belongs to the defendant. In our system, a defendant is entitled to keep its own property until a plaintiff in a private action proves a cause of action that supports a judgment against the defendant. Cy pres takes that money anyway, without the required proof, simply because the default by the purported plaintiffs occurs at a later stage in the litigation. In this way, as well, cy pres improperly crosses the divide between private damages awards and governmental fines.
Cy Pres Helps Create A Self-Financing Litigation Industry
One perennial recipient of cy pres is so-called “public interest” law. In this way, non-economic litigation is able to finance still more non-economic litigation. Litigation-related "charities" can pass around cy pres distributions from their own litigation to others of the same ilk, thus financing still more attempts to spawn additional non-economic litigation. See In re Agent Orange Product Liability Litigation, 818 F.2d 179, 186 (2d Cir. 1987) (vacating cy pres arrangement that would have allowed a “foundation” run by plaintiffs and their counsel to use funds for “political advocacy”); Jones v. National Distillers, 56 F. Supp.2d 355, 359 (S.D.N.Y. 1999) (donating cy pres funds to legal aid to “help those needing legal assistance”); In re Wells Fargo Securities Litigation, 991 F. Supp. 1193, 1198 (N.D. Cal. 1998) (distributing cy pres funds to a “clearinghouse” for publicizing securities litigation run by a law school).
Similarly, there's nothing to stop cy pres distributions from being funnelled into “charitable” organizations that are dedicated to “studying” such things as toxic exposure solely to produce plaintiff-side junk science – which, in turn, gets used in the next round of litigation in which somebody might have been injured (if the junk science is credited), but nobody can say who or by how much.
Cy Pres Creates Problems In Subsequent Litigation
There’s nothing about cy pres that limits it to cases in which all possible defendants are sued. Where joint tortfeasorship (where several defendants are all liable for the same injury) is alleged, cy pres settlements with some but not all defendants, lead to insuperable problems with contribution, indemnity, and claim splitting. If there’s a cy pres settlement with one alleged polluter, and one of the members of the supposed class sues a different defendant individually down the road, is a cy pres settlement that didn’t benefit that plaintiff still a satisfaction that forbids a second suit for the same injury? If it doesn’t, do funds that the plaintiff himself never saw – but which were distributed through cy pres – count as an offset in subsequent litigation? Even in the same litigation, does a cy pres settlement create a windfall for non-settling joint tortfeasors?
Cy Pres Allows Courts To Play Santa Claus With Other People’s Money
There being no legal basis for cy pres, there are no standards for it either – beyond whatever a court creates for itself with in any given case. There’s no rule of civil procedure or canon of judicial ethics covering cy pres distributions. Private persons can give their own money to whatever person or charity they want, but they have to respect the various tax implications (gift, income tax deductions, etc.). Courts get to give away other people’s money, cy pres style, free of any of these constraints. Judicial gifts of other people’s money thus pack more oomph and come with fewer strings that what we’re allowed to do ourselves.
Cy Pres Can Create A Judicial Patronage System
Since there are no standards for cy pres, other than a court’s self-restraint, cy pres has the risk of devolving into judicial – and class counsel – patronage. It creates a group of sycophantic “charities”, dependent upon the largesse of the court and class counsel, who can be expected to do their bidding in the hope of handouts. There's nothing to prevent gifts to the judge’s law school, or to some charity run by some pal or relative of class counsel. Completing the circle, such charities could be expected to give “person of the year” awards or other similar perks and recognition to those who give them all this money. They won’t bite the hand that feeds them.
Cy Pres Is A Taking Without Due Process/Violates The Rules Enabling Act, Etc.
Finally, there’s a lot of fancy arguments that we could make (and we have, in litigation) that, by dispensing with proof of causation and/or damages, cy pres distributions violate a defendant’s (or even a non-participating plaintiff’s) right not to have property taken without due process of law. There’s another equally arcane (but valid) argument that we could make that eliminating the elements of damage and causation in order to facilitate class actions under Rule 23 (or other forms of aggregated litigation) amounts to allowing procedure to change the substantive law in violation of the Rules Enabling Act (28 U.S.C. §2072). We agree with all that stuff, but we’ll leave you hard core types that are interested in that to read the Redish Article (especially pp. 32 to end), which provides quite a thorough rundown of these arguments. We can’t claim to be that sophisticated. Our dissent from the doctrine of cy pres is bottomed on more visceral and philosophical reactions.
* * * *
So, for all of these reasons, we don’t like cy pres very much. It cuts too many corners, creates too many conflicts, and above all facilitates too much litigation for us ever to be comfortable with it. If it’s going to be used at all, at a minimum no award of counsel fees should be based on any cy pres distribution, since inherently such distributions don’t result in the members of the class getting anything.
But we don’t think cy pres should be used at all. The bottom line is simple: if a plaintiff can’t prove his case, that plaintiff doesn’t deserve anything. Conversely, if a person hasn’t been injured and hasn’t brought suit, that person doesn’t deserve anything either – even if it's a charity.
Cy pres has developed as a way of punishing “negligence in the air,” that is, some alleged wrongdoing that nobody can prove has hurt anyone. Maybe it has; maybe it hasn’t. But as a legal matter, we have the spectacle of a suit being brought by plaintiffs who can’t prove their causes of action, and funds being distributed to a different entity that never even filed suit. Without proof of causation and damages for the original plaintiffs – or proof of any cause of action at all on behalf of the latecomer – such claims of wrongdoing shouldn’t be the stuff of private litigation.
To be sure, wrongdoing without injury may well warrant criminal punishment or administrative sanctions by the state, but unless and until the legislature or the executive acts, negligence in the air doesn’t belong in court. It’s simply not up to courts to create new remedies that the legislature or the relevant common law has not seen fit to impose as a matter of substantive law.
Wednesday, October 14, 2009
These three justices state:
To the extent that New Jersey law allows a trial court to impose the onerous costs of class notification on a defendant simply because of the relative wealth of the defendant and without any consideration of the underlying merits of the suit, a serious due process question is raised.Query, if there are "serious" due process implications to the imposition of the cost of class notification "without any consideration of the underlying merits," how about imposition of the much larger costs of discovery? Might the same Due Process concerns underlie the Court's more stringent reading of Fed. R. Civ. P. 8 in Twombly/Iqbal?
[T]here is considerable force to the argument that a hearing in which the trial court does not consider the underlying merits of the class-action suit is not consistent with due process because it is not sufficient, or appropriate, to protect the property interest at stake.What a difference a few years make! It wasn't that long ago that a lot of courts held, under a misreading of Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177 (1974), that "merits" consideration in the context of class action litigation was a no-no. See In re Initial Public Offering Securities Litigation, 471 F.3d 24 , 33-39 (2d Cir. 2006) (discussing demise of this misreading at length). Now it looks like there's some support on the Court for the opposite proposition - that preliminary merits review might be constitutionally required.
After all, many courts have observed that class certification has a huge coercive effect on settlement. Merits consideration may well be equally (if not more) constitutionally required to protect a defendant's property interests in that situation, given the greater sums at stake.
Tuesday, October 13, 2009
We also mentioned that we were disappointed to learn about the Allergan case by reading about it in The New York Times, rather than learning about it from our usual source -- our readers, who typically report to us just moments after a complaint is filed or an issue decided.
Shame worked wonders! We received an avalanche of e-mails from readers telling us about news on the FDA - First Amendment front.
We're using this post to sort through that stuff.
First, several tobacco companies have indeed filed a complaint in federal court in Kentucky challenging the FDA's authority to restrict certain communications relating to the sale of tobacco products. But that's not a drug or device case, so we're setting it aside.
Second, some readers speculated that there may be an interesting First Amendment appeal arising out of Scott Harkonen's conviction in a criminal case alleging that Harkonen made illegal statements about the efficacy of Intermune's drug Actimmune.
We're not waiting with bated breath for that one. Although Harkonen was convicted of wire fraud, he was acquitted of having misbranded a product in violation of the Food, Drug, and Cosmetic Act. It's thus uncertain whether that appeal will raise issues about the FDA's ability to restrict speech.
Third, you alerted us to "three" cases filed by the Alliance for Natural Health US against the Secretary of Health and Human Services (Kathleen Sebelius), the FDA, and others challenging the regulation of certain health claims made by manufacturers of dietary supplements.
There's news on that front -- although it doesn't really involve "three" cases. One of the Alliance-Sebelius cases challenges an FDA regulation that deems violation of the GMP record-keeping regulations to constitute "adulteration" of a product without any evidence of a glitch in the actual manufacturing process or any evidence of a risk to public health. That's an interesting case, but we're not calling it a First Amendment issue.
The remaining two Alliance-Sebelius cases are worth noting (even if they involve only dietary supplements, rather than prescription drugs, which are this blog's sweet spot).
In Alliance for Natural Health US v. Sebelius, No. 1:09-cv-01470 (D.D.C. filed Aug. 4, 2009) (complaint here), a non-profit outfit that protects the rights of practitioners of alternative medicine, two scientists who design dietary supplements, and an association formed to advocate "that federal government agencies not block consumer access to accurate representations concerning the science on the role of nutrients" joined forces as plaintiffs.
Their complaint recites that the Nutrition Labeling and Education Act of 1990 provided a "safe harbor" for certain claims made by dietary supplement manufacturers about their products. The Act required the FDA to create rules for approving those health claims. The FDA then promulgated 21 C.F.R. Secs. 101.14 and 101.70 to set up a system to evaluate claims.
According to plaintiffs, those regulations required "near conclusive proof before any claim would be authorized by the agency." Complaint at para. 13. In 1999, the D.C. Circuit struck down the "FDA's policy of censoring all claims it did not approve" through the established regulatory process. Id. at para. 14. The court "required FDA to use claim qualification in lieu of outright suppression as a less speech restrictive means to eliminate potential misleadingness." Id.
In April 2008, the plaintiffs filed a petition with the FDA seeking approval of certain "health claims involving the relationship between selenium and the reduction of risk of cancer." Id. at para. 19. Among other things, the plaintiffs wanted to be able to say that "selenium may reduce the risk of certain cancers," "selenium may reduce the risk of prostate cancer," and "selenium may reduce the risk of colon and digestive tract cancers." Id. In June 2009, the FDA issued an order completely banning the use of four of the five health claims, and requiring that many qualifications be included if a company chose to make the fifth claim. Id. at 20.
The spat is about the quantity and quality of evidence needed for a dietary supplement manufacturers to make a health claim. The manufacturer had cited in its petition to the FDA "over 150 peer-reviewed publications supporting the risk reduction relationship between selenium and cancer." Id. at para 25. But the FDA "dismissed all but a very small number of the studies as irrelevant, unreliable, unsupported, or inapplicable for a myriad of reasons." Id. "[I]n its final analysis the FDA gave credence to only 20 publications out of 233." Id.
The complaint pleads that the ban of four health claims, and required qualification of the fifth, violates the First Amendment. The case was assigned to Judge Ellen S. Huvelle. From our review of the docket, it looks as though cross-motions for summary judgment will be fully briefed by January 15, 2010, and we can expect an opinion thereafter.
The second case, Alliance for Natural Health US v. Sebelius, No. 1;09-cv-01546-RJL (D.D.C. Aug. 14, 2009) (complaint here), recites a similar regulatory history and then objects to the FDA's ban of four, and restrictions imposed on two, health claims relating to the ingestion of Vitamins C and E on the risk of cancer. That case was assigned to Judge Richard J. Leon, and no briefing schedule appears yet to have been set.
We'll stand by our assessment that the Allergan case will be most interesting to readers of this blog. First, it involves drugs, which are our true passion. [Every time we write that, it sounds funny.] Second, the Allergan case challenges big chunks of the FDA's regulatory scheme, while the Alliance-Sebelius cases are much narrower -- they seek only advance judicial approval for a company to make certain specific statements.
But we'll nonetheless gently monitor the progress of the dietary supplement cases.
And keep those cards and letters -- egad! A cliche rendered obsolete by the passage of time!
Keep those e-mails coming in.
If we don't hear from our readers, then this blogging game won't be worth the candle.