WLF Briefing Discusses FDA’s “Plaintiffs’ Bar Over Patients” Generic Drug Labeling Proposal

FDA’s Generic Drug Labeling Proposal: Unauthorized and Counterproductive Disturbance of the Hatch-Waxman Balance

Our Panelists

  • Ralph G. Neas, The Generic Pharmaceutical Association
  • Alex Brill, American Enterprise Institute
  • Richard A. Samp, Washington Legal Foundation

Accompanying Materials

 

Behavior of Plaintiffs’ Lawyers in Food “Misbranding” Class Actions Called into Question

scalesOver the last two years at The Legal Pulse, we’ve expended a lot of digital ink on food labeling class action lawsuit rulings from the Northern District of California (aka “The Food Court”). Our focus here shifts to similar suits from the Central District of California. Two recent decisions from that jurisdiction spotlight some questionable behavior by plaintiffs’ lawyers.

Jovel v. Boiron, Inc. Plaintiff Jovel alleged in a class action suit that the non-pharmaceutical flu remedy he purchased at GNC, Oscillo, did not relieve his flu-like symptoms as the product label claimed it would. Boiron opposed Jovel’s motion for class certification on a number of grounds, including that Jovel was not an adequate representative of the class under Federal Rule of Civil Procedure 23(a).

What was it that made Jovel inadequate? During his deposition, Boiron’s counsel asked Jovel when he first read the flu-relieving claims on the product label. He stated that he hadn’t read it until after he finished the entire box—a week  after purchase. That fact is, of course, rather important in a case where the plaintiff must prove he relied on the label’s claims to make his purchase.

After a break in the deposition, Jovel’s story had changed. He said he had read the label before buying the Oscillo. Boiron’s counsel then asked:

Counsel: “Did you have a discussion with your counsel that refreshed your recollection about when you read the box?”

Jovel: “Yes”

Judge Stephen Wilson held that such “inconsistency” in his testimony on a material issue in the case reflected poorly on Jovel’s credibility, and he denied class certification on that basis. Continue reading

Don’t Make a Federal Case Out of It: High Court Should Grant Review in No-Injury Class Action

wahooThe U.S. Supreme Court this week has a chance to strike a blow for judicial modesty and at the same time call a halt to a disturbing trend being pushed by the plaintiffs’ bar:  class-action lawsuits in which no one was injured but that seek millions of dollars in “damages.”  The Court is being asked, in the case of First National Bank of Wahoo v. Charvat, to consider whether federal courts possess jurisdiction to hear such no-injury lawsuits.  The Court should accept the invitation and announce that attorneys will no longer be permitted to flout Article III of the U.S. Constitution, which limits the filing of federal lawsuits to those who have actually suffered an injury.

The case involves two small Nebraska banks that, like most banks, charge a small fee to non-customers who use their ATM machines.  Federal law requires banks to provide notice that they charge such a fee.  The two Nebraska banks did provide notice (on the very first screen seen by ATM users), and no one has come forward to claim that he or she used one of the ATMs without being aware that a fee would be incurred.

Here’s the wrinkle: at the time this lawsuit arose, federal regulations (since repealed) also required a second form of notice—on a small placard physically attached to the ATM.  Some of the ATMs maintained by the First National Bank of Wahoo and the Mutual First Federal Credit Union did not display the placard.  Jarek Charvat, an enterprising young man working with a local plaintiffs’ law firm, knew about the ATM fees and observed that the banks were not in full compliance with the federal placard regulation.  So he went from bank branch to bank branch, making ATM withdrawals and deliberately incurring a $2.00 fee at each stop. Continue reading

FDA Action Should Take the Juice Out of Some Food Labeling Class Actions

Unevaporated Cane

Unevaporated Cane

We admit that before scrutinizing the related wave of food labeling class action litigation, we had never seen the term “evaporated cane juice” (ECJ).  It might be fair to wonder whether many of the plaintiffs in these suits had ever noticed it on food labels either. But claims alleging that using ECJ on a food label violate federal rules (and thus also California law) have become ubiquitous. As of January 22, there were over 50 suits pending in federal courts with an ECJ claim. Thanks to an action yesterday by the Food and Drug Administration (FDA), those claims may not survive beyond March.

FDA formally reopened the comment period for draft guidance first published on October 7, 2009. That draft guidance informed industry that “dried cane syrup,” not evaporated cane juice, is the common or usual name under federal rules for “the solid or dried form of sugar cane syrup.” FDA never finalized that guidance, but true to FDA form, the agency still invoked it in warning letters sent to companies using the term evaporated cane juice. Continue reading

Ninth Circuit Ruling Rejecting Preemption in Food Labeling Class Action Difficult to Swallow

Cruz-Alvarez_FFeatured Expert Column

by Frank Cruz-Alvarez, Partner, Shook, Hardy & Bacon, L.L.P., Miami office, with Travis Robert-Ritter, an associate in the firm’s Miami office.

Last week, the U.S. Court of Appeals for the Ninth Circuit in Lilly v. ConAgra Foods, Inc. held that California statutes obligating food manufactures to label the sodium content of the coating on sunflower seed shells are not expressly preempted by federal labeling law that exempts “bone, seed, shell, or other inedible components” from nutritional labeling requirements. — F.3d —-, No. 12-55921, 2014 WL 644706, at *1–3 (9th Cir. Feb. 20, 2014) (emphasis added). In doing so, the court departed from the fundamental precept of judicial interpretation that a statute or regulation “should be construed to give effect to the natural and plain meaning of its words,” and read a distinction into an unambiguous federal regulation where none exists. Id. at *3–4 (Vinson, J. Dissenting).

The appeal arose out of a putative class action filed against ConAgra Foods, Inc. for allegedly violating various California statutes by failing to include the sodium content of the coating on sunflower seed shells in the Nutritional Facts Panel of the company’s products. Id. at *1–2. ConAgra argued before the district court that the state-law claims were expressly preempted because they sought to impose a labeling requirement for sodium that is different from what is required under federal food labeling law. Id. The district court agreed, dismissing the putative class action as preempted because the claims attempted “‘to impose an additional sodium labeling requirement that [was] not identical to the’ Nutrition Labeling and Education Act (21 U.S.C. § 343).” Id. Continue reading

Decertification Silver Bullet?: Ascertainability Concerns Spoil “Natural” Food Labeling Suit

zoneperfectLast month in Update: Frequent Flier Plaintiff in Food Court Crashes Again with Denial of Class Certification, we discussed the need for judges in food “mislabeling” lawsuits to closely scrutinize whether a feasible method exists for the court to identify who is a member of the putative class (i.e. who bought the allegedly mislabeled product). We applauded Judge Phyllis Hamilton’s application of such an “ascertainability” test to deny class certification in Astiana v. Ben & Jerry’s, but we also bemoaned that her rationale was too narrow.

Another Northern District of California decision last week addressed ascertainability, and it did so in the broader way we had advocated. Judge Samuel Conti’s February 13 order denying class certification in Sethavanish v. ZonePerfect Nutrition Co.  exacerbates a split on ascertainability within the Ninth Circuit, and could have a major impact well beyond food-oriented consumer class actions.

Ms. Sethavanish’s claims mimic those in countless other mislabeling suits: that the use of “all-natural” on ZonePerfect nutrition bar labels is false and misleading and led her to buy those products rather than less expensive ones. She sought to certify a class of consumers under Federal Rule 23(b)(3). After rejecting ZonePerfect’s arguments that the plaintiffs lacked standing, Judge Conti turned to whether Sethvanish was required to offer a feasible method for the court to identify class members. Continue reading

CVS Action Brings Call for a Food Fight

CVS aisle, CVS/Pharmacy, Bethesda, MD

CVS aisle, CVS/Pharmacy, Bethesda, MD
Photo by Glenn G. Lammi

Well, that didn’t take long.

Just hours after CVS announced last Wednesday that it would halt sales of tobacco, public health activists and their media allies seized the opportunity to advance a notion championed by such anti-”Big Food” luminaries as The New York Times’ Mark Bittman and the Dean of Duke University’s Sanford School of Public Health, Kelly Brownell: food is the next tobacco.

For instance, the Texas Medical Association sent out the following tweet:

The commentary referenced in the tweet stated baldly, “Wander the aisles of CVS and see how their nutritional offerings fit within the framework of an organization pitching health.”

Next, this from Slate business and economics correspondent Matthew Yglesias:

But the cigarettes issue seems to me to mostly raise the question of how far CVS can really go down this road. After all, I was in CVS just yesterday to buy myself some Diet Coke. The Diet Coke sits next to the sugary sodas. And they’re across the aisle from the potato chips. Up front where you cash out there are lots of M&M’s and Snickers bars.

A Saturday op-ed in The Boston Globe called on CVS to put soda, energy drinks, and other “sugary beverages” behind the counter. In support of its absurd viewpoint, the piece quoted health researcher Deborah Cohen from the (normally cerebral) think tank RAND Corporation, who proclaimed, “The food industry is just shoving food in to us.” Nice imagery.

Speaking of imagery, the food=tobacco messaging wouldn’t be complete without a political cartoon.  One by nationally syndicated cartoonist Jimmy Margulies appeared Saturday on the Washington Post op-ed page.

Food companies obviously chafe at the comparison of these two highly dissimilar product categories, as should any person who doesn’t have an axe to grind. But now that opportunities for paternalistic power and money through tobacco control are waning, anti-Big Food activists and their erstwhile allies in the plaintiffs’ bar see food as a logical and vulnerable next target. And they have at the ready an effective strategic activism plan, battle-tested from the “tobacco wars.” Continue reading

With Bauman v. DaimlerChrysler, High Court May Have Put Brakes on Forum Shopping

220px-Ruth_Bader_Ginsburg_official_SCOTUS_portraitCross-posted from WLF’s Forbes.com contributor site

The Supreme Court’s decision last month in Daimler AG v. Bauman has been viewed by many as having its principal impact on lawsuits involving overseas events.  There is no question that the decision evinces the Court’s reluctance to permit federal courts to exercise jurisdiction over controversies arising within other nations.  But to focus exclusively on this aspect of Daimler overlooks its potential bombshell consequences for domestic tort litigation; it could result in major upheavals in standard operating procedures for much of the plaintiffs’ bar.  Indeed, Daimler may even conceivably spell the end of most nationwide class action lawsuits.

The plaintiffs in Daimler were 22 residents of Argentina who claim to have suffered human rights abuses at the hands of Argentina’s military rulers more than 30 years ago.  The plaintiffs alleged that Mercedes-Benz Argentina, a subsidiary of Daimler, aided and abetted those human rights abuses.  Daimler is a German corporation whose cars are sold world-wide.  It sells its cars here through its American subsidiary, Mercedes-Benz USA (MBUSA).  MBUSA is a Delaware corporation with a principal place of business in New Jersey, and it distributes Daimler-manufactured cars to independent dealerships throughout the U.S., including many in California.

The plaintiffs filed suit in a federal district court in California against Daimler, claiming that it should be held responsible for the alleged misdeeds of its Argentine subsidiary.  They asserted personal jurisdiction over Daimler on the basis of MBUSA’s contacts with California, although they conceded that none of the events giving rise to their claim occurred in California.  The Ninth Circuit upheld the assertion of personal jurisdiction; it held that MBUSA did sufficient business in California to be answerable for any lawsuit filed against it within the state and that Daimler was similarly answerable because MBUSA was Daimler’s agent for jurisdictional purposes. Continue reading

Food Court Delivers Plaintiffs’-Lawyer Consortium Mixed Results in Four January Rulings

food-courtCross-posted at WLF’s Forbes.com contributor site

Last July in a Legal Pulse post entitled “Who’s Filling the Food Court with Lawsuits: Consumers or Lawyers?,” we noted the extensive involvement in food “mislabeling” class actions of a consortium of plaintiffs’ lawyers, some of whom had been active in tobacco litigation. Led by the law firm Pratt & Associates, the group filed 24 class actions in the Northern District of California in less than two months in 2012. We’ve now identified a total of 34 cases the consortium has brought to the Food Court.

In that post we offered a chart tracking the current status of the consortium’s cases.  Our updated chart is available here. Kindly let us know if we missed any.

Northern District of California judges have been busy this month on the group’s cases, issuing four substantive rulings.

Gustavson v. Wrigley Sales Co. Judge Koh’s order in this case is the only complete victory of the four for plaintiffs or defendants. After rejecting Wrigley’s motion to dismiss on preemption grounds last September, Judge Koh reversed herself on that issue in this January 7 decision. What changed? Wrigley cited FDA commentary on a 1993 nutrient content labeling rule which supported the company’s use of the term “sugar free” on its gum. The plaintiff’s suit would require placement of certain FDA-required qualifying language on the gum label in a manner different from what FDA rules allow, so Judge Koh held the claim expressly preempted. She dismissed Gustavson’s claims with prejudice. Continue reading

Dispelling the Myths of Asbestos Litigation: Bankruptcy Judge Finds that Misrepresentations Inflated Settlement Values

faulkFeatured Expert Column

by Richard O. Faulk, Hollingsworth LLP

There was a “shot heard ‘round the world” in asbestos litigation on January 9, 2014.  On that day, U.S. Bankruptcy Court Judge George Hodges for the Western District of North Carolina issued an important order finding that a “startling pattern of misrepresentation” and withholding of exposure evidence in asbestos lawsuits resulted in unfairly “inflated” recoveries.  See In Re Garlock Sealing Technologies, LLC, et al., No. 10-3167 (W.D.N.C., Jan. 9, 2014). With those findings, Judge Hodges firmly rejected the exaggerated claim values urged by plaintiffs’ counsel in a major Chapter 11 bankruptcy, and estimated the debtors’ liability at $125 million, approximately $1 billion less the amount asserted by the claimants.

This order will surely influence asbestos litigation throughout the United States.  Defendants in pending cases will press for full disclosure of settlements made with the bankruptcy trusts of insolvent companies – and Congress and state legislators will continue their quest for reforms to ensure complete disclosure of settlements to preclude exaggerated recoveries against peripheral defendants.  The House of Representatives has already passed H.R. 982 (the “FACT” Act), which requires asbestos trusts to publish claimants’ names and the nature of their claims  States such as Ohio and Oklahoma, have passed similar bills, and another is close to passage in Wisconsin.

But the path to reform has been long and incredibly costly. For many years, plaintiffs’ lawyers resisted disclosure of claims and settlements with the bankruptcy trusts. They resisted even though the claims might contain useful evidence of exposure to the bankrupt parties’ products, and although settlements might be used as credits or offsets against the solvent defendants’ liability. Without a meaningful way to offset insolvent companies’ settlements, defendants faced a “Hobson’s choice.” They could accept inflated settlement values – or risk judgments inflated by their inability to obtain offsets.  America’s courts, which expanded asbestos liability when “necessity” moved them to “change and invent,” see., e.g., Jenkins v. Raymark Industries,  782 F.2d 468, 473 (5th Cir. 1986), were largely nonresponsive to the injustice of this situation – as though the common law restrained change, rather than enabled adaptation and flexibility. See generally, Richard O. Faulk, Dispelling the Myths of Asbestos Litigation: Solutions for Common Law Courts, 44 S. Tex. L. Rev. 945 (2003). Inevitably, more defendants joined their insolvent brethren in bankruptcy – where claims and settlements were cloaked in mythical secrecy. Continue reading