Court Dismisses Baby-Bottle Cooler Class Action Complaint

A federal judge has dismissed a proposed class action that alleged that Playtex Products Inc. sold  insulated baby-bottle coolers with excessive levels of lead. Ramos v. Playtex Products Inc. et al., No. 1:08-cv-02703 (N.D. Ill. 2009).

At MassTortDefense we love talking about defense wins, and especially love posting about early wins.  Here, Judge Joan Humphrey Lefkow dismissed all counts in the consolidated complaint without prejudice. The court relied first on the federal pleading requirements as described in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007); and Ashcroft v. Iqbal, 129 S. Ct. 1937, 1953 (2009) (stating that “Twombly expounded the pleading standard for all civil actions”). We have posted on that before.
 

Plaintiffs alleged that the vinyl fabric from which these coolers are constructed contains dangerous levels of lead and that Playtex marketed these products as being safe, despite its awareness of regulations prohibiting the use of lead in children’s products and knowing that children who ingest lead suffer long-term injuries. Plaintiffs asserted claims for violation of the consumer fraud statutes of forty-three jurisdictions (Count I), common law negligence (Count II), and unjust enrichment (Count III). In the motion papers, the negligence claim became a medical monitoring claim.

The judge said the plaintiffs’ complaint was unable to meet pleading standards for the
claims alleged. The plaintiffs had failed to articulate many important points, including the basis for  their claims under any consumer protection statutes other than in New York and California. Named plaintiffs, Suarez and Stanford, were residents of New York and California, respectively, and neither alleged injury in, or contact with, any jurisdiction other than New York or California.

Additionally, the plaintiffs' claims failed to meet pleading standards of Rule 9(b) because of the absence of numerous crucial details, including where and from whom they purchased the coolers, specifics regarding the presence of lead in the products, such as where and how accessible it was, and whether they relied on statements from Playtex about the coolers’ safety before making their purchases. Averments of consumer fraud generally must be pleaded with the same particularity as common law fraud. See, e.g., Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir. 2009). Even where, as here, plaintiffs assert that fraud is not a necessary element of a claim, any claim with a basis that nonetheless sounds in fraud is subject to the heightened pleading standard of Rule 9(b).  Plaintiffs quoted statements on Playtex’s website assuring customers that its products “surpass the most stringent domestic and international regulatory guidelines on . . . safety matters,” Am. Compl. ¶ 33, but failed to allege whether or when they relied on, or even saw, these statements prior to purchasing the coolers.

Additionally, plaintiffs wanted Playtex to pay for the cost of lead testing for their children, presumably a medical monitoring claim, yet at no point did they make any allegation that their children were exposed to lead.  Indeed, Suarez and Stanford fail to allege that they even have children. Playtex pointed out that the plaintiffs had not described any physical or economic injury associated with the product.  Plaintiffs expressly disclaimed personal injuries in this case at oral argument. What is required to support a claim for medical monitoring is that plaintiffs plead and prove that medical monitoring is probably, reasonably, not just possibly, necessary. The plaintiffs had asserted no allegation that any child came into contact with one of the coolers.  Thus, no allegation of the exposure element of a medical monitoring claim either.

Federal Court Rejects Waffle Consumer Fraud Class Action

A federal court has rejected a class certification motion from a group of consumers alleging that “all-natural” Van’s Waffles have more fat and/or calories than listed on the packaging. Hodes v.  Van's International Foods, et al., CV 09-01530 RGK (C.D. Calif. July 23, 2009).

Van’s manufactures, markets, and distributes frozen waffles.  Plaintiffs alleged that defendant marketed its waffles as healthy and “all natural,” and listed nutritional values on its packaging labels showing lower quantities of calories, fat, and sugar than its competitors. Plaintiffs further alleged that these nutritional values were false because the waffles contained significantly more calories, fat, and sugar than the labels represented. Plaintiffs further asserted that Van’s
knew of the error, but did not change the labels until late 2008.

Plaintiffs asserted claims for fraud, breach of express warranty, breach of implied
warranty of fitness for a particular purpose, false advertising, and unfair business practices in violation of the California Unfair Competition Law.

Plaintiffs sought certification of a nationwide class of consumers who have been purportedly
harmed by defendants’ misrepresentations. Judge Gary Klausner of the U.S. District Court for the Central District of California found that (1) common questions of law and fact did not predominate over individualized issues, and (2) a class action was not superior to other methods for
fairly and efficiently adjudicating this controversy.  The court’s decision was based on the factor of Rule 23(b)(3) dealing with the manageability of this class action. First, the sheer number of class members, which was at least in the “tens of thousands,” caused the court concern over managing the proposed class. Specifically, the court had concerns about how plaintiffs would identify each class member and prove which brand of frozen waffles each member purchased, in what quantity, and for what purpose. The likelihood that tens of thousands of class members saved their receipts as proof of their purchase of Van’s waffles is very low. 

Second, plaintiffs overstated the argument that the “individual nature of damages” in this case
did not overcome the alleged predominance of common issues relating to liability. This was not a case where the individual damages could be calculated almost as a “mechanical task.”  Here,
plaintiffs failed to present the court with any plan for how to determine the amount of damages
suffered by each class member, and thus no showing of why it would not require an investigation as to which of Van’s 19 frozen waffle varieties class members purchased, how much each class member spent, and whether those particular varieties contained nutritional inaccuracies.

Third, the court addressed the important issue of reliance.  Plaintiffs typically claim that the class can be certified because a particular consumer fraud act claim does not require a showing of reliance.  However, here, while plaintiffs alleged that they did not need to prove individual reliance by class members, they ignored the fact that other individualized purchasing inquiries that remain in this case.  The court was not convinced that the common questions of Van’s liability would predominate over the individual questions of who purchased Van’s frozen waffles during the relevant class period, which kind of frozen waffles they purchased, how many they
purchased, and whether the kinds they purchased contained false nutritional information.
 

A useful case reminding readers that the absence of a reliance requirement does not necessarily mean the class should be certified.

Upcoming Seminar On Daubert Issues

Your humble blogger will be one of the speakers at an upcoming CLE teleconference: Daubert Standards for Expert Witness Testimony -- Effective Strategies for Bringing and Defending Daubert Challenges.

This will be a live 90-minute CLE teleconference with interactive Q&A, Thursday, August 20, 2009
1:00pm-2:30pm EDT.
 

More info available here.

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Senator Specter Introduces Bill To Overturn Twombly

I spoke at a CLE a few weeks ago and discussed the recent jurisprudence on federal pleadings requirements.  A couple of attendees were quick to email me when they saw Sen. Arlen Specter, D-Pa., had introduced legislation that would undermine the clarified civil pleading standards for plaintiffs set forth by the U.S. Supreme Court in the Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955 (2007) decision, and reaffirmed in Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009) decided in May. 

The so-called "Notice Pleading Restoration Act of 2009’’ would turn back the clock to the ancient and unrealistic interpretation of Rule 8 of the Civil Rules announced in Conley v. Gibson more than 5 decades ago. The bill is clearly aimed at helping the plaintiffs' bar and making it more difficult for defendants to get courts to dismiss frivolous and ungrounded litigation before expensive discovery. Specter, the newly turned Democrat facing an uphill re-election battle, submitted the bill last week.

Rule 8(a)(2) requires that complaints contain a “short and plain statement of the claim” but also, that statement must show that the plaintiff is “entitled to relief.”  The view that a complaint cannot be dismissed unless "no set of facts" might support the claim comes from Conley dicta, and, as applied, has seemed to dispense with the need for any showing of a reasonably founded hope that a plaintiff would be able to make out a case.  This has created huge, that is, expensive problems for defendants, because courts relegate to discovery the task of sorting out whether there is really anything to litigate.  A good example may be In re MTBE Products Liability Litig., 379 F. Supp.2d 348, 367-70, 432 (S.D.N.Y. 2005), where the court quoted the “no set of facts” language multiple times to support a convoluted and vague commingled market share liability theory.  The standard led to approval of broad, vague allegations, particularly, but not exclusively, involving conspiracy or concerted action.

Under the new cases, it is no longer enough to say that some set of unpleaded facts consistent with the complaint might make out a claim someday.  Instead, plaintiffs must allege facts that establish the legal cause of action; the facts must be plausible; more than speculative and more than a suspicion.  And there must be enough facts to raise a reasonable expectation that discovery will reveal evidence of the alleged breach of duty.

While detailed factual allegations are not necessary, plaintiffs need more than labels and conclusions.  Thus, a formulaic recitation of the elements of a cause of action will not do.  The Supreme Court recognized this harsh reality: “The requirement of [adequate] allegations ... serves the practical purpose of preventing a plaintiff … from taking up the time of a number of other people, with the right to do so representing an in terrorem increment of the settlement value.” 127 S.Ct. at 1959.  “It is no answer to say that a claim just shy of plausible entitlement can be weeded out early in the discovery process, given the common lament that the success of judicial supervision in checking discovery abuse has been modest.” 127 S.Ct. at 1959.  Accordingly, some "threshold of plausibility must be crossed at the outset before a … case should be permitted to go into its inevitably and protracted discovery phase.” 127 S.Ct. at 1966.  “And it is self-evident that the problem of discovery abuse cannot be solved by careful scrutiny of evidence at the summary judgment stage, much less lucid instructions to juries….the threat of discovery expense will push cost-conscious defendants to settle even anemic cases before reaching those proceedings.” 127 S.Ct. at 1967.

An example of the rule in operation: Bailey v. Janssen Pharmaceutica, Inc., 288 Fed. Appx. 597 (11th Cir. 2008). Plaintiff alleged, “The defective patches were not accompanied by adequate instructions and/or warnings to fully apprise the prescribing physicians . . . of the full nature or extent of the risks and side effects associated with its use.”  The court dismissed the complaint because it failed to even recite the contents of the warning label or to describe the manner in which the warning was inadequate. 

Ashcroft v. Iqbal made clear that the Twombly pleading rule applies to all civil cases, including products liability.  It explained the principles on which Twombly rested:

  • “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” 129 S.Ct. at 1949.
  • “only a complaint that states a plausible claim for relief survives a motion to dismiss…. a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. at 1950.
  • Requiring plaintiffs to furnish “more than a sheer possibility that a defendant has acted unlawfully,” id. at 1949, makes sense as a matter of public policy in light of the often immense demands of discovery.
     

While Specter claims the high court's decisions in those two cases were effectively an “end run” around Congress' authority to amend the FRCP, in reality the bill is just the latest of a series by Democrats to overturn decisions they don't like for political reasons, and to make it easier for their allies in the plaintiffs' bar to force defendants to settle meritless claims because of the cost of litigation.  Far from denying plaintiffs with meritorious claims access to the federal courts, the new decisions require plaintiffs simply to allege suuficient information to show that their claim is not frivolous, without forcing defendants to engage in expensive and intrusive discovery.

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Presidential Memo On Preemption Sends A Warning

Along with my partner Andy Gaddes, I taught a recent CLE seminar on products liability issues.  One of the topics the attendees -- in-house counsel from a variety of industries -- were most interested in was President Obama's May, 2009 memorandum to federal agencies reversing the Bush administration's well-reasoned preemption policy.
 
The new policy is contained in a memo, not a formal executive order, but it clearly expresses a new view of preemption. Cloaked somewhat ironically in the guise of "state's rights", the policy comes from an administration that apparently has no trouble expanding the role of the federal government in unprecedented ways, taking over the auto companies, banks, and others.
 
The memo provides that heads of departments and agencies should not include in regulatory preambles statements that the department or agency intends to preempt State law through the regulation except where preemption provisions are also included in the codified regulation.  Heads of departments and agencies should not include preemption provisions in codified regulations except where such provisions would be justified under the Administration's new interpretation of the legal principles governing preemption.  Finally, heads of departments and agencies should review regulations issued within the past 10 years that contain statements in regulatory preambles or codified provisions intended by the department or agency to preempt State law, in order to decide whether such statements or provisions are justified under the new interpretation of the applicable legal principles governing preemption.
 
The legal basis of the doctrine is not really that malleable. Federal preemption is derived from the supremacy clause of the Constitution that says federal law is the supreme law of the land and any conflicting state law or regulation is without effect.  The policy basis of the doctrine is equally clear: allowing each state to set diverse and individual safety standards can undercut needed uniformity and can subject manufacturers to expensive, unfair, and confusing requirements. It forces product sellers to potentially navigate a confusing, often contradictory patchwork quilt of up to 50 sets of laws and regulations.  Of course, the preemption issue affects more than traditional administrative regulation by the states: companies may become subject to regulation by litigation at the hands of the plaintiffs' bar. 
 
The new policy has the potential to create a real chilling effect in agencies that should be clear about the preemptive intent and reach of their regulations.  While the Obama administration claims its approach breaks no new ground, it may well fundamentally weaken the federal government's ability to address problems on a national level and thus may have untended consequences by allowing states to interfere with parts of the Obama administration's domestic agenda. Regulations for health care and climate change, for example, arguably cannot work absent preemption.
 
Preemption has been applied to drugs and medical devices, vehicular roof crush standards issued by the National Highway Traffic Safety Administration, mattress flammability standards issued by the Consumer Product Safety Commission, pesticides regulated by the EPA and a variety of other products.  A majority of the regulations containing preemptive language were issued by the FDA and NHTSA.   
 

 

So-Called Sunshine Act Bears Scrutiny

Readers of MassTortDefense, outside counsel and clients alike, should have their eye on a pending legislative proposal to change the way protective orders are entered in civil lawsuits, as it may further burden an already expensive discovery process.  The "Sunshine in Litigation Act" was reintroduced in both the House and Senate earlier this year, as an attempt to change the way protective orders are used to protect trade secret information exchanged during discovery.

Under the bills, the federal court would be prohibited from making any information produced in discovery in a case confidential, unless and until a determination is made that keeping the information under seal would not restrict the disclosure of information "relevant to public health and safety." The court could also enter a protective order when the public interest in the disclosure of potential health or safety hazards is outweighed by a specific and substantial interest in maintaining the confidentiality of the information or records in question.  The current system operates with parties able to object to the designated confidentiality of a document after a protective order has been issued, with the judge making  a determination on whether the information should continue to be protected.  The new bill would require judges to review all potentially confidential information before it is exchanged in discovery to determine whether the interest in keeping it private outweighs the public's interest in a potential health or safety hazard. 

While plaintiffs have lobbied hard for the change, it is clear that the the proposal is an unnecessary
measure that places too heavy a burden on the judiciary.  The court would actually have to review what the parties were proposing to designate as confidential, creating a tremendous expense and delay at the early stages of the case.   Even the ABA has opposed the bill for the increased burden it poses on litigation, and because it appears to undermine the Rules Enabling Act, the longstanding procedure established by Congress for issuing and revising rules in the federal courts.


Moreover, there is no empirical evidence that protective orders create any significant problem of "concealing" information about public hazards. And the bills would put vital trade secrets at risk. To undermine important intellectual property rights in litigation that may not even have any merit seems like a bad idea. Such confidential information should be appropriately protected, which the current system does.

The goal of forcing public health disclosure, whatever one thinks about it, is clearly NOT the role of a court adjudicating a private dispute between private litigants;  it is the role of regulatory agencies, such as the FDA or the CPSC.  Of course, the legislation gives the courts no real guidance about how to assess and weigh the "public's interest in a potential health or safety hazard." And under the bills, it doesn't matter whether plaintiffs want to act like mini-regulators: No party shall request, as a condition for the production of discovery, that another party stipulate to an order that would violate this section, and a court shall not approve or enforce any provision of an agreement between or among parties to a civil action that would undermine the mandated disclosures.

State Supreme Court Issues Design Defect Ruling On Intrinsic Characteristics

The Wisconsin Supreme Court has affirmed a lower court's dismissal of strict liability and negligence claims against white lead carbonate pigment manufacturers, ruling that a product's characteristic ingredient cannot  constitute a design defect. See Ruben Baez Godoy v. E.I. du Pont Nemours and Co. et al., No. 2006AP2670 (Wisc. S.Ct.).

The court affirmed a circuit court's ruling that the complaint had failed to allege a design feature that rendered defective the design of white carbonate lead pigment, which can be found in white paint.
Plaintiff alleged lead poisoning from white lead carbonate pigment in the paint in his Milwaukee apartment, and sued DuPont, Armstrong Containers, Sherwin-Williams and American Cyanamid.
He asserted that despite alleged knowledge that lead is hazardous to human health, the manufacturers promoted the use of the pigment and marketed it as safe.

The lower court dismissed the design defect claims, finding  that lead is an inherent  characteristic of white lead carbonate, and thus the product cannot be designed without lead. The court of
appeals found that a product cannot be said to be defectively designed when that design is inherent in the nature of the product so that an alternative design would make the product something else.  This is the long-standing, but often misunderstood notion, that an alternative product is not an alternative design.  In those states in which a plaintiff must prove the existence of a feasible alternative design that would have avoided the injury, or in which the defendant may show the absence of any feasible alternative design, it is not enough for a plaintiff to point to a different product that might serve the same use. 

The state Supreme Court affirmed, noting that a claim for defective design cannot be maintained where the presence of lead is the alleged defect in design, and its very presence is a characteristic of the product itself.  Without lead, there can be no white lead carbonate pigment.  The court offered an analogy:  Foil for your kitchen use can be made using ingredients other than aluminum (gold, for example), but aluminum foil cannot be made without aluminum. The presence of aluminum is characteristic of aluminum foil. If the mere presence of aluminum posed a danger, a manufacturer might be liable based on the failure to adequately warn or other claims. However, the manufacturer
would not be liable based on the "design" of aluminum foil for including aluminum.

Interestingly, the court reaffirmed that Wisconsin strict products liability law does not require a
plaintiff to prove the feasibility of an alternative design.  However, the feasibility of an alternative design can be considered when evaluating a design defect claim. While plaintiff argued that it is inconsistent to reject a reasonable alternative design requirement and still maintain that characteristic ingredients of the product cannot support a claim for defective design, the court clarified that it was not requiring that a plaintiff affirmatively prove, through expert testimony, that an alternative design was commercially viable. The court was simply acknowledging that some ingredients cannot be eliminated from a design without eliminating the product itself. When the ingredient cannot be designed out of the product, the Restatement (Second) instructs that although other claims may be theoretically asserted, the proper claim is not design defect.  

That rationale would seem to apply to design defect claims in drug cases, where the characteristics of a chemical constituting an FDA-approved drug are challenged. The "design" of a typical drug cannot be changed without creating a different molecular structure, and hence  a different product, one which would require a second FDA approval.

Sanctions Against Plaintiffs in HRT Litigation

The judge in charge of multidistrict litigation involving Wyeth Pharmaceuticals' hormone replacement pill, Prempro, has decided to sanction a law firm representing hundreds of plaintiffs, for its failure to timely produce completed client fact sheets. In re: Prempro Products et al., No. 4:03-cv-01507 (E.D. Ark.). 

Judge Wilson of the U.S. District Court for the Eastern District of Arkansas recently granted Wyeth's motion for sanctions against a Texas-based firm, although he declined to dismiss the plaintiffs.

Readers of MassTortDefense know the role plaintiff fact sheets (PFT) play in mass tort litigation, replacing some aspects of basic fact discovery; allowing defendants to gather information for early case assessment; beginning the process that winnows the number of cases that will be subjected to fuller case-specific fact discovery and expert discovery; and eventually informing the pool of cases available for initial trials if the case management process includes bellwether trials. 

The information requested on the PFT is often a negotiated topic, but typically includes information that any plaintiff's attorney who has done a good faith, Rule 11 assessment of the claim should have, or could readily access. The Manual for Complex Litigation notes that in lieu of interrogatories, questionnaires directed to individual plaintiffs in standard, agreed-on forms were used successfully in the breast implant and diet drug litigation.  It also includes sample case management orders regarding, inter alia, plaintiff fact sheets. (For other examples of plaintiff fact sheets, see In re Baycol Products Litigation, MDL 1431, Pretrial Order No. 10 (D. Minn. Mar. 18, 2002) and In re Phenylpropanolamine (PPA) Products Liability Litigation, MDL No. 1407, Case Management Order No. 6 (W.D. Wash. Mar. 21, 2002)).

Wyeth showed the court that the plaintiff firm missed several court deadlines to serve completed fact sheets for each of its clients. Wyeth first argued in 2008 that plaintiffs represented by the firm had repeatedly submitted incomplete fact sheets in which they provided merely a “will supplement” answer to several questions. Judge Wilson agreed and issued an order on Dec. 17, 2008,
directing the firm to produce completed fact sheets by Feb. 2, 2009.  In February, defendant again complained to the court that hundreds of fact sheets had not been served by the deadline and that many of those that had been produced remained incomplete, with plaintiffs replacing “will supplement” with the vague language that plaintiffs do "not recall and do not have reasonable access to the information that would be responsive to this question without undue burden or cost.”
Plaintiffs were then given until April 13 to resubmit the fact sheets in accordance with the order, and the responses led Wyeth to renew its bid for sanctions including dismissal.

The judge directed the firm to pay $5,000 to Wyeth to partially compensate it for the time and effort involved in seeking adequate fact sheets.  The firm must also assign an associate or paralegal to immediately contact all plaintiffs identified by Wyeth as still having insufficient fact sheets and to have the documents filled out by August 5th.

The court warned that it was likely that additional sanctions — and perhaps considerably more severe sanctions — will be imposed if substantial effort is required to review the adequacy of fact sheets filed by Aug. 5, 2009. 

The court indicated it had seriously considered dismissing all the affected cases without prejudice, and with the proviso that if a case was refiled it must have a reasonably accurate fact sheet attached and that sanctions against counsel would likely be imposed if additional fact sheets were attached with non-answers.  Only the administrative burden of dealing with amended complaint filings prevented this.

DRI Annual Meeting

No substantive post today, as your faithful blogger is out of town for a DRI meeting, wearing another hat as the chair of the Mass Torts and Class Action group of DRI's Products Liability Committee.

DRI is the international organization of attorneys defending the interests of business and individuals in civil litigation. DRI provides numerous educational and informational resources to DRI members and offers many opportunities for liaison among defense trial lawyers. DRI's goals include: To teach and educate and to improve the skills of the defense law practitioner;  to strive for improvement in the civil justice system; to be a counterpoint to the plaintiff's bar and seek balance in the justice system in the minds of potential jurors and on all fields where disputes are resolved; and to assist members in dealing with the economic realities of the defense law practice, including the competitive legal marketplace.


Later this year DRI will hold its annual meeting in Chicago, October 7-11.  This Annual Meeting will celebrate DRI’s 50th anniversary and Lincoln’s 200th birthday.

You can join DRI  here, and register for the annual meeting conference here.

iPhone MDL Created

The U.S. Judicial Panel on Multidistrict Litigation has issued an order consolidating 12 putative class actions alleging that Apple Inc.’s iPhone 3G did not perform as fast as promised on AT&T Mobility LLC’s 3G data network.  In re: Apple IPhone 3G Products Liability Litigation, MDL No. 2045.

Plaintiffs allege that iPhone owners paid extra for the supposedly superior functionality and high-speed data network used by the phone. They further allege that because the phone is typically used for e-mail and on-line activities, many purchasers subscribe to a data plan that uses AT&T’s 3G network. But, they assert, the phone does not function as fast as promised and often performs at slower speeds than other 2G and 3G phones. In the litigation thus far, plaintiffs' complaints conspicuously seem to omit one critical condition precedent to their causes of action: an allegation that they contacted Apple to seek a repair of the alleged defects or a replacement iPhone 3G under Apple's one-year limited warranty.

In the order issued last week, the JPML said that centralizing the lawsuits in the U.S. District Court for the Northern District of California was appropriate. All actions involve common factual questions arising from the performance of Apple’s iPhone 3G on AT&T’s 3G network. Specifically, the actions share allegations that Apple and, where named, AT&T, misrepresented to the public the speed, strength and performance of the iPhone 3G on AT&T’s 3G network. Centralization under Section 1407 will eliminate duplicative discovery; prevent inconsistent pretrial rulings, particularly with respect to class certification; and conserve the resources of the parties, their counsel and the judiciary.

The Northern District of California stands out as an appropriate transferee forum, said the panel. The headquarters of the common defendant, Apple, are located within this district; accordingly, relevant witnesses and documents will likely be found there. Eight actions are already pending in the district. Other cases are in the Southern District of Florida, the District of New Jersey, the Eastern District of New York and the Eastern District of Texas.

Update on FEMA Trailer MDL

A federal judge has decided an that an advisory jury can hear evidence on claims against the U.S. government in bellwether trials in the MDL concerning alleged formaldehyde-laden trailers. In re: FEMA Trailer Formaldehyde Products Liability Litigation, MDL 1873 (E.D. La.)

Readers of MassTortDefense will recall how Hurricane Katrina devastated much of the Gulf Coast in 2005. The total damage of Hurricane Katrina has been estimated at $75 billion, while not-much-later Hurricane Rita caused $10 billion in damage. The government, through FEMA, moved individuals whose homes were lost or deemed uninhabitable into makeshift housing provided by the agency.  Plaintiffs allege that the trailers had components that exposed them to dangerous and excessive levels of formaldehyde.

The court has decided that it will hold bellwether trials in the MDL. But the defendants include both private entities and the government. The government moved to strike the jury demand and requested that a jury not be involved in any manner in determining its liability. The federal government argued that, because the plaintiffs have filed claims under the Federal Torts Claims Act (“FTCA”), 28 U.S.C. §§ 2671-2680 and 28 U.S.C. § 1346(b), the use of any jury is precluded under 28 U.S.C. § 2402 which states that “[a]ny action against the United States under section 1346 shall be tried by the court without a jury. . .”  The Plaintiffs’ Steering Committee (“PSC”) and the nongovernmental defendants both opposed the motion. Indeed, both the PSC and the non-governmental defendants contended that it is both permissible and sensible for the court to utilize an advisory jury who will hear evidence of the Government’s alleged fault in order to properly apportion liability to all parties. The government claimed that any use of even an advisory jury contravenes the statute and congressional intent to have FTCA cases decided by the court without a jury.

Rule 39(c) of the Federal Rules of Civil Procedure states, in pertinent part, “[i]n an action
not triable of right by a jury, the court, on motion or on its own . . . may try any issue with an
advisory jury.”  The court found that it has the power to make use of an advisory jury in this case. Because of the purely advisory function that a jury empaneled under Rule 39(c) has, the use of an advisory jury is not precluded under 28 U.S.C. § 2402. The court concluded it will empanel a jury to hear the bellwether plaintiffs’ claims against the non-governmental defendants in the bellwether trials and will exercise its discretion to use that jury in an advisory capacity to hear the claims against the government in those same trials.

This advisory jury will not be asked or allowed to make a binding factual determination on the plaintiffs’ FTCA claims; instead, it will be allowed to hear the case and, through the verdict, advise the court, who will remain free to consider the same evidence and completely disregard such findings. The court determined that utilizing an advisory jury will alleviate jury confusion that would result if jurors are expected to listen to all the evidence against all the defendants - including FEMA - but then are instructed to ignore any evidence pertinent to the government.
 

 

Update On China Drywall MDL

The judge handling the MDL involving the consolidated litigation involving Chinese manufactured drywall claims has issued a first order. Pursuant to Pretrial Order #1, the initial pretrial conference was set for July 9, 2009,  in the Courtroom of Judge Fallon. Earlier this summer, the U.S. Judicial Panel on Multidistrict Litigation agreed to consolidate a number of the suits in the U.S. District Court for the Eastern District of Louisiana. The suits have named as defendants the Chinese-based manufacturers, as well as importers, contractors, suppliers and others, including Knauf Gips KG, Knauf Plasterboard Tianjin Co., Taishan Gypsum Co., L&W Supply Corp., USG Corp. and Lennar Corp., the country’s second-largest home builder by volume.

The items listed in the Manual for Complex Litigation (Sections 22.6, 22.61, 22.62, and 22.63) were, to the extent applicable, set as a tentative agenda for the conference. (That may include adding parties, pleadings and motions, issue identification and development. ) Counsel were ordered to confer and seek consensus to the extent possible with respect to the items on the agenda, including a proposed discovery plan, any amendment of pleadings, consideration of any class action allegations and motions, and be prepared to select trial dates.

Plaintiffs and defendants were to submit to the Court before the conference a brief written statement indicating their preliminary understanding of the facts involved in the litigation and the critical factual and legal issues. (These statements will not be filed with the Clerk, will not be binding, will not waive claims or defenses, and may not be offered in evidence against a party in later proceedings.)

The Order covers a host of housekeeping issues for a new MDL. The Clerk will maintain a master docket case file under the style "In Re: CHINESE MANUFACTURED DRYWALL PRODUCTS LIABILITY LITIGATION” and the identification "MDL No. 2047 ".  All parties and their counsel were reminded of their duty to preserve evidence that may be relevant to this action. The duty extends to
documents, data, and tangible things in possession, custody and control of the parties to this
action, and any employees, agents, contractors, carriers, bailees, or other non-parties who possess materials reasonably anticipated to be subject to discovery in this action.

Prior to the initial conference, counsel for the plaintiffs and counsel for the defendant(s) were required to confer and seek consensus on the selection of a candidate for the position of liaison counsel for each group who will be charged with essentially administrative matters.

It is the Court’s intention to appoint a Plaintiffs’ Steering Committee (“PSC”) to conduct and coordinate the discovery stage of this litigation with the defendant’s representatives or committee.  The main criteria for membership in the PSC will be: (a) willingness and availability to commit to a time-consuming project; (b) ability to work cooperatively with others; and (c) professional experience in this type of litigation (d) willingness to commit the necessary resources to pursue this matter.

Behind the scenes, history suggests that a key issue underlying parts of the litigation the litigation will be whether the pollution exclusion applies. Insurers will likely argue that the alleged off-gassing of sulfur compounds from the Chinese drywall clearly constitutes the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants (referencing terms of the typical exclusion clause).  There is a split of authority on the scope of such a pollution clause.  Some states have narrow definitions which favor policyholders, while the more broad definitions in other jurisdictions typically favor insurers. Choice of law may be the determining factor on this.

One builder (Dragas Management) has already been named in a declaratory judgment action by its insurer, Builders Mutual Insurance Co.  In addition to relying on a pollution exclusion argument, insurers seem intent on showing that each installation of drywall constitutes a separate “occurrence” under the policy, and as such, a separate deductible would apply to each. Builders would undoubtedly prefer a single deductible for the installation within an entire development or project.

Concerns over the drywall have prompted legislators, including Sens. Nelson, D-Fla., and Landrieu, D-La., to introduce the Drywall Safety Act of 2009, which seeks to impose a recall and a temporary ban on imports until federal drywall safety standards are put in place.

 

Summary Judgment For Defense In Dry Cleaning Chemical Case

The Seventh Circuit has affirmed the entry of summary judgment in favor of the defendant in a toxic tort case arising from dry-cleaning chemicals. See Cunningham v. Masterwear Corp., 2009 WL 1751429 (7th Cir. 6/23/09).

The plaintiffs, Bill and Mary Ann Cunningham, alleged that after they moved their photo studio next to a dry-cleaning business operated by defendant, Masterwear Corp., they began developing severe headaches, and Mr. Cunningham developed a bad cough. In December 2003, the Indiana Environmental Protection Agency allegedly told them that the level of perchloroethylene (PCE) levels in the building could be significantly high and may pose a health concern over the long term.  Plaintiffs contended that the PCE vapors detected were the result of improper storage of chemicals by Masterwear.   When the Cunninghams went to sell the building (which they also had started living in) after learning about the alleged danger from PCE, they claim they had to sell it at well below market price because of the vapors.

Judge Richard A. Posner, writing for the panel, held that the plaintiffs' medical expert did not  establish that the level and duration of plaintiffs' exposure of PCE could have caused their symptoms.  The plaintiffs' expert, a respiratory doctor, had never treated a respiratory illness caused or aggravated by PCE.  He relied on a report that showed that PCE can cause respiratory symptoms and headaches, but the reported concentration levels were well above the dose that plaintiffs were exposed to. Readers of MassTortDefense know that the founding principle of toxicology is that the dose makes the poison. The expert did not present, either directly or by citation to a scientific literature, a theory that would link the level and duration of the exposure of the plaintiffs to PCE to their symptoms.

While the state of Indiana had set safe exposure levels for PCE, plaintiffs' expert had not been able to specify what risks or dangers led the state to choose the “safe level” it did. For example, if exposure at a certain level to a chemical caused birth defects; a person who was exposed to above that level of the chemical and developed asthma could not attribute this to his exposure.

Turning to proof of the economic injury, the alleged impairment of the value of the plaintiffs' property presents a separate issue -contamination can reduce property values without endangering anybody's health, observed the court. But like the health issue, "causation turns out to be the plaintiffs' Achilles heel," said the opinion.  Judge Posner affirmed the district's court finding that the testimony about what the real estate agent thought the property worth and what prospective buyers had told the agent would have been inadmissible hearsay.   Mr. Cunningham proposed to testify that he had to accept a much lower price than the $135,000 he was asking because prospective buyers were concerned about the building being contaminated. Although Indiana law allows a property owner to testify about the value of his property, that information must be based on sufficient facts within his personal knowledge. In this case, it was inadmissible hearsay to testify about what a real estate agent said, and what potential buyers allegedly told the real estate agent.  The plaintiffs did not provide any evidence on the “critical question” related to their property value, i.e., how much they could have sold the building for had it not been for the contamination. What the owner is not allowed to do is merely repeat another person's valuation.


 

California Enacts E-Discovery Reform

California Gov. Arnold Schwarzenegger has signed into law a new enactment governing e-discovery in that state.  Readers of MassTortDefense know what a significant issue electronic discovery has been in products litigation, particularly since the amendments to the Federal Rules of Civil Procedure more specifically focused on e-discovery issues. Rather than a device to uncover relevant facts for the litigation, e-discovery often is about plaintiffs’ attempt to find some alleged misstep by the defendant that will bring sanctions.

The Governator signed the Electronic Discovery Act, establishing new rules and procedures for litigants who seek electronically stored information.  The law is designed to make discoverable only  those reasonably accessible sources of electronic data, and it provides that litigants shouldn't be sanctioned for losing data through the ordinary operation of an electronic system. The law establishes that a party may move for a protective order from an electronic discovery request on the grounds that the information sought is inaccessible, though it gives courts discretion to require limited discovery in those cases if the demanding party shows good cause, subject to specified restrictions in specified circumstances.

California courts may also limit electronic discovery from accessible sources if they determine that the information sought could be obtained by other means, is duplicative, or if the expense of
the discovery outweighs its likely benefit. While the Electronic Discovery Act allows courts to
impose sanctions on parties which fail to comply adequately with discovery requests, the courts shall not impose sanctions on a party (or any attorney of a party) for failure to provide electronically stored information that has been lost, damaged, altered or overwritten as the result of the routine, good faith operation of an electronic information system.

The new law also requires discovered materials to be produced in the form in which they are kept in the ordinary course of business.

MassTortDefense noted that a survey by the U.S. Chamber of Commerce Institute for Legal Reform of chief legal officers at Fortune 100 companies revealed that:

-On average, 45‐50% of respondents’ civil litigation costs in 2007 related to discovery activities.

-Discovery of ESI accounted for, on average, a significant share (between 33‐39%) of total discovery costs.

-Costs associated with e‐discovery vendors were reported in 63% of large cases. When used, e‐discovery vendors accounted for, on average, 10‐12% of total costs.

-About 61% of case respondents felt that certain discovery requests received from the opposing party were designed to impose undue settlement pressure by increasing the costs to continue the litigation.

-In both state and federal court, the company respondents reported that more than half of their civil litigation matters involved the receipt of discovery requests that sought information beyond the claims or defenses at issue.

- About 31% of company respondents reported that at least 40% of the time ESI requested from them by the opposing party is not reasonably accessible.

This bill is to take effect immediately as an urgency statute.
 

Class Action Dismissed In Printer Litigation

The federal court has dismissed a proposed class action accusing Dell Inc. of fraudulently marketing an ink-jet printer feature to convince customers to replace ink cartridges that don't need to be replaced yet. Dajani v. Dell Inc., 2009 WL 1833983 (N.D.Cal. June 25, 2009).

Dajani alleged that Dell fraudulently marketed its Ink Management System, a technology feature on all Dell ink jet printers.  The feature will display ink levels on a status window during a print job. The complaint alleged that the Ink Management System was highly imprecise and inaccurate, and that it was designed to deceive customers into replacing what they believed to be nearly empty cartridges, when they actually still contained a substantial amount of usable ink. Dajani sought to represent a class of all Californians who own or have owned Dell ink jet printers.

Judge Susan Illston rejected the lawsuit, without leave to amend the complaint.  Previously, the court had dismissed California-law based claims, as the terms and conditions of his sales agreement provided for Texas law to be allied to all claims. The amended complaint alleged a claim under Texas law for breach of implied warranty of merchantability and a claim of unjust
enrichment.

The court ruled last week that the claim for the breach of implied warranty of merchantability could not survive, because the printer was not unmerchantable as the term is defined under Texas law. The product must be unfit for the ordinary purposes for which it is used because of a lack of something necessary for adequacy.  Dell argued that the ordinary use of the product was printing, not measuring ink, and that any alleged imprecision in the Ink Management System had no impact on that basic function. The court agreed, finding that at most, plaintiff had alleged that the use of the Ink Management System is cumbersome because of allegedly premature replacement prompts. The device still worked.  And plaintiff hurt his claim by alleging that upon receiving “low ink” warnings, he simply removed and discarded his ink cartridge and replaced it with a new one. Such was "plainly at odds" with the product’s instruction manual, which states that a low ink warning appears when ink cartridges are low, not yet empty, and that a separate "reserve tank"  window appears when they are empty.

The judge also dismissed the unjust enrichment claim because under Texas law, when a valid, express contract covers the subject matter of the parties' dispute, there can be no recovery under a theory of unjust enrichment. Fortune Prod. Co. v. Conoco, Inc., 52 S.W.3d 671, 684 (Tex.2000) (“Parties should be bound by their express agreements. When a valid agreement already addresses the matter, recovery under an equitable theory is generally inconsistent with the express agreement.”).

Because plaintiff cannot cure the defects mentioned above through the pleading of additional facts which do not contradict those already made, plaintiff's complaint was dismissed without leave to amend.

Summary Judgment For Manufacturer in Pain Pump Litigation

In what appears to be the first substantive decision to come out of the multiple suits alleging that a pain pump medical device damages patients, a federal court has granted summary judgment to the defendant. Kilpatrick v. Breg, Inc., No. 4:08-cv-10052 (S.D. Fla. 6/26/09). Judge Michael Moore ruled in favor of medical device manufacturer Breg, finding that the plaintiff, who alleged damage to his shoulder cartilage, did not provide enough reliable expert evidence to link the condition to the defendant's shoulder pain pump.

Plaintiff Kilpatrick underwent arthroscopic shoulder surgery in 2004 after an orthopedic specialist discovered a tear in his shoulder socket.  To help with post-operative pain, the surgeon inserted a pain pump into plaintiff's shoulder, which would allow the doctor to administer an anesthetic via a catheter in the patient's arm. The surgeon injected bupivacaine into the pump's attached catheter and further filled it with 100 cc's of anesthetic, which was to be delivered into Kilpatrick's shoulder over the next 48 hours.  Plaintiff alleges that he began experiencing severe pain in his shoulder in 2006. An orthopedic surgeon diagnosed the pain as glenohumeral chondrolysis, a deterioration of the cartilage, and Kilpatrick underwent shoulder replacement surgery. He then brought suit, alleging negligence, strict products liability, and violations of Florida's Deceptive and Unfair Trade Practices Act.  Kilpatrick claimed that using the Breg pain pump to administer local anesthetic directly into his shoulder joint caused him to develop post-arthroscopic glenohumeral chondrolysis.

The reliability prong of the Rule 702 analysis was the central issue.  Breg argued, and plaintiff apparently did not contest, that the case should be treated like a toxic tort case for purposes of the Daubert inquiry, in that plaintiff had to offer proof of both general and specific causation. “If anything, determining causation in this case requires an even more complex logical chain than the typical toxic tort case, because the key issue is not merely whether a chemical compound could and did cause injury, but whether that compound as delivered via a particular medical device inserted in a particular location (within Kilpatrick's shoulder joint) could and did cause injury,” the court found.

The summary judgment motion focused first on general causation, and the ability of plaintiff's expert to opine adequately under Daubert that the device can cause this type of injury.  The causes of chondrolysis remain disputed, and experts in the medical community have pointed to autoimmune deficiencies, certain kinds of sutures, thermal energy procedures and contrast dyes made from gentian violets as possible risk factors.  Plaintiff's expert admitted it was a still developing science.

Plaintiff's expert relied on several published studies to attempt to show causation, which were not directly on point, and the Court found that his extrapolations from the studies were not warranted either.  None of the articles were based on controlled, randomized epidemiological studies of human beings, which are the best evidence. “Significantly, none of the articles explains the mechanism by which bupivacaine damages cartilage, each has important limitations that Poehling does not take into account, and none of them offers an ultimate conclusion as to the general causation of glenohumeral chondrolysis,” the court noted. At most they suggest a possible association.  Association is not causation.  As for the animal studies, the expert did not explain the possible differences in dose-response relationship between humans and rabbits, an important factor to consider in evaluating whether an alleged exposure caused an adverse effect. 

As to specific causation, as is typical of many plaintiff experts, Poehling described a process of so-called "differential diagnosis," trying to rule out other suspected causes such as thermal energy and gentian violet, the contrast dye sometimes used during arthroscopic surgery. This approach cannot, observed the court, make up for a fundamental lack of adequate proof about the general toxicity of the substance.  To "rule in" one cause, even while ruling out other causes, requires a sufficient general causation proof.  At its base, however, the conclusion on specific causation still would be unreliable, the court said, as it was "ultimately rooted in nothing more than temporal relationship.”   That before/after focus is not the basis of good science, the court said, “and Poehling's dependence upon it further weakens the reliability of his methodology.”  Significantly, the expert had not offered a sufficient explanation of the background risk for genohumeral chondrolysis, casting further doubt on the reliability of the chosen method. He admitted that not only the pain pump — as a kind of drug delivery system — could have caused the injury, but also the anesthetic delivered via the pain pump.  Poehling's concession that the current state of medical literature is still unsettled about the cause of the plaintiff's condition seriously undermines the reliability of his methodology, the court concluded.  His methodology had no known rate of error, and thus all he had was a hypothesis that “may be exactly right,” but that currently is “merely plausible, not proven.”

It will be interesting to see what impact the approximately 300 suits pending against pain pump manufacturers in state and federal courts.   


 

Report Offers Another Reason To Reject Medical Monitoring

The Medicare Payment Advisory Commission reported this month the results of a study suggesting that when physicians have a financial interest in medical imaging equipment, they are more likely to order imaging tests and incur higher overall spending on their patients' care.  The June MedPAC report is titled Report to the Congress: Improving Incentives in the Medicare Program.  Such an issue seems important to the current debate on health care reform and efforts to curb the rising costs of health care.  But is it of interest to readers of MassTortDefense?

Imaging, particularly the use of PET scans and CT scans, is a favorite tool of plaintiffs' lawyers seeking medical monitoring. Currently before the Massachusetts Supreme Judicial Court is a case involving a proposed class action seeking CT scans for lung cancer. See Kathleen Donovan, et al. v. Philip Morris USA, Inc., SJC No. 10409 (Mass. SJC, argued June 9, 2009)

Multiple policy grounds support the decision to reject  medical monitoring. Metro-North Commuter Railroad Company v. Buckley, 521 U.S. 424 (1997). This imaging issue stands as yet another reason courts need to be careful with claims for medical monitoring and wary of plaintiff experts opining that imaging is reasonably medically necessary ( a typical element of a medical monitoring claim) because it is supposedly becoming more widely used. See Redland Soccer Club, Inc. v. Dept. of the Army and Dept. of Defense of the U.S., 548 Pa. 178, 696 A.2d 137, 145-46 (1997) (requiring the prescribed monitoring regime is reasonably necessary according to contemporary scientific principles); Wyeth, Inc. v. Gottlieb, 930 So.2d 635 (Fla.App. 3 Dist.2006) (same).

MedPAC is an independent advisory body charged with providing policy analysis and advice concerning the Medicare program, and issued its most recent report to Congress on imaging, among other topics.  The commission noted that rapid technological progress in diagnostic imaging over the last decade has enabled physicians to more effectively diagnose and treat certain illnesses. At the same time, use of medical imaging has grown in certain areas of the country, without a clear benefit in terms of the quality of care.   The report also noted that recent research indicates a particular expansion of in-office imaging as many physicians buy and use machines in their offices, rather than refer patients out.

The report cites the 2008 Government Accountability Office report which ties the growth in Medicare spending to the increase in physicians who perform advanced imaging services in their office. That GAO report found that Medicare spending for imaging services performed by doctors doubled from 2000 to 2006. In particular, costs for advanced imaging such as computed tomography (CT) scans and nuclear medicine rose faster than other standard previous imaging services such as MRIs.