Tuesday, September 16, 2014

Who is the Prescriber?

You’ve no doubt heard that hard cases make bad law.  But sometimes hard cases make no law.  That is, the judge decides not to decide, because deciding seems too difficult.  We would have thought that ‘deciding stuff’ would have been way up there in the job description of judges, certainly above “managing litigation,” strong-arming settlements, and grousing about litigators who have the temerity to … litigate.  But not to decide is to decide.  For example, when a state court judge rules that she cannot determine whether a claim is preempted because preemption issues are too darn complicated, then she has essentially ruled that the claims are not preempted.  She has also essentially lifted the curtain to commence the discovery festival and  extortion melodrama.  (That is not a hypothetical.  That happened.)


The facts in Heineman v. American Home Products Corp., 2014 U.S. Dist. LEXIS 124987 (D. Colorado Sept. 8, 2014), are passing strange, but they are no basis for the court to refuse to apply well-established law.   The plaintiff alleged that her use of diet drugs in 1996-97 caused her to suffer from primary pulmonary hypertension (PPH), a very nasty disease.   The key legal theory was that the drug label failed to warn of PPH.  But the prescriber never read the label, and that fact should be enough to foreclose the claim.  After all, a better warning would have made no difference.  So why did the court deny the defendant’s motion for summary judgment?


Not so fast.  First, let’s enjoy a brief interlude.  The Heineman case began as an exercise in litigation tourism.  It was initially filed in 2012 in the Philadelphia Court of Common Pleas.  We can see that court out our window.  It is in Philly’s City Hall, surely one of the two or three most handsome city halls in our republic.  We like the building and the people in it very much.  As much as we like our local court, plaintiff attorneys seem to like it even more.   They like it so much that they file cases there even when it is clearly the wrong court.  In Heineman, the defendant was able to remove the case to the Eastern District of Pennsylvania, where the diet drug MDL was pending.  Then the defendant was able to transfer venue of the case to the federal court in Colorado, on the fairly compelling grounds that the plaintiff and her doctors were all in Colorado, and that is where the injuries were sustained. 


Now about those doctors.  The plaintiff had prevailed upon her physician parents, whom the court calls  “Dr. John” and “Dr. Joan,” to issue her a prescription for the diet drug.  When we see the name “Dr. John,” we think of the great New Orleans musician (“Right Place, Wrong Time,” “Such a Night,” etc.) and his unique ability to tease musicality out of nonsense words and phrases.  Some of that nonsense, but none of that musicality, creeps into the Heineman case.  It turns out that Dr. John signed the prescription for the diet drug.  To be more specific, Dr. John signed blank prescription forms, and Dr. Joan filled in the relevant information.   Dr. John testified that he did not review any warnings about the drug before prescribing it.  In fact, he had never heard of it.  This sort of thing probably happens more than we’d like.  As a real-life prescriber, Dr. John, worries us a bit.  But Dr. John is the perfect prescriber if you are a pharma defendant itching to get out of a case on the theory that there is no warning causation.


If Dr. John is the prescriber, then the plaintiff’s case is in real trouble.  But the plaintiff contended that Dr. Joan was truly the prescriber.  Unlike poor ignorant, non-reading dad, Dr. Joan testified that she had considered the allegedly incomplete warning information in the PDR before allowing her daughter to have the drug.  There was even some sliver of testimony that Dr. Joan might have written one or more prescriptions, but it was vague, uncertain, minimal evidence, and the court did not seem to consider it


The plaintiff argued that the defendant’s duty to warn ran not only to Dr. John as the physician technically prescribing the diet drug for the plaintiff, but also Dr. Joan, as the physician ostensibly “treating” the plaintiff and consulting with Dr. John on the suitability of the drug.  That argument leans heavily on Hoffman v. Sterling Drug, Inc., 485 F.2d 132, 142 (3rd Cir. 1973), a case where the Third Circuit made an Erie guess that “Pennsylvania law would view it as insignificant whether the doctor is a prescribing or treating physician, the important consideration being that the warning best reach the patient.”  That guess was made in 1973.  In 1973 our favorite tv shows were “All in the Family” and “Room 222.”  The Godfather won Best Picture.  “Tie a Yellow Ribbon Round the Old Oak Tree” was the top song.  Nixon was still president, though in a private (later not-so-private) taped conversation he agreed that a “cancer” was growing on his presidency. 


1973 was a long time ago.  Pennsylvania state court cases later made it clear that the Hoffman guess was a bad one.  Pennsylvania, like pretty much every other jurisdiction, looks to see whether the prescriber’s decision was affected by the allegedly inadequate warning.


So the plaintiff’s failure to warn claims are toast, right?


Well …. the court finds the defendant’s argument to be “incomplete at this point, thus preventing the entry of summary judgment in its favor.”  2014 U.S. Dist. LEXIS 124987 at *15.    We are told that the defendant’s argument “elides the question of how the phrase ‘prescribing physician’ should be understood in the unusual factual scenario presented here.”  Id. at *16.  The court read the record as reflecting that “Dr. John did nothing more than sign a blank prescription form and turn it over to someone else, apparently abdicating any and all professional responsibilities that accompany the act of prescribing medicine.”  Id.  Maybe that makes Dr. John a bad prescriber, but it doesn’t make him not the prescriber.  How far now can we go behind the prescriber’s signature to pretend to find out what really animated the prescription decision?  In fact, the court admits that the defendant “may be correct that the question is answered slavishly, based solely on the signature on the bottom of the prescription, regardless of how that prescription came to be.”  Id.  “Slavishly” presumably means following a clear, black-letter rule.    


The court punts.  There is no other word for it.  Here is what the court says:  “The parties have failed to adequately address the means by which the court can identify this person (or perhaps persons) in the peculiar circumstances of this case.”  Id. at *19-20.   Maybe it’s a hard decision (we actually do not think it is – Dr. John signed the prescription, so he’s the prescriber) but it is still a decision by the court.  There is no genuinely disputed fact.  What more did the court need to know to be able to render its decision? Do we now always need a 360 degree inquiry into everyone who might have affected a prescriber’s decision?  Is the issue whether the prescriber actually made any decision?


Or is the issue that this court did not want to make a decision?  


Monday, September 15, 2014

Important FOIA Decision

We don’t normally follow Freedom of Information Act (“FOIA”) decisions, but Public Citizen v. U.S. Dep’t of Health and Human Services, ___ F. Supp.2d ___, 2014 WL 4388062 (D.D.C. Sept. 5, 2014), falls more or less in our sweet spot.  Back in 2009, Public Citizen, an ostensible “public interest” group that regularly acts as a stalking horse for the plaintiffs’ bar, filed a FOIA request demanding disclosure of a drug manufacturer’s annual reports filed with defendant HHS pursuant to a “corporate integrity agreement.”  Such agreements are often part of settlements of claims brought by the government alleging illegal activity.  The claim in Public Citizen involved off-label promotion.

A number of issues were resolved in an earlier opinion, Public Citizen v. U.S. Dep’t of Health & Human Services, 975 F. Supp.2d 81, 88–89 (D.D.C. 2013).  The most important remaining issues involved disclosure of:
·                     Reportable event summaries
·                     Disclosure log summaries, and
·                     Records reflecting the content of detailing sessions between healthcare providers and manufacturer’s representatives disclosed to the government.

2014 WL 4388062, at *4.

The good news is that the intervening manufacturer won all of these issues – no FOIA disclosure of these materials was required.

The court ruled that these materials were:  (1) commercial in nature, even though involving possible regulatory violations, (2) legitimately confidential as capable of informing a competitor of how the defendant markets its products, i.e., what it considers “lawful” promotion; and (3) would allow competitors “to learn from [intervenor’s] mistakes at little or no cost in capital or exposure to risk.”  Id. at *8-10.

In addition, as to FOIA disclosure of the underlying records of detailing sessions (called “verbatims”), the court held:

While the plaintiff is correct that the information in the verbatims is known by both the health care provider who was surveyed and the market research firm, it is not freely or cheaply available from those sources.  A competitor wishing to obtain this information would, absent its release through the FOIA, have to pay a market research firm to conduct a similar survey, incurring the same expenses [intervenor] incurred in the first instance.  A competitor’s ability to obtain the information at virtually no cost would cause competitive harm . . ., since it could be used affirmatively by those competitors to challenge [intervenor’s] place in the market and exploit any vulnerability revealed through the verbatims’ content.

Consequently, [intervenor] has shown the underlying records reflecting the content of the detailing sessions . . . are confidential

Id. at *12 (citations and quotation marks omitted).

It is an unfortunate fact of life that, as a result of the government’s monetization of its constitutionally questionable ban on truthful off-label promotion, quite a few of our clients are forced to operate under corporate integrity agreements that require disclosure of promotion-related information to the government.  The Public Citizen litigation is a significant favorable development in determining that plaintiff’s lawyers, either directly or acting through surrogates, cannot obtain our clients’ promotion-related disclosure materials from the government through FOIA requests.

Friday, September 12, 2014

A Foregone Conclusion On A Runaway Verdict

            From our ivory tower in the kingdom of blogdom, we track cases and litigations from afar, peeking in on them from decisions rendered at specific points in time.  Sometimes, from a single decision, we venture on what will happen next, like whether claims that survived dismissal will make it past summary judgment or whether a judgment will survive appeal.  Other times, we look at multiple decisions in the same case or litigation and make a somewhat more intelligent guess as to where things are headed.  Every once in a while, we have looked at several pre-trial rulings from the same case that consistently favor one side or position that it is fairly easy to guess what the judge will do at trial.  What the jury will do is always less predictable.

            In In re Actos (Pioglitazone) Prods. Liab. Litig. (Allen v. Takeda Pharms. N. Am., Inc.), MDL No. 6:11-md-2299, No. 12-cv-000064-RFD-PJH, 2014 U.S. Dist. LEXIS 121648 (W.D. La. Aug. 28, 2014), we have the culmination of several bad decisions.  Back in January, we questioned the court’s rejection of conflict preemption for failure to warn claims in the absence of evidence that the FDA had rejected a request to strengthen a warning of an approved drug.  We also suggested that the court’s requirement of only a prima facie showing by the plaintiff allowed it five experts to stroll through the Daubert gate without any real challenge by its purported keeper.  Later, we have posted on rulings on spoliation and a request for default judgment because a witness answered “I don’t know” a number of times.  Along the way, we noted that the first MDL bellwether trial had resulted in a very high plaintiff verdict with lots of punitive damages thrown in.  After several months, the court has now ruled on the defendants’ Rule 50(b) motion made during trial and re-urged after the verdict.  In a surprise to nobody following the case, the court denied the motion in its entirety.  And nobody who follows this blog will be surprised to hear that we think that the decision was wrong and that the reasoning of the opinion was lacking.
            We start by what the reader will not find in the opinion—what the jury awarded to the plaintiff.  That was $1.5 million in compensatory damages and $9 billion (with a “b”) in punitive damages.  While there is plenty of discussion of money in the opinion, the profits from the sale of the drug and how profits allegedly motivated the NDA holder and co-marketer to take various actions concerning the drug and its bladder cancer risk, but nothing about what the jury awarded, whether it bore any relation to the evidence, or whether it provided any basis to suspect that something had gone wrong with the trial.  While the opinion did not address any challenge to the amount of the punitive award—just to whether there was sufficient evidence to support any award (particularly against a mere co-promoter)—it does seem strange to omit the amount of the award from a very long decision.  It also seems weird that the court repeatedly expressed its misgivings about having to address issues it had addressed in different procedural postures when, as it said, the “jurisprudential support” had not changed.  This is, of course, how the Federal Rules of Civil Procedure work.  A motion to dismiss may be followed by a motion for summary judgment, which may be followed by motions for judgment as a matter of law during and after trial, all of which may address the same issue (e.g., preemption) without the controlling law changing.  Much like the analysis of whether the amount of punitive damages comports with constitutional requirements involves looking at proportionality in regard to the amount of actual damages, there is some notion that very jury large awards, jury decisions involving many plaintiffs, and even defense verdicts in cases where the plaintiff had substantial injuries should receive extra scrutiny from the presiding judge.  An opinion that conveys a sense of anger at some of the parties (or their lawyers) or a reluctance to consider all the arguments at face value does not increase confidence in our civil courts.

            As we have said, the opinion is quite long, in part because it recaps the plaintiff’s version of the evidence he offered in more than two months of trial.  We are not in a position to begin to question whether the evidence was as described in the opinion, but a few things are obvious from reviewing the recap and how it is used.  First, lots of evidence came in that was focused solely on whether defendants defrauded the FDA.  Second, lots of evidence came in that blurred the lines between which defendant did what and when they did it in relation to when plaintiff was prescribed the drug.  Third, although Dr. Kessler was plaintiff’s mouthpiece for why the label should have been changed earlier and how discussions with FDA on labeling should have been different, there does not appear to have been any evidence that the label could have been changed unilaterally or that FDA would have acceded to the labeling change plaintiff urged.  Fourth, in discussions about what the co-marketer’s sales representatives did not say, there was no attention to whether the additional information that plaintiff urged could have been legally disclosed before the label had changed.  These observations tie in to the court’s ultimate rejection of the defendants’ preemption and punitive damages arguments.  There is certainly more to the opinion, but we can only address so much in one post before the Oscar wrap-it-up music starts playing in our head.
            We would be remiss if we discussed the rejection of defendants’ preemption and punitive damages challenges without noting that the opinion does not mention Buckman, which held:

[T]he plaintiffs’ state-law fraud-on-the-FDA claims conflict with, and are therefore impliedly pre-empted by federal law. The conflict stems from the fact that the federal statutory scheme amply empowers the FDA to punish and deter fraud against the Agency, and that this authority is used by the Agency to achieve a somewhat delicate balance of statutory objectives. The balance sought by the Agency can be skewed by allowing fraud-on-the-FDA claims under state tort law.
531 U.S. 341, 348 (2001).  This ruling was not based on the express preemption provisions of the Medical Device Amendment and has been applied to drug cases fairly often.  See, e.g., Garcia v. Wyeth-Ayerst Labs., 385 F.3d 961, 965-966 (6th Cir. 2004); Bouchard v. American Home Prods. Corp., 213 F. Supp. 2d 802, 811 (N.D. Ohio 2002).  Even from an account of the evidence that is avowedly from plaintiff’s perspective, the plaintiff’s case was about as focused on whether defendants had defrauded the FDA as any we have seen since Buckman.  Deciding issues of preemption and punitive damages without addressing whether plaintiff was advancing fraud-on-the-FDA claims, however he titled them, makes no sense to us.  Indeed, the opinion’s repeated citation of plaintiff’s evidence that allegedly showed defendants had concealed relevant information from the FDA as a justification for why there was no preemption of claims or why plaintiff could recover punitive damages against both defendants just reinforces that these were fraud-on-the-FDA claims that should have been preempted.

            As we have said many times, a conflict preemption analysis should start with identifying whether there is a properly asserted and supported claim under a recognized state law theory of recovery and what the regulated defendant needed to do to comply with the state law duty.  Then, the analysis should go on to whether the defendant can comply with the state law duty while simultaneously complying with its federal duties.  (There are many in-depth discussions of preemption principles in prior posts, including this one on Bartlett, another Supreme Court preemption decision not discussed in the opinion.)  In analyzing whether the claims asserted against the co-marketer were impliedly preempted, the opinion neither cites the state law providing for such a claim nor what plaintiff contended the co-marketer was supposed to have do meet its state law duties.  2014 U.S. Dist. LEXIS 121648, **69-79.  In fairness—we do want to be fair sometimes—there are cites in two other sections to a single intermediate appellate decision “that visits liability on companies . . . that are responsible for placing a drug into the marketplace.”  Id. at **59 & 175 (citing Brumbaugh v. CEJJ, Inc., 152 A.D.2d 69, 71, 547 N.W.S.2d 699 (N.Y. Sup. Ct. – App. Div. 3d Dept. 1989)).  That is not the same thing as saying the state law imposes duties on co-marketers, the breach thereof can result in liability for failure to warn and implied warranty of merchantability, the two claims plaintiff apparently advanced at trial.  Similarly, for all the citation to plaintiff’s evidence that the co-marketer did not disclose the true risk of bladder cancer in the years before the FDA-approved label did (from plaintiff’s perspective), there is nothing in the opinion saying what an adequate warning would have been.  This matters because the opinion’s analysis of preemption boiled down to whether the co-marketer was precluded by federal law from conveying to physicians “any information or warning language beyond the actual language included on the insert label approved by the FDA.”  Id. at *70.  Concluding that the regulations afforded some leeway to present marketing materials that were different than, but still consistent with, the approved label, and pointing to evidence that the co-marketer consulted with the NDA holder on the label and did have some marketing materials that were different than the label, the court found no preemption.  This is not the right inquiry.  Did state law impose a duty on the co-marketer to provide physicians with information about the risk of the product?  If it did, then  could the co-marketer have complied with federal requirements of keeping marketing materials and statements consistent with the approved label while including whatever extra-label statements about a bladder cancer risk that the plaintiff urged?  Those are the questions that should have been answered.
            The opinion’s consideration of the broader preemption challenge made by both defendants followed a similar pattern.  The issue was whether FDA would have approved the labeling change that plaintiff urged—whatever that actually was—before plaintiff allegedly developed bladder cancer from using the drug.  This would be evaluated under the singular “clear evidence” standard from Levine, but with a free hand for plaintiff to ignore Buckman and contend that defendants kept FDA in the dark on the risk of bladder cancer.  Defendants had evidence that FDA determined, in the year plaintiff started the drug and the co-marketer stopped co-marketing it, that a bladder cancer warning belonged in the Precautions section of the label, did not request a revision upon receipt of study data three years later, and only approved a label with information on bladder cancer in the Warnings section two years after that.  Plaintiff countered with evidence that the defendants allegedly withheld information from the FDA and that defendants negotiated with FDA over the label, but nothing about whether the FDA would have approved the warning plaintiff wanted when plaintiff wanted them.

            In weighing this evidence, the court seemed to endorse the ludicrous notion, advanced by Dr. Kessler, that language in a drug label about a risk of the drug does not count as a “warning” (a state law concept) unless it is in the “Warning” section of the label.  Id. at **47-48; but see id. at *168 (“The Defendants are, however, correct that New York law does not require a warning to be located in the “Warnings” section of a medication label in order for the warning to comply with the duty to warn individuals considering taking the medication, or physicians considering prescribing the medication.  However, [plaintiff says none of the information about bladder cancer in the label should be considered a warning].”).  Setting aside how the format of drug labels changed during the time at issue in this case due to the Physician Labeling Rule so that the old “Warnings” and “Precautions” sections have been merged into one section called “Warnings and Precautions,” this is just a na├»ve view prescription drugs.  Language in other sections of drug labeling, like Contraindications, may be key to individual prescribing decisions and the focus of allegations by product liability plaintiffs.  In addition to this misimpression, the opinion ignored the possibility that the FDA would ever find a proposed warning to be excessive in light of the scientific evidence available.
Finally, in light of the evidence pointed to by Plaintiffs as presented at trial, this Court cannot find Defend-ants' argument that the FDA, had it been presented with a complete, accurate, and forthright description of the evidence, would have chosen to hide from the medical community and the general public the possibility of an increased risk of the very serious side effect of bladder cancer by not allowing the very warning they made overture to explore, persuasive.   
Id. at *85 (emphasis in original).  We could go on, but we think you get the gist.

            The rejection of all arguments as to the punitive award (amount hidden from the reader) built on the evidence of fraud-on-the-FDA and of the defendants failure to do things they may not have been permitted to do by applicable regulations.  It also looked to evidence of what you read as general alleged “bad conduct” evidence not tied to the underlying theories of recovery, which is generally frowned upon when it comes to punitive damages.  On top of this morass of evidence that the court stated (several times) showed that the defendants intentionally picked profits over safety, the jury got to hear about the alleged spoliation of records by the NDA holder, which we have already said mostly involved missing from sales representatives who left the company five or more years before the litigation started.  The NDA holder’s “conduct in destroying files of key employees involved in the development, marketing, and management of Actos® could be one fact the jury might have considered in assessing Takeda's intent.”  Id. at *179 (emphasis in original).  The jury was also, apparently, permitted to infer something about the co-marketer’s intent from this “fact.”  There was nothing wrong with that, because the co-marketer had apparently not requested a limiting instruction when the jury was informed of court’s view on spoliation.  Id. at **180-81.  The court took no responsibility for informing the jury of spoliation by one defendant without making it clear that the other defendant was not implicated.
            We will have to wait and see if the court can find some way under Rule 59 (motion still pending) to justify a punitive damages award that was 6000 times higher than the actual damages award.  We will also have to wait and see what, if anything, the Fifth Circuit has to say about all of this.  We do know its decision in Lofton v. McNeil Consumer & Specialty Pharms., 672 F.3d 372 (5th Cir. 2012), embraced Buckman, so we are optimistic that a panel of cooler heads would prevail. 

Third Circuit Rejects Consumer Fraud/Unjust Enrichment Class Action

            Yesterday the Third Circuit upheld a District of New Jersey decision denying class certification as to plaintiffs’ consumer fraud and unjust enrichment claims.  Grandalski v. Quest Diagnostics Inc., 2014 U.S. App. LEXIS 17543 (3d. Cir. Sep. 11, 2014). 

            Plaintiffs alleged that Quest had overbilled them for testing services and their complaint proposed multiple nationwide litigation classes.  Id. at *2-3.  The court examined both causes of action and found neither met the standards or requirements for class certification.

            First up was consumer fraud.  In denying class certification, the district court conducted a choice of law analysis.  On appeal, plaintiffs argued that such an analysis was premature and alternatively, that the choice of law ruling was incorrect.  For their prematurity argument, plaintiffs relied on another Third Circuit decision that stated that it may be “inappropriate to decide choice of law issues incident to a motion for class certification.”  Id. at *8 (citation omitted).  But the Grandalski court quickly pointed out that that other case concerned settlement classes – not nationwide classes proposed for the purpose of trial.  For putative litigation classes, “it was reasonable for the District Court to inquire at the certification stage as to whether the classes posed intractable management problems for trial.”  Id. at *9.  Such as – application of 50 different states’ consumer fraud statutes. 

            So, plaintiffs next took issue with the district court’s conclusion that the laws of the putative class members’ home states controlled their consumer fraud claims.  It was undisputed that there was a conflict between New Jersey consumer fraud law and the consumer protection laws of other states.  Id. at *10.  Therefore, under New Jersey’s choice of law rules, it was up to the court to determine which state had the most “significant relationship” to the case.  For this the court looked to §148(2) of the Restatement (Second) of Conflict of Laws.  Section 148(2) addresses when alleged misrepresentations were made and received in different states and applies a 6 factor test:   (a) the place where the plaintiff acted in reliance upon the defendant's representations; (b) the place where the plaintiff received the representations; (c) the place where the defendant made the representations; (d) the place of business of the parties; (e) the place where a tangible thing which is the subject of the transaction was situated at the time; and
(f) the place where the plaintiff is to render performance under a contract which he has been induced to enter by the false representations of the defendant.  Id. at *12.

            The Third Circuit agreed with the district court that the totality of the factors weighed in favor of applying the law of plaintiffs’ home states – the place where plaintiffs received and paid the allegedly erroneous bills and where Quest performed and plaintiffs obtained the testing services.  Finding that residency was a wash, the court held that the place where the representations were made – New Jersey – was not enough to overcome the remaining factors which all pointed to the plaintiffs’ home states.  Id. at *13. 

            Plaintiffs advanced one more argument to try to save class certification of the consumer fraud claims – groupings.  For purposes of trial, the court could group together plaintiffs whose state law prohibits “unfair or deceptive conduct” and those whose state law prohibits “false or misleading conduct.”  Id. at *16-17.  The Third Circuit acknowledged that while groupings may be a permissible approach – “plaintiffs face a significant burden to demonstrate that grouping is a workable solution.”  Id. at *19.  A burden that plaintiffs in Grandalski failed to carry:  “Appellants must do more than provide their own ipse dixit, citation to a similar case, and a generic assessment of state consumer fraud statutes, to justify grouping.”  Id.  Without a viable trial grouping plan, the Third Circuit upheld the lower court’s decision that “class litigation involving dozens of state consumer fraud laws was not viable and that common facts and a common course of conduct did not predominate.”  Id. at *20.

            Moving on to unjust enrichment, plaintiffs failed to meet the predominance requirement.  As framed by the court, the question is “whether essential elements of the class’s claims can be proven at trial with common, as opposed to individualized evidence.”  Id. at *21 (citation omitted).  The Third Circuit’s opinion contains a discussion of the difference between the predominance requirement and the ascertainability requirement – the latter being “whether individuals fitting the class definition may be identified without resort to mini-trials.”  Id. at *20.  The district court held that plaintiffs failed to satisfy either requirement, while the Third Circuit focused more on predominance. 

            After examining several factual scenarios presented by defendant’s expert that would amount to overbilling, but not necessarily unjust or fraudulent overbilling (indeed some plaintiffs had received refunds), the Third Circuit agreed with the district court’s conclusion that

individual inquiries would be required to determine whether an alleged overbilling constituted unjust enrichment for each class member. Such specific evidence is incompatible with representative litigation.    

Id. at *23.  

            And so falls another proposed class action. 

Thursday, September 11, 2014

Telling It Like It Is

The Eleventh Circuit’s recent decision in In re Engle Cases, ___ F.3d ___, 2014 WL 4435893 (11th Cir. Sept 10, 2014), although involving cigarettes rather than prescription medical products, rips the scab off shoddy practices that plague many mass torts and are inherent in the other side’s solicitation-based approach to such litigation.  Basically, the soliciting firms don’t give a hoot about either their clients or their cases – all they want is numbers.  More “plaintiffs” drives up both the nuisance value of the litigation (which can be astronomical in mass torts involving thousands of would-be litigants) and increases the influence of the lawyers filing such cases as they jostle with other plaintiffs’ firms for fees.  The practices that the Eleventh Circuit condemned in Engle Cases are like Gresham’s law gone wild, disadvantaging ethical plaintiffs’ firms (no, that’s not an oxymoron), not to mention defendants.

Engle involved hundreds of cases (you’ll see why it’s difficult to describe them as “plaintiffs” in a moment), filed in the aftermath of the Florida Supreme Court’s decision in Engle v. Liggett Group., 945 So.2d 1246 (Fla. 2006), which purported to change the cut-off date for a class action settlement, among other things.  See Engle Cases, 2014 WL 4435893, at *2 (discussing that decision).  Since we once worked on Engle at a prior firm, that’s all we’ll say about the legal background.

Engle touched off a plaintiffs’ side feeding frenzy, part of the aftermath of which the Eleventh Circuit was tasked with cleaning up.  Of these cases, 588 were filed in the names of people who were already dead.  Engle Cases, 2014 WL 4435893, at *1.  Dead people aren’t sui juris – the dead have no standing to sue – as we’ve discussed several times (links here) when a few pre-deceased plaintiff were discovered in the Aredia/Zometa litigation, and their ostensible counsel were sanctioned with costs as a result.  As the Eleventh Circuit bluntly put it, “[a]s any lawyer worth his salt knows, a dead person cannot maintain a personal injury claim.”  Engle Cases, 2014 WL 4435893, at *1.

588 already dead plaintiffs?  The mind boggles.

That’s not all.  160 other persons filed loss of consortium claims relating to these pre-deceased plaintiffs.  Loss of consortium claims are “derivative” – they fall when the injured person’s claim fails.  Id.  The court also mentions two wrongful death cases filed beyond the absolute 2-year Florida statute of limitations for such claims.  Id.  Compared to the other numbers, that sounds small, but it’s another example of the filing of blatantly invalid actions.

The trial court dismissed all these cases.

Amazingly, the plaintiffs appealed.  Only in an MDL.

As the Eleventh Circuit points out, these dismissed cases were just the tip of the iceberg.  Counsel treated the filing of complaints like throwing mud against the wall – seeing what would stick.  Other problems the opinion mentions:

  • wrongful death claims filed by “survivors” of smokers who were still living;
  • cases filed as a result of “clerical errors”;
  • multiple cases filed for the same person;
  • cases filed for people the law firm had no contact with;
  • claims that had already been adjudicated by another court;
  • cases filed for people who didn't want to pursue a lawsuit;
  • claims filed long after the relevant limitations period had run.

Engle Cases, 2014 WL 4435893, at *1.  Rule 11 – where are you when we need you?

The underlying problem was that counsel for these “plaintiffs” solicited and received more cases than they were capable of handling.  Faced with a filing deadline, they simply filed complaints for everybody, including for hundreds (if not more) persons that they were not even in contact with.  The district court displayed the patience of Job – for a long time it tried to get the plaintiffs to do after filing, what Rule 11 requires them to do beforehand, that is, to perform basic investigation of their cases.  Only when plaintiffs refused even to contact their supposed “clients” to verify information, and withheld adverse information from the special master, did the district court turn to involuntary dismissals and Rule 11 certifications.  The Eleventh Circuit lays out the gory details at great length in its opinion, id. at *3-16, for anyone who wants to read it.  It makes for fascinating reading because rarely has a court so thoroughly exposed these sorts of mass tort plaintiff shennagins.  But for present purposes, what’s important to us isn’t the details, but the outcome.

The Eleventh Circuit affirmed every single dismissal.

As to the already dead plaintiffs, the 588 complaints were all “nullities.”  There were no grounds for relief from dismissal because it was not “understandable,” as required by Fed. R. Civ. P. 17, that the same lawyer could make the same “mistake” 588 times.  Engle Cases, 2014 WL 4435893, at *18.  It was obvious that hundreds, if not thousands, of cases were filed with no pre-complaint investigation to speak of:

We are not told what [plaintiffs’ counsel] did to keep up with its clients . . ., how many of those clients it lost touch with . . ., what efforts it took . . . to reestablish contact, or how many of these missing clients it failed to contact before a lawsuit was filed on their behalf. . . .  Nor are we told what information [counsel] used to draft complaints for the missing clients, when those clients had last been in contact with the firm, or what efforts were taken to update client information and otherwise investigate the validity of their cases.  And [counsel’s] declaration did not even mention, much less explain, how his firm came to file personal injury cases on behalf of [persons] . . . who obviously did not contact his firm to request representation.

Id. at *21.  “Counsel had more than one opportunity to build a record,” but failed to do so.  Id.  Nor did the court accept the disappearing act of original counsel – not showing up at the hearing so that subsequent counsel could “claim[] ignorance” of everything that went on, or didn’t go on.  Id.  When counsel were finally forced to respond after defendants instituted Rule 11 proceedings, what they said was “incomplete or conflicting on nearly every relevant point.”  Id. at *22.  Again, the details are in the opinion.  One thing that did come out is that counsel filed over 100 lawsuits on behalf of persons “whom he presumably knew to be dead,” because there had been contact with the families.  Id. at *23.

On this record, dismissal of the already-dead-plaintiff cases was eminently proper – indeed required – by the Rules of Civil Procedure:

Rule 17 was not promulgated to allow lawyers to file placeholder actions . . . to keep a limitations period open while they investigate their claims and track down the proper parties.  If we were to adopt the approach plaintiffs’ counsel propose − and thus compel courts to allow substitution any time the real plaintiff is waiting in the wings − we would read this limitation out of existence and enable, in fact encourage, lawyers to file complaints without proper authorization or investigation.  Such a result would run counter not only to the policy underpinnings of Rule 17, but also those of Rule 11.

Engle Cases, 2014 WL 4435893, at *24 (footnote with complete text of Rule 11 omitted).  The court held, with remarkable restraint, that counsel’s inability to track down its own clients before the Engel filing deadline “was at least partially a problem of its own making” because they “signed up so many clients.”  Id.

The Eleventh Circuit then told it like it is.  Counsel cannot use the volume of their own solicitation of clients as an excuse to avoid their obligations under Rule 11.  Every defense lawyer in a mass tort case should take the following words to heart – and make the other side live up to their fundamental obligations as lawyers:

[U]nforeseen hardship . . . did not excuse [plaintiffs’ counsel] from his Rule 11 obligations at the time of filing, nor do they give plaintiffs’ counsel an automatic right to substitution now. . . .  The solution to managing these types of mass actions is surely not that the standard of care diminishes as the number of cases grows.  If we were to hold that plaintiffs' counsel are entitled to substitution solely on account of the large volume of cases they filed, we would invite the same result in every mass tort action.  In fact, we would give lawyers an incentive to tack on unauthorized and uninvestigated claims; for if sheer volume relaxes the requirement that a lawyer investigate the facts alleged in his complaints before filing them, then bulk filing like [counsel’s] becomes self-justifying − a practice we would never accept in a single case would become more palatable the more times it is repeated. We decline to adopt such an approach.

Engle Cases, 2014 WL 4435893, at *24 (emphasis added).  That’s the key.  Solicitation of massive numbers of plaintiffs does not give counsel warrant to ignore either their clients or their obligations to the judicial system in a “mass tort,” any more than it would “in a single case.”

Damn straight.  It’s our job to hold the other side to the standards set by the relevant rules in mass tort litigation.

The Eleventh Circuit turned its attention to what may be an even more egregious failing, that being counsel’s concealment of their initial “mistakes” by “failing for over four years to bring their 588 mistakes to the District Court’s attention.”  Id. at *25.  Their “four year silence” constituted “undue delay, bad faith or dilatory motive” justifying refusal of any Rule 15 right to amend.  The Eleventh Circuit condemned a common plaintiff-side tactic in mass torts – the hiding of meritless cases in the shadows of the sheer numbers of plaintiffs while hoping for a settlement before the litigation rocks are turned over and light is shined on what lies beneath.  In pursuit of that tactic in Engle Cases, “plaintiffs’ counsel opposed the defendants’ initial request that they submit basic information about their cases, including whether the named plaintiff was still alive.”  Id. at *26.

The notion that lawsuits were filed on behalf of people who were dead, and in some cases dead for a long time . . . one of the plaintiffs had been dead for 25 years, and the notion that those lawsuits could be filed and then because so many lawsuits were filed, we, as an accommodation and as a case management tool, stayed those cases so we could try to start to get a hold of them and that now becomes the reason that the plaintiffs were freed of any obligation, if that obligation did not exist before the date of filing, but were now freed of all obligation or any obligation to determine whether their client was a living, breathing human being or not.


We embrace the District Court's view on this point.

Id. at *27 (quoting adopting district court rationale).

Engle Cases thus demonstrates why Lone Pine orders should be the presumptive default option in mass torts.  Plaintiffs’ counsel should not be allowed to swamp the judicial system with filings and thereby conceal that the majority (often the great majority) of the cases being filed aren’t worth the paper the complaints are printed on.

Delay (here for four years) in discovering meritless cases isn’t “in the interest of efficiency.”  Id. at *28.  “It is not plaintiffs’ counsel’s place to decide what’s best for the litigation.  As officers of the court, they were duty bound to inform the court of the information in counsel’s complaints that they knew to be false.”  Id.  Even in the absence of prejudice (and the settlement pressure exerted by the pendency of hundreds of bogus cases should be per se prejudice), “a district court has discretion to deny leave to amend when the moving party's delay was the result of bad faith, dilatory tactics, or sheer inadvertence, or when the moving party offers no adequate explanation for a lengthy delay.”  Id.

[Plaintiffs’ counsel] have no excuse for withholding that information from the court.  It’s clear that if the court hadn’t ordered plaintiffs’ counsel to submit the questionnaires, plaintiffs’ counsel would have continued to sit on that information for years until the court activated these cases for trial. . . .  But to say that, having unearthed plaintiffs’ counsel’s mistakes, the court was then required to grant them leave to fix those mistakes under Rule 15(a)’s command that it do so “when justice so requires,” is, to put it bluntly, absurd.


At minimum, trying to hide meritless cases in hopes of evading review should result in dismissal.  But since the cases were worthless to start with, there still needs to be more incentive to prevent this improper tactic.  The Eleventh Circuit provided one.  Counsel claimed to have resurrected some plaintiffs previously thought dead.  The appellate court held that, in light, of the protracted failure to investigate on a timely fashion, dismissals of those actions would not be disturbed:

We decline to grant what is effectively a request to reopen the questionnaire process to correct errors that plaintiffs’ counsel have only now discovered.  They have had ample opportunity to check their clients’ dates of death.  They had over four years . . . to discover and confirm the status of the plaintiffs named in their lawsuits.

Engle Cases, 2014 WL 4435893, at *29.  Perhaps this will be a teachable moment.

Turning to consortium claims relating to the pre-deceased plaintiffs, the Eleventh Circuit held that these plaintiffs could not, after all this time, try to convert these derivative claims into free-standing actions.  Throughout the protracted proceedings, “nobody questioned that the fate of the consortium cases was tied up with the fate of the personal injury cases they derived from.”  Id. at *30.  Failure to pay attention to these cases was not an excuse.  Counsel “cannot now claim to have been surprised by the court’s ‘inadvertent’ dismissal of these cases simply because they later thought up an argument as to why those cases shouldn’t have been dismissed.”  Id.

The fact of the matter is that the genesis of these invalid consortium cases is identical to that of the invalid personal injury cases they derived from.  They all stem from [plaintiffs’ counsel’s] mass filing and they all sat on the docket for years until the court ordered plaintiffs’ counsel to submit the information it had been asking for all along.  Plaintiffs’ counsel did not come forward with any new reasons why the court should have allowed them to amend these consortium claims 5 years after they were filed.


Finally, as to the two statute of limitations-barred wrongful death cases, the same failure to investigate (or even to include dates of death in the original complaints), combined with years of delay and obfuscation, justified denial of any right to amend.  Id. at *31-32.

Maybe Engle Cases is an extreme example, but the problem this litigation exemplifies – massive solicitation of would-be plaintiffs, combined with utter disregard of pre-filing obligations such as Rule 11 – is present in just about every mass tort.  In Engle Cases, out of the “4500 cases” originally filed, in the end “we are dealing with 29 − and heading to 26.”  2014 WL 4435893, at *9 n.14.  The dirty little not-so-secret of mass tort practice is that the great majority (here it looks like more than 99%) of the cases clogging up the courts would be thrown out with little or no discovery if brought individually.  It is long past time for courts to institute procedures, such as Lone Pine orders in all MDLs, requiring Rule 11 certifications (as was done in Engle Cases), and cost-shifting sanctions (which we hope will be the next round in this litigation), to de-incentivize the deliberate filing of garbage cases.

Wednesday, September 10, 2014

Later is not Better than Never


We do not devote a lot of space to statute of limitations cases.  That is not because they are unimportant.  To the contrary, statutes of limitations serve fundamental principles of fairness and predictability.  Parties should not have to worry about litigations springing up well after the operative events occurred, and well after witnesses, or their memories, have departed.  But statutes of limitations are inherently fact- and jurisdiction-specific.  Thus, it is not always easy to tease some principle of general applicability and interest out of those cases. 


But you just know that we’re about to tease such a principle out of a statute of limitations case, don’t you?  In most tardily-filed cases, we are greeted by an assertion that the discovery rule should come to the rescue because the defendant hid the truth, polluted the information environment, and prevented the plaintiff from filing earlier – that is, within the statute of limitations.  That argument is almost always unadulterated hogwash.  A federal judge in California recently did a thorough and elegant job of demolishing that argument.  We could not resist sharing it with you. 


In Plumlee v. Pfizer, Inc., 2014 U.S. Dist. LEXIS 121634 (N.D. Cal. August 29, 2014), the plaintiff brought a class action alleging that Zoloft did not work for her, and she wanted her money back.  That’s only a slight oversimplification of the case.  Various California statutes – the usual suspects -- were invoked.  This case, to our cynical noses, smells like an effort to concoct a no-injury class action that would do more good for the attorneys than the litigants.   No matter.  It was filed too late.  The plaintiff last purchased Zoloft or its generic equivalent in June 2008.  She filed her class action lawsuit on January 30, 2013, which is four years and seven months after her claims accrued.  The longest applicable statute of limitations was four years.  The math is simple, and the math means that all of her claims are time barred. 


How to get around that pesky statute of limitations?  The plaintiff said that she did not discovery the defendant’s alleged misrepresentations and omissions regarding Zoloft’s efficacy until on or about May 22, 2012, when she watched a 60 Minutes segment regarding the placebo effect and depression.  Before that, the plaintiff dwelled in ignorance, as she “did not see any media, journal articles, press releases, websites, letters, or statements concerning Zoloft and its ability to outperform placebo in treating depression.”   Plumlee, 2014 U.S. Dist. LEXIS 121634 at *11.  The problem for the plaintiff is that the delayed discovery rule benefits only plaintiffs who can show that they acted reasonably and diligently in preserving their rights.  The court had dismissed the original complaint in this case, but granted leave to amend, insisting that the plaintiff show her diligence.  Did she manage to do that?  She did not.    


When a plaintiff attempts to enlist the discovery rule to elude the statute of limitations, the burden is on the plaintiff to show diligence.  Conclusory allegations will not withstand a motion to dismiss.  Plaintiffs are charged with presumptive knowledge of an injury if they have information of circumstances to put them “on inquiry or if they have the opportunity to obtain knowledge from sources open to their supervision.”  Id. at *22.   The plaintiff raised four arguments to explain her late discovery:  (1) there is no affirmative duty to investigate under the delayed discovery rule; (2) she had no obligation to seek out publicly available information regarding Zoloft’s effectiveness; (3) such information was unavailable at the time; and (4) her subjective belief excuses her lack of diligence.  Like most hitters on our beloved Phillies team this year, the plaintiff went 0 for 4.


The court bought precisely zero of plaintiff's arguments, and for good reason.  The plaintiff “gave up” taking Zoloft and its generic equivalent in June 2008 because she “did not believe Zoloft was helping her depression.”  Id. at *24.  What did the plaintiff do to figure out why Zoloft was ineffective in treating her depression between June 2008 and when she saw the 60 Minutes segment in May 2012?  Nothing.  The plaintiff apparently did not consult her physician or psychiatrist about why the Zoloft was not helping her, nor did she look for any information regarding Zoloft’s effectiveness.  The plaintiff said that she saw no information between March 2008 and May 2012 criticizing Zoloft’s efficacy, and that “[u]pon information and belief, no media or information criticizing Zoloft’s efficacy existed during this time period to which a reasonably diligent consumer would have been exposed.”  Id. 


After too many years of seeing the discovery rule invoked in too many cases, we’ve come to believe that in the plaintiff lawyer’s view of the world, only three things can inform someone of a potential claim, thereby starting the statute of limitations clock:  (1) a 60 Minutes story; (2) an admission of liability by a company; or, most reliably and authoritatively of all, (3) a lawyer advertisement hawking the latest mass tort.  But the law does not share this crabbed and crazy world view.  The threshold issue is “whether the plaintiff acted diligently to investigate whatever information was available to her when she suffered her injury.”  The plaintiff was not required to have all the facts underlying her specific legal theories served up to her on a platter.  Once she knew Zoloft was ineffective for her, she could not “wait for [the facts] to find [her] and sit on [her] rights,” rather she had to “go find” the available facts. Id. at *25.


Predictably, the plaintiff argued that the defendant’s alleged misrepresentations and concealment of negative clinical trial data excuse her lack of diligence.  The Plumlee court skewered this argument, pointing out that “[m]isrepresentations are a part of every fraud cause of action; nonetheless, the duty to investigate raises if the circumstances indicate that the defendant’s representations may have been false.”  Id. at *26.  According to her own allegations, the plaintiff had actual notice of Zoloft’s ineffectiveness, at least with regards to her own depression as of June 2008.  With actual knowledge of Zoloft’s advertisements, drug label, and ineffectiveness in treating her depression after three years, the plaintiff had “reason to at least to suspect a factual basis” for her claims that the Zoloft advertising and label were misleading.  Id. at *29.


In any event, there was no reason to accept at face value the plaintiff’s statement that “no media or information criticizing Zoloft’s efficacy existed during this time period to which a reasonably diligent consumer would have been exposed.”  The defendant submitted dozens of publically available documents and articles, which were judicially noticed by the court, showing that a reasonably diligent consumer could have discovered information regarding the placebo effect, Zoloft’s effectiveness, and unpublished clinical trials. These articles came from such hidden and obscure sources as USA Today, Wall Street Journal, and the New York Review of Books.  (Okay, that last one can be pretty obscure.)  The defendant also demonstrated that eight of the scientific articles regarding the placebo effect of antidepressants, including Zoloft, that the plaintiff referenced in her amended complaint are available free of charge on the Internet.  Id. (By the way, would you mind if we injected just a slight dose of reality into this topic?  Since Al Gore invented the internet, it is simply and literally incredible for someone to claim that he or she did not hear or read about something related to some injury or medical condition.  Nowadays, people open Google ASAP if they feel gas pains or espy a hint of toenail fungus.) 


It would be convenient for plaintiffs if they could seize advantage of the discovery rule based only on their own (alleged) subjective belief as to when the action accrued.  Such a belief is bulletproof.  Every plaintiff could pretend ignorance and thereby turn the statute of limitations into a dead letter.  If a plaintiff believes it is time to file a lawsuit, then it is. 


Fortunately, the law is a tad more objective and rigorous.  If a person becomes aware of facts that would make a reasonably prudent person suspicious, “he or she has a duty to investigate further and is charged with knowledge of matters which would have been revealed by such an investigation.”  Id. at *32.  In Plumlee, the plaintiff had a factual basis to suspect her injury and a corresponding duty to investigate.  Had the plaintiff “taken any minimal step toward investigating her injury, she would have discovered the abundant publicly available information.”  The plaintiff’s decision to “rely on her own subjective belief and forego taking any minimal step toward investigating her injury places her beyond the reach of the delayed discover rule.” Id. 



The court’s patience was exhausted.  This time, just in time, not a moment too soon, the dismissal was with prejudice.