Mass Tort Defense

Summary Judgment for Drug Company in Pain Pump Case

Sean Wajert — Thu, 11 Mar 2010 06:44:23 -0500

A federal court has granted defendant summary judgment in a case which alleged that cartilage damage sustained by the plaintiff, a former high school athlete, was caused by the post-surgery use of the drug company’s pain medication in an automated pump device. Jensen Meharg, et al. v. I-Flow Corp., et al., No. 1:08-cv-00184 (S.D. Ind. 3/1/10).

The former high school athlete underwent shoulder surgery, after which a pain pump was utilized. The pain pump in question was manufactured and sold by I-Flow Corporation; the local anesthetic–bupivacaine Hcl – was manufactured and sold by defendant AstraZeneca. AstraZeneca did not in any way promote the use of bupivacaine with pain pumps, and that use was not mentioned in the instructions and warnings provided with the drug -- an off-label use. Several months later, plaintiff began to experience shoulder pain again. An MRI allegedly revealed that plaintiff had developed chondrolysis in her shoulder, which she alleged was caused by the post-surgery administration of the bupivacaine with the pain pump.

The strict liability claim was for alleged failure to warn; a warning defect claim requires that defendant had a duty to warn. Duty is generally a legal issue. In the context of a prescription drug manufacturer, the duty to warn does not arise until the manufacturer knows or should know of the risk. In cases that involve an off-label use of a prescription drug that is not promoted by the manufacturer, the requisite knowledge of the risk, at a minimum, includes that the manufacturer must know (or be charged with knowledge of) both that the off-label use is occurring and that the off-label use carries with it the risk of the harm at issue – in this case, damage to cartilage.

The court found as a matter of law that the information allegedly possessed by defendant was insufficient to trigger AstraZeneca’s duty to warn of the risk of cartilage damage from continuous infusion of bupivacaine into a patient’s joint. Simply put, the plaintiff failed to point to sufficient evidence that demonstrated that at the time of plaintiff’s surgery AstraZeneca knew of that risk or that it should have known of the risk because experts in the relevant field had such knowledge.

More interesting was plaintiff's other theory. Plaintiff's expert also opined that prior to plaintiff’s surgery the defendant supposedly knew that bupivacaine was being used in pain pumps, and that this knowledge triggered an alleged duty to “investigate the nature of that use, determine whether the drug was being promoted in accordance with approved indications, conduct or sponsor those studies necessary to ensure that the promoted use was safe, and to warn physicians that long-term risks to the joint had not been scientifically established but that the risks should be weighed seriously, given that the anticipated use was for elective post-operative pain therapy for which multiple alternatives existed.” The court noted that such a “duty” does not exist under relevant (Indiana) law. The duty to warn does not arise until the manufacturer knows or should know of the risk. The alleged far broader duty – a duty, in essence, to warn physicians that there might be a risk, although we don’t know yet because neither we or the scientific community at large has studied it yet -- doesn't exist.

Such a duty would cause physicians to be inundated with such pseudo-warnings and quasi-risk information distracting them from heeding real warnings of actual risk; and it would add very little to the fact that physicians already know, i.e., that if a use is omitted from a prescription drug’s label, that use has not been tested sufficiently to demonstrate to the FDA that it is safe and effective.

Product Liability Seminar Offers Topical Mass Tort Session

Sean Wajert — Wed, 10 Mar 2010 12:16:13 -0500

We have posted before about the 2010 DRI Product Liability Conference in Las Vegas in April, as an event worth checking out.

Let me add that one of the attractive feature of the conference is that, in addition to the exceptional program put together for the main stage, there are many great Specialized Litigation Group (subcommittee) programs planned, including the highly-relevant-to-readers Mass Torts & Class Actions SLG.

At the Mass Torts & Class Actions SLG breakout session on Thursday, April 8th (likely to be more daring than Criss Angel, more talented than Terry Fator, more energetic than a Blue Man Group) includes:

Legislative and Regulatory Update: Impact of New Administration and New Statutes, Rollback on Preemption and Effort to Rollback Twombley
Jeffrey A. Holmstrand, McDermott & Bonenberger PLLC, Wheeling, West Virginia
Anthony Sammons, Dinsmore & Shohl LLP, Lexington, Kentucky

Emerging Class Action Issues: Impact of the ALI Project on Aggregation and Update on Problematic Causes of Action (Public Nuisance, Consumer Fraud Act and Medical Monitoring)
Richard A. Oetheimer, Goodwin Procter LLP, Boston, Massachusetts
John Parker Sweeney, Womble Carlyle Sandridge & Rice PLLC, Baltimore, Maryland

Emerging Mass Tort Issues: Examination of Daubert/ Frye Issues, Update on Green-Product Issues and Use of Risk Assessment Concepts
Robert C. James, TERRA Inc., Tallahassee, Florida
David C. Uitti, Dechert LLP, Princeton, New Jersey

Best Practices on Managing Mass Torts: Exploring the Virtual Law Firm, Cost Controls, Alternative Fee Arrangements and Early Case Dispositions
Moderator Kip T. Bollin, Thompson Hine LLP, Cleveland, Ohio

You can still register.

Consumer Class Certification Denied -- Again

Sean Wajert — Wed, 10 Mar 2010 06:46:38 -0500

An up and down class action proceeding involving Listerine has taken a new turn. Pfizer Inc. v. Superior Court of Los Angeles County, No.B188106 (Cal. App. 3/2/10).

Plaintiffs brought a proposed class action on behalf of California consumers who allegedly purchased Listerine on the claim that the mouthwash prevented plaque and gingivitis as effectively as dental floss, relying on the state's Unfair Competition Law (UCL) (Bus. & Prof. Code, § 17200 et seq.) and the False Advertising Law (FAL) (§ 17500 et seq.). The trial court certified a California class consisting of all individuals who purchased Listerine between June, 2004 and January, 2005. The appeals court initially ruled in 2006 that the trial court’s certification was overbroad, relying on Proposition 64 which amended standing requirements in such actions and requires proof that the proposed class suffered injury. Following the decertification order, however, the California Supreme Court ordered the appeals court to revisit the issue in light of its intervening decision in In re: Tobacco II, 46 Cal.4th 298 (2009).

Upon remand, the court of appeals vacated the prior opinion, received supplemental briefs from the
parties and amici curiae, and reconsidered. Upon reflection, the appeals court concluded that the circumstances of the case still did not warrant class certification.

The court noted that the causation requirement for purposes of establishing standing under the UCL, and in particular the meaning of the phrase "as a result of" in section 17204, holds that a class representative proceeding on a claim of misrepresentation as the basis of his or her UCL action must demonstrate actual reliance on the allegedly deceptive or misleading statements, in accordance with well-settled principles regarding the element of reliance in ordinary fraud actions. Those same principles, the state supreme court had said Tobacco II in an amazingly result-driven fashion, do not require the class representative to plead or prove with an "unrealistic degree of specificity" that the plaintiff relied on particular advertisements or statements when the unfair practice is a fraudulent advertising campaign. But Tobacco II does not stand for the proposition that a consumer who was never exposed to an alleged false or misleading advertising or promotional campaign is entitled to restitution.

The certified class, consisting of all purchasers of Listerine in California, was overbroad because it presumed there was a class-wide injury. However, the record reflected that of 34 different Listerine mouthwash bottles on sale, 19 never included any label that made any statement comparing Listerine mouthwash to floss. Further, even as to those flavors and sizes of Listerine mouthwash bottles to which defendant did affix the labels which were at issue, not every bottle shipped between in the class period bore such a label. Also, although Pfizer allegedly ran four different television commercials with the “as effective as floss” campaign, the commercials did not run continuously and there is no evidence that a majority of Listerine consumers viewed any of those commercials. Thus, many, perhaps the majority of, class members who purchased Listerine during the pertinent period did so not because of any exposure to any allegedly deceptive conduct, but rather, because they were brand-loyal customers or for other reasons. As to such consumers, there is absolutely no likelihood they were deceived by the alleged false or misleading advertising or promotional campaign. Such persons cannot meet the standard of having money restored to them because it “may have been acquired by means of” the unfair practice.

Finally, plaintiff testified he did not make his purchase based on any of the four television commercials or other ads, and that he bought Listerine due to the bottle’s red label (which differed from the other labels), which he recalled said “as effective as floss.” Because the various commercials and labels contained different language, with some even expressly advising consumers to continue flossing, his testimony as to his reaction to the Listerine label is not probative of his, or absent class members’, reaction to different language contained in television commercials and other labels. Therefore, named plaintiff lacked standing to assert a UCL claim based on those television commercials or other labels.

House Committee to Hold Hearing on FDA

Sean Wajert — Tue, 09 Mar 2010 07:29:14 -0500

The House Energy and Commerce Committee's Subcommittee on Health will hold a hearing titled, "Drug Safety: An Update from the FDA" -- tomorrow, Wednesday, March 10, 2010.

At the hearing, the Food and Drug Administration will detail the Agency's views on current challenges and successes in the area of drug safety. Set to testify is Joshua M. Sharfstein, M.D., Principal Deputy Commissioner, Food and Drug Administration.

Update on CPSC Database Issues

Sean Wajert — Tue, 09 Mar 2010 06:26:43 -0500

We have posted before about one of the more controversial aspects of the Consumer Product Safety Improvement Act, the to-be-created publicly accessible database of product safety information.

The CPSIA mandates that the database be completed by March, 2011. The agency views its task as the creation of a public portal and a publicly accessible, searchable database of consumer product incident reports. Through the public portal, consumers will theoretically be able to report potential product safety hazards to CPSC in ways that are supposed to improve the quality, value, and accuracy of the data collected. Manufacturers will be able to investigate and respond to product hazard reports more quickly, and to share information with both CPSC investigators and with the public through the public database. And consumers are supposed to be able to use the public portal and database to find more information about hazards in order to keep their families safe.

Unless done very carefully, the database will be of little use to the average consumer, but subject to potential mischief in the hands of plaintiff lawyers.

Since last Fall, the CPSC has held various meetings and a two-day public workshop to gather stakeholder input on the new database. A number of affected groups have submitted comments on the implementation of the new product safety database, including the Soap and Detergent Association. A common theme for the comments is the need for the CPSC to focus on verifying and ensuring the accuracy of safety incident reports submitted to the commission. Factual accuracy and veracity are two fundamental elements underpinning a credible incident database.

CPSC needs to develop a process for addressing false and inaccurate reports that will scare consumers, harm business, and generate no additional safety gains. The commission needs to employ means to prevent the submission of fraudulent reports of harm while not discouraging the submission of valid reports. CPSC also needs to think about specific disclaimers it should make with regard to the accuracy of the information contained in the public database, and not put the governmental imprimatur on voluntary data that has not been verified. A sufficient time period should also be allocated for manufacturers to evaluate and respond to any proposed report.

Companion Bill Introduced To Ease Suits Against Foreign Manufacturers

Sean Wajert — Mon, 08 Mar 2010 06:25:32 -0500

Previously we alerted readers to the introduction of The Foreign Manufacturers Legal Accountability Act of 2009 (S. 1606), introduced in the Senate in August 2009 by Sen. Sheldon Whitehouse (D-R.I.). The bill followed up on hearings last Spring during which witnesses testified about the perceived delays and difficulties with serving foreign manufacturers with process and establishing jurisdiction.

Last week, Rep. Betty Sutton (D-Ohio) and several co-sponsors introduced in the House their own version of the Foreign Manufacturers Legal Accountability Act of 2010 (H.R. 4678). The operative provisions of the House bill overlap those in the Senate bill, although the Senate bill also includes a section which discusses the alleged need for the legislation.

The proposed legislation would impact five categories of products: drugs, devices and cosmetics; biological products; chemical substances; pesticides; and consumer products. The bills only apply to manufactured products “in excess of a minimum value or quantity established by the head of the applicable agency" in regulations applying the legislation.

Both bills make consent to jurisdiction and service of process a condition of importing products into the United States. That is, the bills instruct several relevant product-regulating agencies to issue regulations requiring foreign manufacturers and producers to designate a registered agent. A person would not be able to import into the United States a covered product (or component part that will be used in the United States to manufacture a covered product) if such product or any part of such product (or component part) was manufactured or produced outside the United States by a manufacturer or producer who does not have a registered agent.

Such a system which requiring an agent for service of process for every foreign manufacturer or producer who imports products into the U.S. would render the Hague Convention's methods for service abroad unnecessary for such companies, and raises the risk that other countries may choose to create similar rules, subjecting U.S. companies to litigation in those other countries where their products may be sold.

Under the bills, a foreign manufacturer or producer of covered products that registers an agent as above thereby consents to the personal jurisdiction of the State or Federal courts of the State in which the registered agent is located for the purpose of any civil or regulatory proceeding. Presumably, the expanded jurisdiction would also make it easier for U.S. companies to pursue indemnification claims against foreign manufacturers who were upstream suppliers.

Currently, foreseeing that one's product may enter a state is not, on its own, a sufficient basis for that state to assert jurisdiction. Asahi Metal Industry Co., Ltd. v. Superior Court, 480 U.S. 102, 112(1987); but cf. Nicastro v. McIntyre Machinery America Ltd., No. A-29-08 (N.J. 2/2/10). It has been argued that Congress cannot create jurisdiction where the Constitution would forbid it. And it may be that a constitutional challenge would lie to some applications of the proposed bills. E.g., Texas Trading & Milling Corp. v. Federal Republic of Nigeria, 647 F.2d 300 (2d Cir. 1981). Presumably, the sponsors are looking to bypass the due process concerns by providing for consent to jurisdiction.

It is unclear what the effect of the bills might be on countries around the world regarding their willingness to enforce judgments entered in the United States, as the issue of the lack of foreign manufacturer assets in the U.S. is not addressed by the proposed legislation.

Fifth Circuit Grants Rehearing En Banc In Climate Change Case

Sean Wajert — Thu, 04 Mar 2010 05:17:30 -0500

We have posted on the climate change litigation, including inexplicable decisions such as the putative class action alleging that -- follow the chain -- dozens of oil and chemical companies emitted greenhouse gasses which contributed to an impact on the atmosphere which contributed to a rise in temperature of some parts of the ocean which contributed to making Hurricane Katrina stronger which contributed to additional damages to plaintiffs' property. Such decisions represent a clear and dangerous trend within certain courts to usurp Congress, warp the traditional nuisance doctrine, and plunge the federal courts into what are essentially political questions.

Now comes the welcome news that the Fifth Circuit has ordered en banc rehearing of the case. Comer et al. v. Murphy Oil USA et al., No. 07-60756 (5th Cir.). The court issued an order last week granting the defendants' petition for a rehearing en banc, vacating the panel decision from last Fall. The Fifth Circuit panel had ruled that private property owners under Mississippi law may have standing to bring climate change-related nuisance and trespass claims for both property and punitive damages.

The defendants will re-brief the issues by the end of this month, and oral argument appears to be set for the end of May.

New Proposed Jury Instruction on Electronic Devices

Sean Wajert — Wed, 03 Mar 2010 05:31:37 -0500

At its last meeting, the Judicial Conference Committee on Court Administration and Case Management (CACM) endorsed a set of suggested jury instructions that federal district judges are to consider using to help deter jurors from using electronic technologies to research or communicate about cases on which they serve.

The CACM Committee developed these instructions to address the increasing incidence of juror use of such devices as cellular telephones, BlackBerries, or computers to conduct research on the Internet or communicate with others about cases. Such use has resulted in mistrials, exclusion of jurors, and, even, imposition of fines. The suggested instructions specifically inform jurors that they are prohibited from using these technologies in the courtroom, in deliberations, or outside the courthouse to communicate about or research cases on which they currently serve.

The instructions admonish the jurors to decide the case based solely on the evidence presented within the four walls of the courtroom. It also notes in part that jurors may not communicate with anyone about the case on a cell phone, through e-mail, BlackBerry, iPhone, text messaging or on Twitter.

Chemical Products Liability Conference This Spring

Sean Wajert — Tue, 02 Mar 2010 05:04:21 -0500

Your humble blogger will speak at the American Conference Institute's Chemical Products Liability and Environmental Litigation Conference (April 28-29, 2010).

On April 29, I will be joined by Gradient's Dr. Barbara Beck and Jerome Doak of Jones Day on a panel program entitled Presenting Effective Arguments to Courts Against Awarding Medical Monitoring Damages. Against the background of recent court decisions regarding medical monitoring, the program will address key legal and scientific issues often pivotal in medical monitoring cases. I will focus on medical monitoring class action issues.

More information here.

State Supreme Court Issues Noteworthy Personal Jurisdiction Opinion

Sean Wajert — Mon, 01 Mar 2010 05:47:39 -0500

The New Jersey Supreme Court has recently ruled that a New Jersey court can exercise jurisdiction in a product liability action over a foreign manufacturer based on the manufacturer's relationship with a nationwide distributor and on its presence at national trade shows. Nicastro v. McIntyre Machinery America Ltd., No. A-29-08 (N.J. 2/2/10).

Personal jurisdiction addresses the reach of the court’s power over a party, and without such jurisdiction, any ruling by the court is not binding on the party. Plaintiff lawyers focus on personal jurisdiction as part of the equation where they can sue; defendants as part of where they can be sued properly. The rules governing personal jurisdiction are well described in numerous reference works. As a general matter, a defendant can only be sued where it has sufficient minimum contacts with the state such that a suit there does not offend traditional notions of fair play and substantial justice.

In 2001, plaintiff was injured while operating the McIntyre Model 640 Shear, a recycling machine used to cut metal. The Model 640 Shear was manufactured by J. McIntyre Machinery, Ltd., a company incorporated in the United Kingdom, and then sold, through its exclusive United States distributor, McIntyre Machinery America, to the employer. Plaintiff sued, alleging that the shear machine was defective in that it did not have a safety guard that allegedly would have prevented the accident. The trial court granted the foreign defendant's motion to dismiss the action, finding that the English manufacturer did not have sufficient minimum contacts with New Jersey to justify the state’s exercise of personal jurisdiction. The Appellate Division reversed, concluding that the exercise of jurisdiction by New Jersey “would not offend traditional notions of fair play and substantial justice” and was justified “under the ‘stream-of-commerce plus’ rationale." Under that test, the actions of a defendant must be “purposefully directed toward the forum State” for a court of that state to exercise personal jurisdiction. Acknowledging that the English company had no presence in, or minimum contacts with, New Jersey, the state Supreme Court said plaintiff's argument for jurisdiction “must sink or swim with the stream-of-commerce theory of jurisdiction.”

New Jersey has a long-arm rule that permits service of process on a non-resident defendant “consistent with due process of law.” Therefore, its courts may exercise jurisdiction over a non-resident defendant “to the uttermost limits permitted by the United States Constitution.” The Supreme Court seemed influenced by the view that we live in a global marketplace. It also noted that a state has a strong interest in protecting its citizens from defective products as well as a paramount interest in ensuring a forum for its injured citizens who have suffered catastrophic
injuries due to allegedly defective products in the workplace. While its conception of jurisdiction must surely comport with traditional notions of fair play and substantial justice, the court noted it must also reflect modern truths – the radical transformation of the international economy.

Accordingly, the court held that a foreign manufacturer will be subject to this state’s jurisdiction if it knows or reasonably should know that through its distribution scheme its products are being sold in New Jersey. A manufacturer that knows or reasonably should know that its products are distributed through a nationwide distribution system that might lead to those products being sold in any of the fifty states must expect that it will be subject to the state’s jurisdiction if one of its defective products is sold to a New Jersey consumer, causing injury. The focus under this approach is not on the manufacturer’s control of the distribution scheme, but rather on the manufacturer’s knowledge of the distribution scheme through which it is receiving economic benefits in each state where its products are sold. A manufacturer cannot shield itself merely by employing an independent distributor – a middleman – knowing the predictable route the product will take to market. If a manufacturer does not want to subject itself to the jurisdiction of a New Jersey court while targeting the United States market, then, the court said, it must take some reasonable step to prevent the distribution of its products in that state.

The power of the state to subject a person or business to the jurisdiction of its courts has evolved with the changing nature of the American economy, said the court. As the nation is part of a global economy driven by startling advances in the transportation of products and people and instantaneous dissemination of information, the expanding reach of a state court’s jurisdiction, as permitted by due process, has reflected those historical developments.

The stream-of-commerce doctrine of jurisdiction is particularly suitable in product-liability actions, opined the court. It will not necessarily be a substitute for other jurisdictional doctrines -- such as minimum contacts -- that will apply in contract and other types of cases. Within the confines of due process, jurisdictional doctrines must reflect the economic and social realities of the day. The exercise of jurisdiction by New Jersey in this case was called "a reasoned response" to the globalization of commerce that permits foreign manufacturers to market their products through distribution systems that bring those products into the state. With the privilege of distributing products to consumers comes the responsibility of answering in a New Jersey court if one of those consumers is injured by a defective product, concluded the majority.

A lengthy dissent argued that the majority had ignored the fact that the original stream of commerce idea had included the element of a manufacturer's expectation that its products will be purchased in the forum state. It also criticized an apparent shift in focus from the defendant to the plaintiff, including the severity of injuries.

The majority's test may come to have implications for manufacturers selling to other states as well, outside New Jersey. Many foreign and out-of-state manufacturers reasonably should know that their products are distributed through a nationwide system that might result in sales in any given state. It is quite possible the U.S. Supreme Court will want to clarify the reach of the so-called stream of commerce test, which was mentioned in Justice O’Connor’s plurality opinion in
Asahi Metal Industry Co. v. Superior Court of California, 480 U.S. 102 (1987).

Appeals Court Upholds Summary Judgment on Negligence Per Se Claim

Sean Wajert — Fri, 26 Feb 2010 06:54:37 -0500

Last week, the Ninth Circuit upheld summary judgment for the maker of an artificial disc on a claim that the company's alleged off-label promotion of the device constituted negligence per se. See Carson v. DePuy Spine Inc., No. 08-56698 (9th Cir., 2/16/10)(unpublished).

Readers know that alleged violations of state or federal regulations can be used by plaintiffs in a number of ways, including the allegation that the violation constitutes negligence per se under state law. The artificial disc involved in this action was a class III medical device that had received pre-market approval from the FDA in 2004. All devices approved by the agency carry labels that describe the uses and patient conditions for which they may be used. Any use by a physician that differs from the label is considered an off-label use. Here, plaintiff argued that the defendant was negligent in allegedly promoting off-label use for its product.

The court noted that he FDCAct expressly protects off-label use: “Nothing in this chapter shall be
construed to limit or interfere with the authority of a health care practitioner to prescribe or administer any legally marketed device to a patient for any condition or disease within a legitimate health care practitioner-patient relationship.” 21U.S.C. § 396. In addition, the Supreme Court has emphasized that off-label use by medical professionals is not only legitimate but important in the practice of medicine. Buckman Co. v. Plaintiffs’ Legal Comm., 531 U.S. 341, 350 (2001). And a manufacturer is not liable merely because it sells a device with knowledge that the prescribing doctor intends an off-label use.

Plaintiffs argued that the FDA has adopted regulations that limit a drug or device manufacturer’s
ability to promote a drug or device for off-label use. Therefore, while doctors may use a drug or device off-label, the marketing and promotion of a Class III device for an unapproved use violates Section 331 of the FDCA, 21 U.S.C. § 331, claimed plaintiff. Thus, plaintiff asserted a state law negligence per se theory predicated on violation of federal law.

In California, negligence per se is not a separate cause of action but is the application of an evidentiary presumption. Quiroz v. Seventh Avenue Center, 140 Cal. App. 4th 1256, 1285-86 (Cal. 2006). In California, there are four elements required to establish a viable negligence per se theory: (1) the defendant violated a statute or regulation; (2) the violation caused the plaintiff's injury; (3) the injury resulted from the kind of occurrence the statute or regulation was designed to prevent; and (4) the plaintiff was a member of the class of persons the statute or regulation was intended to protect. See Alejo v. City of Alhambra, 75 Cal.App.4th 1180, 1184-1185 (Cal.App. 1999).

The court of appeals found that the district court had correctly concluded that Carson had failed to present sufficient evidence to create a genuine issue as to two of the elements: violation of
federal law and causation. There was no evidence in the record to support the claim that defendant illegally promoted an off-label use of the products, that the physician was influenced by such promotion, or that the off-label use of the disk caused the injury. Indeed, there was uncontroverted testimony that plaintiff developed a spinal condition that put undue stress on the device, and that the surgeon broke the disc himself during revision surgery.

Summary judgment affirmed.

Supreme Court Clarifies Definition of "Principal Place of Business"

Sean Wajert — Thu, 25 Feb 2010 06:39:50 -0500

Our readers know a crucial early decision for defendants in cases brought in state court is whether to seek to remove the case to federal court. In a decision that will impact when corporations can remove litigation to federal court based on diversity, the Supreme Court this week adopted a new test of corporate citizenship. Hertz Corp. v. Melinda Friend, et al., No. 08-1107 (S.Ct. 2/23/10).

Plaintiffs, California citizens, sued Hertz Corporation in a California state court. Hertz sought removal to the federal district court, claiming that because it and plaintiffs were citizens of different states, the federal court had diversity jurisdiction. Plaintiffs, however, claimed that Hertz was a California citizen, like themselves, and that, hence, diversity jurisdiction was lacking under §1332(c)(1), which provides that “a corporation shall be deemed to be a citizen of any State by which it has been incorporated and of the State where it has its principal place of business.”

To show that its “principal place of business” was in New Jersey, not California, Hertz submitted a declaration stating, among other things, that it operated facilities in 44 States, that California accounted for only a portion of its business activity, that its leadership is at its corporate headquarters in New Jersey, and that its core executive and administrative functions are primarily carried out there. The district court concluded that it lacked diversity jurisdiction because Hertz was a California citizen under Ninth Circuit precedent, which asked, instead, whether the amount of the corporation’s business activity is “significantly larger” or “substantially predominates” in one state.

The Supreme Court acknowledged that the phrase “principal place of business” has proven difficult to apply. Lower courts were at times uncertain as to where to look to determine a corporation’s “principal place of business” for diversity purposes. If a corporation’s headquarters and executive offices were in the same state in which it did most of its business, the test seemed straightforward. But if those corporate headquarters, including executive offices, were in one state, while the corporation’s plants or other centers of business activity were located in other states, the answer was less obvious. In particular, courts have had difficulty when a corporation’s operations are not far-flung but rather limited to only a few states. When faced with this question, various federal courts have focused more heavily on where a corporation’s actual business activities are located, adopting divergent and increasingly complex tests to interpret the statute.

In an effort to find a single, more uniform interpretation of the statutory phrase, the Supreme Court returned to the “nerve center” approach under which a “principal place of business” is best read as referring to the place where a corporation’s officers direct, control, and coordinate the corporation’s activities. In practice it should normally be the place where the corporation maintains its headquarters — provided that the headquarters is the actual center of direction, control, and coordination, i.e., the “nerve center,” and not simply an office where the corporation holds its board meetings.

Among the considerations that convinced the Court that the “nerve center” approach, while admittedly imperfect, was superior to other possibilities: first was the statutory language which uses the word “place” in the singular, not plural, and refers to a place within a state, not the state itself. This rules out those lower court tests that look not at a particular place within a state, but incorrectly at the state itself, measuring the total amount of business activities that the corporation conducts there and determining whether they are significantly larger than in the next-ranking state.

Second, administrative simplicity is a major virtue in a jurisdictional statute. A “nerve center” approach is simple to apply, comparatively speaking. MassTortDefense agrees that a clear rule -- predictability -- is something the business community has been looking for. Greater predictability may assist businesses in making investment and other financial decisions. The new rule may also reduce the need for extensive and expensive jurisdictional discovery.

The Court admitted that while there may be no perfect test that satisfies all administrative and policy criteria, this test is relatively easier to apply. The Court warned that if the record reveals attempts at jurisdictional manipulation -- for example, that the alleged “nerve center” is nothing more than a mail drop box, a bare office with a computer, or the location of an annual executive retreat -- the courts should instead take as the “nerve center” the place of actual direction, control, and coordination, in the absence of such manipulation.

New Food Safety Article Discusses Future Trends

Sean Wajert — Wed, 24 Feb 2010 06:58:22 -0500

From time to time, we have noted the significant litigation that may arise from food recalls. For those readers interested in this area, we flag a recent article in the International Journal of Food Microbiology. Questeda, et al., "Trends in technology, trade and consumption likely to impact on microbial food safety," 10 I.J. Food Micro. 1016 (2010).

Experts from Unilever, the UK Food Standards Authority, and the US National Center for Food Safety and Technology outline what they think of as the key future threats to food safety, and strategies to tackle them. The article looks at current and potential future trends in technology, consumption, and trade of food that may impact on food-borne disease. Among the most important factors driving an increase in the burden of food-borne disease in the next few decades were found to be the anticipated doubling of the global demand for food; the growing international trade in food; and a significantly increased consumption of certain high-value food commodities such as meat and poultry and fresh produce.

The article opines that the most important factor in reducing the burden of food-borne disease was an improved ability to first detect and investigate a food safety issue and then to develop effective control measures. Given the global scale of impact on food safety that current and potentially future trends have, it is observed that a key role may be played by intergovernmental organizations and by international standard setting bodies.

Product Liability Conference Worth Investigating

Sean Wajert — Tue, 23 Feb 2010 06:03:32 -0500

This year’s DRI Product Liability Conference is worth checking out. It's entitled "The Masters of Products: The Stars Come Out to Shine." The conference will take place April 7-9, 2010 at The Venetian in beautiful Las Vegas, Nevada. In addition to all that Vegas has to offer, the seminar promises a jackpot of 18.5 hours of outstanding CLE, including 2 hours of ethics credit.

The main program features presentations by judges, academics, and government officials, including Hon. Inez Moore Tenenbaum, Chair of the U.S. Consumer Product Safety Commission; Prof. Steven Gensler, Professor at the University of Oklahoma College of Law; Honorable Lee H. Rosenthal, United States District Court, Southern District of Texas; in-house counsel experienced in managing global product liability litigation, the trial of difficult cases including wrongful death and class actions, the use of demonstrative evidence and other trial tactics in product liability litigation, the new CPSIA and the reporting database, and the art of storytelling as a trial lawyer.

Break-out sessions are held by each of the 18 Specialized Litigation Groups (SLGs), (your humble author is Chair of the Mass Tort and Class Action SLG), so you can hone your skills in specific areas. And of course, the program will be attended by in-house and outside counsel from around the country, with ample opportunities to meet, greet and network. You won't want what you learn in Vegas to stay in Vegas.

You can get more info here.

More Groups Challenge EPA's "Endangerment Finding" in Climate Change Debate

Sean Wajert — Mon, 22 Feb 2010 06:20:29 -0500

A variety of business groups, including the National Association of Manufacturers (NAM), last week filed a petition in federal court challenging the U.S. EPA's decision to regulate greenhouse gas emissions through the Clean Air Act. Also petitioning in this latest round of filings are the American Petroleum Institute, the National Petrochemical & Refiners Association, the National Association of Home Builders, the Corn Refiners Association, the Brick Industry Association, the Western States Petroleum Association, and the National Oilseed Processors Association.

The groups are challenging EPA’s "Endangerment Finding" determination, and asserting that EPA hasn't asked the right questions, or sought the right information, and hasn't met the government's burden under the standards set forth in the Clean Air Act. The endangerment finding was based in large measure on the scientific findings of the U.N. Intergovernmental Panel on Climate Change. The IPCC findings have come under fire since e-mails were disclosed in November which seem to show that some scientists were trying to manipulate the data to falsely show that climate change is occurring.

Raising the slippery slope problem, the petitioners worry that if EPA moves forward and begins regulating stationary sources, it may open the door for them to regulate everything from industrial facilities to farms to even American homes. Such a move would further complicate a permitting process that EPA is not equipped to handle, while increasing costs to the manufacturing sector. According to some published estimates, the “Endangerment Finding” and subsequent regulations will trigger new permitting requirements for more than 6 million stationary sources. These 6 million sources may include 200,000 manufacturing facilities, approximately 20,000 farms, and another 200,000 other sources such as universities, schools and even American homes, impacting every aspect of the U.S. economy. These costly burdens and uncertainty, they observe, will stifle job creation and harm our competitiveness in a global economy.

The organizations note they support a comprehensive climate change policy that achieves real environmental results while also fostering continued economic growth – essential conditions for a healthy manufacturing sector in the United States. The state of Texas has also joined the list of opponents of the EPA's finding. The U.S. Chamber of Commerce filed a petition already.

EPA Administrator Lisa Jackson had announced the agency finding back in December that greenhouse gas emissions endanger public health and welfare and that cars and light trucks cause or contribute to the emissions. See 74 Fed. Reg. 66,496. The agency is reportedly planning to take regulatory action in March, under the Clean Air Act.

The finding responded to a decision in 2007 by the U.S. Supreme Court saying that greenhouse gas emissions fall under the definitions of the Clean Air Act, but that EPA must make a finding on whether they endanger public health and welfare and justify its decision based on science. See Massachusetts v. EPA, 549 U.S. 497 (2007).

Senate Holds Hearing on TSCA Issues

Sean Wajert — Fri, 19 Feb 2010 06:03:37 -0500

The Senate Committee on Environment and Public Works' Subcommittee on Superfund, Toxics and Environmental Health held a hearing earlier this month entitled, "Current Science on Public Exposures to Toxic Chemicals." Readers from the chemical and energy industries in particular will want to take note of the discussion.

Chairman Lautenberg (D.N.J.) opined that TSCA fails to give EPA the tools it needs to protect against unsafe chemicals.He claimed that in three decades EPA has tested only 200 of the more than 80,000 chemicals in the products people use every day. He mentioned unnamed "studies" that allegedly have found that as much as five percent of cancers, ten percent of neuro-behavioral disorders and 30 percent of asthma cases in children are associated with hazardous chemicals. That is why, he said, he will soon introduce a bill that will overhaul our nation’s chemical laws, with the "simple goal" to force chemical makers to prove that their products are safe before they end up in a store.

This bill would fall into place with the ideas of other proponents of radical reform and supporters of the so-called precautionary principle. Common sense would suggest that principles for any regulatory or statutory changes to TSCA should be based on the best available science, including risk assessment; must include cost-benefit considerations; must protect proprietary information; and must prioritize reviews for existing chemicals. Senator Lautenberg's notion would encourage litigation, allow for activist rather than government enforcement, and would compel unnecessary product substitution that will further damage our weak economy. Indeed, it would harm small and medium-sized companies and could harm innovation.

Other witnesses at the hearing included Steve Owens, Assistant Administrator, Office of Prevention, Pesticides and Toxic Substances Environmental Protection Agency; Dr. Henry Falk of the CDC; and Dr. Linda Birnbaum, Director of the National Institutes of Environmental Health Sciences.

A number of witnesses also talked about bio-monitoring, the concept to potentially identify the concentration of chemicals actually taken up by the human body and the metabolic fate of those chemicals; to identify susceptible populations or particular at-risk groups (e.g. genetic polymorphisms) for chemical toxicity; and to inform discussions regarding levels of exposure consistent with no adverse effects (thresholds). However, bio-monitoring cannot eliminate potential confounders or alternative explanations for identified associations between chemical exposure and disease. Any environmental chemical will be present to some extent in those who ingest, inhale or otherwise are exposed to it. Thus, the rabble-rousing about “neurotoxins”, “endocrine disruptors”, or other “harmful chemicals” is essentially meaningless, without specific relationship to dose, exposure timing, and comparison to appropriate control populations. Our ability to measure substances at very low concentrations has outstripped our ability to determine causation.

Unfortunately, bio-monitoring has been abused as a tool. The practical problem with overstating exposure-disease associations is seen every day by medical professionals who evaluate people who are fearful of being “poisoned” by the latest chemical touted in a study as the cause of the same disease blamed on another compound just the month before, noted witness Dr. Charles McKay.

Court Dismisses Vitamin Consumer Class Action

Sean Wajert — Wed, 17 Feb 2010 06:51:40 -0500

A federal court has dismissed a class action that accused Bayer Corp. of misrepresenting the cancer-preventing nature of its men's vitamin products. Johns v. Bayer Corp. et al., (S.D. Cal. Feb. 9, 2010).

Readers of MassTortDefense know how a government investigation or advocacy group's criticism of a product can spawn products liability and other class action litigation. But can plaintiffs walk too closely in the footsteps of the government?

Plaintiff David Johns filed a putative class action alleging that defendants misrepresented on product packaging, commercial advertisements, their website, and in other marketing materials, that one of the product line's key ingredients, selenium, has the ability to reduce the risk of prostate cancer in men. Plaintiff alleges that, despite emerging evidence, selenium does not in fact prevent or reduce the risk of prostate cancer. Plaintiff alleged he purchased one bottle of Men’s Health in July 2009 for approximately $8. He alleges he read the information regarding selenium on the product packaging and relied on those statements in making his purchasing decision.

Plaintiff then brought a proposed class action on behalf of all persons in the United States or, alternatively, all California residents, who since 2005 purchased the men's health vitamin products. Plaintiff alleged claims for: (1) violation of California’s Unfair Competition Law, California Business & Professions Code § 17200 (“UCL”), (2) violation of the Consumers Legal Remedies Act, California Civil Code § 1750 (“CLRA”), and (3) unjust enrichment.

Defendants moved to strike key aspects of the complaint because the allegations seemingly were simply borrowed from the language of an FTC investigation of the vitamin product line. Defendants argued that these allegations violated plaintiff’s duty under Rule 11 to conduct a reasonable factual investigation into the allegations to be made in a complaint. Attorneys have a duty to make a reasonable inquiry into whether the factual contentions made in a complaint have evidentiary support. Fed. R. Civ. Pro. 11(b).

That FTC lawsuit resulted in a settlement and consent decree; there was no adjudication on the merits and no admission of wrongdoing or fault on the part of Bayer. Thus, quotes from the government pleadings were, at best, a repetition of mere allegations, including of a special interest advocacy group that had complained to the government. The federal court thus struck these allegations. See also In re Connectics, 542 F. Supp. 2d 996, 1005-06 (N.D. Cal. 2008). Because the court granted defendants’ motion to strike the various paragraphs of the complaint, there were no factual allegations remaining to support the claim that defendants’ advertising was deceptive. Accordingly, the motion to dismiss was granted without prejudice.

The court went on to address several issues "as guidance if Plaintiff chooses to file an amended
complaint." The court noted that in two recent opinions, the Supreme Court had clarified the standard of review for Rule 12(b)(6) motions. See Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009); Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). To survive a motion to dismiss under this standard, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim for relief that is plausible on its face.’” Iqbal, 129 S.Ct. at 1949 (citing Twombly, 550 U.S. at 570). For example, the court pointed out a standing issue: plaintiff did not allege that he saw any advertisements for one of the products in the line, Men’s 50+, nor that he read the packaging on the product, nor that he even considered purchasing the product. Plaintiff cannot expand the scope of his claims to include a product he did not purchase or advertisements relating to a product that he did not rely upon. The statutory standing requirements of the UCL and CLRA are narrowly prescribed and do not permit such generalized allegations.

State Court Affirms Exclusion of Expert Evidence in Accutane Case

Sean Wajert — Tue, 16 Feb 2010 06:45:22 -0500

A New Jersey appellate court recently affirmed a trial court's decision that an Accutane plaintiff's expert's study must be excluded as unreliable. See Palazzolo v. Hoffmann La Roche Inc., 2010 WL 363834 (N.J. Super. Ct., 2/3/10).

Plaintiffs filed a product liability and consumer fraud complaint against defendants claiming that Accutane, a drug used to treat acne, caused their family member to develop depression which led to his suicide. They contended that at the time of his death in 1997, Accutane should have carried a warning label concerning the possibility that the drug could cause depression and suicide.

As one element of their product liability cause of action, plaintiffs needed to establish “general causation,” by showing that Accutane can cause depression and suicide. See Kemp v. State, 174 N.J. 412, 417 (2002); Coffman v. Keene Corp., 133 N.J. 581, 594 (1993). On that issue, plaintiffs retained Dr. James Bremner, as an expert. Plaintiffs paid Bremner to undertake a study of the issue; there was no dispute that the study was commissioned specifically for use in this litigation.

In the study at issue, Bremner and a team of other scientists used positron emission tomography (PET) technology to compare changes in brain metabolism between two groups of subjects being treated for acne. One group was receiving antibiotic treatment and the other group was being treated with Accutane. According to Bremner, the PET study demonstrated that the subjects treated with Accutane showed decreased metabolism in the orbital frontal cortex, a portion of the brain associated with depression. He published an article about the study in a scientific journal, describing his methodology and his conclusions. Based largely but not entirely on the PET study, he issued an expert report opining that Accutane can cause depression and suicide.

Defendants challenged the evidence. In deposition and at a hearing, Bremner was repeatedly confronted with potential problems in the PET study, including missing data, inaccurate data, and deviations from the methodology he claimed to have followed. As a result, in the middle of the Rule 104 hearing, the court permitted Bremner to re-work his study data and issue a supplemental expert report and allowed defendant to re-depose him. The trial court then excluded the evidence.

The court of appeals affirmed. First, Bremner did not actually use the methodology he claimed to have used. Although his PET scan article was peer-reviewed, he admitted that he did not in fact follow the steps described in the article. Significantly, contrary to representations made in the article, he did not get before-and-after questionnaires from many of the subjects. Those questionnaires were designed to elicit the extent to which the subjects might be worried about their acne. This was relevant because some scientists were of the view that worrying, as well as depression, could affect activity in the orbital frontal cortex.

Secondly, Bremner also could not document much of the data on which his published results were based. Third, he admitted that some of the statistical analysis was inaccurate. For example, in the hearing session, Bremner admitted that, for each study participant, comparing the activity in the orbital frontal cortex with the activity in the whole brain revealed no difference between the subjects who took Accutane and those who took antibiotics.

The court noted that an expert's scientific peers cannot fairly judge the expert's written work, including whether it is worthy of publication, if his article does not accurately represent either the underlying data or what the author did to produce his results. In essence, Bremner's study was not soundly and reliably generated.

There also was no error in precluding Bremner from providing supplemental reports or information after the Rule 104 hearing record closed. The judge allowed Bremner multiple opportunities to correct errors in his study before the record closed. The orderly conduct of litigation demands that expert opinions reach closure. See Miller v. Pfizer, Inc., 356 F.3d 1326, 1334 (10th Cir.), cert. denied, 543 U.S. 917 (2004).

The court of appeals remanded the case for consideration whether, even without the PET study, Dr. Bremner can still offer an opinion that Accutane can affect the brain and produce depression.

FDA To Revise Guidance on Medical Imaging: What Does That Say About Medical Monitoring?

Sean Wajert — Thu, 11 Feb 2010 12:53:02 -0500

The U.S. Food and Drug Administration announced this week that it will set new safeguards for medical imaging to reduce the amount of radiation to which patients may be exposed through increasingly common radiation-based diagnostic procedures.

Like all medical procedures, computed tomography (CT), fluoroscopy, and nuclear medicine imaging exams present both benefits and risks. These types of imaging procedures have led to improvements in the diagnosis and treatment of numerous medical conditions. At the same time, these types of exams expose patients to ionizing radiation, which may elevate a person’s lifetime risk of developing cancer.

Through the Initiative to Reduce Unnecessary Radiation Exposure from Medical Imaging, FDA is advocating the universal adoption of two principles of radiation protection: appropriate justification for ordering each procedure, and careful optimization of the radiation dose used during each procedure. In other words, each patient should get the right imaging exam, at the right time, with the right radiation dose.

According to a March 2009 report by the National Council on Radiation Protection and Measurements (NCRP), the U.S. population’s total exposure to ionizing radiation has nearly doubled over the past two decades. This rise is largely attributable to increased exposure from CT, nuclear medicine, and interventional fluoroscopy. NCRP estimates that 67 million CT scans, 18 million nuclear medicine procedures, and 17 million interventional fluoroscopy procedures, and 18 million nuclear medicine procedures were performed in the U.S. in 2006.

Concerns have been raised about the risks associated with patients’ exposure to radiation from medical imaging. Because ionizing radiation can cause damage to DNA, exposure can increase a person’s lifetime risk of developing cancer. Although the risk to an individual from a single exam may not itself be large, millions of exams are performed each year, making radiation exposure from medical imaging an important public health issue. Some experts have estimated recently that t approximately 29,000 future cancers could be related to CT scans performed in the U.S. in 2007. While estimates vary, most responsible public health officials agree that care should be taken to weigh the medical necessity of a given level of radiation exposure against the risks.

Against this backdrop, plaintiff lawyers continue to seek medical monitoring in the form of CT and other scans for millions of proposed class members around the country. Plaintiffs' theory is that exposure to an alleged toxic substance has put the class at an increased risk of developing disease in the future, and thus they need medical monitoring to early detect the disease. Most jurisdictions have not recognized this claim, but in those that do, defendants will want to pay close attention to the elements of the claim that require a plaintiff to prove that the testing is reasonably medically necessary or part of the standard of care. The reason that treating physicians and public health agencies do NOT recommend monitoring in the form of CT scans for healthy, asymptomatic folks may increasingly include this issue of potential over-exposure. While jurors may come to the court room with the pre-load that monitoring is great because early detection saves lives, the reality is that in many contexts, monitoring may do more harm than good.

Because CT, fluoroscopy, and nuclear medicine require the use of radiation, some level of radiation exposure is inherent in these types of procedures. Only when these procedures are conducted appropriately do the medical benefits they can provide generally outweigh the risks. In the medical monitoring context, patients may be exposed to radiation without sufficient clinical need or benefit. Unnecessary radiation exposure, and thus cancer risk, results from the performance of a particular medical imaging procedure when it is not medically justified given a patient’s signs and symptoms, or when an alternative might be preferable given a patient’s lifetime history of radiation exposure. That kind of needed individual assessment is one of the reasons why class-wide determination of medical monitoring is a bad idea. While plaintiffs trumpet the new technology, reports suggest that the radiation dose associated with one CT abdomen scan is the same as the dose from about 400 chest X-rays.

Daubert Webinar Worth Checking Out

Sean Wajert — Wed, 10 Feb 2010 05:44:17 -0500

Readers are invited to consider the upcoming webinar, "Daubert Standards for Expert Witness Testimony: Effective Strategies for Bringing and Defending Daubert Challenges." Your humble blogger will be a co-presenter.

This is a live 90-minute webinar program with interactive Q&A, set for Thursday, February 25, 2010, at 1:00 p.m. Eastern Time / 12:00 p.m. Central Time / 11:00 a.m. Mountain Time / and 10:00 a.m. Pacific Time. You can check it out or register.

Readers know that Daubert motions are one of the most critical pre-trial aspects of a case involving expert witness testimony because exclusion of a plaintiff's expert can effectively end a lawsuit. A strong Daubert challenge can also have an impact on settlement.

This seminar will discuss effective strategies for Daubert motions, and I will talk about when you might want to NOT file one.