Federal Court Offers Cogent Analysis of Warning Causation in Drug Case

A New Jersey federal court granted summary judgment last week to a pharmaceutical defendant in a failure to warn case. See Baker et al. v. APP Pharmaceuticals LLP et al., No. 3:09-cv-05725 (D.N.J.).  The case should be interesting to our readers in part because there really isn't a huge amount of law on warning causation in the busy jurisdiction of New Jersey.

During a hospital stay, plaintiff Baker was administered the commonly prescribed drug heparin. Heparin is an anticoagulant: it prevents blood clots. The opinion noted that the drug is associated  with heparin induced thrombocytopenia (“HIT”), or low blood platelet count. HIT may in a few patients progress to a more serious adverse reaction called heparin induced thrombocytopenia  and thrombosis (“HITT”). Plaintiff received heparin during and after her surgery, and a few days later her  platelet count was down; but according to the opinion it was not known at what point her platelet count reached serious levels because no one measured her platelet level for several days, despite the hospital’s stated protocol to monitor a patient’s platelet count periodically in order to detect possible HIT.

Plaintiff suffered injury to her left foot and leg, and thereafter sued several manufacturers of heparin, asserting they failed to adequately warn of the serious side-effects associated with heparin use. The parties agreed that defendant’s heparin has always contained FDA-approved labeling, including risk disclosures and warnings. In 2001, the heparin label specifically disclosed the risk of HIT and HITT in the “Precautions” section.  In 2005, defendant submitted a supplemental NDA via the “changes being effected” process to include additional HIT and HITT information the “Warnings” section of its heparin labeling. See 21 C.F.R. 314.70. The FDA suggested several alterations, all of which defendant incorporated into the labeling, and the FDA found the updated labeling “acceptable” in June 2007. 

In New Jersey, product liability actions are governed by the New Jersey Products Liability Act (“PLA”). N.J. Stat. Ann. §2A:58C-1, et seq. Under the PLA, in failure to warn cases involving prescription drugs, if the warning or instruction given in connection with a drug has been approved or prescribed by the FDA, there is a rebuttable presumption that the warning is adequate. This is no ordinary rebuttable presumption, remarked the court. Compliance with FDA regulations gives rise to “what can be denominated as a super-presumption.” Kendall v. Hoffman-La Roche, Inc., 36 A.3d 541, 544 (N.J. 2012).  Indeed, the PLA’s presumption that an FDA-approved prescription drug label is adequate “is stronger and of greater evidentiary weight than the customary presumption referenced" in the rules of evidence. Bailey v. Wyeth, Inc., 37 A.3d 549, 571 (N.J. Super. Ct. Law Div. 2008), aff’d sub nom. Deboard v. Wyeth, 28 A.3d 1245 (N.J. Super Ct. App. Div. 2011).

In this case, there is no dispute that the heparin labeling was approved by the FDA. Therefore, defendant was entitled to the statutory presumption that its heparin labeling satisfied its duty to warn. Plaintiff tried to rebut the presumption, first, with allegations of deliberate concealment or nondisclosure of after-acquired knowledge of harmful effects by the pharmaceutical company, and second with allegations of an economically-driven manipulation of the post-market regulatory process. See McDarby v. Merck & Co., Inc., 949 A.2d 223, 256 (N.J. Super. Ct. App. Div. 2008).

However, significantly, all of the information plaintiff accused defendant of withholding was publicly available in published scientific and medical literature.  And defendant did in fact disclose much
of what plaintiff claimed was deliberately concealed or withheld. For example, when submitting its proposed updated label to the FDA in 2005, Baxter included several scientific articles and a number of adverse event reports relating to HIT and HITT.  As to the second rebuttal effort, plaintiff offered no real evidence that Baxter rejected the FDA’s proposed changes to heparin labeling, or asked pharmaceutical representatives to avoid discussing HIT and HITT when speaking to physicians, or manipulated the conclusions of heparin clinical trials, or did anything sufficient to "manipulate" the regulatory process.

The more interesting part of the opinion arises from the fact that even if a plaintiff is able to demonstrate that a prescription drug’s warning is inadequate, that plaintiff still must prove that the inadequate warning proximately caused her injury. See Campos v. Firestone Tire & Rubber Co., 485 A.2d 305, 311 (N.J. 1984). “To satisfy this burden, a plaintiff must show that adequate warnings would have altered her doctors’ decision to prescribe.” Strumph v. Schering Corp., 606 A.2d 1140 (N.J. Super. Ct. App. Div. 1992) (Skillman, J., dissenting), rev’d 626 A.2d 1090 (1993) (adopting Judge Skillman’s dissent).

The court noted that “a heeding presumption may be applicable to claims of failure to warn of the dangers of pharmaceuticals.” McDarby, 949 A.2d at 267. A heeding presumption allows one to presume that the plaintiff’s physician would not have prescribed the drug to the plaintiff if there had been an adequate warning; in other words, the plaintiff’s physician would have heeded the adequate warning. The heeding presumption is rebuttable and can be rebutted if the plaintiff’s physician was aware of the risks of the drug that he prescribed, and having conducted a risk-benefit analysis, nonetheless determined its use to be warranted. Also. a manufacturer who allegedly fails to warn the medical community of a particular risk may nonetheless be relieved of liability under the learned intermediary doctrine if the prescribing physician either did not read the warning at all, or if the physician was aware of the risk from other sources and already considered the risk in prescribing the product. In that context, the physician’s conduct is the superseding, intervening cause that breaks the chain of liability between the manufacturer and the patient.

Here, the doctor stood by his decision to administer heparin to Mrs. Baker. She required heparin by standard medical procedure, and well documented clinical knowledge, at several different  points during her operation and for several different reasons, he opined.  Since he was aware of the risks of the drug that he prescribed and, having conducted a risk-benefit analysis, nonetheless determined its use to be warranted, the presumption was rebutted as a matter of law.

Moreover, the prescriber testified in his deposition that he does not read the label of drugs he frequently prescribes, which includes heparin. Therefore, a different warning would not have made a difference in plaintiff's treatment or outcome because there was no evidence he would have reviewed it.

Finally, there was a third causation problem; the opinion notes that it was undisputed that, despite doctors orders, the Hospital failed to follow its own heparin treatment protocol. Had that monitoring occurred, Mrs. Baker’s physicians would have discovered the onset of HIT sooner. Plaintiff's own expert admitted that her injuries “would have been substantially mitigated” with a “good chance of avoiding" them.   Therefore, plaintiff failed to raise a genuine issue of material fact that it was the heparin labeling, as opposed to the conduct of the hospital, that caused her injury.

 Summary judgment on the warning claim.

Industry Weighs in on "Safe Chemicals" Bill

A variety of companies and chemical industry trade groups weighed in last week on a bill to amend the decades-old Toxic Substances Control Act.   

Several dozen interested parties, including the National Association of Manufacturers, American Chemistry Council, and American Petroleum Institute, sent a letter to the U.S. Senate noting their objections to S. 847 — dubbed the Safe Chemicals Act -- that the Environment and Public Works Committee recently sent to the Senate floor. 

We have posted about this bill before.  It would give the EPA revised authority to regulate a broader range of potentially toxic chemicals.  But it would establish an unworkable safety standard, and would require an enormous amount of additional government resources to implement. The bill would also dramatically increase the time it would take for EPA to review new chemicals and undermine long-standing protections of trade secrets, seriously hampering innovations in new products and technologies.

In their letter, the groups said that the bill that did not reflect the input of the Republican Senators or many of the stakeholders on all the very complex issues involved in updating TSCA. On July 25th, the EPW Committee held a markup of S. 847, and then voted along party lines to approve the bill.

The industry groups said they wholeheartedly support the continuation of a bipartisan process to discuss the right concepts needed in legislation to effectively reform the Environmental Protection Agency’s ability to regulate chemicals. But they believe that S. 847 as reported by the Committee does not accomplish this goal.  They continue to support sound, science and risk-based legislation to update TSCA, and will work with Senators on such new legislation.


 

 

Denial of Class Certification Affirmed in Cellphone Case

The Eleventh Circuit last week upheld a trial court’s refusal to certify a class action accusing the defendant of improperly reactivating lost or stolen cellphones.  See Robinson et al v. T-Mobile USA Inc., No. 12-10170 (11th Cir. 2012).

MassTortDefense has often wondered why the issue of damages seems to get insufficient weight in the class certification decision. Would a class be satisfied with proving its case except damages? Would an award of zero damages to a class be devastating to a defendant? Shouldn't it matter that each plaintiff get a fair an accurate amount of damages to compensate for the alleged conduct of defendant? Doesn't a defendant have a right to dispute claimed damages regarding each class member? Here, the trial court determined that plaintiffs failed to offer a viable method for how proposed damages were to be calculated, and plaintiffs paid too little attention to this issue on appeal as well.

The plaintiffs filed a proposed class action against T-Mobile asserting state-law claims of conversion, trespass to chattels, and unjust enrichment. They alleged that: (1) they had reported to T-Mobile that their cell phones had been lost or stolen; (2) an unknown person brought their lost or stolen phones to T-Mobile; and (3) T-Mobile unlawfully reactivated the phones without the plaintiffs’ permission.

The district court denied the plaintiffs’ motion for class certification on five grounds. The first ground was that the plaintiffs had not satisfied their preliminary burden of establishing that their
proposed class was clearly ascertainable. Before a district court may grant a motion for class certification, a plaintiff seeking to represent a proposed class must establish that the proposed class is “adequately defined and clearly ascertainable.” DeBremaecker v. Short, 433 F.2d 733, 734 (5th Cir. 1970)1; cf. John v. Nat’l Sec. Fire & Cas. Co., 501 F.3d 443, 445 (5th Cir. 2007) (“The existence of an ascertainable class of persons to be represented by the proposed class representative is an implied prerequisite of Federal Rule of Civil Procedure 23.”).  Here, the court reasoned, in part, that the plaintiffs had “made no effort to separate out those putative class members who may very well be barred from pursuing class claims due to the existence of valid arbitration agreements or class action waivers that potentially prohibit such litigation.”

The second ground on which the district court denied class certification was that the plaintiffs had not satisfied the Rule 23(a)(1) numerosity requirement. The court reasoned that the plaintiffs had offered no evidence showing numerosity, nor made any “effort to account for those putative class members who waived their right to pursue relief against T-Mobile on a class-wide basis or who are bound by their agreement to arbitrate disputes with T-Mobile.”

The third ground the district court stated for denying class certification was that the plaintiffs had failed to satisfy the predominance requirement in Rule 23(b)(3) because there were “significant state-wide variations in the law” of conversion and in the law regarding other issues, such as the enforceability of class-action waivers.

The fourth ground the court stated for denying class certification was that  the plaintiffs had failed to establish superiority under Rule 23(b)(3). The court based that determination, in part, on the plaintiffs’ failure “to suggest how to manage the rather thorny issue of putative class members whose rights to litigate their conversion claims as part of a class proceeding in this forum may have been cutoff by either a class action waiver provision, an agreement to arbitrate, or both.”
 

The fifth reason was that “damage-related concerns evidence a predomination of individualized inquiries and render the proposed class unfit for certification under Rule [23](b)(3).” The district court explained what those damage-related concerns were. Here, plaintiffs contended that “in this era of Ebay and other public online sites selling used phones by the millions, determining a particular model phone’s value is a relatively simple matter of online research.” However, they certainly offered no concrete proposal or methodology about how to effectively and accurately manage such online research on a nationwide basis. For example, when conducting online research, would 2011 be the year to use for establishing the value for a used phone of a certain model or would the year in which the phone was misplaced or stolen be the more appropriate time frame? Plaintiffs also ignored how individualized issues relating to the age of the phone, what contents or applications were previously on the phone, and whether the original owner was a heavy or light user of the phone, might affect the value of the used phone.  Additionally, plaintiffs did not address whether loss of use of the phone should be compensable and, if so, suggest how it might be reduced to a formula-type calculation.  

The district court’s determination that the plaintiffs had not established the predominance of common issues under Rule 23(b)(3) because of individual damage-related issues was an alternative, independent ruling -- and one that prevailed on appeal. Class certification would have been denied for that reason regardless of the variations instate law relating to conversion and regardless of the enforceability of class-action waivers.

Then on appeal, plaintiffs failed to adequately challenge in their opening brief the district court’s  independent, alternative ruling that damage-related concerns evidence a predomination of individualized inquiries and render the proposed class unfit for certification under Rule [23](b)(3). The plaintiffs’ opening brief failed to clearly argue the predominance issue involving variation in damages. They also failed to raise it in their reply brief after T-Mobile had argued in its answer brief that one of the reasons the court of appeals should affirm the denial of class certification was
that variation in damages destroyed the predominance of common issues, as the district court had ruled.  By failing to challenge in their brief the district court’s ruling, the plaintiffs had abandoned any contention that the court erred in denying class certification on that ground.

Decision affirmed.

Federal Court Orders Class Action Plaintiffs to Share Defendant's Discovery Costs

A federal district court in Pennsylvania recently gave defendants in putative class actions new authority for requiring plaintiffs to share discovery costs. See Boeynaems v. LA Fitness International, LLC, No. 2-10-cv-2326-MMB, 2012 WL 3536306 (E.D. Pa. Aug. 16, 2012).  Specifically, Judge Michael Baylson ruled that when class action plaintiffs request “very extensive discovery, compliance with which will be very expensive,” plaintiffs typically should share defendant’s discovery costs – at least until plaintiffs’ certification motion has been filed and decided.

In discussing the case with my colleague Becky Schwartz, a class action guru, one of the things that jumped out at her was the notion: “If the plaintiffs have confidence in their contention that the Court should certify the class, then the plaintiffs should have no objection to making an investment.” Judge Baylson went on to say that the "Court is firmly of the view that discovery burdens should not force either party to succumb to a settlement that is based on the cost of litigation rather than the merits of the case.” 2012 WL 3536306, at *10. We have posted before about the dangers of blackmail settlements.

This case involved five named plaintiffs who alleged breach of contract and unfair trade practices related to alleged attempts to cancel their fitness club memberships. The parties were before the court on plaintiffs’ motion to compel production of additional documents and electronically stored information (“ESI”). One example of the parties’ disagreements involved defendant’s internal communications.  Defendant claimed that large numbers of internal memoranda had already been provided, while plaintiffs held fast to their demand that absolutely “all responsive internal documents” be identified and produced. The court compared the parties’ discovery dialog to “a Verdian opera scene, where a tenor and a bass boast of their qualities, to compete to win over the fair princess.” 2012 WL 3636306, at *2.

Recognizing that discovery in the case was “asymmetrical,” the court contrasted the “very few documents” in plaintiffs’ possession – e.g., their membership contract and related  correspondence – with the millions of potentially discoverable items in defendant LA Fitness’s possession. “The Court does not in any way suggest that counsel is acting otherwise than in the interests of their clients, but economic motivation and fairness are relevant factors in determining cost shifting of disputed discovery burdens,” Judge Baylson said. 2012 WL 336306, at *4.

“Plaintiffs have already amassed, mostly at Defendant’s expense, a very large set of documents that may be probative as to the class action issue,” the court opined. “If Plaintiffs conclude that additional discovery is not only relevant, but important to proving that a class should be certified, then Plaintiffs should pay for that additional discovery from this date forward, at least until the class certification is made.” 2012 WL 3536306, at *10.

My colleague Mark Cowing (many of our readers know Mark from his work on DRI’s Electronic Discovery Committee), pointed out that the court established a protocol by which the plaintiffs would list discovery that they still requested, being “specific as to what searching of ESI, or hard documents, is required.” Defendant’s response would include its internal costs for providing this information, including “the appropriately allocated salaries of individuals employed by Defendant who participate in supplying the information which Plaintiffs request, including managers, in-house counsel, paralegals, computer technicians and others involved in the retrieval and production of Defendant’s ESI.” 2012 WL 3536306, at *11. Plaintiffs would then be required to advise whether they were willing to make the necessary payment. Judge Baylson concluded the time-line by saying that “[t]he Court reserves the right to make an allocation of these costs depending upon the outcome of the class action motion and/or the merits of the case.” Id.

To help guide the process, the opinion itemized the categories of information that were considered to be relevant and irrelevant (i.e., “inside and outside the fence”) while certification remained pending. Citing the U.S. Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2451 (2011), Judge Baylson noted that “the most relevant discovery at this stage of the case is that which will illuminate the extent to which Defendant’s membership cancellation policies and practices are set and followed nationally; Plaintiffs must show either that individual managers have no discretion or that there is a common mode of exercising discretion that pervades the entire company.” 2012 WL 3536306, at *11 (internal quotation marks omitted).

SHB’s Suggestions for Defense Counsel

I asked Mark, Becky, and my partner Denise Talbert, who chairs SHB’s eDiscovery, Data & Document Management Practice, for some e-discovery pointers for our readers, in light of this potentially important discovery decision. They suggest that defendants: 

1. From the outset, maintain a record of the volume, cost, and custodians of documents and ESI reviewed for responsiveness and produced to opposing counsel.

2. In responses to plaintiffs’ requests for production, take care to (a) describe what defendant is willing to produce without objection; (b) specify the parts of plaintiffs’ requests that are irrelevant to the claims and defenses in the case; and (c) explain how individual requests are overly broad and unduly burdensome.

3. Be alert for opportunities where defendant may be able to offer to produce only examples of certain types of documents “sufficient to show” notice or some other specific fact. This can reduce costs associated with the production of repetitive documents such as articles and monthly reports.

4. Proactively seek agreement on the custodians and sources from which collection and production will be made. Emphasize the value of first producing from a core group of custodians (hopefully no more than three to five) and defendant’s willingness to meet and confer about reasonable requests to search additional sources after plaintiffs have reviewed the initial production.

5. Don’t jump the gun on a cost-shifting motion. It may well be stronger once a threshold volume of information has been produced and plaintiffs’ further requests begin to appear even more onerous.

6. Consider these approaches not only in class actions but in all complex cases in which a client is asked to produce documents and ESI in large volumes. 
 

Court of Appeals Vacates Class Certification in Tire Case

Last week, the Third Circuit reversed a trial court's certification of a class of consumer who alleged their vehicles were equipped with allegedly defective run-flat tires. Marcus v. BMW of North America LLC, Nos. 11-1192, 11-1193 (3d Cir.,  8/7/12).

As their name suggests, run-flat tires  can “run” while “flat.” Even if an RFT suffers a total and abrupt loss of air pressure from a puncture or other road damage, the vehicle it is on remains operable.  Plaintiff alleged he experienced four “flat” tires during his three-year lease of a BMW equipped with this tire technology.  In each case, the RFT worked as intended. That is, even though the tire lost air pressure, Marcus was able to drive his car to a BMW dealer to have the tire replaced. He nonetheless sued BMW and the tire maker Bridgestone, asserting consumer fraud, breach of warranty, and breach of contract claims. in part because the tires needed to be replaced rather than repaired.  The District Court certified plaintiff’s suit under Federal Rule of Civil Procedure 23(b)(3) as an opt-out class action brought on behalf of all purchasers and lessees of certain model-year BMWs equipped with Bridgestone RFTs sold or leased in New Jersey with tires that “have gone flat and been replaced.” Defendants appealed.

The requirements set out in Rule 23 are not mere pleading rules. The party seeking certification bears the burden of establishing each element of Rule 23 by a preponderance of the evidence. The Third Circuit has repeatedly emphasized that actual, not presumed, conformance with Rule 23 requirements is essential. Newton v. Merril Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 167 (3d Cir. 2001) (quoting Gen. Tel. Co. of the Sw. v. Falcon, 457 U.S. 147, 160 (1982)).  To determine whether there is actual conformance with Rule 23, a district court must conduct a “rigorous analysis” of the evidence and arguments put forth. When doing so, the court cannot be bashful. It must resolve all factual or legal disputes relevant to class certification, even if they overlap with the merits — including disputes touching on elements of the cause of action.

The term "game-changer" is often misused and overused as a buzz word in the business world by those who want sound trendy, but the Third Circuit here correctly recognized that, as a practical matter, the certification decision is "typically a game-changer, often the whole ballgame," for the parties and counsel. That is, denying or granting class certification is often the defining moment in class actions. 

The Third Circuit first addressed the issue of numerosity.  When a plaintiff attempts to certify both a nationwide class and a state-specific subclass, as plaintiff did here, evidence that is sufficient to establish numerosity with respect to the nationwide class is not necessarily sufficient to establish numerosity with respect to the state-specific subclass. See Vega v. T-Mobile USA, Inc., 564 F.3d 1256, 1266-68 (11th Cir. 2009) (plaintiff could not simply rely on the nationwide presence of T-Mobile to satisfy the numerosity requirement without Florida-specific evidence).  The District Court found that the New Jersey class met the numerosity requirement because “it is common sense" that there will probably be at least 40 class members in New Jersey. The court of appeals noted that this may be a bet worth making, but it cannot support a finding of numerosity sufficient for Rule 23(a)(1);  a district court must make a factual determination, based on the preponderance of the evidence, that Rule 23’s requirements have been met. Mere speculation is insufficient.

The second major issue was predominance. A plaintiff must demonstrate that the elements of the legal claim capable of proof at trial through evidence that is common to the class predominate over the issues that must be litigated through proof individual to its members. The court’s  obligation to consider all relevant evidence and arguments on a motion for class certification  extends to expert testimony on the common or individual nature of issues and proof, whether offered by a party seeking class certification or by a party opposing it. Expert opinion with respect to class certification, like any matter relevant to a Rule 23 requirement, calls for rigorous analysis. Weighing conflicting expert testimony at the certification stage is not only permissible, it may be integral to the rigorous analysis Rule 23 demands.  

Here, the District Court then found plaintiff could show, without resort to individual proofs, that the alleged common defect (RFTs go "flat" too easily) caused the class members’ damages. But that causation finding was an abuse of discretion.  Central to plaintiff's claim was what caused class members’ tires to go flat and need replacement. Causation was pivotal to each of Marcus’s claims. The District Court failed to analyze an undisputed, fundamental point: any tire can “go flat” for myriad reasons. Even “defective” tires can go flat for reasons completely unrelated to their defects. Critically, to determine why a particular class member’s Bridgestone RFT had “gone flat and been replaced” requires an individual examination of that class member’s tire. But these individual inquiries are incompatible with Rule 23(b)(3)’s predominance requirement.

For example, of the two tires plaintiff presented for inspection in his lawsuit, one went “flat” and was replaced because he ran over a jagged chunk of metal, and the other because he ran over a sharp object that tore and gouged the tire and damaged the sidewall. All the experts agreed that the two tires could not have been repaired and that any tire (run-flat or conventional, defective or not) would also have been damaged under the circumstances. Thus, even if Marcus could prove that Bridgestone RFTs suffer from common, class-wide defects, those defects did not cause the damage he suffered for these two tires: the need to replace them. In this sense, Marcus was no different than a class member who, seconds after buying his car, pulled off the dealership lot and ran over a bed of nails -- neither could claim a “defect” caused his tires to go flat and need replacement.

One other key aspect of the opinion for our readers: the court of appeals also raised an issue should plaintiffs attempt to get a different class certified on remand.  Many courts have recognized that an essential prerequisite of a class action, at least with respect to actions under Rule 23(b)(3), is that the class must be currently and readily ascertainable based on objective criteria. See, e.g., John v. Nat. Sec. Fire & Cas. Co., 501 F.3d 443, 445 (5th Cir. 2007).  If class members are impossible to identify without extensive and individualized fact-finding or “mini-trials,” then a class action is inappropriate. Some courts have held that where nothing in company databases shows or could show whether individuals should be included in the proposed class, the class definition fails. See Clavell v. Midland Funding LLC, No. 10-3593, 2011 WL 2462046, at *4 (E.D. Pa. June 21, 2011); Sadler v. Midland Credit Mgmt, Inc., No.06-C-5045, 2008 WL 2692274, at *5 (N.D. Ill. July 3, 2008); In re Wal-Mart Stores, Inc. Wage & Hour Litig., No. C 06-2069 SBA, 2008 WL 413749, at *8 (N.D. Cal. Feb. 13, 2008); Deitz v. Comcast Corp., No. C 06-06352 WHA, 2007 WL 2015440, at *8 (N.D. Cal. July 11, 2007).

The ascertainability requirement serves several important objectives. First, it eliminates serious administrative burdens that are incongruous with the efficiencies expected in a class action by insisting on the easy identification of class members.  Second, it protects absent class members by facilitating the “best notice practicable” under Rule 23(c)(2) in a Rule 23(b)(3) action. See Manual for Complex Litigation, § 21.222 (4th ed. 2004). Third, it protects defendants by ensuring that those persons who will be bound by the final judgment are clearly identifiable. See Xavier v. Philip Morris USA, Inc., 787 F. Supp. 2d 1075, 1089 (N.D. Cal. 2011). Ascertainability is needed for properly enforcing the preclusive effect of final judgment. The class definition must be clear in its applicability so that it will be clear later whose rights are merged into the judgment; that is, who gets the benefit of any relief and who gets the burden of any loss. If the definition is not clear in its applicability, then satellite litigation will be invited over who was in the class in the first place.

If plaintiff attempts to certify a class on remand, the District Court would have to resolve the critical issue of whether the defendants’ records can ascertain class members and, if not, whether there is a reliable, administratively feasible alternative. The Third Circuit cautioned against approving a method that would amount to no more than ascertaining by potential class members’ say so. For example, simply having potential class members submit affidavits that their Bridgestone RFTs have gone flat and been replaced may not be “proper or just.”  Defendants would be able to cross-examine an individual plaintiff at trial about whether and why his tires “have gone flat and been replaced.” So, forcing defendants to simply accept as true absent persons’ declarations that they are members of the class, without further indicia of reliability, "would have serious due process implications."

 

Court of Appeals Considering Significant Mass Tort Settlement Issue

When a defendant settles a mass tort, it wants to achieve peace; one of the worst things that can happen is for plaintiffs to attempt to pursue claims that were and ought to have been extinguished in the settlement.  An important version of this issue arises in the Vioxx mass tort. See In re: Vioxx Products Liability Litigation, No. 12-30560 (5th Cir. 2012).

Amicus, the Product Liability Advisory Council, weighed in on the issue, emphasizing the policy implications.  Merck entered into a class action settlement in the Vioxx MDL. Afterwards, plaintiffs in Missouri sought to pursue claims that had already been resolved in the settlement. Specifically, the state court plaintiffs sought recovery of alleged economic damages for the price of Vioxx prescriptions that were owned, not by the Missouri plaintiffs, but by the MDL plaintiffs who settled their claims and were paid already.  The MDL court stepped in, issuing an injunction under the All Writs Act, to protect and effectuate its orders regarding the settlement.  The district court concluded that the injunction was necessary to prevent interference with years of effort, at great expense, to reach the massive settlement. Plaintiffs appealed.

PLAC noted that an MDL court has authority and flexibility to decide a case and to manage it, including to effectuate binding settlements that state courts may not frustrate or imperil. Injunctions in aid of the settlement are valid exercises of a federal court's authority under the All Writs Act.

The policy underlying this view is that, otherwise, the finality of virtually any class action involving pendent state claims could be defeated by subsequent suits brought in those states, asserting rights derivative of those already released by class members.  As a practical matter, no defendant in consolidated federal court actions could reasonably be expected to consummate a settlement of the claims if those claims could later be reasserted under state law by different plaintiffs seeking recovery of the money already paid to the federal court plaintiffs.

The "clear and present risk" to the finality of the settlements reached, argued PLAC, was the duplication of effort, the re-litigation of claims that were settled, and a possible double recovery of the damages. The success of any federal court settlement is dependent on the parties' ability to agree to a release of all claims in exchange for fair consideration; if any of those claims can be re-litigated, there could be no certainty about the finality of the federal settlement, nor the amount a defendant will pay.  This would threaten settlement efforts by the district courts, and hamper the utility of the MDL forum.  Indeed, MDL litigation presents a unique opportunity to resolve large numbers of claims in an efficient manner. Parallel state court actions that functionally would require defendants to pay twice on the same claims would severely curtail the incentive to settle.

PLAC argued that the had been careful not to over-reach; the injunction forbids recovery only of the claims that have already been settled.

JPML Declines MDL Status for Surgical Robots

We have posted before about the MDL process and the importance of the initial decision by the Panel on ordering coordination. Last week the Judicial Panel on Multidistrict Litigation declined to consolidate the suits by plaintiffs alleging injuries from da Vinci surgical robots. See In re Da Vinci Robotic Surgical System Products Liability Litigation, MDL No. 2381 (J.P.M.L., , 8/3/12).

We like to flag for readers, for any insights they may offer, the less common decisions rejecting MDL status, see also here and here. Also here. See here.

At the time of the decision there were five cases pending in five different federal courts. Defendant Intuitive Surgical, Inc. also supported the motion. The parties even agreed on centralization in the Northern District of California.

But the Panel was not persuaded that Section 1407 centralization would serve the convenience of the parties and witnesses or further the just and efficient conduct of this litigation. Each action, said the Panel, alleged personal injuries arising out of alleged defects in the da Vinci Robotic Surgical System. These are "relatively straightforward personal injury or wrongful death actions,"   and the litigation may focus to a large extent on individual questions of fact concerning the circumstances of each patient’s alleged injuries.

Given the "minimal number of actions currently pending," the proponents of centralization failed to convince the Panel that any factual questions shared by these actions are sufficiently complex or
numerous to justify Section 1407 transfer. The court noted that the proponents maintained that this litigation may eventually encompass “hundreds” of cases or “over a thousand” cases. But the Panel declined to accept such predictions, and considered voluntary coordination among the parties and the involved courts of these relatively actions to be a preferable alternative to centralization at this time.

Failure of Expert Testimony on Alternative Designs Dooms Claim

A New Jersey appeals court ruled recently that plaintiffs' expert testimony was indeed insufficient in a suit over a fire and explosion involving a furnace used to manufacture super alloys for aerospace uses. See Leonard et al. v. Consarc Corp., No. A-1413-10T4, (N.J. Superior Court,  Appellate Division).

Plaintiffs were employed by Howmet Dover Alloy, which uses a vacuum induction melting furnace (VIM) to manufacture super alloys for aerospace uses. Howmet contracted with Consarc to retrofit and upgrade a VIM located at its Dover facility. As part of that project, Consarc manufactured a new vacuum chamber and dome, an industrial crucible to fit inside the vacuum chamber, and controls for the device.  Allegedly, while Howmet employees were melting super alloys in the VIM's interior crucible, it tipped and spilled molten super alloy onto the floor, causing such extreme conditions of heat that fires broke out in adjacent areas. The fire department responded and got the blaze under control.

Allegedly, Howmet workers then began to assess the situation for clean-up. In an effort to get a better view of the condition of the crucible and chamber, the workers removed the glass from sight ports, opened various valves, and turned on the vacuum pumps to extract the smoke from the fire. The pumps expelled the smoke but also the argon gas used to suppress the fire. As the argon gas was removed, it was replaced by air drawn in through the sight ports, the now open valve, and, possibly, a hole in the chamber resulting from the original fire.

However, a substantial quantity of unburned oil and resulting vapor remained in the chamber, and  molten metal or still hot walls ignited the air-oil mixture and caused an explosion. Plaintiffs were allegedly injured.

They sued alleging defective product design. Plaintiffs retained a mechanical engineer as an expert in the analysis of "industrial accidents, mechanical malfunctions, fires and explosions." He issued a report which concluded that (1) the hydraulic hose used to deliver hydraulic fluid required to tilt the crucible containing the molten metal alloys was touching or extremely close to the interior floor of the chamber at the time of the accident, which constituted a defect in the design because the hose could not withstand coming into contact with molten alloy; and (2) the dome of the chamber was defectively designed because it should have been protected by exterior shields to repel any hazardous gases emerging from inside the furnace.

Defendant moved to exclude the expert as unqualified, but the trial judge concluded that he was qualified as an expert under Rule 702, and denied Consarc's motion. He held that, while the witness did "not have specific experience in the field of vacuum induction furnaces, [or] melting furnaces, [he] certainly has overall experience in the analysis of industrial accidents, mechanical malfunctions, fires and explosions."

At the conclusion of plaintiffs' case at trial, Consarc moved for an involuntary dismissal pursuant to NJ Rule 4:37-2(b).  Although the trial judge did not agree with all of Consarc's arguments in support of an involuntary dismissal, he granted the motion to dismiss on the following grounds: (1) the expert gave a net opinion as to the inadequacy of any existing hose and the proposed relocation of the connections for the interior hydraulic hose; (2) he gave a net opinion as to the
feasibility of placing protective shields around the dome of the furnace; and (3) Howmet's conduct after the explosion (the inspection actions) served as an intervening and superseding cause that precluded Consarc's liability.

In New Jersey, design defect is defined by the Products Liability Act, N.J.S.A. 2A:58C-1 to -11,
as something that renders a product not "reasonably fit, suitable, or safe for its intended purpose." N.J.S.A. 2A:58C-2. A design defect is further defined as a danger inherent in a product that has been manufactured as intended when that danger, as a public policy matter, is greater than can be justified by the product's utility.  When a product is manufactured as intended but the design renders the product unsafe, the first element of a design defect case exists.  In addition, the defect must have existed when the product left the hands of the manufacturer. If the plaintiff contends that an alternative design would have rendered the product safe, the plaintiff must also prove that a practical and feasible alternative design existed that would have reduced or prevented the harm.  Lewis v. Am. Cyanamid Co., 155 N.J. 544, 560 (1998).

A claim that there could have been an alternative design requires support by expert opinion that the proposed alternative design was available at the time of manufacture and that it was practical,
feasible and safer. Expert testimony in conclusory terms is insufficient to meet that burden. N.J.R.E. 703 requires an expert to give the why and wherefore of his or her opinion rather than a mere conclusion.  Jimenez v. GNOC, Corp., 286 N.J. Super. 533, 540 (App. Div.), certif. denied, 145 N.J. 374 (1996). Therefore, experts must be able to identify the factual bases for their conclusions, explain their methodology, and demonstrate that both the factual bases and the methodology are scientifically reliable.

Plaintiffs appealed, and the court of appeals affirmed.  The witness did not have the expertise or the factual basis for opining that there was a feasible alternate design for the hose connection points. As a consequence, his opinion amounted to nothing more than a net opinion. The same problems apply to his opinion with respect to the dome. He testified that there should have been shields around the top of the dome to prevent discharged material from injuring anyone standing nearby. He also asserted that it would have been very simple to do so. However, he was not aware of any such design in actual use and he provided no details to demonstrate that his proposed design was actually feasible. The witness had no expertise in the field of vacuum
induction furnaces. His qualifications were, at best, minimal with respect to the type of  sophisticated machinery involved in this case. More importantly, he offered no specifics with respect to the details and feasibility of the alternative designs upon which he relied. For that reason, plaintiffs failed to meet their burden to prove that alternate designs were available, feasible, and practical at the time of manufacture.

CPSC Commissioners Testify At Hearing Regarding Database

Issues about the product complaint database set up by the U.S. Consumer Product Safety Commission bubbled over again last week.  We have posted on the topic before.

The CPSC-operated database allows consumers, government agencies, and others to submit reports of alleged injury or death allegedly caused by a product. Since the beginning of the database notion, there have been serious concerns about the accuracy and confidentiality of reports of alleged injury submitted and conveyed back to the public in the database. There has always been an apparent lack of attention to legitimate issues of a manufacturer's goodwill and reputation, to the costs of unnecessary panic among product consumers, and the mischief that some plaintiffs' lawyers might cause with unwarranted increase in litigation against manufacturers.  Obviously, false or inaccurate information does not serve the interests of consumers. And CPSC allows reports by parties who are more likely to have an agenda that goes beyond merely advising CPSC of an incident. The possibility that someone might attempt to seed the database with inaccurate or misleading information to provide ostensible support for lawsuits is a real concern for many observers.

As we noted, an anonymous company sued the CPSC last Fall over an apparently false report in the database.

Last week, Commissioner Anne Northup testified before a Subcommittee on Commerce, Manufacturing, and Trade of the House Energy and Commerce Committee at a hearing on “Oversight of the Consumer Product Safety Commission.” She addressed generally the issues with CPSC regulatory approaches. Commissioner Nord also testified, and she has reported that many of the complaints on the database were filed by law firms.

Chairwoman Mary Bono Mack, R-Calif., noted that the public database remains a source of controversy. Manufacturers continue to express their concern that most of the complaints are not vetted by the CPSC before they are made public, "opening the door to all kinds of mischief, whether to fuel law suits or to try and ruin a competitor’s brand."

Video of the hearing here.

State Supreme Court Approves Exercise of Jursidiction - Again

Regular readers of MassTortDefense know that one issue we try to keep an eye on is the exercise of personal jurisdiction over foreign product sellers in the U.S. courts, particularly following the Supreme Court decisions in Nicastro and Goodyear.  Readers may recall from our earlier posts that Nicastro resulted in a plurality opinion which tracked Justice O'Connor's plurality opinion in Asahi Metal Industry Co. v. Superior Court of California, 480 U.S. 102 (1987), concurring in the notion that the foreign product manufacturer lacked sufficient minimum contacts to allow a New Jersey court to exercise jurisdiction over it, but concluding that because this case did not present the new and special issues arising from recent changes in commerce and communication, it was unnecessary to get into full analysis of the steam of commerce issue as it might be applied to 21st century marketing. Rather, the outcome of the case could be determined by the Court’s existing precedents, which have held that a single isolated sale, even if accompanied by the kind of sales effort indicated in the record in the case, is not sufficient.

Last Fall, we posted on an Oregon case involving an allegedly defective wheel chair, in which the state court had exercised jurisdiction over the foreign manufacturer. The case arose from a fire allegedly caused by a battery charger manufactured by CTE, a Taiwanese company; the battery charger was incorporated into a motorized wheelchair. Plaintiffs allege that the fire began in the chair, because of a defect in the charger. CTE sought dismissal on the grounds the state court lacked personal jurisdiction. The trial court denied the motion, and the Oregon Supreme Court denied defendant's petition for a writ of mandamus on the issue. But the Supreme Court granted review, vacated the Oregon opinion denying the manufacturer's challenge to jurisdiction, and remanded the case for further consideration in light of J. McIntyre Machinery, Ltd. v. Nicastro.

We mused: "On remand, it will be interesting to see what the state court does, given what many observers see as their recent resistant approach on directions from the high Court on remands."

We now have an answer, as the state court again held that the sale of the battery chargers in Oregon via an Ohio wheelchair manufacturer was sufficient to establish minimum contacts with Oregon, subjecting the foreign company to personal jurisdiction there.  See Willemsen v. Invacare Corp., No. SC S059201 (Ore., 7/19/12).


Plaintiffs relied on the specific jurisdiction branch of personal jurisdiction, which depends on an
affiliation between the forum and the underlying controversy, principally, activity or an occurrence that takes place in the forum State and is therefore subject to the State's regulation. In contrast to general, all-purpose jurisdiction, specific jurisdiction is confined to adjudication of  issues  deriving from, or connected with, the very controversy that establishes jurisdiction.

In this case, plaintiffs argued that the sale of Invacare wheelchairs and CTE battery chargers in Oregon provided sufficient minimum contacts with this state for Oregon courts to assert specific jurisdiction over CTE for injuries that its battery chargers allegedly caused there. One difficult issue in this case arose from the fact that CTE sold its battery chargers to Invacare in Ohio, not Oregon, and with the expectation that Invacare would sell its wheelchairs together with CTE's battery chargers nationwide, not just Oregon. Defendant contended that, because Invacare (and not CTE) is the one that targeted Oregon, CTE had not purposefully availed itself of the privilege of doing business in Oregon and, as a result, the Oregon courts may not assert jurisdiction over it. The argument was that the the mere fact that it may have expected that its battery chargers might end up in Oregon is not sufficient to give Oregon courts specific jurisdiction over it.

Defendant relied heavily on the Nicastro plurality's view that the mere fact that it was foreseeable that a defendant's products might be distributed in one or all of the 50 states was not enough; rather, the plurality would have required evidence that the out-of-state defendant had "targeted" the forum state in some way. But the Oregon court focused on Justice Breyer's concurring opinion in Nicastro, which it read to mean only that nationwide distribution of a foreign manufacturer's products is not sufficient to establish jurisdiction over the manufacturer when that effort results in only a single sale in the forum state. In this case, the record showed that, over a two-year period, Invacare sold 1,102 motorized wheelchairs with CTE battery chargers in Oregon. In the court's view, the sale of over 1,100 CTE battery chargers within Oregon over a two-year period showed a regular flow or regular course of sales in Oregon.

Defendant argued that these sales figures in Oregon were a miniscule fraction -- both in sheer numbers, as well as the proportion of end product sales in the forum -- of what a Supreme Court
majority would have found to be insufficient in Asahi. But the court concluded that the decision in Asahi "provides little assistance to CTE."

It would not be a surprise if this case found its way back to the US Supreme Court again.