November 8, 2007
Merck Agrees to $4.85 Million Vioxx Case Settlement
According to a Friday New York Times article by Alex Berenson, Merck has agreed to a $4.85 billion settlement of 27,000 lawsuits by people claiming injury to themselves or family members because of the use of the drug Vioxx. It is one of the largest settlements ever in civil litigation.
$60 Million Ford Explorer Rollover Verdict Is Overturned
The Florida Court of Appeals overturned a $60 million dollar verdict and ordered a new trial in a case against Ford based upon an allegatino that an Explorer SUV was defectively designed because it was too prone to rollovers. Seventeen-year-old Lance Hall was ejected from the vehicle and killed after the driver fell asleep and lost control of the vehicle which then rolled over four times. His parents filed suit for the death claiming that defects in the vehicle's design caused it to roll over instead of skid. The appellate court found that the trial judge had erred by allowing testimony alluding to hundreds of Ford Explorer accidents without first determining that those other accidents bore a substantial similarity to the one in which Hall died. See Billy Shields' story for Daily Business Review.
November 3, 2007
U.K.'s New Corporate Manslaughter Act
The Corporate Manslaugher and Corporate Homicide Act 2007 has been enacted in the United Kingdom under which product manufacturers whose products cause a person's death as a result of some failure to manage the product's quality and safety may face criminal prosecution. Section 1 (1) of the Act provides that an organization is guilty of an offense if "the way in which its activities are managed or organised (a) causes a person's death, and (b) amounts to a gross breach of a relevant duty of care owed by the organisation to the deceased." The Act goes on to specify that a manufacturer will be guilty only if "the way in which its activities are managed or organized by its senior management is a substantial element in the breach." While the Act defines "senior management" in section 1(4)(c), it will be necessary to determine on a case-by-case basis which individuals fall within this definition and whether their actions are a "substantial element" in the breach of duty giving rise to liability.
A company found guilty under the Act is subject to unlimited fines and, possibly, remedial orders requiring the company to take specific steps to remedy any deficiency in its operations, organisation or management that may have led to the death.
This significant piece of legislation goes far beyond pre-existing U.K. law which only provided modest sanctions against product manufacturers under product safety regulations and well beyond any U.S. law. This new legislation creates a criminal offense and expressly targets product manufacturers, creating a real risk of prosecution of companies that put dangerous products into the marketplace.
The legislation does not provide for the prosecution of individual officers or managers, only of the company itself. However, any investigation leading to a prosecution will inevitably focus on the activities of senior managers in the company and quite possibly submit their decisions and behaviors to intense public scrutiny.
November 2, 2007
Drug Research Firm Sued for Negligence and Fraud
A federal judge refused to dismiss negligence and fraud claims against a research firm that allegedly conspired with a drug manufacturer to mislead the Food and Drug Administration. As a consequence, the plaintiff in Wawrzynek v. Statprobe, Inc., 2007 WL 3146792 (E.D. Pa. 2007) alleges, the FDA approved a drug used during her spinal surgery that was ineffective, caused complications, required a second surgery and left her permanently disabled. The complaint alleges that Statprobe conspired with the Gliatech, the drug manufacturer, to manipulate study data that formed the basis for the FDA's conditional approval of the drug. Gliatech later plead guilty to a number of federal criminal charges including submission of a false and misleading report regarding a medical device.
U.S. District Judge Gene Pratter rejected Stratprobe's argument that it owed no duty to the plaintiff, noting that the research lab "appears to have assumed a role in the U.S. clinical study . . . that involved much more than simple, remote 'number crunching.' Specifically, in light of the fact that [the defendant] knew that ADCON-L had a tendency to cause CSF leaks, Mrs. Wawrzynek cannot be said to be out of the foreseeable orbit of potential planitffs . . . ."
Statprobe also argued that Wawrzynek's claims were pre-empted because they amounted to a fraud on the FDA claim of the kind barred by the U.S. Supreme Court's 2001 opinion in Buckman Co. v. Plaintiff's Legal Committee. Judge Pratter ruled, however, that the plaintiff's claim fell within the exception to the Buckman rule carved out in the concurring opinion in that case. "Where prior to the state litigation, the FDA determines that a manufacturer committed fraud and had taken steps to remove the harm-causing product from the market, the state-law fraud claim would not 'depend upon speculation as to the FDA's behavior in a counterfactual situation, but would be grounded in the agency's explicit actions.' The claim would therefore be permissible and, indeed, 'would supplement and facilitate the federal enforcement scheme.
November 1, 2007
CPSC Reform Bill Approved By Senate Commerce Committee
The Senate Conference Committee has approved comprehensive legislation to improve the effectiveness of the Consumer Product Safety Commission despite objections from the White House and acting head of the CPSC that the legislation was unnecessary. The proposed legislation would more than double the agency's budget by 2015 primarily to increase staffing levels. It would also dramatically increase the cap on fines under the act from $1.8 million to $100 million, give the agency greater authority to order product recalls, and impose independent third-party testing requirements for children's products. See the story in BNA's Product Liability Daily.