Compromise Reported On CPSC Reform Act

The approach of the August congressional recess has apparently spurred compromise on the Consumer Product Safety Commission bill. The House passed its CPSC reform bill in December, 2007, and the Senate passed its version, the Consumer Product Safety Commission Reform Act of 2008, in March.  MassTortDefense has posted on the process here and here. And here.

The conference committee has reached an agreement, and will present the new compromise CPSC Improvement Act of 2008 to both houses for a vote, probably late this week.  The House Conference Report is found here.

One sticking issue had been language concerning phthalates, which have been used to soften plastic in children's toys. The original Senate version included a stringent assertedly non-preemptive version of a California law banning toxic phthalates in children's products. But, of course, not all phthalates are created equal. Phthalates are a broad class of chemicals, and each phthalate has distinct properties and safety profiles. The European Union Risk Assessment organization has concluded that one form (DINP) is safe for use in toys, for example. The new bill would ban phthalates from toys and other child-care items.

The compromise bill would name the ASTM international standard No. F963-07 as the temporary safety standard for toys, pending work on a permanent regulation (to take place within a year).  Ideally, this would mean that product safety decisions will be made by experts at the appropriate federal agencies, rather than allow creation of a hodge-podge of varying state standards. But the bill "grandfathers" in, as not preempted, any existing overlapping state regulations on child product safety, and permits states to apply for exemption from preemption for future proposed safety standards.  The CPSC is to consider whether the state standard offers significantly higher protection, the technological and economic feasibility of the standard, and the need for a uniform national standard.

The bill also contains the controversial "whistle-blower" protection provision, and requires third-party testing of certain children's products.  And it would create the consumer product safety database from the original House bill.

Federal Court Denies Motion To Dismiss In Proposed Lipstick Class Action

A federal court earlier this month permitted a proposed class action to move forward with its central allegation that Christian Dior lipstick contains excessive levels of lead. See Stella v. LVMH Perfumes and Cosmetics USA Inc., No. 1:07-cv-06509, 2008 WL 2669662 (N.D. Ill. 7/8/08).

Named plaintiff Pamela Stella alleges that she purchased Christian Dior "Addict Positive Red" lipstick, manufactured by LVMH Perfumes and Cosmetics USA Inc., at a Nordstrom department store in June, 2007. The so-called “Campaign for Safe Cosmetics” group issued a report in October, 2007 claiming that tests showed a lead level in LVMH lipsticks which slightly exceeds the regulatory limit established by the Food and Drug Administration for lead content in certain products like candy.  In reality, the average amount of lead a woman would be exposed to when using cosmetics is 1,000 times less than the amount she would get from eating, breathing and drinking water that meets Environmental Protection Agency (EPA) drinking water standards, according to the Cosmetics, Toiletry and Fragrance Association (CTFA).

Plaintiff then sued LVMH in November, 2007 on behalf of a proposed nationwide class of lipstick purchasers. She alleged that the company violated the Illinois deceptive business practices statute and breached an implied warranty of merchantability. She also brought claims for strict liability, negligence per se, unjust enrichment, and injunctive relief.

Judge Elaine E. Bucklo of the U.S. District Court for the Northern District of Illinois denied defendant’s motion to dismiss. She determined that Stella sufficiently alleged a claim under the deceptive trade practices law, including its requirement of actual damages. Stella sought to recover actual damages, the court said, "in the form of pecuniary damages (the cost of the lipstick).” The court also noted that plaintiff had alleged that her reliance on defendant's omission caused her to buy the lipstick and become exposed to lead. “This sufficiently alleges proximate cause.”

The court also agreed with plaintiff that Illinois law would permit medical monitoring as a remedy. The Illinois Supreme Court has not ruled on the question. But in Carey v. Kerr-McGee Chemical Corp., 999 F. Supp. 1109, 1118-19 (N.D. Ill. 1998), the district court had predicted that medical monitoring would be recognized as cognizable under Illinois law.

MassTortDefense has posted on medical monitoring before, here and here. The clear trend has been away from recognizing these claims, see Lowe v. Philip Morris USA, Inc., 344 Or. 403, 183 P.3d 181 (2008), or to narrow their scope. See Sinclair v. Merck & Co., 195 N.J. 51, 948 A.2d 587 (2008).

Where recognized, medical monitoring plaintiffs typically must prove:
1. exposure greater than normal background levels;
2. to a proven hazardous substance;
3. caused by the defendant's negligence;
4. as a proximate result of the exposure, plaintiff has a significantly increased risk of contracting a serious latent disease;
5. a monitoring procedure exists that makes the early detection of the disease possible;
6. the prescribed monitoring regime is different from that normally recommended in the absence of the exposure; and
7. the prescribed monitoring regime is reasonably necessary according to contemporary scientific principles.

Medical monitoring is almost always seen as a potential class action claim, for several reasons:
• First, the individual damages associated with periodic testing of a so-far healthy plaintiff may not be all that financially attractive to plaintiff attorneys.
• Secondly, a number of the elements of the claim (or remedy) of medical monitoring seem, on the surface, amenable to “common” proof in the form of epidemiological evidence. For example, the increased risk that typically must be shown.

When the issue is ripe, it should be clear that such claims are not appropriate for class treatment, as numerous individual issues will arise, including choice of law, properly viewed, in a nationwide class.

Defendant LVMH's also challenged the implied warranty claims, based on the absence of contractual privity between plaintiff and LVMH. But the court narrowly construed the privity requirement to say that Illinois law requires contractual privity as a prerequisite for breach of implied warranty claims only for recovery of economic losses. Voelker v. Porsche Cars North Am., Inc., 353 F.3d 516, 527 (7th Cir.2003). The medical monitoring claim, as "a form of personal injury claim," brought plaintiff out from under this privity requirement, said the court.

California Supreme Court Grants Review Of Punitive Damages Decision

The ongoing saga that is Philip Morris USA Inc. v. Williams continues to reverberate through the lower courts. California's Supreme Court recently granted Ford Motor Co.'s petition to review an appeals court's July 2006 decision awarding $82.6 million to a woman left paralyzed by a 2002 rollover crash. Buell-Wilson v. Ford Motor Co., S-163102 (Cal. S.Ct. July, 2008), see here. But the Court deferred merits briefing on the issues until after the U.S. Supreme Court's next decision in Williams. One of the central issues in that case is the constitutional barrier to using punitive damages in product liability cases to punish companies for harm allegedly inflicted on those other than the plaintiffs.

The Ford case was brought by a woman left a paraplegic in 2002 allegedly after her Ford Explorer rolled over several times when she claims she swerved to avoid an object that fell from another vehicle onto the road. At trial, plaintiff claimed that the vehicle's design was dangerously unstable and prone to rollover; plaintiff also alleged the vehicle roof was inadequately supported and defectively weak. The jury found a design defect and a crash-worthiness design defect in the roof. The jury awarded the plaintiff (and spouse) more than $368 million, two-thirds of which was punitive damages. The judge in the case reduced the award to about $150 million. The California appeals court further reduced the total damages to $82.6 million -- $55 million in punitives -- in July, 2006.

Ford sought review, arguing the significant risk that the jury thought it could, and in fact did, punish Ford on behalf of people other than the plaintiff. Ford cited arguments from the plaintiff such as the one that went, “They go ahead and release the Bronco II in 1983 ... knowing it will roll over and kill or catastrophically injure many people, which it has.” Ford insisted in its petition for state Supreme Court review that the plaintiffs should not have been allowed to present any evidence of defects in the Bronco II sport utility vehicle model, which was not involved in the rollover case at bar. The jury thus may have gone ahead and punished the company for others allegedly harmed in Ford rollover accidents.

The grant of the petition notes that the case presents the following issues: (1) What procedural protections are required by Philip Morris USA v. Williams, 127 S.Ct. 1057, which held that due process requires that a jury not award punitive damages to punish for harm to third parties; and under what circumstances can those constitutional rights be deemed forfeited? (2) Are punitive damages prohibited in product liability cases where the manufacturer’s design conforms to governmental safety standards and industry standards and custom, and there is a “genuine debate” about what the law requires? (3) Is the amount of the punitive damage award in this case unconstitutionally excessive and arbitrary?

The court ordered briefing deferred pending the next decision of the United States Supreme Court in Philip Morris USA, Inc. v. Williams, No. 07-1216, cert. granted June 9, 2008. In the previous appeal of Williams, 127 S.Ct. 1057, the Court confirmed a significant constitutional principle limiting punitive damages awards: the Due Process Clause prohibits juries from basing punitive damages awards in part upon the desire to punish a defendant for harm to persons that are not before the court. Williams arose from an Oregon trial wherein a jury awarded $821,000 in compensatory damages and $79.5 million in punitive damages against cigarette manufacturer Philip Morris. At trial, the plaintiff’s attorney had urged the jury to punish Philip Morris for alleged harm to smokers other than the plaintiff by referring to the defendant’s market share and the number of smokers not only in the state of Oregon, but nationwide, who had allegedly contracted a smoking-related illness in the last 40 years. The Supreme Court held that the Due Process Clause forbids a jury from assessing punitive damages to punish a defendant for injury that it inflicts upon non-parties or “strangers” to this litigation. While a jury may consider the actual or potential harm to non-parties in the narrow context of determining “reprehensibility” of the conduct, which in turn is one of the factors relevant to an analysis whether the punitive damages award is excessive or not, it may not punish the defendant for the impact of its alleged misconduct on other people, who may bring lawsuits of their own in which other juries can resolve their claims. The Court cautioned state courts that they must make sure that the “jury will ask the right question, not the wrong one.” That is, evidence regarding alleged injuries of those not before the court must be used solely to judge the reprehensibility of the conduct, not to assess damages for the harm caused to those strangers. While the Court commented on the Oregon court’s refusal to give a jury instruction clarifying this distinction, it noted that state courts cannot authorize any procedures that create an unreasonable and necessary risk of any such confusion occurring. When evidence is introduced or argument made that risks this confusion, the state court must take steps to protect against that risk.

In both Williams and the Ford case, the lower courts have ignored the Supreme Court’s directive, asserting that the defendants had somehow waived their due process rights by not proposing jury instructions that explicitly and exactly anticipated the precise language of the Supreme Court decision that had not yet been issued. But the U.S. Supreme Court and now the California high court both seem unconvinced by plaintiffs’ waiver arguments.

Federal Court Reverses Self On Drug Preemption

Judge David F. Hamilton of the U.S. District Court for the Southern District of Indiana has reversed a prior decision and reinstated a Paxil suicide case that had been dismissed – properly in the view of MassTortDefense --  on preemption grounds last year. See Tucker v. SmithKline Beecham Corp./d/b/a Glaxosmithkline, No. 04-1748, (S.D. Ind. 7/18/08). See opinion here.  In granting plaintiff’s motion for reconsideration, the court violated the rule “if it ain’t broke, don’t fix it.”

Plaintiff Debra Tucker sued GSK on behalf of her brother, Rick Tucker, alleging that her brother committed suicide in September 2002 as a result of taking Paxil for three weeks. The claim was that GSK breached a duty to warn of an alleged increased suicide risk among Paxil patients. (MassTortDefense notes that the scientific evidence actually does not establish that paroxetine (the active ingredient in Paxil) causes suicide, suicide attempts, self-harm or suicidal thinking. On the basis of research in tens of thousands of patients taking antidepressants, including Paxil, there is no significantly increased risk of suicidal thinking or behavior in people age 24 and older and, in fact, in patients older than 65, there was a reduction in risk in suicidal thoughts and behavior.)

The defendant sought summary judgment on preemption grounds. The court correctly determined in September, 2007, that her claims conflicted with the FDA's labeling requirements for Paxil. The court said it believed the record showed that the FDA had rejected the hypothesis that there is a causal link between Paxil and suicide.

In granting the plaintiff's motion for reconsideration, the court said it had "failed to appreciate the fact that the ongoing ability, authority, and responsibility to strengthen a label still rest squarely with the drug manufacturer." In its new decision, the court first noted that under 21 C.F.R. §201.80, a manufacturer must revise labeling "to include a warning as soon as there is reasonable evidence of an association of a serious hazard with a drug; a causal relationship need not have been proved." Under 21 C.F.R. §314.70(c), a manufacturer may unilaterally add or strengthen a contraindication, warning, precaution or adverse reaction upon submission of a "changes being effected" [CBE] supplement. The court now thinks that the FDA's power to disapprove a label "does not make the manufacturer's voluntarily strengthened label a violation of federal law, which is what it would take to establish an actual conflict between state tort law and federal law.”  If the agency disapproves the revised label, the manufacturer simply stops distribution; there is no retroactive illegality.

The court’s new order rejected the FDA’s position that such failure to warn claims are preempted, calling the agency's position on preemption an "180-degree reversal" of its earlier stance. On reconsideration, the court thus gave "relatively little weight to the FDA's opinion on the preemptive effects of its regulations." In 2006, the FDA amended its regulations governing prescription drug labeling, clarifying the preemption of certain warning claims. The court adopted plaintiff’s argument that the 2006 Preamble was promulgated without notice-and-comment.

GSK argued that drug manufacturers will be forced to place scientifically unsubstantiated warnings on their drug products unless state law tort claims are preempted. But the causation requirements on plaintiffs will guard against this risk, the court said. In fact, thought the court, failure to warn litigation can reinforce the FDA's regulations, which already place the obligation to strengthen the warnings on a drug's label “squarely on the shoulders of the drug's manufacturer."  GSK's possible future risk of prosecution for distributing a misbranded drug would present a conflict only if GSK could say with absolute certainty that it will never have new evidence sufficient to trigger its regulatory obligations to revise its label to strengthen a warning with Paxil-specific language, but is forced to do so by state tort law, stated the new opinion.

Here’s why the new opinion got it wrong.
Regarding CBE, proposed changes in labeling typically are first submitted to the FDA for
approval. 21 C.F.R. § 314.70(a)-(d). A limited exception is with the use of a changes being effected supplement. 21 C.F.R. § 314.70(c). When a new safety issue emerges with a product, the pharmaceutical company may temporarily add to the product's labeling under this rule, which describes "changes that may be made before FDA approval." 21 C.F.R. § 314.70(c). Nonetheless, the FDA must still be notified and will subsequently review the modified labeling to ensure compliance with FDA regulations. In 1982, when the CBE procedure was proposed, the FDA stated, "these supplements would describe changes placed into effect to correct concerns about newly discovered risks from the use of the drug." 73 Fed. Reg. 2849 (Jan. 16, 2008) (quoting 47 Fed. Reg. 46622, 46623 (Oct. 19, 1982)). FDA’s longstanding position is that a CBE supplement “is appropriate to amend the labeling for an approved product only to reflect newly acquired information . . . to add or strengthen a contraindication, warning, precaution, or adverse reaction only if there is sufficient evidence of a causal association." 73 Fed. Reg. 2848 (Jan. 16, 2008). The FDA explicitly defines "newly acquired" as "data, analyses, or other information not previously submitted to the agency." Id. at 2850.

The holding of the court that any label change adding or strengthening warnings could always be made unilaterally, without FDA pre-approval, would lead to absurd and unreasonable results. If manufacturers were free to make unilateral changes to labeling the day after FDA’s approval based on information that was previously available to the agency, the approval process would be greatly undermined and the agency’s careful balancing of risks and benefits thwarted. And plaintiff’s proposed reading of the rule would require manufacturers to make the same CBE change over and over again – despite FDA rejection of the change – in order to avoid liability, because a jury would be free to say – despite the FDA decision – that the manufacturer was free to make the change anyway. It just doesn’t make any sense for the CBE process to permit (and thus obligate, under plaintiffs’ view), a manufacturer to ignore an FDA-mandated label by unilaterally changing the warning to something else. Plaintiffs' construction of the current CBE regulation would permit (and thus obligate) manufacturers to repeat such changes again and again, each time the FDA rejects the proposed change – all without any new scientific evidence to warrant any change at all. Plaintiffs could argue that the “weight” or “accumulation” of evidence required a label change, even as the FDA has rejected changes based on each individual “new” evidence. The only way to prevent the CBE exception from becoming a vehicle for ignoring FDA labeling decisions is to limit it to new information. Any changes to a drug’s labeling without prior FDA approval must be based on new information establishing that risks arising from use of the drug are of a different type or greater severity than the risks of which FDA had previously been made aware – not cumulative new information that does not add to the information that was previously available to the agency.

Second, since this part of the argument is about interpretation of the scope of the FDA’s own CBE regulation, government views concerning that regulation are entitled to substantial deference, not the little weight given. Judicial deference to administrative positions on preemption, typically expressed in amicus briefs, has more or less been the rule, rather than the exception.

Third, regarding the supposed “reinforcing” aspect of tort claims, the new decision in this case would allow a jury to determine whether an FDA-approved label adequately informs physicians about a medication's risks and benefits, as the label generally has to be found to be inadequate before the manufacturer can be held liable. This could result in a patchwork of labels/warning information that vary from state to state for no good reason – the science in Maine is the same in California, even if the juries are not. And this would place doctors and patients in an untenable position. Indeed, state common-law tort actions based on the manufacturers’ failure to warn present the pharmaceutical manufacturers with particular difficulties. State standards of care undoubtedly would differ from state to state. Absent a determination that the FDA-approved labeling and the FDA’s refusal to require the warnings suggested by plaintiffs in this case preempt state tort actions, the manufacturers may be subjected to considerable liability based on varying standards, with no benchmark that they should follow.

The FDA, rather than a jury, has the responsibility to determine whether the labels on medicines offered in the U.S. are appropriate. The FDA has actively monitored the possible association between SSRIs and suicide for nearly twenty years, and has concluded that the suicide warnings desired by plaintiffs are without sufficient scientific basis and would therefore be false and misleading. This claim of supposed harmony or reinforcement by tort law is belied by what the plaintiffs always ask for:  that state courts provide a check on agency power; that state juries be allowed to make their own judgment on whether the label was adequate; and that FDA approval of a label, or rejection of an alternate label, doesn’t mean anything to the company’s potential liability.

Finally, regarding misbranding, a pharmaceutical company that independently institutes a change in labeling may be subject to penalty or seizure if the drug is deemed misbranded by the FDA. See 21 U.S.C. § 333 (authorizing penalties); 21 U.S.C. § 334 (authorizing seizure); 21 C.F.R. § 7.45(a) (providing authority to request recall). And it has never been required, for a conflict to exist, to show how many times the federal law was applied, or how significant the sanctions were. That the federal agency has the legal power to enforce the federal rule is, and ought to be, sufficient.

In its next term, the U.S. Supreme Court will take up a preemption question in Wyeth v. Levine, and we may see if the court got it right the first time or the second time.

Shoe On The Other Foot: State/Plaintiff Criticized For Discovery Reponses

Managing the potentially vast scope of discovery requests in life sciences industry litigation can be daunting. The discovery requests in such litigation may be quite broad, following the product through its entire life cycle, and under the new(ish) Federal Rules can be even broader than in the past. They may now involve requests for samples, requests for access to databases, requests for technical support and IT depositions.

Companies in the life sciences area know well that multiple kinds of litigation now regularly arise from same product issue or nucleus of facts, including
– product liability
– medical monitoring
– securities
– consumer fraud class action
– DOJ and government investigations

The vast array of litigation raises the potential for inconsistent positions in the different parts of the litigation concerning same subject. In addition, defendants must be on guard against spoliation attacks and the plaintiffs’ new favorite, the “Gotcha” Game, in which plaintiffs seek discovery not for information, but to find and challenge wherever defendant drew the line in document or data preservation. All in all, the management and conduct of e-discovery has become an area of true specialization.

Defendants may have wondered whether discovery is a two-way street under the new rules. Plaintiffs don’t have as much data, perhaps, and courts have been reluctant to hold individual plaintiffs to the same standards as corporate defendants. In a recent decision in the Zyprexa litigation, a governmental plaintiff may have been, however.

The magistrate judge overseeing discovery in the MDL has weighed in on the state of New Mexico’s apparent failure to properly respond to discovery requests in a lawsuit it filed against Eli Lilly & Co. over Zyprexa. Madrid v. Eli Lilly & Co., No. 07-cv-1749 (MDL-1596 E.D.N.Y.).

As is typical in this branch of the litigation, the state alleges that it would not have spent Medicaid funds on Zyprexa if it had known more about the supposed risks of the drug. The lawsuit was removed to the U.S. District Court for the District of New Mexico in 2006 after it was originally filed in state court. It was transferred for pretrial proceedings to the U.S. District Court of the Eastern District of New York by the panel on multidistrict litigation.

Earlier this month, Eli Lilly challenged the adequacy of the state's responses to interrogatories and document demands it had made in June. The magistrate judge's Order concluded that New Mexico had neither replied to Lilly's attempts to confer in good faith on this issue nor had it provided the court with any justification whatsoever for its boilerplate objections. The state's silence on this issue “underscores the indefensible nature of its responses.” Apparently, the state had ignored the specificity requirement for objection and merely labeled each request as “unintelligible” or “irrelevant.” The court also faulted the state for not including a privilege log.

Discovery is supposed to be a two-way street.

State Supreme Court Upholds Certification of Nationwide Class

The Oklahoma Supreme Court earlier this month upheld certification of a nationwide class in litigation alleging DaimlerChrysler Corp. should have provided repairs to steering systems on vehicles manufactured between 1993 and 2001. Masquat v. DaimlerChrysler Corp., Okla., No. 104971 (7/1/08), found here.

Plaintiffs alleged that LH platform vehicles contained a defect in the power rack and pinion steering system. These vehicles were sold as various Dodge and Chrysler models during model years 1993 through most of 2001. Plaintiffs alleged that shortly after production and sale of the LH vehicles began, Defendant began to receive reports from consumers of steering related problems. Defendant eventually introduced a newly designed steering system bolt, in late calendar year 2000.  Plaintiffs' theory is that the cure/repair to the problem developed by Defendant was never provided to already-produced LH platform vehicles, and consumers were not adequately informed that the fix was available and that the repair should be made.

Among the defenses asserted was the fact that the claims of most of the proposed class members seemed time-barred. Plaintiffs’ response was that the statute of limitations was tolled, based on alleged "active concealment" of the alleged defect in the steering system.

Following a hearing on the motion for class certification, the trial court certified a nationwide class of current owners of the vehicles. Class certification in Oklahoma is governed by Okla. Stat. Tit. 12 Sec. 2023, which provides for numerosity, commonality, typicality, and adequacy in language similar to Federal Rule of Civil Procedure 23(a), and for predominance and superiority in the same manner as Rule 23(b)(3). Defendants appealed, continuing to assert that individual issues predominate, especially those raised by the choice of law issues. Nationwide classes typically are inappropriate because they require the class court to try to explain, and the jury to try to apply, the varying law of 51 different jurisdictions.

The Supreme Court first noted that the substantive law of Michigan would apply to all the breach of warranty claims in this matter. The class of plaintiffs is pursuing breach of warranty claims against a Michigan manufacturer. Under the "most significant relationship" test applied in Oklahoma, Michigan law applies. Furthermore, the factual issues associated with the breach of warranty claims appear to be essentially uniform across the class as they arise from the same event or course of conduct and give rise to the same legal or remedial theory, said the Court.

The more hotly contested issue was whether common issues predominate over individual issues in regard to Defendant's statute of limitations defense. Plaintiffs asserted that the statute of limitations was tolled because Defendant actively concealed information regarding the steering system tie rods from the class. Plaintiffs emphasized that they were not pursuing a common law fraud claim, which might require that the "law of 51 jurisdictions" be applied. Defendant, on the other hand, asserted that the choice of law rule applicable to the Court's determination of the proper limitation period, and thus the appropriate requirements for tolling that provision, must be found in Oklahoma's "borrowing statute." That act provided that the period of limitation applicable to a claim accruing outside of this state shall be that prescribed either by the law of the place where the claim accrued or by the law of this state, whichever last bars the claim. Defendant argued that application of the borrowing statute will require the comparison of Oklahoma's limitation period for a warranty claim to the warranty limitation period of each state in which a class member resides.

The Court agreed with Defendant, but only in part. The borrowing statute was the right approach, but because Michigan law applied to the warranty claims of the class, the Court need only compare the limitation period under Michigan law to that of Oklahoma and apply the one which "last bars" the claims.

Third, Defendant argued that predominance is defeated by the need to question each class member individually as to whether the class member exercised reasonable diligence in learning of the allegedly concealed defect. Some class members might well have been more diligent than others, and some class members may have known more about the alleged defect than others, based on their own experience, or the experience of people they know. In contrast to the choice of law issue, the Oklahoma Supreme Court admitted that it had never been presented with the opportunity to address the class action predominance requirement in the context of an asserted fraudulent concealment exception to the statute of limitations, with its possible factual roots.

The Court rejected the defense position, finding that the essence of fraudulent concealment is knowledge in possession of the person committing the fraud. Thus, in this matter, the principal focus on the statute of limitations defense will be Defendant's conduct, claimed the Court. The "common questions" supposedly arising from Plaintiff's assertion of fraudulent concealment were (1) whether Defendant affirmatively concealed the alleged defect, and thus concealed a breach of warranty, and (2) whether the class members, by exercising due diligence, could have determined that a breach had occurred.

On the latter point, which seems to MassTortDefense to raise basic individual issues, the Court stressed that common evidence included whether knowledge of the alleged defect was readily available so as to put an ordinary prudent class member on inquiry. This, of course, begs the question whether, even if not everyone should have known, some class members knew or should have known prior to the statutory period. But the Court concluded that any question of variation in individual reliance is eclipsed by the common questions surrounding the allegation of fraudulent concealment. “The mere presence of individual issues does not defeat predominance.”

Underlying this opinion may have been the factor that the trial court capped the amount of damages compensation at $310 for the bolt fix repair and $400 for other steering system repairs caused by the bolt problem, meaning that many class members might not pursue individual actions. The limited legal theories raised by class plaintiffs also limited the defense opportunity to unearth predominating individual issues.


Parties Spar Over Possible Bifurcation In Mirapex MDL

Pfizer and the other defendants in the Mirapex litigation are seeking a bifurcated trial plan. In motions filed with the U.S. District Court for the District of Minnesota, where MDL-1310 is based, the defendants asked for separate liability and punitive damages phases. Defendants raised the legitimate concern that the jury may be swayed by financial considerations when determining liability.

In this litigation, plaintiffs allege that the drug causes a compulsive urge to gamble. The plaintiffs claim that Mirapex triggered compulsive behaviors, and that the defendants knew the risks but failed to properly study the effects or warn patients. As is so often the case, a label change (in February 2006) seems to have prompted litigation.

Defendants assert that bifurcation is warranted because evidence of defendants' finances is irrelevant to the issues of liability; introduction of such evidence during the liability phase would be unduly prejudicial. Bifurcation is thus necessary to prevent unfair prejudice to defendants during the liability determination. The motions note that the 8th Circuit has recognized bifurcated trial plans in a number of settings. Indeed, bifurcation is a common feature of pharmaceutical mass torts.

Plaintiffs oppose the proposal, arguing that the issue of liability and punitive damages are somehow “intertwined.” Meaning, of course, that they would like for the jury to consider the company’s financials when judging its conduct. Plaintiffs insist on a single trial where the fact finder considers “all the evidence at once.” To the extent some of that evidence should not be considered on the issues of liability, plaintiffs propose that the jury could be instructed to consider the financial information only in the proper context.

MassTortDefense has posted on the importance of proper trial plans here. The Mirapex motions present perhaps the most basic form of bifurcation or trial plan issue.  The timing of the punitive damages issues in class actions or other complex aggregated litigation can become highly complex and controversial. The questions as to punitive damages may include: a) whether they can be awarded; b) if so, whether as a lump sum, as a multiplier of individual compensatory damages, or on a per class member basis, c) whether they can be tried before individual liability as to specific class members, or as to absent class members, or non-bellwether plaintiffs has been decided; d) whether they can be awarded before the actual amount of compensatory damages has been determined; and e) how punitive damages are allocated among class members or the aggregated plaintiffs if not determined on a per plaintiff basis. State Farm Mutual Auto Insurance Co. v. Campbell, 538 U.S. 408 (2003). See In re Simon II, 407 F.3d 125 (2d Cir. 2005); Beck v. Boeing Co., 60 Fed. Appx. 38 (9th Cir. 2003); Allison v. Citgo Petroleum Corp., 151 F.3d 402 (5th Cir. 1998); Johnson v. Ford Motor Co., 35 Cal.4th 1191,113 P.3d 82 (Cal. 2005) (rejecting aggregate disgorgement); Engle v. Liggett Group, Inc., 945 So.2d 1246, 1265 (Fla. 2006); In re Chevron Fire Cases, 2005 WL 1077516, at *14-15 (Cal. App. May 6, 2005); Colindres v. QuitFlex Manufacturing, 235 F.R.D. 347, 378 (S.D. Tex. 2006).

Punitive damages are designed to punish a defendant for egregious conduct and deter future reprehensible conduct on the part of the defendant or others. Particularly in the context of juries unchecked by proper legal instructions and unorthodox trial plans that prematurely address the punitive damages issue, they constitute a serious litigation threat to product sellers today. In aggregated litigation, such damages have the potential to lead to crippling verdicts, and thus the threat of punitive damages may coerce “blackmail” settlements.

In recent years, the United States Supreme Court has identified a variety of constitutional limits on punitive damage awards. Specifically, such awards cannot be arbitrary punishments and cannot be grossly excessive. In Philip Morris USA v. Williams, 127 S.Ct. 1057 (2007), the Court confirmed a significant constitutional principle limiting punitive damages awards: the Due Process Clause prohibits juries from basing punitive damages awards in part upon the desire to punish a defendant for harm to persons that are not before the court. Williams arose from an Oregon trial wherein a jury awarded $821,000 in compensatory damages and $79.5 million in punitive damages against cigarette manufacturer Philip Morris. At trial, the plaintiff’s attorney had urged the jury to punish Philip Morris for alleged harm to smokers other than the plaintiff by referring to the defendant’s market share and the number of smokers not only in the state of Oregon, but nationwide, who had allegedly contracted a smoking-related illness in the last 40 years. The Supreme Court held that the Due Process Clause forbids a jury from assessing punitive damages to punish a defendant for injury that it inflicts upon non-parties or “strangers” to this litigation. While a jury may consider the actual or potential harm to non-parties in the narrow context of determining “reprehensibility” of the conduct, which in turn is one of the factors relevant to an analysis whether the punitive damages award is excessive or not, it may not punish the defendant for the impact of its alleged misconduct on other people, who may bring lawsuits of their own in which other juries can resolve their claims. The Court cautioned state courts that they must make sure that the “jury will ask the right question, not the wrong one.” That is, evidence regarding alleged injuries of those not before the court must be used solely to judge the reprehensibility of the conduct, not to assess damages for the harm caused to those strangers. While the Court commented on the Oregon court’s refusal to give a jury instruction clarifying this distinction, it noted that state courts cannot authorize any procedures that create an unreasonable and necessary risk of any such confusion occurring. When evidence is introduced or argument made that risks this confusion, the state court must take steps to protect against that risk.

One implication of the Court’s emphasis on avoiding misuse of evidence of harm to “strangers” clearly relates to the employment of reverse-bifurcated trial plans in aggregated cases, in particular trial plans in which the entitlement and amount of punitive damages (by ratio or dollar amount) is set in an early phase of the trial, well before the jury has considered whether the vast bulk of the plaintiffs have actually been injured by the alleged conduct of the defendant. E.g., In re Tobacco Litigation, 624 S.E.2d at 740 (W. Va. 2005)(holding that an aggregated, reverse-bifurcated punitive damage multiplier trial before adjudication of any affirmative defense would not be per se invalid). Some state courts favor this approach because it puts pressure on defendants to settle by creating the risk of a huge punitive damages burden before it has even been established whether many or most of the plaintiffs have any compensatory damages. Such a trial plan clearly creates an unnecessary and unreasonable risk of a due process violation under Williams, one that a simple jury instruction about the distinction between entitlement and reprehensibility cannot hope to address adequately. See, e.g., In re Simon II Litig., 407 F.3d at 138 (“In certifying a class that seeks an assessment of punitive damages prior to an actual determination and award of compensatory damages, the district court’s Certification Order would fail to ensure that a jury will be able to assess an award that, in the first instance, will bear a sufficient nexus to the actual and potential harm to the plaintiff class, and that will be reasonable and proportionate to those harms.”); Allison v. Citgo Petroleum Corp., 151 F.3d at 417–418 (stating that “because punitive damages must be reasonably related to the reprehensibility of the defendant’s conduct and to the compensatory damages awarded to the plaintiffs, . . . recovery of punitive damages must necessarily turn on the recovery of compensatory damages”); Southwestern Ref. Co. v. Bernal, 22 S.W.3d at 433 (“Under the [trial plan], the jury would decide punitive damages for the entire class without knowing the severity of the offense or the extent of compensatory damages, if any, for each of the 885 plaintiffs…. the modified trial plan is … prejudicial because it fails to ensure that punitive damages have some understandable relationship to compensatory damages and are not grossly out of proportion to the severity of the offense for each of the 885 plaintiffs.”).

Indiana Appeals Court Upholds Summary Judgment On Causation Issue

The Indiana Court of Appeals has ruled that the trial court correctly granted summary judgment to DaimlerChrysler Corporation in two separate toxic exposure cases involving visiting workers at the company's New Castle, Ind., facility. See Coomer v. DaimlerChrysler Corp., Ind. Ct. App., No. 33A01-0712-CV-582, 7/11/08); and Gregory v. DaimlerChrysler, Ind. Ct. App., No. 33A01-0712-CV-581, 7/11/08). In affirming the rulings of the Indiana Circuit Court, the Court of Appeals held that the expert in both cases, Dr. George Rogers, did not adequately specify the level, concentration, or duration of plaintiffs' alleged exposure to unspecified chemicals. Accordingly, the workers failed to present sufficient expert evidence to establish causation.

Plaintiffs Matthew Gregory and Darrin Coomer were employees of Smoot Construction, and alleged they were doing work at the DaimlerChrysler New Castle Machining and Forging Facility. Three months after starting work, Coomer experienced a seizure while playing video games at home. Coomer’s treating neurologist diagnosed him with juvenile myoclonic epilepsy (JME), the “most common genetic or inherited form of epilepsy . . . [which is] thought to be caused by an abnormal gene on the short arm of chromosome 6.”  About 7 months after he began working, plaintiff Gregory, who was twenty-seven years old, allegedly experienced his first seizure after returning home from work. An IME showed he suffered from idiopathic seizure disorder.

Gregory and Coomer, in two separately filed complaints against Daimler/Chrysler Corp., Methadone Corp., and NC-M Chassis Systems LLC, alleged that the seizures were caused by their exposure to allegedly contaminated soil, water, and toxins at the facility. Defendant moved for summary judgment on the issue of causation. In response, plaintiffs presented their own expert, a professor of pediatrics and pharmacology/toxicology, who concluded that Coomer and Gregory were "clearly'' exposed to a "complex mixture of potentially toxic materials.''  The expert opined that many of the materials identified on the site, including some solvents and metals, can cause seizures with excess exposure. “I think it is reasonable to conclude that [plaintiffs'] occupational exposure to this mix of toxic chemicals may have contributed to the onset" of their disorders.

The Court of Appeals noted that an expert’s opinion is insufficient to establish causation when it is based only upon a temporal relationship between an event and a subsequent medical condition. In particular, when an expert witness testifies in a chemical exposure case that the exposure has caused a particular condition because the plaintiff was exposed and later experienced symptoms, without having analyzed the level, concentration or duration of the exposure to the chemicals in question, and without sufficiently accounting for the possibility of alternative causes, the expert’s opinion is insufficient to establish causation. Dr. Rodgers did not identify which chemicals plaintiffs were allegedly exposed to. He did not specify the level, concentration, or duration of their alleged exposure to the unspecified chemicals. Instead, Dr. Rodgers made vague assertions regarding plaintiffs’ alleged exposure to a mixture of “potentially toxic materials.” MassTortDefense has posted about the importance of evidence of dose here.

In toxic tort cases in Indiana, one way an expert may approach the causation issue is by way of a “differential diagnosis,”  testing to rule out alternative causes of the plaintiff’s ailments. But the expert never addressed the independent medical examiner’s conclusion that Gregory had an idiopathic seizure disorder, and he also failed to address the possible impact of a skull fracture Gregory sustained in an accident as a child. The expert failed to respond to the fact that Coomer’s own physician concluded that Coomer’s seizures were the result of a genetic form of epilepsy.

In sum, because Dr. Rodgers did not identify specific chemicals, analyze the level, concentration, or duration of Coomer’s alleged exposure, or account for the possibility of alternative causes, his opinion was insufficient to establish causation.

Update on Salmonella

Quick follow-up to our recent post on salmonella in which we noted a current focus on peppers rather than tomatoes: Federal officials announced yesterday that they have found the bacteria in a jalapeño pepper from a small distribution facility in McAllen, Tex. Accordingly, they warned consumers to avoid eating raw jalapeños or products that contain them.

The company has stopped distributing jalapeño peppers and is recalling jalapeños sold since June 30 to customers in Georgia and Texas. Investigators don't know where the contamination occurred. CDC officials are hoping that another round of interviews with people who got sick since early June in Arizona and New Mexico will shed more light on the source of the outbreak.

FDA Still Puzzled By Salmonella Outbreak

Federal officials announced last week that all tomatoes currently on the U.S. market are safe to eat. But they admit they still don't know what's causing a salmonella outbreak that has affected thousands over the past three months. Jalapeno and other peppers remain under investigation. Tomatoes had been identified in early June as the likely source of one of the largest food-borne illness outbreaks in the past decade. There were more than 1200 confirmed illnesses linked to the outbreak. While new cases are still being found, the rate has slowed, according to the CDC.

The FDA says it's possible tomatoes caused some illnesses and that it's impossible to prove that they didn't cause any. But not a single contaminated tomato has been found. FDA tested 1,700 samples without finding traces of the outbreak. Apparently, this is not unusual: In half of all produce disease outbreaks, health investigators have never determined what made the people sick. The short shelf life of most fresh fruits and vegetables means it's less likely the items will still be in people's refrigerators when investigators arrive. And the complexity of the produce distribution system can be a large impediment.

Industry leaders are not so sure. They worry it was not a failure of traceability, but a lack of imagination. When the trace-back did not support the tomato hypothesis, investigators should have more quickly tried alternative hypotheses, they say.

In any event, a broad coalition of growers, distributors, restaurants, and retailers have been working on a national tracking system. The current proposal would utilize a global trade item number (GTIN). Every part of the distribution chain would be required to use a bar code encoded with the GTIN and the grower or shipper who produced it, the production lot it was part of, and the date it was packed or harvested. If the GTIN system were to be adopted, investigators could quickly determine where a box of fruit or vegetables came from, and thus whether it needs to be isolated or recalled.

This ability to better link up the product may impact product liability litigation: cause in fact is a basic element requiring plaintiffs to show that the product of the defendant caused his or her injury.  But industry recognizes that it is in everyone's interest to be able to trace back the source as quickly as possible and thus to take immediate action that will limit the number of people possibly affected.  And the inability to quickly trace back may have significant financial impact: The tomato warning, issued for varieties of fresh tomatoes, likely cost the industry millions of dollars, according to trade associations.

The L.A. Times recently reported on an AP poll that finds that nearly half of consumers have changed their eating and buying habits in the past six months because they're afraid they could get sick by eating contaminated food. Also, 86% of those polled said produce should be labeled so it can be tracked through layers of processors, packers and shippers, all the way back to the farm. The poll found that 80 percent of Americans said they would support new federal standards for fresh produce.

The Professors at the Mass Tort Litigation Blog have posted on this as well.

Daubert Ruling And Summary Judgment In Lymphoma Case

Judge Stewart Dalzell of the U.S. District Court for the Eastern District of Pennsylvania granted summary judgment to Novartis Pharmaceuticals Corp. in a suit that alleged the company's eczema drug, Elidel, caused plaintiff’s lymphoma. Perry v. Novartis Pharmaceuticals Corp., 2008 WL 2683047 (E.D. Pa. July 09, 2008). Although we typically focus on appellate opinions at MassTortDefense, this well-reasoned opinion is worth a look.

The Perrys filed suit against Novartis in October, 2005 alleging that the company had failed to warn about the risks of Elidel. Their son allegedly developed eczema shortly after his birth, and a pediatrician prescribed Elidel in 2003. He was diagnosed with lymphoma a few months later.

Defendant challenged plaintiffs’ expert evidence on causation. As is frequently the case, if plaintiffs’ expert testimony does not meet the Daubert standard, summary judgment for failure of proof on causation follows. The court noted that the core issue that the jury would have to address in this case is whether Perry's exposure to Elidel was a substantial cause of his disease. Courts in toxic tort cases often separate the causation inquiry into general causation (whether the substance is capable of causing the observed harm in general), and specific causation (whether the substance actually caused the harm a particular individual suffered). Plaintiffs' experts did the same, each drawing conclusions about both the capacity of the drug to cause Non-Hodgkins Lymphoma (NHL) in humans and its particular effect in Perry's case.

An expert's journey from general causation to specific causation need not be just a two-step process. So long as, taken together, the expert is able to draw a chain of scientifically reliable causal links that meets plaintiff's requirements under the substantive tort law, the evidence is admissible, and it will be left to the jury to establish the relative credibility of the parties' competing experts. Where, however, the expert reports leave wide, unexplained gaps in the causal chain, the evidence is not helpful to the trier of fact and must be excluded. In Daubert terms, just as there is no fit where there is simply too great an analytical gap between the data and the opinion offered, see Soldo v. Sandoz Pharms. Corp., 244 F.Supp.2d 434, 527 (W.D. Pa. 2003) (quoting General Electric Co. v. Joiner, 522 U.S. 136, 146 (1997)), “there is also no fit when there is too great an analytical gap between an expert's general causation conclusion and the specific causation question the jury must ultimately answer,” said the court.

One problematic gap concerned epidemiology. Although it has not been held by the Third Circuit that epidemiological studies are an indispensable element in the presentation of a prima facie drug product liability case, Lanzilotti v. Merrell Dow Pharms. Inc., 1986 WL 7832 (E.D.Pa. July 10, 1986) at *2, epidemiology is the primary generally accepted methodology for demonstrating a causal relation between a chemical compound and a set of symptoms or a disease. See Soldo, 244 F.Supp. at 532 (quoting Conde v. Velsicol Chem. Corp., 804 F.Supp. 972, 1025-26 (S.D. Ohio 1992)). Thus, while an expert's conclusions reached on the basis of other studies could perhaps be sufficiently reliable where no epidemiological studies have been conducted, no reliable scientific approach can simply ignore the epidemiology that does exist.

A second issue concerned the state of the art. The court made clear that the non-existence of good data does not allow expert witnesses to speculate or base their conclusions on inadequate supporting science. In cases where no adequate study shows the link between a substance and a disease, expert testimony will generally be inadmissible, even if there are hints in the data that some link might exist. This may mean that early victims of toxic torts are left without redress because they are unable to prove their cases with the scientific data that currently exists. While this is a “regrettable result in those individual cases,” said the court, it is an unavoidable reality of the structure of our legal system and is necessary to protect the interests of defendants who might otherwise be subject to crippling verdicts on the basis of slender scientific evidence. As the Seventh Circuit has noted, the courtroom is not the place for scientific guesswork, even of the inspired sort. “Law lags science; it does not lead it.” Rosen v. Ciba-Geigy Corp., 78 F.3d 316, 319 (7th Cir.1996).

Focusing next on specific causation, the court noted that each plaintiff expert engaged in a differential diagnosis. MassTortDefense notes the increasing use, and misuse, by plaintiffs of so-called differential diagnosis. The process by which a doctor views symptoms and test results to rule out possible alternative diseases in the diagnostic process to arrive at a conclusion concerning what ails the patient, has morphed into a process by which experts can tell the jury what caused the condition of the plaintiff – a far different thing. Here, after finding that no other risk factor for NHL was present, the experts concluded that because the drug was the only risk factor present and because the disease is rare, plaintiff’s treatment with Elidel was a substantial factor in his presentation with the disease. However, in order to result in an admissible conclusion, a differential diagnosis should reliably rule out reasonable alternative causes of the alleged harm including idiopathic causes. Soldo, 244 F.Supp.2d at 567. Admissible expert testimony need not rule out all alternative causes, but where a defendant points to a plausible alternative cause and the doctor offers no explanation for why he or she has concluded that it was not the sole cause, that doctor's methodology is unreliable.

Here, the differential diagnoses by plaintiff experts failed to exclude the likelihood that Perry's lymphoma had no known cause. Most NHL cases are idiopathic, having no known cause. Courts have excluded experts' differential diagnoses where they failed to adequately account for the likelihood that the disease was caused by an unknown factor. Doe v. Ortho-Clinical Diagnostics, Inc., 440 F.Supp.2d 465, 478 (M.D.N.C. 2006); Whiting v. Boston Edison Co., 891 F.Supp. 12 (D. Mass.1995). This is not to say, cautioned the court, that where most diagnoses of a disease are idiopathic it is impossible to prove specific causation. But in those cases, analysis beyond a differential diagnosis will likely be required.

Plaintiffs' experts' general causation conclusions were primarily based on animal studies and their failure to satisfactorily address epidemiology (and the gap related to dosage levels in the studies vs. plaintiff’s exposure) undermined the usefulness of those conclusions to a jury. Since plaintiffs' experts failed to form a scientifically grounded chain of inference between their general causation finding and their specific causation finding, their opinions were excluded. Summary judgment followed.

Conference Committee Reports Progress On CPSC Legislation

Congress took a step closer last week to finalizing the Consumer Product Safety Modernization Act. The conference committee (including chairs Sen. Daniel Inouye (D-Hawaii) and Rep. John Dingell (D-Mich.)) voted in favor of nine more provisions, further reconciling the different bills that have passed the Senate and House of Representatives. MassTortDefense has posted on the bills here and here.

The lawmakers agreed:
- to ban the export of recalled and nonconforming products, enabling the CPSC to prohibit a U.S. entity from exporting a product out of compliance with CPSC rules unless the importing country has previously notified the Commission of its permission;
- to require certain import safety management and interagency cooperation steps, requiring requires the CPSC to develop a plan to identify shipments of consumer products for import into the U.S.;
- to create a public consumer product safety database and
- to require the public disclosure of certain safety information.

They also adopted provisions to create a substantial product hazard list, mandate the destruction of imported products that don't comply with U.S. laws, require inspectors general to carry out audits and file reports, set new rules on lead paint in children's (12 or under) products and empower state attorneys general to enforce product safety laws.

The CPSC will return to five full members. Both bills (H.R. 4040 and S.2663 would increase funding for the agency. Both versions of the law would establish third-party premarket testing of certain products.

Senators and Representatives are still unable to agree on phthatlate restrictions, mandatory ASTM toy testing standards, preemption, whistleblower protection, mandatory All-Terrain Vehicle standards, and product-specific standards. The conferees also voted on an amendment to allow CPSC to ban importers and local manufacturers from the marketplace for repeat offenses. The Senators unanimously voted in favor while the Representatives unanimously voted against the amendment.

In the first conference on June 25, conferees voted and agreed on 21 noncontroversial items. The conferees have repeatedly said that they are hoping that the legislation passes in time for the August recess, which begins in just about two weeks.

How To Deal With Litigation-Related Concerns In "REMS" For Biologics

Last year’s Food and Drug Administration Amendments Act gave the FDA increased authority to require Risk Evaluation and Mitigation Strategies (REMS)— safety plans similar to those previously known as Risk Minimization Action Plans (RiskMAP). A recent article in Corporate Counsel offers in-house counsel a note of caution concerning the relationship between REMS and the claims made in a typical personal injury or consumer fraud litigation.

For example, the authors note that if REMS are needed, identifying and implementing the appropriate measures will involve a substantial amount of internal work by the manufacturer as well as significant interaction with the FDA. Both include opportunities and pitfalls that could have a significant effect on future litigation involving the product. The REMS process may engender “bad documents” (a paper trail that casts the company or its products in a bad light). On the other hand, one of the common claims asserted in product litigation is that a manufacturer was aware of and failed to adequately warn about its product’s risk. As the REMS process is specifically designed to increase the warnings to the health care  and patient communities, the authors (full disclosure: colleagues of MassTortDefense) suggest it may constitute a solid defense against the assertion that the manufacturer failed to provide adequate warnings.

Preemption Decision In Toxic Tort Claims Under Railroad Safety Act

There has been significant discussion of preemption recently, particularly in the medical device and drug context. A recent decision under the Federal Railroad Safety Act offers some insight into potentially important aspects of the doctrine, and particularly when Congressional action may affect preemption.

In Lundeen v. Canadian Pac. Ry. Co., 2008 WL 2597958 (8th Cir. July 2, 2008), the Eighth Circuit confronted a situation in which a legislative amendment, which was retroactive to the date of the relevant incident, had the apparent effect of reinstating a suit which had been preempted.

In January, 2002, a freight train operated by Canadian Pacific Railway Co. derailed in North Dakota, releasing a cloud of anhydrous ammonia. Nearby residents sued in state court, alleging respiratory disease and eye damage. Defendants removed based on federal question jurisdiction, but plaintiffs amended their complaint to delete reference to federal law. The district court then ruled that the cases should be remanded to Minnesota state court. Canadian Pacific appealed the ruling, and the Eighth Circuit found that the claims were preempted under the Federal Railroad Safety Act. The cases were remanded to the district court, which dismissed on the merits.

Plaintiffs appealed, and while the appeal was pending, the Act was amended, retroactive to the date of the train derailment. The amendment stated that “nothing in this section shall be construed to preempt an action under State law seeking damages for personal injury, death, or property damage alleging that a party …has failed to comply with the Federal standard of care established by a regulation or order issued by the Secretary of Transportation (with respect to railroad safety matters), or … has failed to comply with a State law, regulation, or order that is not incompatible with [federal law].” This “clarifying” amendment reflected Congress's disagreement with the manner in which the courts, including the Eighth Circuit, had interpreted the Act to preempt state law causes of action whenever a federal regulation covered the same subject matter as the allegations of negligence in a state court lawsuit.

Defendants argued that applying the amendment here: 1) would violate the U.S. Constitution's separation of powers doctrine; 2) violate due process; 3) violate equal protection; and 4) violate the ex post facto clause.

The appeals court rejected the railroad's separation of powers argument, citing Plaut v. Spendthrift Farm, 514 U.S. 211 (1995), for the notion that the doctrine is violated only when Congress tries to apply new law to cases which have already reached a final judgment. Here, the amendment became effective while these cases were on appeal and had not reached final judgments. The Supreme Court has reiterated that Congress possesses the power to amend existing law even if the amendment affects the outcome of pending cases.

The court also denied the due process challenge. The railroad had the burden of showing there is no rational basis for the law. See FCC v. Beach Communications, Inc., 508 U.S. 307 (1993). Indeed, the court noted it reviews legislation regulating economic and business affairs under a “highly deferential rational basis” standard of review. The sufficient rational basis for the amendment, said the court, was to give railroad accident victims the right to seek recovery in state courts when they allege railroads violate safety standards. Prior to the amendment, the relevant section had been interpreted in such a way that an injured person’s state law claims were preempted. It was “rational” for Congress to clarify this result was not an intended purpose of the Act.

No equal rights violation was recognized despite the amendment imposing different standards on railroads that caused harm before and after the effective date. Every retroactive statute, by necessity, imposes different standards on parties affected by the statute, and those differences are directly tied to the statute's effective date.

Finally, the court said, the amendment does not violate the Ex Post Facto clause, because there is no proof that Congress intended the amendment as a criminal penalty. The Ex Post Facto clause applies only to criminal penalties, and clear proof is needed to support the argument that a civil remedy is so “punitive” in purpose or effect as to be in essence a criminal penalty.

In an interesting dissent, Judge Beam disagreed with the majority view of retroactivity. Because the case had already been up on appeal on an issue of federal jurisdiction there was a final decision that could not be undone by legislation.

Of more interest to readers of MassTortDefense is his argument that the court should have followed Riegel v. Medtronic, Inc., 128 S.Ct. 999 (2008) and its discussion of the preemption precedent established in Cipollone v. Liggett Group, Inc., 505 U.S. 504 (1992); Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996); and Bates v. Dow Agrosciences LLC, 544 U.S. 431 (2005).

“I concede that the MDA as discussed in Riegel deals with a product or service different from that of the FRSA. But, for preemption analysis, any differences are immaterial-the preemption language and the regulatory requirements are analogous. For federal preemption purposes, a medical device manufactured and marketed under a regime employing specific federal safety requirements is little different from a railroad service formulated and delivered under specific federal safety regulations. Thus, Riegel provides the precedent we must apply.”

And “Like the medical device in Riegel, the railroad service in Lundeen is entitled to be delivered free of state requirements that differ from the federal regime. And, when the amended statute is properly construed, the limited state cause of action authorized by FRSA II fits within that paradigm. So, with minor exceptions not applicable in Lundeen, all state railroad safety requirements that are in addition to or different from those established under FRSA II are preempted. Paraphrasing Justice Scalia's comment in Riegel, excluding North Dakota common law duties from the scope of the FRSA II preemption scheme would make little sense.”

Thus, the dissent argued that Congress had authorized the creation of a state cause of action, but at the same time carefully protected the concept of federal uniformity established by the Act. This cause of action is limited to allegations regarding the failure of a defendant to comply with the federal standards of care established by regulation or order issued by the Secretary of Transportation, or the failure to comply with a plan, rule or standard created pursuant to regulation or order of the Secretary. This limited claim for damages preserves the federal uniformity demanded by the FRSA. Accordingly, any state law cause of action permitting railroad liability based upon more expansive state-based requirements than those directly established by the Secretary's regulations, rules or orders, does not pass muster under the amended Act, said the dissent. 

Is There A New Tom Clancy Novel?

For those readers of MassTortDefense thinking about a new book to read on the beach this weekend, a recent contribution to the Wall Street Journal by Mark Herrmann entitled “The Plaintiff Was Unhappy” reviews, critiques, and balances the recent release Side Effects by Alison Bass. The book is an attack on the FDA and the drug industry in the context of antidepressant medications.

Herrmann shows how one-sided the book/attack is, concluding that Side Effects “belongs to a genre of investigative journalism that involves talking to plaintiffs, their lawyers and their expert witnesses, taking their stories as gospel, and denigrating the opposing view because corporate money (apparently less pure than money from the plaintiffs' side) supposedly has a corrupting effect” on science. 

Herrmann (along with Jim Beck) is an author of the popular Drug and Device Law blog.

Waxman Seeks Preemption Drafts From FDA

Preemption of state law claims, particularly in the area of medical devices and drugs, has been a hot topic lately. MassTortDefense has posted on it here and here, and there are numerous good posts on the topic at Drug and Device Law.

In the latest development, Congressman Henry A. Waxman (D-Calif.), Chair of the House Committee on Oversight and Government Reform recently sent a letter to Food and Drug Administration Commissioner Andrew C. von Eschenbach, requesting information about the agency's stance on federal preemption issues under the Bush administration.

The FDA believes, correctly, that state product liability lawsuits which challenge or undermine or invite conduct inconsistent with the federal agency's authority can have a detrimental effect on public health.  Waxman calls this a "reversal of FDA's long-standing position on preemption.”  Waxman’s view about the FDA’s position isn’t so firmly grounded, as seen in the back and forth between the majority and the dissent in Colacicco v. Apotex Inc., 2008 WL 927848 (3d Cir. Apr. 8, 2008), concerning whether the FDA has been “inconsistent” in its positions towards preemption. Going back to the Clinton era (Bill), for example, the FDA has repeatedly stated that FDA regulations may displace both state legislative requirements and state common law duties. In 2000, the FDA fretted that consumers in court would have to prove that harm was linked to the substance based on a standard that might vary by jurisdiction or at the “whim of a jury.” 65 Fed. Reg. 43269, 43278-79 (FDA July 13, 2000). And in an FDA final rule regarding FDA-mandated adverse event reports in state-law civil litigation, the agency stated that implied preemption was appropriate because state or local laws, rules, regulations, or other requirements would impede FDA’s ability to monitor product safety after approval to ensure that human drug products, biologics, and medical devices are safe and effective for their intended uses. “Thus, under principles of preemption law, congressional intent to preempt State law can be inferred.” 60 Fed. Reg. 16962, 16963 (FDA Apr. 3, 1995). See also 59 Fed. Reg. 3944, 3948 (FDA Jan. 27, 1994).

Nevertheless, Waxman is asking for numerous documents from the agency, including:

-all documents since Jan. 20, 2001, concerning communications between FDA and private individuals about preemption;
-all documents since that date, relating to internal FDA communications about preemption;
-all documents since Jan. 20, 2001, relating to communications between FDA officials and officials in the Department of HHS, the White House, and other federal agencies about preemption;
-all amicus briefs since Jan. 20, 2001, filed by FDA in product liability suits; and
-all drafts since that date of the final drug labeling rules issued Jan. 24, 2006.

Liberal Democrats in Congress have been buzzing about the Supreme Court’s decision in Riegel v. Medtronic Inc., in which the Court held that federal law preempted state-law claims against the manufacturer of a medical device that went through the Food and Drug Administration's premarket approval process. And they introduced H.R. 6381 that would reverse the effects of Riegel in medical device lawsuits. Waxman’s letter also comes in anticipation of the Court’s consideration of the extent to which the Food, Drug and Cosmetic Act impliedly preempts state law claims against drug makers. See Wyeth v. Levine, U.S., No. 06-1249, review granted 1/18/08. Of course, DOJ/FDA filed an amicus brief arguing in favor of preemption in that case.

Grout Sealer MDL Court Denies Summary Judgment Motion

The MDL transferee court has denied the summary judgment motion of the manufacturer of an allegedly toxic ingredient in Stand 'n Seal grout sealer. In re Stand 'N Seal Products Liability Litigation, 2008 WL 2622793 (N.D.Ga.), No. 1:07-MDL-01804 (6/26/08). The motion focused on the apparent inability of 67 plaintiffs to demonstrate exposure to the product, which in turn meant they could not show causation. Proof of exposure is a recurring theme in toxic tort litigation, and MassTortDefense has blogged on it here.

Stand 'n Seal originally contained an ingredient called Zonyl, according to the court’s recitation. The manufacturers substituted one ingredient, Innovative Chemical Technologies, Inc.’s product, Flexipel S-22WS, for Zonyl in 2005; some users then complained of respiratory problems, leading to a recall. Numerous personal injury actions were consolidated in a multidistrict litigation overseen by Judge Thomas W. Thrash of the U.S. District Court for the Northern District of Georgia.

ICT’s motion sought to dismiss the group of 67 plaintiffs on the basis that they could not prove their exposure to the Stand 'n Seal product with Flexipel. Generally, plaintiffs must show that the product that allegedly caused their injuries was, in fact, manufactured or supplied by the defendant in this case.

According to Judge Thrash, some of these plaintiffs lacked a can identification number – typical product identification evidence – because they threw away their cans of Stand 'n Seal. Others, he said, retain a can that contains Zonyl, but claim they used more than one can of Stand 'n Seal. The court found that under applicable Georgia law such plaintiffs could use circumstantial evidence to meet their burden of proving exposure to the ingredient. In an interesting turn of phrase, the court stated that ICT had not presented clear and positive evidence that all of the Plaintiffs used cans containing only Zonyl. Under the summary judgment standard, defendant as the moving party did not have that burden. Rather, defendant needed to show there was genuine issue of fact, and plaintiffs’ lack of relevant evidence was certainly part of that showing.

The court concluded that the plaintiffs subject to this motion should be allowed to present individualized circumstantial evidence that they were exposed to cans containing Flexipel. “Such evidence could include testimony concerning the smell of the product. It could include testimony as to the date and place of the purchase of the product.” In a typical case, the plaintiff would have had to make such a showing to defeat summary judgment. But here, in the MDL. the timing of summary judgment motions can be atypical. Accordingly, the court held that the presentation of such individualized evidence by the plaintiffs could occur following remand to the transferor courts or before bellwether trials in this MDL court.

The "Virtual Law Firm" In Pharmaceutical Mass Tort Litigation

The pharmaceutical industry has been under litigation siege for several years. Plaintiff lawyers regularly seize upon FDA regulatory action, label changes, and new scientific studies concerning potential side effects, as a basis for significant product liability litigation. It matters not that a learned intermediary prescribed the medication. It matters not that the warnings information comported with the state of the art of medical knowledge. The alluring stream of revenue generated by a successful product can be like blood in the water. Plaintiff lawyers have become adept at recruiting clients, utilizing the internet, and product liability actions may descend into mass torts, with tens of thousands of named plaintiffs. From Accutane to Zyprexa, no product seems immune, and few manufacturers seem safe, no matter how robust their pre-launch efforts. That a drug is still approved and on the market does not necessarily prevent significant litigation.

One disturbing feature of today’s litigation concerning pharmaceutical products is its potential breadth. Product liability claims require significant defense efforts, and potentially extensive resources. Cases may arise in multiple jurisdictions at once, including the so-called “judicial hellholes” so favorable to plaintiffs. Increasingly, plaintiff lawyers coordinate, such that maximum discovery obtained in one case becomes a mere minimum for what plaintiffs in other cases seek. Defense counsel facing this must bring a variety of skills, including e-discovery experience, medical/scientific expertise, and top trial talent.

In addition to traditional products liability claims based on alleged negligence or strict liability, pharmaceutical mass torts may include securities law claims. When the adverse publicity concerning a new study or FDA action affects stock prices, plaintiffs cry fraud. The litigation may include claims based on state consumer fraud statutes, in which plaintiffs argue they need not show that they actually suffered a side effect, merely that the allegedly undisclosed side effect caused them to pay more for the product than they should have. Those few dollars multiplied in a class action by all the prescriptions written can generate frightening damages. Other plaintiffs, again not even injured, may allege that they are at risk of contracting the side effect in the future, and seek expensive medical monitoring. Yet another group of potential plaintiffs, beyond those patients who actually suffered an alleged injury, are the third-party payers, such as union health funds, who may assert that on behalf of their subscribers they were allegedly economically damaged by the company’s conduct regarding a medication. Finally, in addition to direct FDA regulatory review, other government agencies may pile on, including the DOJ/US Attorney. Prosecutors may bring criminal or civil charges, seek significant fines, and put in jeopardy the company’s ability to participate in vital government health care programs.

Companies facing product liability cases must be pro-active in this environment. First, they must assess the risks whether the litigation will expand, by factoring in the posture of the FDA, the level of media and interest group interest, and any attention being paid by the DOJ. The status of the key scientific issues must be frankly acknowledged, as well as potential future developments that may affect the state of the art. Lessons may be profitably learned from other mass torts: how vulnerable is the company to the allegations typically made in these cases, such as alleged ghostwriting, improper handling of key opinion leaders in the medical community, and the degree of off-label usage.

Second, a company that detects a risk of expanding litigation will want to be proactive in setting in place a mechanism to deal with the potential problem. It may be that FDA review leads to no significant label changes; or that prosecutors review basic documents and decline to proceed. A dozen or fifteen cases do not always turn into a mass tort. But if they do, the development can be sudden, and one lesson of history is that early decisions in the litigation can affect – for better or worse – the entire course of the mass tort.

How, then, does a pharmaceutical (or medical device company, for that matter) prepare for a battle that may include many different types of claims, in many different jurisdictions, by many coordinating plaintiff firms? And how does a company secure the quality resources needed to battle what may potentially be hundreds or even thousands of claims?

In recent years, a model that has sometimes been used with success is the so-called “virtual law firm” (“VLF”). In this defense scheme, a company hires lawyer teams from several (typically 4-6) defense firms. Those lawyers are expected to, and indeed are hired on the condition that they will, strive to work with each other seamlessly, as if they were in one law firm rather than several. Hence, the term virtual law firm.

The potential advantages to the client are numerous. First, it allows the client to select what is akin to an all-star team, taking the best trial lawyers from each firm to try the cases, the best legal thinkers from each to draft motions and briefs, the most scientifically adept lawyers at each firm to work up expert witnesses, etc. Second, each firm can concentrate on offering its strengths and true expertise. So, for example, a firm that has great regulatory expertise regarding the product may be invaluable on FDA issues, even outside the regulatory setting, but may not have the capacity or expertise to try cases. The model allows for that firm to handle its niche and also share its expertise with other lawyers in the virtual firm. Third, it allows the client to coordinate among the various kinds of litigation. For example, it may not be efficient to have one firm collecting documents and producing them to the DOJ and a different firm collecting and producing data to personal injury plaintiffs. The need to coordinate among the various types of cases cannot be overstated. Rulings in one case may impact all the other types of cases. Discovery in one may become quickly available in all, despite “protective orders,” because of competing jurisdictions. Depositions taken in one kind of matter may be used in another.

An effective virtual law firm can address many of these issues. A client pursuing this strategy must put together a team that covers each of the major needs, brings talent to each of the essential areas, and can – as a whole – expand and contract to meet the size and scope of the litigation over time. But there is more to a working VLF than selecting the team. The process involves clear communication of needs and expectations. It requires the set-up of appropriate communication tools, from regular meetings and calls, to a secure website database each firm can contribute to and access.

Many clients will appoint one firm as the captain of the team, the steward of the VLF, with responsibility to help in-house counsel make the system work. Attractive candidates for this role will have served as national counsel, co-national counsel, and regional counsel in prior significant litigation. Even if the steward firm will not be handling all phases of the litigation, that they have experience in all phases, or many, is a plus. Clients should seek a firm (all other things being equal) with a reputation for setting the tone for amicable and advantageous relationships in these arrangements.

Managing a VLF can be more daunting than hiring a single firm.  The coordination and communication aspects are constant challenges.  It may be inevitable that some "sharp elbows" appear.  But several companies in the industry have made this model work for them in recent years.

PhRMA Revises Marketing Code Regarding Interactions With Healthcare Professionals

The Pharmaceutical Research and Manufacturers of America (PhRMA) has just adopted measures to enhance the PhRMA Code dealing with Interactions with Healthcare Professionals. (PhRMA represents research-based pharmaceutical and biotechnology companies.) Attacks on the marketing practices of drug makers is a common feature in pharmaceutical mass torts, including criticisms of the relationships between healthcare providers and pharmaceutical companies.

Informative professional relationships between healthcare providers and pharmaceutical research companies are instrumental to effective patient care. While plaintiffs frequently malign interactions between the companies and prescribers, doctors appropriately rely on information about new medicines in order to enhance the quality of care they give patients. Providing doctors with up-to-date information on the medicines they prescribe improves patient care. Thus, reasons for interaction include:

• inform healthcare professionals about the benefits and risks of products to help advance appropriate patient use,
• provide scientific and educational information,
• support medical research and education, and
• obtain feedback and advice about our products through consultation with medical experts.

The new code will take effect in January, 2009. The code is voluntary, reflecting the fact that different companies may approach the issues differently, all well within the range of choices available to a reasonable manufacturer in a competitive environment.

Federal Court Tosses Punitive Damages Award in HRT Case

A federal district court has thrown out a jury award of more than $27 million in punitive damages awarded to a Little Rock, Ark. woman who developed breast cancer allegedly as a result of taking hormone replacement therapy. In re: Prempro Products Liability Litig. (Scroggin v. Wyeth, et. al.), MDL No. 1507-WRW, 4:04CV01169.  Plaintiff Donna Scroggin developed breast cancer and had a double mastectomy, and blamed the hormone drugs she allegedly took for 11 years to combat menopausal symptoms. Defendants noted their products have carried a label warning of a heightened risk of breast cancer at all relevant times. In February, a federal jury returned a verdict in favor of Scroggin in her lawsuit against drug makers Wyeth and Upjohn, awarding her $2.75 million in compensatory damages and $27 million in punitive damages.

In an opinion July 8th on post-trial motions, Judge Wilson, of the E.D. of Arkansas, threw out the punitive damages award, finding he should not have permitted certain key testimony from a former Food and Drug Administration official, Dr. Suzanne Parisian. She had testified as the plaintiff's regulatory expert. The Court concluded, as defendants had asserted, that Dr. Parisian testified to a bottom line conclusion without sufficient explanation, failed to provide expert analysis, testified beyond limitations established by pretrial orders, testified in areas beyond her expertise, and invaded areas that required no expert testimony. Specifically, the expert failed to provide convincing testimony that Wyeth's actions had violated FDA regulations in any way that would warrant a punitive award.

In a part of the ruling particularly useful for readers of MassTortDefense, the judge said the expert did little more than read select portions of exhibits without providing further comment. Contrary to plaintiff’s position during the Daubert hearing, and during the punitive damages stage, Dr. Parisian, generally, did not give the jury the tools they need to look at those documents, or to understand them in the context of a regulatory background -- she simply read the documents to the jury. He hadn’t admitted such “so that [the expert] could simply engage in recitation of those exhibits; jurors are capable of reading documents.” Ironically, on cross-examination, Dr. Parisian, on at least one occasion, took the position that the document “speaks for itself.”

If an expert does nothing more than read exhibits, is there really any point in her testifying as an expert? The Court said “no.” As was seen during the punitive damages stage, the use of the “regulatory expert” to deal with large volumes of conduct documents is subject to abuse. MassTortDefense has seen this same technique in asbestos, in tobacco, in other pharma cases. The expert here did not explain the documents, provide summaries, or tie them in to her proposed regulatory testimony. Dr. Parisian did not provide analysis or expertise. Instead, improperly, she was a mere document delivery device.

The promised expert testimony simply was not delivered, said the Court, “so I should have struck this testimony at the time.”  Without Parisian's testimony, plaintiff had not presented sufficient other evidence to meet the clear and convincing standard required for punitive damages. The Court said plaintiff tried to present evidence of what, out of context and at first blush, might be considered questionable practices (e.g., alleged ghostwriting, countering negative press, etc.), but all this fell far short of establishing a submissible jury issue on punitives.

Summary Judgment Ruling In New Jersey HRT Litigation

On July 11, 2008, the mass tort judge handling hormone replacement cases in New Jersey granted summary judgment dismissing Bailey v. Wyeth, No. L-999-06 MT (N.J. Super.), ruling that the labels used by defendants Wyeth and Upjohn were adequate as a matter of law. The failure to warn claims were dismissed because the plaintiffs could not overcome the presumption of adequacy of FDA-approved labels created by the New Jersey Products Liability Act (NJ PLA). The claims for fraud, negligent misrepresentation, and consumer fraud likewise failed because they are subsumed by the NJ PLA and could not be asserted as independent causes of action.

Because our firm is involved in HRT litigation, and because of past and current client relationships, MassTortDefense policy is to not offer extensive commentary on such decisions.  Here, however, for interested readers is the actual opinion.

Summary Judgment Ruling In New Jersey HRT Litigation

On July 11, 2008, the mass tort judge handling hormone replacement cases in New Jersey granted summary judgment dismissing Bailey v. Wyeth, No. L-999-06 MT (N.J. Super.), ruling that the labels used by defendants Wyeth and Upjohn were adequate as a matter of law. The failure to warn claims were dismissed because the plaintiffs could not overcome the presumption of adequacy of FDA-approved labels created by the New Jersey Products Liability Act (NJ PLA). The claims for fraud, negligent misrepresentation, and consumer fraud likewise failed because they are subsumed by the NJ PLA and could not be asserted as independent causes of action.

Because our firm is involved in HRT litigation, and because of past and current client relationships, MassTortDefense policy is to not offer extensive commentary on such decisions.  Here, however, for interested readers is the actual opinion.

State Supreme Court Fails To Correct Causation Error in Asbestos Case

Typically, MassTortDefense will post about significant opinions issued on product liability issues. A recent decision, without opinion, by the California Supreme Court is worth a mention. Just recently, the court declined to review the intermediate appellate court’s affirmance of a $3.9 million asbestos verdict. It thus left standing the appellate court’s view on the important issue whether so-called de minimis exposures are sufficient to satisfy the substantial factor test. Norris v. Crane Co., 2008 WL 638361 (Cal.App. 2d Dist. 2008). The California rule raises significant issues for asbestos and potentially other toxic tort defendants, and stands in contrast to the better view in many other jurisdictions.

The plaintiff, former Naval worker Joseph Norris, had been awarded $3.9 million by the jury, 50% liability assigned to defendant Crane Co. The company appealed the verdict, arguing that plaintiff failed to present substantial evidence linking asbestos in the Crane valves to the decedent's mesothelioma. The Second District Court of Appeal disagreed, and affirmed the verdict. On June 25th, the state Supreme Court denied the petition for review.

The court of appeals found sufficient the evidence that the U.S. Navy purchased several types of Crane Co. valves, and that the defendant was aware that parts of these valves would have to be replaced at some point. Norris was allegedly "within a few feet" of other workers who were grinding Crane valves and replacing gaskets on the product. The jury could infer that this process released fibers that contributed to the dust in the air plaintiff breathed as he waited. Also, Norris slept in quarters with two small Crane valves, and when the valves were overhauled, dust was released and was not cleaned up.

Expert testimony was offered to the effect that every exposure to asbestos fibers increased the total dose in his lung that led to the development of his disease. Each dose added more fibers that could stay in the lung. There was substantial evidence plaintiff’s “exposure to asbestos from materials in Crane valves increased his risk of developing mesothelioma and, therefore, was a substantial factor in causing his injury." Thus, the plaintiff successfully proved a causal link between the Crane Co. valves and Norris' mesothelioma, said the court.

What’s Wrong With This Picture?
Tort law requires that the allegedly defective product have caused the injury. In the toxic substance context, plaintiff must have been exposed to defendant’s product, and exposed to a sufficient dose that is capable of causing the disease, and actually did cause the disease in plaintiff. Dose refers to the amount of chemical that enters the body, and is arguably the single most important factor to consider in evaluating whether an alleged exposure caused a specific adverse effect. Indeed, a founding principle of toxicology is that the “dose makes the poison.”

The problem with the California opinion is that the plaintiff had improperly been allowed to submit evidence of "any exposure," which rule would allow exposed persons to sue thousands of new defendants whose supposed “contribution” to the disease is trivial at best, and certainly far below the type of doses actually known to cause or increase the risk of disease in any meaningful way.

It is common for plaintiffs to submit expert affidavits attesting that any exposure to asbestos, no matter how minimal, is a substantial contributing factor in asbestos disease. Such generalized opinions ought not suffice to create a jury question in a case where exposure to the defendant's product is de minimis, particularly in the absence of evidence excluding other possible sources of exposure (or in the face of evidence of substantial exposure from other sources). See generally Borg-Warner Corp. v. Flores, 232 S.W.3d 765 (Tex. 2007)(rejecting view that if plaintiff can present any evidence that a company's asbestos-containing product was at the workplace while plaintiff was at the workplace, jury question has been established as to whether that product proximately caused plaintiff's disease).

A far different take on this issue is seen in other jurisdictions. The Pennsylvania Supreme Court, for example, reached conclusions contrary to the California appellate court's ruling in Gregg v. V.J. Auto Parts Inc., 943 A.2d 216, 226-227 (2007). That court concluded that it is not a viable solution to indulge in a fiction that each and every exposure to asbestos, no matter how minimal in relation to other exposures, raises a fact issue concerning substantial-factor causation. The result of that approach would be to subject defendants to full joint-and-several liability for injuries and fatalities in the absence of any reasonably developed scientific reasoning that would support the conclusion that the product sold by the defendant was a substantial factor in causing the harm.

Other courts will thus apply the frequency, regularity, proximity factors in asbestos litigation, Lohrmann v. Pittsburgh Corning Corp., 782 F.2d 1156 (4th Cir.1986), if not as a rigid standard with an absolute threshold necessary to support liability, then at least as an aid in distinguishing cases in which the plaintiff can adduce evidence that there is a sufficiently significant likelihood that the defendant's product caused his harm, from those in which such likelihood is absent on account of only casual or minimal exposure to the defendant's product. The California court missed this opportunity.

(Any readers interested in a copy of the Amicus brief on this issue in the court of appeals can email me and I will send you a copy.)

MDL Court Holds To Pretrial Deadlines For Next Bellwether Case In Welding Fumes

The MDL court in the In re Welding Fume Products Liability Litigation, MDL-1535 (N.D. Ohio) recently issued an interesting Order about mediation. Not ordering mediation. Instead, it came to the Court’s attention that various plaintiff counsel have stated publicly that the Court has ordered the parties to engage in mediation. This statement, in turn, has led to various conjectures and to requests that assorted deadlines be postponed pending mediation. The Court issued an “Order to end inappropriate speculation.” Although the MDL Court did, sua sponte, raise the concept of mediation, the Court has not ordered any mediation in this case. In particular, the Court has scheduled the next MDL bellwether case – Byers v. Lincoln Electric Company – for trial in November of 2008. The Court issued the Order to make “clear here that it expects the parties will pursue all deadlines in their welding fumes litigation accordingly.” Motions in limine are due 9/15. Dispositive motions are due 9/8.

In this mass tort, plaintiffs have moved to dismiss more than 4,000 cases in the MDL. The total number of cases pending against the welding defendants has dropped by over two-thirds. Plaintiffs have been forced to dismiss five trial-ready cases, including three slated for early trials in the MDL. Although plaintiffs secured a significant verdict last December in the Tamraz case, it was the first plaintiff victory in several years, and juries have found for defendants in 20 of the last 23 plaintiffs’ cases tried in this litigation, including consolidated cases that are heavily weighted toward plaintiffs and cases in jurisdictions that are considered plaintiff-friendly.

CDC Announces Results Of Study Of Formaldehyde In FEMA Trailers

The Centers for Disease Control and Prevention has released the results of a study which it commissioned concerning formaldehyde levels in mobile homes provided to residents of the Gulf Coast affected by Hurricane Katrina in 2005. The trailers, which were provided by the Federal Emergency Management Agency to survivors of the hurricane, have been the targets of a series of lawsuits around the United States. See In Re FEMA Trailer Formaldehyde Products Liability Litigation, MDL No. 1873 (E.D. La.). CDC has been working with FEMA and other agencies to investigate possible levels of formaldehyde in the trailers and mobile homes.


The study was conducted by the Lawrence Berkeley National Laboratory in California, and concluded that the individual component parts of the trailers contained formaldehyde below federally regulated levels, but when combined, the formaldehyde level can rise higher than regulatory limits/industry standards. That is, in the study of four vacant trailers, CDC's contractor found that the amount of formaldehyde given off by each trailer part was not higher than the limit set by the U.S. Department of Housing and Urban Development. The higher overall total “may be because” the trailers use more composite wood products, such as thin particleboard, than site-built or manufactured houses, have more composite wood products in a smaller space than site-built or manufactured homes, and/or let in less fresh air than does a site-built or manufactured house. The study found that the trailers had more wood paneling in a more constricted space than other homes. “These findings indicate that elevated formaldehyde levels are most likely due to a construction/design issue in the trailers,” said the report.

Berkeley scientists focused on commercially available trailers and models built custom for FEMA by four makers. Scientists tested formaldehyde levels inside trailers for one hour in the morning and one hour in the afternoon. LBNL then tested individual pieces of the trailer at the Berkeley, Calif. lab. for emissions from specific parts of each trailer, such as walls, floors, ceilings, tables and cabinets. Some 45 small material samples of wood products from the 4 units were collected to measure their material-specific emission rates for 33 compounds. Only three of the compounds tested for were detected, and formaldehyde was the only one considered to be of possible human health significance. An important finding was that only one material of the 45 tested exhibited formaldehyde emissions in excess of the HUD standard.


CDC said the study helped identify the sources of formaldehyde and other volatile organic compounds that may make the largest contributions to the indoor air quality. It also indicates that the amount of ventilation affects the concentrations found in the air. However, MassTortDefense notes that the study analyzed only 4 vacant, never-used trailers, which were provided by FEMA, including two trailers that were specifically designed to be used as temporary emergency housing and thus not commercially available. CDC admits that this study, because it only examined four travel trailers, did not provide results that could be applied to all FEMA-supplied travel trailers or to other types of temporary housing, such as park models or mobile homes. That will likely not stop plaintiffs from trying to misuse it in litigation.  

Such studies can present significant challenges in litigation because they may have the aura of credibility associated not only with an "independent" testing facility but also the government agency which commissioned the study. Generally speaking, parties facing such studies will want to carefully analyze the study, with expert assistance, to detect any issues with methodology, data, conclusions or application to the facts in the case at issue. For example, this study did not compare trailers purchased "off the lot" by FEMA to those designed specifically for FEMA use. Such flaws can point the way to investigations defendants may undertake to properly and more fully address issues in the litigation.  Similarly, CDC admits that "the results of the LBNL investigation described in this report are not definitive."   It would be arguably improper for plaintiffs' experts to place more reliance on the results than the agency that commissioned the study. Finally, defendants facing such studies will want to carefully explore potential sources of bias or interest on the part of the agency or testing facility.

CPSC Releases Import Final Safety Strategy Document

The Consumer Product Safety Commission has just released its revised import safety strategy document. The comment period on the draft import strategy (which MassTortDefense posted on here) expired in May. The final import plan is now described in the CPSC document, Executive Summary: Import Safety Strategy, found here.

The four-prong plan addresses regulated consumer products at the design, manufacture, distribution, and consumption stages:
I. Engage the private sector and foreign governments to foster both compliance with relevant safety standards and adoption of more effective techniques of identifying potential product hazards;
II. Build safety assurances into the production processes by promoting the use of safety standards by manufacturers, and verifying compliance through third-party testing and inspections where appropriate;
III. Prevent unsafe products through strategically redeploying CPSC resources according to principles of hazard analysis and risk management to target surveillance and inspection of the distribution chain; and
IV. Identify and quickly remove product hazards in the market and provide real-time communications to consumers, foreign governments, and the private sector.

There has been a 100% increase in imports of consumer products into the United States over the last decade. The value of all imported consumer products under the jurisdiction of the CPSC was an estimated $639 billion in 2007. Last year, approximately 42% of these products were from China, and the value of these imports from China nearly quadrupled from 1998 to 2007. While imports currently account for about 44% of all consumer products sold in the United States today, they comprise over three-fourths of all product recalls administered by the agency.

With over $2 trillion worth of products (including those under CPSC jurisdiction) imported into the United States every year by over 800,000 importers at more than 300 U.S. ports of entry, the CPSC must be strategic in its vision and targeted in its use of resources to ensure the products imported into this country are safe. The plan’s theme involves reaching out to foreign agencies and countries to attempt to build safety assurances into production processes. CPSC sees a need to address product safety in the "new global marketplace" with a range of actions beyond the traditional methods of marketplace surveillance and enforcement historically utilized by the Commission. Those actions include memoranda of understanding with 14 foreign regulatory agencies in Canada, China, European Commission, Israel, South Korea, Peru, Chile, Costa Rica, India, Japan, Mexico, Taiwan, Egypt, and Vietnam.

Imports from China, in particular, have recently presented serious issues, as noted by MassTortDefense here and here and here. The CPSC action plan with China's General Administration for Quality Supervision, Inspection, and Quarantine focuses on product safety for fireworks, toys, electrical products, and lighters. The plan employs such steps as exchange of standards information, training on product testing, and exchange of information on emerging hazards. This year, CPSC created a Chinese-language page on its web site. The U.S. in December, 2007 signed two memoranda of agreements with China to enhance the safety of a wide variety of food, feed, drugs, and medical devices.

The release of the plan was accompanied by an updated import action plan update report from the Interagency Working Group on Import Safety, citing progress in import safety strategy and reiterating the call for measures beyond simply inspecting imported products at the border. The report, Import Safety--Action Plan Update, here, outlines steps taken by the federal government and trading partners to improve import safety since the last update in November, 2007. The update cited new enforcement actions, signed agreements with key trading partners, bilateral and multilateral discussions, and critical information shared on best practices. For example, CPSC established its Import Surveillance Division in early 2008, representing the first permanent, full-time presence of CPSC personnel at key U.S. ports-of-entry 

A congressional conference committee currently is working to harmonize competing versions of CPSC reform legislation that would strengthen CPSC authority and increase funding. MassTortDefense has posted on the legislation, here and here

State Supreme Court Rejects Public Nuisance Lead Claim

In a unanimous decision, the Rhode Island Supreme Court has rejected the state's public nuisance suit against three former lead pigment makers. See Rhode Island v. Lead Industries Association, No. 2006-158-Appeal; No. 2007-121-Appeal (July 1, 2008).

The decision represents the latest round in the ongoing battle surrounding the misapplication by plaintiffs of the traditional tort of nuisance. The Rhode Island action was the first suit filed by a state against the lead paint industry. Since then, appeals courts in New Jersey, Missouri, and Illinois all have rejected public nuisance claims against former lead pigment manufacturers.

The state sued a number of paint makers and the trade group Lead Industries Association Inc., in 1999. The state alleged that the manufacturers or their predecessors-in-interest had
manufactured, promoted, distributed, and sold lead pigment for use in residential paint, despite
that they allegedly knew or should have known, since the early 1900s, that lead is hazardous to human health. The state also contended that the LIA was, in essence, a co-conspirator of one or more of the manufacturers from at least 1928 to the present. The state asserted that defendants failed to warn Rhode Islanders of the hazardous nature of lead and failed to adequately test lead pigment. In addition, the state maintained that defendants concealed these hazards from the public or misrepresented that they were safe. 

Paint manufacturers voluntarily stopped selling lead-based house paint in the 1990’s after evidence began to suggest that it posed serious health risks. Particular to the nuisance claim,  defendants assert that they did not control the lead pigment at the time it caused harm to Rhode Island children and that, therefore, they cannot be held liable for public nuisance. The defendants also argue that there was no interference with a public right, as that term has been recognized under public nuisance law.

The Rhode Island trial judge declined to dismiss the state's public nuisance claims. Defendants had asserted that the state had not alleged and could not show that defendants' conduct interfered with a public right, or that defendants were in control of lead pigment at the time it allegedly caused harm to children in Rhode Island. The first trial in the case ended in a mistrial in 2002. Following a 15-week trial, the longest civil jury trial in the state’s history, the jury in state Superior Court in 2006 found Sherwin-Williams Co., NL Industries Inc., and Millennium Holdings LLC responsible for the public nuisance posed by lead in buildings. The jury found that the defendants should be ordered to abate the nuisance, the first time in the United States that a trial resulted in a verdict that imposed liability on lead pigment manufacturers for creating a public nuisance. The state offered a $2.4 billion abatement plan in September 2007.

On appeal, defendants argued that argued that the trial justice erred by: (1) misapplying the law of public nuisance; (2) finding a causal connection between defendants’ actions and lead poisoning in Rhode Island; and (3) failing to hold that the action was barred by the constitutional provision concerning separation of powers. In an 81-page ruling, the state's top court reversed the judgment of abatement.

The Restatement (Second) defines public nuisance, in relevant part, as follows:
1) A public nuisance is an unreasonable interference with a right common to the general public.   2) Circumstances that may sustain a holding that an interference with a public right is unreasonable include the following: “(a) Whether the conduct involves a significant interference with the public health, the public safety, the public peace, the public comfort or the public convenience….” 4 Restatement (Second) Torts § 821B at 87.

The Rhode Island Court accordingly recognized three principal elements that are essential to establish public nuisance: (1) an unreasonable interference; (2) with a right common to the general public; (3) by a person or people with control over the instrumentality alleged to have created the nuisance when the damage occurred. After establishing the presence of the three elements of public nuisance, one must then determine whether the defendant caused the public nuisance."  Causation is a basic requirement in any public nuisance action." In addition to proving that a defendant is the cause-in-fact of an injury, a plaintiff must demonstrate proximate causation.

The Rhode Island attorney general failed to prove that the companies interfered with a public right or had control of the lead paint when it harmed children in the state. Control at the time the damage occurs is critical in public nuisance cases, especially because the principal remedy for the harm caused by the nuisance is abatement. The responsibility for the harm that lead paint caused lies with property owners, as the state Legislature has already established. “The General Assembly has recognized defendants' lack of control and inability to abate the alleged nuisance because it has placed the burden on landlords and property owners to make their properties lead-safe.”

However grave the problem of lead poisoning is in Rhode Island, public nuisance law simply does not provide a remedy for this harm. The proper means of commencing a lawsuit against a manufacturer of lead pigments for the sale of an unsafe product is a products liability action. The law of public nuisance never before has been applied to products, however harmful. "Undoubtedly, public nuisance and products liability are two distinct causes of action, each with rational boundaries that are not intended to overlap." Public nuisance focuses on the abatement of annoying or bothersome activities. Products liability law, on the other hand, has its own well-defined structure, which is designed specifically to hold manufacturers liable for harmful products that the manufacturers have caused to enter the stream of commerce.

Courts presented with product-based public nuisance claims have expressed their concern over the ease with which a plaintiff could bring what properly would be characterized as a products liability suit under the guise of product-based public nuisance. Courts in other states consistently have rejected product-based public nuisance suits against lead pigment manufacturers, expressing a concern that allowing such a lawsuit would circumvent the basic requirements of products liability law. See American Cyanamid Co., 823 N.E.2d at 134; Benjamin Moore & Co., 226 S.W.3d at 116; In re Lead Paint Litigation, 924 A.2d at 503-05 (N.J.).

The battle now shifts to pending cases in Ohio and California.

Two Recent Canadian Pharmaceutical Class Action Decisions

Two recent decisions illustrate just how difficult Canada is becoming as a jurisdiction for class actions defendants, particularly companies in the pharmaceutical industry. Frequently, identical consumer products, drugs, and medical devices are marketed in Canada as well as the U.S.  When a product is recalled, or new science suggests risks in a product leading to American product liability and mass tort litigation, Canadian plaintiff attorneys have not been bashful about bringing copycat litigation, borrowing from U.S.-conducted theories and discovery.  However, Canada appears not to be mimicking the trend against personal injury class actions in the U.S.


Quebec was the first Canadian province to enact class action procedures in 1978, and a 2003 amendment to the Quebec Code of Civil Procedure simplified the class “authorization” process. In practice, the amendment may have made it easier for plaintiffs to obtain certification. The requirements are that the claims of the members raise identical, similar or related questions of law or fact (true commonality not required); the facts alleged seem to justify the conclusions sought; the composition of the group makes joinder difficult or impracticable; and the member to whom the court intends to ascribe the status of representative is in a position to represent the members adequately. Not a daunting challenge in some fact patterns.  Notice the absence of predominance, superiority, and manageability as explicit factors.

In Ontario, class action procedures were developed much more recently, dating back only to 1992. They permit certification when there is an identifiable class of two or more persons that would be represented by the representative plaintiff or defendant; the claims or defenses of the class members raise common issues; a class proceeding would be the preferable procedure for the resolution of the common issues; and there is a representative plaintiff who would fairly and adequately represent the interests of the class, has produced a plan for the proceeding that sets out a workable method of advancing the proceeding on behalf of the class and of notifying class members of the proceeding, and does not have an interest in conflict with the interests of other class members.


First, in the latest ruling in the HRT litigation against Wyeth, the Supreme Court of British Columbia refused to dismiss a putative class action in which plaintiffs in Canada allege that Premarin and Premplus therapy treatments caused breast cancer. Stanway v. Wyeth Canada Inc., 2008 BCSC 847 (June 27, 2008). The company denies the claims alleged in the litigation, insisting the products have carried an adequate label warning of a heightened risk of breast cancer, based on state of the art. Indeed, HRT drugs are still approved by the FDA as safe and effective and remain on the market.

The Canadian plaintiffs asserted two causes of action against the defendants. The first is for negligence, and the second is a statutory cause of action for deceptive acts and practices under the province's Business Practices and Consumer Protection Act. Wyeth’s motion asserted that the court lacked “territorial competence” over the U.S. entities of the company pursuant to the Court Jurisdiction and Proceedings Transfer Act, S.B.C. 2003, c. 28 (the “CJPTA”).

The U.S. Wyeth entities offered the position that there is no real and substantial connection between British Columbia and the facts upon which the proceeding against the U.S. defendants is based. Wyeth presented affidavits showing that the executives and staff of the U.S. defendants have not managed and do not manage North America as a single market. They have not interfered and do not interfere with the Canadian market. The U.S. defendants do not play a controlling or decision-making role in the pharmaceutical operations of the Canadian defendants. Individuals within Wyeth Canada reported directly or indirectly to the president of Wyeth Canada, not to anyone at Wyeth Pharmaceuticals. Employees of Wyeth Canada may have liaised with counterparts at Wyeth Pharmaceuticals but did not answer to them. Wyeth Canada owns the Canadian patents and trademarks for Premarin, holds various approvals for Premarin from Health Canada.

Moreover, Wyeth Canada runs its own marketing campaign and designs its own packaging, independently from U.S. Wyeth. The U.S. defendants do not conduct any sales or promotional activity related to Premarin or Premplus in Canada. Wyeth Canada runs its own marketing campaigns and designs its own packaging. Wyeth Canada generates its own promotional literature and a copy review committee of Wyeth Canada signs off. Warnings and other information are the responsibility of Wyeth Canada. It has its own independent training group and there is no functional reporting relationship between Wyeth Canada and Wyeth. Wyeth Canada’s marketing employees meet with their worldwide counterparts to exchange ideas and practices. Wyeth Canada tracks sales and decides whether or not to market a particular product.

The only Premarin tablets sold in Canada during the period the plaintiff says that she was prescribed the product would have been manufactured in Canada. At no time have any packages of Premarin or Premplus sold in Canada identified any association with U.S. Wyeth.

The plaintiff’s allegation was that Premarin and Premplus were introduced into and maintained within the Canadian stream of commerce. She alleged that the defendants are jointly involved with or responsible for the negligent manufacturing, testing, marketing, labeling, distribution, promotion and sale of Premarin and Premplus to consumers in British Columbia, and that they failed to warn her about the dangers of taking these drugs.

The Court noted that the plaintiff must prove circumstances that constitute a real and substantial connection between British Columbia and the facts on which a proceeding is based. The statute gives a non-exhaustive list of relevant factors, including whether the tort was committed in British Columbia, and whether the claim concerns a business carried on in British Columbia.

Despite the powerful showing by Wyeth, the Court concluded that the plaintiff successfully established a link between British Columbia and the tort allegedly committed by the U.S. defendants under the CJPTA. The Court concluded that there is no dispute that the plaintiff alleges that she suffered damage in British Columbia. It is in the interest of the forum to protect the legal rights of its residents, and to allow injured plaintiffs "generous access" to litigation. The defendants engaged in “harmonization” and “coordination” of matters involving core monograph and labeling requirements, the efficacy of the products, and the collecting and sharing of other clinical research or trial information, said the Court.  Wyeth Pharmaceuticals’ role as a central repository and coordinator for adverse event reporting for all the Wyeth affiliates worldwide demonstrated, the Court concluded, a sufficient involvement of the U.S. defendants in promoting the efficacy of the drug and its safety.

In the second recent decision, involving Eli Lilly and its Zyprexa schizophrenia drug, an Ontario appeal court affirmed the lower court's decision that class action plaintiffs may proceed with an attempt to recover damages tied to company sales rather than individual damages. Andrea Heward vs. Eli Lilly & Co., No. 181/07, Ontario Superior Court of Justice, Divisional Court (Toronto) (July 2, 2008).

Plaintiffs accused Lilly of failing to warn that Zyprexa may allegedly cause diabetes and other disorders. Zyprexa is approved by the FDA and Canadian regulators to treat schizophrenia and bipolar disorder. The proposed national class (excluding British Columbia and Quebec) has an estimated 575,000 members. In addition to claims sounding in negligence, plaintiffs allege a so-called “waiver of tort” theory that resembles an unjust enrichment theory seeking disgorgement of profits and/or a constructive trust of the proceeds of the defendants’ sale of the drug. The interlocutory appeal was confined to the issues whether the motion court had erred in concluding that the damages (accounting, disgorgement, constructive trust) was a common issue, and whether the class proceeding is the preferable procedure to resolve the claim of waiver of tort.

Defendants asserted that the amount of damages would implicate individual issues because all class members would not have taken Zyprexa even if they had been warned as plaintiffs asserted they should have been, and plaintiffs could not show that Health Canada would not have approved Zyprexa for sale if the warnings had been different. Indeed, Zyprexa continued to be used for years after the label was amended to change the language about diabetes risks.

The Superior Court noted that “waiver of tort” is confusing nomenclature. It does not refer to waiving a right to sue, but an election to base a claim in restitution. The Court acknowledged the debate over whether the waiver of tort theory constitutes an independent cause of action or a remedy in Ontario. It is an “uncertain area of law” raising “policy concerns” which “require clarification in our jurisprudence.”

However, the Court concluded that the embryonic nature of the waiver of tort doctrine simply meant that no decisions should be made absent a full evidentiary record. The class action procedures provide options for the common issues phase to create subclasses, and craft the boundaries of the remedy of disgorgement to fit the requisite causal link, and even decertify common issues when necessary. The Court concluded that individual issues that factor into the determination of the quantum of the restitutionary disgorgement or constructive trust would not undermine the applicability of waiver of tort on a class-wide basis. This seems to confuse two issues: individual issues on quantum of damage might not alone defeat certification, but that does not make them common questions, which was the issue on appeal.

Regarding the second issue, the Court concluded that even if the amount of relief based in waiver of tort cannot be assessed in aggregate, a class action remains the preferable procedure for this claim. In potentially troubling language for defendants, the Court noted that “the only necessary evidence with respect to waiver of tort may well be simply the wrongful conduct of the defendants.” While conditional, such an interpretation of this type of claim may affect future certification decisions and stands to make future defendants liable for truly enormous amounts of damages unless clarified.

MTBE Court Excludes Part, Permits Part Of Plaintiffs' Expert Opinion

In another in a series of rulings on expert issues, the MDL court in the MTBE litigation has excluded parts of the proffered testimony of a plaintiffs' expert, while permitting others. Judge Shira Scheindlin of the U.S. District Court for the Southern District of New York issued an order permitting Dr. Myron Mehlman to testify that MTBE causes adducts to form on DNA and is a probable human carcinogen. Judge Scheindlin found that the plaintiffs proved that this part of his testimony is the product of reliable principles and methods. However, he may not testify that plaintiffs have a reasonable basis for their alleged fear of cancer.

The suits in the MDL generally allege that MTBE, which was added to gasoline at varying levels between 1979 and 2007, has leaked from underground storage tanks and contaminated groundwater. The defendants in this particular case within the MDL are the owners of two gas stations and their suppliers who allegedly contaminated 50 private water wells in the town of Fort Montgomery, N.Y. See In re: Methyl Tertiary Butyl Ether Products Liability Litigation, case number 1:00-cv-01898.

Defendants argued that Mehlman's opinion should be excluded because his methods are not generally accepted in the scientific community and because he hadn't applied those methods reliably to the facts. The absence of general acceptance in the community remains a relevant factor under Daubert.

The court noted that if a method hasn't gained general acceptance, it may be properly viewed with skepticism. But “viewing a method with skepticism is a far cry from the bright-line rule of exclusion.” The expert relied on the peer reviewed MTBE-DNA Adducts study, as well as numerous studies allegedly showing exposure to MTBE has led to cancer in animals. The court held that a vigorous cross examination by defendants at trial was the proper way to handle the issues concerning the expert’s methodology as well as its underlying assumptions. “After evaluating the evidence from both sides, the jury may well agree with defendants that MTBE does not cause cancer in humans,” the court noted.

However, the expert cannot testify that specific plaintiffs suffered subcellular damage or have a reasonable fear of cancer because he did not adequately quantify their alleged exposure. While the levels of exposure to toxic substances is sometimes difficult to precisely quantify, this does not excuse Dr. Mehlman from attempting to analyze plaintiffs' exposure levels if he intended to testify that they have a basis for their fear of cancer.

Risk Management Article: China Manufacturing Risks

MassTortDefense has posted about the recalls of products made in China, and ways product sellers can mitigate the risks of that happening, here and here. A recent article in Risk Management Magazine offers another, broader, perspective on this. (Kent Kedl, Risk Strategies for the Chinese Market , published by the Risk and Insurance Management Society, which targets corporate risk managers.) At bottom, it is risk management to avoid a potential mass tort.

First, plan Strategy before Structure. In recent years, the Chinese government has changed its investment regulations to allow --and even encourage-- a variety of business arrangements, from strategic partnerships to wholly foreign-owned enterprises, to full acquisitions. RM suggests that companies coming to China must first ignore the "how" of structure and first focus on the "why" of their strategic intent for China: What products will have the most play? What segments of the market should they target? What distribution channels should they use? Who will be the major competition and how can they structure a defensible and sustainable value proposition?

Second, they advise companies to Get Close to the Market. Clearly, there are Chinese factories that have had quality issues, but the fact remains that there are millions of products coming out of China every month, most of which have no problems whatsoever. Maybe, then, the question should be how best to manage product quality, because someone is doing it right. Kedl and RM suggest that foreign companies need to manage their vendors on an ongoing basis. Meet with suppliers; validate the supply chain; don’t worry about price and on-time delivery to the exclusion of all else. Companies sourcing from China should consider putting their own people on the ground to manage their supply chain, establish and monitor their own quality systems, and maintain ongoing relationships with the vendors. This approach may raise a company's fixed costs but, in the long run, may greatly lower the risk associated with having products made in an emerging market.

Third, recognize that Relationships Matter. Early successful foreign entrants to China worked hard to build a relationship network for themselves. As China has developed a more credible legal framework and a more predictable market environment, however, foreign companies too often have believed they no longer need that social network and that, instead, they can do it on their own. RM suggests that may be a mistake.

Interest Group Releases Sunscreen "Analysis" As FDA Ponders Regulations

Just when you thought it was safe to head outside to your Fourth of July picnic, parade, and swim party, an investigation by the Environmental Working Group (EWG) is released alleging that nearly 1,000 brand-name sunscreen products either fail to adequately protect consumers or contain chemicals that may pose health hazards.

Before we all cancel our plans, note the EWG study is based on non-standard methods and data, as well as subjective judgments, admittedly “customized” safety and effectiveness ratings, and “on a unique, in-house compilation” of industry, government and academic data sources. For what its worth, the study concludes that only 15% of products analyzed met EWG's subjective criteria for safety and effectiveness, blocking both UVA and UVB radiation, remaining stable in sunlight, and containing few if any ingredients with “suspected” health hazards.  It thus ignores a fairly extensive, long-standing body of scientific data, as sunscreen products have been thoroughly studied and tested, and used safely for more than 30 years.

Interestingly, the study asserts that many sunscreens contain nano-scale ingredients that raise "concerns.”  (MassTortDefense has posted on nano-technology here.) EWG asserts that powder and spray sunscreens with nano-scale ingredients raise concerns, since the small particles might be absorbed through the lungs. EWG also asserts that some sunscreens absorb into the blood and thus also raise safety concerns. “Some release skin-damaging free radicals in sunlight, some could disrupt hormone systems, several are strongly linked to allergic reactions, and others may build up in the body or the environment.”

EWG complains that the FDA has not established rigorous safety standards for sunscreen ingredients that fully examines these effects. The activist group also asserts that FDA has approved just 17 sunscreen chemicals for use in the U.S., while at least 29 are approved for use in the E.U.

However, there are currently FDA safety and effectiveness regulations that govern the manufacture and marketing of all sunscreen products. Sunscreens are classified as drugs by the FDA, and the agency requires significant safety and efficacy data on every active ingredient before it is approved for use in a sunscreen product. The agency also has broad authority to inspect manufacturers, require adherence to strict manufacturing practices, and enforce rigorous, science-based regulations to ensure that sunscreen products are safe and effective for consumers.

Moreover, the FDA in 2007 did propose a new regulation that would set standards for formulating, testing and labeling over-the-counter sunscreen products with ultraviolet A (UVA) and ultraviolet B (UVB) protection. The proposed regulation creates a consumer-friendly rating system for UVA products designed to help consumers identify the level of UVA protection offered by a product. Ratings would be derived from two tests the FDA proposes to assess the effectiveness of sunscreens in providing protection against UVA light. The first test measures a product's ability to reduce the amount of UVA radiation that passes through it. The second test measures a product's ability to prevent tanning. This test is nearly identical to the SPF test used to determine the effectiveness of UVB sunscreen products.

The finalization of the sunscreen safety standards is a complicated regulatory undertaking, addressing complex scientific principles involving countless submissions of data. FDA must thoroughly evaluate all of this information in making the best possible regulatory and scientific decision for consumers.

In the proposed regulations, a "Warnings" statement in the "Drug Facts" box will be required of all sunscreen product manufacturers. The warning would say: "UV exposure from the sun increases the risk of skin cancer, premature skin aging, and other skin damage. It is important to decrease UV exposure by limiting time in the sun, wearing protective clothing, and using a sunscreen." While the warning is intended to increase awareness that sunscreens are one part of a sun protection program, it seems likely that most adults today understand that exposure to the sun may cause skin damage, up to and including skin cancer. Skin cancer is the most common form of cancer in the United States.The American Cancer Society has long designated May as Skin Cancer Awareness Month.

Many manufacturers provide significant science and risk information on websites, as well as links to organizations such as the American Cancer Society, the American Skin Association,  the Skin Cancer Foundation, and the National Cancer Institute.

FDA Responds to NEJM Article on Medical Device Approval Process

In this week’s New England Journal of Medicine, 359 NEJM 88 (July 3, 2008), the FDA responds in a letter to harsh criticism published in the Journal earlier this year on the issue of medical device approval. Dr. Daniel Schultz expresses concern “about several statements” in the earlier article that “may have misled readers.”  Readers of MassTortDefense know that significant product liability litigation has arisen over recalled medical devices in recent years.

In the earlier “Perspective,” Dr. William H. Maisel criticized the FDA’s decision to approve a device (an implantable cardioverter–defibrillator (ICD) lead) in 2004. See Maisel WH., “Semper fidelis -- consumer protection for patients with implanted medical devices,” 358 NEJM 985 (2008). Dr. Maisel is apparently a consultant for the FDA and a member of the Medicare Coverage Advisory Committee.

Obviously, no complex device can be 100% free of design, manufacturing, and performance flaws. Malfunctions inevitably occur, and manufacturers should be rewarded, not criticized, for identifying and correcting any problems. The demands placed on ICD leads, in particular, are intense: they must withstand hundreds of millions of repetitive cardiac cycles, survive in the hostile environment of the human body, and allow delivery of high-voltage energy at a moment's notice. A recent editorial in the Wall Street Journal opined that "the real danger to public health is the overreaction to medical risk," noting that some patients refuse to have a device implanted because of concern about potential malfunctions.

Maisel argued, however, that the agency is failing to fulfill its mission of helping the public get the accurate, science-based information they need. Essential consumer protections are currently lacking, allegedly. He argued it was “increasingly apparent” that improvement will require Congressional action.

Specifically, Maisel criticized the FDA for approving changes in the device/lead on the basis of bench testing rather than clinical data. However, FDA regulations allow manufacturers to apply for marketing of a modified device on the basis of bench testing, and many devices are approved in this way. This is not an inherently unsafe approach, Dr. Schultz noted. In evaluating an application involving a modified device, the FDA will analyze the proposed modification, determine the potential types of failure, and tailor testing requirements accordingly. In many cases, agency questions are best answered by performing appropriate engineering analyses, but in other cases, FDA may also require clinical data.  To require that these modified devices undergo clinical trials across the board as a condition of FDA approval would limit the availability of improved products. Also, most of these trials would, in any event, have insufficient power to detect small but clinically meaningful differences in performance.

Maisel also criticized some device manufacturers for continuing to market existing models while modified models await FDA approval. But there is nothing inherently wrong with doing so unless the older models pose undue health risks.


Evaluating Mass Torts In An M&A Context- Part II

In our last post, MassTortDefense began a discussion of the need for and process of evaluating mass torts in a merger or acquisition context. An important aspect of evaluating the possible acquisition of a target company is the potential litigation liability that may be acquired simultaneously. Even in the absence of an actual merger or stock acquisition, it may be that a buyer of corporate assets will still face exposure to product litigation liability risks.

Mass Tort Due Diligence: Goals and Methodology

The due diligence analysis to help answer the question “What am I buying into?” may involve actual data and dollars. But, requiring as it does judgments about the future litigation environment, it may not result in a precise numerical risk estimate. Thus, the buyer will ultimately make a business judgment about the range of risks that are acceptable in light of numerous factors, including assets available to cover the risks (such as insurance and indemnifications), and the financial benefits of the deal.

Experience has shown the optimal approach to the mass tort due diligence inquiry is to approach the risk question from numerous distinct perspectives, and then combine the learning from the approaches to help minimize the impact of gaps in knowledge. This allows extrapolations to be made with greater confidence. (Such due diligence is best conducted by counsel with experience in the mass tort arena and the ability to apply an understanding of the forces driving product liability claims. )

Due Diligence Approaches: Claims History

If the target company has been involved in the litigation, the current claims status, the past claims history, and the trends that may be emerging will be analyzed. Together, the claims picture will be a useful, albeit imperfect, predictor of future litigation risks. New waves of plaintiffs, new scientific studies, and new revelations from internal documents are not unusual features that can morph mass tort litigation and impact the number of claims.

The due diligence process may include the number of claims filed and the current status of all filed cases. It may be important to know the types of cases, the injuries alleged, the occupations of plaintiffs, exposure scenarios alleged, and the dates of exposure to the product. In some instances, the legal theories involved may be important, as well as the status of any case aggregations. The jurisdictions in which the claims are filed can have a significant impact on claim value. The due diligence inquiry may also explore the identity of the plaintiff firms involved.

The process will almost certainly explore those cases resolved already, and the facts that have been important to settlements, motions practice, and verdicts, favorable or not. The target should provide detailed information on all settlement terms. The due diligence review should not overlook other claims costs to the target, including attorney fees and disbursements for experts. Any changing patterns in the claims or dollars should be explored as well.

There are numerous sources that may be consulted for the claims information, beyond information from the seller’s deal counsel. These include SEC filings, annual reports, press releases, court dockets, and published case reports. Another useful set of resources may include the in-house counsel managing the litigation, the outside defense attorney of the target, and the seller’s insurance company.

The Product Dimension: Usage and Sales History

A complementary approach is to gain an understanding of the product involved, its uses, marketing, and warnings; the nature of the alleged defects; and the regulatory environment governing such products. Product usage and sales can help form an estimate of the population from which actual claimants may arise. This approach might include a historical dimension, if the product changed at any point in design or in its warnings. The useful life of the product can help determine whether the hazards are confined to a certain time frame or may extend beyond sales dates. An underrated factor is how easy it would be for plaintiffs to identify the target’s brand as the actual brand they used. Due diligence may want to examine the sales records that would allow plaintiffs to identify the acquisition target as the relevant manufacturer.

The chain of distribution may be traced to analyze the consumers the target sold to, and thus the potential plaintiffs. For example, the customers may be part of an older population which is diminishing actuarially. Similarly, it may be provident to assess how claimants could have been exposed to the product, with an eye to the credibility of alleged exposure scenarios. Beyond end users, other potential plaintiffs may be involved, including installers, repairers, and bystanders.

While plaintiffs’ lawyers are often unencumbered by such products facts when they sue, the number of units sold, over what time period, and used by which consumers in what ways, may still be instructive of future risk.

The Medicine and Science of Potential Claims

The third recommended approach begins with the proposition that the science of plaintiffs’ claims can dramatically impact the litigation in either direction. For example, even if a company has stopped selling a product, if the latency period is 30 years, the company can theoretically see claims for three decades after stopping sales. Another science issue may be “general causation,” the ability of the product to cause the type of injury alleged. There may also be a need to assess “specific causation” in the litigation. That is, even if a product is capable of causing a disease, it does not necessarily mean that all product users with the disease got it from the product.

These medical and scientific issues associated with a product’s hazards can impact the size of the potential universe of claimants, the causation issue, and even the availability of additional, novel claims against the target company, such as medical monitoring.

The Rest of the Story: Assets

The due diligence inquiry may also include an investigation of the assets available to respond to possible litigation costs, including defense costs. This may involve contractual indemnification, or possible contribution or indemnification claims available as a matter of statutory or common law against others in the product’s chain of distribution. It may include a review of insurance and the status of any coverage litigation.