Product Liability 2009 - Arnold & Porter LLP

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Update on U.S. Product Liability Law Sidley Austin LLP concluded that the amounts in controversy must be aggregated. [See Endnote 35.] Thus, when a defendant is faced with multiple identical or substantially identical claims in which the CAFA jurisdictional minimum is not met, the defendant may decide to seek a consolidation of those claims and, if successful, remove the consolidated action. Another strategy defendants may employ where a complaint disavows recovery for amounts at or above $5 million, or is silent as to the amount in controversy, is to contend that the allegations contained in the complaint place the jurisdictional minimum at issue. Defendants should beware, however, that a federal court’s willingness to consider extrinsic evidence that the minimum amount in controversy is met depends on the jurisdiction. [See Endnote 36.] Removal under CAFA is not a guarantee that the case will remain in federal court throughout the proceedings. Some courts have concluded that an action properly removed under CAFA may cease to be properly in federal court at some point during the proceedings. In Muehlbauer v. General Motors Corp., No. 05 C 2676, 2009 WL 874511 (N.D. Ill. Mar. 31, 2009), for example, the defendant properly removed a class action alleging a class in excess of 100 members and an aggregate amount in controversy of over $5 million. For each individual class member, however, the amount in controversy was “far below” $75,000. When certification of the class action was denied, the court concluded that subject matter jurisdiction based on CAFA was no longer proper, and held that it did not have diversity jurisdiction because the aggregate amount in controversy of the plaintiffs’ individual claims did not exceed the jurisdictional minimum of $75,000. In contrast, other courts have found that where a federal court has subject matter jurisdiction over a class action under CAFA at the outset of the case, such jurisdiction does not abate simply because the federal court denies certification of the class. See, e.g., Garcia v. Boyar & Miller, P.C., 2007 WL 1556961 (N.D. Tex. May 30, 2007). As consensus has not yet developed on these and other issues, defendants must ensure that they have a clear understanding of the current state of the law regarding CAFA in the jurisdictions in which they are defending against class action or mass action claims. Forum Non Conveniens Non-U.S. plaintiffs often file product liability claims in U.S. courts, seeking to benefit from certain procedural mechanisms and substantive law that are unavailable in their home countries. The advantages that encourage non-U.S. plaintiffs to seek redress in U.S. courts include substantial pretrial discovery, perceived generous damages awards (including punitive damages), and jury trials. With the high stakes and expenses associated with mass tort litigation, the U.S. system may also be appealing because of the availability of contingency fee arrangements and the absence of awarding attorneys’ fees to the prevailing party automatically. Defendants may move to dismiss non-U.S. plaintiffs’ claims on grounds of forum non conveniens. A court may dismiss a case based on forum non conveniens where the defendant successfully establishes that: (1) an alternative forum is available and adequate; and (2) the balance of factors related to the parties’ private interests and the public interest weighs in favour of adjudication elsewhere. Among the private and public interests a court will often consider are access to witnesses and documents, the ability of the defendant to implead necessary third parties, the interest of a plaintiff’s home country in resolving the dispute, and the burden placed on the U.S. court system if the case is not dismissed. [See Endnote 37.] In the past year, U.S. courts have issued decisions that highlight ICLG TO: PRODUCT LIABILITY 2009 © Published and reproduced with kind permission by Global Legal Group Ltd, London challenges non-U.S. plaintiffs may encounter when facing motions to dismiss on forum non conveniens grounds. One Florida appellate court dismissed a case on forum non conveniens grounds where the purportedly available and adequate forum had declined to exercise jurisdiction over the case. See Scotts Co. v. Hacienda Loma Linda, 2 So. 3d 1013 (Fla. Dist. Ct. App. 2008). In that case, the defendant moved to dismiss a Panamanian corporation’s claims based on forum non conveniens. The lower court denied the motion, but the appellate court reversed and required the parties to stipulate that the court would retain jurisdiction if the Panamanian court would not entertain the case based on preemption (or preventive jurisdiction). [See Endnote 38.] Id. at 1014-15. After the reversal, and while the Panamanian corporation sought rehearing and discretionary review in the Florida Supreme Court, Panama enacted a law that would block transfers based on forum non conveniens. [See Endnote 39.] Id. at 1015. The Panamanian corporation filed its complaint in the Panamanian trial court, including with it “allegations and exhibits sufficient to invite dismissal based on preemption and the blocking statute . . . .” Id. at 1016. The Panamanian court did precisely that. Id. at 1015-16. The case was subsequently reinstated in the Florida state court, and the defendant appealed such reinstatement. The Florida appellate court reversed the order of reinstatement. Id. at 1017-18. Central to its decision was the recognition that a non-U.S. plaintiff whose claims have been dismissed by a U.S. court cannot take steps to render the alternative forum unavailable either by “itself inducing the foreign court to dismiss the foreign action or . . . relying on foreign laws or decisions plainly calculated to preclude dismissal . . . .” Id. at 1017-18. Thus, the Florida appellate court concluded that where a court finds an alternative forum available and adequate, the plaintiff must submit to that forum and support that court’s exercise of jurisdiction. Practical considerations may carry significant weight in a court’s ultimate forum non conveniens analysis. For example, in the Factor VIII or IX Concentrate Blood Products MDL, defendants moved to dismiss the claims of Taiwanese citizens based on forum non conveniens. See In re Factor VIII or IX Concentrate Blood Prods. Liab. Litig., 595 F. Supp. 2d 855 (N.D. Ill. 2009). After considering expert testimony from both sides, and determining that Taiwan was an available forum, that Taiwan and California (where the complaints were filed) were on par as to adequacy (or inadequacy), and that on balance, factors favoured dismissal, it ultimately was a practical consideration on which the court’s decision hinged. See id. at 860, 866, 874. Anticipating that defendants would move to dismiss the case in Taiwan on the basis that the statute of limitations barred the plaintiffs’ claims if the district court granted the motion to dismiss, the district court concluded that dismissal would impose unnecessary expense on the plaintiffs where California courts would apply the same limitations law as would the Taiwanese court. Id. at 874. Thus, the district court denied defendants’ motion to dismiss on forum non conveniens grounds. Timeliness of a defendant’s motion to dismiss based on forum non conveniens may be another factor that the court considers. In the Vioxx MDL, the court granted a motion to dismiss claims of various non-U.S. plaintiffs based on forum non conveniens. In re Vioxx Prods. Liab. Litig., No. 2:05-MD-01657-EEF-DEK (E.D. La. Feb. 10, 2009). [See Endnote 40.] In so doing, the court rejected the plaintiffs’ argument that Merck’s motion should be dismissed as untimely. [See Endnote 41.] Id. at 22. The court noted that there is no precise time period within which a defendant must file a motion for dismissal under the doctrine of forum non conveniens. Id. at 20. Given the complexity of the Vioxx MDL, the court determined that Merck had filed its motion within a reasonable time. Id. at 20-22. The court also rejected a request by U.K. plaintiffs that Merck be required to agree that: (1) the parties would WWW.ICLG.CO.UK 27
28 Update on U.S. Product Liability Law Sidley Austin LLP have a trial by jury in the U.K.; (2) the parties could obtain evidence pursuant to the Federal Rules of Civil Procedure; (3) the parties would be permitted to present testimony at trial in the form of oral, video, and written depositions; and (4) that Merck would identify, produce and authenticate all documents it had produced, authenticated, listed, or offered as exhibits in previous U.S. trials. Id. at 23. The court indicated that the U.K. plaintiffs were seeking to circumvent the rules and procedures adopted by the U.K. which reflected its policy judgments. Id. at 24. The Vioxx court refused to undermine those judgments and impose conditions on a foreign court. Id. at 22-24. The increasingly transnational nature of litigation will undoubtedly be accompanied by growing efforts of non-U.S. plaintiffs to access U.S. courts and benefit from particular features of the U.S. judicial system. Although forum non conveniens motions are often granted, counsel should carefully consider practical considerations, appropriate timing of such motions, and supporting experts and evidence. Defence counsel also should be prepared to counter new attempts to circumvent forum non conveniens rulings, such as occurred in Scotts Co. and the Vioxx MDL. Settlements U.S. product liability proceedings can involve hundreds or even thousands of plaintiffs, creating the risk of large defence costs and substantial potential liability for manufacturers. Manufacturers tackle these risks in different ways. Some take the initial position that they will defend every case, one trial at a time; others choose to settle product liability claims early in the litigation. Yet, trying every case is not workable as a long-term solution for manufacturers if the proceedings involve hundreds or thousands of plaintiffs. Litigating claims can result in spiraling defence costs and liability awards, which creates uncertainty for the company. As a result, it is not surprising that some defendants decided to pursue settlement last year before a single case was tried in the relevant MDL and state court proceedings. For example, in the ReNu Contact Lens Solution MDL, Bausch & Lomb began settling claims that its ReNu with MoistureLoc contact lens solution caused infection due to Fusarium keratitis before any such cases were tried, but has not been settling any claims of bacterial infection. [See Endnote 42.] Early settlement of Fusarium claims likely was driven by the fact that the product had been withdrawn from the market, [see Endnote 43] so the universe of claimants was limited and the running of the statute of limitations defined. In addition, there was evidence that the alleged Fusarium infections were caused by the product at issue based on available scientific and epidemiological data, which indicated that ReNu with MoistureLoc contact lens solution was associated with an increased relative risk of Fusarium. [See Endnote 44.] On the other hand, settlement of bacterial infections claims could encourage additional filings, as any contact lens user has an increased risk of bacterial infection. Therefore, these claims have not been subject to early settlement. A significant court ruling also can pave the way for an early settlement before any cases are tried. For instance, last year Pfizer set aside $894 million to settle lawsuits relating to its Cox-2 inhibitors, Bextra and Celebrex. [See Endnote 45.] The settlement followed rulings by the MDL court and New York state court excluding expert testimony that a 200 mg dose of Celebrex could increase the risk of heart attack and stroke. [See Endnote 46.] As 200 mg was the most widely used dosage of Celebrex, this ruling had a significant impact on limiting Pfizer’s potential liability, and was one factor leading to the settlement of the majority of Celebrex and Bextra lawsuits before any such cases were tried. Merck took a different approach in the Vioxx litigation, in which it tried 20 cases before reaching a $4.85 billion settlement with plaintiffs in 2007. [See Endnote 47.] During the past year, the Vioxx settlement continued to progress. Of interest, insurers who paid medical expenses for claimants in the Vioxx settlement had placed liens on the claimants’ settlement in an effort to recover their expenses, which is a typical occurrence in the U.S. However, 100 private health insurers agreed to the “Private Lien Resolution Program” that automatically reduces all injury-related liens by 50 percent and places caps on the liens. [See Endnote 48.] This agreement is reported to be the first of its kind in a mass litigation settlement. [See Endnote 49.] Settling parties will likely try to reach similar agreements with lien holders in the future. Conclusion 2009 likely will be remembered for the Wyeth decision, but there were several additional important legal developments that occurred. We expect that, in the next year, product liability litigation will continue to give rise to ground-breaking decisions and evolving legal theories. 1. Endnotes Adam Liptak, Drug Label, Maimed Patient and Crucial Test for Justices, N.Y. TIMES, Sept. 19, 2008 (quoting Catherine M. Sharkey, law professor at New York University), available at http://www.nytimes.com/2008/09/19/us/ 2. 19scotus.html?n=Top/Reference/Times%20Topics/ Subjects/ L/Liability%20For%20Products. Jerry Markon, High Court Case Looms Large for Drugmakers, N.Y. TIMES, Nov. 4, 2008, available at http://www.washingtonpost.com/wp-dyn/content/article/ 2008/11/03/AR2008110300192.html 3. U.S. CONST. art. IV, cl. 2. 4. Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 211 (1824). 5. See Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516 (1992) (“[The] purpose of Congress is the ultimate touchstone of pre-emption analysis.”). 6. See, e.g., Buckman Co. v. Plaintiffs’ Legal Comm., 531 U.S. 341, 348 (2001). 7. See S. Gourley & S. Knutson, Update on U.S. Product Liability Law, THE INTERNATIONAL COMPARATIVE LEGAL GUIDE TO: PRODUCT LIABILITY 2008, at 23. 8. Compare, e.g., Bruesewitz v. Wyeth, No. 07-3794, 2009 WL 792468, at *7 (3d Cir. Mar. 27, 2009) (holding design and warning claims in case involving DTP vaccine expressly preempted by the Vaccine Act), and Longs v. Wyeth, No. 1:03-cv-2042, 2009 WL 754524, at *4 (N.D. Ohio Mar. 20, 2009) (holding that plaintiff’s pre-FDA approval claims were preempted and distinguishing Wyeth on the basis that it focused on the manufacturer’s post-approval duty to update warning labels), with Schrock v. Wyeth Inc., No. CIV-08-453- M, 2009 WL 635415, at *3 (W.D. Okla. Mar. 11, 2009) (holding no preemption of warning claims in case involving generic Reglan). 9. See Barry Meier & Natasha Singer, Drug Ruling Puts Devices in Spotlight, N.Y. TIMES, Mar. 5, 2009, available at http://www.nytimes.com/2009/03/05/business/05device.htm l?partner=rss. 10. Adam Liptak, No Legal Shield in Drug Labeling, N.Y. TIMES, Mar. 5, 2009, available at http://www.nytimes.com/ 2009/03/05/washington/05scotus.html. WWW.ICLG.CO.UK ICLG TO: PRODUCT LIABILITY 2009 © Published and reproduced with kind permission by Global Legal Group Ltd, London
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