Monday, December 7, 2009
On December 1, 2009 Judge Weinstein issued a ruling granting partial summary judgment to the pharma company Eli Lilly in the lawsuit by the state of Mississippi concerning Zyprexia. The opinion can be found here. The folks over at Drug and Device Law blog discuss the opinion in which they colorfully state "Pigs Get Fat, Mississippi Got Slaughtered."
The opinion is long, but it beautifully lays out the issues of aggregate proof in modern litigation. Judge Weinstein's discussion of the caselaw concerning the Individual Proof Rule is masterful. (slip op 64 - 96). Although Weinstein notes the certification of a Third Party Payor's class action based on aggregate proof (253 FRD 69 (EDNY 2008)), its survival is in doubt because of "the majority of the Courts of Appeals' hostility to the use of aggregate proof...." (slip op at 96).
The Drug and Device Law folks also rightly point to Weinstein's characterization of three "types" of class actions (slip. op at 65):
1. Rule 23 Class Actions - this is what we mean when we say class action, a civil action that can be certified, to which Rule 23 protections apply and which binds all absent class members that do not opt out.
2. Quasi Class Actions - a new category that really ought to be called aggregate litigation. Not a certified class action but a collection of similar cases through an MDL that are resolved together.
3. Structural Class Actions - where an individual plaintiff brings claims based on the underlying claims of large numbers. In this case, the state of Mississippi was bringing claims for reimbursements it provided to thousands of individual patients for their medical costs incurred as a result of their use of Zyprexia. Weinstein explains "In effect, Mississippi's individual claim is structured on the foundation of many thousands of conceptually separate claims, coordinated and aggregated by the State for purposes of recovering a portion of its overall Zyprexa-related costs..."
Quasi class actions, in my view, is really another way of saying aggregate litigation. There's nothing really new about it and there's nothing binding about it as a formal matter. Informally (and that's the quasi part) it can probably feel pretty binding to the plaintiffs. The lengths to which the lawyers in Vioxx went to try to bind plaintiffs and the broohaha that resulted in the legal ethics world illustrates both the non-binding and the feeling of being bound. If the ALI proposals on Aggregate Litigation became the law, that would be a different story.
The structural class actions concept brings to mind punitive damages, especially if you think punitive damages are a form of deterrence, intended to address spillover effects of defendant's conduct that is not accounted for in the compensation part of the lawsuit. See Catherine Sharkey, Punitive Damages as Societal Damages 113 Yale L. J. (2003) (unfortunately you can't download it off SSRN, the link is only to an abstract). This is the part of punitive damages that the Supreme Court was trying to carve out in Phillip Morris v. Williams, but I think conceptually that is impossible to do. On that note, interested readers may want to take a look at Richard Nagareda, Embedded Aggregation in Civil Litigation, forthcoming in the Cornell Law Review and available on SSRN.