Mass Tort Litigation Blog

Latest Use of Bellwether Trials

Bellwether trials are gaining popularity, particularly in Louisiana.  After Judge Fallon used the trials to help establish settlement values in the Vioxx litigation, Judge Kurt D. Engelhardt is proposing their use in the litigation over formaldehyde-laden FEMA trailers (FEMA Trailer Formaldehyde Prods. Liab. Litig, MDL No. 1873, E.D. La.).  As is typical in bellwether trials, the jury's opinion is advisory only and does not bind the parties for purposes of preclusion.  The government has strongly opposed a jury trial given that the jury pool is likely to have strong feelings about the government's handling of pre- and post-Katrina events.  Plaintiffs claim that the government-supplied trailers contained toxic materials, including formaldehyde.

ECB

Certification Denied in St. Jude Heart Implant MDL

 The U.S. District Court for the District of Minnesota recently issued a ruling denying a third attempt at class certification in a consumer fraud MDL alleging material omissions by a manufacturer of a heart valve whose product was found to cause leaking in some clinical trials and was subsequently recalled from the market.  District Court Judge John R. Tunheim (pictured) had previously approved class certification twice and on both occasions the Eighth Circuit reversed.  Not surprisingly, then, Judge Tunheim ruled on this third occasion that the latest decision from the Eighth Circuit required him to deny certification. 

WBR

Robert Rabin on Conflicting Conceptions of Tort Preemption

Professor Robert Rabin (Stanford) has posted on SSRN his article, Territorial Claims in the Domain of Accident Law: Conflicting Conceptions of Tort Preemption, Brook. L. Rev. (forthcoming 2009).  Here's the abstract:

Beginning in 1992, with the landmark decision in Cipollone v. Liggett Group, Inc., the U.S. Supreme Court has decided a burgeoning number of preemption cases, squarely challenging the continuing vitality of tort in many domains of accident law. Cipollone addressed the preemption question in an atypical context. The case did not involve competing claims to territorial authority between a regulatory regime and state tort law. Rather, Cipollone involved a challenge to the continuing viability of tort in the face of statutory directives mandating explicit industry conduct; more specifically, the explicit warnings required in the 1969 version of the cigarette labeling act.

In this article, I begin by revisiting Cipollone to reassess what it has to offer as a foundation for setting the boundaries of regulatory containment of the tort system. Next, I discuss three leading cases from the series of efforts by the Supreme Court to grapple with express preemption clauses in a variety of regulatory schemes. Against this backdrop, I then explore the circumstances under which it might be justified to imply preemption despite the absence of an express provision, with particular reference to the recent Supreme Court decision in Wyeth v. Levine, addressing preemption in the context of FDA regulation of prescription drugs. A concluding note ties the strands together.

BGS

Douglas Smith on Preemption After Wyeth v. Levine

Douglas Smith (Kirkland & Ellis) has posted on SSRN his article, Preemption After Wyeth v. Levine, Ohio St. L.J. (forthcoming 2009).  Here's the abstract:

This Article addresses the Supreme Court’s recent preemption decision in Wyeth v. Levine. In Wyeth, the Court held that the Food and Drug Act did not preempt a state law tort suit alleging that the labeling for an anti-nausea medication, Phenergan, failed to adequately warn about the risks associated with IV-push administration of the drug. Already, Wyeth has been interpreted by some as sounding the death knell for the preemption doctrine in the context of pharmaceutical products. However, a careful analysis of the Court’s decision indicates that this is far from the case. The majority underscored that its decision was a 'narrow' one based largely on the facts and circumstances before it. In particular, the Court made a point of noting that the record was devoid of evidence that the particular risks at issue had actually been considered by the FDA and that the defendant had thus failed to show that there was an actual conflict between FDA regulation and the state law tort suit. The majority’s analysis therefore suggests that state law tort suits based on an alleged failure to warn are preempted in cases in which the FDA has specifically considered the particular risks at issue and has determined that the pharmaceutical product’s labeling adequately warns of those risks. I argue that the ruling thus construed has significant benefits. As the Court has repeatedly recognized, there is an inherent tension between the congressional establishment of a federal regulatory regime for the labeling of pharmaceuticals and medical devices by experts at the FDA and allowing a jury of ordinary citizens with no specialized expertise to render their own judgment regarding, and in effect overrule, such expert determinations. As several members of the Court have noted, there is a potential danger in allowing these expert decisions to be undermined by state court juries. Moreover, such an outcome may have undesirable indirect effects, such as raising the prices of pharmaceutical products to satisfy state court judgments that are not warranted based on the best available scientific evidence and the potential confusion and inconsistency that may result with juries in fifty-two separate jurisdictions imposing different standards concerning what constitutes appropriate labeling. The Court’s decision properly balances these competing considerations.

BGS

Roche Pulls Accutane Off the Market

Roche notified the FDA today that it was pulling Acctane (an acne medicine) off the market.  The company faces at least $33 million damage award from jury trials and faces around 5,000 personal injury claims.  Michael Hook (an FSU grad who graciously spoke to my complex litigation class this past spring about the litigation) won a $10.5 million claim against Roche in April of 2008 is quoted as saying, "We've been winning the cases with the drug still on the market, but this move certainly isn't going to hurt us going forward."  Roche has already taken Accutane off the market in roughly 11 other countries.  For more information, here's a link to Bloomberg's report and to the Associated Press article.  

ECB

Cert denied in 9/11 Saudi Liability Case

The Supreme Court yesterday denied certiorari in Burnett v. Al Baraka, in which plaintiffs sought to hold Saudi Arabia and the Saudi royal family liable for the September 11 terrorist attacks.  The plaintiffs sought to establish liability by linking the Saudis to the financing of Al Qaeda.  The Second Circuit held that the claims were barred by the Foreign Sovereign Immunities Act, reasoning that terrorism claims against a foreign government required a state department designation of that government as a supporter of terrorism.

Here's an excerpt from today's article in the Philadelphia Inquirer:

In a decision that creates broad immunity for Saudi Arabia in terrorism lawsuits, the Supreme Court yesterday let stand lower-court rulings that the desert kingdom and senior members of the Saudi royal family are not liable for the 9/11 attacks.  ...

For the moment, the decision leaves untouched litigation against scores of Islamic charities, alleged terrorism financiers and financial institutions named as defendants in the case. But the Supreme Court's decision is a significant defeat for the 6,000 individual victims and family members along with insurers and other commercial interests seeking compensation. ...

The plaintiffs allege that Saudi Arabia funded and controlled Islamic charities that were used to launder money into al-Qaeda.  Absent that financial support, al-Qaeda never would have become a global terrorist threat and never would have been able to pull off the Sept. 11 attacks, they allege.

The Obama administration, concerned about the case's effect on U.S.-Saudi relations, weighed in with an amicus brief last month urging the Supreme Court to decline the case.

HME

Supreme Court Reaffirms Availability of Damages for Fear of Future Illness in Asbestos Cases

In CSX Transportation, Inc. v. Thurston Hensley, the Supreme Court addressed the question of whether a former railroad worker who contracted astestosis after long-term exposure to asbestos on the job could recover damages for pain and suffering under the Federal Employers' Liability Act (FELA) based on his fear of developing lung cancer in the future.  In its June 1 decision, the Court, per curiam, reaffirmed a prior requirement that such damages are available but are limited to plaintiffs who can prove that their fear of cancer is both genuine and serious; the Court thus found that the lower court erred by not utilizing a jury instruction embodying this standard.  The full text of the opinion can be found here.

WBR

The GM Reorganization and Product Liability Claims

Article in the Wall Street Journal -- Car Liability, Dealers Pose New Hurdles For GM Plan, by Mike Spector and Jeffrey McCraken.  Here's an excerpt:

The U.S. Treasury Department is negotiating with more than a dozen state attorneys general to roll back two key features of General Motors Corp.'s bankruptcy plan that would have wiped out billions of dollars in potential claims from car-accident victims and closed auto dealers.

The discussions show how the federal government's GM rescue is brushing up against the limits of its ambitious legal approach, which attempted to use the Bankruptcy Code to override many state legal contracts and protections.

This could ultimately expand the cost of GM's $60 billion bailout, though government officials say it
shouldn't delay the emergence of a "new GM" from bankruptcy protection.
.

BGS

NTSB Finds Identifies Two New Instances of Airbus-Sensor Problems

Article in the Wall Street Journal -- Safety Board Cites Two New Reports of Problems With Airbus Sensors, by Andy Pasztor.  Here's an excerpt:

U.S. air-crash investigators are looking into two recent incidents in which they believe Airbus A330 jetliners suffered airspeed sensor malfunctions similar to those being examined in the crash of Air France Flight 447 last month.

The National Transportation Safety Board on Thursday identified separate malfunctions on two different airlines that ended with safe landings over the past few weeks. They appear to describe the same type of malfunction -- triggering a loss of autopilot and automatic-throttle -- that investigators believe occurred on the Air France A330 shortly before it crashed May 31 en route from Rio de Janeiro to Paris in stormy weather.

Such airspeed issues aren't enough to bring down a jetliner. Investigators in the Air France crash suspect a combination of turbulent weather, possible computer glitches, pilot actions and perhaps other factors combined to put the jet into a fatal dive.

BGS

Nestle Not Completely Cooperative with FDA Inspections Prior to E. Coli Outbreak

Article in the Wall Street Journal -- Nestlé Unit Denied FDA Requests, by Jane Zhang.  Here's an excerpt:

The Nestlé USA plant at the center of a federal probe into an E. coli outbreak involving cookie dough refused to give inspectors access to pest-control records, environmental-testing programs and other information, according to newly released inspection reports covering the past five years.

In a September 2006 visit, for example, managers at the Danville, Va., plant refused to allow a Food and Drug Administration inspector to review consumer complaints or inspect its program designed to prevent food contamination. The inspector found dirty equipment and "three live ant-like insects" on a ledge but nothing severe enough to give the plant a failing grade.

A year earlier, officials at the Nestlé plant presented another FDA inspector with a list of things it wouldn't do. "Among these are the refusal to review the firm's consumer complaint file, refusal to permit photography, refusal to sign affidavits or receipts and refusal to provide specific information on interstate commerce," the inspector wrote.

BGS

Interesting Cases in this BNA Class Action Litigation Report Released Today

Some of the highlights include:

Class members may sue an attorney who altered a class settlement in a smokeless tobacco class action without first notifying class members, the Fourth Circuit held in an unpublished opinion (Martin v. Ball, 4th Cir., No. 08-1757, 6/12/09)

A CAFA jurisdictional ruling -- the Eleventh Circuit held (per curiam) that the plaintiff's pleadings must establish that the amount in controversy has been met.  Other Circuits had held that the defendant could produce evidence that the amount had been met through its own documentation. (Thomas v. Bank of America Corp., 11th Cir., No. 09-11143, 6/12/09).

A $30 million criminal fine in the case against two lawyers accused of bilking their clients in connection with the diet drugs litigation has been affirmed.  (U.S. v. Gallion, E.D. Ky., No. 2:07-39-S-DCR, 6/17/09).

ADL

Exxon to Bear Its Own Costs in Punitive Damages Case

BNA Law Week reports that the 9th Circuit has held that each party must bear its own costs in the Exxon punitive damages litigation. (Baker v. Exxon Mobil Corp. (In re Exxon Valdez), 9th Cir., No. 04-35182, 6/15/09).  The costs were substantial -- approximately $70 million -- mostly attributable to the bond the company had to put up.  The original award was $5 billion and it was reduced to approximately $500 million.  While the reduction was substantial, the 9th Circuit held that the results were sufficiently mixed that Exxon was not the "prevailing party" such that costs could be shifted under Fed. R. App. P. 39(a)(4) (stating that "if a judgment is affirmed in part, reversed in part, modified, or vacated, costs are taxed only as the court orders.")

ADL

President Obama Signs Tobacco Bill Giving FDA Oversight

Article on cnn.com -- Obama signs bill putting tobacco products under FDA oversight.  Here's an excerpt:

President Obama signed landmark legislation Monday giving the Food and Drug Administration new power to regulate the manufacturing, marketing and sale of tobacco.

The Family Smoking Prevention and Tobacco Control Act gives the FDA power to ban candy-flavored and fruit-flavored cigarettes, widely considered appealing to first-time smokers, including youths. It also prohibits tobacco companies from using terms such as "low tar," "light" or "mild," requires larger warning labels on packages, and restricts advertising of tobacco products.

It also requires tobacco companies to reduce levels of nicotine in cigarettes.

BGS

A Collective Solution to the Subprime Mortgage Disaster

Ray Brescia (Albany Law School) has posted an article entitled, Tainted Loans: The Value of a Mass Torts Approach in Subprime Mortgage Litigation, advocating the employment of techniques such as class actions, consolidation of related cases, and global settlements for litigation concerning subprime litigation.  The full abstract is presented below:

A poison has entered the financial bloodstream. The subprime mortgage crisis and the wider financial crisis it has spawned have caused the erosion of trillions of dollars in wealth, the destruction of whole communities and the dislocation of millions of homeowners. Yet, unlike in other situations where toxic products have caused widespread harm, to date, we have not seen an avalanche of litigation, large jury awards, massive settlements compensating victims and financial ruin for the distributors of those products. Some of this is changing, however. Litigation arising out of the present financial crisis is hitting the courts, including suits alleging discrimination in the proliferation of subprime mortgages, securities litigation, and claims under state unfair trade practices laws and common law fraud principles. Courts may soon be inundated with these cases and will need effective tools for handling them.

With some exceptions, the litigation presently underway is an incoherent collection of random cases, however. If we view the subprime mortgage crisis and the financial crisis that has followed as the result of the proliferation of toxic products, a mass tort approach to the subprime mortgage disaster would seem inevitable. Such an approach would include utilization of the following techniques: class actions; consolidation of related cases; global settlements; and aggregation of factual, liability and damages assessments. This article makes the case that subprime litigation should adopt the techniques utilized in mass torts cases to make the prosecution of such litigation more efficient, comprehensive and effective, while bringing those most responsible for the present financial crisis to justice. It is argued that these techniques are best suited to achieve what I identify as goals for a legal response to the financial crisis: reducing the number of foreclosures; correcting for past illegality in the mortgage market; uncovering and spreading information about the presence of such illegality; promoting the modification of outstanding mortgage loans; strengthening and expanding voluntary efforts to overcome past abuses in the market; preserving home values; and complementing legislative and regulatory efforts to improve oversight of financial markets. The article also concludes that a mass torts approach in the subprime litigation context is superior in terms of meeting these goals when compared to other potential legal responses: i.e., individual litigation, individual bankruptcy, regulation, voluntary efforts and social insurance.

WBR

Sherman on Aggregate Litigation

Edward Sherman (Tulane) one of the most experienced scholars in the area of complex litigation has posted "An MDL Model for Resolving Complex Litigation if a Class Action Is Not Possible" on SSRN.  The piece was published in Tulane Law Review (2008).  Here is the abstract:

This article reviews the origins and development of multidistrict litigation before proceeding to examine its ability to take the place of class actions for the resolution of complex litigation. After noting that class actions are increasingly unavailable, particularly in pharmaceutical products liability cases, the article explores the management of the In re Vioxx Products Liability Litigation MDL. The article concludes that the MDL model can allow for the efficient resolution of complex litigation where a class action is not available, but creative management by the MDL transferee court is crucial. Highlighted are the use bellwether trials and the global settlement across jurisdictional lines, crafted by counsel in both federal and state courts and blessed and overseen in its execution by the MDL court. Professional ethics issues regarding requiring opting-in plaintiffs' attorneys to urge their clients to participate in the global settlement and, if not, to withdraw, are discussed. The growing use of multidistrict transfers of discreet litigation to a single court in various states is examined. Finally, the article calls for Congress to enhance the powers of MDL courts and to learn from the experience of the states and district courts that have experimented, often on an ad hoc basis, with the MDL model.

ADL