Drug Class Action Rejected Again

Class certification was denied -- again -- in litigation brought by plaintiffs who allege a drug maker misstated the likelihood of withdrawal symptoms in use of a prescription medication.  See Saavedra v. Eli Lilly & Co., No. 12-09366 (C.D. Calif., 7/21/15).

Plaintiffs originally moved to certify four classes under the state consumer fraud acts of Missouri, New York, Massachusetts and California. The court rejected those proposed classes, noting plaintiffs' "unusual" theory of injury and damages. Plaintiffs did not allege they suffered the alleged withdrawal effects, or that they were injured by being overcharged.  They asserted instead that they were harmed because they received a product that had less value than the class expected it to have.  They got a product with less utility, defined as the benefit consumers believe they will get by using the product.  This flawed model looked only to the demand side of the market because it focused on a refund tied to consumers out of pocket costs; yet, the prescription drug market is quintessentially inefficient and the relationship between price and value is "severed."  In turn, causation and injury could not be shown on a class-wide basis, and common issues did not predominate. 

Plaintiffs tried again, with a proposal to certify New York and Massachusetts classes. This effort, too, raised serious issue of predominance. Plaintiffs claimed to seek only the minimum statutory damages provided under the laws of the two states,  Thus, they sought to avoid the problems of their original damages model.  But plaintiffs still had to show that each class member was injured as a result of defendant's alleged misleading act -- that the act caused the loss.  Plaintiffs could only show that harm by alleging the acts caused them to pay the wrong price, too much, a price premium, for the drug;  this is either a variant on the rejected fraud-on-the-market theory or a theory that calls for a subjective individual inquiry into what each class member got and paid for.  Because the prescription drug market is not efficient (for example, it is complicated by the role of insurance and co-payments), plaintiffs cannot rely on price to show injury in this way.  Pricing affected different class members to varying degrees because of different health insurance and the different terms of benefits that can accompany it. Even if, under the new theory, plaintiffs did not need to quantify the subjective injury each felt to quantify damages, that didn't change the fact that plaintiffs would need to show that same thing to establish causation and fact of injury.  This could not be done on a class-wide basis.

Here, the class period spanned a decade and included class members who paid different prices for the drug and had different insurance. Different class members would have been affected to different degrees.  And use of a defendant's internal marketing or pricing documents wouldn't bridge the gap: the suggestion that a lower level of withdrawal symptoms might lead some consumers to pay more for a drug does not prove that a premium was actually charged, that the price charged was in excess of the drug's true value, or that prices negotiated with third-party payers were directly and fully passed on to the class.

So, again, the attempted showing of predominance failed.

 

Exclusion of Causation Expert Upheld

The Seventh Circuit recently held that a lower court was correct to preclude a proposed causation expert from testifying for the plaintiffs in a suit relating to a plaintiff''s alleged exposure to chlorine gas at an Indiana amusement park.  See  Kent Higgins, et al. v. Koch Development Corp., No. 14-2207 (7th Cir. 7/20/15).

At the park, plaintiff allegedly inhaled an unspecified amount of chemical fumes that lingered in the air near malfunctioning equipment.  Complaining of chest tightness, burning eyes, shortness of breath, and nausea, Higgins visited the emergency room later that day, where he was diagnosed with “mild chemical exposure” and discharged with instructions to follow up with his primary
care physician. More than a year later he was diagnosed with reactive airways dysfunction syndrome (“RADS”) and chronic asthma. 

This treater, Dr. Haacke, was offered as an expert, and when challenged, plaintiff's argument appeared to be that she was qualified merely because she was a board certified pulmonologist. Although a doctor may have “experience diagnosing and treating asthma … that does not make him qualified to ‘assess its genesis.’” Cunningham v. Masterwear, Inc., 2007 WL 1164832, at *10 (S.D. Ind. Apr. 19, 2007). Plaintiff offered no evidence that Dr. Haacke had ever treated another
patient for chlorine gas exposure or had any training in toxicology. Nor could plaintiff establish that Dr. Haacke employed a reliable methodology in forming her causation opinion (even assuming she was qualified to do so). The expert essentially diagnosed Higgins after listening to his own description of his symptoms and the events at the park—some fourteen months after the fact—and after looking at the results (though not the underlying data) of the pulmonary function study conducted by another doctor the year before.

The record was silent on whether Dr. Haacke considered other possible causes of Higgins’s
ailments and, if so, how and why she ruled them out. That is problematic, because plaintiff argued the doctor was employing “differential diagnosis."  A "differential diagnosis” actually refers to a method of diagnosing an ailment, not determining its cause. See Myers, 629 F.3d at 644. Some courts have recognized a form of  "differential etiology,” as a causation‚Äźdetermining methodology. Even then, to be validly conducted, an expert must systematically “rule in” and “rule out” potential causes in arriving at her ultimate conclusion. There was no showing that this was done.

The experts Ļ work is admissible only to the extent it is reasoned, uses the methods of the discipline, and is founded on data.  Lang v. Kohl’s Food Stores, Inc., 217 F.3d 919, 924 (7th Cir. 2000). Accordingly, it was within the district court’s discretion to deem Dr. Haacke unqualified to
proffer this expert testimony.

 

 

 

Proposed Class Action Stayed Pending FDA Guidance

A California recently indicated he would stay a putative class action raising allegations  about labeling of “evaporated cane juice” pending a decision from the U.S. Food and Drug Administration on sweetener labeling.  See Jennifer Shaouli v. Reed’s Inc., No.BC534738 (Sup. Ct. Los Angeles, Cal.).  The 2014 complaint can be found at 2014 WL 533701, and alleges various juice products, including defendant's  Hibiscus Ginger Grapefruit, Cranberry Ginger, Lemon Ginger Raspberry, Pomegranate Ginger, Coconut Water Lime, Passion Mango Ginger, and Cabernet Grape, were labeled misleadingly because they allegedly list “organic evaporated cane juice” as an ingredient. 

The Food and Drug Administration reopened the comment period on its draft guidance for industry on declaring "evaporated cane juice" as an ingredient on food labels. The agency originally published the draft guidance in October of 2009 and accepted comments through early December of that year. FDA reopened the comment period to obtain additional data and information to better understand the basic nature and characterizing properties of the ingredient, the methods of producing it, and the differences between this ingredient and other sweeteners.

The FDA is still mulling the new comments. And the court wisely decided it made little sense to proceed with the proposed class action until hearing from the FDA. Among the issues FDA is considering is whether the name “evaporated cane juice” adequately conveys the basic nature of the food and its characterizing properties or ingredients. 

Local Fracking Ban Struck Down

We typically focus on state court class actions when they reach the appellate level, but wanted to note an interesting decision at the trial court level.  An Ohio court has rejected a proposed class action by a group seeking to ban hydraulic fracturing in their community.  See Mothers Against Drilling in Our Neighborhood v. Ohio, No. CV-14-836899 (Ohio Ct. Com. Pl., 7/1/15).

Last December, community activists filed the class action against the state, the governor, and some fracking defendants, with the far-reaching argument that the portion of state law (Ohio Rev. Code § 1509) that gives the state Department of Natural Resources exclusive authority to permit, locate, space and regulate oil and gas wells, somehow violates plaintiffs' state constitutional right to local self-governance.  Plaintiffs' community had voted in favor of a city ordinance that bans fracking within the boundaries of their city.

The court granted defendants' motion for summary judgment, relying in large measure on a recent Ohio Supreme Court ruling in State v. Beck Energy Corp., Ohio, No. 2013-465, 2015 WL 687475 (Ohio, 2/17/15).  The ban on fracking was an invalid exercise of the city's home rule authority as it was preempted by Ohio Rev.C. 1509 as a matter of law.  In Beck, the state supreme court had noted that Chapter 1509 regulates oil and gas wells and production operations in Ohio. While it preserves certain limited powers for local governments, it gives the state government “sole and exclusive authority” to regulate the permitting, location, and spacing of oil and gas wells and production operations within the state.The supreme court held that the Home Rule Amendment to the Ohio Constitution did not grant to a city the power to enforce its own permitting scheme atop the state system. 

More background on this local regulation debate can be found at Knight & Gullman, The Power Of State Interest: Preemption Of Local Fracking Ordinances In Home-Rule Cities, 28 Tul. Envtl. L.J. 297 (Summer, 2015).