Published By: Maxwell S. Kennerly, Esquire

Consumer Protection

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As Judge Posner remarked, “only a lunatic or a fanatic sues for $30,” Carnegie v. Household Int’l, Inc., 376 F.3d 656 (7th Cir. 2004), and that’s because it costs money to seek civil justice. For all the complaints by corporate defendants about the “rising costs of litigation,” those costs are just as frequently — perhaps more frequently — borne by plaintiffs. I’ve had individual wrongful death cases that required hundreds of thousands of dollars in litigation expenses alone, not including attorney and paralegal time.

Here in Philadelphia, the tallest building by far is the Comcast Center, built in part by the enormous profits reaped by way of Comcast’s monopoly power over cable-television services in the area, causing Philadelphia-area consumers to be overcharged by over $875 million from 1998 to 2007, as alleged by the Behrend lawsuit. I was a Comcast customer in that timeframe, and you know how much my individual antitrust claim is worth? Zero. I was personally overcharged no more than $500; the $350 filing fee for my complaint will eat up most of what I could recover, and certainly the remaining $150 in potential damages won’t justify the millions of dollars in litigation expenses and tens of thousands of hours of attorney time I’ll need to invest in the case.

This problem was solved nearly fifty years ago, when Federal Rule of Civil Procedure 23 was amended to create a streamlined procedure for these types of cases. “The policy at the very core of the class action mechanism is to overcome the problem that small recoveries do not provide the incentive for any individual to bring a solo action prosecuting his or her rights.” Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 617 (1997)(internal quotation omitted).

The actual requirements of Fed.R.Civ.P. 23 are not particularly strict.
Continue Reading Cleaning Up The Supreme Court’s Newest Class Action Mess, Comcast v. Behrend

This week’s U.S. Supreme Court argument in Bartlett v. Mutual Pharmaceutical (link goes to my thoughts on the case, which I posted back in December) has taken the issue of “impossibility preemption” for a brief stroll through the rest of the legal world, crossing paths with some major news outlets. Karen Bartlett was given a shot of a pain reliever, sulindac, which caused her to develop Stevens-Johnson Syndrome and toxic epidermal necrolysis so severe her burn surgeon called it “hell on earth.” There would be a handful of legal avenues available to her if she had received the brand-name drug, but, because she received a generic, there’s the looming question as to whether her State tort law lawsuit is “preempted” under the Supreme Court’s 2011 case, PLIVA v. Mensing.

A brief refresher. There are four types of “preemption,” so named when federal law trumps — i.e., “preempts” — state law.

1. Express Preemption is when Congress and the President pass a law that says States’ law on the issue are unenforceable. For example, the preemption clause of ERISA, 29 U.S.C. § 1144, “the provisions of this title … shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan …”

2. Impossibility Preemption is when Congress has not passed any law preempting State law, but “where compliance with both federal and state regulations is a physical impossibility for one engaged in interstate commerce.” Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142-143 (1963).

3. Conflict Preemption occurs where Congress hasn’t passed a law preempting State law, and where it’s possible to comply with both, but “under the circumstances of [a] particular case, [state] law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” Hines v. Davidowitz, 312 U.S. 52, 67 (1941).

4. Judicial Activism Preemption happens when a judge, or the majority of judges on a federal appellate court, don’t like a particular State law and so make up a reason to get rid of it. No, the courts themselves don’t call it that, they typically call it “impossibility preemption.” This is my term for it.

In the Bartlett case, just like in every other pharmaceutical liability case, there’s no express preemption. In the 80 years since the passage of the Federal Food, Drug, and Cosmetic Act in 1938, Congress has never once saw fit to preempt State law lawsuits against brand-name or generic drug manufacturers.

In 2011, a slim majority of the Supreme Court in PLIVA, Inc. v. Mensing, 131 S. Ct. 2567 (2011) applied what I call Judicial Activism Preemption under the guise of impossibility preemption, and made up a reason to blow up the majority of lawsuits against generic drug manufacturers. I wrote more about it here. Law professor Leslie Kendrick recently wrote about how problematic impossibility preemption is in the conduct of pharmaceuticals in general.

Mensing involved a “failure to warn” claim — i.e., an allegation that the drug’s warning labels didn’t adequately disclose the drug’s real risks — and the Supreme Court held those claims were preempted. Bartlett on the surface involves a pure strict liability claim — i.e., a claim that the drug is simply unreasonably dangerous given the minor benefits it has compared to the serious risks — and then in the details involves a number of complicated factual and legal issues, including the strange decision by the defendant to waive most of its defenses, complicated issues that, to me, should have caused the Supreme Court to decline the case for consideration.

Be that as it may, the oral argument (transcript here) revealed a lot about the true nature of preemption and the Justice’s thoughts.
Continue Reading Impossibility Preemption, Strict Liability, And The Troll Supreme Court Justice

Last week, we took a ride on the corporate defense lawyer baloney train, this week we jump on the express. Two months ago, pharmaceutical manufacturer Roche Laboratories filed a motion asking Atlantic County, New Jersey Superior Court Judge Carol E. Higbee to recuse herself from the over 7,000 Accutane cases still pending in that consolidated litigation.

The 39-page brief Roche filed in support of the motion didn’t have much substance to it, but it was met with much fanfare across the tort reform world as a bold effort to attack a judge who wasn’t sufficiently accommodating to their scorched earth litigation tactics. Roche argued, for example, that Judge Higbee shouldn’t have mentioned at a conference for defense lawyers that Roche was not settling cases because “Roche considers the fact of whether settlements have or have not occurred … to be confidential,” as if we should care that Roche “considers” a publicly-available fact anyone can see on a docket to be “confidential.”

Last week, Judge Higbee denied the motion (opinion here, good LexisNexis summary here), shedding more light on how forgiving she has been of the defense misconduct in the case. 
Continue Reading Defense Lawyer Earns A Well-Deserved Benchslap For Misguided Recusal Motion

A month ago, I wrote about how the Office of the Comptroller of the Currency had inexplicably and inexcusably written several banking regulations to protect banks that fraudulently re-ordered bank withdrawals to create additional overdraft fees. Last week presented another example of obvious “regulatory capture” with the FDA’s astonishingly belated action on metal hip implants.

On January 17, the Food and Drug Administration issued a “Safety Communication” for metal-on-metal hips, noting “Metal-on-metal hip implants have unique risks in addition to the general risks of all hip implants” and recommending orthopedic surgeons “select a metal-on-metal hip implant for your patient only after determining that the benefit-risk profile of using a metal-on-metal hip implant outweighs that of using an alternative hip system.”

The FDA’s warning would have been prompt if it had been issued four years ago, by which point there was already substantial data showing the DePuy hip implants were failing at four to five times the expected rate; in 2009, Johnson & Johnson had already started to phase out the DePuy ASR, (falsely) claiming “slowing sales.” The FDA’s warning would have at least been timely if it had been issued in March 2010, when the NYTimes ran an article on the DePuy hip implants being withdrawn from the market, or perhaps April 2010, when the United Kingdom’s Medicines and Healthcare products Regulatory Agency (MHRA) issued a medical device alert that included specific follow-up recommendations for patients with metal-on-metal hip replacements.

By August 2010 — two and a half years ago — DePuy finally recalled all 93,000 of the ASR and ASR XLs it had implanted in patients; had the FDA warning sent out their warning then, it would have been charitably described as “belated.” (Indeed, within six months after that, so many lawsuits had been filed by the hundreds of patients who had already had revision surgeries — and thousands more who were told to get one — that multi-district litigation had been created, and we trial lawyers already knew just how awful these devices were.)

But January 2013? I would say that’s like closing the barn door several years after the cow got out, but the barn door isn’t actually closed, because the FDA hasn’t actually prohibited the sales of metal-on-metal hip implants. All the Safety Communication did was warn doctors about something they should have known years ago: metal-on-metal hips are a bad idea, and shouldn’t be used unless there’s a good reason why. The recent “Safety Communication” admits as much, and admits — without saying it — that metal-on-metal hips should be pulled from the market entirely.Continue Reading FDA Figures Out Risk Of Metal Hip Implants Several Years Too Late

Since its creation in 2010, certain members of Congress have been desperate to thwart the Consumer Financial Protection Bureau (CFPB)  by repeatedly passing bills to limit the CFPB’s power.  Generally throwing a fit, these congressmen claim that the CFPB is a “run-away regulator unlike any other in American history.”

A case decided last week by the Ninth Circuit Court of Appeals, Gutierrez v. Wells Fargo Bank, shows why the CFPB is so important, how its predecessor (the Office of the Comptroller of the Currency) failed the American public, and why we should view anyone opposed to the CFPB with deep suspicion.

The Gutierrez case arises from a change Wells Fargo made to the processing of debit card transactions back in 2001. Wells Fargo claimed in its brochures that, when a consumer used a debit card, the money was “immediately” and “automatically” deducted from their accounts, and admonished customers — with the type of blatant hypocrisy only a true scoundrel can muster — “remember that whenever you use your debit-card, the money is immediately withdrawn from your checking account.  If you don’t have enough money in your account to cover the withdrawal, your purchase won’t be approved.”

In reality, Wells Fargo waited until the end of each day, when it would re-order the transactions to create as many overdrafts as theoretically possible, and then charge the customer a fee for each bank-manufactured overdraft. 
Continue Reading Rampant Bank Fraud Shows Why We Need The Consumer Financial Protection Bureau

[Update, March 2013: I originally wrote this post in December 2012. Three months later, the FDA announced it “is evaluating unpublished new findings by a group of academic researchers that suggest an increased risk of pancreatitis, or inflammation of the pancreas, and pre-cancerous cellular changes called pancreatic duct metaplasia in patients with type 2 diabetes treated with a class of drugs called incretin mimetics.” Several news agencies ran with the news, including AP and Bloomberg, as did some pharma industry bloggers. The JAMA Internal Medicine medical journal ran a column urging more research into the link between the drugs and pancreatic cancer, an article with a concerning, but perhaps harmless, revision after it was published. We think the latest attention and research makes the case against these drugs even stronger, and we’re moving forward in our own litigation.]

Diabetes is a global epidemic, affecting over 25 million Americans and ten times that worldwide. That also makes it an economic opportunity: the diabetes control medication market is worth more than $40 billion in the United States alone. There are thirteen types of approved Type 2 Diabetes medications on the market today (comprising over two dozens drugs), with another seven therapies in various stages of research and development. There’s big money to be made, if you’re a pharmaceutical company — hence the recent advertising push for Januvia, Byetta, and Victoza (the one Paula Deen endorses), relatively new entries to the overcrowded diabetes control market.

I’ve discussed before on this blog how one of the biggest public health problems in America is the pharmaceutical industry’s reliance on the “blockbuster” drugs that exceed $1 billion in annual sales. The whole industry, from research, to clinical trials, to physician education, is oriented around creating and promoting drugs that will become household names — to the exclusion of other useful medicines and to the detriment of patient safety. A year ago, I wrote about why Merck still didn’t admit Propecia caused persistent erectile dysfunction more than eight years after competent research showed the problem. The reason is quite simple: Propecia / Proscar was routinely bringing in more than half a billion dollars a year for Merck, and they wanted to keep it going for as long as possible.

Which brings us to Januvia, a drug that stock market analysts call a “real success story” for Merck. The Type 2 Diabetes market is huge, and Januvia (marketed as “Janumet” when mixed with metformin) has captured 75% of the dipeptidyl peptidase 4 (DPP-4) inhibitor market — for $4.6 billion in revenue in 2011 and likely topping $5 billion this year. It’s not hard to see why Januvia and other DPP-4 drugs have been successful and their sales are growing. They’re a one-a-day pill, not a shot, they haven’t been shown to cause weight gain, and they have a lower incidence of the nausea, abdominal pain, and digestive problems that characterize most diabetes treatments.

But there’s a big problem brewing.
Continue Reading Do The Drugs Januvia, Byetta and Victoza Cause Pancreatic Cancer?

[Update, August 26, 2013: After some further bickering and litigation in the Haeger case, the Court granted the plaintiff’s motion for attorney’s fees, then ordered “judgment in favor Plaintiffs and against Graeme Hancock in the amount of $548,240.23 and against Basil J. Musnuff and the Goodyear Tire and Rubber Co. in the amount of $2,192,960.93.”]

Over at Safety Research, Sean Kane details a recent order from the federal court in Arizona entering sanctions against Goodyear and its lawyers for concealing testing data in a tire failure case. As every product liability lawyer knows well, the concealment of evidence by tire manufacturers and car companies is pretty much routine these days. It doesn’t matter how specific your request is, how many times you ask, or if you have several court hearings or court orders on your side: the car and tire companies will tell you that they have no safety testing or crash investigations that relate in any way to the products involved in your case. That is, of course, until you retain an expert to point out that the company apparently didn’t do any safety testing of its own products — at which point you will have thousands of studies and investigations dumped on your lap, but none involving the product at issue in your case. It’s a funny coincidence that way.

I’ve written before about the national scandal of tire failures, in which old and otherwise defective tires kill people every day. Tires are more than just rubber — numerous compounds are woven and glued together — but, when all is said and done, the tire is only as strong as its weakest link, and that weakest link is often a rubber compound or an adhesive. In hotter temperatures, and at higher speeds, the temperature of the tire goes up, making failure more likely. Simple chemistry.

Simple, but still too much for Goodyear. The deadly Goodyear G159 tire is well-known among trial lawyers. The tire was first designed for use on regional delivery trucks, which typically don’t travel at high speeds and which often stop. As baby-boomers began to age into their fifties in the 1990s, the Recreational Vehicle market grew rapidly, and Goodyear wanted to capitalize on it, so they re-branded the G159 as an RV tire, and it was adopted as the standard tire on several Fleetwood and Monaco RVs.

Problem was, the G159 wasn’t meant to withstand the weight of an RV at high interstate speeds (and sometimes in high temperatures in the South and the Southwest) for long durations. The tires began to fail at an alarming rate, prompting a wave of litigation, but no recall — and plenty of G159 tires are still out there, some as spares, getting older and even less reliable as the rubber and glue compounds dry out over time.

The Haeger case is thus almost routine by product liability standards: back in 2003, a husband and wife were seriously injured when the Goodyear G159 tires on their motor home failed while they were driving on the interstate. In the Haeger lawsuit, Goodyear was asked to produce a variety of high temperature and high speed testing, but didn’t, and repeatedly told the Court and the plaintiff’s lawyers otherwise. The case settled on the eve of trial; nearly a year later, the plaintiff’s lawyer was reading about another G159 case that went to trial and resulted in a $5.6 million verdict. The newspaper article mentioned the plaintiffs there had used at trial “Goodyear documents including internal heat and speed testing and 13 failure rate data” — the same studies Goodyear and its lawyers said didn’t exist in the Haeger lawsuit.

The plaintiff’s lawyer was, shall we say, upset, and wrote to Goodyear’s lawyer, who promptly admitted they hadn’t produced the studies, and claimed everyone — Court included — knew it! Unsurprisingly, the plaintiff’s lawyer disagreed, and so filed for sanctions.  Sean Kane’s post includes the sanction order itself, and I must admit it’s comforting to see, in a court order, confirmation of what product liability plaintiff’s lawyers like me say all the time: corporations routinely conceal evidence. As the Court dug up while considering the sanctions motion, Goodyear’s lawyers didn’t disclose evidence as required by court rules and court orders; instead, their internal emails showed they only produced what, they said, “serves our best interest to produce.”

But I don’t want to dwell on those details. 
Continue Reading Discovery Sharing By Plaintiff’s Lawyers (Or, The Dog Ate Goodyear’s Homework)

Product liability claims are doubly challenging for plaintiffs’ lawyers. First, product liability law is in a state of flux (with the trend going against injured consumers). Second, product liability cases are notoriously time-consuming and expensive to pursue: in addition to all the ordinary expenses and burdens of personal injury litigation, product cases usually require hiring a bevy of experts who then have to spend hundreds of hours examining the products and preparing their reports. It’s not unusual for lawyers to spend over one hundred thousand dollars on a product liability case in out-of-pocket expenses alone (not including lost attorneys fees), and when you start talking about complicated products like cars, you’re talking about a quarter million dollars or more.

That’s part of why product liability court opinions often have such tragic facts: the claim needs to be worth $1 million or more to justify the risk, and generally speaking, brain injury, spinal cord injury, and wrongful death cases are most likely to produce those kinds of awards. Whatever the injury is, it needs to be permanent, otherwise you’re investing six figures into a case that will, after expenses, return far less than that — or nothing at all.

Correspondingly, because the product liability suits brought involve such huge damages, they never follow the sort of routine that car accident and slip and fall cases do — where production of medical reviews and review of any police report or witness statements will answer most of the factual questions, and so the case can be settled with minimal litigation long before trial. The manufacturer or seller of a defective product will virtually never offer any sort of reasonable settlement amounts until after summary judgment and Daubert motions (testing the sufficiency of the plaintiff’s expert witnesses) have been decided.

I’m more than happy to rail all day against the unfair, sometimes downright illogical, restrictions placed on plaintiffs in product liability cases, and I’ve done so many times on this blog (e.g., railing against the Third Restatement of Torts, the learned intermediary doctrine, the judicially-created implied pre-emption doctrine). But sometimes the problem really can be traced back to the plaintiff’s case.

Via Abnormal Use, I learned of two recent product liability summary judgment opinions dismissing the plaintiffs’ respective cases, one in the South Carolina Supreme Court and the other in the federal court in Massachusetts. They’re examples of how the lack of a proper expert opinion can doom a case before it’s ever put in front of a jury.Continue Reading The Product Liability Expert Who Wasn’t There

A fellow trial lawyer sent me the story this morning, with the comment “this is going to be the new McDonald’s hot coffee case.” At first blush the case sounds primed to create an urban legend: a $7 million verdict for regularly using the same consumer product millions of us use every day? Let’s dig a little bit deeper.

It’s no secret that exposure to diacetyl, which was used in the butter flavoring of microwave popcorn, can cause a particular type of obstructive lung disease called bronchiolitis obliterans. The National Institute for Occupational Safety and Health (NIOSH) first confirmed that back in 2000, when more than a dozen employees of the Gilster-Mary Lee Corporation’s microwave popcorn plant in Jasper, Missouri, filed workers’ compensation claims alleging their permanent coughing, wheezing, shortness of breath and so on were the result of exposures in the workplace. What NIOSH found was awfully suspicious:

Plant employees had 2.6 times the rates of chronic cough and shortness of breath compared to national data, adjusted for smoking and age group; younger employees who had never smoked had rates about five times higher than expected from national rates. Overall, plant employees had 3.3 times the rate of obstructive spirometry abnormalities compared to national adjusted rates; never smokers had 10.8 times the national expected rate. Worker reports of physician-diagnosed asthma and chronic bronchitis were about twice as frequent as expected from national data, with a 3.3-fold excess of chronic bronchitis in never smokers. Microwave popcorn workers had statistically higher rates of regular trouble breathing and unusual fatigue, compared with workers in two lower exposure groups. Strong exposure-response relationships existed between quartile of estimated cumulative exposures to diacetyl and respirable dust and frequency and degree of airway obstruction.

NIOSH noted that “BBA butter flavoring, which contains diacetyl and many volatile organic compounds, has caused damage to epithelial lining of the rat respiratory system in animal experiments,” and concluded “we believe that butter flavoring vapors in the air caused lung disease in workers at this plant.” NIOSH thought the exposure was so problematic they recommended the company set up an industrial ventilation hood in the “quality control area” – you know, the place where they’re just microwaving popcorn like you and me. The company didn’t remove diacetyl from their butter flavoring until 2007, five years after the NIOSH recommended it.

The problem is so serious there’s a page up on the CDC website for the specific problem of “flavorings-related lung disease.” But that’s for the workers, who were exposed to extraordinary amounts of the chemicals day in and day out in a closed space with inadequate ventilation, often without any sort of protection like respirators. Can eating two bags of popcorn a day for ten years, like Wayne Watson did, really expose someone to enough diacetyl that they develop bronchiolitis obliterans?
Continue Reading The Science And Law Behind The $7 Million Microwave Popcorn Lung Jury Verdict

Do you think it’s fair to ask riding lawnmower manufacturers to pay for the medical care of children injured in riding lawnmower accidents? How about asking meat blender suppliers to compensate people injured by commercial blenders? Neither of these events happen all that often, and the cost would be passed on to consumers, making the question: would you mind paying a little bit more for your lawnmower to set up a fund for children who lost part of their leg, sometimes much more, after being run over by riding lawnmower? How about a little bit more for your hamburger in case the person blending the meat loses their hand when the blades unexpectedly keep spinning?

Sometimes, a court just plain gets it right, and Justice Nix of the Pennsylvania Supreme Court got it right 34 years ago in adopting strict liability in the Commonwealth of Pennsylvania:

The realities of our economic society as it exists today forces the conclusion that the risk of loss for injury resulting from defective products should be borne by the suppliers, principally because they are in a position to absorb the loss by distributing it as a cost of doing business. In an era of giant corporate structures, utilizing the national media to sell their wares, the original concern for an emerging manufacturing industry has given way to the view that it is now the consumer who must be protected.

Azzarello v. Black Bros. Co., 391 A.2d 1020 (Pa. 1978). That’s the argument eminent torts professor William Prosser had been making for “strict liability” for decades. See, e.g. Prosser’s Strict Liability to the Consumer, 18 Hastings L.J. 9 (1966). The concept of strict liability was quite simple: whereas an injured person could always sue a manufacturer for negligence and then prevail by proving the manufacturer acted unreasonably by failing to guard against foreseeable harms, strict liability eschewed any question of the manufacturer’s conduct and instead focused on the product itself, making manufacturers liable for injuries caused by products that were so unsafe as to be “defective.”

The whole point of strict liability was, as explained by Azzarello, to make suppliers of surprisingly unsafe goods (i.e., goods that turned out to be more dangerous than consumers expected they would be) the insurer for accidents caused by the product. It’s a recognition that, in this day and age, consumer goods can contain a variety of risks that are more easily borne by the manufacturer, which made the decision to market the product, has better access to insurance, and can distribute the costs of these unexpected injuries on other consumers. In practice, strict liability is usually only successful where the product totally failed, resulting in catastrophic injuries. Consider some of the early strict liability cases, the ones characterized more as warranty cases than as the tort of strict liability:Continue Reading The Purpose of Strict Liability In Pennsylvania