State Court Allows Double-Dipping Asbestos Claim

A state appeals court has ruled that an employer may face liability under New Jersey law for allegedly exposing a plaintiff to asbestos through contact with her husband's work clothes, even if she also had worked for the employer as a direct employee herself. See Anderson v. A.J. Friedman Supply, et al., No. A-5892-07T1, 2010 WL 3289061 (N.J. Super. Ct. App. Div.,  8/20/10).

Plaintiffs alleged that Bonnie Anderson contracted mesothelioma from one or both exposures to asbestos at the Linden Bayway Refinery owned by defendant Exxon Mobil Corporation (and home of the state's largest Christmas tree apparently).  The first was bystander exposure from laundering her husband John's asbestos-laden work clothes during his employment with Exxon from 1969 to 2003. (In Olivo v. Owens-Illinois Inc., 186 N.J. 394 (2006), the court had found that an employer could be liable for indirectly exposing family members to the asbestos fibers found on an employee's work clothes.)  The second was alleged direct exposure during Bonnie's own employment with Exxon from 1974 to 1986.

At trial, plaintiffs focused on the bystander exposure, and tried to downplay any significant exposure at work.  A defense expert agreed that the only epidemiologically established cause of mesothelioma is asbestos exposure; it is commonly accepted today that it's possible that women can get mesothelioma from asbestos dust brought home on the clothing of a husband or parent; and that mesothelioma has an average latency period of thirty-two years.

The trial court charged the jury that asbestos brought home by John need not have been the sole cause of plaintiff's asbestos-related injuries, but it must be a substantial contributing factor, and if the jury were to find that Bonnie's exposure occurring during the course of her employment was the sole cause of her injury or disease, it should return a verdict for Exxon.

Exxon appealed  from a judgment in favor of plaintiffs, awarding more than $7 million to the Andersons in compensatory damages.

The appellate court noted that this case presented a novel scenario of a single injury arising after a long latency period caused by one of two, or both, asbestos exposures.  The court of appeals framed the question as whether Mrs. Anderson could continue to assert a claim against Exxon if she was exposed as a result of washing the clothes but she was also an employee with possible direct exposure at that time. 

As to that question, the court turned to the "dual persona doctrine," which under New Jersey law generally provides that an employer may become like a third person, vulnerable to tort suit by an employee, outside the normal bar of the exclusivity of the workers compensation system, if and only if it possesses a second persona so completely independent from and unrelated to its status as employer that by established standards the law recognizes that persona as a separate legal person.

The court could find no close precedents, but one might think that the role of the defendant as employer of husband and wife and its supposedly distinct role in the alleged exposure due to the husband's work-related clothing do not rise to the the level of separate legal persons.  But the court affirmed the trial court's reasoning that Exxon had such a dual persona, having an employer capacity for an eight year period, but then having a separate "relationship" to Mrs. Anderson as a bystander for 20 years. It was thought unfair to the plaintiff not to let her pursue her claim based on her bystander exposure, which had "absolutely nothing" to do with her employment relationship with Exxon. That is, although Exxon could not be held liable based on her direct occupational exposure, it could be held liable pursuant to her separate exposure to the asbestos brought home by John from his Exxon job.

One might assume that if the employer was a "separate legal person" who was not protected by the workers comp scheme for purposes of the alleged bystander exposure, then at least the defendant could get some recognition on the verdict form of this separate legal entity/status.  But even though the trial judge viewed Exxon as "standing in two different pairs of shoes," the court refused Exxon's request to have the two legal persons listed on the verdict sheet, and declined to direct the jury to allocate fault between Bonnie's direct asbestos exposure as an Exxon employee and any bystander exposure from washing John's work clothes.

The court of appeals agreed, reasoning that the jury could not allocate any fault to Exxon as Bonnie's employer, because Exxon was immune from suit pursuant to the Workers Comp Act. The state's comparative fault doctrine provides that fault shall be allocated among each "party" in the case. The workers' compensation bar precluded Exxon from being a "party" in this litigation in its status as Bonnie's employer.

Thus, defendants like Exxon get the worst of both worlds: no safe haven under workers' compensation for having been the plaintiff's employer, and no allocation of fault to the "distinct" exposure because it was the employer under the workers comp scheme!

 

U.S. Urges Reversal of 2d Circuit Global Warming Nuisance Decision

The federal government (Acting Solicitor General Neal Katyal on behalf of the Tennessee Valley Authority, a government-owned company), last week urged the Supreme Court to overturn a court of appeals decision that allowed Connecticut and several other states to move forward in their suit seeking greenhouse gas emissions reductions under a federal common law nuisance theory. American Electric Power Co. v. Connecticut, No. 10-174 (U.S., brief filed 8/24/10).

Readers may recall from earlier posts that in Connecticut v. American Electric Power Co., 2009 WL 2996729 (2nd Cir. 9/21/09),  two groups of plaintiffs, one consisting of eight states and New York City, and the other consisting of three land trusts, sued several electric power corporations that own and operate fossil-fuel-fired power plants, seeking abatement of defendants' alleged ongoing contributions to the "public nuisance of global warming." Plaintiffs claimed that global warming, to which the defendants allegedly contributed as large emitters of carbon dioxide, is causing and will continue to cause serious harm affecting human health and natural resources. The plaintiffs' theory is that carbon dioxide acts as a greenhouse gas that traps heat in the earth's atmosphere, and that as a result of this trapped heat, the earth's temperature has risen over the years and will continue to rise in the future. Pointing to an alleged “clear scientific consensus” that global warming has already begun to alter the natural world, plaintiffs predicted that it “will accelerate over the coming decades unless action is taken to reduce emissions of carbon dioxide.”

When thinking about "global climate" changes, MassTortDefense has always been sobered by the fact that humans have been trying to measure temperature consistently only since the1880s, during which time advocates think the world may have warmed by about +0.6 °C -- which is less than the margin of error on our ability to measure the Earth's temperature!

Anyway, plaintiffs brought these actions under the federal common law of nuisance or, in the alternative, state nuisance law, to force defendants to cap and then reduce their carbon dioxide emissions. The district court held that plaintiffs' claims presented a non-justiciable political question and dismissed the complaints. 406 F. Supp. 2d 265.

On appeal to the Second Circuit, plaintiffs argued that the political question doctrine does not bar adjudication of their claims; that they had standing to assert their claims; that they had properly stated claims under the federal common law of nuisance; and that their claims were not displaced by any federal statutes.

In a lengthy opinion, the two judges (Justice, then-Judge Sotomayor had to drop out) held that the district court erred in dismissing the complaints on political question grounds; that all of plaintiffs had standing; that the federal common law of nuisance governs their claims; that plaintiffs had stated claims under the federal common law of nuisance; that their claims were not displaced by other federal law.

In a very minimalist interpretation of what is needed for standing, the Second Circuit distinguished multiple precedents of the Supreme Court which held that to have standing a plaintiff must allege an injury that is concrete, direct, real, and palpable -- not abstract.  Injury must be particularized, personal, individual, distinct, and differentiated -- not generalized or undifferentiated. The Supreme Court has further stated that the asserted injury must be actual or imminent, certainly impending and immediate --not remote, speculative, conjectural, or hypothetical. The court rejected defendants challenge that the contentions of future injury at some unspecified future date are not the kind of “imminent” injury required. The court also gave short shrift to the argument that plaintiffs could neither isolate which alleged harms will be caused by defendants' emissions, nor allege that such emissions would alone cause any future harms.

As we noted here, several defendants have filed a cert petition that raises the important, recurring question whether states and private plaintiffs have standing to seek, and whether federal common law provides authority for courts to impose, a non-statutory, judicially created regime for setting caps on greenhouse gas emissions based on vague and indeterminate nuisance concepts. It also asks the Court to decide whether judges, in addition to Congress and the EPA, may regulate greenhouse gas emissions at the behest of states and/or private parties and, if so, under what standards. Under the Second Circuit's ruling, a single judge could set emissions standards for regulated utilities across the country—or, as here, for just that subset of utilities that the plaintiffs have arbitrarily chosen to sue. Judges in subsequent cases could set different standards for other utilities or industries, or conflicting standards for these same utilities.

While the Second Circuit called this an ordinary tort suit, this litigation seeks to transfer to the judiciary nearly standard-less authority for some of the most important and sensitive economic, energy, and social policy issues presently before the country. Federal nuisance law is neither sufficiently developed nor sufficiently detailed to substitute for actual regulation. Thus, at stake is the financial health and security of numerous sectors of the economy. Indeed, virtually every entity and industry in the world is responsible for some emissions of carbon dioxide and is thus a potential defendant in climate change nuisance actions under the theory of this case. The threat of litigation, and the indeterminate exposure to monetary and injunctive relief that it entails, could substantially impede and alter the future investment decisions and employment levels of all affected industries, and ultimately every sector of the economy.


Now the government brief takes a different approach, asking the Court not to accept the case for full review, but rather to simply vacate the decision and direct the Second Circuit to reconsider two issues: whether the plaintiffs have standing to bring the lawsuit, and whether recent actions by the EPA  to regulate greenhouse gas emissions supplant the reason given by the Second Circuit for allowing the lawsuit to go forward.  Since the initial decision below, EPA has issued final rules establishing reporting requirements for major emitters of greenhouse gases; issued a finding that greenhouse gas emissions from cars and light trucks endanger public health and welfare; and established new greenhouse gas emissions limits for cars and light trucks. In addition, EPA has signed off on a final rule requiring that additional categories of sources begin to track and report greenhouse gas emissions under EPA's earlier GHG reporting rule.  The Second Circuit decision was seemingly predicated on the "now-obsolete conclusion" that EPA had not taken action to regulate carbon-dioxide emissions from stationary sources. 

The TVA brief also argues that  that the lower court should dismiss the case based on “prudential standing,” a narrower ground than the case or controversy argument of the other defendants.


 

Ninth Circuit "Strikes" a Blow for Proper Motion Procedure

Phillies' slugger Ryan Howard was ejected from a game this week in extra innings, leaving his team (which had no more position players) to insert ace pitcher Roy Oswalt into the outfield and to use him at the plate. First time the Phils used a pitcher in the field in decades. Howard argued a mistakenly called third strike on a check swing.

Today's post relates to a different kind of mistaken strike. The Ninth Circuit has explained that trial courts cannot strike a claim for damages on the ground that the damages are precluded as a matter of law.  Whittlestone Inc. v. Handi-Craft Co., No. 09-16353 (9th Cir. Aug. 17, 2010).  Specifically, Rule 12(f) of the Federal Rules of Civil Procedure does not authorize the court to strike the claim for damages on the basis that such damages are legally not recoverable.

Here, the defendant field a Rule 12 motion to strike the paragraphs of the complaint that sought the recovery of lost profits and consequential damages, in alleged violation of the plain language of the parties' contract.  The trial court granted the motion, and plaintiff appealed.

Rule 12(f) states that a district court “may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” The function of a 12(f) motion
to strike is to avoid the expenditure of time and money that would arise from litigating spurious issues by dispensing with those issues prior to trial.  While the motion here seemed to fit the purpose of the rule, it didn't fit the language. The court found that the damages allegations met none of those listed categories. 

Handi-Craft argued that Whittlestone’s claim for lost profits and consequential damages should be stricken from the complaint, because such damages were precluded as a matter of law.  But that meant that Handi-Craft’s 12(f) motion was really an attempt to have certain portions of  Whittlestone’s complaint dismissed or to obtain summary judgment against Whittlestone as to those portions of the suit, which attempt was better suited for a Rule 12(b)(6) motion or a Rule 56
motion, not a Rule 12(f) motion. 

And this was not harmless error, said the 9th, because the standard for review of the different motions is not the same, and there was some question whether a 12(b)(6) motion would be granted, had it been filed.

The court concluded that Rule 12(f) of the Federal Rules of Civil Procedure does not authorize a district court to dismiss a claim for damages on the basis it is precluded as a matter of
law.


 

Drywall Litigation Update

The Georgia Superior Court has preliminarily approved a $6.5 million settlement between the Lowe's home improvement stores and a nationwide proposed class of drywall purchasers. Vereen v. Lowe's Home Centers Inc., SU10-CV-2267B (Ga. Super. Ct., Muscogee Cty.).

The proposed resolution of this piece of the drywall litigation would provide Lowe's gift certificates ranging from $50 to $2,000 to any consumer who purchased drywall (not just from China), as well as cash awards of up to $2,500, if the claimant can provide documentation of damages and proof of purchase. That is, plaintiffs who provide proof of purchase of drywall from Lowe's but have no proof of actual damages would receive gift cards valued up to $250. Class members unable to provide a proof of purchase would receive $50 gift cards.

Under the settlement, Lowe's also agreed to pay attorneys' fees and expenses up to 30% of the class fund, as well as $1 million to the plaintiff attorneys for administration of claims. The settlement purports to release Lowe's from all drywall claims.The Georgia court conditionally certified a settlement class and set a final fairness hearing for November 19th.

But the proposed settlement has apparently drawn objections from participants in the federal Chinese drywall multidistrict litigation, who are arguing that the settlement fund is too small and that the settlement would interfere with federal jurisdiction.  The plaintiffs' steering committee for the Chinese drywall multidistrict litigation in the Eastern District of Louisiana went so far as to move to enjoin the state court from moving ahead with the settlement, arguing that the benefit to the class is too small, and the attorneys' fees too large. Ironically, these plaintiff attorneys assert that the form of the class benefit, i.e.,  a gift card, is also improper.

The MDL lawyers assert that the parties involved in the MDL have been negotiating towards a global settlement, and allowing the state court, one-defendant settlement to go forward would simply undermine those efforts.  They called on the federal court, pursuant to the Anti-Injunction Act, to enjoin state court proceedings where, as here, it is allegedly necessary in aid of its jurisdiction or to protect or effectuate its judgments.

Readers will recall that after Hurricanes Katrina and Rita in 2005, drywall was imported from China to address a shortage of drywall required for repairs and new construction. After the drywall was installed, homeowners began to complain of smells, gas emanations, corrosion of appliances and electrical fixtures, and other alleged property damage. The lawsuits typically allege that sulfur compound levels in the drywall are too high, causing issues with air conditioning systems, electrical appliances, internal wiring, and other electrical systems in homes. Plaintiffs also allege the drywall produces a rotten egg-like stench and causes a variety of respiratory and other health problems for those who live in the affected homes.

So far, a few bench or jury bellwether trials have been completed, with mixed results.
 
 

Snapple The Best Stuff in Court - Consumer Class Action Denied

Earlier this month a trial court in New York denied class certification purchaser of Snapple beverages who complained that drinks labeled “All Natural” are somehow misleading because they contain high fructose corn syrup.  See Weiner v. Snapple Beverage Corp., (S.D.N.Y. 8/3/10).

Off and on, we have commented on the growing and alarming trend for plaintiffs lawyers to concoct consumer fraud class action claims against products, even when consumers were not injured and got basically what they paid for, because of some alleged ambiguity in the label or old-fashioned puffing.

Snapple Beverage Corporation was founded in New York’s Greenwich Village in 1972. Snapple began selling and marketing its teas and juice drinks in the late 1980s. In marketing its beverages, Snapple focused on, among other things, flavor, innovation, and humor. Snapple became known for its quirky personality and funny advertising, as well as its colorful product labels and beverage names. For instance, Snapple’s television advertisements featured, among other things, Snapple bottles dressed in wigs and hats, singing in a Backstreet-esque “boy-band,” running with the bulls (hamsters with cardboard horns) in Spain, and performing synchronized swimming.

When Snapple entered the beverages market in the late 1980s, it avoided putting preservatives, which were then commonly found in some similar beverages, in its teas and juice drinks. Snapple was able to do so by using a “hot-fill” process, which uses high-temperature heat pasteurization to preserve products immediately before bottling. Snapple also used 16-ounce glass bottles instead of aluminum cans or plastic. Hence the term on their label "All Natural."

From their inception, Snapple’s beverages were sweetened with high fructose corn syrup.  HFCS is made from corn ( a natural product last time we checked), and its primary constituents are glucose and fructose, the sugars that comprise table sugar and honey (which also sound pretty natural). It is undisputed that Snapple disclosed the inclusion of HFCS in the ingredient list that appears on the label of every bottle of Snapple that was labeled “All Natural.”

But plaintiffs alleged that they paid a price premium for Snapple beverages as a result of the “All Natural” labeling, and that Snapple’s “All Natural” labeling was misleading because Snapple had HFCS.  They brought a class action on behalf of all people who purchased Snapple in New York.  The FDA is reportedly looking at whether high fructose corn syrup may be considered a natural ingredient, but the court didn't need that guidance to dispose of this bogus class claim.

The court focused on the Rule 23(b)(3) predominance inquiry which tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation. The predominance requirement is met only if the plaintiff can establish that the issues in the class action that are subject to generalized proof, and thus applicable to the class as a whole, predominate over those issues that are subject only to individualized proof.  The issues in turn are determined by the causes of action and defenses to them.  Plaintiffs' main claim was for alleged deceptive acts or practices in the conduct of any business, trade or commerce under N.Y. Gen. Bus. L. § 349. Generally, claims under § 349 are available to an individual consumer who falls victim to misrepresentations made by a seller of consumer goods through false or misleading advertising.

New York's § 349 does not require proof of actual reliance. But the plaintiff must show that the defendant’s material deceptive act caused the injury. In addition, a plaintiff must prove actual injury to recover under the statute.  The court noted that proof of actual injury in this case is bound up in proof of damages, or by how much plaintiffs have been harmed. Only by showing that plaintiffs in fact paid more for Snapple beverages as a result of Snapple’s “All Natural” labeling could plaintiffs establish the requisite elements of causation and actual injury under § 349.

The court concluded that plaintiffs had not proposed a suitable methodology for establishing the critical elements of causation and injury on a class-wide basis. Without a reliable methodology, plaintiffs had not shown that they could prove at trial using common evidence that putative class members in fact paid a premium for the beverage. Because individualized inquiries as to causation, injury, and damages for each of the millions of putative class members would  predominate over any issues of law or fact common to the class, plaintiffs’ § 349 claim could not be certified under Rule 23(b)(3).

In support of their contention that causation and injury were susceptible to generalized proof on a class-wide basis, plaintiffs relied on the expert report of Dr. Alan Goedde, an economist.  In his report, Goedde proposed two “approaches” for determining the purported price premium attributable to Snapple’s “All Natural” labeling: (1) a “yardstick” approach, which would use “class-wide economic data and standard economic methodologies” to “compare the price of products labeled ‘All Natural’ to similar products which do not have ‘All Natural’ labeling;” and (2) an “inherent value”  approach, which would analyze unspecified “studies and market research” to gather “data that can be used to determine the increased value, standing alone, that a product realizes due to the perception of that product being natural.”

The court found Goedde’s testimony unreliable. The witness did not demonstrate in adequate detail how his proposed “approaches” would be used to develop an empirical algorithm to determine, on a class-wide basis, whether there was a price premium as a result of Snapple’s “All Natural” labeling and, if so, how such a premium could be quantified. For example, he did not identify the products to which Snapple should be compared. He did not explain how his approach would isolate the impact of the “All Natural” labeling from the other factors that purportedly affect the price of Snapple and its competitors. He failed to take into account that there was no uniform price for Snapple beverages during the class period, and thus did not explain how his approach would account for the various prices that putative class members actually paid in determining injury
on a class-wide basis.

Goedde relied on two internal Snapple marketing strategy documents to support his alternate hypothesis that Snapple’s “All Natural” label allowed it to command a premium in the marketplace. Yet he did not review the deposition transcripts of Snapple’s witnesses or any of the other  documents produced by Snapple, which would have provided critical context for these documents.

The court accurately spotlighted the common plaintiff tactic in these kinds of cases: the failure to
invest sufficient time and effort to develop a reliable methodology to support an expert opinion at the class certification stage.  Although the court thought plaintiffs correct in arguing that Goedde need not “implement” or fully “test” his methodology at the class certification stage, an expert must still provide sufficient detail about the proposed methodology to permit a court to determine whether the methodology is suitable to the task at hand.

Without Goedde’s testimony, plaintiffs offered no evidence that a suitable methodology is available to prove the elements of causation and actual injury on a class-wide basis. Individualized inquiries would therefore be required in order to determine whether class members in fact paid a premium for Snapple beverages, and whether any such premium was attributable to the “All Natural” labeling. This would require, among other things, an examination of each of the millions of class members’ Snapple purchases, which the evidence showed were made in different locations, at different times, and for different prices, over the nearly eight-year class period.

One further issue of note is class definition.  The court found that plaintiffs failed to show how the potentially millions of putative class members could be ascertained using objective criteria that were administratively feasible. Plaintiffs - typically  - suggested that after certification, the court could require simply that class members produce a receipt, offer a product label, or even sign a declaration to confirm that the individual had purchased a Snapple beverage within the class period. The court labeled this suggestion "unrealistic." Plaintiffs offered no basis to assume that putative class members retained a receipt, bottle label, or any other concrete documentation of their purchases of Snapple beverages bearing the “All Natural” description.  Indeed, putative class members were unlikely to remember accurately every Snapple purchase during the class period, much less whether it was an “All Natural” or diet beverage, whether it was purchased as a single bottle or part of a six-pack or case, whether they used a coupon, or what price they paid. Soliciting declarations from putative class members regarding their history of Snapple purchases would invite them "to speculate, or worse."

However beloved Snapple may be, said the court,  there is no evidence to suggest that its consumers treat it like a fine wine and remove and save its labels.

 

State Supreme Court Adopts Risk Utility Test for Defect

The South Carolina Supreme Court last week vacated a $31 million verdict for a minor injured in a Ford Bronco rollover accident.  Branham v. Ford Motor Co., 2010 WL 3219499 (S.C. 8/16/10).  The case raises a number of interesting points for our readers.

This was a product liability action involving a Ford Bronco II.   Hale was driving the vehicle with several children as passengers, including her daughter seated in the front passenger seat.  No one was wearing a seat belt.  Hale admittedly took her eyes off the road and turned to the backseat to ask the children to quiet down. When she took her eyes off the road, the Bronco veered towards the shoulder of the road, and the rear right wheel left the roadway. She responded by over-correcting to the left, which allegedly led the vehicle to roll over.

Plaintiff, the parent of one of the injured passengers, sued. The case against Ford was based on two product liability claims, one a defective seat belt sleeve claim, and the other, a “handling and stability” design defect claim related to the vehicle's alleged tendency to rollover.  The jury returned a verdict of $16,000,000 in actual damages and $15,000,000 in punitive damages.

The trial court had dismissed the strict liability claim regarding the seat belt on the basis that the sleeve was not defective as a matter of law. But the negligence claim shared with the strict liability claim the element that the product be in a dangerous condition unreasonably dangerous. The trial court should thus have dismissed it too, the supreme court said.

The court also found that the closing argument of Branham's counsel was designed to and likely did inflame and prejudice the jury. The closing argument relied heavily on inadmissible evidence to pump up the punitives claim in requesting that the jury punish Ford.  This closing argument invited the jury to base its verdict on passion rather than reason, and the supreme court found that it denied Ford a fair trial.

But the more interesting part of the case related to Ford's two-fold argument that: (1) Branham failed to prove a reasonable alternative design pursuant to the risk-utility test; and (2) South Carolina law requires a risk-utility test in design defect cases to the exclusion of the consumer expectations test. 

The court found that plaintiff had produced sufficient evidence of a feasible alternative design to get to a jury.  But, while the consumer expectations test may fit well in manufacturing defect cases, the court agreed with Ford that the test is ill-suited in design defect cases. It thus held that the exclusive test in a products liability design case is the risk-utility test, with its requirement of showing a feasible alternative design.

The very nature of feasible alternative design evidence entails the manufacturer's decision to employ one design over another. This weighing of costs and benefits attendant to that decision is the essence of the risk-utility test.  The court noted that this approach is in accord with the current Restatement (Third) of Torts.  The court noted that the Third Restatement effectively moved away from the consumer expectations test for design defects, and towards a risk-utility test.  While the feasible alternative design inquiry is the core of the risk-utility balancing test in design defect cases, the court went out of its way to note that a jury question is NOT created merely because a product can be made safer. There is a longstanding principle that a product is not in a defective condition unreasonably dangerous merely because it “can be made more safe.” 

 The court sent the case back for a new trial.

State Court Misses Opportunity to End Unconstitutional Arrangements With Contingency Fee Counsel

The Pennsylvania Supreme Court this week missed an opportunity to protect the due process rights of companies facing litigation from the improper alliance of government officials and private contingency fee counsel.  See Commonwealth of Pennsylvania, Office of General Counsel v. Janssen Pharmaceutica, Inc., No. 24 EAP 2009 (Aug. 17, 2010).

Back in 2008, OGC filed a complaint against Janssen, raising various statutory and common law tort claims related to Risperdal, a prescription antipsychotic medication marketed by Janssen.
Instead of prosecuting the action itself, OGC had retained Bailey Perrin, a private law firm based in Houston, Texas, to prosecute the action on a contingent fee basis.  The Commonwealth’s retention of contingent fee private counsel in this matter raised significant issues including whether and when state law authorizes the Office of General Counsel to enter into a contingent fee contract with outside counsel; whether the Commonwealth’s hiring of outside litigation counsel on a contingent fee basis violates the state constitution, including the separation-of-powers mandate of the Pennsylvania Constitution; and whether the Commonwealth’s hiring of outside litigation counsel on a contingent fee basis violates the due process rights of the defendant company.

This case was an appeal of the trial court’s order denying the motion of appellant Janssen to disqualify contingent fee counsel retained by appellee, the Commonwealth’s Office of General Counsel (“OGC”). The Court took the case on a grant of extraordinary relief pursuant to 42 Pa.C.S.§ 726.

(Note: Just last month the California supreme court took a major step backward by modifying a 1985 decision that had properly limited the power of government agencies to retain private plaintiffs attorneys on a contingency fee basis to prosecute nuisance litigation.)

The majority never reached the merits, finding no standing and narrowly construing some of Janssen's arguments to get to that result. The Court focused on the threshold question of whether Janssen had standing to challenge Bailey Perrin’s representation of the OGC. The Court acknowledged that the OGC did not even argue statutory standing to the trial court, but then concluded that Janssen didn't argue that the standing issue was thereby waived.

Thus free to inquire, the Court found no standing, and then made "clear that the standing question we are asked to decide is one of statutory interpretation" only, under the Commonwealth's Attorneys Act, which allegedly gave the OGC authority to retain outside counsel. But Janssen argued that it also had standing to move to disqualify Bailey Perrin because nothing in the Attorneys Act prevents a litigant from challenging OGC’s unconstitutional usurpation of the General Assembly’s spending powers, or from litigating due process claims deriving from the Commonwealth’s retention of private contingent fee counsel.

Indeed, Justice Saylor stated in his Dissenting Opinion that he would apply traditional standing principles; that the Constitution is obviously the supreme law of the land that cannot be trumped by a statute; and that, therefore, Janssen’s constitutional claims may not be barred by the standing limitations of the statute.

The majority dismissed that by asserting that, under the theory Justice Saylor proposed, application of the standing restriction in the Commonwealth Attorneys Act to limit standing here would be unconstitutional. But Janssen never argued that traditional standing analysis should apply, says the majority. So, while Justice Saylor has formed "a cogent argument concerning traditional standing and the constitutionality" of the act, it is not the argument the majority perceived to be advanced by Janssen. The majority refused to read Janssen’s challenge as involving a constitutional challenge to the statutory standing limitation, with a consequent resort to traditional standing principles.

That may leave the door open for defendants in a future case who are victims of the unchecked alliance of elected officials and private contingency fee plaintiff lawyers, who are not elected and have their own separate interests. 

The legal policy of many states strongly favors open, competitive bidding for contracts involving state funds. Such requirements, included in some state Constitutions and various statutes, are designed to prevent fraud, eliminate bias and favoritism, and thus protect vital public interests. Those same goals of open and good government reside in the requirement that state officials give their undivided loyalty to the people of a state.  Many of the contingent fee contracts used by state officials to bring mass tort actions violate the core principle that attorneys pursuing actions on behalf of the state represent a sovereign whose obligation to govern impartially is essential to its right to govern. Government attorneys must exercise independent judgment as a ministers of justice and not act simply as advocates. The impartiality required of government lawyers cannot be met where the private pecuniary interest inherent in the contingent fee is the primary motive force behind the bringing of the action. By turning over sovereign prosecutorial-like power to contingency counsel, a state effectively creates a new branch of government – motivated by the prospect of private gain rather than the pursuit of justice or the public welfare.

This subversion of neutrality does more than implicate the due process rights of those confronting such tainted prosecutions. Direction of state prosecutions by financially interested surrogates also damages the very public interest that such litigation is supposed to advance. Here, the allegations of the complaint were crafted more for the pecuniary goals of counsel than for the needs of the patients served by the allegedly affected state programs. 

[Your faithful blogger was able to contribute to the amicus brief of the Washington Legal Foundation, the public interest law and policy center, in this matter.]
 

Senate Moves Forward With Compromise Food Safety Act

U.S. Senate negotiators apparently reached an agreement last week on food safety legislation in order to have it ready for the full Senate to consider when lawmakers return from the summer recess.

The group that negotiated the framework for the new Senate version of the Food Safety Modernization Act included Tom Harkin, D-Iowa; Mike Enzi, R-Wyo.; the bill's authors Dick Durbin, D-Ill., and Judd Gregg, R-N.H.; and lead co-sponsors Christopher Dodd, D-Conn., and Richard Burr, R-N.C.

The bill would require facilities that manufacture, process, pack, or hold food to have in place risk-based preventive control plans to address identified hazards and prevent adulteration.  It requires importers to verify the safety of foreign suppliers and imported food. It would give the FDA additional resources to hire new inspectors and requires FDA to inspect food facilities more frequently. The bill gives the FDA authority to order a mandatory recall of a food product if the food will cause serious adverse health consequences or death and a company has failed to voluntarily recall the product upon FDA’s request. It has provisions to enhance surveillance systems to detect food-borne illnesses.

Significantly, this version does not include language banning BPA, as originally demanded by Sen. Feinstein.  Her prior insistence, despite a lack of scientific evidence supporting such a ban, was one of the major logjams for the bill. She says she still plans to introduce an amendment to ban BPA from children’s products as soon as the bill arrives on the Senate floor.  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.



 

 

Toyota Court Recognizes "Apex" Rule for Corporate Executive Depositions

The Michigan Court of Appeals ruled last week that two top Toyota executives do not have to give depositions in a personal injury lawsuit involving the death of a Flint, Mich., woman whose vehicle allegedly suddenly accelerated and struck a tree. See Alberto v. Toyota Motor Corporation, No. 296824 (Mich. Ct. App.,  8/5/10).

Plaintiff filed this wrongful death action and claimed that decedent drove a 2005 Toyota
Camry at a speed of less than 25 miles per hour when the vehicle suddenly accelerated to a speed in excess of 80 miles per hour. Plaintiff also asserts that decedent attempted unsuccessfully to apply the vehicle’s brakes, but the vehicle struck a tree, went airborne, struck another tree; plaintiff’s decedent sustained fatal injuries.

Plaintiff noticed the video depositions of Yoshimi Inaba, defendant’s Chairman and Chief
Executive Officer, and Jim Lentz, defendant’s President and Chief Operating Officer, and defendant moved in response for a protective order to prevent the depositions because neither Mr. Inaba nor Mr. Lentz participated in the design, testing, manufacture, warnings, sale, or distribution of the 2005 Camry, or the day-to-day details of vehicle production.  Thus neither officer had unique
information pertinent to issues in the case.  The trial court denied the protective order, and defendant appealed.

This appeal presented the question whether Michigan should formally adopt the apex
deposition rule in the corporate context. As used by other state and federal courts, the apex
deposition rule provides that before a plaintiff may take the deposition of a high-ranking or
“apex” government official, the plaintiff must demonstrate that: (1) the government official or officer possesses superior or unique information relevant to the issues being litigated, and (2)  information cannot be obtained by a less intrusive method, such as by deposing lower-ranking persons. See, e.g., Baine v Gen Motors Corp, 141 F.R.D. 332, 334-35 (M.D. Ala. 1991).  Courts have applied the apex deposition rule not to shield high-ranking officers from discovery, but rather to sequence discovery in order to prevent litigants from deposing high-ranking government officials as a matter of routine procedure before less burdensome discovery methods are attempted. See, e.g., Sneaker Circus, Inc. v. Carter, 457 F Supp 771, 794 n. 33 (E.D.N.Y. 1978).

Courts have reasoned that giving depositions on a regular basis would impede high-ranking government officials in the performance of their duties, and thus contravene the public interest. See, e.g., Union Savings Bank v. Saxon, 209 F. Supp. 319, 319-320 (D.D.C. 1962). In essence, the apex deposition rule prevents high-ranking public officials from being compelled to give oral depositions unless a preliminary showing is made that the deposition is necessary to obtain relevant information that cannot be obtained from another discovery source or mechanism. Baine, 141 F.R.D. at 334-336.

Premised on similar reasoning, several federal appellate and district courts have extended
application of the apex deposition rule to high-ranking corporate executives. Generally, these
cases hold that before a high-ranking corporate executive may be deposed, the plaintiff must
establish that the executive has superior or unique information regarding the subject matter of the
litigation, and that such information cannot be obtained via a less intrusive method, such as by
deposing lower-ranking executives, etc. See, e.g., Salter v. Upjohn Co., 593 F.2d 649, 651 (5th Cir.
1979); Lewelling v Farmers Ins. of Columbus, Inc., 879 F.2d 212, 218 (6th Cir. 1989); Thomas v.
Int’l Business Machines
, 48 F.3d 478, 482-484 (10th Cir. 1995); Mulvey v. Chrysler Corp, 106 F.R.D.
364, 366 (D.R.I. 1985); Evans v. Allstate Ins. Co., 216 F.R.D. 515, 518-519 (N.D. Okla. 2003).

Some state courts, including California and Texas, have also adopted the apex deposition rule
in the corporate context. For example, in Liberty Mut. Ins. Co. v. Superior Court, 10 Cal. App. 4th
1282; 13 Cal. Rptr. 2d 363 (1992), the California Court of Appeals, relying on federal decisions
adopted the apex deposition rule in the corporate context and held that the potential deponent, the company President and Chief Executive Officer, could not be deposed absent a showing that the officer had “unique or superior personal knowledge of discoverable information.” Id. at 1289.

The court here adopted the apex deposition rule in the public and private corporate context as consistent with Michigan’s broad discovery policy, which allows a trial court to control the timing and sequence of discovery for the convenience of parties and witnesses and in the interests of
justice. Recognizing that the highest positions within a business entity rarely have the specialized
and specific first-hand knowledge of matters at every level of a complex organization, courts
have adopted the apex deposition rule in the corporate context to: (1) promote efficiency in the
discovery process by requiring that before an apex officer is deposed it must be demonstrated
that the officer has superior or unique personal knowledge of facts relevant to the litigation, and (2) prevent the use of depositions to annoy, harass, or unduly burden the corporate parties.

The rule does not mean that an apex or high-ranking corporate officer cannot be deposed under any circumstances. The rule is to ensure that discovery is conducted in an efficient manner and that other methods of discovery have been attempted before the deposition of an apex officer is conducted.

Adopting the apex deposition rule in the corporate context does not shift the burden of proof, but
merely require the party seeking discovery to demonstrate that the proposed deponent has unique
personal knowledge of the subject matter of the litigation and that other methods of discovery
have not produced the desired information.  It is invoked only after the party opposing discovery has moved for a protective order and has made a showing regarding the lack of the proposed deponent’s personal knowledge and that other discovery methods could produce the required information. In other words, after the party opposing the deposition demonstrates by affidavit or other testimony that the proposed deponent lacks personal knowledge or unique or superior information relevant to the claims in issue, then the party seeking the deposition of the high-ranking corporate or public official must demonstrate that the relevant information cannot be obtained absent the disputed deposition, said the court of appeals.

Here, the record reflected that Mssrs. Inaba and Lentz had only generalized knowledge of Toyota’s alleged unintended acceleration problems, but had no unique or superior knowledge of or role in designing the subject vehicle or in implementing manufacturing or testing processes.

Appeals Court Vacates Verdict On Exclusion of Context Evidence

Comic Dimitri Martin notes, "I'm sorry" and "I apologize" mean the same thing -- unless you are speaking to the widow at a funeral.  The lesson? Context is key.

The New Jersey appeals court last week vacated a jury verdict for a woman who used the acne drug Accutane and allegedly developed inflammatory bowel disease (IBD).  See Kendall v. Hoffmann-LaRoche Inc.,No. A-2633-08T3 (N.J. Super. Ct.,  8/5/10). The court found that the trial court erred by restricting the defendant's use of evidence concerning the incidence of IBD in the general population to set a proper context.

Readers know that defendants frequently want to put evidence in a fuller context and give the jury a full picture.  Plaintiffs seem much less concerned that a jury will take evidence (a word in an email, a phrase in a memo, a point of data) out of context.

Some background- In 1982 the Food and Drug Administration approved the use of Accutane to treat recalcitrant nodular acne. Patients using Accutane have reported a number of common side effects. The alleged side effect that was centrally at issue in this case was the alleged propensity of Accutane to cause patients to suffer from inflammatory bowel disease. The exact scientific causes of IBD have not been conclusively established, said the court. IBD has been statistically associated with several factors, including family history, prior infections, frequent use of antibiotics, and possibly the use of contraceptives and nonsteroidal anti-inflammatory drugs.

Plaintiff underwent several courses of treatment. She had taken four courses of Accutane before she developed IBD, with no apparent gastrointestinal effects. Her medical records indicated that plaintiff's mother informed the treating physician that plaintiff had been diagnosed with an IBD, and that disease "has nothing to do with her Accutane use, according to her G.I. doctors."  Plaintiff took two courses of Accutane after she developed IBD, with "no evidence of exacerbation" of the
IBD.  But in early 2005, plaintiff suffered from excessive diarrhea, bowel incontinence, bloody diarrhea, fatigue, cramping, and abdominal pain. As 2005 progressed, plaintiff's symptoms
worsened, leading to surgery.

Plaintiff contends that if she had been warned that Accutane use could cause, or exacerbate, her IBD, she would not have taken the drug. She alleged that there was no specific reference to IBD, or that Accutane use could cause IBD, in any of the materials she personally received from 1997 to 2003.  However, prior to the use of Accutane by plaintiff, defendant revised the various warnings that it supplied concerning the drug. Roche amended the "WARNINGS" section of the Accutane package insert provided to physicians to include language about Inflammatory Bowel Disease.  In a "Dear Doctor" letter, dated August 1998, which was sent to board-certified dermatologists, Roche warned that patients taking Accutane should be monitored for IBD. Roche subsequently revised its product warnings for Accutane, with FDA approval, in 2000 and again in 2002. Plaintiff's expert opined, not surprisingly, that even the amended warnings contained in the later label were inadequate.

The appeal presented several issues, including statute of limitations, but for our readers we want to focus on the argument that the trial court abused its discretion in preventing Roche from adducing evidence as to the number of Accutane users and in limiting Roche's arguments to the jury concerning such data.

In opening, in her trial proofs, and in her counsel's closing arguments to the jury, plaintiff relied heavily upon the number of adverse case reports for Accutane and other quantitative evidence as
proof of at least two critical issues: (1) that a patient's use of Accutane can cause IBD and other gastrointestinal problems, and (2) that Roche allegedly acted too slowly and ineffectively in
responding to those risks with more forceful product warnings. Roche contended that the trial court unfairly curtailed its ability at trial to defend that numbers-oriented evidence and advocacy.

Prior to the trial in this case, plaintiff moved to bar defense counsel from presenting certain proofs and arguments concerning the background incident rates of IBD in the general population. That makes complete sense; how often do people get the disease when they aren't exposed? But, in
essence, plaintiff argued those general background rates are unreliable because symptoms of IBD are allegedly frequently under-reported.  The trial court agreed and precluded Roche from referring at trial to the background rates of IBD in the general population to disprove causation. The order did allow Roche only to present "factual testimony" to show that it acted reasonably based on such background rates, and only if "the numbers are not told to the jury."  The trial court did not, however, impose any restrictions upon plaintiff in her own use of numerical proofs at trial, other than a restriction against using the numbers in a specific formula.

Thus, during opening statements, plaintiff's counsel noted that she would present proof that Roche was aware of at least 104 reported cases of IBD, of which thirty-three cases were supposedly given a causality rating of possible or probable by the company. Plaintiff's counsel also cited in opening argument to an internal Roche report supposedly stating that, in 2002, there had been sixty-four reports of Crohn's disease (BTW, a form of IBD with no epidemiological link to the drug in any reputable study).  The trial court ruled that Roche could not argue that a comparison of those AERs vs. the background rate was a scientifically valid way to help evaluate the risk of a drug. Defendant was also curtailed in cross-examination of plaintiff's labeling expert,  particularly with regard to how Roche had analyzed certain data on Accutane that it had in fact presented to the FDA.

During the defense case in chief, the trial court did loosen her ruling and did permit a defense expert to explain to the jury that, in calculating the number of IBD cases in the exposed population, Roche had assessed the reported adverse events. Because it was suspected such events are under-reported, Roche already  factored in under-reporting. In calendar year 1988, when approximately one million patients took Accutane, there were only seven reports of IBD. From 1982 to 1999, when more than 32 million patients took the drug, there were only 206 case reports of IBD.

(Readers know that an adverse event report does not establish a causal relationship between the drug and a particular event. The FDA itself has warned that for any given ADE case, there is no certainty that the suspected drug caused the event. This is because physicians and consumers are encouraged to report all suspected ADEs, not just those that are known or even suspected to be caused by the drug. The adverse event may have been related to an underlying disease for which the drug was given, to other concomitant drug usage, or may have occurred by chance at the same time the suspect drug was administered. The courts have characterized ADEs as “complaints called in by product consumers without any medical controls or scientific assessment.” McClain v. Metabolife Intern., Inc., 401 F. 3d 1233, 1250 (11th Cir. 2005). Because the reporting system is not subject to scientific controls, data from it is subject to various statistical biases. It is likely that the mix of reported events does not represent an accurate sampling of those events that can occur while a person is taking any medication. Moreover, medical or media attention can stimulate reporting in a distorted manner, and known adverse reactions are more likely to be diagnosed and reported than others. See DeLuca v. Merrell Dow Pharmaceuticals, Inc., 791 F. Supp. 1042, 1050 (D. N.J. 1992), aff’d 6 F. 3d 778 (3d Cir. 1993), cert. denied, 510 U.S. 1044 (1994) (ADEs “have inherent biases as they are second-or-third hand reports, are affected by medical or mass media attention, and are subject to other distortions.”).)

However, the trial court here gave the jury a limiting instruction on this evidence that defendant on appeal argued was especially harmful, by accentuating to the jurors that Roche's internal corporate use of background numbers was supposedly, at least in some respects, "unscientific."  Defendant argued that the trial court's directive to the jurors that at least one use of the background numbers was not "scientifically accepted," placed a prejudicial and unnecessary spin on the proofs, to Roche's detriment.

The appellate court concluded it lacked confidence that this trial, when considered as a whole, provided a full and fair opportunity for Roche to contest, present, and advocate the relevant "numbers" evidence. Specifically, the trial court erred in forbidding Roche from placing into
evidence (and arguing) statistics about Accutane usage that could have made Roche's conduct and labeling decisions appear far more reasonable to the jury. The number of users evidence  could have given the jurors very relevant contextual background, and possibly led the jury to view differently Roche's pacing in upgrading the risk information on Accutane's label and package insert.  Even accepting, for the sake of argument, plaintiff's contention that adverse events are heavily under-reported, the quantity of actual users of a drug logically is a significant part of the
numerical landscape. At a minimum, the actual usage data for Accutane would go to "safety signaling" concerns, i.e., whether Roche had received sufficiently frequent adverse "signals" to take corrective action. Had Roche been allowed to fully present the statistics on users and other related counter-proofs, the jury would have had a fuller and more balanced picture of the data bearing upon the company's conduct in changing its label. See McCarrell v. Hoffman-La Roche, Inc., No. A-3280-07 (App. Div. Mar. 12, 2009), certif. denied, 199 N.J. 518 (2009).

The court recognized that the trial court's attempted conceptual boundary between using background data for purposes of evaluating "signals" and company conduct, but not for "causation," is a technical and somewhat elusive distinction. Increased reports of a medical condition occurring in a drug's users, as contrasted with the general population, may well provoke a drug maker to strengthen its labeling, even if such adverse reports may suggest only an association and not that the product is, in fact, "causing" such adverse results. In any event, the court of appeals felt there was no need here to draw the boundaries between causation and conduct with precision or with definiteness. The point remains that, even accepting, arguendo, as reasonable the trial court's prohibition upon Roche using background numbers to disprove causation (because of a concern about reporting), the trial as a whole did not provide Roche with a sufficient opportunity to make full and legitimate uses of such contextual evidence as part of its trial advocacy.  In particular, the jury instruction issued by the court went too far in characterizing to the jurors the use of background numbers to prove or disprove causation as "unscientific."

The case was remanded for a new trial.  And on remand, the defense will not be foreclosed from attempting to use the numbers evidence to show not only that the company acted reasonably in the manner in which it developed and modified the Accutane product warnings, but also to attempt (if it chooses to do so) to disprove general causation (along with the multiple epidemiological studies refuting causation).

Roche has successfully defended IBD claims in the federal cases brought to date, obtaining dismissals in each case that have been affirmed on appeal by the United States Court of Appeals for the Eleventh Circuit.

 

Defendants in Second Circuit Climate Change Case Seek Cert

Several electric power companies have asked the Supreme Court to review a Second Circuit ruling that Connecticut and several other states may seek greenhouse gas emissions reductions under a federal common law nuisance claim.  American Electric Power Co. v. Connecticut, No. 10-174 (U.S. 8/2/10). The petition for certiorari was filed by American Electric Power Co., Duke Energy Corp., Southern Co., and Xcel Energy Inc.

Readers may recall that in 2004, two groups of plaintiffs, one consisting of eight states and New York City, and the other consisting of three land trusts, sued six electric power corporations that own and operate fossil-fuel-fired power plants, seeking abatement of defendants' alleged ongoing contributions to the "public nuisance of global warming." Plaintiffs claimed that global warming, to which the defendants allegedly contributed as large emitters of carbon dioxide, is causing, and will continue to cause serious harm affecting human health and natural resources.

Because of the procedural posture (motion to dismiss), the court did not really describe the other side of the story, but readers of MassTortDefense know that change is what the climate is always doing as a result of the planet's orbital eccentricities, axial wobbles, solar brightness changes, cosmic ray flux, and multiple other factors. There are numerous plausible terrestrial drivers of climate changes too. While global warming is a serious topic worthy of scientific study and political discussion, plaintiffs' alleged "consensus" on this issue ignores the fact that global mean temperature is only one part of climate, and may not even be the best metric. Moreover, the most important driver of the greenhouse effect are water vapor and clouds. Carbon dioxide is only about 0.038% of the atmosphere, and humans are responsible for only about 3.4% of carbon dioxide emitted to the atmosphere annually, the rest of it being natural.  When thinking about "global climate" changes, we have to be cognizant of the fact that humans have been trying to measure the temperature consistently only since the1880s, during which time even advocates think the world may have warmed by about +0.6 °C -- which is less than the margin of error on our ability to measure the Earth's temperature. 

Anyway, plaintiffs brought these actions under the federal common law of nuisance or, in the alternative, state nuisance law, to force defendants to cap and then reduce their carbon dioxide emissions. The district court correctly held that plaintiffs' claims presented a non-justiciable political question and dismissed the complaints. On appeal, plaintiffs argued that the political question doctrine does not bar adjudication of their claims; that they had standing to assert their claims; that they had properly stated claims under the federal common law of nuisance; and that their claims were not displaced by any federal statutes.

In a lengthy opinion, the court of appeals held that the district court erred in dismissing the complaints on political question grounds; that all of plaintiffs had standing; that the federal common law of nuisance governs their claims; that plaintiffs had stated claims under the federal common law of nuisance; that their claims were not displaced.  In a very minimalist interpretation of what is needed for standing, the Second Circuit distinguished multiple precedents of the Supreme Court which held that to have standing a plaintiff must allege an injury that is concrete, direct, real, and palpable -- not abstract. Injury must be particularized, personal, individual, distinct, and differentiated -- not generalized or undifferentiated. The Supreme Court has further stated that the asserted injury must be actual or imminent, certainly impending and immediate --not remote, speculative, conjectural, or hypothetical. The court of appeals rejected defendants challenge that these vague contentions of future injury at some unspecified future date are not the kind of “imminent” injury required. The court also gave short shrift to the argument that plaintiffs could neither isolate which alleged harms will be caused by defendants' emissions, nor allege that such emissions would alone cause any future harms. 

This petition raises the important, recurring question whether states and private plaintiffs have standing to seek, and whether federal common law provides authority for courts to impose, a non-statutory, judicially created regime for setting caps on greenhouse gas emissions based on vague and indeterminate nuisance concepts.  It also asks the Court to decide whether judges, in addition to Congress and the EPA, may regulate greenhouse gas emissions at the behest of states and private parties and, if so, under what standards.  Under the Second Circuit's ruling, a single judge could set emissions standards for regulated utilities across the country—or, as here, for just that subset of utilities that the plaintiffs have arbitrarily chosen to sue. Judges in subsequent cases could set different standards for other utilities or industries, or conflicting standards for these same utilities.

While the Second Circuit called this an ordinary tort suit, this litigation seeks to transfer to the judiciary nearly standardless authority for some of the most important and sensitive economic, energy, and social policy issues presently before the country.  Thus, at stake is the financial health and security of numerous sectors of the economy. Indeed, virtually every entity and industry in the world is responsible for some emissions of carbon dioxide and is thus a potential defendant in climate change nuisance actions under the theory of this case. The threat of litigation, and the indeterminate exposure to monetary and injunctive relief that it entails, could substantially impede and alter the future investment decisions and employment levels of all affected industries, and ultimately every sector of the economy.

JPML Orders Gulf Oil Spill MDL to Eastern District of Louisiana

The Judicial Panel on Multidistrict Litigation yesterday selected New Orleans as the site of the oil spill litigation MDL. The Panel ordered coordination, and transferred 77 lawsuits to the Eastern District of Louisiana before U.S. Judge Carl J. Barbier (and referred to more than 200 potential tag along actions). In Re: Oil Spill by the Oil Rig "Deepwater Horizon" in The Gulf of Mexico, MDL No. 2179 (Aug. 10, 2010). 

In its order, the Panel found that the cases indisputably share factual issues concerning the cause (or causes) of the Deepwater Horizon explosion/fire and the role, if any, that each defendant played in it. Centralization under Section 1407 would eliminate duplicative discovery, prevent inconsistent pretrial rulings, including rulings on class certification and other issues, and conserve the resources of the parties, their counsel, and the judiciary. Interestingly, the Panel noted that centralization may also facilitate closer coordination with Kenneth Feinberg’s administration of the BP compensation fund.

Over some objections, the Panel also concluded that it made sense to include the personal injury/wrongful death actions in the MDL. While these actions will require some amount of individualized discovery, in other respects they overlap with those that pursue only economic damage claims, found the Panel. The Order notes that the transferee judge has broad discretion to employ any number of pretrial techniques – such as establishing separate discovery and/or motion tracks – to address any differences among the cases and efficiently manage the various aspects of this litigation. See, e.g., In re Lehman Brothers Holdings, Inc., Securities & Employee Retirement Income Security Act (ERISA) Litigation, 598 F.Supp.2d 1362, 1364 (J.P.M.L. 2009). 

In terms of where the cases should be coordinated, the Panel noted that the parties advanced sound reasons for a large number of possible transferee districts and judges. They settled upon the Eastern District of Louisiana as the most appropriate district for this litigation. Without discounting the spill’s effects on other states, the Panel concluded that "if there is a geographic and psychological center of gravity in this docket, then the Eastern District of Louisiana is closest to it."

In selecting Judge Barbier, the Panel expressly declined the suggestion made at oral argument that, given the litigation’s scope and complexity, it should assign the docket to multiple transferee judges. "Experience teaches," said the Panel, that most, if not all, multidistrict proceedings do not require the oversight of more than one judge, provided that he or she has the time and resources to handle the assignment. Moreover, Judge Barbier has at his disposal all the many assets of the Eastern District of Louisiana which is accustomed to handling large MDLs. Judge Barbier may also, found the Panel, choose to employ special masters and other case administration tools to facilitate certain aspects of the litigation. See Manual for Complex Litigation, Fourth §§ 11.52, 11.53 (2004).


 

Failure to Warn Even When You Warn? Court Rejects Plaintiff's Theory

One of the fascinating and disturbing things about failure to warn claims is the endless supply of creative, far-fetched, fantastic, implausible, fanciful, incredible, questionable, even bizarre theories that plaintiff lawyers sometimes come up with to support this type of claim.

Last week, a Pennsylvania appeals court rejected just such a theory. Specifically, plaintiff alleged that a failure to warn caused her injury -- nothing strange there.  But the manufacturer DID warn specifically of the condition she developed.  So, what was the plaintiff's failure to warn theory?  That a drug maker may be liable for failure to warn despite warning of the condition plaintiff developed, because a warning about a different medical issue —one that she did not develop— would somehow have caused her doctor to not prescribe the drug.  Cochran v. Wyeth Inc., 2010 WL 2902717 (Pa. Super. Ct., 7/27/10).

Plaintiff ingested the prescription weight-loss drug dexfenfluramine, which was manufactured by Wyeth and sold under the brand name Redux. Wyeth informed the prescriber that Redux may cause primary pulmonary hypertension (“PPH”). The doctor, in turn, warned plaintiff of the risk of PPH prior to prescribing her Redux. At the time of his decision, however, the prescriber claimed he was unaware of the risk that Redux may cause valvular heart disease (“VHD”).  Later, plaintiff was diagnosed with PPH, which she had been warned about.  But she claimed that the doctor would not have prescribed Redux to her had he been warned that Redux could cause VHD.

Proximate cause is an essential element in a failure to warn case.  A proximate, or legal cause, is defined under Pennsylvania law as a substantial contributing factor in bringing about the harm in question. That is, a plaintiff must establish proximate causation by showing that had defendant issued a proper warning to the learned intermediary, he would have altered his behavior and the injury would have been avoided.   Wyeth argued that even if its warnings with regard to VHD were inadequate, its failure to warn of VHD was not the proximate cause of plaintiff's PPH.  To establish proximate causation, plaintiff must prove that the warnings failed to disclose the risk of her particular injury (PPH).

The trial court agreed. On appeal, the court found an absence of clear authority on the issue, but strong guidance in those cases that have addressed a plaintiff's burden of proving proximate causation in the informed consent context.  Finding the torts of informed consent and failure to warn analogous, the superior court was persuaded by those jurisdictions that have concluded a plaintiff cannot establish proximate causation where the non-disclosed risk never materialized into an injury.

Here, the risk of VHD did not develop into the actual injury of VHD. Although the prescriber testified in deposition that he would not have prescribed Redux had he known of the risk of VHD, this does not alter the fact that while Wyeth allegedly failed to disclose the risk of VHD the plaintiff suffered from PPH. In these circumstances, the relationship between the legal wrong (the alleged failure to disclose the risk of VHD) and the injury (PPH) was  "not directly correlative and is too remote" for proximate causation.

Summary judgment for defendant affirmed.

 

Window Closing on Time to Comment on CPSC Draft Strategic Plan

In 2008, as readers know, the CPSC was granted extensive new regulatory authorities and mandates to on consumer product safety issues through the Consumer Product Safety Improvement Act (CPSIA).   So what's next? The Commission recently completed a strategic planning process intended to help align resources with agency priorities to meet what it sees as the key challenges moving into the next decade.

The CPSC is for only a short time longer accepting comments on a new draft of its 2011–2016 strategic plan.  As globalization and technological advances expand the range of products on the market, the risks and opportunities associated with these advancements make the challenge of overseeing and regulating the thousands of product types all the more complex, says CPSC. Some risks include the growth of global supply chains that assemble products across a vast web of interconnected geographies, the difficulty of identifying product hazards among hundreds of thousands of containers entering US ports, and the new ways in which the public receives product information through the Internet and other media sources.

The revised plan details CPSC efforts to set consumer product safety priorities, efficiently identify and respond to product hazards, improve public outreach efforts, and raise awareness of potential product risks. The plan grew out of interviews and focus groups with 76 internal and external stakeholders to obtain feedback on the CPSC’s performance and how the agency can improve in the future (these individuals and groups included a cross-section of diverse stakeholders: consumer organizations, industry associations, the CPSC headquarters staff, the CPSC field staff, other federal agencies, and states’ attorneys general).

One goal of the plan is to find ways the CPSC can reduce the number of unsafe imported products entering the U.S. marketplace, such as by strengthening its bilateral and multilateral relationships with foreign regulators and manufacturers. The draft also states that CPSC wants to improve its response time for removing hazardous products from the market. 

A third major aspect of the plan relies on the new public product safety database, which is scheduled for launch in March 2011.  The database will allow consumers and others to submit reports of alleged harm in a Web-based, publicly search-able format to the CPSC. The database is to be designed with the needs of multiple types of users in mind. Creation of the database is being guided by a series of public hearings, focus groups, and joint workshops with CPSC staff to determine how manufacturers, retailers, and consumer advocates expect to use the database and how they think it should work. The new system is supposed to make it simple for consumers, industry representatives, health officials, and any other member of the public to report safety incidents and view publicly reported incident information that the CPSC has amassed on a particular consumer product safety concern.

We reported earlier this year on the notice of proposed rulemaking that would establish a publicly available consumer product safety information database. As we have noted at MassTortDefense, CPSC still needs to develop a rigorous and timely process for addressing false and inaccurate reports-- those that will scare consumers, harm business, and generate no additional safety gains. The commission needs to employ means to prevent the submission of fraudulent reports of harm while not discouraging the submission of valid reports. CPSC also needs to think about specific disclaimers it should make with regard to the accuracy of the information contained in the public database, and not put any governmental imprimatur on voluntary data that has not been verified. A sufficient time period should also be allocated for manufacturers to evaluate and respond to any proposed report.
 

California Supreme Court Amends Rules for Government Retention of Private Contingent Fee Counsel

The California supreme court has taken a major step backward by modifying a 1985 decision that had properly limited the power of government agencies to retain private plaintiffs attorneys on a contingency fee basis to prosecute nuisance litigation. County of Santa Clara v. The Superior Court of Santa Clara County, Cal., No. S163681 (7/26/10). 

A group of public entities composed of various California counties and cities were prosecuting a public-nuisance action against numerous businesses that manufactured lead paint. Defendants moved to bar the public entities from compensating their privately retained counsel by means of contingent fees. The lower court, relying upon People ex rel. Clancy v. Superior Court, 39 Cal.3d 740 (1985), ordered that the public entities were barred from compensating their private counsel by means of any contingent-fee agreement, reasoning that under Clancy, all attorneys prosecuting public-nuisance actions must be “absolutely neutral.”

The supreme court acknowledged that Clancy arguably supported defendants' position favoring a bright-line rule barring any attorney with a financial interest in the outcome of a case from representing the interests of the public in a public-nuisance abatement action. The court proceeded to engage in a reexamination of the rule in Clancy, however, finding it should be "narrowed," in recognition of both (1) the wide array of public-nuisance actions (and the corresponding diversity in the types of interests implicated by various prosecutions), and (2) the different means by which prosecutorial duties may be delegated to private attorneys supposedly without compromising either the integrity of the prosecution or the public's faith in the judicial process.

The court had previously concluded that for purposes of evaluating the propriety of a contingent-fee agreement between a public entity and a private attorney, the neutrality rules applicable to criminal prosecutors were equally applicable to government attorneys prosecuting certain civil cases. The court had noted that a prosecutor's duty of neutrality stems from two fundamental aspects of his or her employment. As a representative of the government, a prosecutor must act with the impartiality required of those who govern. Second, because a prosecutor has as a resource the vast power of the government, he or she must refrain from abusing that power by failing to act evenhandedly.

But now, the court concluded that to the extent Clancy suggested that public-nuisance prosecutions always invoke the same constitutional and institutional interests present in a criminal case, that analysis was "unnecessarily broad" and failed to take into account the wide spectrum of cases that fall within the public-nuisance rubric. In the present case, found the court, both the types of remedies sought and the types of interests implicated differed significantly from those involved in Clancy and, accordingly, invocation of the strict rules requiring the automatic disqualification of criminal prosecutors was unwarranted.

The court described a range of cases; criminal cases require complete neutrality. In some ordinary civil cases, neutrality is not a concern when the government acts as an ordinary party to a controversy, simply enforcing its own contract and property rights against individuals and entities that allegedly have infringed upon those interests. The present case fell between these two extremes on the spectrum of neutrality required of a government attorney. The case was not an “ordinary” civil case in that the public entities' attorneys were appearing as representatives of the public and not as counsel for the government acting as an ordinary party in a civil controversy. A public-nuisance abatement action must be prosecuted by a governmental entity and may not be initiated by a private party unless the nuisance is personally injurious to that private party. The case was being prosecuted on behalf of the public, and, accordingly, the concerns identified in Clancy as being inherent in a public prosecution were, indeed, implicated.

But, the court found that the interests affected in this case were not similar in character to those invoked by a criminal prosecution or the nuisance action in Clancy.  This case would not result in an injunction that prevents the defendants from continuing their current business operations. The challenged conduct (the production and distribution of lead paint) has been illegal in the state since 1978. Accordingly, whatever the outcome of the litigation, no ongoing business activity would be enjoined. Nor would the case prevent defendants from exercising any First Amendment right. Although liability may be based in part on prior commercial speech, the remedy would not involve enjoining current or future speech, said the court.

With the public-nuisance abatement action being prosecuted on behalf of the public, the attorneys prosecuting this action, although not subject to the same stringent conflict-of-interest rules governing the conduct of criminal prosecutors or adjudicators, were held to be subject to a heightened standard of ethical conduct applicable to public officials acting in the name of the public — standards that would not be invoked in an ordinary civil case.  That is,  to ensure that an attorney representing the government acts evenhandedly and does not abuse the unique power entrusted in him or her in that capacity — and that public confidence in the integrity of the judicial system is not thereby undermined — a heightened standard of neutrality is required for attorneys prosecuting public-nuisance cases on behalf of the government.

The court then determined that this heightened standard of neutrality is not always compromised by the hiring of contingent-fee counsel to assist government attorneys in the prosecution of a public-nuisance abatement action.  Use of private counsel on a contingent-fee basis is permissible in such cases if neutral, conflict-free government attorneys retain the power to control and supervise the litigation.  In so finding, the court downplayed the reality that the public attorneys'  decision-making conceivably could be influenced by their professional reliance upon the private attorneys' expertise and a concomitant sense of obligation to those attorneys to ensure that they receive payment for their many hours of work on the case.

To pass muster, neutral government attorneys must retain and exercise the requisite control and supervision over both the conduct of private attorneys and the overall prosecution of the case. Such control of the litigation by neutral attorneys supposedly will provide a safeguard against the possibility that private attorneys unilaterally will engage in inappropriate prosecutorial strategy and tactics geared to maximize their monetary reward. Accordingly, when public entities have retained the requisite authority in appropriate civil actions to control the litigation and to make all critical discretionary decisions, the impartiality required of government attorneys prosecuting the case on behalf of the public has been maintained, said  the court.

The list of specific indicia of control identified by the court seem quite strained, and to elevate form over substance, written agreements over human nature. The authority to settle the case involves a paramount discretionary decision and is an important factor in ensuring that defendants' constitutional right to a fair trial is not compromised by overzealous actions of an attorney with a pecuniary stake in the outcome. The court found that retention agreements between public entities and private counsel must specifically provide that decisions regarding settlement of the case are reserved exclusively to the discretion of the public entity's own attorneys. Similarly, such agreements must specify that any defendant that is the subject of such litigation may contact the lead government attorneys directly, without having to confer with contingent-fee counsel.

But in reality, even if the control of private counsel by government attorneys is viable in theory, it fails in application because private counsel in such cases are hired based upon their expertise and experience, and therefore always will assume a primary and controlling role in guiding the course of the litigation, rendering illusory the notion of government “control”.  The concurring opinion questioned whether public attorneys under all foreseeable circumstances will be able to exercise the independent supervisory judgment the majority concludes is essential if private counsel are to be retained under contingent fee agreements. 

The court noted that the issues all arose under its authority to regulated the practice of law, and no statutes or state constitutional provisions were at issue, which may distinguish the case from the issue in other states.

Federal Court Misses Opportunity To Support Common Sense

A federal court last week refused to dismiss most claims by a putative class challenging health claims in vitaminwater beverage labeling. Ackerman v. Coca-Cola Co., CV-09-0395 (E.D.N.Y., 7/21/10).

Here at MassTort Defense we have warned companies about the dangers of consumer fraud class actions and highlighted some of the many ridiculous, far-fetched, beyond belief claims that plaintiffs make about being misled about some product.  This one is near the top of the list. Plaintiffs allege that the name, "vitaminwater," along with a description of the vitamins in the water are somehow deceptive because they supposedly mislead people to believe that the beverages do not have sugar or calories in them. Plaintiffs are not alleging that vitaminwater doesn't have water or doesn't have vitamins or that the particular vitamins in vitaminwater fail to provide the benefit claimed. Rather, they claim that vitaminwater’s labeling and marketing are misleading because they "bombard" consumers with a message that supposedly draws consumer attention away from the significant amount of sugar in the product. About the sugar? The FDA-mandated label on each bottle bears the true facts about the amount of sugar per serving.

(The opinion also rejected defendant's argument that the claim was expressly and/or impliedly preempted by statutes and regulations preventing states from imposing labeling requirements that are different from those imposed by the FDA.)

The complaint alleged claims of unlawful business acts and practices in violation of California Business and Professions Code (“Cal. BPC”) § 17200 et seq. (“Unfair Competition Law” or “UCL”); Cal. BPC § 17500 et seq. (“False Advertising Law” or “FAL”); and California’s Consumers Legal Remedies Act, Cal. Civ. Code § 1750 et seq. (“CLRA”); (2) unfair business acts and practices in violation of California UCL; (3) fraudulent business acts and practices in violation of California UCL; (4) misleading and deceptive advertising in violation of California FAL; (5) untrue advertising in violation of California FAL; (6) unfair methods of competition or unfair or fraudulent acts or
practices in violation of § 1770(a)(7) of the CLRA; (7) deceptive acts or practices in violation of
New York General Business law (“GBL”) § 349; (8) false advertising in violation of New York
GBL § 350; (9) violation of New Jersey Consumer Fraud Act (“NJCFA”), N.J.S.A. 56:8-1 et
seq.; (10) breach of an express warranty; (11) breach of an implied warranty of merchantability;
(12) deceit and/or misrepresentation; and (13) unjust enrichment.

The claims were brought on behalf of three purported classes of plaintiffs: all California Residents who purchased vitaminwater at any time from January 15, 2005 to the present, (the “California Class”); all New York residents who purchased vitaminwater at any time from January 30, 2003 to the present, (the “New York Class”); and all New Jersey residents who purchased vitaminwater at any time from January 22, 2003 to the present (the “New Jersey Class”).

So what's misleading? The court found that plaintiffs had sufficiently pleaded that the collective effect of the marketing statements was to mislead a reasonable consumer into believing that vitaminwater is either composed solely of vitamins and water, or that it is a beneficial source of nutrients.   Despite the fact that the sugar content was plain as day to anyone who would look at the label. The court found that the fact that the actual sugar content of vitaminwater was accurately stated in an FDA-mandated label on the product does not eliminate the possibility that "reasonable" consumers may be misled. The court relied on Williams v. Gerber Products Co., 552 F.3d 934 (9th Cir. 2008), for the notion that the mere fact that an FDA-mandated nutritional panel provided
accurate nutritional information on a product did not bar claims that reasonable consumers could
be misled. Reasonable consumers should not, said the court, be expected to look beyond representations on the front of the box to discover the truth from the ingredient list in smaller print on the side of the box. But unlike the Gerber case, there were no allegations here that the packaging for vitaminwater contained any false statements or pictures. As noted, plaintiffs concede that vitaminwater actually contains the vitamins the marketing says it does. And it hardly seems like an unfair burden on a "reasonable" consumer to turn from the word "vitaminwater" on one part of the bottle to the label in close proximity on the very same bottle.

As a matter of law, plaintiffs should not be permitted to move forward with a claim about the presence of an ingredient that is clearly disclosed on the Nutrition Facts label, exactly where FDA tells the manufacturer to put that information.  And, of course, the problem with allowing the claim to proceed past the motion to dismiss claim is that the case will proceed through expensive discovery to reach a stage where common sense prevails and summary judgment is granted -- if a defendant is not blackmailed into settling.  And a common thread in many of these consumer fraud class actions is the fundamental notion by plaintiffs' attorneys --implicit in their theory-- that the public must be stupid, cannot read labels, and cannot make legitimate product choices for itself. In fact, the public speaks just fine with its wallets and pocketbooks. Fortified beverages are not new and are one of the fastest-growing market segments. Consumers are indeed able to read nutrition labels and ingredient listings and make smart choices, for themselves, without the help of the plaintiffs' bar.  Contrast this case with recent comon sense decisions.

House Holds Hearing on Proposed Toxic Chemicals Safety Act

The Subcommittee on Commerce, Trade, and Consumer Protection  of the House Committee on Energy and Commerce held a hearing on H.R. 5820, the “Toxic Chemicals Safety Act of 2010,” last week.  The proposed legislation would amend the Toxic Substances Control Act of 1976 to deal with potential risks resulting from chemical exposure.

Witnesses included Steve Owens from the EPA; Calvin M. Dooley, President and Chief Executive Officer of the  American Chemistry Council; and Beth Bosley, Society of Chemical Manufacturers and Affiliates, Inc.

Any approach toward updating federal chemical regulation should balance safety issues with the need to preserve the ability of the United States to serve as the innovation engine for the world; and protect the hundreds of thousands of American jobs fueled directly and indirectly by the business of chemistry.  That is, reforming TSCA to enhance the safety assessment of chemicals while maintaining the ability of the U.S. chemical industry to be the international leader in innovation and manufacturing.

It is clear that the standards established in this bill sets an impossibly high hurdle for all chemicals in commerce, and are guaranteed to produce significant technical, bureaucratic and commercial barriers. For example, the bill requires that “aggregate exposure” to a chemical or a mixture meet the “reasonable certainty of no harm” standard. This apparently means that when a chemical or mixture is listed for a safety determination, the manufacturer carries the burden of showing with reasonable certainty not just that the company’s use of the chemical and any resulting exposures from those uses pose no significant risk of harm, but that all other aggregated exposures from all other uses of the chemical pose no harm. It is not clear to MassTortDefense how any company could actually do that in the real world.  TSCA regulates thousands of chemicals, many with hundreds of uses. TSCA chemicals have multiple important industrial applications and consumer product applications. It is totally unclear how industry or even the EPA would be able to gather enough information to meet this aggregate exposure standard for each and every regulated substance.

The proposed bill thus creates a burden that seems far out of proportion to its benefit. The onslaught of new regulations may simply force customers of the industry to relocate their factories and make the products at issue overseas, outside the EPA's jurisdiction.  The bill would also  discourage the introduction of new chemicals, including new greener chemicals, into commerce in the United States.  Congress, keep working at it.
 

JPML Hears Oral Argument In Gulf Oil Spill MDL

The U.S. Judicial Panel on Multidistrict Litigation heard oral argument last week on the issue of consolidating the hundreds of cases arising from the Gulf oil spill. In re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico,  MDL No. 2179.

The MDL panel met this time in Boise, Idaho, and suspended the usual rule limiting oral
argument to 20 minutes.  Multiple attorneys representing the various parties in the pending cases addressed the panel.  Most defendants urged the cases be coordinated in the Southern District of Texas, while most plaintiffs, including some of the restaurant owners and fishermen affected by the spill, argued for the Eastern District of Louisiana, asserting that much of the injury/damages is centered there. A  few other plaintiffs pushed for the cases to be coordinated in Mississippi, Alabama, or Florida courts.

BP argued that the Texas forum was appropriate because this defendant's headquarters, documents, and key fact witnesses are all located there. The government wants the cases consolidated in New Orleans. But one issue is that 8 federal judges, including several in Louisiana, have recused themselves from the spill cases.  This led to discussion whether potential judicial conflicts should compel the panel to bring in a judge from outside the Gulf states. In New Orleans, the Eastern District of Louisiana has consolidated its 50+ oil spill cases before Judge Carl J. Barbier, who has issued interim case management orders and appointed interim liaison counsel for plaintiffs and defendants.  Some have argued this has effectively created an administrative framework that could be utilized were the Panel to send the MDL to New Orleans.

At last look, federal cases were spread around the country, including in New York and California and Illinois.  However, the busiest oil spill dockets are in the Eastern District of Louisiana, Southern District of Texas, Southern District of Alabama, and the three Florida district courts, each with more than 10 cases. 

As noted here, the litigation involves a wide variety of claims, from personal injury, to property or environmental damages, lost profits, and securities-based economic injury.  The panel asked whether the cases, even if consolidated, should be put in separate groupings.  Some plaintiffs' attorneys  argued it was particularly important to set up a separate track for personal-injury claims.