We Remember

No legal post. Today is Memorial Day on which we commemorate the valiant men and women who died while serving in the American military. Originally known as Decoration Day, Memorial Day was officially proclaimed in May, 1868 by General John Logan, national commander of the Grand Army of the Republic.  Flowers were placed on the graves of Union and Confederate soldiers at Arlington National Cemetery.

It has been said that we should not think of the day as only one of mourning; a half-masted flag might be replaced by the flag at its peak, because those whose sacrifice we commemorate were proud to see the flag flying where their valor placed it. We honor them in a joyous, thankful, triumphant commemoration of what they did.  As General Patton wrote, we should not just mourn those who died; rather, we should thank God that they lived. 

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CPSC Issues Proposed Rule on Database

The Consumer Product Safety Commission has issued a notice of proposed rulemaking that would establish a publicly available consumer product safety information database.  Readers may know that Section 212 of the Consumer Product Safety Improvement Act of 2008 (‘‘CPSIA’’) amended the Consumer Product Safety Act (‘‘CPSA’’) to require the Commission to establish and maintain a publicly available, searchable database on the safety of consumer products, and other products or substances regulated by the Commission. We posted on some of the potential issues before.  Serious questions surround the potential posting of inaccurate, incomplete, or confidential information as part of the database.

The proposed rule would interpret the various statutory requirements pertaining to the information to be included in the database and also would establish provisions regarding submitting reports of harm; providing notice of reports of harm to manufacturers; publishing reports of harm and manufacturer comments in the database; and dealing with confidential and materially inaccurate
information.  The new regs would consist of four subparts:  Subpart A—Background and Definitions; Subpart B—Content Requirements; Subpart C—Procedural Requirements; Subpart D—Notice and Disclosure Requirements.

Some of the highlights: A submitter of a report of harm must affirmatively verify that he or she has reviewed the report of harm and that the information contained therein is true and accurate to
the best of the submitter’s knowledge, information and belief.  As part of verifying the report, submitters of reports of harm must indicate which category they are in (consumer,
government agency, health care professional etc.).

Proposed § 1102.12(a) would state that manufacturers who receive a report of harm transmitted from the CPSC may submit comments. Proposed § 1102.12(b) would propose that comments may be received via an on-line manufacturer portal where the manufacturer can register to submit comments on a secure nonpublic portal that will be provided through the Commission’s database. The proposal also would specify that comments may be submitted via electronic mail or regular mail. The Commission will publish a manufacturer’s comments related to a report of harm if the comment specifically relates to a report of harm, contains a unique identifier assigned to it, contains the manufacturer’s verification of the truth and accuracy of their comment (similar to the verification required of a submitter of a report of harm) as well as their consent for publication in the database. The proposed rule would require a manufacturer to affirmatively request that its comment be published and to affirmatively consent to such publication in order for the manufacturer comment to be published in the database.

CPSC says it will not publish confidential information in the database. Proposed §1102.24 explains how the Commission will define ‘‘confidential information’’ and would set forth criteria which must be followed to assert a claim of confidentiality. The Commission notes its view that most reports of harm received from consumers will not likely contain confidential information. However, where such a claim for a portion of information on a report of harm is asserted, the proposal would require affirmative statements that would assist the Commission in an evaluation of the merits of the request. The proposal would establish parameters for asserting and supporting a claim of a portion of a report of harm as confidential. For example, proposed § 1102.24(b)(3) would require an explanation on whether the asserted confidential portion of the report is commonly known or readily ascertainable by outside persons with a minimum of time and effort. Proposed § 1102.24(b)(5) would explain that the manufacturer also must support a confidentiality claim by describing how release of the information could cause competitive harm. Overall, one wonders whether the CPSC is trying to create a barrier to a valid claim of confidentiality much higher than in other contexts.

Proposed § 1102.26 would contain definitions and the process for how claims of materially inaccurate information contained in reports of harm may be asserted and how they will be evaluated. Materially inaccurate information in a report of harm means information that is false or misleading in a significant and relevant way that creates or has the potential to create a substantially erroneous or substantially mistaken belief in a database user about information in a report of harm relating to:
(i) The identification of a consumer product;
(ii) The identification of a manufacturer or private labeler; or
(iii) The harm or risk of harm related to use of the consumer product.

Written comments must be received by July 23, 2010.  It is not clear that the database plan offers adequate safeguards or assurances that the information posted will be true and accurate, will not simply lead to consumer confusion, and will not give rise to lawsuits based on a rumor repeated through the echo chamber of the Internet.  Although not as strong as we have called for here at MassTortDefense, § 1102.42 does have a disclaimer to the effect that the Commission does not guarantee the accuracy, completeness or adequacy of the contents of the Database, particularly with respect to the accuracy, completeness, or adequacy of information submitted by persons outside of the CPSC. The Consumer Product Safety Information Database will contain a notice to this effect that will be prominently and conspicuously displayed on the database and on any documents that are printed from the database.
 



 

Gulf Oil Spill Litigation

More than 100 federal and state court actions have been filed against BP PLC, Transocean Ltd., and other companies in connection with the Deepwater Horizon drilling rig accident in the Gulf of Mexico.  (The API has a Q&A on the accident, and the Unified Command on the incident offers updates.)  Like many mass accident scenarios, the spill has generated a variety of kinds of actions. The claims so far fall into several main categories, including personal injury/wrongful death, maritime torts, property damage/lost profits, shareholder claims, and environmental law actions.

The wrongful death actions arise from the 11 workers missing and presumed dead in the accident.  These cases were filed in federal and state courts in Louisiana and Texas.  Gulf-front property owners, fishermen, shrimpers, harvesters, seafood processors, and restaurants in Louisiana, Alabama, Mississippi and Florida are among the entities suing over alleged harm to their businesses and their economic livelihoods. Many of these suits are class actions with overlapping class definitions.  The plaintiffs typically allege that defendants knew of the dangers associated with deepwater drilling and failed to take appropriate safety measures to prevent damage to marine or coastal environments, where they work and earn their income.

These claims potentially implicate caps on damages under the Limitation of Liability Act, and the Oil Pollution Act, which currently caps certain oil spill liability at approximately $75 million.  Plaintiffs have asserted that there are various exemptions from this reach of the Oil Pollution Act, for gross negligence and certain cleanup costs.  Also, the Obama administration and Democrats in Congress have advocated raising the caps retroactively. Bills S. 3305  (the so-called Big Oil Bailout Prevention Liability Act of 2010) and H.R. 5214 would raise the liability for economic damages to $10 billion per spill from the current $75 million. In a Senate hearing, Interior Secretary Ken Salazar warned that raising the trust fund's liability cap to $10 billion would prevent smaller and mid-sized energy companies from operating offshore. Perhaps most importantly, there is some case law suggesting that the Oil Pollution Act will not preempt state common law tort liability.

The administration is also proposing a tax increase, to support the Oil Spill Liability Trust Fund, of a further 1 cent per barrel on petroleum. It is interesting that the administration has been criticized for the slowness of some of its responses to the spill, but is very quick to propose tax hikes, without an opportunity for all stakeholders to be heard and without careful consideration of the availability of the fund for future incidents. A White House summary of its proposals for legislation on oil spill response is available.

Some plaintiffs have proposed that the federal cases be coordinated in an MDL proceeding in the Eastern District of Louisiana.  In Re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, MDL No. 2179 (filed 4/30/10). Certain defendants have suggested instead that the Southern District of Texas host the MDL. A large group of plaintiffs' attorneys had met in New Orleans early in the month to plot out litigation strategy.  Interestingly, the Mississippi Bar issued a statement advising potentially affected parties of the risk of improper solicitation by plaintiff attorneys.It will be fascinating to see if the defendants can remain similarly coordinated and avoid unnecessary finger-pointing.  The testimony of various executives for BP Plc, Transocean Ltd., and Halliburton in front of the Senate Energy and Natural Resources Committee and the Senate Environment and Public Works Committee that pointed out the responsibilities of the other companies, raises this issue. 

Another type of pending action is by various shareholders alleging securities fraud in a class action that asserts that defendants made false and misleading statements about their safety procedures. Allegedly as a result of the statements and the company's supposed failure to disclose prior safety issues, the stock prices had been inflated, tumbling after the accident.  Several shareholder derivative lawsuits were also filed against certain officers and directors of the defendants, claiming that they breached their fiduciary duties by supposedly ignoring critical safety issues. The suits also allege that defendants lobbied governmental authorities to reduce the extent of safety  regulation of the companies' gulf operations. (one would think that was protected speech)

Some litigation has named Interior Secretary Salazar and the U.S. Department of the Interior for their oversight of off-shore drilling operations. These case point to the rules regulating the oil companies' blowout and worst-case oil spill preparations.  Some have gone so far as to seek a halt to BP's operations at other oil drilling platforms.  Still others have focused on the oil companies' environmental impact statement posture as in violation of  the National Environmental Policy Act, and their seismic surveys and drilling operations as in violation of the Marine Mammal Protection Act and the Endangered Species Act.

Democratic Senators are pressuring the Justice Department to to open a criminal probe into the accident, and BP's statements to the federal government regarding its ability to respond to oil spills. Earlier this month, Florida Gov. Crist appointed two former Florida state attorneys general to head a newly formed legal team that will represent the state on issues related to the spill.

 

Proposed BPA Ban Undermines Food Safety Bill

Sen. Dianne Feinstein (D-Calif.) announced last week that she would seek to ban the chemical bisphenol-A in food and drink containers as part of an amendment to the proposed Food Safety Modernization Act (S.510). That move has the double distinction of lacking in scientific merit and threatening to undermine the bipartisan support for the good parts of the pending bill.  The Grocery Manufacturers of America and the Chamber of Commerce had expressed support for the food safety bill, but may oppose it if the bill contains language banning the chemical. The food safety bill is expected to come up after Congress returns from its Memorial Day break.

The Senator's ill-supported approach by-passes the safety review that belongs with the FDA, and is ongoing, with a re-review assessment due in 2011. NIH has also launched a study on the safety of low level exposure to BPA.  World-wide regulatory agencies who have reviewed BPA have thus far concluded that BPA is safe for use in canned products.  The European Food Safety Authority has announced a delay in delivering its own latest BPA report, needing more time to review the body of research on the chemical.

Clearly, an abrupt and unnecessary ban on packaging containing BPA would affect consumer ability to find nutritious, valuable, and shelf stable foods and beverages.  The proposed ban runs counter to the fact that BPA has been used for over 30 years to improve the safety and quality of food and beverages, including by providing protective coating for cans. The overwhelming scientific evidence points to the conclusion that at current human exposure levels, BPA is not toxic.  What is in fact occurring is that anti-chemical activists are simply manipulating consumers’ fears, and opportunistic politicians are jumping in.

Even though there is no persuasive scientific evidence that BPA causes the type of harm the politicians speculate about, litigation is well underway in both the Western District of Missouri (MDL 1967) and the Western District of Kentucky (MDL 2137). The former involves class action suits against manufacturers of baby bottles and sippy cups. The claims include alleged violation of state consumer protection acts, fraud, breach of warranty, unjust enrichment, strict product liability, and negligence. MDL 2137, on the other hand, involves suits against an aluminum bottle manufacturer claiming that the manufacturer marketed its product as an alternative to BPA-containing plastic even though its metal bottles were allegedly lined with an epoxy resin containing BPA.  

 

Expert on "Ethics" Rejected in Device MDL

The federal court overseeing the MDL concerning an allegedly defective stress urinary incontinence device has issued a number of rulings on defendant Mentor Corp.'s motions to exclude various plaintiff experts. The one we want to focus our readers on is the order granting the company's motion to exclude the testimony of a so-called "business ethicist," who was proffered to testify about the supposed inappropriateness of Mentor's conduct relating to the warnings about the ObTape device.  In re Mentor Corp. ObTape TransObdurator Sling Prods. Liab. Litig., 2010 WL 1727828 (M.D. Ga. Apr. 27, 2010).

Mentor developed a device called ObTape Transobturator Tape (“ObTape”), which was used to treat women with stress urinary incontinence. Plaintiffs contended that the allegedly defective design of ObTape caused complications that resulted in significant injuries, including serious infections and erosion of the tape. Of course, every ObTape package included an FDA-approved Product Insert Data Sheet which listed vaginal erosion, urethral erosion, and infection as possible complications associated with ObTape. The Judicial Panel on Multidistrict Litigation transferred the several federal products liability cases to the Middle District of Georgia in 2008. Ahead of the upcoming trials in the bellwether cases, both parties filed various motions in limine to exclude the other's expert  witnesses.

Plaintiffs intended to offer Professor Ann Buchholtz, Ph.D., as an "ethics" expert. Prof. Buchholtz proposed to opine about defendant's alleged ethical duty to protect the safety of patients and its ethical duty to provide information to physicians and patients. Specifically, she asserted, based on a review of selected internal Mentor documents, that certain information about ObTape should have been reported to the FDA and to physicians and patients. Mentor contended that Prof. Buchholtz’s ethics opinions should not be permitted because (1) the opinions would not assist the jury, (2) the opinions are unreliable, and (3) Prof. Buchholtz is not qualified to render the opinions.

For an expert’s testimony to “assist” the trier of fact, the evidence must have a valid scientific connection to the disputed facts in the case. A court may exclude expert testimony that is imprecise and unspecific, or whose factual basis is not adequately explained. Cook ex rel. Tessier v. Sheriff of Monroe County, Fla., 402 F.3d 1092, 1111 (11th Cir. 2005).  Expert testimony is generally only admissible if it concerns matters that are beyond the understanding of the average lay person. Proffered expert testimony generally will not help the trier of fact when it offers nothing more than what lawyers for the parties can argue in closing arguments.

And that is the precise problem with so-called business ethics experts who testify merely to highlight plaintiff counsel's interpretation of cherry-picked internal documents; to testify as to ethical standards that are not legal standards at issue in the case; to invade the province of the jury by substituting the witness' conclusions about the appropriateness of the defendant's conduct; and to work the jury into a lather with a subjective, supposedly expert view of that conduct. See generally In re Rezulin Products Liability Litigation, 309 F. Supp. 2d 531 (S.D.N.Y. 2004). Personal views on corporate ethics and morality are not expert opinions. See In re: Diet Drugs Prod. Liab. Litig., 2001 WL 454586 at *9 (E.D.Pa. Feb. 1, 2001); see also In re Trasylol Products Liab. Litig., MDL-1928, 2010 WL 1489793 (S.D.Fla.Feb. 24, 2010).  Expert testimony about a company's "intent" is merely conjecture based on the expert's impressions of the physical evidence, and must be excluded as not based on any reliable methodology or scientific principle. J.B. Hunt Transport, Inc. v. Gen. Motors Corp., 243 F.3d 441, 444-45 (8th Cir.2001); In re Baycol Products Litigation, 532 F.Supp.2d 1029.  Similarly, an expert cannot be presented to the jury solely for the purpose of constructing a factual narrative based upon record evidence.  In re Diet Drugs Prods. Liab. Litig., MDL No. 1203, 2000 WL 876900, at *9 (E.D.Pa. June 20, 2000); see also In re Fosamax Products Liab. Litig., MDL 1789, 645 F.Supp.2d 164 (S.D.N.Y.July 27, 2009).

Here, the court found the expert was not qualified to render an opinion regarding what information Mentor should have disclosed to the FDA or to physicians and patients. Prof. Buchholtz is not a physician, a medical researcher, or a medical ethicist. She had no expertise in the fields that would
qualify a witness to testify about what scientific information should be reported to the FDA or to testify about medical device industry standards for warning physicians and patients about potential adverse effects of a medical device.  Therefore, she was not qualified to offer an opinion about the appropriateness of Mentor’s conduct regarding its alleged failure to warn the FDA, physicians, and
patients about certain risks associated with ObTape.

Beyond the qualification issue, the court went on to note that even if the “Code of Ethics” that Prof. Buchholtz relied on was somehow relevant to a medical device company’s standard of care in the context of product development and marketing, anyone who reads and understands the English language can interpret and apply the principles underlying that “Code of Ethics.” So Prof. Buchholtz’s testimony on the subject was unnecessary, and not beyond the understanding of a lay jury. 

Update on "Climate Change" Litigation -- Vanishing Quorum

Readers may recall my post about the Fifth Circuit granting the petition for rehearing en banc in Comer v. Murphy Oil.  The case involves a lawsuit by property owners against some three dozen oil, coal, and chemical companies, alleging that the defendants' activities contributed to climate change and magnified the effects of Hurricane Katrina, and thus exacerbated the damage from the storm. The trial court dismissed the suit on political question and standing grounds.  On appeal, a panel of the 5th Circuit reversed last Fall, finding that the plaintiffs did have standing and that the political question doctrine did not apply.

The defendants filed a petition for rehearing en banc, which was granted, and set the case for oral argument next week.  But, the clerk recently sent a letter noting the cancellation of en banc oral arguments.  Apparently, since the en banc court was constituted, new circumstances have arisen that make it necessary for another judge to recuse, leaving only eight members of the court able to participate in the case. Consequently, said the clerk, the en banc court has lost its quorum. Seven members of the court had previously recused themselves from the case.

Several defendants have filed a motion arguing for a different reading of the rule regarding a quorum, and/or raising the argument that the district court's opinion ought to remain the controlling law of the case, rather than the panel's decision which was vacated by the en banc decision. The court has responded by asking for supplemental briefing on these issues. Specifically, the order invited the parties to address the matter “as they think appropriate” but specifically directed them to analyze the interplay between the following rules and statute in resolving the disposition of the appeal: Fed. R. App. P. 35(a), 28 U.S.C. §46 (c) and (d), Fed. R. App. P. 41 (a) and (d) (1), 5th Cir. Local Rule 41.3, and Fed. R. App. P. 2. The court also instructed the parties that they may consider the rulings of Chrysler Corp. v. United States, 314 U.S. 583 (1941) and North American Co. v. Securities & Exchange Comm’n, 320 U.S. 708 (1943) and the Rule of Necessity.

Presumably, three outcomes are possible:the court decides it actually does have a quorum and thus oral argument is rescheduled; the panel decision is reinstated by default (with an ensuing cert petition to the Supreme Court); or, the district court is affirmed without opinion.

Many observers had predicted that the en banc decision by the 5th Circuit would create a circuit split  with the 2d Circuit decision in Connecticut v. American Electric Power. There, a two-judge panel reversed the lower court dismissing the case on political question grounds, and finding the plaintiffs had standing to assert nuisance claims (with a similar attenuated causation theory).  This presumably would have paved the way for Supreme Court cert review.  Of course, Justice Alito has recused himself in cases involving ExxonMobil due to his ownership of its stock, and  Justice Breyer has recused himself from cases involving BP.  Perhaps Justice Sotomayor would also recuse herself due to her participation in the Connecticut v. American Electric Power case when she was on the Second Circuit.  So any possible Supreme Court review may be complicated also by the recusal and quorum issues.

Stay tuned.  This one is getting even more interesting, if thatis possible.

 

Duke Hosts Conference on Civil Rules

At the request of the Standing Committee on Rules of Practice and Procedure, the Advisory Committee on Civil Rules sponsored a conference last week at Duke University School of Law. The purpose of the conference was to explore the current costs and burdens of civil litigation, particularly discovery, and to discuss possible solutions. The Conference was designed in part to highlight some new empirical research done by the Federal Judicial Center, and others, to assess the degree of satisfaction with the performance of the present system and the suggestions of lawyers as to how the system might be improved.  The Conference included insights and perspectives from lawyers, judges and academics, on the discovery process (particularly e-discovery), pleadings, and dispositive motions. Other topics considered included judicial management and the tools available to judges to expedite the litigation process, the process of settlement, and the experience of the state courts on these issues.

Specifically, the empirical data from the FJC was discussed by Judge Rothstein, and Emery Lee and Tom Willging of the FJC; the ABA Litigation Section research data was to be reported by Lorna Schofield; the NELA Data was next.  Prof. Marc Galanter commented on vanishing jury trial data. Litigation cost data from the Searle Institute, and RAND data were circulated. The next section of the agenda focused on pleadings and dispositive motions, fact based pleading, Twombly, Iqbal. Participants included several judges and academics. The following panel asked about excessive discovery, and included practitioners, judges, and academics. The judicial management issue, and the level of early judicial involvement, was next.

Day Two focused on e-discovery and the degree to which the new rules are working or not.  The U.S. Chamber Institute for Legal Reform weighed in with a white paper.  The conference turned next to whether the process was structured sufficiently for trial and settlements as they really occur, i.e., should the endgame be viewed as settlement rather than trial. Corporate counsel, outside lawyers, public and governmental lawyers weighed in next. The following panel offered perspectives from the state courts. Finally, the Bar Association and lawyer group proposals were on the table. The Lawyers for Civil Justice, DRI, Federation of Defense & Corporate Counsel, and International Association of Defense Counsel submitted a white paper.

One speaker summed up the two-day discussion, suggesting that consensus had formed around the proposition that federal judges should provide strong, early, consistent case management, although plaintiff lawyers felt there was no need to give the judges any more formal authority.  But there was great disagreement on critical questions of the scope of discovery, the breadth of possible voluntary disclosures, and pleading requirements. Readers have read my posts about  Twombly and Iqbal, which clarified the requirements of what must be included in a complaint.

A survey of the Oregon system, a fact-based pleading approach, was presented by the Institute for the Advancement of the American Legal System. It has not led to more dismissals, and most observers agreed that fact-based pleading was revealing the key issues and narrowing the contentions earlier. 

The notion that the cost of the process is so large that it may be making litigation beyond the reach of many potential litigants is something a number of participant expressed concern about. One judge noted that he now requires lawyers to estimate the costs of discovery, and report that to their client. One participant raised the issue of cutting off discovery for defendants who move to
dismiss, although it is unclear how that would be an effective remedy for any current unsatisfactory case management methods.

 

Decision to Not Conduct Daubert Inquiry Leads to Class Certification

A federal court recently certified a class of Minnesota building owners in litigation over issues with plumbing systems. See In re: Zurn Pex Plumbing Products Liability Litigation, MDL No. 08-1958, 2010 WL 1839278 (D.Minn. 5/6/10).

The issue for our readers is not so much what happened, but what should have happened but did not.  I recently posted about the7th Circuit decision in American Honda Motor Co., Inc. v. Allen, 2010 WL 1332781 (7th Cir., April 7, 2010), mandating that trial courts rule on the admissibility of expert testimony at the certification stage of litigation when the testimony is critical to certification.  That is the only approach that makes any sense. Otherwise, the court risks certifying a class -- and engaging the parties in  the massive discovery and notice process that accompanies it  -- based on testimony that fails the Daubert test, is unreliable, and eventually inadmissible under the Federal Rules.  Here, the court refused to exclude the testimony of two plaintiff experts at the certification stage.  The court noted that the 8th Circuit had not yet adopted the approach of the 7th Circuit. 

Historically, potable water plumbing systems used copper pipes. In the 1990's, some companies designed plumbing systems using polybutylene plastic. After a wave of litigation involving allegedly failed polybutylene plumbing systems, defendant Zurn designed a cross-linked polyethylene plumbing system, commonly referred to as “pex,” as an alternative to polybutylene systems and copper plumbing systems. Plaintiffs were individuals who owned a home with a Zurn pex plumbing system. in several lawsuits, plaintiffs alleged that defective fittings used in the pex system caused their plumbing systems to leak resulting in damage to their properties. Plaintiffs also alleged that Zurn failed to adequately test the brass crimp fittings in their anticipated environments before marketing its product. In 2008, the Judicial Panel on Multi-District Litigation determined that the pex plumbing cases met the MDL test, and that centralization of the cases in Minnesota was appropriate.

Plaintiffs moved for certification of a class of all persons and entities that own a structure located within the State of Minnesota that contains a Zurn Pex plumbing system with brass crimp fittings.  Defendants, in turn, moved to exclude portions of the testimony of plaintiffs' experts, Dr. Wallace Blischke and Dr. Roger Staehle.  

Dr. Blischke, a statistician, performed an analysis of Zurn's warranty claims data and estimated that millions of Zurn's brass fittings will fail within the twenty-five year warranty period; he concluded that the fittings have a mean time to failure of 40 years.  Defendants offered evidence that the 40 years was based on unsupported assumption, not data.  The court admitted that as merits discovery unfolded and more information becomes available, Dr. Blischke's 40 year estimate for the mean time to failure "may or may not be admissible," but it would consider the expert testimony in support of class certification anyway and "has given such testimony proper weight."

Dr. Staehle then conducted a round of testing known as the U-bend test of brass specimens from Zurn's fittings. Defendants offered evidence that the reliability of Dr. Staehle's U-bend testing was undermined by his use of an artificially inflated level of strain, and they challenged the correctness of Dr. Staehle's calculation of the strain. The court concluded that "at this point" it would not exclude the testimony, which could be the subject of cross examination.

The certification battleground was 23(b)(3) predominance.  Defendants stressed that there were lots of possible causes of the failure of any particular plumbing system, and thus individual issues predominated.  Plaintiffs -- and here we see where the denial of a Daubert inquiry has its pernicious effect -- responded that the brass crimp fittings used in the pex plumbing system suffer from an inherent design and manufacturing defect, and that the parts were substantially certain to fail within the 25 year express warranty provided by Zurn and/or the useful life of the fittings.  And this was a set of predominating common issues, they said.  But they only get there through the testimony of the experts, not only on the merits, but on the presentation that the defects and useful life were demonstrable on a common basis through expert testimony about testing and time-to-failure.  So, for example, in certifying a warranty class for those plaintiffs whose systems had not yet failed, the court readily acknowledged being influenced by the fact that plaintiffs "allege, and intend to prove by expert testimony, that Zurn's brass crimp fittings suffer from a uniform, inherent design and manufacturing defect...."

Similarly, with regard to a class relying on a negligence cause of action, the court concluded that if plaintiffs can prove that the crimp fittings suffer from a uniform, inherent design and manufacturing defect, and that the defect is the only cause of failure in the majority of the cases, then proximate cause will not involve predominately individual determinations, and resolution of that issue would be common the class. For class certification purposes, the court was "convinced that Plaintiffs have adduced sufficient evidence to support their theory of the case."  But, of course, that evidence was arguably inadmissible expert testimony.

Since proof of reliance will likely vary among class members, and since defendants are entitled to present individualized defenses to reliance under Minnesota law, plaintiffs failed to show that the reliance component of their consumer protection claims could be proven by common evidence. Accordingly, class certification as to plaintiffs' consumer protection claims was denied.

But imagine how easy it can be to show "predominance" of common issues when your proof is unreliable, inadmissible, unscientific, expert testimony that just doesn't get screened.  Why should the gatekeeper role not impact entrance to the expensive, protracted world of a class action as much as to trial?

 

 

ALI Annual Meeting

Next week I will be on the road attending the Annual Meeting in Washington, D.C., of the American Law Institute (ALI).  I was pleased to be elected earlier this year to membership in this organization.

As readers may know, the American Law Institute is one of the leading independent organizations in the United States producing scholarly work seeking to clarify, modernize, and otherwise improve the law. The Institute (made up of leading lawyers, judges, and law professors) drafts, discusses, revises, and publishes Restatements of the Law, model statutes, and principles of law that are enormously influential in the courts and legislatures, as well as in legal scholarship and education. ALI has long been influential internationally and, in recent years, more of its work has become international in scope.

By participating in the Institute's work, its members have the opportunity to influence the development of the law in both existing and emerging areas, to work with other lawyers, judges, and academics, to give back to a profession to which they are deeply dedicated, and to contribute to the public good. 

Among the projects of interest to readers are the Restatement (Third) of the law of restitution and unjust enrichment, and the just-published Principles of the Law of Aggregate Litigation.

Parties File Joint Report in Toyota MDL

The three attorneys serving as interim plaintiffs' counsel in the Toyota multidistrict litigation have filed a joint Preliminary Report, pursuant to the Court’s April 14, 2010 CMO No. 1. See  In re Toyota Motor Corp. Unintended Acceleration Marketing, Sales Practices, and Products Liability Litigation, No. 8:10-ml-02151-JVS-FMO (C.D. Cal.,  4/30/10).

Among the topics covered were many of the basic MDL structural issues, including the proposed structure and roles of designated counsel.  The parties recommended 18 attorneys to serve in leadership positions. More than 80 law firms and attorneys had filed applications by the May 3rd deadline to serve as lead counsel or in some other leadership role in this MDL.

The plaintiffs' attorneys also recommended establishment of a core discovery committee led by the co-lead counsel for the two types of cases, personal injury and economic loss.  Plaintiffs’ outlined their Core Discovery (types of information and documents, and types of discovery). Proposed core discovery  included: (i) Floor Mat,  (ii) Pedal, and (iii) Electronic Throttle systems issues. Plaintiffs' core discovery includes probing allegations of the existence of a defect in Toyota vehicles responsible for alleged sudden unintended acceleration; and the design and manufacture process for the engine throttle control system (including pedals, floor mats, electronic control systems, accelerator pedals, throttle bodies, etc.).  They also outlined proposed document discovery, as far back as the 1990s, claiming that design of that system began in the 1990s and that it was put in place in some vehicles as early as model year 1998.

Similarly, defendants outlined their proposed discovery in personal injury cases and economic loss cases. A key issue for them is the preservation of the vehicles in testable condition.

The parties offered a brief statement of the facts and legal issues, including class certification issues, standing issues, the application of the economic loss rule, choice of law, and the statute of limitations. Defendants’ specifically requested coordination with state court proceedings. There are now reportedly about 100 cases in 22 states.

Toyota has previously announced that it had retained an outside engineering and scientific consulting firm to conduct a comprehensive, independent analysis of Toyota and Lexus vehicles using the ETCS-i system (Electronic Throttle Control System with intelligence) for concerns related to unintended acceleration.

Toyota has provided members of Congress with an interim, first phase report from this expert on its evaluation of the ETCS-i system, consistent with the company’s commitment to transparency regarding the quality and safety of its vehicles

Brand Name Drug Maker Not Liable To Plaintiff Who Used Generics

A federal trial court in Texas has held that a plaintiff who admitted using only generic products cannot maintain failure to warn claims against brand-name drug manufacturers. Finnicum v. Wyeth Inc.,  2010 WL 1718204 (E.D. Tex., 4/28/10). 

Finnicum alleged that her doctor prescribed metoclopramide to treat her heartburn sometime in 2003 and that she regularly ingested a generic form of the drug until at least 2007. Finnicum stipulated, however, that she never ingested any form of metoclopramide manufactured or distributed by defendants Wyeth or Schwarz. In mid-2007, Finnicum alleged she began exhibiting symptoms of tardive dyskinesia, a neurological disorder characterized by involuntary movements, especially of the lower face. Finnicum contended that her long-term ingestion of metoclopramide caused her to develop the disease.

She brought suit, asserting causes of action against Wyeth and Schwarz for negligence, strict products liability, breach of warranty, fraud, and violations of the Texas Deceptive Trade Practices Act.

Although plaintiff never ingested any form of metoclopramide that defendants manufactured or distributed, she alleged that manufacturers of generic metoclopramide are required by federal law to use brand name warnings when selling their products. Finnicum further contended that physicians rely on brand-name warnings when prescribing generic drugs. Finnicum maintained that defendants, as manufacturers of the brand name drug (Reglan), failed to provide adequate warnings of the long-term effects of metoclopramide use. And that impacted the warnings she did get.

The court granted summary judgment to the defendants, joining the majority of courts that have considered this question. Texas law applied. The Texas Supreme Court has stated that a manufacturer generally does not have a duty to warn or instruct about another manufacturer's products, even though a third party might use those products in connection with the manufacturer's own products. Thus, Texas law does not permit a plaintiff who ingested another manufacturer's drug to maintain a failure-to-warn claim against a brand-name manufacturer.  This result is in accord with, for example, the Eighth Circuit in Mensing v. Wyeth, Inc., 588 F.3d 603 (8th Cir.2009); see also Foster v. American Home Prods. Corp., 29 F.3d 165 (4th Cir. 1994).

The court expressly rejected the California decision, Conte v. Wyeth, Inc., 85 Cal.Rptr.3d 299 (Cal.Ct.App.2008). In Conte, the court extended a brand name drug manufacturer's duty of care regarding product information to patients who were injured by generic brands. This ruling would impose a duty that would stretch the concept of foreseeability too far.

House Hearing on FDA Progress on Food Safety

Last week, the House Subcommittee on Oversight and Investigations of the Energy and Commerce Committee, held a hearing to discuss the recent performance of FDA in ensuring food safety.

Witnesses included Michael R. Taylor, Deputy Commissioner for Foods, Food and Drug Administration; Steven M. Solomon, Assistant Commissioner for Compliance Policy, Office of Regulatory Affairs, Food and Drug Administration; Lisa Shames, Director, Agriculture and Food Safety, Government Accountability Office; Jodi Nudelman, Regional Inspector General for Evaluation and Inspections, Region II, Health and Human Services Office of Inspector General.

The hearing examined two reports relating to the Food and Drug Administration's management of international food imports and inspections of domestic food facilities. In September 2009, the Government Accountability Office (GAO) released a report on the safety of imported food, entitled Food Safety: Agencies Need to Address Gaps in Enforcement and Collaboration to Enhance Safety of Imported Food.  In the report, GAO examined FDA’s difficulties in coordinating information-sharing and enforcement efforts with Customs and Border Protection. CBP provides information on imported food shipments to FDA, but GAO found that the two agencies’ failure to assign unique identification numbers to import firms limited FDA’s ability to tackle problems with high-risk food shipments.  GAO also opined that FDA does not have sufficient authority to ensure importer compliance with existing requirements. After imported food enters the United States, it remains in the possession of the importing firm until the FDA approves its release. The importer posts a monetary bond with CBP that is intended to discourage the shipment’s unauthorized release prior to FDA approval. However, the report found that because the value of the bond penalty is low, GAO previously concluded that the system may not provide an effective deterrent.

FDA testimony last week acknowledged that GAO has raised some important issues in its report on imported food. The Agency apparently agrees with many of the GAO recommendations and will incorporate them, as appropriate, into both short-term and long-term initiatives to help ensure the safety of imported foods. FDA also admitted it has encountered certain problems with rolling out PREDICT (the Predictive Risk-based Evaluation for Dynamic Import Compliance Targeting system to improve import screening and targeting nationwide), due to difficulties with incorporating it into the Agency’s information technology infrastructure, which itself is in the process of undergoing major upgrades.


FDA officials also testified that enacting new food safety legislation is critical to strengthening FDA’s oversight of imported foods. H.R. 2749 would, among other things, provide valuable new tools, said the agency, for ensuring that importers reliably verify that the foods they import are produced in compliance with the same prevention-oriented standards that would be applicable to foods produced in the United States. For our food safety system to be effective, prevention must begin at the point of production, not at the port of entry, according the FDA.

The second report was from the Department of Health and Human Services Office of the Inspector General (OIG), and was entitled FDA Inspections of Domestic Food Facilities; it identified a number of challenges confronting FDA in safeguarding domestically produced food.  OIG found that, on average, FDA inspects only 24% of domestic food facilities annually; in addition, the number of inspections declined from 2004 to 2008.  The report also found that over the past five years, FDA has not inspected 56% of the food facilities subject to its authority.  OIG found that when violations were identified, FDA did not always take swift and effective action to ensure that these violations were remedied.  Additionally, OIG claimed that some facilities that had violations significant enough to warrant regulatory action refused to grant FDA inspectors access to their official records.

FDA claims the agency has already addressed many of the issues and recommendations noted in the report, and considerable progress is being made on others. FDA agrees with OIG’s assessment of the gaps in the Agency’s inspection authority. FDA is seeking more effective enforcement tools in accordance with OIG’s legislative recommendations. H.R. 2749 seeks to provide enhancements to FDA’s ability to trace the origin and distribution of tainted food. FDA would issue regulations that require food producers, manufacturers, processors, transporters, or holders to maintain a pedigree of the origin and previous distribution history of the food and to link that history with the subsequent distribution history of the food.  


 

Supreme Court Approves Proposed Amendments to Rule 26

Last week, the Supreme Court approved the proposed amendments to Federal Rules of Civil Procedure 8, 26, and 56, and Illustrative Form 52, and transmitted them to Congress. The amendments were approved by the Judicial Conference of the United States last fall (as covered earlier here).

Readers will recall that with regard to Rule 26, the amendments would extend work-product protection to the discovery of draft reports by testifying expert witnesses and, with three important exceptions, to the discovery of communications between testifying expert witnesses and retaining counsel. The amendments also provide that a lawyer relying on a witness who will provide expert testimony but is not required to provide a Rule 26(a)(2)(B) report – because the witness is not retained or specially employed to provide expert testimony and is not an employee who regularly gives expert testimony – must disclose the subject matter of the witness’s testimony and summarize the facts and opinions that the witness is expected to offer. The prior 1993 amendments to Civil Rule 26 have been interpreted by some courts to allow discovery of all draft expert witness reports and all communications between counsel and testifying expert witnesses. The experience under those amendments revealed significant practical problems in the eyes of many litigators.

Absent congressional intervention, the amendments will become effective on Dec. 1, 2010.
 

 

 

California Takes Next Steps On "Green Chemistry"

Readers know how California's often extreme statutory and regulatory initiatives can influence toxic tort litigation.  Now comes word that California regulators last week released a proposed framework for forthcoming regulations to reduce certain chemicals in consumer products, as part of its “green chemistry” initiative.

The California Department of Toxic Substances Control’s release of an outline of the Draft Regulations for Safer Products is a second step in identifying "chemicals of concern" in California. The outline proposes guidelines for scientific and systematic prioritization of chemicals and products of concern, certification of alternatives assessment and development of DTSC’s regulatory response. Those responses may include banning substances or products, and end-of-life management issues. It also described a process manufacturers could use to evaluate the chemicals and safer have to perform an "Alternatives Assessment" for the product. Note that any public or private entity or individual may petition the Department to evaluate a chemical or a chemical and product combination during the prioritization process.

DTSC called for feedback on the outline.  The next step will be creating actual draft regulations based on the outline. The agency said that draft regulations will be released in the very near future, and that it will begin a formal rule-making process. State law requires the regulations be adopted by January 1, 2011.

California's green chemistry initiative, a statutory mandate since 2008, is an effort to identify and to reduce the use of chemicals that regulators conclude pose the greatest risk to public health and the environment. 

 

Claim Against Classic Coke Down the Drain

The Coca-Cola Co. has successfully obtained summary judgment in a case alleging that the company unfairly marketed its Coca-Cola Classic soft drink as “original formula” despite allegedly having substituted high-fructose corn syrup for the ordinary table sugar it used when the drink was introduced. Judge Patrick Murphy issued an order last week in the U.S. District Court for the Southern District of Illinois.

Plaintiffs Amanda Kremers and Jason McCann, sued on behalf of themselves and a proposed class of Illinois citizens, alleging that Coca-Cola’s conduct in labeling cans and bottles of “Classic” Coke with the terms “Original Formula” constitutes a deceptive and unfair trade practice. This is because, plaintiffs contended, the “Original Formula” of Coke, which was invented in 1886, called for Coke to be sweetened using sucrose (ordinary table sugar, in essence), whereas “Classic” Coke currently is sweetened using high fructose corn syrup (“HFCS”). They alleged violation of the Illinois Consumer Fraud and Deceptive Business Practices Act (“ICFA”), and unjust enrichment.

Proposed class rep Kremers conceded at her deposition that she has known since the 1990's that “Classic” Coke contained HFCS and that “Classic” Coke is marketed as the “Original Formula” of Coke.  Kremers admitted also that she read the words “Original Formula” on a container of “Classic” Coke in the 1990s.  That was sufficient to put her on notice to inquire about her alleged claims, and that she knew or reasonably should have known of her so-called injury. Thus, her claim was barred by the statute of limitations, even with the discovery rule.

Turning to the merits of the case, the state statutory cause of action requires: (1) a deceptive act or practice by the defendant, (2) the defendant’s intent that the plaintiff rely on the deception, (3) the occurrence of the deception in the course of conduct involving trade or commerce, and (4) actual damage to the plaintiff (5) proximately caused by the deception.  To prove that element of proximate causation in a private cause of action brought under the ICFA, a plaintiff must allege that he was, in some manner, actually deceived. 

McCann’s testimony at his deposition was that he wasn't actually deceived.  He never read the key language until after he was approached by counsel for plaintiffs in this case about serving as the representative of the proposed class. Hence, he could not prove proximate causation for purposes of a claim for deceptive trade practices under the ICFA.

To establish a prima facie case of unfair trade practices under the ICFA, a plaintiff must prove that a defendant intentionally engaged in an unfair practice in the course of conduct involving trade or commerce, and that this practice proximately caused harm to the plaintiff. The court found that as a matter of law, the sales here were not unfair trade practices. The trade practices in dispute in this case were not deceptive acts (as above). No public policy of Illinois proscribed the use of HFCS as a sweetening agent in beverages and foodstuffs. The facts concerning plaintiffs' use hardly suggested they had been oppressed by Coca-Cola’s trade practices, or had been afforded the lack of meaningful choice necessary to establish unfairness.

Perhaps most importantly, McCann could not show the necessary substantial harm for an unfair trade practice, given the small amount of the product he purchased, the fact that he continued to purchase "Classic” Coke after the commencement of this suit and despite knowledge that the product contains HFCS, and because the alleged injury was one any consumer of “Classic” Coke quite easily could have avoided, by, for example, simply drinking a different soft drink or other beverage.

Although fraud is not an element of a claim for unjust enrichment under Illinois law, the Seventh Circuit nevertheless has made clear that where the plaintiff’s claim of unjust enrichment is predicated on the same allegations of fraudulent conduct that support an independent claim of fraud, resolution of the fraud claim against the plaintiff is dispositive of the unjust enrichment claim as well.

Class motion dismissed as moot.

 

DRI Webinar on FRE 502 Worth a Listen

Readers recognize how the discovery landscape has changed, and not necessarily for the better, with the amendments to the Federal Rules of Civil Procedure regarding electronic discovery. We are also coming up on the two-year anniversary of Federal Rule of Evidence 502, intended to address concerns about the disclosure of information protected by the attorney-client privilege or work product doctrine, including inadvertent disclosures.

An interesting upcoming DRI webcast in June will discuss how Rule 502 has impacted discovery strategy, document review, and document disclosures, with a focus on the production of documents in the electronic age. The speakers will also discuss how courts have addressed the new rule, how those cases impact your mass tort and complex litigation practice, and how to advise your clients on these issues.

Check out the brochure.

Senator Urges House to Amend FDA Powers on Drugs

Like a cross-over episode from two bad TV shows, Sen. Chuck Grassley, ranking member of the Senate Committee on Finance testified before a subcommittee of the U.S. House of Representatives Committee on Appropriations last week.  His Senate Committee staff is generally regarded as having issues presenting a balanced or complete view of the FDA and industry's efforts to monitor the safety and efficacy of approved medication.

In his testimony, the Senator urged Congress to give the U.S. Food and Drug Administration more power to monitor drugs' safety after they enter the market.

He raised questions about whether or not various post-marketing studies sanctioned by the FDA were properly performed.  He talked about his twice-introduced legislation to establish an independent office of drug safety at the FDA, a Center for Postmarket Drug Evaluation and Research.  This entity would tackle the alleged lack of equality between the Office of New Drugs (OND), which decides whether to approve a drug, and the Office of Surveillance and Epidemiology (OSE). OSE, he said, is the office that monitors a drug’s safety once it’s on the market and being sold to patients.

The supposed imbalance between OND and OSE was apparent, he argued, in various drug safety issues that developed into major mass torts. Individuals in the office responsible for post-market surveillance should be allowed to provide an “independent opinion” based on the best available evidence, he asserted. He claimed vaguely that FDA physicians and scientists committed to post-market monitoring of drugs have sometimes been suppressed or ignored.

Other speakers included a Yale School of Medicine Professor who testifies for plaintiffs in pharma cases, and the Director of the anti-industry Health Research Group of Public Citizen.  More fair balance? Maybe after November.