using plaintiff firms’ marketing websites against them ... · using plaintiff firms’ marketing...

Using Plaintiff Firms’ MarketingWebsites Against Them: Pufferyand Ethical Issues...................1

STATE FARM v. CAMPBELL –Its Implication and Application aYear Later................................2

Impact of the Restatement(Third) Torts: Product Liability................................................3

What They Don’t Know: UsingEvidentiary Law to ExcludePotentially Damaging Facts andOpinions..................................5

Establishing an EquitableException to the One-YearLimitation on Removal............6

Kentucky Supreme CourtAdopts Learned IntermediaryDoctrine Larkin v. Pfizer, Inc. etal., Case No. 2002-SC-0746-CL, Rendered June 17, 2004................................................8

The Implication of Buckman:Exclusion of "Fraud-on-the-FDA" Evidence......................9

"Some Accurate Information isBetter Than No Information atAll"..........................Addendum

Using Plaintiff Firms’ Marketing WebsitesAgainst Them: Puffery and Ethical IssuesDoug Dennis

Often websites created by plaintiff firms are marketingtools disguised as reliable sources of information. Theattorneys using these marketing tools are often notafraid to push the edge of the envelope of what is truth-ful or what is allowed by the ethical rules. Some of thethings that plaintiff attorneys say in these web sites canbe used in the defense of a case.

Contingent FeesMany websites created by plaintiff firms provide only apartial explanation of how contingency fee cases work.Attorneys will try to entice potential clients with the fol-lowing statement: “The initial consultation is free ofcharge, and if we agree to handle your case, we willwork on a contingency fee basis, which means we getpaid for our services only if there is a monetary recoveryof funds.” This is a potential violation of the DisciplinaryRules in many states—including Ohio—because it failsto disclose that plaintiffs may be responsible for expens-es and costs, which can stack up against a plaintiff inthe complex litigation of a pharmaceutical tort lawsuit. Italso fails to disclose the immediate conflict of interestbetween the attorney seeking a quick settlement at lowcost and the plaintiff seeking the maximum payout.Many plaintiffs are disappointed to find that their attor-ney does very little to move their case forward. Someplaintiffs’ attorneys often sit back, do as little as possiblewith the majority of their claims, and work on only thebest claim with the hope that they can get a settlementfor their entire “inventory” of cases, regardless of themerit of some of the individual claims. Sometimes,plaintiff firms cover these issues with very tiny print atthe bottom of a long web page or a second web page.

Dubious InformationAnother interesting feature of the websites designed byplaintiff firms is the often misleading information provid-ed. For example, one site talks a great deal about thevarious drugs that it deems “toxic,” and then actuallysells advertising to other entities based on the numberof hits that such information retrieves.

Some of the information contained on such websites isintentionally dubious. For example, another website iscalled “Fen-Phen-Legal-Resources.com” but directs youto what is essentially an advertisement for a nationalPlaintiff firm, not an unbiased information source that theaddress might lead you to expect. A great deal of theinformation contained on sites such as this is dated, andincludes op-ed pieces, media summaries, and sensa

tionalistic headlines, with little to nothing in the way ofreliable medical studies or information.

While plaintiff attorneys are not permitted under the ethi-cal rules of most states to hold themselves out asexperts in bringing lawsuits against pharmaceutical com-panies, many of these marketing websites use superla-tives to discuss their expertise and intentions in repre-senting plaintiffs. These statements are made in oneplace on the website, and then disclaimed in otherplaces on the website in tiny print. These disclaimersoften state that no attorney-client relationship is formedand that the information on the website is not legaladvice. Then, the various state-required disclaimers areusually listed, but out of context from the statements thatthe disclaimers are intended to disclaim.

Catchy MarketingCatchy marketing is the hallmark of many of these web-sites. For example, one web site asks plaintiffs to call 1-800-bad-drug, while another calls itself “The People’sFirm.” Some web sites claim that they are “nationalfirms” while in the tiny print at the end state that they areonly practicing in South Carolina. Or Illinois. Or Illinoisand Iowa. Perhaps the best is 1-800-jus-tice.

These marketing ploys may bring clients to their lawfirms. But they might well embarrass the law firm whenit comes discovery questions as to how the claimantsfound their law firm.

Could These Marketing Ploys Backfire?Catchy 1-800 numbers and misleading statements aredesigned to get plaintiffs, but they could backfire. Oneof the important audiences for deposition testimony isoften the claimant herself. When deposing the claimant,good defense attorneys will probe how they found theirattorney, what information led them to pursue a claim,how they received testing that led them to believe thatthey had a medical problem, and what has been done toget them adequate treatment.

Additionally, assuming that the claimant testifies that itwas website marketing by the plaintiff firm that led totheir choice of counsel, some of this marketing mayresult in embarrassment to the Plaintiff law firm. Thishas played well before some juries, who are increasinglyskeptical about law firms that take upwards of 40% of aplaintiff’s settlement or verdict, and that operate more onclaim inventory than on earnest work on behalf ofclaimants.

So do not forget to explore these areas and do your owninvestigation of your opponent’s marketing tactics—itcould yield big dividends with both opposing claimantsand with triers of fact. g

August 2004

STATE FARM v. CAMPBELL – ITS IMPLICA-TIONS AND APPLICATIONS A YEAR LATERSteve Gracey

Over a year has passed since the United StatesSupreme Court issued its decision in State Farm Mut.Auto Ins. v. Campbell (2003), 538 U.S. 408, 123 S.Ct.1513, 155 L.Ed. 2d 585. Since Campbell, the mannerin which defendants facing catastrophic punitive dam-age claims have approached their litigation plan andstrategy has changed significantly. Campbell allowsdefendants to aggressively pursue various pre-trial andpost-trial remedies to punitive damage claims andawards. This article discusses the changes to theseremedies in light of Campbell.

In Campbell the plaintiffs brought an action againstState Farm Mutual Automobile Insurance in a Utah trialcourt, alleging bad faith, fraud and intentional inflictionof emotional distress. The trial court denied StateFarm’s motions to exclude evidence of its dissimilar out-of-state conduct and out-of-state business practices thatbore no relationship to the plaintiffs’ claims. After con-sidering this evidence, the jury returned a plaintiff ver-dict of $2.6 million in compensatory and $145 million inpunitive damages. The trial court reduced theseawards to $1 million in compensatory and $25 million inpunitive damages. The Utah Supreme Court granted awrit of certiorari and reinstated the $145 million punitivedamages award.

The United States Supreme Court granted a writ of cer-tiorari on the matter. The Supreme Court reversed andremanded the Utah Supreme Court’s reinstatement ofthe $145 million punitive damages award. It held thatthe Due Process Clause prohibits the imposition ofgrossly excessive or arbitrary punishments on a tortfea-sor, such as punitive damages that arbitrarily deprive adefendant of property. The Court laid out the followingthree factors for consideration when reviewing a puni-tive damage claim or award: 1) the degree of reprehen-sibility of the defendant’s misconduct, 2) the disparitybetween the actual or potential harm suffered by theplaintiff and the punitive damage award, and 3) the dif-ference between the punitive damages awarded by thejury and the civil penalties authorized or imposed incomparable cases.

In light of the Campbell factors, punitive damagesshould be awarded only if the defendant’s conduct is ofsuch a reprehensible nature that it warrants the imposi-tion of further sanctions to punish or deter the defen-dant. A state does not have a legitimate concern forimposing punitive damages to punish a defendant forunlawful acts and conduct committed outside of the

state’s jurisdiction, and punitive damages should onlybe awarded for conduct directed towards the plaintiff.Further, punitive damage awards exceeding a single-digit ratio between the punitive and compensatory dam-ages will rarely satisfy due process.

Based on the holding of Campbell and the case lawleading up to it, defense counsel have numerous pre-and post-trial remedies to defend against punitive dam-age claims.

DISCOVERYSince a plaintiff is only entitled to discovery responsesthat are likely to lead to the discovery of admissible evi-dence, defense counsel should object to any discoveryrequests that seek information, documents, or other evi-dence regarding a defendant’s out-of-state conduct. Asheld in Campbell, a defendant’s out-of-state conduct isnot admissible to support a punitive damages claim.Thus, these requests are not likely to lead to the discov-ery of admissible evidence. Defense counsel shouldonly produce evidence that relates to the defendant’s in-state conduct and conduct towards the plaintiff.Therefore, early in the litigation process, defense coun-sel should begin the fight to prevent inadmissible evi-dence from ending up in the hands of the plaintiff.

MOTION FOR SUMMARY JUDGMENTA motion for summary judgment is an early and costefficient way to defend against a punitive damagesclaim. When ruling on a motion for summary judgment,the court must determine if a given factual disputerequires submission to a jury. Anderson v. LibertyLobby, Inc. (1986), 477 U.S. 242, 255, 106 S. Ct. 2505;91 L. Ed. 2d 202. This determination must be guidedby the substantive evidentiary standards that apply tothe case or claim. Id. In most jurisdictions, a plaintiffhas a heightened burden that she must meet to prevailon a punitive damage claim. A motion for summaryjudgment will force a court to determine at an earlierstage in the litigation whether a genuine issue of materi-al fact exists as to whether the plaintiff will be able tomeet this burden. Not only is a motion for summaryjudgment an excellent way to remedy a punitive dam-age claim, if the motion is denied, the decision will pro-vide critical information needed to effectively evaluatethe client’s potential risk of being hit with a punitivedamage judgment.

MOTION IN LIMINEIf a motion for summary judgment is denied, the attor-ney should file a motion in limine to exclude certain evi-dence and arguments from trial. Campbell establishesthat the Interstate Commerce Clause and theFourteenth Amendment Due Process Clause require the

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court to exclude certain types of evidence from a jurydeciding a punitive damages claim. Specifically, a plain-tiff may not introduce or argue evidence of the defen-dant’s net worth, capitalization, wealth, or financial con-dition. Further a plaintiff may not introduce evidence ofharm suffered by persons other than the plaintiff orargue that the defendant should be punished for thesame. Finally, a plaintiff is precluded from introducingevidence relating to harm suffered by persons outsideof the jurisdiction.

Defense counsel should file a motion in limine toexclude evidence and arguments regarding these factsfrom trial. If a court denies this motion and a jury con-siders this evidence in reaching its verdict, the defen-dant will have a strong argument on which to appealany punitive damages awarded by the jury.

JURY INSTRUCTIONSIf a jury is permitted to consider awarding punitive dam-ages, the jury instructions submitted to the jury are ofcritical importance. Defense counsel should submit aninstruction stating that a jury cannot punish a defendantfor any out-of-state conduct. The jury should also beinstructed to not consider the defendant’s net worth,capitalization, wealth, or financial condition.

It is absolutely necessary to create an adequate recordfor an appeal. As such, special interrogatories regard-ing the factors considered by a jury when awardingpunitive damages are helpful. As reiterated inCampbell, the most important factor an appellate courtmust consider in reviewing a punitive damages award isthe degree of reprehensibility of the defendant. Aninstruction requiring the jury to set forth this degree willprovide a strong record for the appellate court to exam-ine when considering an appeal of the award. If thepunitive damage award is grossly over-proportionate tothe degree of reprehensibility indicated by the jury, theaward should be reversed on appeal. In addition, aspecial interrogatory detailing the difference betweenthe actual or potential harm suffered by the plaintiff andthe punitive damage award submitted to a jury may be helpful.

As held in Campbell, few awards exceeding a single-digit ratio between punitive and compensatory damageswill satisfy due process. This ratio can easily be deter-mined by the use of a special interrogatory. With theproper jury instructions, defense counsel can limit thefactors a jury considers when deciding a punitive dam-ages claim, while at the same time create an adequaterecord for appeal.

POST TRIAL MOTIONS – MOTIONS FOR JUDGMENTAS A MATTER OF LAW AND FOR A NEW TRIALIf a jury awards punitive damages, defense counselshould immediately file motions for a judgment as amatter of law and for a new trial. If these motions arefiled, the Due Process Clause of the FourteenthAmendment of the United States Constitution requiresthe trial court to conduct a de novo review of the evi-dence presented to and considered by the jury award-ing a punitive damages award.

To conduct this review the court must examine threefactors: 1) the degree of reprehensibility of the defen-dant’s misconduct; 2) the disparity between the actualor potential harm suffered by the plaintiff and the puni-tive damages award; and 3) the difference between thepunitive damages awarded by the jury and the civilpenalties authorized or imposed in comparable cases.If the punitive damage award is not warranted underany of the three factors, the court must grant the posttrial motion or risk being reversed on appeal.

In short, Campbell and the case law leading up to ithave provided defense counsel opportunities to pursuea more aggressive defense against punitive damageclaims. Counsel should be aware of all of the availableremedies to evaluate and defend punitive damageclaims to the satisfaction of their clients. Since theseremedies are available at all stages of litigation, theyshould form a strategy early and should advise theirclients regularly of the best ways to prevent or at a mini-mum reduce overwhelming punitive damage awards. g

Impact of the Restatement (Third) Torts:Product LiabilityJack B. Harrison

Pharmaceutical companies and lawyers practicing in thearea of drug and medical device product liability arecertainly familiar with the Restatement (Second) Torts §402A, along with its accompanying "comment k."Section 402A generally imposes strict liability on phar-maceutical companies for "any product in a defectivecondition" even where the seller "has exercised all pos-sible care in the preparation and sale" of the product.However, comment k generally provides for an exemp-tion from strict liability products, including prescriptiondrugs, where those products are "unavoidably unsafe."

Under the "risk-utility" test set forth in comment k, incertain circumstances, it is in the public interest to allowunsafe drugs to be marketed because the benefits ofthe drugs justify the risks. Application of comment k isoften justified as a way to provide a balance between a

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pharmaceutical manufacturer’s responsibility to providesafe drugs to consumers and the encouragement ofresearch and development of new drugs.

In the application of comment k, courts have employedvarious analyses, with some viewing comment k ascomplete protection from liability for the defectivedesign of prescription drugs and others applying com-ment k on a case-by-case basis. See Freeman v.Hoffmann-La Roche, Inc., 618 N.W.2d 827, 835-36(Neb. 2000) (listing cases from jurisdictions providing"blanket immunity" from strict liability under comment k).

In 1997, the American Law Institute published theRestatement (Third) Torts: Product Liability with the goalof modernizing and clarifying the law of product liability.The express stated purpose of Section 6 of theRestatement (Third) was to clarify the language of theRestatement (Second) and bring more uniformity todrug design defect law. Section 6, "Liability ofCommercial Seller or Distributor for Harm Caused byDefective Prescription Drugs and Medical Devices," provides, in part, that:

1) pharmaceutical companies that sell or distributedefective prescription drugs are subject to liabilityfor harm caused by the defect;

2) a drug is defective if it is not reasonably safe dueto inadequate design;

3) a prescription drug is not reasonably safe due todefective design if the foreseeable risks of harmposed by the drug are sufficiently great in relationto its foreseeable therapeutic benefits such thatreasonable healthcare providers, knowing of suchforeseeable risks and therapeutic benefits, wouldnot prescribe the drug for any class of patients(essentially a "reasonable physician" test); and

4) a drug is not reasonably safe due to inadequateinstructions or warnings if reasonable instructionsor warnings regarding foreseeable risks of harm arenot provided: a) to the healthcare provider, or b) tothe patient when the pharmaceutical companyknows or has reason to know that the healthcareprovider will not be in a position to provide thewarning, such as in the case of mass immuniza-tions.

From the standpoint of pharmaceutical manufacturers,Section 6 can be seen as both potentially helpful andharmful. For example, section 6(c), the “reasonablephysician” test, if adopted by the courts, could prove tobe helpful to pharmaceutical companies in defeatingfailure-to-warn claims because it appears, in theory atleast, to advocate something close to a "no-defect" pre-

sumption for drug designs. Section 6(d), on the otherhand, has the potential to increase liability for pharma-ceutical companies, particularly with respect to Direct-To-Consumer advertising.

Section 6(c), by premising the test for design defect onwhether the drug would be prescribed for "any class ofpatients," potentially allows a pharmaceutical defendantto defeat a plaintiff's claim by demonstrating that thedrug in question had some benefit for some individual.For example, comment f to section 6 notes that "giventhis very demanding objective standard, liability is likelyto be imposed only under unusual circumstances."

Since being approved by the ALI in 1997, few courtshave had the opportunity to address section 6(c). Forthe most part, those that have addressed it have eithermerely mentioned the section without comment or havedeclined to apply it in the absence of state precedent.However, in Freeman, Nebraska rejected section 6(c)and the "reasonable physician test." In doing so, theFreeman court summarized several criticisms of section 6(c).

lFirst, the court observed that section 6(c) does notaccurately restate the law. The few cases that theThird Restatement cites in support of the "reason-able physician" test also apply the "risk-utility" testassociated with Section 402A and comment k.

lSecond, the court found the "reasonable physician"test artificial and difficult to apply, in that it is a bal-ancing test that focuses on a variety of factors,including the existence of an alternative design andrequires fact finders to presume that physicianshave as much or more knowledge about a prescrip-tion drug as the pharmaceutical company itself.The court believed the test ignores the possibilitythat physicians may prescribe drugs they are famil-iar with or for which they have received advertisingmaterial, even when studies indicate that betteralternatives are available.

lThird, it found that the test lacks flexibility and treatsdrugs of unequal utility equally. For example, adrug used for cosmetic purposes but which causesserious side effects has less utility than a drug thattreats a deadly disease and has serious sideeffects. In each case, the drugs would likely beuseful to a class of patients under the reasonablephysician standard for some class of persons.

lFinally, the court stated that the test allows a con-sumer's claim to be defeated simply by a statementfrom the defense's expert witness that the drug at


issue had some benefit for any single class of peo-ple. Thus, the court reasoned that application ofsection 6(c) could shield pharmaceutical companiesfrom a wide variety of suits that could have beenbrought under comment k of the SecondRestatement .

The court concluded that section 6(c) had no basis inthe case law and was too strict a rule, under whichrecovery would be nearly impossible.

While seemingly beneficial to pharmaceutical compa-nies because it provides a more rigid standard by whichto judge the risks of a given drug, the criticisms of thefirst court to address the design defect portion of sec-tion 6 may have some influence on cases that followand may ultimately detract from the strength and guid-ance that section 6 would ostensibly provide.Therefore, until more courts have addressed its applica-tion, section 6(c) does not seem to provide a reliableframework by which pharmaceutical companies canpredict liability for drug design defects.

Additionally, section 6(d) recognizes that a pharmaceuti-cal company may need to warn a consumer directlywhen the healthcare provider is not in a position to pro-vide that warning. While it is difficult to imagine a sce-nario where a physician would not be in a position toprovide a patient with warnings and instructions for aprescription drug's use, comment e to section 6 notesthat an argument can be made that pharmaceuticalcompanies who directly communicate with consumersregarding a particular drug should not escape liability"simply because the decision to prescribe the drug wasmade by the healthcare provider." The Restatement(Third) "leaves to developing case law" the decisionwhether or not a DTC advertising exception to thelearned intermediary rule should be recognized. TheNew Jersey Supreme Court, in Perez v. Wyeth, 734A.2d 1245 (N.J. 1999), held that such an exceptionshould be recognized in certain circumstances. Likesection 6(c), section 6(d) has not been widelyaddressed by the courts, so it remains to be seenwhether a DTC advertising exception to the learnedintermediary doctrine will be recognized.Pharmaceutical companies and attorneys who advisethem should nevertheless be aware of the possibility ofincreased liability with regard to the adequacy of theirwarnings under section 6. g

What They Don’t Know: Using Evidentiary Lawto Exclude Potentially Damaging Facts andOpinionsJay Schoeny

Excluding Expert Opinions on Ethics, Morality and MotiveWe find ourselves in an era of unprecedented publicscrutiny and censure of corporations and corporateexecutives. In this atmosphere, the plaintiffs’ bar is allthe more likely to try to attack the ethics and moralityunderlying decision-making by corporate defendants,whether or not there is any basis to do so. Americanjuries, influenced by corporate scandals and growingmore accustomed to viewing corporate leaders led inperp-walks and sentenced to prison terms, are becom-ing predisposed to a belief that corporate America is anunethical and immoral place. It is the responsibility ofdefense attorneys in civil litigation to dissuade them ofthat belief, and the first step in doing so is to keep theplaintiffs’ bar from introducing speculative testimony tothat effect.

Plaintiffs’ experts routinely attempt to testify to allegedethical breakdowns of pharmaceutical defendants,especially in the context of the presentation of, andreaction to, clinical testing of drugs and medicaldevices. The testimony is inherently subjective andintentionally inflammatory. It is used to elicit an emo-tionally charged response and thereby unfairly prejudicethe jury. It is therefore important to identify and preventdiscussion of those opinions before they reach the jury.Fortunately, because of the speculative, irrelevant, andpotentially prejudicial and confusing nature of thesetypes of opinions, they are ripe for a preemptiveDaubert challenge.

The familiar principles underlying Daubert and its progeny have been codified in FRE 702. The Rule provides that “if scientific, technical or other specializedknowledge will assist the trier of fact to understand theevidence or to determine a fact in issue,” a witness whohas been properly qualified as an expert may offer opin-ion testimony only if “(1) the testimony is based uponsufficient facts or data, (2) the testimony is the productof reliable principles and methods, and (3) the witnesshas applied the principles and methods reliably to thefacts of the case.”

In a recent development in the Rezulin ProductsLiability MDL, Judge Lewis Kaplan, in a thoughtful andwell-reasoned opinion in In Re: Rezulin ProductsLiability Litigation, MDL No. 1348, S.D. N.Y, Feb. 27,2004, granted Warner-Lambert’s motions in limine to


exclude, among other things, what constitutes ethicalbehavior for a company, as well as, the motive, intent,and state of mind of company employees, FDA employ-ees, and authors of scientific authors. Judge Kaplan’sanalysis in granting the motions was threefold byassessing lack of reliability under FRE 702 andDaubert, lack of relevance under the same, and thepotential for undue prejudice and confusion under FRE 403.

At the outset, Judge Kaplan noted that the proposedethics testimony of the plaintiffs’ witnesses was basedon personal, subjective views rather than on “knowl-edge.” Thus, the very core requirement of FRE 702had not been met. He furtherexplained thatopinionsregarding the intent, motive, or state of mind of a corpo-ration has “no basis in any relevant body of knowledgeor expertise.” Such determinations are lay matters forthe jury that require no expert testimony.

This analysis comports with the line of cases that havefollowed Daubert. Issues of ethics, morality and motiveare non-scientific, non-technical matters that are withinthe common understanding of jurors. Expert testimonyon these issues is not only unnecessary, but it also isinappropriate and almost always unfounded. It isunfounded because few, if any, experts called in phar-maceutical litigation that are qualified in scientific ortechnical fields could also qualify as experts on corpo-rate intent or the goals of maintaining a profit-makingorganization subject to standards, customs, rules, regulations, and influence from shareholders and public opinion.

Furthermore, if the witness relies solely or primarily onpersonal experience to reach his or her opinions, thenthe witness must explain how that experience leads tothe conclusion reached, why that experience is a suffi-cient basis for the opinion, and how that experience isreliably applied to the facts. When the conclusion is astenuous as whether or not the motive and intent under-lying a business decision is ethical, it is hard to imaginea case where personal experience could provide suffi-cient foundation.

Even if we assumed that ethics testimony was basedupon a reasonable foundation and was appropriate forexpert analysis, it would not meet the second leg ofJudge Kaplan’s analysis. The testimony is irrelevant. It cannot meet the threshold requirement of FRE 702because it does not assist the fact-finder in determininga factual dispute at issue. The key issues in product lia-bility litigation are whether the defendant manufacturersbreached a legal duty to the plaintiff in manufacturing,labeling and marketing their products and, if so, whether

any such breach proximately caused the plaintiff’salleged injury. Personal opinions about ethics andmorality underlying business decisions do not bear onthe legal issues. In a classic example, plaintiffs’ expertsopine that profit motive leads to or indicates corruptionand indifference to dangers to consumers. Not only isthe conclusion a logical fallacy, it does nothing to provethat the defendant breached a legal duty to the plaintiff.

Testimony on ethics and morality is not only vulnerableto attack on foundation and relevance, it is also poten-tially prejudicial and confusing to the jury. As mentionedabove, the testimony is inflammatory and thus, emotive.It is akin to character testimony, and by drawing onestablished bias against corporations, is intended to(mis-)characterize the moral fiber of the manufacturingdefendant. Also, as the previous comments on rele-vance imply, such testimony can easily be interpretedas alternative and improper grounds for decision onbases other than the pertinent legal standards.

For all of these reasons, “expert” opinions on morality,ethics and motive in pharmaceutical litigation should beinadmissible. A Daubert motion in limine will set thestage well for an early order against such testimony. Inaddition, defense counsel must continue to be percep-tive at trial to anticipate and preclude such testimonyfrom reaching the jury’s ears. g

Establishing an Equitable Exception to theOne-Year Limitation on RemovalJoseph Tomain & Peter Cummins

There is a concerning trend of forum shopping in drugand medical device litigation by plaintiffs. Specifically,plaintiffs try to avoid removal to federal court by naminga non-diverse defendant, such as the prescribing physi-cian or pharmacy. Yet, they have no intention of actual-ly pursuing the non-diverse defendant and in manycases will dismiss that defendant shortly after the one-year limitation under 28 U.S.C. §1446(b) has expired.Not only is this tactic forum shopping, it also results inthe same harm as fraudulent joinder. Because suchtactics are improper, federal courts should uniformlyadopt an equitable exception to the one-year limitationon removal. Indeed, at least one Circuit has adoptedthis equitable exception.

As defense attorneys, removal from state court shouldalways be considered. There are good reasons forremoval. First, empirical evidence shows that a defen-dant is more likely to prevail in a federal court than in astate court. Second, in some states like Kentucky, thestate standard for summary judgment is higher than in


federal courts. Unfortunately, because of the presenceof a non-diverse defendant, removal is not always an option.

Plaintiffs’ attorneys often rely on the presence of non-diverse defendants to keep a case in state court. Someattorneys baldly plead a medical negligence claimagainst treating physicians to keep a case in statecourt. Because most jurisdictions only require noticepleading, it is possible to plead such a claim withoutincluding many factual allegations. Moreover, becausethe fraudulent joinder standard is so strict, defendantsrarely succeed on getting a non-diverse defendant dis-missed under this theory.

A fallback strategy for defendants is to try to secure adismissal of non-diverse defendants within the one-yearperiod set forth in §1446(b). The natural course of litiga-tion, however, is often so prolonged that a dispositivemotion cannot be briefed and ruled upon in the one-year period. Because of these barriers, the questionbecomes: “Is your client necessarily stuck in statecourt?” The only circuit court to directly address theissue answered no.

In Tedford v. Warner-Lambert, 327 F.3d 423 (5th Cir.2003), the Fifth Circuit concluded that the one-year peri-od contained in §1446(b) is not an absolute bar toremoval. Tedford was a pharmaceutical product liabilitycase in which a non-diverse physician was named inthe complaint. Plaintiff’s counsel, however, failed toactually pursue a claim against that defendant. Plaintifffiled a notice of non-suit of the non-diverse physiciandefendant shortly after the expiration of the one-yearanniversary of the commencement of the action.Thereafter, the pharmaceutical defendant removed thecase. In affirming the district court's denial of a motionto remand, the Court of Appeals concluded that "Section1446(b) is not inflexible, and the conduct of the partiesmay effect whether it is equitable to strictly apply theone-year limit." Id. at 426. Plaintiff's conduct showedthat he manipulated the statutory removal process andwrongfully prevented the defendant to invoke his right toremoval. For this equitable reason, the court tolled theone-year limitations period. Id. at 428-29.

An equitable exception to the one-year time limitationset forth in §1446(b) is a reasonable response to count-er forum shopping tactics by plaintiffs and upholds thestatutory right of removal. But, whether the exceptionwill be adopted in other circuits is yet to be seen.District courts are split on the issue. Some hold that likea statute of limitations, the one-year removal period canbe tolled. Other courts find that it is a jurisdictional rule,and thus, not subject to exception. A review of cases

cited in Tedford in which the equitable exception hasbeen applied reveals the following similarities:

l The claim against the non-diverse defendant wascolorable based upon the pleadings (after all,removal from the outset is proper where there isfraudulent joinder);

lThe plaintiff failed to pursue the claim against thenon-diverse defendant (e.g., the plaintiff fails todesignate an expert witness who will testify that thenon-diverse physician breached the applicablestandard of care); and

l The plaintiff voluntarily dismissed the non-diversedefendant shortly after the one-year period runs.

When it appears that plaintiffs’ counsel is including anon-diverse defendant simply to avoid removal to feder-al court, defendants have reasonable grounds to arguefor adoption of an equitable exception. Indeed, Tedfordprovides federal appellate case law showing the neces-sity for and appropriateness of an equitable exception.Such an argument is especially persuasive when thefacts of a case are egregious. For example, in In reRezulin Prods. Liab. Litig., (Glossip), 00 Civ. 2843,Order, (S.D.N.Y. Jan. 30, 2004), the Rezulin MDL Courtfollowed Tedford and applied an equitable exception to§1446(b) noting that counsel for plaintiff had improperly“acted tactically to avoid removal.”

Nonetheless, counsel should be aware that there iscase law, which is cited in Tedford, holding that no equi-table exception exists. In short, this is a clear exampleof unsettled law. Therefore, when deciding to advancethis argument, counsel should consider bringing theirstrongest cases first to secure a favorable trend inthe law.

While far from set in stone, the equitable exception tothe one-year period set forth in §1446(b) is a viableargument that counsel for drug and medical devicemanufacturers can make in cases in which non-diversedefendants are voluntarily dismissed after one year.Adoption of such an exception would prevent the samekind of forum shopping that the fraudulent joinder doc-trine was designed to prevent. g


Kentucky Supreme Court Adopts LearnedIntermediary DoctrineLarkin v. Pfizer, Inc. et al., Case No. 2002-SC-0746-CLRendered June 17, 2004Susan Wettle

In a 4-3 opinion, the Kentucky Supreme Court adoptedthe learned intermediary doctrine as set forth in theRestatement (Third) of Torts: Product Liability Section6(d). The case was before the Court on a request forcertification of a question of law from the Sixth CircuitCourt of Appeals. The issue certified to the KentuckySupreme Court was: “Whether the learned intermediarydoctrine should apply in Kentucky to a case involving anallegation that a manufacturer of a prescription drugfailed to warn the ultimate consumer of risks associatedwith that drug, even though the manufacturer informedthe prescribing physician of those risks?” The majority’sopinion answered that question in the affirmative.

The underlying facts were straightforward. PlaintiffRobert Larkin was being treated by his internist, Dr.Jeffrey Reynolds, for sinusitis and muscular pain in hisshoulder. Dr. Reynolds prescribed Zithromax, an antibi-otic manufactured by Pfizer, Inc. for the sinusitis, andDaypro, a non-steroidal anti-inflammatory manufacturedby G. D. Searle for the shoulder pain. The prescribinginformation for each medication stated that Stevens-Johnson syndrome and toxic epidermal necrolysis –severe and sometimes life-threatening skin conditions --were rare but potential side effects of the drug’s usage.When he prescribed the drugs for Mr. Larkin, Dr.Reynolds was aware that these conditions were associ-ated with both drugs, as well as with most other drugsin their respective classes. However, it was not Dr.Reynold’s normal practice to inform patients of thisextremely rare risk, and he did not inform the plaintiff.A few weeks after he began taking the two medications,Larkin developed a skin rash that developed into severeblisters over a large portion of his body. Dr. Reynoldsdiagnosed the condition as toxic epidermal necrolysisand Stevens-Johnson syndrome, which he believedresulted from taking either Zithromax or Daypro or both.

The plaintiff filed a product liability suit against Pfizerand G. D. Searle, asserting counts for negligence, strictliability and breach of warranty. Following discovery,both defendants moved for summary judgment on thegrounds that, under the learned intermediary doctrine,the drugs were not defective or unreasonably danger-ous because full and adequate warnings had been pro-vided to the treating physician. Judge Thomas Russellof the Western District of Kentucky granted summaryjudgment for both defendants. While noting that no

appellate court in Kentucky had addressed the adoptionof the learned intermediary rule, Judge Russell’s opin-ion predicted that Kentucky courts would apply the doc-trine to the facts before him. The plaintiff appealed thesummary judgment ruling to the Sixth Circuit Court ofAppeals; following briefing and oral argument the SixthCircuit certified the question of law to the KentuckySupreme Court.

The majority’s Opinion by Justice Cooper discussesthree basic rationales that support the learned interme-diary rule. First, the prescribing physician is in a superi-or position to impart warnings concerning a drug andcan provide an independent medical decision as towhether use of the drug is appropriate for treatment of aparticular patient. Second, manufacturers lack effectivemeans to communicate directly with each patient.Third, imposing a duty to warn upon the manufacturerwould unduly interfere with the physician-patient rela-tionship, to the point where a consumer faced with along list of potential but rare side affects might foregobeneficial or even vital medical treatment. The Courtnoted that, although under the learned intermediary rulea manufacturer’s duty to warn runs only to the physicianintermediary, the warning must still be adequate andsufficiently apprise physicians of the dangerous propen-sities of the drug.

The Court’s Opinion notes that some exceptions to thelearned intermediary rule have been recognized and inlimited circumstances courts have held that the manu-facturer of a drug must warn the ultimate consumer. Afew courts have invoked an exception in the case ofmass immunizations, where the healthcare providermay not in a position to individually balance the risks foreach recipient, or in the case of oral contraceptives,where the patient often plays a much greater role inchoosing the drug. The Court noted that a third excep-tion for direct-to-consumer advertised drugs has beenrecognized by New Jersey only. The KentuckySupreme Court stated that none of the exceptionsapplied to the facts of the case before it and thereforedeclined to decide which, if any, of the recognizedexceptions to the rule should be adopted in Kentucky.

The Court then acknowledged the almost universalacceptance of the learned intermediary doctrine: Thecourts of 34 states have specifically adopted the rule bycommon law decision, two additional courts haveapplied the principals of the rule while not specificallyadopting it, and federal courts applying the law of nineother states and Puerto Rico have predicted that thosejurisdictions would adopt the rule or have interpreted theexisting state law as having adopted it. No court thathas directly addressed the doctrine as an exception to


the common law duty to warn has rejected the learnedintermediary rule per se.

The Court next addressed the arguments raised by theplaintiff against adoption of the learned intermediaryrule. First, plaintiff argued that under MontgomeryElevator Co. v. McCullough, Ky. 676 S.W.2d 776 (1984),all manufacturers have a “non-delegable duty” to warnthe ultimate consumer of the risks presented by theirproducts. The Court pointed out that Montgomeryinvolved an escalator, not a prescription drug, and thatthe Montgomery opinion quoted language regarding the “non-delegable duty” from a Washington state court case decided two years after the WashingtonSupreme Court adopted the learned intermediary rule,thus indicating that both the general “non-delegableduty” rule and the learned intermediary exception were compatible.

Next, the Court rejected the plaintiff’s argument that theKentucky General Assembly’s failure to mention thelearned intermediary rule in the Kentucky ProductLiability Act, KRS 411.300, et esq., indicated a legisla-tive intent not to adopt the rule in Kentucky. The Courtstated that the duty to warn is purely a common lawduty and is not contained anywhere in the ProductLiability Act. Thus if the Court were to apply plaintiff’sreasoning that the Product Liability Act is controlling,there would be no need for the learned intermediaryrule as there would be no duty to warn in the first place.

The Court also rejected the plaintiff’s alternative argu-ment that adoption of the learned intermediary rule is amatter of public policy that should be left to the legisla-ture. The Court held that the adoption of an almost uni-versally accepted exception to a common law rule wasnot a matter of public policy. Only three jurisdictionshave adopted the learned intermediary rule by statute,and all three enacted their statutes after their statecourts had adopted the rule by common law. Moreover,the learned intermediary rule is consistent withKentucky’s informed consent statute, KRS 304.40-320,which anticipates that doctors will inform their patientsof dangers inherent in proposed treatment.

Lastly, the Court rejected the argument that adoptingthe learned intermediary rule would immunize manufac-turers of prescription drugs from product liability claims.The manufacturers’ duty to warn remains; the rulemerely provides that the party to be warned is thehealthcare provider who prescribes the drug. If themanufacturer fails to adequately warn the healthcareprovider, the manufacturer is directly liable to the patientfor resulting damages.

Three members of the Court dissented from the majorityopinion, contending that a decision to adopt the learnedintermediary rule was a matter solely within the discre-tion of the Kentucky General Assembly, and not the judi-ciary. The dissent, authored by Justice Wintersheimer,argues that Kentucky’s legislature has preempted thefield of products liability by enacting the Product LiabilityAct which applies to all claims arising from the use ofproducts, regardless of the theory advanced. Becausethe Product Liability Act does not incorporate thelearned intermediary doctrine, the dissent claims thatthe doctrine should not be imposed “by judicial fiat.”

The dissent further argues that the doctrine should berejected because the development of direct-to-con-sumer pharmaceutical advertising has indelibly changedthe realities of physician/patient relationships. Citing tovarious journal articles regarding direct marketing ofpharmaceuticals, the dissent concludes that becausemanufacturers are now directly marketing to consumersand benefiting by increased sales, they must alsoassume an increased share in the risks and duties perti-nent to selling their products. g

The Implications of Buckman: Exclusion of"Fraud-on-the-FDA" EvidenceJack B. Harrison, Robert D. Shank, and Jeffrey H.Melucci

In September 2002, Dr. Lester M. Crawford, DeputyCommissioner of the Food and Drug Administration,announced the consolidation of the FDA's responsibilityfor reviewing new pharmaceutical products into itsCenter for Drug Evaluation and Research. In conjunc-tion with the announcement, Dr. Crawford noted that the"FDA's drug and biological product reviews have longbeen the gold standard for the world... By carefully combining part of our present biologics review operationresponsibilities with our drug review operation, FDA will be optimally positioned to uphold that gold standard by continuing to review novel pharmaceutical productspromptly and rigorously in an accountable and consistent manner."

While the FDA admits that the "gold standard" has beena direct result of the "vast majority of the pharmaceuti-cal industry sharing the FDA's commitment to the healthand safety of the public to produce high quality, reliableproducts," the communication, relationship, andexchange of information between the FDA and theindustries it regulates has recently been a touchstone ofgreat debate. Some commentators have claimed thatthe current regulatory system does not provide ade-quate incentives to reduce risks posed by regulatedwww.frostbrowntodd.com

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products. See, e.g., McGarity, "Beyond Buckman:Wrongful Manipulation of the Regulatory Process in theLaw of Torts," 41 Washburn L.J. 549 (2002). Othershave argued that the pharmaceutical industry hasbecome over-regulated because states too oftenattempt to assume the role of "mini-FDAs" in supervis-ing the regulation of drugs and medical devices, despitethe comprehensiveness of FDA regulation. See, e.g.,Semet, "Toward National Uniformity for FDA-RegulatedProducts," at http://leda.law.harvard.edu (a LegalElectronic Document Archive at the Harvard Law SchoolLibrary). States frequently allow their legislatures andtheir courts to supplement or even attempt to supersedeFDA determinations of safety and efficacy. Id.Manufacturers of FDA-regulated products, faced withforced compliance with different domestic and interna-tional regulatory regimes, and in defending products lia-bility suits, are often called to meet standards of carethat exceed what the FDA requires. Id.

In February 2001, the United States Supreme Courtentered the fray to address whether states could permittort claims based on allegations that a manufacturermade fraudulent representations to the FDA in order tosecure clearance for a regulated medical device.Whether a consumer should have a private cause ofaction based on "fraud-on-the-FDA" is an issue that hadsplit the federal circuit courts of appeal and even frag-mented the Supreme Court over the previous decade.

In the landmark decision of Buckman Co. v. Plaintiffs'Legal Committee, 531 U.S. 341 (2001), the SupremeCourt definitively addressed the issue by holding thatstate law "fraud-on-the-FDA" tort claims in a lawsuitstemming from injuries allegedly caused by a medicaldevice were impliedly preempted by the Federal Food,Drug and Cosmetic Act, as amended by the MedicalDevice Amendments of 1976 ("FDCA"). The Court con-cluded that the FDA, and not a private litigant, was bestsuited and equipped to police such fraud.

Although Buckman v. Plaintiffs' Committee went a longway towards clarifying a previously convoluted andequally contentious issue, the implications and reach ofthe Supreme Court's decision are just now being real-ized. Using the Buckman rationale, manufacturers ofregulated products have pushed to expand the preemp-tion defense to other types of products, other claims,and other procedural and evidentiary areas of the law,with mixed results. More specifically, Buckman hasfound broad application barring fraud-on-the-FDA claimswith regard to regulated pharmaceutical products aswell as medical devices. In addition, manufacturersattempting to preempt other tort claims, such as failureto warn, have raised the defense; they have, however,

had little success to date. More notably, Buckman hasfound application as a bar to fraud-on-the-FDA evidenceeven in the absence of fraud-on-the-FDA claims. As dis-cussed in more detail below, a federal district judgerecently excluded fraud-on-the-FDA evidence in a prod-uct liability case regarding a regulated pharmaceuticalproduct where the evidence was offered to show thatthe FDA was misled, or that information was intentional-ly concealed from the FDA.

Given these recent developments, this article examinesthe implications of Buckman and its progeny by tracingthe application of the preemption defense to casesinvolving regulated pharmaceutical products. The articlewill also examine the novel utilization of Buckman to barfraud-on-the-FDA evidence, in Bouchard v. AmericanHome Products Corp., 213 F.Supp.2d 802 (N.D.Ohio 2002).

State "Fraud-on-the-FDA" Claims Preempted byBuckmanIn Buckman Co. v. Plaintiffs' Committee, a class ofplaintiffs claimed injuries resulting from the use of ortho-pedic bone screws in the pedicles of their spines. As aresult, they sued the screw manufacturer and a consult-ant--Buckman Company--that assisted the screw manu-facturer in obtaining approval for the use of the screwsfrom the FDA. Although the plaintiffs settled their claimsagainst the screw manufacturer, they continued to pur-sue state law fraud claims against Buckman.Specifically, the plaintiffs claimed that Buckman madefraudulent representations to the FDA as to the intendeduse of the bone screws, and that as a result, thedevices were improperly given market clearance.Buckman responded that the plaintiffs' state law fraud-on-the-FDA claims were preempted by the FDCA.

Although the Court of Appeals for the Third Circuit rea-soned that the patients' fraud claims were neitherexpressly nor impliedly preempted, the Supreme Courtreversed, holding that the state law fraud-on-the-FDAclaims were preempted by the FDCA because policingfraud against federal agencies was not a field tradition-ally occupied by the states. As such, the general pre-sumption against preemption did not apply. Further, theCourt concluded that fraud-on-the-FDA claims conflictedwith the federal statutory scheme that empowered theFDA to punish and deter fraud against the FDA. TheCourt reasoned that the FDA used this authority toachieve a delicate balance of statutory objectives. By allowing state law tort claims, this balance could be skewed.

The Court identified a number of practical implicationsof upsetting the balance and flexibility maintained by the


FDA. First, state claims conflict with the FDA's responsi-bility to police fraud. Thus, complying with the FDA'sdetailed regulatory regime in the shadow of 50 states'tort regimes would dramatically increase the burden fac-ing potential applicants for FDA approval. Second,applicants would be discouraged from seeking approvalfor devices for fear that off-label uses might expose themanufacturer to unpredictable civil liability. Third, subse-quent adjudication of disclosures once deemed ade-quate by the FDA would encourage applicants to submitenormous amounts of information in an effort to ulti-mately satisfy 50 states' tort regimes. Such a disclosureof information would overburden the FDA, slow theprocess of approval, impede competition among predi-cate devices, and delay health care professionals' abilityto prescribe off-label uses.

Thus, the main thrust of the Court's decision inBuckman v. Plaintiffs' Committee was to restore thepower to police fraud in the regulatory process solely tothe FDA. The FDA alone must decide whether a manu-facturer has made a full and accurate disclosure ofinformation regarding its product. Consequently, claimsbased on a manufacturer allegedly defrauding the FDAare not appropriate to support a private right of action.

Extending Buckman to Drugs and Other Causes of ActionOnce the Supreme Court concluded that the FDA wasbest suited to police fraud in the regulatory process formedical devices based on preemption principles, thepush to apply these same principles to pharmaceuticalproducts and other claims soon followed.

Less than two weeks after Buckman was decided, adrug manufacturer argued that Buckman applied equallyto regulated pharmaceutical products. In Globetti v.Sandoz Pharmaceutical Corp., 2001 U.S.Dist.LEXIS2391, 2001 Westlaw 419160 (N.D.Ala.), the plaintiffasserted various state law tort claims including misrep-resentation, suppression, negligence, and inadequatewarning related to her use of the drug Parlodel. In addi-tion to the defendant's argument that the Buckman pre-emption doctrine applied to regulated pharmaceuticalproducts, the manufacturer also argued that Buckmanprecluded any claim relating to communications with theFDA, including claims regarding the adequacy of awarning and those for direct fraud against the consumerand medical community. 2001 U.S.Dist.LEXIS 2391, at *3.

The district court held that Buckman precluded theplaintiff from seeking damages based on allegations thedefendant lied to the FDA. Id. The court found no mean-ingful distinction between the preemption of fraud-on-

the-FDA claims regarding medical devices and thoseregarding regulated pharmaceutical products.

However, the court in Globetti also held that Buckmandid not preempt claims for inadequate warning (eventhough the warning itself was obviously approved by theFDA), nor was the plaintiff barred from asserting claimsseeking damages for misrepresentations that the manu-facturer may have made directly to the plaintiff. Id. at *5-6. The court concluded that:

Defendant owed separate duties beyond simply fulland fair disclosure to the FDA, duties not to marketa defective and unreasonably dangerous product,not to misrepresent or suppress the facts neededby physicians and consumers to assess the safetyof a product, and to adequately warn of known risksassociated with it. These duties existed irrespectiveof the FDCA.

Id. at *6. Consequently, while the court permitted theextension of the preemption defense beyond the med-ical device context, it failed to extend Buckman toclaims other than for fraud-on-the-FDA.

In Brasher v. Sandoz Pharmaceuticals Corp., 2001U.S.Dist.LEXIS 18364 (N.D.Ala.), the district court againconcluded that Buckman preempted fraud-on-the-FDAclaims against a drug manufacturer. However, the courtrefrained from concluding that the plaintiff's inadequatewarning claims or fraud claims based on direct misrep-resentations to the plaintiff and her physician were pre-empted under Buckman. Id. at *25.

Despite Globetti and Brasher, drug manufacturers con-tinue to raise the preemption defense to claims otherthan those for fraud-on-the-FDA, based on the rationaleout-lined by the Supreme Court in Buckman. In Carakerv. Sandoz Pharmaceuticals Corp., 172 F.Supp.2d 1018(S.D.Ill. 2001), the plaintiff filed suit against the manu-facturer of the drug Parlodel. The plaintiff asserted vari-ous state law claims for design defect, failure to warn,and negligence, but did not assert a claim for fraud-on-the-FDA.

While a common thread relevant to all these claims isthat the defendant's warnings were inadequate, thedefendant argued that any claim or theory based on itsfailure to warn is impliedly preempted under Buckman.More specifically, the defendant in Caraker v. Sandozargued that, if Illinois law held the defendant to a higherstandard of timely warning to drug users, via theirlearned intermediary, about the risks of taking the drug(even after new information surfaces after FDAapproval), any state jury verdict based on that dutywould actually conflict with the FDA's determinations ini-


tially approving the drug to be marketed with its warninglabel. The manufacturer also argued that allowingIllinois to enforce its traditional common law duty towarn against drug manufacturers would stand as anobstacle to the accomplishment of the federal objectiveof the FDA to regulate drug warning labels, a policy thatstood at the heart of the Buckman decision.

In response, the plaintiffs in Caraker argued that thereis no direct conflict because the FDA generally laysdown "minimum standards" that do not preempt statelaw standards. In addition, the Illinois traditional com-mon law duty to warn stands as no significant obstacleto the accomplishment of the federal objective, inas-much as the federal objective is to have drug manufac-turers take the initiative and attempt to strengthen exist-ing warnings whenever they see, or should see, the need.

Adopting the minimum standards argument, the court inCaraker held that the manufacturer failed to carry itsburden of showing that the plaintiff's claims based onfailure to warn theories were impliedly preempted. 172F.Supp.2d at 1032. In support of its holding, the courtnoted that plaintiff did not assert fraud-on-the-FDAclaims. The court also stated that the defendant failed toshow by clear evidence that Congress or the FDAintended to displace virtually the entire state productsliability scheme with respect to prescription drugs bymeans of a conflict. Id. at 1033. Without this clear evi-dence of preemptive intent, the court refrained fromholding that these claims were preempted.

Unlike Caraker, the plaintiff in Flynn v. American HomeProducts Corp., 627 N.W.2d 342 (Minn.App. 2001),attempted to assert common law tort and statutory con-sumer fraud claims based on a fraud-on-the-FDA theo-ry. The court concluded that the pre-emption defensebarred plaintiff's fraud claims. Id. at 349. It held that theexistence of state law claims against applicants for, andrecipients of, FDA drug approval, for alleged violation ofFDA regulations conflicts with the FDA's authority toconsistently police fraud within the agency's powers asexplained in Buckman. Id. The court noted that:

Like the claims of fraudulent procurement of med-ical device approval at issue in Buckman, the exis-tence of the federal regulations is critical to appel-lant's claims that those regulations were violatedand caused her injuries. Moreover, the BuckmanCourt's observation that 50 state-law causes ofaction for violation of the FDA's detailed regulationswould increase the burdens placed on applicantsfor FDA approval applies to drug manufacturers aswell as to medical-device manufacturers.

Id. For these reasons, the court concluded that theplaintiff's fraud-on-the-FDA common-law tort and statu-tory consumer fraud claims were preempted.

Flynn and the other cases discussed above clearlyextend Buckman beyond the medical device context toregulated pharmaceutical products. Despite the generalreluctance of courts to apply the preemption defense toclaims other than those for fraud-on-the-FDA, the use ofthe preemption defense is not limited to simply barringfraud-on-the-FDA claims. Notably, as explained below,Buckman has been applied to bar the admission of evi-dence of alleged fraud purportedly perpetrated by amanufacturer on the FDA, even where the plaintiff hasnot asserted fraud-on-the-FDA claims.

Excluding Evidence of Fraud in State Law ClaimsIn Bouchard v. American Home Products Corp., 213F.Supp.2d 802 (N.D.Ohio 2002), the plaintiff claimedthat her ingestion of diet drugs resulted in injuries. As aresult, she sued the drug manufacturer, asserting vari-ous product liability claims. Like the plaintiffs inBuckman, the Bouchard plaintiff also asserted state lawclaims for fraud. However, she contended that herclaims were based on direct fraud against her and herhealthcare provider. The plaintiff took care to argue thather claims were not based on fraud-on-the-FDA asser-tions. Despite the plaintiff's contention, she sought tointroduce evidence alleging that the defendant misledthe FDA or violated FDA regulations.

The manufacturer moved to exclude any evidence orargument that it misled the FDA. Given that the plaintiffcontended that it was not asserting fraud-on-the-FDAclaims, the defendant acknowledged that it was notrequesting that any causes of action be preempted;rather, it was only attempting to exclude evidence thatthe manufacturer misled the FDA. The defendant main-tained that the Supreme Court, in Buckman, held thatalleged noncompliance with strictures of the FDCA, orits implementing regulations, could not serve as thebasis for state law claims. Further, the manufacturercontended that the FDA and Department of Justicewere empowered to determine whether federal require-ments have been violated; notably, those agenciesnever found any such violations. Thus, any evidenceallegedly showing that violations existed should be excluded.

The plaintiff argued that the Buckman principle wasinapplicable to her case because: 1) Buckman standsfor the proposition that claims of fraud-on-the-FDA aris-ing only from medical devices are preempted, notclaims arising from the use of pharmaceuticals; and 2)


none of the causes of action in her complaint includefraud-on-the-FDA as an essential element.

The manufacturer responded by citing a number of thedecisions outlined above where courts have appliedBuckman's reasoning to pharmaceutical products. Inaddition, the defendant argued that plaintiff was makinga "semantic distinction" between claims captioned"fraud-on-the-FDA" and those captioned "inadequatewarning and design defect" that rely on evidence offraud on the FDA. The manufacturer noted commentaryon this issue explaining:

As a practical matter, these [fraud-on-the-FDA andinadequate warning] claims are indistinguishable,and any argument that plaintiffs can avoid preemp-tion simply by placing a different label on theirfraud-on-the-FDA arguments would renderBuckman a nullity. The key danger giving rise toconflict with federal law is not the existence of afraud-on-the-FDA claim per se, but the possibilitythat a jury will impose damages under state tort law premised on the argument that the FDA was defrauded.

"The Buck Stops Here: Product Liability ClaimsInvolving FDA-Regulated Products," 69 U.S.L.W. (BNA)2755 (June 12, 2001). The defendant contended thatany attempts by plaintiff to create "shadow FDA viola-tions" in lawsuits, especially where the FDA has foundnone, is prohibited by Buckman.

The Ohio federal court in Bouchard granted the manu-facturer's motion to exclude the fraud-on-the-FDA evi-dence. In so holding, it rejected the plaintiff's contentionthat fraud-on-the-FDA claims are limited to the medicaldevice context. The court stated that it need not engagein a "searching analysis of Buckman to determine thatclaims of fraud on the FDA are preempted," given thedecision in Kemp v. Medtronic, Inc., 231 F.3d 216 (6thCir. 2000), which barred any fraud claims premised onfalse representations to the FDA even though plaintiffsstyled their claims as direct fraud on the consumer andhealth care provider.

Having concluded that private actions premised onfraud-on-the-FDA were not permitted, the Bouchardcourt further determined to what extent, if any, allegedfraud-on-the-FDA evidence offered by the plaintiffshould be excluded. Although the court found that evi-dence concerning what information was or was not pro-vided to the FDA might be relevant to the plaintiff'sclaims of direct fraud against her and her healthcareprovider, the court excluded all evidence that wasoffered to show that the FDA was misled, or that infor-mation was intentionally concealed from the FDA. The

court also held that exclusion of further evidence maybe necessary to prevent confusion of the jury as to thenature of the plaintiff's claims.

It is noteworthy that the court in Bouchard excluded theevidence at issue despite the fact that the plaintiff didnot assert a state law claim for fraud-on-the-FDA. Inspite of the plaintiff's arguments that her claims focusedonly on the judgment and determinations made by thedefendant, and that the evidence the defendant alleged-ly misled the FDA was submitted only to prove mali-cious conduct, not to prove that the FDA was misled,the court held that such evidence must be excluded outright when it is offered to show "that information wasintentionally concealed from the FDA." 213 F.Supp.2d at 812.

Limited Availability of Punitive DamagesIn addition to the extension of Buckman to bar evidencethat a manufacturer allegedly misled the FDA, evenwhen the plaintiff was not asserting a fraud-on-the-FDAclaim, the decision in Bouchard is significant whenunderstood in the context of Ohio law on punitive dam-ages. Ohio Revised Code § 2307.80(C) authorizespunitive damages in conjunction with a regulated phar-maceutical product liability claim only when the manu-facturer misleads, or fails to disclose material informa-tion to, the FDA:

If a claimant alleges in a product liability claim thata drug caused harm to the claimant, the manufac-turer of the drug shall not be liable for punitive orexemplary damages in connection with that productliability claim if the drug that allegedly caused theharm was manufactured and labeled in relevantand material respects in accordance with the termsof an approval or license issued by the federal foodand drug administration under the "Federal Food,Drug, and Cosmetic Act,"... as amended, unless itis established by a preponderance of the evidence,that the manufacturer fraudulently and in violationof applicable regulations of the food and drugadministration withheld from the food and drugadministration information known to be material andrelevant to the harm that the claimant allegedly suf-fered or misrepresented to the food and drugadministration information of that type...

(Emphasis added). Given that evidence that the FDAwas misled by a manufacturer is subject to exclusionwhen it is offered to show that information was inten-tionally concealed from the FDA, as demonstrated byBouchard, punitive damages are arguably recoverablefor a product liability claim regarding a regulated phar-maceutical only when the FDA affirmatively concludes


that the manufacturer has misled the agency by formallyfinding a violation of the FDCA.

Such an outcome is entirely consistent with theSupreme Court's conclusion in Buckman that the FDAhas the sole responsibility to police fraud according tothe agency's judgment and objectives. After Buckman,the FDA, not a private plaintiff, is charged with deter-mining whether pharmaceutical companies have com-plied with the FDCA and the regulations thereunder. Ifthe FDA itself does not find a regulatory violation, whichis the driving force at the heart of Buckman, then theplaintiff is not entitled to punitive damages in Ohio, orunder similar statutes such as those in Arizona, NewJersey, North Dakota, Oregon, and Utah. Given that theFDA made no such determination regarding the regulat-ed product at issue in Bouchard, the plaintiff was,arguably, not entitled to punitive damages. It seemslikely that Bouchard will lead drug and medical devicedefendants to argue that no evidence of fraud-on-the-FDA should be admitted, nor should any plaintiff recoverpunitive damages in Ohio, Arizona, New Jersey, NorthDakota, Oregon, and Utah, or jurisdictions with similarstatutory provisions for a products liability claims regard-ing a regulated product absent a finding by the FDA thatthe manufacturer defrauded the agency.

Keep in mind, however, that Bouchard left the dooropen as to the admissibility of fraud evidence to supportdirect fraud claims. Like the decisions in Globetti andBrasher discussed above, the court in Bouchardexpressly stated that it could conceive of a situationwhere a plaintiff alleges claims for direct fraud againsther and her healthcare provider where evidence con-cerning what information was and was not provided tothe FDA might still be relevant. Nonetheless, the courtin Bouchard was clear that "evidence will be excluded

outright when it is offered only to show that the FDAwas misled, or that information was intentionally con-cealed from the FDA." 213 F.Supp.2d at 812.

ConclusionThe implications of Buckman v. Plaintiff's Legal SteeringCommittee on state tort law is not limited to the avail-ability of punitive damages under the state product lia-bility statutes discussed above. Buckman could alsohave the consequence of invalidating tort-reform laws inseveral states. See "Medical Devices: Food, Drug, andCosmetic Act Preempts State Law Fraud Claims," 27Am. J. L. & Med. 351 (2001). Legislatures in somestates, such as Michigan and New Jersey, have permit-ted fraud-on-the-FDA claims in exchange for limitationson other types of suits against drug and medical devicecompanies. Id.

Regardless of its potential effect on state tort schemes,courts will likely continue to apply Buckman v. Plaintiffs'Committee to invalidate any attempt to avoid or other-wise second-guess the FDA's policing of fraud. AfterBouchard, it is conceivable to argue that all fraud-on-the-FDA evidence should be excluded at trial, whetheror not such evidence is a necessary element of a statelaw tort claim. The extent that the Buckman decision willbe applied to other procedural, evidentiary, or substan-tive claims apart from fraud-on-the-FDA will undoubtedlycontinue to evolve.

Copyright © 2003 Defense Research Institute, Inc.For The Defense The magazine for defense, insurance and corporatecounselVol. 45, No. 2, February, 2003

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