Saturday, December 29, 2007
Professor Lester Brickman (of Cardozo) commented recently in the Wall Street Journal that the Department of Justice has given doctors and lawyers a "free pass" "to commit massive tort fraud, exceeding $30 billion in the past 15 years." Here's an excerpt:
But it now appears as if neither this U.S. Attorney's Office nor the parent Department of Justice is going to prosecute mass tort fraud. Six months ago there were signs that Justice was moving forward on some key cases involving one or more of the litigation doctors. Now, unfortunately, that activity appears to have all but ceased.
The dimensions of this fraud are stunning. An asbestos screening of 1,000 potential litigants generates about 500-600 diagnoses of asbestosis. If these same occupationally exposed workers were examined in clinical settings, approximately 30-50 would be diagnosed with asbestosis. The total take for "excess" asbestos diagnoses is more than $25 billion, of which $10 billion has gone to the lawyers. More billions for bogus claims in the diet drug (fen-phen) and silicone breast implant litigations can be added to this bill.
A comparative handful of doctors and technicians are responsible for the vast majority of bogus medical tests and diagnoses. To indict and prosecute those responsible would require testimony from other doctors that the mass-produced diagnoses cannot have been rendered in good faith.
To be sure, doctors can differ in reading X-rays or making a diagnosis. But when a doctor has been paid millions of dollars to produce 5,000 or even 50,000 diagnoses in the course of mass-tort screenings -- and when panels of experts have found the vast majority of these to be in error -- the most compelling conclusion is that the diagnoses were "manufactured for money."
Prosecutors on the federal and state level are nonetheless concerned that such a "battle of the experts" will raise reasonable doubt in the minds of juries, and so they decline to prosecute these doctors, let alone the lawyers who hired them. This decision, however, gives the doctors a special dispensation to commit fraud.
Peter Lattman responded on the Wall Street Journal's Law Blog.
Friday, December 28, 2007
I wanted to alert our readers to a very interesting post on the Drug and Device Law blog on epidemiology, general causation and specific causation. How to harness epidemiology to decide cases in mass torts is one of the most important questions in the field.
The BNA Class Action Reporter reports that a Minnesota Court of Appeals ruled that "a federal cigarette labeling law
does not preempt state-law claims that representations about "light"
cigarettes were fraudulent." See Dahl v. R.J. Reynolds Tobacco Co., Minn. Ct. App., No. A05-1539, 12/4/07. The court followed the First Circuit which held in Good v. Altria Group, Inc., 501 F.3d 29 (1st Cir. 2007) that the Federal Cigarette Labeling and Advertising Act does not preempt state law claims. It diverged from the Fifth Circuit, which held in Brown v. Brown & Williamson Tobacco Corp., 479 F.3d 383 (5th Cir. 2007) that such claims are preempted.
Wednesday, December 26, 2007
In In re Bridgestone/Firestone Products Liability Litigation, 333 F.3d 763 (7th Cir. 2003) (Bridgestone/Firestone II), the 7th Circuit denied certification of a nationwide class action and held that this decision was binding -- that is, absent class members could not refile this national class action in another court to obtain certification.
What happened next? You might predict nothing. But that is not the case. Instead, the litigation was settled in state court in Beaumont Texas. You can see a short description in this article that appeared in the Texas Lawyer, reprinted in Law.com. The unpublished opinion approving the settlement can be found on Westlaw: Shields on behalf of herself and all others similarly situated v. Bridgestone/Firestone, 2004 WL 546883 (Dist. Ct. Tx. 2004).
There are a lot of ways to read this chain of events. Consider the following. The Class Action Fairness Act (CAFA) (which was passed after the events described above) was supposed to be responsive to concerns about certain state courts granting certification of class actions with minimal oversight. It purported to solve this problem by giving jurisdiction to the federal courts of class actions over a certain size. But when plaintiffs and defendants are both seeking certification, jurisdictional solutions like CAFA are unavailing because nobody is going to remove the case to federal court. So does Bridgestone/Firestone II have more bite after CAFA?
Addendum: Since Beaumont is sometimes referred to as a "judicial hellhole", this article by Adam Liptak of the NY Times might be of interest (h/t TortsProf Blog). Liptak analyzes a new report by the American Tort Reform Association claiming to "rank" judicial hellholes, albeit not empirically.
“We have never claimed to be an empirical study,” said Darren McKinney, a spokesman for the association. “It’s not a batting average or a slugging percentage. It’s no more or less subjective than what appears in The New York Times."
If they actually did an empirical study, that would be worth reading. The use of anecdotes in policy analysis is extremely misleading. Not necessarily more misleading than the abuse of statistics can be, but perhaps less amenable to reasoned counter-argument and, to the extent that is true, more pernicious as a basis for policy making. My favorite example of the moment of this problem is jury verdicts, which are so often reported as extraordinarily and perhaps offensively large. But in fact studies consistently show that civil juries and judges agree approximately 80% of the time. When they disagree, they split more or less evenly in favor of defendants and plaintiffs. For more on this see Neil Vidmar and Valerie P. Hans' new book American Juries: The Verdict, a follow up to their excellent Judging the Jury, which presented the data in a very balanced and thoughtful way.
Saturday, December 22, 2007
As an interesting follow-up to Howie’s November 10th post on the Vioxx Settlement, on December 17, 2007, some plaintiff’s lawyers filed an emergency motion requesting freedom to keep some of their clients outside the settlement. The settlement currently requires plaintiffs’ attorneys to recommend the settlement to 100% of their eligible clients and for 85% of plaintiffs to accept the deal.
The New York Times reports:
In an emergency motion to Judge Eldon E. Fallon of Federal District Court in New Orleans, the plaintiffs’ lawyers said the provision would prevent them from offering the best independent judgment for each client. Agreeing to the provision might open them to future lawsuits from disgruntled clients, they said.
"The settlement agreement, which allows Merck to dictate the advice a lawyer will offer, is improper in all states," the lawyers wrote in the motion, which was filed Monday.
Grant Kaiser, a Houston lawyer who represents about 1,800 plaintiffs, filed the motion. It was signed by 11 other firms that collectively represent another 4,200 plaintiffs — about 10 percent of all the people who have sued Merck over Vioxx. Mr. Kaiser declined to comment on the motion.
Merck and several large plaintiffs’ law firms agreed to the settlement last month as a way to resolve more than 50,000 claims from people who assert that Vioxx, a painkiller withdrawn from the market in 2004, caused them to suffer heart attacks and strokes. Merck had won most of the 18 suits that reached juries in both state and federal court.
The requirement that lawyers agree to recommend the deal to all their clients — and withdraw from representing those who do not agree — is a crucial part of the agreement.
Plaintiffs’ attorneys contend in their motion that:
Section 22.214.171.124 of the Settlement Agreement sets out one of these responsibilities. It requires each Enrolling Counsel to advise 100% of the lawyer’s eligible clients to participate in the Program and to affirm that the lawyer has done so in the Enrollment Form. No states’ law allows a lawyer to make a contractual commitment like this. Rule 2.1 of the ABA Model Rules of Professional Responsibility, a version of which is in force in every jurisdiction, requires every lawyer to give every client the benefit of the lawyer’s independent professional judgment and to render candid advice. The Restatement (Third) of the Law Governing Lawyers also recognizes his duty. The essence of independent professional judgment is that each client must be counseled accordingly. As the ABA comment to Rule 2.1 puts it: "A client is entitled to straightforward advice expressing the lawyer’s honest assessment." ABA Annotated Model Rules of Professional Conduct, Rule 2.1, Comment  (Fifth Ed.).
Accordingly, the emergency motion requests the following relief:
1. A declaration that the Settlement Agreement empowers the Court to modify provisions that are prohibited or unenforceable because they conflict with state bar rules in Texas and other states.
2. A revision of PTO 31 excising the affirmation relating to settlement participation from the Registration Affidavit and agreement to all terms of the settlement;
3. A declaration that § 126.96.36.199 is prohibited and unenforceable under the state bar rules of all states because it prevents lawyers from giving clients the benefit of their independent professional judgment and candid advice, as required by Rule 2.1 of the Model Rules of Professional Conduct.
4. A declaration that § 188.8.131.52 is prohibited and unenforceable under the state bar rules of all states because it impermissibly restricts the right to practice law, in violation of Rule 5.6 of the Model Rules of Professional Conduct.
5. To set a date certain by which final settlement payments shall be made and/or make other similar equitable provisions.
6. To declare that notwithstanding any provision of the Settlement Agreement purporting to require an assessment of "up to 8%," that as to counsel that entered contracts in compliance with PTO 19, those contracts shall be honored, binding, and controlling as to any assessment.
The docket number is 2:05-md-01657-EEF-DEK and the motion is document number 13105-2.
Monday, December 17, 2007
After touting its $4.85 billion Vioxx settlement as "a good and responsible agreement," Merck plans to continue with experimental cholesterol and obesity drugs. Anacetrapib, a developing cholesterol drug, is similar to Pfizer’s drug, torcetrapib, which failed after a study demonstrated increased death risks. Merck plans to submit its obesity drug, taranbant, for FDA approval next year. A similar drug called rimonabant, produced by Sanofi-Aventis, was rejected by the FDA earlier this year for psychiatric side effects. Wall Street Journal has a report (subscription required). The Wall Street Journal also reports that the FDA rejected Merck’s recent bid to sell Mevacor, a cholesterol drug, over the counter. Here’s an excerpt:
A Food and Drug Administration advisory committee, for the third time, rejected Merck & Co.'s bid to sell the cholesterol drug Mevacor without a prescription, saying it wasn't clear that consumers would use the medication correctly.
The 10-2 vote leaves little hope Merck can win regulatory approval. It is also a setback for GlaxoSmithKline PLC, which has bought the U.S. over-the-counter marketing rights to the drug. The decision is the latest sign of the regulatory hurdles blocking such switches, at least when a medication treats a complicated condition without obvious symptoms. The FDA typically follows the advice of its expert panels.
Wednesday, December 12, 2007
An article on cnn.com -- Merck recalls kids' vaccine -- discusses Merck's recall of 1.2 million doses of child Hib vaccine, because of contamination risks and possibility of infection. The article also summarizes Merck's status in light of the proposed Vioxx settlement:
While the company took a black eye with its September 2004 withdrawal of the painkiller Vioxx due to increased risk of heart attacks and strokes, Merck has been performing well recently. On Tuesday, it gave an upbeat assessment in its annual briefing for analysts.
Five weeks ago, Merck reached a deal to settle up to 50,000 Vioxx lawsuits for $4.85 billion, an amount expected to save the company millions in trial costs.
Its stock price has more than recovered from its post-Vioxx slump, a two-year-old restructuring plan is going well and profits are up. For example, Merck posted a 62 percent increase in its third-quarter profit as revenues jumped by double digits
Article in the Wall Street Journal -- Product-Safety Pacts Put Greater Burden on Beijing, by Jason Leow and Jane Zhang. Here's an excerpt:
The Bush administration signed product-safety agreements with China that place a greater burden on Beijing to regulate exports of food, animal feed, drugs and medical devices.
The agreements require exporters of those products to register with the Chinese government, which will issue certificates stating they meet U.S. Food and Drug Administration standards. The agreements are aimed at closing some loopholes that let Chinese companies export unsafe food, drugs and other products.
Mike Leavitt, secretary of health and human services, signed the two agreements yesterday with Chinese officials in Beijing as part of three days of trade talks with China. "The agreements satisfy our firm principle that any country that desires to produce goods for American consumers must do so in accordance with American standards of quality and safety," he said in a statement.
The agreements cover such products as olives and canned mushrooms, pet food, raw materials for processed foods, farm-raised fish, drugs and medical devices. Drugs covered include: human-growth hormone; oseltamivir, an antiviral drug; and gentamicin sulfate, an antibiotic. The limited list of covered products is an initial step, U.S. officials said, suggesting Washington wants to gain confidence in the Chinese system before expanding the program.
Tuesday, December 11, 2007
This article in the thelawyer.com tells that story of UK firms that are looking to obtain funding for litigation through hedge funds. (H/t Drug and Device Blog). This development is of a piece, it seems to me, with the proposal to develop class actions in the UK and Europe. It poses interesting questions about the extent to which quasi-private ex post regulation should be encouraged in society and raises the concern of the separation of ownership from control of lawsuits that has been the focus of so many judicial opinions and class action scholarship.
Sunday, December 9, 2007
As I previously mentioned, Southwestern Law School is hosting a symposium entitled, "Perspectives on Asbestos Litigation," on Friday, January 18, 2008. Here is a copy of the brochure Download lr_perspectiveinasbestoslitigation.pdf, which lists the exceptional speakers and panels that will occur throughout the day. Hope you can join us. We're overjoyed at the remarkable speakers who have agreed to participate.
Saturday, December 8, 2007
Magistrate Judge James Orenstein approved a $3.1 million attorney’s fee award to NYU Professor Burt Neuborne for his work in representing the Holocaust victims in the Swiss bank litigation. Neuborne is scheduled to speak on a panel about Representation and Conflicts of Interest in Class Actions and Other Group Actions next week at the Globalization of Class Actions Conference in Oxford, England. New York Law Journal has more information on the attorney’s fee award. Here’s an excerpt:
Attorney Burt Neuborne will receive $3.1 million in fees for representing Holocaust victims in litigation that resulted in a $1.25 billion settlement with Swiss banks.
Eastern District of New York Judge Frederic Block said Thursday that Neuborne deserved the payout for work he did as lead settlement counsel in rendering post-settlement services beginning in January 1999. His previous work on behalf of those who claimed that the Swiss banks collaborated with the Nazis had been pro bono.
The decision was the latest in a series of Neuborne's application for fees, which had been vehemently opposed by attorney Robert A. Swift of Swift Kohn & Graf and others who claimed Neuborne had volunteered to perform post-settlement work for free.
Swift, who represented the class, and Samuel J. Dubbin, a Florida lawyer who filed objections to the award on behalf of 17 individual class members and the Holocaust Survivors Foundation USA, later withdrew those objections after Magistrate Judge James Orenstein issued the report and recommendation ultimately endorsed Thursday by Block.
"I'm relieved," Neuborne said Thursday. "It was an unpleasant process and I'm glad it's over."
Neuborne had set the lodestar fee $5.7 million, an amount he said represented 8,178.5 hours at a rate of $700 per hour. He then said he deemed it appropriate, in keeping with the practices of special master and the "unique nature of the litigation," to discount that fee by about 25 percent to $4.1 million.
Friday, December 7, 2007
The Federalist Society has posted a webcast of Professor Richard Epstein discussing the recent U.S. Supreme Court case, Riegel v. Medtronic, which addresses possible preemption of state tort suits for FDA-approved medical devices. Epstein says the Court might rule 9-0 in favor of preemption.
The Wall Street Journal has an article -- Rulings Bolster Insurers, by Liam Plevin and Peter Lattman -- that discusses the tide of pro-insurance appellate rulings in the Katrina litigation. The Journal's Law Blog also celebrates State Farm's outside counsel, Sheila Birnbaum of Skadden Arps, as the Law Blog Lawyer of the Day.
I worked with Sheila Birnbaum while I was at Skadden, and can second the Law Blog's comments. Mass tort litigation remains an unsettled, developing phenomenon, and Sheila's deep understanding of the issues, born of her many years as a law professor at NYU and Fordham, is an invaluable asset -- as is shown particularly by her mastery of appeals and complex negotiations. In the continuing history of mass torts, now several decades old, Sheila should surely be seen as among the handful of most influential lawyers.
The recent settlement agreement in the California state court class action against Ford Motor Company is available through the Superior Court of California’s website. The system doesn’t provide a direct link, but if you follow this link, then click "other," and enter JCCP 4266/4270, the November 29th agreement is currently the sixth document listed. Although I haven’t had a chance to read the full 273 pages, the pertinent compensation and attorneys’ fees are described in paragraph 34. Paragraph 34(e), covering attorneys’ fees, reads as follows:
e. Plaintiffs and Class Counsel may apply to the Court for an award of reasonable attorneys' fees and expenses incurred by them in litigating the Related Actions. Ford agrees to pay an award of attorneys' fees and expenses that is determined by the Court to be reasonable, does not exceed an aggregated total of $25 million for fees and expenses incurred in litigating the Related Actions, and is included in the Final Order and Judgment as of the Effective Date of Settlement. This amount includes any award for attorneys' fees in connection with securing final approval of this Agreement by the Court at the Fairness Hearing. Ford does not agree to pay for any additional attorneys' fees or expenses that may be incurred by or on behalf of Plaintiffs, the Settlement Class, or any Settlement Class Member after the date on which this Agreement is approved by the Court in, and by entry of, the Final Order and Judgment at or following the Fairness Hearing. Class Counsel and Plaintiffs agree not to seek, accept, or enforce, on behalf of themselves, any others, or any combination of themselves and any others, any award of attorneys' fees and expenses that in the aggregate exceeds $25 million. In no event shall Ford be obligated to pay Plaintiffs, Settlement Class Members, Class Counsel, or other counsel in aggregate any attorneys' fee, cost, or expense in any amount greater than the amount specified in this Paragraph for any activity or cost related to any of the Related Actions, the negotiation or implementation of this Agreement, or the allegations that form, or could have formed, the basis of any of the Related Actions, or any combination of the foregoing. Failure of the Court to approve attorneys' fees and expenses of the full amount requested by Plaintiffs or Class Counsel, or approval by the Court of any amount of attorney fees and expenses less than the amount sought by Plaintiffs or Class Counsel, shall not affect any of the other terms of this Agreement. Ford shall deliver to Class Counsel payment of the final award of attorneys' fees, costs and expenses no later than ten (10) days after the Effective Date of Settlement. Ford, in its sole discretion, and upon consultation with Class Counsel, may agree to commence issuance of Certificates and/or Settlement benefits and/or payment of Court-awarded attorneys' fees, costs and expenses before the Effective Date of Settlement.
Thursday, December 6, 2007
Point of Law flags a recent story in the New York Sun -- Judge Lands at Center of a New York Legal Mystery, by Joseph Goldstein -- which chronicles the use of the "related-case" designation by plaintiff's lawyers to maneuver their cases before Judge Weinstein in the Eastern District of New York.
I first encountered plaintiffs' use of this device as a lawyer for defendants in the Simon II tobacco case, which plaintiffs had put before Judge Weinstein as a "related case." A court might justifiably want to keep related cases before a judge with related cases -- there's an argument that it's inefficient to educate multiple judges about the same complex factual and legal issues. But the devil is in the details. Take a look at the Eastern District of New York civil action cover sheet: Download js44-45.pdf . The cover page has a section asking whether there are "RELATED CASE(S) IF ANY" and includes a line for Judge and Docket Number. The plaintiff then has the ability to list any case and judge on the line, and then I believe the case is automatically routed to that judge.
The problem is that there may be multiple judges in a district who have cases that are arguably related to the plaintiff's case. The plaintiff might list whichever judge the plaintiff believes is most inclined to the plaintiff's position -- a system that biases judge selection in favor of plaintiffs. And then as the article notes, the defendant may be held to have no standing to challenge the "related case" judge selection by plaintiffs, on the remarkable grounds that it is an administrative determination when in fact the determination has been made not by an administrator or a judge, but by opposing counsel. Imagine that the first judge plaintiffs get in a mass tort is one who they don't like; then when filing another case, they list no related case, and hope for another particular judge; finally, once the desired judge is obtained, then all future cases are checked as "related" to that cases before that desired judge only.
A better system would be for plaintiffs lawyers to be informed that they are ethically bound to list every case and judge that counsel is aware the case might be reasonably considered related to. If the "related case" box is checked, the court -- through administrators or a judge committee -- should undertake an independent review of whether any other cases and judges are implicated. (For example, court administrators could circulate a weekly "related case" email to clerks, asking if their judges have any cases that are related.) If several judges are involved in the cases, then the case should be randomly assigned among those judges -- unless the court makes its own decisions to centralize all cases before a single judge for administrative reasons. Case assignment to judges is a decision that should be made by the court, not the litigants -- and certainly not only one type of litigant.
Kevin Clermont and Theodore Eisenberg have posted their new paper, CAFA Judicata, on SSRN. They presented their findings at the University of Pennsylvania’s CAFA symposium last weekend. Here’s the abstract:
The Class Action Fairness Act has taken on its real form through construction by the federal judges. That form emerges in this empirical study of judicial activity and receptivity in regard to the Act. Our data comprise the opinions under the Act published during the two and a half years following its enactment in 2005.
CAFA has produced a lot of litigation in its short life. The cases were varied, of course, but most typically the resulting published federal opinion involved a removed contract case, with the dispute turning on the statute's effective date or on federal jurisdiction. Even though the opinions shed some light on issues such as jurisdictional burden and standard of proof, most of the judicial activity was socially wasteful litigation. It emphasized transitional efforts to interpret sloppily drafted provisions.
More interesting, we saw wise but value-laden resistance by judges to CAFA, as they interpreted it in a way to dampen the early hopes of overly enthusiastic removers. Regression analysis confirms the suggestion that one can derive from percentages of cases decided in certain ways. With the exception of Republican male judges, the federal judiciary has not warmly embraced the statute.
According to an article in the L.A. Times -- Lawyer admits bribing judge, from the Associated Press -- lawyer Timothy Balducci has pleaded guilty to attempting to bribe a Mississippi judge in the Katrina insurance litigation. Dickie Scruggs, however, has pleaded not guilty.
Wednesday, December 5, 2007
Plaintiffs' mass tort lawyer Louis Robles was sentenced yesterday to the maximum 15 years for stealing settlement money from clients he represented in asbestos litigation. Here's an excerpt from the Sun Sentinel:
A Miami attorney who admitted stealing more than $13 million from thousands of clients suffering from asbestos-related illnesses was sentenced Tuesday in Miami federal court to 15 years in prison.
Louis Robles, 59, once known as the "King of Torts," pleaded guilty in September to three counts of mail fraud, each carrying a possible five year sentence. U.S. District Judge Alan Gold, who had rejected an earlier plea agreement he thought was too lax, sentenced Robles to the maximum prison term.
Between 1989 and 2002, Robles collected more than $164 million on behalf of roughly 7,000 clients suing asbestos companies. In the mid-1990s, he began dipping directly into settlement proceeds without his clients' knowledge to fund an extravagant lifestyle, prosecutors said.
Jeff Tamraz, a plaintiff in the Welding Fume Product Liability Litigation MDL in the Northern District of Ohio, won a $20.5 million verdict today, according to this news release. The litigation involves claims that manganese fumes from welding rods cause Parkinson's Disease. Welding rod defendants had won the vast majority of cases to go to trial, and an August 2007 industry report on the litigation reported that the lawsuits were on the decline. Whether today's verdict will reinvigorate the litigation or encourage settlement of other cases remains to be seen.
Clarification: The $20.5 million reflects total damages; the jury awarded $17.5 million to Tamraz plus $3 million to his wife.
The Supreme Court heard oral arguments yesterday in Riegel v. Medtronic (06-179), the transcript is available on the Supreme Court’s website. Riegel presents the question of whether federal law preempts state lawsuits against FDA approved medical devices. The Riegels sued Medtronic, the manufacture of a balloon catheter, which burst during the dilation of Mr. Riegel’s coronary artery. The case raises federalism issues, asking whether federal agencies or state governments should make these types of health and safety decisions. Commenting on the case, the New York Times reports:
[I]n 2004, the Bush administration reversed the government’s position and began to take the manufacturers’ side, as it did before the justices on Tuesday in an argument by a deputy solicitor general, Edwin S. Kneedler. Explaining the change in policy, Mr. Kneedler said that in 2004, the F.D.A. "recognized that there would be a serious undermining of F.D.A.’s approval authority and its balancing of the risks and benefits if a state jury could reweigh those."
A question in this case, Riegel v. Medtronic Inc., No. 06-179, is whether the court will give the government’s position the usual deference it accords an agency’s interpretation of its basic statute.
The federal law at issue is the Medical Device Amendments of 1976, which in its section on preemption bars states from imposing on medical devices "any requirement which is different from, or in addition to, any requirement applicable under this chapter."
Beginning with a case in 1992 about warning labels on cigarette cartons, the Supreme Court has treated the word "requirement" as including not only obligations directly imposed by state laws and regulations, but also the award of damages by state tort systems.
For a jury to say, "Well, gee, it should have been done differently in this particular situation" is the equivalent of imposing a requirement in addition to federal approval, Theodore B. Olson, the lawyer representing Medtronic, told the justices.
"The F.D.A. is the right place for these decisions to be made and this balancing process to occur," Mr. Olson said, adding that while "nothing is perfectly safe," it would harm consumers to "discourage the marketing of products that might save our lives." Medtronic no longer makes the balloon catheter, called Evergreen, involved in the case.
In other FDA-related news, several amicus curiae filed their briefs in Warner-Lambert v. Kent (06-1498) on November 28, 2007. It doesn’t appear that the Supreme Court has scheduled oral argument yet. SCOTUSblog provides an overview:
Six years ago, in Buckman v. Plaintiffs’ Legal Committee, the Supreme Court held that state-law claims alleging that the manufacturer of orthopedic bone screws made fraudulent representations to the Food and Drug Administration ("FDA") were impliedly preempted by the Federal Food, Drug, and Cosmetic Act. On Tuesday, the Court granted certiorari in No. 06-1498, Warner-Lambert Co. v. Kent, to clarify the scope of its holding in Buckman: specifically, whether a state product liability statute that creates a general "safe harbor" from liability for FDA-approved drugs but carves out an exception for cases in which the approval was obtained through fraud is also preempted.
Under Michigan law, an FDA-approved drug cannot be deemed defective or unreasonably dangerous for product liability purposes unless the approval was obtained through fraud. Pursuant to this state statute, the respondents – all Michigan citizens – filed suit in Michigan state court, alleging that they were injured by Rezulin, a diabetes drug approved by the FDA but ultimately withdrawn from the market by Warner-Lambert. The case was removed to federal district court in Michigan and then subsequently transferred to the Southern District of New York by the Judicial Panel on Multidistrict Litigation. Warner-Lambert moved for judgment on the pleadings, arguing that under Buckman the claims were impliedly preempted, and the district court agreed.