U.S. politicians and regulators, many of whom ordinarily trend toward hyper-caution on new drug reviews and approvals, are rushing forward with policies aimed at speeding up development of Ebola vaccines and treatments. These measures include coordinated research among public health officials and drug makers, Food and Drug Administration (FDA) pledges of regulatory assistance, and congressional interest in legislation to qualify Ebola-targeted products for an FDA priority-review program. Such cooperation is encouraging, but government also needs to take action on another R&D disincentive which, if left unaddressed, could completely undermine current efforts on Ebola and frustrate future cooperative management of unforeseen pandemics. Ebola vaccine and treatment manufacturers need to have protection from tort liability exposure.
Any medical procedure, pharmaceutical product, or vaccine may have adverse health risks in some instances. Drug manufacturers must consider those risks when deciding whether to invest millions of dollars for product R&D, and the Food and Drug Administration (FDA) must weigh those risks against the benefits when approving a treatment. Such risks, along with the high regulatory barriers and low economic incentives attendant to investing in rare diseases, likely have been factors that explain the dearth of Ebola vaccines and treatments.
The United States government has the motivation and the means to minimize or eliminate such liability risks. Federal health agencies are already directly involved in vaccine development, and they will no doubt also be the major purchasers of the resulting drugs. Those federal entities could include a provision in the R&D agreements or purchasing contracts that would substitute the government as a defendant in any resulting lawsuits against private businesses, or indemnify companies from tort liability. The former option is certainly superior to indemnification, which could require the vaccine and treatment producers to litigate cases and then seek reimbursement for the losses or settlements. The companies would also have to negotiate with the government over whether the indemnification would cover litigation costs, such as attorneys’ fees.
The federal government indemnified manufacturers in contracts for a smallpox vaccine after the September 11, 2001 terrorist attacks. The companies argued that the proposed indemnification was insufficient, and in April 2003, Congress added expanded liability protections to the Homeland Security Act of 2002. For the one-year period of the national smallpox vaccination program (2003-2004), individuals allegedly harmed by a government-purchased smallpox vaccine could only sue the federal government under the Federal Tort Claims Act. Congress could consider the passage of a similar law for Ebola vaccines. Continue reading
Featured Expert Contributor – Antitrust & Competition, U.S. Department of Justice
Mark J. Botti, Squire Patton Boggs (US) LLP with Anthony W. Swisher, Squire Patton Boggs (US) LLP
*Editor’s Note: With this post we welcome the participation in The WLF Legal Pulse of Featured Expert Contributor on Justice Department-related competition law and policy matters, Mark Botti. Mark is co-leader of Squire Patton Boggs’s Global Antitrust & Competition Practice Group and previously spent 13 years at DOJ’s Antitrust Division.
In 2001, the Department of Justice Antitrust Division (DOJ) declined to block the proposed merger of General Electric and Honeywell, allowing the deal to proceed with certain limited divestitures. Announced in October of 2000, that deal would bring together two significant players in a number of related market segments, including aircraft engines, avionics, and landing gear. Despite DOJ’s decision not to block the deal outright, the European Union reached a different result, forbidding the transaction under a “conglomerate merger” theory that has long been out of favor in the United States and has drawn significant criticism in the economic and legal literature.
These diverging enforcement decisions spawned a wave of criticism directed at both jurisdictions. How were multinational businesses in a global economy to order their affairs in the face of such conflicting enforcement theories and outcomes? Were they facing a “race to the bottom,” where the most aggressive enforcers effectively held a veto over the decisions of other competition agencies? Continue reading
by Nicholl B. Garza, a 2014 Judge K.K. Legett Fellow at the Washington Legal Foundation and a student at Texas Tech University School of Law.
Imagine if a commercial truck driver received a citation from the Federal Motor Carrier Safety Administration for failing to keep a record of his driving hours. Further suppose the truck driver lost some of his records, but decided to pay a civil penalty to dispose of the matter. Normal, right? Now imagine three years later the Department of Justice (DOJ) decided to prosecute that person, alleging that he intentionally discarded documents during a federal investigation (a crime under the Sarbanes-Oxley Act (SOX)). While this circumstance may seem absurd, a very similar situation is happening to commercial fisherman John Yates because he allegedly disposed of three fish after being stopped by an official from the Florida Fish and Wildlife Conservation Commission during a commercial fishing trip.
SOX was enacted in 2002. The intended purpose of SOX was to provide (1) criminal prosecution for persons who defrauded investors in publicly traded securities and (2) criminal prosecution for persons who destroyed or altered evidence in certain federal investigations. With regard to “certain Federal investigations,” the SOX Senate Report listed examples such as people committing securities fraud and auditors who intentionally fail to retain audit records. However, the statutory language in SOX does not integrate these specific examples and instead simply references “Federal investigations.” Nevertheless, the Senate Report and previous prosecutions under SOX illustrate that the purpose of the act is to provide a tool to prosecute those who commit financial crimes. Strangely then, in 2010, DOJ decided to prosecute Mr. Yates under SOX. DOJ asserts that in 2007 Yates violated SOX by discarding fish because a federal investigation was taking place.
by Greg Brower and Brett W. Johnson, Snell & Wilmer LLP*
Government contractors and other companies subject to internal investigation requirements won some relief from the United States Court of Appeals for the D.C. Circuit last week with a decision that firmly reiterated that Upjohn v. United States does indeed stand for the proposition that confidential employee communications made during a business’s internal investigation led by company lawyers are privileged.
In United States of America ex rel. Harry Barko v. Halliburton Company, et al, defendant Halliburton’s subsidiary, Kellogg, Brown & Root (KBR) filed a petition for writ of mandamus seeking to reverse a district court’s order that KBR produce in discovery, certain reports created as part of internal investigations conducted at the direction of in-house counsel. Over KBR’s objection, the district court had ordered production of the documents, reasoning that because the KBR investigators who prepared the reports were not lawyers, and because the subject investigations were done pursuant to legal requirements and corporate policy, and not solely for the purpose of obtaining legal advice, the reports were not privileged. For more on the trial court’s opinion, see our March 24 Legal Pulse commentary here.
A three-judge panel of the D.C. Circuit disagreed and vacated the district court’s order. In so doing, the panel found that the privilege claim by KBR was “materially indistinguishable” from the assertion of the privilege in the seminal Upjohn case. Specifically, the court of appeals found that because, as in Upjohn, KBR initiated an internal investigation to gather facts and ensure compliance with the law after being informed of potential misconduct, and because the investigation was conducted under the auspices of KBR’s in-house legal department, the privilege applied. Continue reading
In adopting the Natural Gas Act (NGA), Congress determined that wholesale natural gas pricing issues should be the exclusive preserve of the Federal Energy Regulatory Commission (FERC) and thus that State efforts to regulate the wholesale market were preempted. Courts uniformly barred States from seeking to regulate any “practice . . . affect[ing]” the wholesale rates charged by natural gas companies—until a 2013 U.S. Court of Appeals for the Ninth Circuit decision that is the subject of a pending Supreme Court certiorari petition. ONEOK, Inc. v. Learjet, Inc., No. 13-271. The decision below would permit plaintiffs’ lawyers to proceed with antitrust challenges under state laws to industry practices that directly affected wholesale prices. The court reasoned that preemption was inappropriate because the challenged practices also directly affected a small number of retail natural gas sales.
In response to an invitation from the justices, the Solicitor General of the United States last week filed a brief urging that certiorari be denied. Interestingly, however, the Solicitor General’s brief agrees with the defendants (natural gas suppliers who engage primarily in wholesale transactions) that the Ninth Circuit’s anti-preemption ruling was dead wrong. The Solicitor General recommends against Supreme Court review primarily because he concludes that other courts are unlikely to repeat the Ninth Circuit’s error, particularly with respect to transactions arising after Congress revised the NGA in 2005. But in light of the Ninth Circuit’s fundamental misunderstanding of the scope of NGA preemption, I am far less sanguine that it will eventually see the error of its ways. Unless review is granted, there is every reason to believe that the Ninth Circuit will adhere to its anti-preemption precedent in future cases.
On ten or more occasions every term, the justices request the views of the Solicitor General on whether the Court should grant specific certiorari petitions. The Solicitor General correctly recognizes in his ONEOK brief that merely because the decision below was incorrect is not alone sufficient grounds to recommend that review be granted. The Court has limited the size of its docket to about 75 cases per term. The justices thus usually adhere to the dictates of Supreme Court Rule 10, which states that the Court generally will grant certiorari only in cases that raise an “important question of federal law” and that have decided the question in a manner that conflicts with a relevant decision of the Supreme Court or other appellate courts. Accordingly, the Solicitor General not infrequently recommends that the Court deny a certiorari petition even though he concludes, as here, that the decision below was incorrectly decided.
But the Solicitor General’s principal rationale for recommending a denial of certiorari—that the Ninth Circuit’s error is of reduced importance because it is unlikely to be repeated—is subject to serious question. The plaintiffs accuse natural gas traders of having manipulated privately published price indices in 2001-02. Because buyers and sellers rely on those indices as reference points for pricing all types of natural gas transactions, the direct effect of the alleged manipulation was to raise wholesale natural gas prices. While conceding that wholesale purchasers were barred by the NGA from challenging the alleged manipulation on state antitrust grounds, the Ninth Circuit held that preemption did not extend to suits brought by retail purchasers who challenged the very same manipulation, because retail sales fall outside of FERC’s jurisdiction. The court concluded this despite the fact that the alleged manipulation unquestionably was a “practice . . . affect[ing]” wholesale prices within the meaning of the NGA.
Coleen Klasmeier, a partner with Sidley Austin LLP, Geoffrey M. Levitt, Senior Vice President and Associate General Counsel of Pfizer, Inc., and Jonathan L. Diesenhaus, a partner with Hogan Lovells US LLP discussed the impact of the Second Circuit’s December, 2013 Caronia decision on federal health product regulation and identify the latest developments and trends to follow in 2014 for public and private law enforcement targeted at off-label speech.
by John Andren, Washington Legal Foundation*
It’s not often that a court decision like Waldburger, et al. v. CTS Corporation comes along, one which is interesting not only because of its potentially broad impact, but also because of the case’s intriguing ancillary characteristics. The case featured plaintiffs (represented by law students) arguing for federal preemption so they could bring their state law nuisance claim; a defendant and the U.S. government opposing preemption; and a deeply divided 2-1 outcome in the U.S. Court of Appeals for the Fourth Circuit, where all three judges were Obama appointees.
Waldburger was at its core a case about statutory interpretation and the crucial distinction between statutes of limitations—laws barring claims brought after a certain amount of time has elapsed since either the tortious or criminal act was committed or the claim was discovered—and statutes of repose—which bar claims brought later than a (typically longer) set number of years after the date of the defendant’s last action regardless of when any claim was discovered.
Plaintiffs in the case, who were represented at oral argument by a third-year law student from Wake Forest University, sought compensation for real property damage from CTS Corporation for the alleged dumping of toxic chemicals by one of CTS’s subsidiaries almost 30 years ago. CTS argued that CERCLA’s statute of limitations provision did not preempt North Carolina’s 10-year statute of repose, and since the defendant’s last actions were well over 20 years ago, plaintiff’s claims were barred. Interestingly, the Department of Justice shared time with CTS at oral argument to argue against preemption. DOJ is involved in an Eleventh Circuit case where the United States is the defendant and is opposing application of CERCLA’s limitations provision. Continue reading