Mass Tort Litigation Blog

Supreme Court decides Smith v. Bayer

Today, the Supreme Court decided Smith v. Bayer (opinion here), applying the Anti-Injunction Act to reject a federal court's attempt to control state court class certification.

The federal MDL judge in the Baycol litigation had rejected class certification for a class of West Virginia plaintiffs, finding that common questions did not predominate because each plaintiff would have to prove actual injury.  One of the members of the putative class filed a lawsuit in West Virginia state court (it was non-removable because it included several West Virginia defendants in addition to Bayer), and sought class certification.  Bayer asked the MDL judge for an order enjoining the state court from hearing Smith's motion to certify the class, arguing that Smith's class action was identical to the one the federal court had rejected.  The judge granted the injunction and the Eighth Circuit affirmed.

The Supreme Court unanimously reversed in an opinion by Justice Kagan.  The Anti-Injunction Act, 28 U.S.C. 2283, generally prohibits federal courts from enjoining state court proceedings.  Bayer argued that this case fits within the Act's relitigation exception; according to Bayer, issue preclusion prevents Smith from relitigating the issue of class certification.  The Court rejected this argument for two reasons: (1) it's not the same issue, and (2) it's not the same party. 

It's not the same issue because states are entitled to interpret their own procedural rules differently from federal courts' interpretation of the Federal Rules of Civil Procedure.  Last year's ruling in Shady Grove Orthopedic Associates v. Allstate (2010) emphasized that Rule 23 applies in federal courts and state courts apply their own class action rules.  The text of West Virginia's Rule 23 is nearly identical to the federal rule, but as Justice Kagan explained, federal and state courts "can and do apply identically worded procedural provisions in widely varying ways."  In the Rezulin litigation, the West Virginia Supreme Court announced that it did not necessarily follow the federal approach to class certification, particularly on the question of predominance.  Given that the state does not follow the federal interpretation of Rule 23, issue preclusion cannot prevent relitigation of class certification and the injunction was improper.

It's not the same party because Smith was not a named plaintiff in the federal court case.  You can't bind a non-party, as the Supreme Court emphasized in Taylor v. Sturgell (2008), where it rejected nonparty preclusion on a theory of virtual representation.  Bayer argued that Smith was bound as a member of the class, but the Supreme Court pointed out that there was no class because class certification was rejected: "The definition of the term 'party' can on no account be stretched so far as to cover a person like Smith, whom the plaintiff in a lawsuit was denied leave to represent."

The Court got it right.  It's a complicated case but it was an easy decision.  State courts have their own rules and are entitled to decide what procedures to follow.  Even though a federal judge concluded (correctly, in my view) that the mass tort litigation involving Baycol was not suitable for a class action under Federal Rule 23, the West Virginia state court is entitled to decide that issue under the West Virginia class action rule.  But the decision shows how messy things get when mass disputes are litigated in both federal and state courts.  Justice Kagan's opinion acknowledges the "special problems of relitigation" that can be presented by class actions, but suggests that the solution lies in removal under CAFA and transfer under the MDL statute, rather than departing from fundamental principles of preclusion.

HME

FDA Drug Approval Near Deadline Linked to Safety Problems

Article in the Wall Street Journal -- Late Drug Approval Linked To Safety Issues, by Keith J. Winstein.  Here's an excerpt:

Although every unsafe drug is different, most of them have something in common: last-minute approvals by the Food and Drug Administration, according to a new study.

Liver problems led Pfizer Inc. to withdraw its diabetes drug Rezulin from the U.S. market in 2000. Bayer AG pulled cholesterol-lowering Baycol in 2001 because it caused muscle damage in some patients. Vioxx, Merck & Co.'s controversial painkiller, was withdrawn in 2004 because it sometimes caused heart attacks and strokes.

These and other unsafe drugs all received approval shortly before the FDA deadline for deciding on new-drug applications.

Since 1993, the 97 drugs approved near the FDA's deadline had a 14% rate of severe safety problems down the road, compared with 3% for 216 other drugs. That's according to an analysis in Thursday's issue of the New England Journal of Medicine by Daniel Carpenter, a professor of government at Harvard University. The FDA says some of Dr. Carpenter's data are inaccurate, and disputed his conclusions.

BGS

SDNY Dismisses Louisiana AG's Suit for Recovery On Medicaid Rezulin Prescriptions

On November 26, in the Southern District of New York, Judge Kaplan dismissed claims made by the Louisiana Attorney General’s office that the State would not have paid for Rezulin prescriptions filled by Medicaid recipients if it knew that information was withheld or misrepresented by Warner-Lambert.  The MDL Panel transferred the case to the court in September of 2005.  But in the two years since, the Louisiana Attorney General’s office did not initiate discovery requests and failed to submit a Rule 56(f) affidavit to counter defendants’ motion for summary judgment. Although one might dismiss the case as an anomaly, it does raise questions about institutional design.  Namely, who should bring enforcement actions—public governmental actors, private attorney’s generals, or some mix of the two.  This case suggests some value to having multiple, decentralized enforcers to circumnavigate potential agency inaction.  I’ve written about additional benefits to decentralization in an earlier piece that can be found here.

ECB

Another Development in the Preemption Wars

The Supreme Court granted cert in Warner-Lambert v. Kent, No. 06-1498.  The question presented is whether the Food, Drug and Cosmetic Act preempt product liability claims under Michigan law against drug manufacturers that allegedly defrauded the Food and Drug Administration.  The case is about Rezulin, the diabetes drug.  Point of Law predicts that this will have implications for other pharmaceutical litigation and that the Supreme Court will reverse the Second Circuit.  I think this is more likely to have implications for the Light Cigarette Litigation.  As I pointed out in an earlier post on the topic, the result will be based on theories of statutory interpretation and federalism principles. This case may give Scalia the opportunity he lost in Cipollone; we shall see.

ADL

Alex MacDonald leaves Robinson & Cole

Boston mass tort plaintiffs' lawyer Alex MacDonald has left Robinson & Cole to join Rothweiler Eisenberg.  MacDonald's mass torts group at Robinson & Cole was a rare example of a significant mass tort plaintiffs' practice within a large corporate firm.  (Robins Kaplan in Minnesota is the other prominent example.)  Plaintiffs' practices in large defense-oriented firms have certain advantages -- resources, infrastructure, lawyers with varied experience -- but inevitably run into conflicts of interest and sometimes culture clashes as well.  The question is whether the benefits outweigh the costs.  Apparently, MacDonald found that the big-firm association no longer made sense for his practice. 

Here's a clip from a Connecticut Law Tribune article -- High-End Plaintiffs Cases an Uneasy Fit at Defense Firms:

In the end, multimillion-dollar contingency fee recoveries couldn't keep Hartford, Conn.-based Robinson & Cole and the chairman and founder of its nationally prominent mass tort group together under the same roof.

Like for other high-end plaintiff practices operating within large defense-oriented law firms, client conflicts eventually convinced Alex H. MacDonald that greener pastures lay elsewhere, he said.

Recently, he took the reputation he gained from brokering a record-breaking fen-phen settlement and joined forces with two high-profile Philadelphia trial lawyers to form MacDonald Rothweiler Eisenberg.

The message to other defense firms: Dabbling in plaintiffs work can be lucrative, but the more lucrative it gets, the more inevitable an eventual breakup becomes.

According to the article, Robinson & Cole's longstanding representation of Pfizer had precluded MacDonald's group from taking on Rezulin cases (because Pfizer was on the verge of acquiring Warner-Lambert) or Vioxx cases (because Pfizer produced similar drugs Celebrex and Bextra).

MacDonald made his name in the fen-phen litigation, in which he represented Mary Linnen and a host of other PPH claimants, and became a central figure on the plaintiffs' side.  He was profiled in Alicia Mundy's book, Dispensing with the Truth (St. Martin's Press 2001).

HME

Pfizer Must Face Suit in Michigan Over Rezulin

Article in today's Los Angeles Times -- Pfizer Must Face Suit in Michigan Over Rezulin, from Bloomberg News: "Pfizer Inc. must defend a lawsuit in which people claim its diabetes drug Rezulin damaged their livers."

BGS