Mass Tort Litigation Blog

Erin Glenn Busby on Wyeth v. Levine

In a Federalist Society SCOTUScast, appellate lawyer Erin Glenn Busby discusses Wyeth v. Levine, the pending Supreme Court case involving whether state tort lawsuits are preempted by FDA approval of prescription-drug labeling.

BGS

American Pipe tolling in mass torts

Interesting post yesterday at the Drug & Device Law Blog arguing that the American Pipe tolling rule does not make sense in the mass tort context, and praising Beisner and Miller for their arguments along the same lines.  In 1974, the Supreme Court held in American Pipe v. Utah that the pendency of a class action tolls the statute of limitations for the claims of the class members.  The idea was that if a class action has been filed, even if not yet certified, we don't want each class member to feel the need to file a timely individual action (or to intervene in the class action) to preserve the claim.  Rather, the individual class members should be allowed to wait and rely on the class action to protect their interests; if the class action is not certified, then the individuals can go ahead and file claims if they so choose.

Defense lawyers, seeking dismissal of potentially time-barred individual claims, have advanced a number of arguments against applying the tolling rule in mass torts:
(1) Class certification in most mass torts is a long shot, unlike some other types of class litigation.
(2) Individual claimants in mass torts rarely rely on class actions as a reason to postpone individual complaints because (a) class cert is a long shot, (b) claimants don't know whether a class action has been filed, (c) even if they know a class action has been filed, claimants with sizeable claims would file individual complaints anyway, and (d) claimants with very small (negative value) claims would not file individual complaints regardless of a class action.
(3) In mass torts, MDL and statewide centralization and consolidation procedures allow courts to handle an influx of individual claims, so a flood of individual complaints presents less of a downside than thought in 1974.

These arguments are neither new nor ready to disappear.  My former colleagues Mitchell Lowenthal and Menachem Feder made similar arguments in a 1996 article, The Impropriety of Class Action Tolling for Mass Tort Statutes of Limitations, 64 Geo. Wash. L. Rev. 532 (1996).  More recently, Judge Fallon in the Vioxx litigation acknowledged these arguments but nonetheless faithfully applied American Pipe in denying several of Merck's motions to dismiss on statute of limitations grounds.

HME

Investigation into FDA's Medical Device Approval

The New York Times reports that several dissident FDA scientists may be under criminal investigation for their role in approving high-risk medical devices. In response, they wrote a letter to President Obama stating, "It is an outrage that our own agency would step up the retaliation to such a level because we have reported [the FDA's] wrongdoing to the United States Congress. Here's an excerpt of the Times piece:

The letter is the latest escalation in a highly unusual internal battle that has been simmering for nearly a year within the agency’s device division. The nine scientists have banded together and charged that agency officials have acted illegally and that patients are routinely put at risk from high-risk medical devices that are approved for sale even though manufacturers have never proved that the products are either safe or effective.

The scientists complained in May to Dr. Andrew C. von Eschenbach, who was then the F.D.A. commissioner, and the agency began an internal review that continues. Dissatisfied with the pace and results of that review, the scientists wrote a letter to Congress in October pleading for an investigation, and the House Committee on Energy and Commerce announced in November that it would begin one, which also continues.

Three weeks ago, the scientists wrote a similar letter to the president-elect’s transition team. And on Monday, the scientists wrote another letter to President Obama.

Confidential agency documents, which include both e-mail messages and medical reviews detailing the internal dispute were provided to The Times.

It can be a crime for agency employees to reveal documents or information considered confidential by companies seeking agency approval for medical products.

Some of the scientists’ claims about the agency’s device approval process were echoed in a report released two weeks ago by the Government Accountability Office that was also critical of the agency’s device center.

ECB

WLF program on MDL for mass torts

The defense-oriented Washington Legal Foundation is sponsoring a live webcast entitled Litigate the Torts, not the Mass:  Improving the Multi-District Litigation Process, featuring John Beisner and Jessica Davidson Miller of O'Melveny & Myers.  The webcast will occur Friday, Jan. 30, 2009, at 10:00 a.m.

HME

The Causation Problem in Chemical Exposure Cases

Whereas some toxic substances have signature diseases (asbestos and tobacco come to mind) in other cases causation is difficult for impossible to prove, creating serious legal problems for workers and others exposed to the substances seeking compensation through the tort system.  A New York Times article by Felicity Barringer ("Exposed to Solvent, Worker Faces Hurdles") from this past Saturday (January 24, 2009) details the story of a worker trying to obtain compensation for workplace exposure that he believes caused his Parkinsons.  While a 2008 study showed increased risk of disease from exposure to the chemical at issue, that does not necessary translate into legal causation for purposes of worker's compensation and/or tort suits. 

The article demonstrates how difficult it is to bring tort claims arising out of exposure to various toxic chemicals.  As one lawyer stated:

“Most workers who have an occupational disease don’t think they have an occupational disease,” Mr. Metzger said, adding that “the few who might think it are mostly not successful” in getting compensation “because there isn’t a robust body of literature to support the claim.”

This problem demonstrates the interrelationship between our tort system, worker's compensation system, environmental, insurance and healthcare systems.  Because we have a weak insurance and healthcare regime and weak regulations, many turn to the tort and worker's compensation systems to support workers who are harmed.  But these systems are not well structured or suited to address the problems they are being asked to solve.  The currect state of causation doctrine is one reason why. 

ADL

Pfizer to acquire Wyeth

Pfizer and Wyeth today announced that Pfizer will purchase Wyeth for $68 billion, as anticipated.  The deal, as today's NY Times article notes, stands out in the current financial climate:

The deal not only create a pharmaceutical behemoth but would be a rarity in the current financial tumult: a big acquisition that is not a desperate merger of two banks orchestrated by the government.  It will also be the first big merger backed by Wall Street in months. While credit has been notoriously tight of late, five banks have agreed to lend Pfizer $22.5 billion to pay for the deal. Pfizer, which has roughly $26 billion in cash, would finance the remainder through a combination of cash and stock.

Every major pharmaceutical company has experienced mass tort litigation, and these two are no exceptions.  Pfizer defended the Celebrex and Bextra litigation, and earlier the Bjork-Shiley heart valve litigation.  Wyeth (formerly American Home Products) took a huge hit in the fen-phen litigation, and more recently has faced mass litigation over its Prempro and Premarin hormone replacement therapy products.

Last May, Amy Schulman joined Pfizer as its general counsel.  Before going in-house at Pfizer, Schulman headed the mass tort practice at DLA/Piper and was lead counsel for Pfizer in the Celebrex-Bextra litigation.  In December, Pfizer hired Bradley Lerman as its litigation chief.  As a partner at Winston & Strawn, Lerman defended McDonald's in the fast food litigation and worked for Phillip Morris in the Engle tobacco class action.

HME

Ethics Rules May be Tightened for Drug and Medical Device Makers

The Physician Payments Sunshine Act, a bill introduced in the Senate, is a parallel effort to that in the House to require drug and device makers to report all financial links with doctors on a federal website. Here's an excerpt from the N.Y. Times piece:

“The public is clamoring for transparency,” one of the Senate sponsors, Herb Kohl, a Wisconsin Democrat, said. The co-sponsor is Charles E. Grassley, Republican of Iowa.

The nation’s biggest hip and knee makers, including Smith & Nephew, Zimmer Holdings, DePuy and Biomet, are operating under Justice Department oversight as part of a deal to resolve allegations they gave doctors illegal inducements to use their products.

Other sectors of the device industry face continuing federal inquiries or are voluntarily taking house-cleaning measures. Much of it involves the public disclosure of information that would be mandated under the Senate proposal — the names of the doctors who work for device manufacturers as consultants, lecturers, researchers or trainers, and how much each one is paid for those services.

Under their Justice Department settlements, the hip and knee makers are already disclosing such payments on their corporate Web sites. And seeing the writing on the wall, several other large device companies, including Boston Scientific and Edwards Lifesciences, recently announced they would do so voluntarily.

Meanwhile, the device industry’s main trade group, the Advanced Medical Technology Association, said it had supported the Senate measure when it was introduced two years ago.

There is little question that battles over how much companies, doctors and medical institutions disclose about their financial ties will continue. But some experts on medical conflicts of interest, seeing the rapid fall of resistance by most major companies, say that a turning point has arrived.

ECB

Pfizer/Wyeth Consolidation?

Today's New York Times reports that Pfizer is close to purchaing Wyeth for more than $60 billion. Pfizer is already the world's largest drug company with revenues of $48 billion in 2007. Here's an excerpt:

Still, because much of Pfizer and Wyeth’s portfolios overlap, there is potential to save billions of dollars through cutting duplicative costs, analysts say.

“If Pfizer and Wyeth combine sales forces and other operations, they will have a sleeker cost structure,” said Erik Gordon, a professor at the Ross School of Business at the University of Michigan. “Most other large companies have cut just everything they can. The only way to come up with new cuts without endangering their future is to merge in a way that creates redundancies that give the companies new job-cutting opportunities.”

Two weeks ago Pfizer said it would lay off 800 researchers, and it hinted at further job cuts. Last year, it did away with more than 10,000 jobs and announced it would focus on six therapeutic areas — cancer, pain, inflammation, diabetes, Alzheimer’s disease and schizophrenia.

It remains an open question whether mergers in the pharmaceutical industry work at all. Pfizer is itself a product of a series of mergers, with mixed results. It bought Warner-Lambert, which owned Lipitor, for more than $90 billion in stock in 2000 and three years later bought Pharmacia for stock valued at $60 billion.

"Pfizer’s tried it before, and it really hasn’t worked with other firms," said Edward F. X. Hughes, a professor who teaches pharmaceutical business at the Kellogg School of Management at Northwestern University.

ECB

Peanut Plant Closes

The Associated Press reports that the peanut plant in Blakely, Georgia, The Peanut Corp. of America, has closed its doors after salmonella investigations. To date, there are reports of 486 people becoming sick and six deaths.

ECB

New Mass Tort Blog: Jackson on Consumer Class Actions and Mass Torts

Russell Jackson (Skadden) has started a blog, Jackson on Consumer Class Actions and Mass Torts.  Welcome to the blogosphere!

BGS

Increased Risk for Space Workers Is Not Compensable Injury

BNA reports the dismissal of a suit by space center workers arising out of exposure to beryllium-containing products was upheld by the 5th Circuit. The court held that the workers were only able to show that the exposure resulted in increased sensitivity to the toxic substance, and that this was not a compensable injury.  Increased risk of developing chronic beryllum disease was not held to be sufficient to sustain the suit.  The case is Paz v. Brush Engineered Materials Inc., 5th Cir., No. 08-60085, 1/13/09. 

Vietnam Vet Class Action Filed Against CIA

BNA Class Action Litigation Report reports that a Vietnam veterans group has filed a class action lawsuit in the Northern District of California against the CIA seeking compensation for human experimentation conducted in the 1970s.  The suit is Vietnam Veterans of America v. Central Intelligence Agency, N. D. Cal., No. 09-cv-00037, filed 1/7/09. 

ADL

Effects of Tort Reform

Patricia Born (California State University), Kip Viscusi (Vanderbilt), and Tom Baker (Penn) have posted an article titled The Effects of Tort Reform on Medical Malpractice Insurers' Ultimate Losses that might be of general interest to tort aficionados.  Here's the abstract:

Whereas the literature evaluating the effect of tort reforms has focused on insurers' reported incurred losses, this paper examines the long run effects of reforms using the developed losses from a comprehensive sample of insurers writing medical malpractice insurance from 1984-2003. The long run effects of reforms are greater than insurers' expected effects, as five year developed losses and ten year developed losses are below the initially reported incurred losses for those years following reform measures. The quantile regressions show that reforms have the greatest effects for the firms that are at the high end of the loss distribution. The beneficial effects of reforms on developed losses are more pronounced than those obtained from initially-reported losses, suggesting that insurers underestimated the true effects of the reforms.

ECB

Peanut Butter Lawsuits Begin

As posted on the Marler Blog, the first lawsuit arising out of the recent nation-wide outbreak of Salmonella in Peanut Butter has been filed in Georgia.  The post is here.  Marler reports that there are more than 485 infected people in 43 states so far and that numerous products have been recalled.  A list of products is here. 

ADL

GAO Criticizes FDA

The New York Times reports that the Government Accountability Office recently criticized the Food and Drug Administration's device approval process. Here's an excerpt:

Created in 1976, the F.D.A.’s process for approving devices divides the products into three classes and three levels of scrutiny. Tongue depressors, reading glasses, forceps and similar products are called Class I devices and are largely exempt from agency reviews. Mercury thermometers are Class II devices, and most get quick reviews. Class III devices include pacemakers and replacement heart valves.

Congress initially allowed many of the Class III products to receive perfunctory reviews if they were determined to be nearly identical to devices already on the market in 1976 when the rules were changed. But the original legislation and a companion law enacted in 1990 instructed the agency to write rules that would set firm deadlines for when all Class III devices would have to undergo rigorous testing before being approved.

The agency laid out a plan in 1995 to write those rules but never followed through, the accountability office found. The result is that most Class III devices are still approved with minimal testing.

Agency officials told the accountability office investigators that writing the new rules was still important.

“When asked for their time frame for doing so, however, the officials did not provide one,” the report stated.

Dr. Susan Alpert, the chief regulatory officer of Medtronic, the leading maker of heart devices, said that many of the Class III devices that currently receive less scrutiny before approval would, once the agency completed its overhaul, be reclassified as less risky Class II devices.

“So the impression that F.D.A. is approving new technologies with little review is erroneous,” Dr. Alpert said.

Still, she said, “there is no question” that F.D.A. needs to fix its reclassification process.

ECB

Today's $1.4 billion Zyprexa deal

As expected, the Justice Department and Eli Lilly today announced that Lilly will pay $1.4 billion in a criminal plea deal and civil settlement.  The deal includes $615 million as a criminal penalty and $800 million to settle civil claims by the United States and over 30 states.  Speculation about the negotiations goes back nearly a year.

Here are some details from today's report on Bloomberg:

Eli Lilly & Co. will plead guilty to a criminal charge of promoting its antipsychotic drug Zyprexa for unapproved uses, pay $1.42 billion in fines and submit to U.S. monitoring against future lawbreaking.   ...

Lilly resolved federal and state probes into how it marketed the drug and will plead guilty in U.S. District Court in Philadelphia in the next few weeks, the Indianapolis-based drugmaker said in a statement. Lilly said it promoted Zyprexa in elderly people to treat dementia, a use not approved by the Food and Drug Administration, between September 1999 and March 2001, a criminal violation of the Food, Drug and Cosmetic Act. ...

As part of the settlement, Lilly agrees to operate under a federal monitor’s review for five years.

Twelve states' claims remain unresolved.

Two things strike me about the deal.  First, it is huge, and it had to be.  From the perspective of the Department of Justice, the U.S. Attorney's Office, and the state attorneys general, anything less than a billion would have seemed an ineffective deterrent given the revenues that Zyprexa generated.  In an era of multi-billion dollar revenues for blockbuster drugs, we are bound to see more 10-figure resolutions.

Second, today's deal drives home how multi-faceted mass tort litigation has become.  I used to think of "mass tort litigation" as, well, litigation involving massive numbers of tort claims.  The Zyprexa litigation is mass tort litigation, but "the Zyprexa litigation" includes wrongful death claims, personal injury claims, consumer fraud claims, securities claims, third-party payor claims, federal and state government civil claims, and federal criminal charges.

When Eli Lilly settled the bulk of the tort claims, it wasn't nearly done with the Zyprexa litigation.  Lilly settled tens of thousands of individual claims through mass aggregate settlements -- 8000 plaintiffs for about $700 million in 2006 and 18,000 plaintiffs for about $500 million in 2007.  Judge Jack Weinstein in the MDL treated the litigation and settlement as a "quasi-class action."  At the time, one might have thought that those gargantuan settlements resolved the bulk of the Zyprexa dispute.  With today's deal, we are reminded that the personal injury and wrongful death claims were only one piece of the Zyprexa litigation.

Over a billion dollars in tort settlements.  Tens of millions more for state consumer protection claims.  Over a billion dollars today for the government criminal and civil claims.  A billion here, a billion there, and pretty soon we're talking about real money. 

HME

Zyprexa -- Possible Settlement of Criminal and Civil Claims

Eli Lilly Co. is expected to pay $1.4 billion to settle the government's criminal and civil claims against the company in connection with its marketing of Zyprexa, according to this article in the New York Times, which notes the record-breaking size of the deal:

Eli Lilly, the drug company, is expected to agree as soon as Thursday to pay $1.4 billion to settle criminal and civil charges that it illegally marketed its blockbuster antipsychotic drug Zyprexa for unauthorized use in patients particularly vulnerable to its risky side effects.  The amount of the settlement is a record sum for so-called corporate whistle-blower cases, which are federal lawsuits prompted by tips from company employees or former employees.

Zyprexa is approved for schizophrenia and bipolar disorder.  Lilly is charged with pushing doctors to prescribe the drug for unruly children and nursing home patients, despite the increased risks attendant to use of the drug by the young and the elderly.  The Times article points out that a $1.4 billion fine, while substantial, may represent as little as one year's worth of off-label-use Zyprexa revenues, as Zyprexa has generated over $39 billion in revenues since 1996.

According to the article, more information may come out Thursday:

The government’s case will remain sealed until at least Thursday, when a judge is expected to approve the settlement. People involved in the negotiations say that prosecutors pressed for a resolution in the waning days of the Bush administration to avoid having to get another set of approvals from new bosses at the Justice Department in Washington.

While the settlement is intended to resolve all pending government claims, it is unclear whether all states, which are parties to the case through the federal-state Medicaid program, have agreed to terms.

HME

Black Robes, White Coats

Though focused on criminal settings, the recently published book Black Robes, White Coats, by Professor Rebecca C. Harris (Washington & Lee, Dep't of Politics), looks interesting.  Here's a summary:

Scientific evidence is commonplace in today’s criminal trials. From hair and handwriting analysis to ink and DNA fingerprints, scientists have brought their world to bear on the justice system.
 
Combining political analysis, scientific reasoning, and an in-depth study of specific state supreme court cases, Black Robes, White Coats is an interdisciplinary examination of the tradition of “gatekeeping,” the practice of deciding the admissibility of novel scientific evidence. Rebecca Harris systematically examines judicial policymaking in three areas —forensic DNA, polygraphs, and psychological syndrome evidence—to answer the question: Why is scientific evidence treated differently among various jurisdictions? These decisions have important implications for evaluating our judicial system and its ability to accurately develop scientific policy.
 
While the interaction of these professions occurs because the white coats often develop and ascertain knowledge deemed very useful to the black robes, Harris concludes that the black robes are well positioned to render appropriate rulings and determine the acceptability of harnessing a particular science for legal purposes.

BGS

Shapo on Experimenting with the Consumer

Marshall S. Shapo (Northwestern) has posted an overview of his latest book, Experimenting with the Consumer: The Mass Testing of Risky Products on the American Public on SSRN. The book is available for purchase through Greenwood Publishing Group.  Here's the SSRN overview and table of contents:

We almost all become subjects of experimentation on human beings just by living in this society. We usually tend to think of experiments on people as carefully controlled procedures done by doctors in white coats. But every time a company launches on the market a new product that may carry some risk, it is experimenting on us, the general public. Advertisers in various kinds of media trumpet the benefits of new products, but they usually do not tell us about potential risks - or uncertainties about danger - that may be associated with those products. As a rule, innovation makes our lives better, but sometimes experimentation on mass markets requires a trade-off; it entails risk to some who unwittingly are the subjects of those experiments.

The devil is in the details of experiments on mass markets: from drugs and devices to chemicals that are used in workplaces and that leak, or are dumped, into the environment. It is scientifically complicated, and expensive, to find out which products cause significant risks to human beings. Scientists themselves often disagree about the level of acceptable risk. If we understand the nature of mass market experimentation, that understanding is a first step toward protecting ourselves.

SOME MAJOR THEMES:

* There are constant wars over risk and safety among many groups: Scientists against scientists, scientists against doctors, product sellers against other sellers; manufacturers against government agencies; and claimants' lawyers against sellers and agencies.

* There are ongoing competitions between consumers who are averse to taking risks with safety and those who would like to take risks in hopes that they will gain in their fights against disease, or enhance their sex appeal, or acquire a broad range of new consumer products.

* Media are powerful forces in many aspects of mass experimentation. They affect our views not only through direct to consumer advertising of products that formerly were entirely the province of prescribing physicians, but also through news stories that shape the views of consumers about risks that are difficult for lay people to understand.

The book ties together the AIDS patient, the woman who gets multiple breast implants, the man who uses drugs for erectile dysfunction (or maybe only to generate more and better erections), the postmenopausal woman who wants estrogen therapy, and the employee who unknowingly may be confronting the risk of powerful substances used in the workplace. The book projects the histories of these specific topics to embrace all people who are the subjects of human experimentation-in the clinic, in their purchases of mass market products at the pharmacy, at work, and in the environment generally.

TABLE OF CONTENTS:

INTRODUCTION

Chapter One: EXPERIMENTATION: A SURVEY AT TRENCH LEVEL

Chapter Two: HIV/AIDS DRUGS: SPEEDING UP SCIENCE, UNDER POLITICAL PRESSURE

Chapter Three: BREAST IMPLANTS: A PARABLE OF LAW'S RESPONSE TO IMPROVEMENTS ON NATURE

Chapter Four: TREATING THYSELF - FOR MEN ONLY: VIAGRA

Chapter Five: ESTROGENS-A GATHERING OF DATA, A GATHERING STORM

Chapter Six: ESTROGENS - THE STORM BREAKS; A STRUGGLE OF MEDICINE, LAW, AND POLITICS

Chapter Seven: EXPERIMENTS AT THE BILLIONTH LEVEL: NANOTECHNOLOGY

CONCLUSION

ECB

Baker on Liability Insurance at the Tort-Crime Boundary

Tom Baker (Penn) has a new article posted on SSRN titled Liability Insurance at the Tort-Crime Boundary.  While it doesn't directly discuss mass torts, its implications might be of interest to readers.  Here's the abstract:

This essay explores how liability insurance mediates the boundary between torts and crime. Liability insurance sometimes separates these two legal fields, for example through the application of standard insurance contract provisions that exclude insurance coverage for some crimes that are also torts. Perhaps less obviously, liability insurance also can draw parts of the tort and criminal fields together. For example, professional liability insurance civilizes the criminal law experience for some crimes that are also torts by providing defendants with an insurance-paid criminal defense that provides more than ordinary means to contest the state's accusations. The crime-tort separation in liability insurance cannot be explained by economic incentives, alone. Morality matters, too. The fact that liability insurance sometimes provides coverage for criminal defense costs suggests that liability insurance institutions could cover a broader swath of crime torts than they do, providing further support for the claim that consequentialist reasoning, alone, cannot explain the observed relationship between liability insurance, torts, and crime. The tort-crime separation reflects and reinforces a concept of liability insurance as protection for defendants, rather than as a fund for victims. In turn, this concept of insurance reflects and reinforces an understanding of tort claims as encounters between particular plaintiffs and defendants, rather than as a price setting or loss spreading insurance mechanism.

ECB