Court of Appeals Rejects Medical Monitoring Class Action

The Third Circuit last week affirmed a lower court decision denying class certification in a medical monitoring case alleging vinyl chloride exposures. Gates v. Rohm & Haas Co., No. 10-2108 (3d Cir.,  8/25/11).

Readers may recall we posted on this case at the trial court level last year.  Plaintiffs alleged that vinyl chloride released from Rohm & Haas’s specialty chemicals manufacturing facility in Ringwood, Illinois contaminated the groundwater in and around McCollum Lake Village, as well as the air in the Village. Plaintiffs alleged that between 1968 and 2002, the vinyl chloride evaporating from the shallow plume blew over the Village, contaminating the air in the Village and causing some Village residents to breathe varying amounts of it. Plaintiffs claimed that the levels of vinyl chloride in the Village air were higher than the background level.

Plaintiffs sought certification of two classes: (1) a class seeking medical monitoring for Village residents exposed to the airborne vinyl chloride between 1968 and 2002, and (2) a liability-only issue class seeking compensation for property damage from the exposure. (We will focus on medical monitoring.)

The district court denied certification; it found the medical monitoring class lacked the cohesiveness needed to maintain a class under Rule 23(b)(2), and that common issues of law and fact did not predominate as required under Rule 23(b)(3). Both failed for the same reason—the “common” evidence proposed for trial did not adequately typify the specific individuals that composed the two classes. In particular, the court found plaintiffs failed to present common proof of three issues critical to recovering on the medical monitoring claim—(1) that plaintiffs suffered from exposure greater than normal background levels, (2) the proximate result of which is significantly increased risk of developing a serious disease, and (3) whether the proposed medical monitoring regime is reasonably medically necessary.  The court also found the remaining individual issues would require individual trial proceedings, undoing any efficiencies of class treatment and possibly leading a second jury to reconsider evidence presented to the jury in the class proceeding.

Plaintiffs took an interlocutory appeal under Fed. R. Civ. P. 23(f) from the denial of class certification. The court of appeals affirmed.

The Third Circuit offered a number of important points for readers that may be confronting putative medical monitoring class actions:

1) what is a medical monitoring class?

A medical monitoring cause of action allows those exposed to toxic substances to recover the costs of periodic medical appointments and the costs of tests to detect the early signs of diseases associated with exposure. The few states that recognize medical monitoring as a remedy recognize it as a cause of action, like Pennsylvania, Redland Soccer Club, Inc. v. Dep’t of the Army, 696 A.2d 137, 142 (Pa. 1997), or treat it as a type of relief granted in connection with a traditional tort cause of action, see, e.g., Bourgeois v. A.P. Green Indus., Inc., 716 So.2d 355, 359 (La. 1998).

The remedy of medical monitoring has divided courts on whether plaintiffs should proceed under Rule 23(b)(2) or Rule 23(b)(3), said the court. The Pennsylvania Supreme Court has talked about awarding medical monitoring damages as a trust fund which “compensates the plaintiff for only the monitoring costs actually incurred.” Redland Soccer Club, 696 A.2d at 142 n.6. But it has not yet clearly decided whether or when medical monitoring awards can be in the form of a lump-sum verdict.

The appeals court noted, however, that some guidance may have come from the fact that the Supreme Court recently clarified that Rule 23(b)(2) applies only when a single injunction or declaratory judgment would provide relief to each member of the class. Wal-Mart Stores, Inc., v. Dukes, 131 S. Ct. 2541, 2557 (2011). In light of the Supreme Court's recent decision, the Third Circuit would "question whether the kind of medical monitoring sought here can be certified under Rule 23(b)(2)."  If the plaintiffs here prevailed, class members' regimes of medical screenings and the corresponding cost would vary individual by individual. A single injunction or declaratory judgment would seem to not be able to provide relief to each member of the class proposed here. Rule 23(b)(2) “does not authorize class certification when each class member would be entitled to an individualized award of monetary damages.” Wal-Mart, 131 S. Ct. at 2557. But it did not need to reach the issue, because certification was improper under either category of Rule 23 for reasons apart from the monetary nature of plaintiffs' claims.

2) Cohesion and (b)(2) Certification

Although Rule 23(b)(2) classes need not meet the predominance and superiority requirements of Rule 23(b)(3), it is well established that the class claims must be cohesive. A key to the (b)(2) class is the indivisible nature of the injunctive or declaratory remedy warranted—the notion that the conduct is such that it can be enjoined or declared unlawful only as to all of the class members or as to none of them. Wal-Mart Stores, Inc, 131 S. Ct. at 2557 (quoting Richard A. Nagareda, Class Certification in the Age of Aggregate Proof, 84 N.Y.U. L. Rev. 97, 132 (2009)). Indeed, a (b)(2) class may require more cohesiveness than a (b)(3) class. As all class members will be bound by a single judgment, members of a proposed Rule 23(b)(2) injunctive or declaratory class must have strong commonality of interests. The Supreme Court in Wal-Mart recently highlighted the importance of cohesiveness in light of the limited protections for absent class members under subsections (b)(1) and (b)(2) of the class rule. 

3) Individual Issues in Medical Monitoring Class

Because causation and medical necessity often require individual proof, medical monitoring classes may founder for lack of cohesion. See In re St. Jude Med. Inc., 425 F.3d 1116, 1122 (8th Cir. 2005); Ball v. Union Carbide Corp., 385 F.3d 713, 727-28 (6th Cir. 2004); Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180, 1195-96, amended, 273 F.3d 1266 (9th Cir. 2001); Barnes, 161 F.3d at 143-46; Boughton v. Cotter Corp., 65 F.3d 823, 827 (10th Cir. 1995). Frequently the rigorous analysis of common and individual issues  will entail some overlap with the merits of the plaintiff‟s underlying claim.  Wal-Mart Stores, Inc, 131 S. Ct. at 2551.  The trial court may consider the substantive elements of the plaintiffs' case in order to envision the form that a trial on those issues would take.  The District Court here did so and found individual issues were significant to certain elements of the medical monitoring claims here.

Readers will recall that to prevail on a medical monitoring claim under Pennsylvania law, plaintiffs must prove:
(a) exposure greater than normal background levels;
(b) to a proven hazardous substance;
(c) caused by the defendant‟s negligence;
(d) as a proximate result of the exposure, plaintiff has a significantly increased risk of contracting a serious latent disease;
(e) a monitoring procedure exists that makes the early detection of the disease possible;
(f) the prescribed monitoring regime is different from that normally recommended in the absence of the exposure; and
(g) the prescribed monitoring regime is reasonably necessary according to contemporary scientific principles.
Redland Soccer Club, 696 A.2d at 145-46.  “Expert testimony is required to prove these elements.” Sheridan v. NGK Metals Corp., 609 F.3d 239, 251 (3d Cir. 2010).

Here, the District Court identified individual issues that would eclipse common issues in at least three of the required elements, noting several potential variations in proving exposure above background, a significantly increased risk of a serious latent disease, and the reasonable necessity of the monitoring regime.

4) Exposure

Plaintiffs proposed to show the exposure of class members through expert opinions on air dispersion modeling that mapped concentrations of vinyl chloride exposure (isopleths) that allegedly could provide average exposure per person. But in fact those isopleths only showed average daily exposure, not minimum exposure, used average exposure over very long periods of time when exposure likely varied, and thus could not show that every class member was exposed above background.  Instead of showing the exposure of the class member with the least amount of exposure, plaintiffs proof would show only the amount that hypothetical residents of the village would have been exposed to under a uniform set of assumptions without accounting for differences in exposure year-by-year or based upon an individual's characteristics. At most, the isopleths showed the exposure only of persons who lived in the village for the entire period the isopleth represents and who behaved according to all assumptions that the experts made in creating the isopleth.

5) Composite Proof
Plaintiffs cannot, said the court,  substitute for evidence of exposure of actual class members evidence of hypothetical, composite persons in order to gain class certification. The evidence here was not  truly common because it was not shared by all (possibly even most) individuals in the class. Averages or community-wide estimations would not be probative of any individual's claim because any one class member may have an exposure level well above or below the average.
Attempts to meet the burden of proof using modeling and assumptions that do not reflect the individual characteristics of class members have been met with skepticism, noted the court of appeals. See In re Fibreboard Corp., 893 F.2d 706, 712 (5th Cir. 1990); In re “Agent Orange” Prod. Liab. Litig. MDL No. 381, 818 F.2d 145, 165 (2d Cir. 1987); see also 2 Joseph M. McLaughlin, McLaughlin on Class Actions: Law and Practice § 8:9, at 8-55 to -57 (3d ed. 2006).

Plaintiffs have traditionally loved medical monitoring in part because they think that class certification may come more readily given their alleged ability to use epidemiological or group or aggregate proof to establish some the elements of the medical monitoring claim.  That is why it is significant that the Third Circuit recognized that plaintiffs' aggregate proof in the form of exposure isopleths did not reflect that different persons may have different levels of exposure based on biological factors or individual activities over the class period. Factors which affect a person's exposure to toxins can include activity level, age, sex, and genetic make-up. See Federal Judicial Center, Reference Manual on Scientific Evidence 430 (2d ed. 2000).  For example, some people will have higher breathing rates per body weight which would create a disparity between the concentrations of vinyl chloride (based on estimated exposure as opposed to actual exposure).
Each person's work, travel, and recreational habits may have affected their level of exposure to vinyl chloride. Differences in the amount of time spent outside the village would create different average concentrations to which the class members were exposed. A person who worked outside the village would have been exposed less than a stay-at-home parent, or retiree. The isopleths approach simply assumed exposure to the same concentration for class members who may have spent very different amounts of time in the village.

6) Significant Increased Risk

Plaintiffs were unable to prove a concentration of vinyl chloride that would create a significant risk of contracting a serious latent disease for all class members. Nor was there common proof that could establish the danger point for all class members. The court rejected plaintiffs' attempted use of a regulatory threshold by the EPA -- for mixed populations of adults and children—as a proper standard for determining liability under tort law. Even if the regulatory standard were a correct measurement of the aggregate threshold, it would not be the threshold for each class member who may be more or less susceptible to diseases from exposure to vinyl chloride.  Although the positions of regulatory policymakers are relevant in litigation, their risk assessments are not necessarily conclusive in determining what risk an exposure presents to specified individuals. See Federal Judicial Center, Reference Manual on Scientific Evidence 413 (2d ed. 2000) (“While risk assessment information about a chemical can be somewhat useful in a toxic tort case, at least in terms of setting reasonable boundaries as to the likelihood of causation, the impetus for the development of risk assessment has been the regulatory process, which has different goals.”); id. at 423 (“Particularly problematic are generalizations made in personal injury litigation from regulatory positions. . . . [I]f regulatory standards are discussed in toxic tort cases to provide a reference point for assessing exposure levels, it must be recognized that there is a great deal of variability in the extent of evidence required to support different regulations.”).  Plaintiffs proposed a single concentration without accounting for the age of the class member being exposed, the length of exposure, other individual factors such as medical history, or showing the exposure was so toxic that such individual factors are irrelevant. The Third Circuit concluded that the trial court did not abuse its discretion in concluding individual issues on this point make trial as a class unfeasible, defeating cohesion.

7) Necessity of Monitoring

Nor did the lower court abuse its discretion in determining individual issues defeat cohesion with respect to whether the proposed monitoring regime is reasonably medically necessary. Many courts have been skeptical that the necessity for individuals' medical monitoring regimes can be proven on a class basis. See Barnes, 161 F.3d at 146; see Principles of the Law of Aggregate Litigation § 2.04 reporter‟s notes cmt. b, at 126 (2010). Plaintiffs' experts had no compelling answer to the point that the negative health effects of screening may outweigh any potential benefits. For example, the proposed regime of serial MRIs would be contraindicated and potentially risky because the contrast agent used for MRIs poses dangers to those with kidney disease.

8) Certification under (b)(3)

Courts have generally denied certification of medical monitoring classes when individual questions involving causation and damages predominate over (and are more complex than) common issues such as whether defendants released the offending chemical into the environment. See In re St. Jude Med., Inc., 522 F.3d 836, 840 (8th Cir. 2008).  Here, the same the inquiries into whether class members were exposed above background levels, whether class members faced a significantly increased risk of developing a serious latent disease, and whether a medical monitoring regime was reasonably medically necessary all required considering individual proof of class members' specific circumstances.  Common issues did not predominate.

 

 
 

CHPA Comments on Draft FDA Guidance on Nanotechnology

Last week, the Consumer Healthcare Products Association (CHPA) submitted comments on the FDA’s draft guidance on nanotechnology, "Considering Whether an FDA-Regulated Product Involves the Application of Nanotechnology, "  which we posted on before.

CHPA is the not-for-profit association representing the makers of over-the-counter medicines and dietary supplements, and the consumers who rely on these healthcare products. CHPA is one of the oldest trade associations in the United States. Nanotechnology holds great promise for this industry.

CHPA agreed with the FDA that proposing a "definition" for nanotechnology is not a straight forward process; applying a strict, universal definition of nanotechnology to the fields of drug research, drug product development and drug manufacturing would not be, in CHPA's view, an appropriate science-based approach.

Defining a nanomaterial as a structure between 1 and 100 nm, and using this definition to establish new regulations on products containing nano-sized materials, would, they asserted,  erroneously group drug products together to form a new category based on size of ingredients.  Nanotechnology is not a separate drug category, but a technology used to, among other things, generate nanometer-sized ingredients and excipients. Inclusion of nanometer-sized active ingredients or excipients in a drug product does not by itself determine a product's safety and efficacy (i.e. size alone is not itself an indicator of toxicity). 

CHPA agreed that the agency should distinguish between engineered nanomaterials and those
naturally occurring at the nanoscale.  There exist common pharmaceutical ingredients with a long history of use that should not be considered as "engineered nanomaterials" or as agglomerates of nanomaterials but which may have particles whose size naturally falls within this range.

CHPA also noted that NIOSH accurately refers to nanotechnology as the manipulation of matter on a near-atomic scale to produce new structures, materials, and devices.  Nanomaterials are mainly engineered for their novel chemical, physical, and quantum mechanical properties; at the nanometer size, many materials exhibit such unique beneficial properties that may not exist when at the micron size. CHPA argued it is appropriate to include in the description the notion of particles that are deliberately manipulated and controlled at the nanoscale, which also exhibit changes in physical, chemical, or electromagnetic properties, the existence of unique phenomena to enable novel applications.

For example, milling, a beneficial process for the manufacturing of many individual pharmaceutical ingredients, may create particles with a portion of the particle size distribution under 1 micron; however, the chemical properties of the milled ingredient usually do not differ drastically from that of the bulk ingredient.

The agency should give further consideration, said CHPA,  to the possibility that not all materials should be considered equal; each material must be evaluated on a case-by-case basis. For example, soluble nanomaterials might not be treated the same as insoluble ones.  

ABA To Select Annual Best Blogs

Ok, so it is not the Oscars or the Emmys, and to my children it ranks well behind the Kid's Choice Awards, but to those in the blogosphere it is noteworthy that the ABA is working on its annual list of the 100 best legal blogs, and they want your advice on which "blawgs" you think they should include.

Here is the link to the form to tell the ABA  your thoughts, but keep your remarks pithy—you have a 500-character limit.

Friend-of-the-blawg briefs are due no later than Sept. 9, 2011.

While we would not be unhappy to be nominated, if any readers think us worthy, may we make a suggestion that you consider commenting on the Drug and Device Law Blog; and the Mass Torts Professors Law Blog; and Overlawyered.com; as well asPoint of law.com; and the Consumer Class Action Litigation blog, among the many worthy sites.

 

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State Supreme Court Holds Causation Evidence Insufficient

The Vermont Supreme Court recently held that a plaintiff's evidence that exposure to benzene allegedly caused his cancer was insufficient to get to the jury.  Blanchard v. Goodyear Tire & Rubber Co.,  No. 2010-250 (Vt. 8/5/11).

Plaintiff was diagnosed with non-Hodgkin's lymphoma, and he attributed the onset of the disease to benzene exposure that allegedly occurred between 1968 and 1973 while he was a teenager playing on a ball field on the grounds of the former Goodyear rubber manufacturing plant. That  plant operated in Windsor, Vermont from 1936 to 1986. He sued, alleging that the field itself was polluted and that there was a gully in the outfield that transported foul-smelling and oily stormwater discharge away from the manufacturing plant.

Defendants moved for summary judgment. The lower court concluded that plaintiff was not entitled to present his case to a jury because he had provided insufficient evidence to support an inference that he had been exposed to benzene in any amount, let alone an amount that could have caused his illness, nor sufficient expert testimony sufficient to eliminate other potential causes of his disease. On appeal, plaintiff argued that his circumstantial evidence of causation was sufficient to present his case to the jury.

The state Supreme Court noted that the plaintiff could not survive the motion for summary judgment on his toxic tort claim unless he was able to point to evidence suggesting a probability, rather than a mere possibility, that (1) he was exposed to the specified chemical at a level that could have caused his physical condition (general causation); and (2) the exposure to that chemical did in fact result in the condition (specific causation).  In a toxic tort case, general causation addresses whether a substance is capable of causing a particular injury or condition in a population, while specific causation addresses whether a substance caused a particular individual's alleged injury. E.g., King v. Burlington Northern Santa Fe Ry. Co., 762 N.W.2d 24, 34 (Neb. 2009). General causation is typically shown through epidemiological studies, and plaintiffs in toxic exposure cases in Vermont generally must demonstrate specific causation by submitting evidence concerning the amount, duration, intensity, and frequency of exposure. Citing  Henricksen v. ConocoPhillips Co., 605 F. Supp. 2d 1142, 1157 (E.D. Wash. 2009) (citing several appellate court cases holding that experts testifying as to specific causation must pay careful attention to amount, intensity, and duration of exposure).

The court recognized that in some toxic tort cases it is impossible to quantify exposure with hard proof, such as the presence of the alleged toxic substance in the plaintiff's blood or tissue and the precise amount of the toxic substance to which an individual plaintiff was exposed. Plourde v. Gladstone, 190 F. Supp. 2d 708, 721 (D. Vt. 2002).  Therefore, expert testimony on toxic injuries may be admissible where dosage or exposure levels have been established through sufficient reliable circumstantial evidence. While it is not always necessary for a plaintiff to quantify exposure levels precisely, the courts generally preclude experts from testifying as to specific causation without having any some measurement or reasonable estimate of a  plaintiff's exposure to the allegedly harmful substance. Finally, a defendant's concession that its product contains a carcinogen, say benzene, does not excuse a plaintiff from having to show the benzene contained in defendant's product is capable of causing the illness at issue.

When direct evidence of the precise amount of exposure to a toxic substance is limited, some courts have allowed expert witnesses to use a differential diagnosis process as a method of proving specific causation. We have posted before about the mis-use and mischaracterization of this process.  Differential diagnosis is a scientific analysis entailing the weighing of relevant evidence, listing all likely explanations of the patient's observed symptoms or injury, then eliminating all but one.  Some courts have made the leap from allowing the process designed to arrive at a diagnosis (what disease caused the symptoms) to arrive at a cause (what substance caused the disease). However, said the state court, even the courts that do recognize differential diagnosis are reluctant to admit causation testimony based on a differential diagnosis where the proffered expert possesses only weak circumstantial evidence that some exposure occurred and makes insufficient effort to scientifically evaluate or estimate the degree of exposure or dosage. Also, and significantly, standing alone, the presence of a known risk factor is not a sufficient basis for ruling out idiopathic origin in a particular case, particularly where most cases of the disease have no known cause. In such cases, analysis beyond a differential diagnosis is required.

Here, plaintiff pointed to three bits of circumstantial evidence. First, he offered statements made by himself and boyhood friends concerning their alleged exposure to chemicals from the Goodyear plant when they were teenagers playing ball on a field adjoining the plant.  Second, plaintiff relied on the testimony of the project manager for an environmental firm hired by Goodyear in 2007 to conduct a site investigation in response to a clean-up agreement reached by Goodyear and the State of Vermont. The 2009 report stemming from the investigation listed contaminants of concern, including petroleum products containing benzene, that could have been released into the environment. Third, plaintiff relies upon the testimony of his two experts, who testified that occupational exposure to benzene is generally associated with a risk of non-Hodgkin's lymphoma, and that plaintiff's cancer was not caused by an immunodeficiency disorder, one of the known causes of that form of cancer.

That evidence "falls well short" of what plaintiff would be required to show in order to prevail in a jury trial. Indeed, if a jury were to find in favor of plaintiff on the evidence relied upon by plaintiff, said the court, "we would have to overturn the verdict." In the end, plaintiff's suspicion that his cancer was caused by exposure to benzene on the Goodyear ball field when he was a teenager was purely speculative. There was no way to know whether any benzene-containing product actually contaminated the ball field.  And there was no evidence indicating the amount or concentration of benzene that was present, even assuming some was. Nor was there any evidence indicating plaintiff's level of exposure to any benzene that may have been present on the field. Nor was plaintiff able to point to studies indicating a risk of cancer posed by exposure to limited amounts of benzene from petroleum products in an outside environment.  

Further, plaintiff could not rely upon differential diagnosis to overcome the complete lack of evidence as to the level of any exposure to benzene. A large percentage of cases of plaintiff's type of lymphoma are of unknown origin. Thus plaintiff's experts could not rule out all other causes, an essential part of the differential diagnosis.  E.g., Whiting v. Boston Edison Co., 891 F. Supp. 12, 21 n.41 (D. Mass. 1995) (concluding that differential diagnosis cannot be used to explain disease where 90% of cases of disease are of unknown origin).
 

Court of Appeals Breathes New Life Into Class Action Prerequisite

The Seventh Circuit last week affirmed the trial court's decision not to certify a class of consumers making product liability claims against the makers of Aqua Dots toys. In Re: Aqua Dots Products Liability Litig., No. 10-3847 (7th Cir. Aug. 17, 2011). A tip of the cap to Ted Frank at PointofLaw who wanted to make sure we didn't miss this one, because of the potentially very useful analysis of Rule 23(a)(4).

Defendants made, distributed, or sold, AquaDots, a toy consisting of small, brightly colored beads
that can be fused into designs when sprayed with water. A Chinese sub-contractor apparently substituted adhesives. While the substitute adhesive was chemically similar to the specified glue, when ingested, the sub metabolizes into gamma-hydroxybutyric acid (GHB), which can induce nausea, dizziness, drowsiness, agitation, depressed breathing, amnesia, unconsciousness, and even death, depending on the dose. Although the directions told users to
spray the beads with water and stick them together, it was possible, given the age of the intended audience, that some would be eaten; children who swallowed a large quantity of the beads could become sick.

After learning of the problem, the manufacturer recalled all Aqua Dots products. The recall notice instructed consumers to take Aqua Dots products away from children and to contact the sellers to exchange them. Consumers got an exchange, or upon request, a refund. The recall was widely publicized, and hundreds of thousands of products were returned.

The plaintiffs were purchasers of Aqua Dots products whose children were not harmed and who did not ask for a refund; they challenged the adequacy of the recall program. The plaintiffs asked for a full refund under federal law plus punitive damages under state law. The Panel on Multidistrict Litigation transferred twelve suits to the Northern District of Illinois for pretrial proceedings. After the district court denied plaintiffs’ motion to certify a class, see 270 F.R.D. 377 (N.D. Ill. 2010), the Seventh Circuit authorized an interlocutory appeal under Fed. R. Civ. P. 23(f).

The district court framed the central class question as whether a defendant- administered refund program may be found superior to a class action within the meaning of Rule 23(b)(3).  270 F.R.D. at 381.  The court concluded that consumers would be better off returning their products for refund or replacement than pursuing litigation, which the court thought would just require the class members to bear attorneys’ fees in order to obtain a remedy that is theirs for the asking already. The record showed that more than 600,000 consumers returned Aqua Dots kits, and that more than 500,000 of these 600,000 received refunds. The district court concluded that the substantial costs of the legal process could make a suit inferior to a recall as a means to set things right.

The Seventh Circuit noted that it "is hard to quarrel with the district court’s objective." The lower the transactions costs of dealing with an allegedly defective product, the better. The transactions costs
of a class action include not only lawyers’ fees but also giving notice under Rule 23(c). Here, notice might well cost more, per kit, than the kits’ retail price—and could be ineffectual at any price, since most purchases were anonymous. The trial court couldn't order that defendants send each buyer a letter; notice presumably would be by publication, yet the recall was already widely publicized. Why bear these costs a second time?

Moreover, the Consumer Products Safety Commission had not expressed dissatisfaction with the recall campaign or its results, and the record did not contain any evidence of injury to children after the recall was announced.

The problem was, however, that a recall is not a form of “adjudication” as described in Rule 23, and a “policy approach” to the superiority analysis could not ignore the Rule’s text.  Policy about class actions has been made by the Supreme Court through the mechanism of the Rules Enabling Act, and Rule 23 establishes a national policy for the district judges.

Even as it mis-read Rule 23(b), departing from the text of Rule 23(b)(3), the district court could have, said the appeals court, simply relied on the text of Rule 23(a)(4), which says that a court may certify a class action only if the representative parties will fairly and adequately protect the interests
of the class.  Plaintiffs here wanted relief that duplicated a remedy that most buyers already had received, and that remained available to all members of the putative class. Bottom line: "A representative who proposes that high transaction costs (notice and attorneys’ fees) be incurred at the class members’ expense to obtain a refund that already is on offer is not adequately protecting the class members’ interests."

So, the trial judge cited the wrong subsection of Rule 23. But defendants did not forfeit their arguments by focusing on superiority; they made the essential contentions -- there is something wrong with proceeding as a class under these circumstances.

The panel noted also serious problems of management with the proposed class, including the  variability of state law, and the fact that individual notice would be impossible, which would make it hard for class members to opt out.  The per-buyer costs of identifying the class members and giving notice could exceed the price of the toys (or any reasonable multiple of that price), leaving nothing to be distributed. "The principal effect of class certification, as the district court recognized,
would be to induce the defendants to pay the class’s lawyers enough to make them go away."

But, the most interesting aspect of the decision, again, is the analysis of Rule 23(a)(4) and the notion that the adequacy requirement forbids class representatives from bringing socially wasteful litigation for the benefit of the attorneys at the expense of the class they seek to represent. The decision can be seen as part of the trend (including Dukes) to put rigor into the Rule 23(a) analysis.

FDA Releases New Strategic Plan for Regulatory Science

This week the FDA released a plan for fostering innovative science. It is entitled the “Strategic Plan for Regulatory Science,” and it focuses on the agency’s goal to enhance the processes for developing and evaluating new medical products and materials.

The strategic plan describes the agency’s intent to collaboratively enhance the process for developing and evaluating promising new products and novel materials from fields such as cell therapy, tissue engineering, genomics, personalized medicine, advanced computing, and information technology. It reportedly also underscores the agency’s emphasis on food safety.

The plan also emphasizes the agency’s intention to study and improve how it communicates health information to consumers, particularly as communication technologies rapidly evolve and change the way people receive that information.

The priority areas listed in the report are:

  • Modernize Toxicology to Enhance Product Safety
  • Stimulate Innovation in Clinical Evaluations and Personalized Medicine to Improve Product Development and Patient Outcomes
  • Support New Approaches to Improve Product Manufacturing and Quality
  • Ensure FDA Readiness to Evaluate Innovative Emerging Technologies
  • Harness Diverse Data through Information Sciences to Improve Health Outcomes
  • Implement a New Prevention-Focused Food Safety System to Protect Public Health
  • Facilitate Development of Medical Countermeasures to Protect Against Threats to U.S. and Global Health and Security
  • Strengthen Social and Behavioral Science to Help Consumers and Professionals Make Informed Decisions about Regulated Products
     

 

MDL Panel Declines to Coordinate Spread Litigation

The Judicial Panel on Multidistrict Litigation declined recently to consolidate three suits by plaintiffs who alleged Ferrero U.S.A. Inc. misrepresented Nutella hazelnut spread as a healthy and nutritious food. In re Nutella Marketing and Sales Practices Litigation, MDL No. 2248 (J.P.M.L.,  8/16/11).

We are always interested when the Panel declines to coordinate cases, but also have to admit that this is a favorite product in the MassTortDefense household.  The spread, in its earliest form, was created in the 1940s by Mr. Pietro Ferrero, a pastry maker and founder of the Ferrero company. At the time, there was very little chocolate because cocoa was in short supply due to World War II rationing. So Mr. Ferrero used hazelnuts, which were plentiful in the Piedmont region of Italy, to extend the chocolate supply. The region is mostly mountains and hills, on the north-western border of Italy with France and Switzerland.

A plaintiff in the District of New Jersey action sought consolidation, arguing that the cases made similar allegations challenging Ferrero's marketing and advertising practices. Interestingly, movants and respondents both recommended centralization because the actions contained "similar allegations" concerning Ferrero’s advertising, marketing and sale of Nutella spread and its alleged misrepresentations of Nutella as a healthy and nutritious food. All parties disagreed only as to the appropriate choice for transferee district.

However, the Panel noted that it has an institutional responsibility that goes beyond simply accommodating the particular wishes of the parties. See In re: Equinox Fitness Wage and Hour Empl’t Practices Litig., 764 F. Supp. 2d 1347, 1348 (J.P.M.L. 2011) (denying unopposed motion for centralization of two actions).

Here, the Panel was not persuaded that Section 1407 centralization was necessary for the convenience of the parties and witnesses or for the just and efficient conduct of this litigation. The actions may have shared some factual questions regarding the common defendant’s marketing
practices, but these questions did not appear complicated to the Panel. Indeed, the parties did not persuade the Panel that any common factual questions were sufficiently complex or numerous to justify Section 1407 transfer.  Instead, said the Panel, cooperation among the parties and deference among the courts should minimize the possibility of duplicative discovery and inconsistent pretrial rulings. See, e.g., In re: General Mills, Inc., Yoplus Yogurt Prods. Mktg. and Sales Practices Litig., 716 F. Supp. 2d 1371 (J.P.M.L. 2010).

 

Case Defines "Product"

Ok, so it's not a major mass tort, but we couldn't resist mentioing this one. McGregor v. Scotts Co., No. 4:11-cv-00548 (E.D. Mo., 8/8/11).  The case goes to a basic element of products liability law, the definition of the product.

Plaintiff’s complaint alleged that he purchased a bag of potting soil sold by defendant, and upon opening the bag and putting his hand in to scoop out some soil, his hand was bitten by a copperhead snake. In Count I, Plaintiff sought damages on a theory of strict liability. Defendant argued that Count I should be dismissed for failure to state a claim because plaintiff failed to state facts supporting an alleged design or manufacturing defect in the potting soil.

Defendant sought to define the product at issue here as just the soil itself, and argued that there was nothing wrong with the soil. But the Court agreed with plaintiff that the product was the bag of soil sold by defendant. See generally Cantu, A Continuing Whimsical Search For The True Meaning Of The Term “Product” In Products Liability Litigation, 35 St. Mary's L.J. 341 (2004).

If indeed, there was a copperhead snake in the bag at the time manufacturing was complete, said the Court, the "product" could have been unreasonably dangerous when used as reasonably anticipated.


 

A Picture Worth a Thousand Words Under Twombly?

We have posted about plaintiffs attorneys seeking to exploit the valuable and significant economic boon that is hydraulic fracturing. Today's post comes from that litigation, but the focus is not on fracking, but on a civil procedure issue that one infrequently sees in mass torts.  Plaintiffs in a case complaining about hydraulic fracturing operations in the Fayetteville Shale deposit in Arkansas recently survived a motion to dismiss, in large part because of the photographs they attached to the complaint.  Ginardi v. Frontier Gas Services LLC, No. 4:11-cv-00420 (E.D. Ark.,  8/10/11).

Plaintiffs alleged that the defendant's compressor stations caused harmful levels of noise pollution, and emitted large amounts of methane and hydrogen sulfide, among other flammable and toxic gasses. Plaintiffs offered multiple theories of liability including: strict liability, nuisance, trespass and negligence. Plaintiffs are seeking to represent similarly situated persons in
a class action. 

Defendant moved to dismiss, arguing that the complaint was insufficient because it failed to connect Kinder Morgan to the noise and gas emissions that are the central alleged injury of the case. Defendant’s argument relied on the heightened pleading standards of Twombly and Iqbal.

The district court downplayed the clear significance of those two decisions, continuing to emphasize the supposed "relatively low hurdle of presenting plausible facts to create a reasonable inference" that Kinder Morgan is involved in activities that may have harmed plaintiffs.

But of more interest is the treatment of the argument that plaintiffs made suggesting that the photographs attached to the amended complaint were sufficient to create a reasonable inference that Kinder Morgan was connected to the alleged misconduct. One supposedly showed the proximity of plaintiffs’ property and residences to the compressor station. The second was a photograph of warning signs at the compressor station, allegedly showing that Kinder Morgan was involved in its operation, and that the facility created noise and emitted toxic material.

Certainly, exhibits properly attached to the complaint may be considered in analyzing a motion to dismiss.  Lum v. Bank of America, 361 F.3d 217, 221 n. 3 (3d Cir.2004).  And it may be more common for a plaintiff to attach photographs to the complaint in certain kinds of claims, such as intellectual property claims. E.g., Magna Mirrors of America, Inc. v. Dura Global Technologies, LLC, 2011 WL 1120265 (E.D.Mich.).  But it is not true that a picture is always worth a thousand words.  If a plaintiff has to write a brief explaining what the picture supposedly shows, or the photograph is susceptible to a variety of interpretations, the photograph cannot substitute for the well-pleaded allegations of a complaint. Dock v. Rush, 2010 WL 4386470 (M.D.Pa.).  A famous photographer once noted, "I always thought good photos were like good jokes. If you have to explain it, it just isn’t that good."

The proximity allegedly shown in the first clearly did not apply to the putative class members; the proposed class was of all those who live or own property within a one-mile radius of defendants' stations in Arkansas -- not what was shown in the photograph. The signs in the second had no context but apparently were merely to warn workers about potential hazards on the site. Nevertheless, the court, with no real analysis, concluded that the complaint with photographs attached as exhibits contained sufficient factual content. If, in words, plaintiffs had alleged merely that the defendant posted signs on its property, warning workers on the site of certain hazards, no reasonable court would have concluded that the pleading requirement was met.

 

Court Hits Cancel On Bulk of Printer Class Action

A California federal court earlier this month rejected many of the claims in a putative class action against Epson America Inc.  Christopher O'Shea, et al. v. Epson America Inc., et al., 2011 WL 3299936 (C.D. Cal.). What may be of most interest to our readers is the important reminder that a manufacturer is not required under consumer protection laws to denigrate its own product and broadcast that its product may not perform as well as its competition.

Plaintiffs claimed that Epson affirmatively misrepresented and failed to disclose material information regarding the performance and/or value of Epson inkjet printers and ink cartridges. Named plaintiffs claimed to be frustrated with the amount of ink the Epson printer consumed.

In fact, Epson discloses that its printers are tested in accordance with ISO standards, and makes available to consumers detailed information about how ink yields are calculated, including the fact that testing is conducted based on continuous printing; potential consumers, further, are expressly cautioned that since no single yield standard can duplicate a customer's actual printer usage, Epson recommends that customers also consider print yield comparisons from reputable independent sources. In the same vein, Epson discloses on the packaging of its printers that actual cartridge yields may vary considerably for reasons including images printed, print settings, temperature and humidity.  But plaintiffs never let a wealth of information deter them from finding one factoid they allegedly didn't get.

So, in essence, plaintiffs sought to impose a duty on the seller to compare this feature of its printers to competitors' products, as the Complaint referred to yields which were allegedly well below the yields of other manufacturers' printers. 

The California courts have held that for an omission to be actionable for purposes of  the state consumer fraud laws, it must be either (1) contrary to a representation actually made by the defendant, or (2) a fact the defendant was obligated to disclose.  E.g., Daugherty v. Am. Honda Motor Co., Inc., 144 Cal.App.4th 824, 835–36, 51 Cal.Rptr.3d 118, 128 (2006). Here, because there was no allegation that the “omitted” information was contrary to an actual representation, to defeat summary judgment and prevail on an omission-based theory of liability, plaintiffs had to establish that Epson was affirmatively obligated to disclose the information.

Yet, plaintiffs failed to identify—and the Court was unable to find—any case in any jurisdiction in which a court imposed an affirmative legal obligation upon a manufacturer to disclose on its packaging that its products performed less efficiently than similar products from competing manufacturers. To the contrary, as Epson pointed out, courts have unequivocally rejected this proposition. As the federal court explained, in the absence of some special circumstance, any duty to disclose information about a competitor's products would be anathema to a competitive free-market economy.  Imagine a car manufacturer having to tell you in every ad about every other car that got better gas mileage or did better in a crash test. Imagine every food maker having to tell you in its ads of every competitive food or beverage that was lower in calories.

Plaintiffs did not allege that Epson's printers were defective, let alone dangerously defective. Their claim, rather, was that they were unhappy upon discovering that Epson's printers “wasted” more ink than other printers.  California's consumer protection laws, though broad and sometimes scary, do not extend so far as to require a company to denigrate its own products or promote those of its competitors just because consumers might be interested in the comparison. The duty that plaintiffs sought to impose upon Epson was properly served by independent consumer reports.

The court held that Epson was not legally obligated to disclose that actual print yields generated by its printers and ink cartridges are “grossly inefficient” vis à vis “reason-able consumer expectations and the yields of other manufacturers' printers.”  Because Epson was not obligated to disclose the purportedly “omitted” information, plaintiffs' omission-based claims consequently failed as a matter of law.

However, the court denied the motion as to express representations allegedly made concerning the claims on one proposed sub-class which alleged that the defendant deceived customers when it told them that its NX series of printers, which uses individual cartridges for different colors of ink, would allow customers to “replace only the color you need.”  There was an issue of fact regarding whether the consumer is familiar enough with printer technology and operations to know that small amounts of colored ink are used when printing black-and-white documents to keep the print head clear. The plaintiffs have moved for class certification, with the hearing set for later in August.
 

Ninth Circuit Affirms Dismissal of Helicopter Crash Case

The Ninth Circuit recently decided a products case that raised issues of the government contractor defense, and a seldom litigated federal Rule of Civil Procedure. Getz v. Boeing Co., et al., No. 10-15284 (9th Cir. 8/2/11). The appeals court affirmed the district court's dismissal of one defendant for lack of personal jurisdiction and the trial court’s summary judgment in favor of the other defendants.

The suit arose from the crash of an Army-operated MH-47E Chinook helicopter in the Kabul Province of Afghanistan. The helicopter was transporting military personnel to Bagram Airbase when it encountered snow, rain, and ice. An initial Army investigation suggested that the aircraft’s engine control system unexpectedly shut down, causing the engine to fail. According to these investigators, the engine’s Digital Electronic Control Unit (DECU)—the onboard computer
that controls fuel flow to the engine—malfunctioned due to some kind of electrical anomaly. A different investigation suggested  that the aircraft’s engine flamed out because it ingested an inordinate amount of water and ice during the inclement weather. This other investigation further suggested, however, that the flameout might have been avoided if the MH-47E’s ignition system had been equipped with a continuous or automatic relight feature, which would have allowed the engine to restart automatically in the event of a water- or ice-induced flameout.

Plaintiffs sued the designers and manufacturers of the aircraft, and ATEC, a British company that designed the hardware and software for the DECU. Defendants removed the action to federal court pursuant  to the Federal Officer Removal Statute, 28 U.S.C. § 1442(a), which allows federal officers and agents to remove state-law claims to federal court by asserting a federal defense.

The court addressed first the dismissal of ATEC for lack of personal jurisdiction. According to plaintiffs, ATEC was subject to personal jurisdiction in California pursuant to Federal Rule of Civil Procedure 4(k)(2). This rule, which is commonly known as the federal long-arm statute, permits federal courts to exercise personal jurisdiction over a defendant that lacks contacts with any single state if the complaint alleges federal claims and the defendant maintains sufficient contacts
with the United States as a whole. The Ninth Circuit concluded that the arising-under-federal-law element of Rule 4(k)(2) is limited to substantive federal claims, a federally created cause of action. See World Tanker Carriers Corp. v. M/V Ya Mawlaya, 99 F.3d 717, 722 (5th Cir. 1996); United States v. Swiss Am. Bank, Ltd., 191 F.3d 30, 45 (1st Cir. 1999).

Whereas foreign defendants lacking sufficient contacts with any single state could previously avoid responsibility for civil violations of federal laws, the revised rule allows federal courts to exercise jurisdiction over these defendants, subject only to the limitations of the Fifth Amendment’s due process clause. Rule 4(k)(2) provides aggrieved plaintiffs with a mechanism for vindicating their federal rights in cases involving defendants that lack single-state contacts, but who possess minimum contacts with the United States as a whole.  However, Rule 4(k)(2) was narrowly tailored so as to avoid conflict with the Fourteenth Amendment’s jurisdictional limits in cases alleging only state-law claims.

Here, none of the purely state law claims by plaintiffs alleged any violation of a federal right and none sought the enforcement of federal law. The invocation of removal jurisdiction by a federal officer/agent does not revise or alter the underlying law to be applied. The only federal interest at issue—the contractors’ eligibility for a federal defense—had no bearing on plaintiffs’ ability to vindicate a federal right and it did not constitute an essential element of plaintiffs’ well-pleaded complaint.

The government contractor defense protects government contractors from tort liability that arises as a result of the contractor’s compliance with the specifications of a federal government contract. To invoke the defense successfully, the contractor must establish three elements: (1) the United States approved the specifications; (2) the equipment conformed to those specifications; and (3) the supplier warned the United States about the dangers in the use of the equipment that were known to the supplier but not to the United States.

On the first, a contractor must demonstrate that the government  approved reasonably precise specifications, meaning more  than a cursory “rubber stamp” approving the design. Plaintiffs argued that the necessary specifications were lacking, but the court was confident that the United States Army approved reasonably precise specifications. Among other things, the Army’s specification included diagrams and drawings for engine controls; engine configuration requirements; and tests for the engine’s ignition system. The government specifically reviewed defendant’s design analyses, reports, and test plans, and attended multiple formal design meetings. The contractor's discretion was limited to “implementation” of the specific design requirements contained within the approved specifications and this did not defeat the government contractor defense. See, e.g., McKay v. Rockwell Int’l Corp., 704 F.2d 444, 450 (9th Cir. 1983) (government contractor defense may still apply if the specifications leave some “discretion to the supplier in the formulation of the product’s design”); Oliver v. Oshkosh Truck Corp., 96 F.3d 992, 999 (7th Cir. 1996) (fact that Oshkosh may have retained some discretion to position the fuel tanks and exhaust system within the envelope permitted by the specifications, standing alone, does not defeat the government contractor defense),

The court also concluded that it makes no difference, for purposes of the government contractor analysis, that a similar engine control system had previously been developed for Great Britain’s Royal Air Force.  If the court were to hold otherwise, the potential for increased liability could dissuade contractors from providing the United States with sophisticated military equipment that they had initially designed for another nation’s armed forces. This ultimately would put the United States military at a competitive disadvantage: either the government would be unable to obtain necessary equipment or it would be forced to pay higher prices to offset the contractor’s increased risk of liability.

Second, the court held that the operative test for conformity with reasonably precise specifications
turns on whether the alleged defect existed independently of the design itself. To say that a product generally failed to conform to specifications is just another way of saying that it was defectively manufactured. Harduvel v. Gen. Dynamics Corp., 878 F.2d 1311, 1321 (11th Cir. 1989). Therefore, absent some evidence of a latent manufacturing defect, a military contractor can establish conformity with reasonably precise specifications by showing extensive government involvement in the design, review, development and testing of a product and by demonstrating extensive acceptance and use of the product following production. Here, the MH-47E conformed with the approved specifications for both the ignition system and the DECU. The government contractor defense does not depend upon satisfaction of some general performance goal. Otherwise, a product involved in a design-induced accident would, as a definitional matter, always be deemed not to comply with such generalities since no performance specifications approved by the government would purposely allow a design that would result in an accident. Kleemann v. McDonnell Douglas Corp., 890 F.2d 698, 703 (4th Cir. 1989). For the defense to have any substance, non-conformance to precise specifications must mean more than that the design does not work in compliance with some general admonition against an unwanted condition.

Third, the contractors satisfied the final requirement. With respect to the potential for a water- or ice-induced flameout, it is clear that the Army was already aware of this particular risk. And, at most, plaintiffs’ evidence suggests that the contractors should have been aware of the alleged defect, but the defense does not require a contractor to warn about dangers of which it merely should have known.

 


 

Federal Court Dismisses Proposed Television Consumer Fraud Class Action

Here's a case of a venerable rule (puffery) and an important new doctrine (Twiqbal) being applied in the context of a troubling trend -- the spate of consumer fraud class actions challenging everything a defendant says about its products.  A New Jersey federal court recently rejected a putative class action alleging that Panasonic Corp. falsely advertised its Viera plasma televisions made in 2008 and 2009. Shane Robert Hughes et al. v. Panasonic Consumer Electronics Co., No. 2:10-cv-00846 (D.N.J. July 21, 2011). A useful and detailed analysis of commonly found flaws in consumer fraud class action complaints.

Plaintiffs putatively represented a class defined as individuals and entities who own or purchased any 2008/2009 model Panasonic Viera Plasma Television. Plaintiffs alleged that the televisions suffered from increased “voltage adjustments” causing a rapid deterioration in picture quality. The  class members allegedly relied on Panasonic’s representations concerning the "industry leading" black levels and contrast ratios, and/or personally observed the televisions’ excellent picture quality on models displayed in retail stores. Plaintiffs sought damages and/or refunds from Panasonic for violations of the New Jersey Consumer Fraud Act (“NJCFA”), N.J. STAT. ANN. § 56:8-1 et seq.; other states’ consumer protection acts; and under various express and implied warranty claims.

Defendant moved to dismiss. The adequacy of pleadings is governed by Fed. R. Civ. P. 8(a)(2), which requires that a complaint allege “a short and plain statement of the claim showing that the pleader is entitled to relief,” but also requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).

Although class members were from around the country, the court determined it need not decide whether it was appropriate to engage in a choice of law analysis at the pleadings stage because, as detailed below, each of the plaintiffs’ claims failed as a matter of law under any of the possibly applicable laws.

Claims under the NJCFA and most state consumer fraud acts require a plaintiff to allege (1) unlawful conduct by the defendants; (2) an ascertainable loss on the part of the plaintiff; and (3) a causal relationship between the defendants’ unlawful conduct and the plaintiff’s ascertainable loss.  Panasonic argued, among other things, that even if the allegations are true, plaintiffs’ CFA claim failed because plaintiffs had not pointed to any actionable unlawful conduct by Panasonic. According to Panasonic, plaintiffs did not set forth any specific advertisements, marketing materials, warranties, or product guides that plaintiffs viewed; where and from whom at Panasonic did plaintiffs received any such information; or how precisely, plaintiffs were injured by any such representations.

The Court found that Panasonic’s alleged misrepresentations about the Televisions’
“industry  leading” technology and features, which create superior image and color quality, were not “statements of fact,” but rather subjective expressions of opinion. Indeed, such statements of
product superiority are routinely made by companies in advertising to gain a competitive advantage
in the industry. The NJCFA distinguishes between actionable misrepresentations of fact and
"puffery.” Rodio v. Smith, 123 N.J. 345, 352 (1991) (the slogan “You’re in good hands with Allstate” was “nothing more than puffery” and as such was not “a deception, false promise, misrepresentation, or any other unlawful practice within the ambit of the Consumer Fraud Act”); see New Jersey Citizen Action v. Schering-Plough Corp., 367 N.J. Super. 8, 13-14 (N.J. Super. App. Div. 2003) (finding that defendant’s advertisements which employed phrases as “you . . . can lead a normal nearly symptom-free life again” were “not statements of fact, but are merely expressions in the nature of puffery and thus were not actionable” under the NJCFA).  The same is true in many states.

The remaining misrepresentations may have been statements of fact rather than mere puffery. However, plaintiffs did not assert sufficient allegations of fact to satisfy the requisite level of adequate pleading under Rule 9(b) or by Twombly/Iqbal.  For example, regarding the alleged misrepresentation about half-brightness, the Amended Complaint did not allege the date, place or time of this misrepresentation or otherwise inject some precision and some measure of substantiation into plaintiffs’ allegations of fraud. While plaintiffs could not be expected to plead facts solely within Panasonic’s knowledge or control, plaintiffs should be able to allege the specific advertisements, marketing materials, warranties or product guides that they each reviewed, which included this misrepresentation and when it was so advertised.

Plaintiffs also alleged various omissions, but fraudulent omissions require a showing of intent. Here, even accepting the allegations of omissions in the Amended Complaint as true, the court found that plaintiffs failed to allege sufficient facts to raise any plausible inference that Panasonic knowingly concealed the alleged defect with the intent that consumers and industry experts would rely upon the concealment. Indeed, throughout the Amended Complaint, it was alleged that Panasonic knew “or should have known” of the defect, but provides no additional facts explaining how or why Panasonic had knowledge of the defect to satisfy Twombly/Iqbal. Such allegations of intentionally failing to disclose the alleged defect were merely conclusory assertions.

Even assuming plaintiffs sufficiently alleged the “unlawful conduct” element under the consumer fraud acts, the court also concluded that the Amended Complaint did not satisfy the pleading requirements of Twombly/Iqbal or Rule 9(b) as to the “ascertainable loss” element.  A plaintiff must suffer a definite, certain and measurable loss, rather than one that is merely theoretical. The certainty implicit in the concept of an ascertainable loss is that it is quantifiable or measurable. The allegations did not sufficiently plead either an out-of pocket loss by plaintiffs or a showing of loss in value. For example. plaintiffs failed to allege how much they paid for their Televisions and how much other comparable Televisions manufactured by Panasonic’s competitors cost at the time.  Plaintiffs failed to allege how much of a premium they claim to have paid for their Panasonic Televisions.  Furthermore, in the Amended Complaint, plaintiffs affirmatively stated that most continue to use the Televisions, thus obscuring any possible measurable loss.  Typically, plaintiffs try not to allege details in this area for fear of undermining their class certification arguments.

Plaintiffs' warranty claim suffered from several defects. While the claim at times was presented as an alleged manufacturing problem, a review of the Amended Complaint revealed that plaintiffs alleged only that the Televisions suffered from an inherent design defect and/or improper programming. Plaintiffs one vague, conclusory allegation that the defect was caused, in part, due to “manufacturing errors” was insufficient to satisfy the requisite pleading standards under Twombly/Iqbal.  Moreover, the express warranty claims were impacted by what the court already concluded in connection with plaintiffs’ consumer fraud claims, that Panasonic’s statements about the Televisions’ “industry leading” technology and features, which create superior image and color quality, were mere expressions of puffery. As such, these marketing statements were not sufficient enough to create an express warranty. 

On the implied warranty claim, while plaintiffs alleged that the Televisions were defective, plaintiffs did not allege that the Televisions were inoperable or otherwise not in working condition. Indeed, the Amended Complaint did not contain any explicit allegation that plaintiffs could no longer use their Televisions - in other words, that they were no longer generally fit for their ordinary purpose.  Although the Televisions may not have fulfilled plaintiffs’ subjective expectations, plaintiffs did not adequately allege that the Televisions failed to provide a minimum level of quality, which is all that the law of implied warranty requires. See also In re Ford Motor Co. Ignition Switch Prods. Liab. Litig., 2001 WL 1266317, at *22 (D.N.J. Sept. 30, 1997) (merchantability “does not entail a promise by the merchant that the goods are exactly as the buyer expected, but rather that the goods satisfy a minimum level of quality”).

Thus, the court concluded, each of plaintiffs’ claims failed to state a claim under Rule 12(b)(6), to satisfy Rule 9(b) heightened pleading requirements, and/or pleading standards under
Twombly/Iqbal. The court granted Panasonic’s motion to dismiss the Amended Complaint without prejudice.

State Court Finds No Duty to Spouse of Exposed Worker

Delaware's supreme court held last month that an employer owes no duty of care to an employee's spouse, who allegedly contracted asbestos-related disease from exposure to her spouse's work clothes. Price v. E.I. du Pont de Nemours & Co., No. 719, 2009 (Del. 7/11/11).

Bobby Price worked as a maintenance technician in defendant's facility from 1957 until 1991. During his employment, Mr. Price allegedly worked with and around products containing asbestos. Allegedly, Mr. Price transported asbestos fibers home on his clothing, vehicle, and skin. Patricia Price, his wife, alleged that years of living with her husband, and handling and washing his work clothes, exposed her to the fibers. Mrs. Price claimed to suffer from bilateral interstitial fibrosis and bilateral pleural thickening of the lungs. These maladies, she claimed, stemmed directly from her exposure to the asbestos dust and fibers her husband brought home from work.

Plaintiff sued, alleging that the company wrongfully released asbestos from its plant and that she was a reasonably foreseeable victim of its asserted misconduct. 

To prevail on a negligence claim under Delaware law, a plaintiff must prove that a defendant owed her a duty of care, the respondent breached that duty, and the breach proximately caused an injury. Whether a duty exists is a question of law, typically. To determine whether one party owed another a duty of care, Delaware courts look to the Restatement (Second) of Torts for guidance.  Negligent conduct involves either (1) an act which the actor as a reasonable person should recognize as involving an unreasonable risk of causing an invasion of an interest of another (described in some cases as misfeasance), or (2) a failure to do an act which is necessary for the protection or assistance of another and which the actor is under a duty to do (sometimes described as nonfeasance).

Plaintiffs moved to amend the complaint to state a claim based on an asserted theory of misfeasance—that the release of asbestos was carried into a worker's home — rather than a claim of nonfeasance based on a failure to warn. The Delaware court noted that in the case of misfeasance, the party who does an affirmative act owes a general duty to others to exercise reasonable care, but, in the case of nonfeasance, the party who merely omits to act owes no general duty to others unless there is a "special relationship" between the actor and the other which gives rise to the duty.

DuPont contended that as a matter of substance the amended complaint really alleged  nonfeasance—not misfeasance. Again, in order to recover for nonfeasance, a plaintiff must specifically allege a “special relationship” between herself and the defendant. Having not alleged any “special relationship” in this case, DuPont argued, Price’s amendments were futile because they failed to state a claim as a matter of law.

The court noted that Price’s allegations, stripped of all reformatory re-characterization, were that: (1) Mr. Price, an employee of defendant, worked with and around products containing asbestos for 34 years, (2) asbestos fibers settled on his skin, clothing, and vehicle, (3) defendant allegedly did not provide locker rooms, uniforms, or warnings to the Prices regarding the dangers of asbestos, (4) defendant did not prevent Mr. Price from transporting the asbestos fibers home on his skin, clothing, and vehicle, and (5) Mrs. Price, because she lived with Mr. Price and washed his clothes, developed disease. These alleged acts were pure nonfeasance—nothing more. Dupont’s alleged failures to prevent Mr. Price from taking asbestos fibers home or to warn the Prices about the dangers of asbestos did not rise to the level of affirmative misconduct required to allege a claim of misfeasance. No amount of semantics can turn nonfeasance into misfeasance or
vice versa.

Having alleged only nonfeasance, Price needed to allege that a “special relationship” existed between her and DuPont in order for DuPont to owe her a duty of care. But the relationship between Mrs. Price and DuPont did not fit any of the recognized “special relationships”
giving rise to a duty to aid or protect. Just because her husband worked for DuPont for over thirty years, or DuPont provided health insurance to her as Mr. Price’s spouse, or DuPont sponsored company picnics and participated in programs promoting a "family friendly" workplace, a special relationship did not exist. 

The plaintiff's bar has been aggressive in efforts to create new methods of recovery from asbestos exposures -- new defendants, new legal theories, new injuries, new plaintiffs. For once, a court has put the brakes on this seemingly endless expansion. 

 


 

Federal Court Denies Class Certification in Vitamin Consumer Case

A federal court late last month declined to certify a proposed class action in which plaintiffs challenged alleged claims about the weight-loss properties of One-A-Day WeightSmart vitamins. Gray v. Bayer Corp., No. 08-4716 (D.N.J. 7/21/11).  Our readers will be interested in the discussion of the predominance and superiority requirements for class actions.

Plaintiff alleged that the packaging of One-A-Day WeightSmart falsely claimed that the vitamin enhances a user’s metabolism. Plaintiff filed a complaint against Bayer alleging claims based on intentional and negligent misrepresentation, and the New Jersey Consumer Fraud Act (NJCFA), N.J.S.A. 56:8-1, et seq.;  plaintiff later moved  to certify a class of purchasers of One-A-Day WeightSmart pursuant to Rule 23(b)(3), which requires that a plaintiff establish that the questions of law or fact common to the class members predominate over any questions affecting only individual members and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.

As plaintiff’s proposed nationwide class called for the application of state substantive law, the court first looked to determine which state’s law governed the claims. Plaintiff argued that New Jersey had the most significant relationship to the claims because all of the decisions with respect to marketing allegedly took place in New Jersey, and all of the alleged operative misrepresentations originated in New Jersey, at Bayer’s headquarters. Defendant noted that because consumers purchased One-A-Day WeightSmart throughout the United States and thereby received the alleged misrepresentations in various jurisdictions other than New Jersey, the consumer fraud laws of the states where the product was purchased should apply. The court agreed that .the place where the
putative class members received Bayer’s alleged representations and the place where the consumers acted in reliance upon those representations, were key factors pointing to the law of the individual states where the product was purchased. (Consumers purchased One-A-Day WeightSmart at retail locations nationwide, not from Bayer itself.)

Moreover, to apply the NJCFA to all the out-of-state consumers in this case would be to ignore the interests of potentially fifty other jurisdictions. Simply because New Jersey has struck a particular balance between consumer protection and the promotion of business within its borders does not suggest that its interest in deterrence should displace the differing policy goals of its fellow states. Those states have instead struck their own legislative balances, awarding compensation based on differing standards of, inter alia, intent, causation, reliance, and damages. The interests of interstate comity and the competing interests of the states counseled against the blanket application of one state’s law over the laws of other interested states.

Thus, the court had to next consider whether variations in state laws presented the types of insuperable obstacles which render class action litigation unmanageable. See In re Warfarin Sodium Antitrust Litig., 391 F.3d 516, 529 (3d Cir. 2004). Where the applicable law derives from the law of the 50 states, as opposed to a unitary federal cause of action, differences in state law will compound any disparities among class members from the different states. It is plaintiff’s burden to
credibly demonstrate, through an extensive analysis of state law variances, that class certification does not present insuperable obstacles. 

Here, plaintiff failed to carry this burden.The court acknowledged a “brewing issue” in the Third Circuit over whether the NJCFA could be applied in a national class action. But the better view was that the court would be required to apply distinct standards of, inter alia, intent, causation, reliance, and damages in order to adjudicate plaintiff’s claims under each state’s consumer fraud law. Litigating plaintiff’s claims based on law from potentially fifty-one different jurisdictions would likely require a multitude of mini-trials to determine Bayer’s liability to each statewide group of consumers. Such a procedure would be an inefficient use of  judicial resources and would defeat the purported economies of class treatment.

The court therefore concluded that plaintiff’s proposed nationwide class failed both the predominance and superiority requirements under Rule 23(b)(3). 

Bayer argued that the alternative proposed Florida class was not ascertainable because claims under the Florida consumer fraud act are subject to a four-year statute of limitations and thus the claims of some Florida class members would be barred -- an issue requiring an individual analysis. Plaintiff was, however, granted leave to file a revised motion for class certification with respect to a more ascertainable Florida class only.

 

State Court Upholds Questionable Bystander Liability Claim

The Montana Supreme Court recently upheld the imposition of liability on a bat manufacturer for allegedly failing to warn about the dangers of aluminum bats. Patch v. Hillerich & Bradsby Co., d/b/a Louisville Slugger, No. DA 10-0051 (Mont. 7/21/11).  Bad facts made bad law here. 

Many people consider "The Natural" to be one of the greatest sports movies of all time, and those that think deep thoughts have asserted that the screenplay  (presumably not the 1952 book too?) was based in part on the story of Sir Percival from the Arthurian myths, with the broken bat "Wonderboy" taking the part of the knight's broken sword.  Had Roy Hobbs used an aluminum bat, that aspect of the story would have been lost. Since their introduction in the early 1970's, aluminum bats have become quite popular in youth and amateur adult baseball and softball markets. The new bats are often touted as having a wider sweet spot, more power, better feel, or higher performance. It is pretty much accepted that balls come off metal bats faster than they do from wood bats, but this aspect of performance has fueled an ongoing metal/wood issue in some circles.

While pitching in an American Legion baseball game on July 25, 2003, the eighteen year-old plaintiff was struck in the head by a batted ball that was hit using H&B’s model CB-13 aluminum bat. Tragically, plaintiff died from his injuries. In 2006, Brandon’s parents sued H&B, claiming H&B’s model CB-13 aluminum bat was in a defective condition because of the alleged enhanced risks associated with its use: It increased the velocity speed of a batted ball when it left the bat, thus decreasing infielders’ reaction times, which allegedly resulted in a greater number of high energy batted balls in the infield.

The matter was tried in October, 2009, and the design defect and failure to warn claims were submitted to the jury, which concluded that the model CB-13 aluminum bat was not designed defectively, but determined the bat was in a defective condition due to H&B’s failure to warn of the enhanced risks associated with its use. They awarded plaintiffs an $850,000 verdict on their failure to warn claim. Defendant appealed.

The key issue was whether a failure to warn claim can be brought by a bystander -- plaintiff was not the consumer nor the user. H&B asserted that only the individual batting (actual user) and the individual who purchased the bat (actual consumer) could assert a failure to warn claim.  The court disagreed, saying this interpretation of the terms user and consumer is somehow contrary to the definition of the terms as contained in the Restatement (Second) of Torts § 402A. This state court’s products liability jurisprudence had recognized that a failure to warn claim may be brought by some persons who are not actual purchasers or users of a product; previous plaintiffs included those who are passively enjoying the benefit of the product, as in the case of passengers in automobiles or airplanes, as well as those who are utilizing it for the purpose of doing work upon it.  "The realities of the game of baseball" supported, said the court, the decision to submit the failure to warn claim to the jury. The bat was deemed an indispensable part of the game. The risk of harm accompanying the bat’s use extends beyond the user, beyond a player who holds the bat in his or her hands. A warning of the bat’s risks to only the batter standing at the plate inadequately communicates the potential risk of harm posed by the bat’s increased exit speed, concluded the court. In this context, all of the players, including plaintiff, were deemed "users or consumers" placed at risk by the increased exit speed caused by H&B’s bat.

Defendant also argued that plaintiff could not establish causation - reading and heeding the warning. The court held that H&B’s argument erroneously assumed that placing a warning directly on the bat is the only method to provide a warning. While placing a warning directly on a product is certainly one method of warning, other methods of warning exist, including, but not limited to, issuing oral warnings and placing warnings in advertisements, posters, and media releases. Davis v. Wyeth Laboratories, Inc., 399 F.2d 121, 131 (9th Cir. 1968) (“[O]ther means of communication such as advertisements, posters, releases to be read and signed . . . or oral warnings . . . could easily have been undertaken . . . .”). Such warnings, if issued by H&B in this case, said the court, could have communicated to all players the potential risk of harm associated with H&B’s bat’s alleged increased exit speed.

What the court here called a "flexible" approach to causation really eviscerates one of the fundamental elements of the claim. The court allowed the jury to infer without any basis in fact that plaintiff would have heeded a warning had one been given-- apparently because he was deceased, and thus real proof of causation was hard to find. There is no basis to allow a jury simply to express sympathy for a tragic accident victim,as here there was not sufficient proof that the plaintiff would have adjusted his behavior after receiving the warning to avoid the injury. The decision puts this court in a tiny minority of states that recognize some kind of bystander failure to warn liability, which most courts agree is unworkable and contrary to the reality of modern commerce.

The concurrence correctly noted that plaintiff did not articulate specifically what a warning should have contained and what message should have been given. Statements to the effect that the bat would hit balls at unusually fast speeds or unusually far distances are the kind of messages accompanying usual product advertising and are not likely to change a player's/plaintiff's behavior. Moreover, they are precisely the qualities in a bat which baseball teams and players seek out. Plaintiff could not articulate specifically how a warning would have changed the result here, in other words, how the failure to warn caused this accident.

H&B also argued that because plaintiff had been hit by batted balls before, he knew he could be hit and, therefore, assumed the risk when he continued playing baseball. The court explained that assumption of the risk defense in this state is inapplicable as a matter of law without evidence the victim actually knew he or she would suffer serious injury or death, and, knowing that, the victim voluntarily exposed himself or herself to the danger. Lutz v. Natl. Crane Corp., 267 Mont. 368, 379-80, 884 P.2d 455, 461-62 (1994). What the victim actually knew is evaluated using a subjective standard in Montana. Here, said the court, there was no evidence that plaintiff actually knew he would be seriously injured or killed when pitching to a batter using one of H&B’s model CB-13 aluminum bats. He knew he could be hit with a screaming line drive, but not that it could injure him seriously?

Plaintiff's apparent theory, as articulated in closing argument, was that H&B should have
advertised that its bat “could kill.” And the inference which plaintiff asked the jury to draw in order to establish causation was that, following the publishing of a warning “that this bat could kill,” the parents would have prohibited Brandon from playing baseball.  That tells you how unworkable the theory is. This was a terrible accident on a baseball field, the kind of accident that has also occurred with wood bats. The bat was not defective. It was made in accordance with the rules approved for play by baseball's organizing and governing bodies. Bad facts again make bad law.