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Business Litigation

Maryland Class Action Lawsuit Contends Pharmaceutical Company Unlawfully Barred Generic Version Of Its Drug

By | Business Litigation, Class Action Lawsuits

On November 20, 2018, a proposed federal class action lawsuit was filed in the United States District Court for the District of Maryland against Actelion Pharmaceuticals Ltd., Actelion Clinical Research, Inc., and Actelion Pharmaceuticals US, Inc. (“Actelion”) alleging that Actelion engaged in an “illegal scheme to maintain its monopoly over the prescription drug bosentan.”

Bosentan is a dual endothelin receptor antagonist that Actelion sells as a treatment for pulmonary artery hypertension (“PAH”) under the brand name “Tracleer.” PAH is a relatively rare, but chronic, and potentially fatal disorder in which elevated blood pressure in the arteries of the lungs causes the heart to work harder than normal. It affects between 10,000 and 20,000 people in the U.S. — most of them women. PAH is a progressive condition. Without treatment, only about 70% of patients survive a year after diagnosis. PAH is also an extremely expensive condition to treat. In 2016, America’s Health Insurance Plans, an industry organization of health insurers, estimated that average drug spending for PAH patients was between $103,464 and $196,560 per year.

The proposed class action lawsuit alleges that while Tracleer is a highly profitable drug (billions in sales for Actelion) and Actelion’s regulatory and patent exclusivity over the use of bosentan to treat PAH expired by November 20, 2008 and November 20, 2015, respectively, no generic manufacturer has brought a generic bosentan to market. At least four manufacturers started the process of bringing a generic bosentan to market, but Actelion allegedly unlawfully blockaded the regulatory process for generic manufacturers to proceed and, thereby, illegally maintained its monopoly over bosentan.

The proposed class action lawsuit alleges that Actelion blocked would-be generic bosentan manufacturers from obtaining samples of Tracleer. This prevented a generic version of bosenten coming to market because in order to obtain FDA approval of a generic drug application, a generic manufacturer must run comparison tests to establish that the brand and the generic are bioequivalent — that is, that the generic is absorbed in the body at the same rate and to the same extent as the brand. Doing so requires samples of the brand product. Without these samples, generic manufacturers cannot complete the regulatory process and cannot bring a competing generic to market.

The proposed class action lawsuit alleges that Actelion prevented would-be generic bosentan competitors from purchasing samples of Tracleer by forbidding its distributors from selling Tracleer to those generic manufacturers and refusing to sell Tracleer directly to the manufacturers as well. By doing both, Actelion allegedly blocked every path generic manufacturers had to obtain samples of Tracleer.

The proposed class action lawsuit alleges that, unable to get samples of Tracleer from distributors as they usually would, at least
four generic manufacturers requested samples directly from Actelion, offering to pay the market price for the samples. Actelion refused, allegedly offering subterfuge for its reason. Tracleer carries risks of serious liver damage and birth defects if taken during pregnancy. Therefore, the FDA approved Actelion’s New Drug Application (“NDA”) for Tracleer subject to two restrictions: (1) a “black box” warning on Tracleer’s packaging, and (2) Actelion’s implementation of a Risk Evaluation and Mitigation Strategy (“REMS”) for Tracleer. Actelion cited its REMS as the reason it would not sell to would-be generic competitors.

The proposed class action lawsuit alleges that Actelion cited the safety protocols imposed by FDA as the reason it refused to sell Tracleer samples to generic manufacturers (and the reason it prevented its distributors from selling them as well). Congress has specified however, that REMS may not be used to delay generic competition. The FDA has also expressly indicated that REMs do not prevent distributors from selling samples to generics nor empower the NDA holder to veto such sales. Indeed, the FDA has repeatedly confirmed that allowing the generics to buy samples does not run afoul of the FDA’s required safety protocols, both generally and with respect to Tracleer specifically.

The proposed class action lawsuit alleges that Actelion wanted to keep its competitors out of the market in order to prevent competition and prolong its monopoly well past its period of legitimate exclusivity, and this is the only logical explanation for Actelion foregoing potential sales, but it is allegedly illegal: the FTC, the FDA, courts, and commentators all agree that the antitrust laws do not tolerate such exclusionary conduct.

The proposed class action lawsuit alleges that Actelion’s anticompetitive scheme has been 100% effective. To date, no generic Tracleer is available in the U.S. nearly three years after the expiration of the Tracleer patent. Actelion’s alleged scheme has forced Plaintiff and other purchasers to pay higher prices for bosentan for far longer than they otherwise would have. Absent Actelion’s years-long blockade, one or more generics would have been available at or around the expiration of Tracleer’s patent protection in November 2015. Actelion’s alleged unlawful conduct has prevented generic manufacturers from entering the market with competing generic bosentan products and has cost purchasers hundreds of millions of dollars in overcharge damages.

GOVERNMENT EMPLOYEES HEALTH ASSOCIATION V. ACTELION PHARMACEUTICALS LTD, ET AL., Case 1:18-cv-03571-CCB.

If your business is presently or may soon be involved in class action litigation in the United States, email us at info@businesslitigationcontingencylawyers.com or telephone us toll-free in the United States at 800-756-2143 to find class action lawyers who may handle your class action litigation matter on a contingency basis.

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California Supreme Court Rules Law Firm’s Fee Arbitration Clause With Its Client Unenforceable

By | Attorney Fee Request, Business Arbitration, Business Litigation

The Supreme Court of California (“California Supreme Court”), in its opinion filed on August 30, 2018, decided a case in which a large law firm agreed to represent a manufacturing company in a federal qui tam action brought on behalf of a number of public entities. During the same time period, the same law firm represented one of these public entities in matters unrelated to the qui tam suit. Both clients had executed engagement agreements that purported to waive all such conflicts of interest, current or future, but the agreements did not specifically refer to any conflict and the law firm did not tell either client about its representation of the other. This arrangement fell apart when the public entity discovered the conflict and successfully moved to have the law firm disqualified in the qui tam action. A fight over the manufacturer’s outstanding law firm bills followed, and the dispute was sent to arbitration in accordance with an arbitration clause in the parties’ engagement agreement.

The engagement agreement’s arbitration clause provided that any dispute over fees or charges that was not resolved through voluntary arbitration under the auspices of the California State Bar, and any other type of dispute between the parties, would be settled by “mandatory binding arbitration” conducted in accordance with the California Arbitration Act (CAA; Code Civ. Proc., § 1282 et seq.). The arbitration clause also stated the agreement would be governed by California law.

The arbitrators ruled in the law firm’s favor and the superior court confirmed the award, but the Court of Appeal reversed. That court concluded that the matter should never have been arbitrated because, notwithstanding the broad conflict waiver in the engagement agreement, the law firm’s undisclosed conflict of interest violated rule 3-310(C)(3) of the Rules of Professional Conduct (i.e., an attorney “shall not, without the informed written consent of each client . . . [¶] . . . [¶] . . . [r]epresent a client in a matter and at the same time in a separate matter accept as a client a person or entity whose interest in the first matter is adverse to the client in the first matter.”). This ethical violation, the court ruled, rendered the parties’ agreement, including the arbitration clause, unenforceable in its entirety. The Court of Appeal further held that the conflict of interest disentitled the law firm from receiving any compensation for the work it performed for the manufacturer while also representing the utility district in other matters.

The California Supreme Court held: “We agree with the Court of Appeal that, under the framework established in Loving & Evans v. Blick (1949) 33 Cal.2d 603, the law firm’s conflict of interest rendered the agreement with the manufacturer, including its arbitration clause, unenforceable as against public policy. Although the manufacturer signed a conflicts waiver, the waiver was not effective because the law firm failed to disclose a known conflict with a current client. But we conclude, contrary to the Court of Appeal, that the ethical violation does not categorically disentitle the law firm from recovering the value of the services it rendered to the manufacturer; whether principles of equity entitle the law firm to some measure of compensation is a matter for the trial court to address in the first instance.”

In Loving & Evans v. Blick, the California Supreme Court had held that the excess-of-authority exception applies, and an arbitral award must be vacated, when a court determines that the arbitration has been undertaken to enforce a contract that is “illegal and against the public policy of the state.” In the present case, the California Supreme Court held that “an attorney contract that has as its object conduct constituting a violation of the Rules of Professional Conduct is contrary to the public policy of this state and is therefore unenforceable” (“California law holds that a contract may be held invalid and unenforceable on public policy grounds even though the public policy is not enshrined in a legislative enactment” – “violation of a Rule of Professional Conduct in the formation of a contract can render the contract unenforceable as against public policy”).

The California Supreme Court stated in the present case: “We conclude that Sheppard Mullin’s concurrent representation of J-M and South Tahoe violated rule 3-310(C)(3) and rendered the engagement agreement between Sheppard Mullin and J-M unenforceable. Our conclusion rests on three subsidiary points: First, at the time Sheppard Mullin agreed to represent J-M in the qui tam action, the law firm also represented a client with conflicting interests, South Tahoe; second, because Sheppard Mullin knew of that conflicting interest and failed to inform J-M of it, J-M’s consent was not “informed” within the meaning of the Rules of Professional Conduct; and third, Sheppard Mullin’s unconsented-to conflict of interest affected the whole of its engagement agreement with J-M, rendering it unenforceable in its entirety.”

The California Supreme Court further stated that “[a]n attorney or law firm that knowingly withholds material information about a conflict has not earned the confidence and trust the rule is designed to protect.” In the case it was deciding, the California Supreme Court stated: “Assessed by this standard, the conflicts waiver here was inadequate. By asking J-M to waive current conflicts as well as future ones, Sheppard Mullin did put J-M on notice that a current conflict might exist. But by failing to disclose to J-M the fact that a current conflict actually existed, the law firm failed to disclose to its client all the “relevant circumstances” within its knowledge relating to its representation of J-M. (Rules Prof. Conduct, rule 3-310(A)(1).)”

The California Supreme Court went on to state: “Whether the client is an individual or a multinational corporation with a large law department, the duty of loyalty demands an attorney or law firm provide the client all material information in the attorney or firm’s possession. No matter how large and sophisticated, a prospective client does not have access to a law firm’s list of other clients, and cannot check for itself whether the firm represents adverse parties. Nor can it evaluate for itself the risk that it may be deprived, via motion for disqualification, of its counsel of choice, as happened here. In any event, clients should not have to investigate their attorneys. Simply put, withholding available information about a known, existing conflict is not consistent with informed consent … We conclude, rather, that without full disclosure of existing conflicts known to the attorney, the client’s consent is not informed for purposes of our ethics rules. Sheppard Mullin failed to make such full disclosure here.”

The California Supreme Court held: “Because Sheppard Mullin’s ethical breach renders the engagement agreement unenforceable in its entirety, the rule of Loving & Evans means that Sheppard Mullin is not entitled to the benefit of the arbitrators’ decision awarding it unpaid contractual fees. The final question before us is whether Sheppard Mullin may receive any compensation for its services at all …  contrary to the Court of Appeal, [ ] California law does not establish a bright-line rule barring all compensation for services performed subject to an improperly waived conflict of interest, no matter the circumstances surrounding the violation.”

The California Supreme Court continued: “When a law firm seeks compensation in quantum meruit for legal services performed under the cloud of an unwaived (or improperly waived) conflict, the firm may, in some circumstances, be able to show that the conduct was not willful, and its departure from ethical rules was not so severe or harmful as to render its legal services of little or no value to the client. Where some value remains, the attorney or law firm may attempt to show what that value is in light of the harm done to the client and to the relationship of trust between attorney and client. Apprised of these facts, the trial court must then exercise its discretion to fashion a remedy that awards the attorney as much, or as little, as equity warrants, while preserving incentives to scrupulously adhere to the Rules of Professional Conduct … When a law firm seeks fees in quantum meruit that it is unable to recover under the contract because it has breached an ethical duty to its client, the burden of proof on these or other factors lies with the firm. To be entitled to a measure of recovery, the firm must show that the violation was neither willful nor egregious, and it must show that its conduct was not so potentially damaging to the client as to warrant a complete denial of compensation. And before the trial court may award compensation, it must be satisfied that the award does not undermine incentives for compliance with the Rules of Professional Conduct. For this reason, at least absent exceptional circumstances, the contractual fee will not serve as an appropriate measure of quantum meruit recovery … Although the law firm may be entitled to some compensation for its work, its ethical breach will ordinarily require it to relinquish some or all of the profits for which it negotiated … By leaving open the possibility of quantum meruit compensation for the 10,000 hours that Sheppard Mullin worked on J-M’s behalf, we in no way condone the practice of failing to inform a client of a known, existing conflict of interest before asking the client to sign a blanket conflicts waiver. Trust and confidence are central to the attorney-client relationship, and maintaining them requires an ethical attorney to display all possible candor in his or her disclosure of circumstances that may affect the client’s interests. Sheppard Mullin’s failure to exhibit the necessary candor in this case has rendered its contract with J-M unenforceable and has thus disentitled it to the benefit of the unpaid contract fees awarded by the arbitrators in this case. Whether Sheppard Mullin is nevertheless entitled to a measure of compensation for its work is, along with the other unresolved noncontract issues raised by the pleadings, a matter for the trial court to consider in the first instance.”

Source Sheppard, Mullin, Richter & Hamilton, LLP v. J-M Manufacturing Company, Inc., S232946.

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$25.5M Verdict Against Aetna For Bad Faith Denial Of Cancer Treatment

By | Business Litigation

A jury in Oklahoma awarded $25.5 million ($15.5 million in compensatory damages and $10 million in punitive damages) to the family of a woman who died from brain cancer, for Aetna’s bad faith in denying her health insurance coverage for cancer treatment, finding that Aetna acted recklessly in denying her proton beam therapy to treat her Stage 4 nasopharyngeal cancer that was near her brain stem. Aetna had denied the treatment that her doctors at MD Anderson Cancer Center in Texas ordered because Aetna considered proton beam therapy to be experimental and investigational.

The woman’s doctors had recommended proton beam therapy because the targeted cancer treatment was appropriate for her specific form and location of cancer without the significant risk of blindness associated with traditional radiation therapy. Aetna’s bad faith denial of coverage forced the 54-year-old woman and her husband to mortgage their home and to set up a GoFundMe page to raise the $92,082.19 cost of treatment. Tragically, the woman died in May 2015 due in part to a viral infection that reached her brain.

Aetna’s attorney reportedly told the jury in his closing arguments that Aetna was proud of the three medical directors employed by Aetna who had denied coverage for the woman’s proton beam therapy, even going so far as to turn to the three medical directors who were sitting in the front row in the courtroom to thank them.

The foreperson of the 12-person jury stated after the verdict that expert testimony during trial established that proton beam therapy was not experimental. She also stated that the jury took into consideration that one of Aetna’s medical directors testified about handling 80 cases per day and that the three medical directors spent more time in preparing for the trial than in reviewing the woman’s treatment requests. “No one was looking at her specific case. That’s where we decided that obviously they were in breach of contract and should’ve paid for that treatment. It was medically necessary in her situation.”

A radiation oncologist who testified during the trial stated after the jury’s verdict: “The thing I tried to illustrate to the jury is that proton therapy is not a new, experimental technique, like Aetna wants to claim. Proton therapy is a well-established treatment for cancer and has been for decades … Nobody in the oncology community considers proton therapy experimental for the treatment of cancer.” The radiation oncologist testified that standard radiation therapy to treat the woman’s cancer could have been used in her case but that the risks of such were “severe”: “She would go blind. She would lose a significant portion of her memory on the left side of her brain and still not have a very good chance at a cure. For her particular tumor, [proton therapy] was extremely valuable.” Before the woman died, scans showed that her tumor was shrinking and that the treatment was working.

Aetna’s lead defense attorney reportedly walked up to the woman’s husband after the jury’s verdict to congratulate him and then callously told him he would lose on appeal.

Source

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U.S. Chamber Institute For Legal Reform Issues Report About Class Action Lawsuits In The U.S.

By | Business Litigation, Class Action Lawsuits, Statistics

The U.S. Chamber Institute for Legal Reform (“ILR”) issued a report on October 26, 2018 entitled “A Rising Threat: The New Class Action Racket That Harms Investors and the Economy” in which it opines, “The securities class action system is spinning out of control. Abusive lawsuits are imposing huge costs on investors without providing any benefit. The only winners are the lawyers, who take home millions of dollars in fees. And we have seen this movie before.”

The ILR report states: “Securities class action filings are increasing dramatically, reaching levels not seen since enactment of the 1995 reform law. The numbers tell the story. Filings in 2017—415 or 412, depending on the particular study being examined are:

• More than 50% higher than 2016’s total number of filings;
• More than double the average annual case filings over the past twenty years (193 cases); and
• Against 8.4% of all U.S.-listed companies—more than double 2014’s percentage of 3.5%—which means one out of every twelve public companies was sued in a securities class action in 2017 . . .

annual filings for 2008 through 2016 ranged from 151 to 271, with an average per-year filing number of 190. But in 2017, filings increased to 412—a 122% jump over the per-year average—and will stay at that unprecedented level for 2018.”

The report states that the last eight years have seen a surge in lawsuits challenging merger and acquisition transactions, which is known as “M&A litigation.” In 2009, only 15% of M&A deals over $100 million triggered federal court lawsuits but in 2017, 74% of M&A deals over $100 million triggered federal securities lawsuits.

The report continues: “From 2003 through 2008, less than half of deals valued at $100 million or more were met by a lawsuit. In 2009, that almost doubled—to 76%. From 2010 through 2014, more than 90% of all such deals attracted a lawsuit—with a high of 96% in 2013. Last year, suits targeted 85% of deals … a study of M&A cases from 2003-2011 found that the overwhelming majority of cases were settled (72%) and 77% of settlements provided for disclosure only. Yet the average attorneys’ fee for these cases was $749,000.”

The report states, “For M&A class actions from 2012-2016: Lawyers got nearly two-thirds of the total payments in cases settled or dismissed (both plaintiffs’ and defense lawyers), with only 39% going to shareholders—of course, the overwhelming majority of cases resulted in disclosure-only settlements with only a few cases with shareholder awards responsible for the 39%.”

The Delaware Chancery Court wrote in a case it decided in January 2016 “disclosure settlements are likely to be met with continued disfavor in the future unless the supplemental disclosures address a plainly material misrepresentation or omission.”

Securities law claims filed in federal court targeted 20% of litigated deals in 2015 but increased to 87% in 2017 (state court filings targeted 80% of the litigated deals in 2015 but only 13% in 2017). In 2017, 89% of all cases were dismissed and 75% involved payment of a “mootness fee” to the plaintiffs’ lawyers (i.e., the defendant unilaterally added new disclosures to address the alleged  “deficiencies” cited in the class action complaint, which moots the claim but the defendant pays a “mootness fee” to the plaintiffs’ lawyers in return for dismissal of the case).

The report states that a significant and growing number of event-driven class action claims target biotech, pharmaceutical, and other medical companies: 85 securities class actions were filed against these companies in 2017, compared to 27 such cases filed in 2012.

The report states: “Securities class actions are almost never resolved by a decision on the merits of the underlying claim. Cases that are not dismissed are virtually always settled—because the costs of litigation are high and these cases threaten hundreds of millions, if not billions, of dollars in possible liability.” From 1997 through 2014, only 14 cases went to trial, compared to 3,938 cases resolved by dismissal or settlement over that period.

The report blames plaintiffs’ lawyers for the uptick in securities class action lawsuits: “For all securities class actions during that period the results were not much better: Lawyers continued to do well, reaping 43% of the total payments, with shareholders getting 57%. The average cost per case was $11.9 million. Plaintiffs’ lawyers got $2.3 million and defense lawyers $2.9 million. Even the relatively small percentages of funds that are paid to shareholders provide no net benefit to investors, because the undisputed reality of securities class actions is that they typically accomplish nothing more than shifting money from one innocent investor to another—with huge transaction costs paid to lawyers.”

The report also claims that the mere filing of lawsuits like securities class actions wipes out, on average, 3.5% of the defendant company’s equity value.

Source

What the report fails to discuss are the abuses and wrongdoings committed by some publicly traded companies that harm stockholders, consumers, and others, and which wrongful acts would not become known to the public but for class action lawsuits filed against them, which also serves as a strong deterrent to bad behavior in the future.

If your business is presently or may soon be involved in class action litigation in the United States, email us at info@businesslitigationcontingencylawyers.com or telephone us toll-free in the United States at 800-756-2143 to find class action lawyers who may handle your class action litigation matter on a contingency basis.

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Antitrust Lawsuits Filed Against Sinclair Broadcast And Tribune Media Regarding TV Advertising Consolidated Into MDL

By | Antitrust Litigation, Business Litigation, Multidistrict Litigation (MDL)

Maryland-based Sinclair Broadcast Group and Tribune Media Company are the defendants in more than a dozen antitrust lawsuits filed in various jurisdictions, contending that they committed antitrust violations involving TV advertising prices. The TV advertising antitrust cases filed throughout the United States were recently transferred and consolidated into Multidistrict Litigation (“MDL”) in Illinois, pursuant to an order of the U.S. Judicial Panel on Multidistrict Litigation earlier this month.

The antitrust lawsuits allege that the defendants stifled competition and raised, fixed, or stabilized television advertising prices throughout the United States, which resulted in advertising prices that were higher than they would have been in a competitive market. Sinclair Broadcast Group owns TV stations that reach 38% of U.S. households, and Tribune Media Company owns TV stations that reach 43% of U.S. households, according to the antitrust lawsuits.

The MDL case is captioned In Re: Local TV Advertising Antitrust Litigation, No. 2867.

One of the antitrust lawyers involved in the antitrust case filed in Maryland in August 2018 (Law Offices of Peter Miller, P.A. v. Sinclair Broadcast Group, Inc. et al, No. 1:18-cv-02316-TDC) alleges that the TV advertising market is susceptible to collusion because there is a limited number of TV station owners selling advertising, the barriers to entry into TV advertising are high, the TV advertising products are similar, the TV stations selling advertising have a common motive to maintain and increase their profits, and the TV stations had ample opportunities to conspire through industry associations and interactions.

Source

If your business is presently or may soon be involved in antitrust litigation in the United States, email us at info@businesslitigationcontingencylawyers.com or telephone us toll-free in the United States at 800-756-2143 to find antitrust lawyers who may handle your antitrust litigation matter on a contingency basis.

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$65M Proposed Settlement In Class Action Lawsuit Against Walmart Involving Cashiers

By | Business Litigation, Class Action Lawsuits

It has been reported that Walmart Inc. has agreed to settle a class action lawsuit filed nine years ago by nearly 100,000 cashiers who alleged that Walmart failed to provide them with adequate seating. The Walmart class action lawsuit was filed pursuant to California’s Private Attorneys General Act that allows California workers to bring claims for violations of California’s labor laws on behalf of the State and provides that the workers are entitled to 25% of the recovery.

The class-action plaintiffs argued that Walmart cashiers are entiteld to seating “when the nature of the work reasonably permits,” pursuant to a California regulation that was originally enacted in 1911 and was intended to benefit women employed in the retail sector. The regulation has been expanded and changed over time to apply to other workers.

The proposed settlement, which was filed on October 10, 2018 in Brown v. Walmart Inc., No. 5:09-cv-03339, which is pending in the U.S. District Court for the Northern District of California, must be approved by the federal judge assigned to the class-action lawsuit before it can become final.

Wamart had defended its failure to provide its cashiers with stools, claiming that stools would create a safety hazzard and result in less productivity, and that it would not be reasonable because its cashiers would have difficulty viewing the bottom of customers’ shopping carts from a seated position, the cashiers would have difficulty bagging customers’ merchandise from a seated position, and because cashiers sometimes are required to perform duties away from their cash registers.

If the proposed class-action settlement is approved as submitted to the federal court in California, cashiers who worked for Walmart since 2008 will share approximately $10.7 million and will receive about $4 per pay period (cashiers who worked the entire time period covered by the class action will receive about $1,000 or more if fewer class members participate in the settlement).

Pursuant to California’s Private Attorneys General Act, the California Labor and Workforce Development Agency would receive 75% of the remaining settlement fund.

Source

If your business is presently or may soon be involved in class action litigation in the United States, email us at info@businesslitigationcontingencylawyers.com or telephone us toll-free in the United States at 800-756-2143 to find class action lawyers who may handle your class action litigation matter on a contingency basis.

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Product Liability Cases Represent 90% Of All Multidictrict Litigation (MDL) Cases

By | Business Litigation, Multidistrict Litigation (MDL)

Lawyers for Civil Justice (LCJ), a national coalition of defense trial lawyer organizations, law firms, and corporations, issued a report on October 4, 2018 entitled “Rules 4 MDLs Calculating the Case” that found, based on its research of data from the Judicial Panel on Multidistrict Litigation (JPML), that product liability cases accounted for approximately 90% of all multidistrict litigation (MDL) cases that were pending at the end of fiscal year 2017. The LCJ further reported that products liability cases within MDLs represented 42% of the entire civil caseload as of the end of fiscal year 2017.

The LCJ found that MDL cases have more than tripled since the end of fiscal year 1992, increasing by 86,949 cases as of the end of fiscal year 2017. Over this same period, products liability cases in MDLs also have more than tripled, increasing by 76,398 cases. The growth in MDL products liability cases alone accounts for almost 88% of the growth in MDL cases since fiscal year 1992. The number of MDLs with  more than 1,000 pending cases also has surged since the early 1990s: as of September 2018, the number of MDLs with more than 1,000 cases has reached an all-time high of 24.

Source

What Is Multidistrict Litigation?

28 U.S.C. § 1407. Multidistrict litigation

(a) When civil actions involving one or more common questions of fact are pending in different districts, such actions may be transferred to any district for coordinated or consolidated pretrial proceedings. Such transfers shall be made by the judicial panel on multidistrict litigation authorized by this section upon its determination that transfers for such proceedings will be for the convenience of parties and witnesses and will promote the just and efficient conduct of such actions. Each action so transferred shall be remanded by the panel at or before the conclusion of such pretrial proceedings to the district from which it was transferred unless it shall have been previously terminated: Provided, however, That the panel may separate any claim, cross-claim, counter-claim, or third-party claim and remand any of such claims before the remainder of the action is remanded.

Source

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Federal Appellate Court Overturns $3M Verdict Against Paxil Manufacturer For Suicide Death

By | Business Litigation

The United States Court of Appeals for the Seventh Circuit (“Federal Appellate Court”) overturned a $3 million Illinois state verdict against GlaxoSmithKline LLC (“GSK”), which marketed paroxetine under the Paxil brand name in the United States using the FDA‐approved label through 2014.

From 1992 to 2014, when GSK sold the right to distribute brand‐name Paxil, GSK was responsible for the “accuracy and adequacy” of the drug’s label. To change the label, GSK needed either FDA permission or newly acquired information that supported a strengthened warning under the CBE regulation (The CBE regulation (“changes being effected”) is an exception to the general rule that changes require advance FDA permission. It allows manufacturers to change a label to “reflect newly acquired information” if the changes “add or strengthen a … warning” for which there is “evidence of a causal association … .” 21 C.F.R. § 314.70(c)(6)(iii)(A)).

Paroxetine is a selective serotonin reuptake inhibitor, one of a class of antidepressants commonly called SSRIs. For decades, the FDA has scrutinized data on the relationship between SSRIs and suicidal behavior.

The plaintiff alleged that in 2010, a doctor prescribed Paxil, the brand‐name version of paroxetine, to treat the plaintiff’s husband’s depression and anxiety. But his prescription was filled with generic paroxetine manufactured by another company. Six days later, the plaintiff’s husband committed suicide. Blood tests showed that paroxetine was in his system. He was 57 years old.

The plaintiff sued GSK, alleging that GSK negligently failed to include warnings that paroxetine was associated with suicide in patients older than 24. Since federal law makes it virtually impossible to sue generic drug manufacturers on a state‐law theory for failure to warn, the plaintiff sued the brand‐name manufacturer, who has more control over drug labels, for injuries caused by taking the generic drugs.

The jury awarded the plaintiff $3 million for the death of her husband, and GSK appealed.

Federal Appellate Court Opinion

Brand‐name and generic drug manufacturers have different federal drug labeling duties. A brand‐name manufacturer seeking new drug approval is responsible for the accuracy and adequacy of its label. 21 U.S.C. § 355(b)(1), (d). A manufacturer seeking generic drug approval, on the other hand, is responsible for ensuring that its warning label is the same as the brand name’s. 21 U.S.C. §§ 355(j)(2)(A)(v) & (j)(4)(G); 21 C.F.R. §§ 314.94(a)(8) & 314.127(a)(7). Thus, from 1992 to 2014, when GSK sold the right to distribute brand‐name Paxil, GSK was responsible for the “accuracy and adequacy” of the drug’s label. To change the label, GSK needed either FDA permission or newly acquired information that supported a strengthened warning under the CBE regulation.

The Federal Appellate Court held in its opinion filed on Augst 22, 2018: “GSK asked the FDA for permission to modify the paroxetine label as plaintiff argues was needed. The FDA said no, repeatedly. Federal law thus preempted plaintiff’s Illinois‐law claim that GSK should have warned of a risk of adult suicidality on the paroxetine label in 2010. GSK added a similar warning in 2006, and the FDA ordered that GSK remove that label and replace it with a class‐wide SSRI warning in 2007. As a matter of law, this is what <em>Levine</em> called “clear evidence” that the FDA would have rejected the warning that plaintiff seeks under Illinois law. After 2007, GSK lacked newly acquired information that would have allowed it to add an adult‐suicidality warning under the CBE regulation.”

Source

Dolin v. GlaxoSmithKline LLC, No. 17‐3030.

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Federal Appellate Court Reverses Dismissal Of Plaintiffs’ Fair Debt Collection Practices Act Violation Claim

By | Business Litigation, Class Action Lawsuits

In its precedential opinion filed on September 24, 2018, the United States Court of Appeals for the Third Circuit (“Federal Appellate Court”) held that the appellants (plaintiffs below) “have pled sufficient factual allegations that state a plausible claim upon which a court may grant relief under the FDCPA.”

Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §1692 et. seq.

Congress enacted the FDCPA in 1977, after noting the “abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors.”  § 1692e of the FDCPA states that “[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt,” and goes on to describe the following as violations of the FDCPA: The threat to take any action that cannot legally be taken or that is not intended to be taken . . . The use of any false representation or deceptive means to collect or  attempt to collect any debt or to obtain information concerning a consumer.

Whether a collection letter is “false, deceptive, or misleading” under § 1692e is determined from the perspective of the “least sophisticated debtor.”

In the case it was deciding, the defendant debt collector sent letters to the plaintiffs attempting to collect outstanding debts, none of which exceeded $600. All of the defendant’s debt collection letters sent to the plaintiffs contained the following language: “We are not obligated to renew this offer. We will report forgiveness of debt as required by IRS regulations. Reporting is not required every time a debt is canceled or settled, and might not be required in your case.”

Because the U.S. Department of the Treasury only requires an entity or organization to report a discharge of indebtedness of $600 or more to the IRS, and because each of the debts linked to the plaintiffs was less than $600, the plaintiffs claimed that the inclusion of the aforementioned language was “false, deceptive and misleading” in violation of the FDCPA.

The Federal Appellate Court held: “By including the reporting language on collection letters addressing debts of less than $600, we believe that the least sophisticated debtor might be persuaded into thinking that the discharge of any portion of their debt, regardless of amount discharged, may be reportable …  it is not merely the inclusion of a lie but also incomplete or inapplicable language in a collection letter that may form the basis for a potential FDCPA violation … While we recognize that [the defendant debt collector], like many debt collection companies, uses form letters when contacting its debtors, we must reinforce that convenience does not excuse a potential violation of the FDCPA. We therefore are obligated to reverse the order of the District Court granting [the defendant’s] motion to dismiss, as a reasonable juror may find a violation of the FDCPA in this instance.”

Source

Schultz v. Midland Credit Management, Inc.,  Case No. 17-2244.

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Federal Class Action Lawsuits – Continued

By | Business Litigation, Class Action Lawsuits

The United States Supreme Court stated in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), that Rule 23 does not set forth a mere pleading standard. A party seeking class certification must affirmatively demonstrate his compliance with the Rule—that is, he must be prepared to prove that there are in fact sufficiently numerous parties, common questions of law or fact, etc.

Class certification is governed by Federal Rule of Civil Procedure 23. Under Rule 23(a), the party seeking certification must demonstrate, first, that:

“(1) the class is so numerous that joinder of all members is impracticable,

“(2) there are questions of law or fact common to the class,

“(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and

“(4) the representative parties will fairly and adequately protect the interests of the class” (paragraph breaks added).

Second, the proposed class must also satisfy at least one of the three requirements listed in Rule 23(b).  Rule 23(b)(2) applies when “the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole.”

In a prior decision, the Supreme Court rejected a composite class for lack of commonality and typicality, explaining: “Conceptually, there is a wide gap between (a) an individual’s claim that he has been denied a promotion [or higher pay] on discriminatory grounds, and his otherwise unsupported allegation that the company has a policy of discrimination, and (b) the existence of a class of persons who have suffered the same injury as that individual, such that the individual’s claim and the class claim will share common questions of law or fact and that the individual’s claim will be typical of the class claims.”102 S.Ct. 2364.

In the present case, the Supreme Court stated that the crux of the case is commonality—the rule requiring a plaintiff to show that “there are questions of law or fact common to the class.” Rule 23(a)(2). The Supreme Court stated “the mere claim by employees of the same company that they have suffered a Title VII injury, or even a disparate-impact Title VII injury, gives no cause to believe that all their claims can productively be litigated at once. Their claims must depend upon a common contention—for example, the assertion of discriminatory bias on the part of the same supervisor. That common contention, moreover, must be of such a nature that it is capable of classwide resolution—which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.”

The Supreme Court continued: “The only corporate policy that the plaintiffs’ evidence convincingly establishes is Wal-Mart’s “policy” of allowing discretion by local supervisors over employment matters. On its face, of course, that is just the opposite of a uniform employment practice that would provide the commonality needed for a class action; it is a policy against having uniform employment practices. It is also a very common and presumptively reasonable way of doing business—one that we have said “should itself raise no inference of discriminatory conduct” … Respondents have not identified a common mode of exercising discretion that pervades the entire company … In sum, we agree … that the members of the class: “held a multitude of different jobs, at different levels of Wal-Mart’s hierarchy, for variable lengths of time, in 3,400 stores, sprinkled across 50 states, with a kaleidoscope of supervisors (male and female), subject to a variety of regional policies that all differed …. Some thrived while others did poorly. They have little in common but their sex and this lawsuit.”

The Supreme Court further held that Rule 23(b)(2) applies only when a single injunction or declaratory judgment would provide relief to each member of the class. It does not authorize class certification when each individual class member would be entitled to a different injunction or declaratory judgment against the defendant. Similarly, it does not authorize class certification when each class member would be entitled to an individualized award of monetary damages.

Source

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