Tag Archives: litigation

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Update: Class Action Settlement in Kellogg Food Labeling Case Preliminarily Approved

Last summer in the Legal Pulse post The Ninth Circuit Rains on Plaintiffs’ Attorneys’ Class Action Pay Day, Washington Legal Foundation K.K.Legett Fellow Lauren Murphree described the U.S. Court of Appeals for the Ninth Circuit’s rejection of a class action settlement in Dennis v. Kellogg Co.

Mr. Dennis and countless other fans of Frosted Mini-Wheats claimed Kellogg’s labeling statements had unlawfully misled them. The parties ended up settling, and the district court approved the settlement. The Ninth Circuit sent the parties back to the drawing board and back to the Southern District of California. On May 3, the presiding trial judge gave preliminary approval to the new settlement.

The Ninth Circuit was understandably troubled by several aspects of the original settlement, including a $5.5 million cy pres award aimed at feeding the indigent (which was “laudable” but had “little to do with the purposes of the underlying lawsuit”) and an attorneys’ fee that came out to $2,100 an hour.

The recipients of the new settlement agreement’s smaller cy pres distribution of $4 million are three “consumer” groups: Center for Science in the Public Interest, Consumer Watchdog, and Consumers Union (Nice of the court to hand over a slush fund of cash which could fund more food labeling lawsuits, and create jobs for lawyers and court staff, likely in California). The amount of money available for allegedly harmed plaintiffs went down from $2.75 million to “$2-2.5 million.” The amount of attorneys’ fees remarkably stayed the same.

District Judge Gonzalez had some questions about these new terms. She wondered:

  1. How did mere identification of proper cy pres recipients result in such a severe drop in the value of the class’s claims?
  2. How is it that the value to the class dropped approximately 75%, while requested attorneys’ fees appear nearly constant?

Excellent questions both, but they did not forestall Judge Gonzalez from giving preliminary approval to the settlement. She did, though, order the parties to “fully address these concerns in their final approval briefing and at the final approval hearing.”

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Does Federal Circuit’s K-Tech Communications Ruling Further Ease Path to Patent Litigation?

bethShaw-0580editConvertedProfile-e1360002102239Featured Expert Column

Beth Z. Shaw, Brake Hughes Bellermann LLP

Last week, the Federal Circuit reversed a district court’s judgment dismissing two patent lawsuits. K-Tech Telecommunications, Inc. (“K-Tech”) sued Time Warner Cable, Inc. (“TWC”) and DirecTV for patent infringement. TWC and DirecTV moved to dismiss the lawsuits because they argued the original complaints lacked factual specifics—including any identification of specific devices. The district court agreed and dismissed the cases for “failure to state a claim,” under the standards articulated in Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009). On appeal, however, the Federal Circuit reversed, holding that the complaints contained enough specificity and plausibility for the lawsuits to continue. The Federal Circuit repeated that, to the extent any conflict exists between Twombly and the Federal Rules of Civil Procedure’s Forms regarding pleadings requirements, “the Forms control.”

K-Tech describes its patents as systems for modifying channel numbers or carrier frequencies to identify a television program. According to K-Tech, the Federal Communications Commission requires that all digital television signals in the U.S. follow certain specifications that define information included in a digital television signal (such as channel numbers and carrier frequencies). K-Tech contends that because TWC and DirecTV identify programs broadcast over their cable or satellite systems with a channel number, TWC and DirecTV use the methods and systems protected by the K-Tech patents to update the digital signals they receive.

Form 18 in the Federal Rules of Civil Procedure sets forth a sample complaint for direct patent infringement. The Federal Circuit stated that “any criticism we may have regarding the sufficiency of the forms themselves is strictly proscribed by Supreme Court precedent.” In other words, the Supreme Court has held what pleading requirements are enough to bring a case of patent infringement. The main requirements are a plausible short and plain statement of the plaintiff’s claim. Continue reading →

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4th Circuit Demands Greater Particularity in False Claims Act Suit Pleading

Mayer_Kirsten_72Hallward-Driemeier_Douglas_72ppiGuest Commentary

by Kirsten V. Mayer and Douglas Hallward-Driemeier, Ropes & Gray LLP

Last month, the U.S. Court of Appeals for the Fourth Circuit reaffirmed that False Claims Act relators must plead presentment of a false claim with particularity.  The decision in United States ex rel. Nathan v. Takeda Pharmaceuticals N.A. Inc. requires that relators proceeding under Section 3729(a)(1)(A) of the False Claims Act offer concrete details that plausibly allege—not just speculate—that actual presentment of a false claim occurred.  By requiring that relators plead false claims with particularity, the Fourth Circuit strikes a blow against relators who would prefer simply to allege a fraudulent scheme and proceed directly to costly discovery.  The holding should be particularly useful to defendants in “off-label” promotion cases, where relators often only speculate that ineligible claims were submitted for reimbursement to government-funded programs.

In Nathan, a Takeda sales manager alleged that Takeda’s Kapidex marketing caused false claims to be presented to the government in two main ways: (1) Takeda allegedly promoted Kapidex to rheumatologists, who do not typically treat patients with conditions that can be treated by Kapidex on-label; and (2) Takeda allegedly promoted Kapidex use at higher doses than FDA had approved.

Liability under Section 3729(a)(1)(A) requires that a defendant actually presented false claims to the government for payment.  Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 789 (4th Cir. 1999).  Nonetheless, the Nathan relator urged the Fourth Circuit to adopt a relaxed application of Rule 9(b) that would rely on inferring from an alleged “fraudulent scheme” that false claims essentially must have been presented to the government.  In support, the relator pointed to a Fifth Circuit decision, United States ex rel. Grubbs v. Kanneganti, 565 F.3d 180 (5th Cir. 2009).   In Grubbs, the relator had alleged with detail that doctors fraudulently recorded medical services that were never performed, and the Fifth Circuit held that this satisfied Rule 9(b), even though the complaint did not provide specific allegations that those records caused the hospital’s billing system to present fraudulent clams to the government.  Id. at 192. Continue reading →

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Will “Sea Change” in Florida Class Action Standards Unleash Flood of Suits?

Cruz-Alvarez_FFeatured Regular Expert Column

Frank Cruz-Alvarez, Shook, Hardy & Bacon, L.L.P. (co-authored with Talia Zucker, Shook, Hardy & Bacon, L.L.P.)

On January 24, 2013, in Soper v. Tire Kingdom, Inc., No. SC11-1462, — So. 3d —, 2013 WL 264441 (Fla. Jan. 24, 2013), the Florida Supreme Court took its most recent step to further distance itself from the United States Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes, — U.S. —, 131 S. Ct. 2541 (2011).  Despite Wal-Mart’s comprehensive analysis of the commonality requirement for class certification, the Florida Supreme Court insists on watering down what commonality means and how it is applied.

As Florida Supreme Court Justice Charles Canady rightly observed in Soper, the Sunshine State’s class action laws have undergone a “sea change”, beginning one and a half years ago – post Wal-Mart­ – with the decision of Sosa v. Safeway Premium Finance Company, 73 So. 3d 91 (Fla. 2011).  See Soper, 2013 WL 264441 at *2 (Canady, J., dissenting) (emphasizing that “[t]he majority’s commonality analysis in Sosa cannot be reconciled with the reasoning of Wal-Mart.”). Continue reading →

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DOJ/FDA Brief in SCOTUS Generic Drug Preemption Case Hands Plaintiffs New Liability Theories

DOJ

Cross-posted at WLF’s Forbes.com contributor page

During the last four years, the Food and Drug Administration has been a faithful ally of the plaintiffs’ bar, routinely opposing any suggestion that federal approval of a prescription drug preempts a state-law tort claim against the drug’s manufacturer.  That’s why it came as surprise to some when last week the United States filed an amicus curiae brief urging the Supreme Court to rule in Mutual Pharmaceutical Co. v. Bartlett that federal law preempts design-defect claims against the manufacturer of a generic drug.  The plaintiffs’ bar need not worry, however; the amicus brief set out a detailed roadmap that explained to plaintiffs how they can avoid preemption findings in all future cases.  The roadmap was wholly gratuitous; it raised issues not presented by Bartlett, and its only apparent purpose was to help lawyers filing tort suits to draft complaints that could withstand preemption claims.

Plaintiffs already have a clear path for suing brand-name drug companies; the Supreme Court held in 2009’s Wyeth v. Levine that failure-to-warn claims against brand-name companies were not preempted, even though the warning language on product labeling has in all cases been explicitly approved by FDA.  But tort suits against generic drug companies have been more difficult to maintain.  Over the objections of FDA and the Solicitor General, the Supreme Court held in 2011’s PLIVA, Inc. v. Mensing that failure-to-warn claims against generic drug companies are preempted by federal law, primarily because generic companies have no authority to make unilateral changes to their product labels even if they come to believe that stronger safety warnings are warranted. Continue reading →

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Do Plaintiffs Have Standing to Bring a Consumer Class Action Including Claims for Products They Didn’t Purchase?

nblazer-21Guest Commentary

by Natalie Blazer, Weil, Gotshal & Manges LLP*

*Cross-posted with permission from Weil’s Product Liability Monitor

At the Product Liability Monitor, we have kept our eye on an emerging trend in product liability lawsuits: consumers seeking to bring claims based on items they never bought. As my Weil, Gotshal & Manges colleague recently reported there, courts have often had to decide this issue when faced with putative class actions. In Miller v. Ghirardelli Chocolate Company, N.D. Cal., no. 12-04936, Dec. 7, 2012, the Northern District of California adopted the reasoning of a majority of courts in its jurisdiction that have held that plaintiffs may have standing to assert claims for unnamed class members based on products they did not actually purchase, but only if the products and the alleged misrepresentations are “substantially similar.”

In Ghirardelli, the plaintiff’s central claim was that the packaging of the product he purchased, as well as that of four other products he did not purchase, contained several actionable misrepresentations. After considering the similarities and differences between all five of the products, the court concluded that while the “products have some similarities in packaging, composition, and labeling,” the products are inherently different from one another, have different target customers, and have substantial labeling differences. Thus, the plaintiff did not have standing to bring claims relating to the dissimilar products he did not purchase.

Just three weeks later, the Northern District of California ruled the other way on standing in Colucci v. ZonePerfect Nutrition Co., N.D. Cal., No. 12-2907, Dec. 28, 2012. In that case, plaintiff Kimberly Sethavanish purchased only one flavor of ZonePerfect bars, but had standing to challenge the labeling of the other 19 varieties as well because the court found that the bars are similar enough to one another. Sethavanish and her fiance James Colucci, for whom she bought the bars, sued ZonePerfect, alleging the company deceptively labeled the bars as “All-Natural,” even though all the varieties contained at least one of 10 allegedly non-natural ingredients. Continue reading →

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California Supreme Court Case Sets New Standards for Expert Testimony

mc sungailaGuest Commentary

by Mary-Christine Sungaila, Snell & Wilmer L.L.P.*

Experts testify in almost every civil case that goes to trial.  Indeed, in many types of cases, such as medical malpractice and product liability actions, a plaintiff cannot recover without expert testimony.  Despite the importance of this type of testimony, the California Supreme Court had remained silent about the proper standards for admitting it.  Until now.

In Sargon Enterprises, Inc. v. University of Southern California, the Court considered whether the trial court erred by excluding expert testimony to substantiate the lost profit damages allegedly stemming from USC’s refusal to clinically test a new implant designed by the plaintiff dental implant company; but for USC’s breach, the implant company claimed, the company would have become a worldwide leader in the implant industry and made millions of dollars in profit each year.  The Supreme Court affirmed the expert’s exclusion, concluding that “trial courts have a substantial ‘gatekeeping’ responsibility,” including the duty “to exclude speculative expert testimony.”

The Supreme Court explained that

under Evidence Code section 801, subdivision (b), and 802, the trial court acts as a gatekeeper to exclude expert testimony that is (1) based on matter of a type on which an expert may not reasonably rely, (2) based on reasons unsupported by the material on which the expert relies, or (3) speculative.”

The court further observed that other provisions of law, including case law, “may also provide reasons for excluding expert testimony.”  Citing to the U.S. Supreme Court’s decision in Daubert v. Merrill Dow Pharmaceuticals, the Court warned, however, that the focus of the trial court’s analysis must be on the principles and methodology espoused by the expert, and not on choosing between two competing expert opinions. Continue reading →

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Appeals Court’s Limited Remand Should Not Give Hope to Trespassing Plaintiffs

31_train_trackIn October, the U.S. Court of Appeals for the First Circuit vacated and remanded back to the U.S. District Court for the District of Massachusetts a premises liability case that could have a significant impact on landowner rights.

In Menard v. CSX Transportation, Inc., a trespasser named Menard injured himself as he walked across an active rail yard on his commute home.  Menard argued that CSX employees breached their duty of care by failing to warn him to leave the property.  However, both the District Court and the First Circuit determined that, as a trespasser, “the duty owed to him – unless and until a specific peril threatened him and this became known to CSX – was only to avoid willful, wanton or reckless conduct.”

At issue on the limited remand is whether Menard was in fact in peril and, if he was, whether CSX employees acted negligently.  The District Court should reassert its previous position and, following Massachusetts case-law, hold that absent aggravating circumstances, an adult who chooses to trespass upon railroad tracks is not entitled to recover. Continue reading →

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Plaintiffs in Playstation Data Security Class Action Back to the Drawing Board

Cross-posted at Forbes.com’s WLF contributor site

One of the hallmarks of frivolous litigation is a class composed of arguably uninjured plaintiffs who often receive little in the way of remuneration for the asserted wrong.  That remuneration is reserved for the lawyers, and the class is thus relegated to receiving coupons or promises to refrain from future behavior.  Where the plaintiffs have not endured any real harm, litigation merely burdens the docket while enriching plaintiffs’ lawyers.  However, a recent opinion in the United States District Court for the Southern District of California may bode well for defendants who encounter this type of litigation, particularly in data breach cases.

In an order for In re: Sony Gaming Networks, the district court granted leave for plaintiffs to amend their complaint after determining that they had not satisfied the burden of pleading a cognizable injury.  This opinion adds to case-law saying the same; in 2011, another California court dismissed some of the claims against Google for its data collection under the Google Street View program due to the plaintiffs’ lack of monetary damages. Continue reading →

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The Ninth Circuit Rains on Plaintiffs’ Attorneys’ Class Action Pay Day

Guest Commentary

By Lauren Murphree, a 2012 Judge K.K. Legett Fellow at the Washington Legal Foundation and a student at Texas Tech School of Law.

The Ninth Circuit recently handed down a strongly worded opinion that may signal a positive trend in so-called “consumer protection” class action lawsuits. Judges across the country appear less willing to rubber-stamp large class action settlements, and their adherence to the rule of law should certainly be applauded.

In Dennis v. Kellogg Co., the rejected settlement agreement would have provided $2.75 million for distribution to the class (up to a whopping $15 per member), $5.5 million “worth” of Kellog items to feed the indigent per the cy pres doctrine, $2 million in attorney’s fees, and an agreement to stop advertising that Kellog’s Frosted Mini-Wheats improved attentiveness by nearly 20% (the marketing claim that provoked the lawsuit in the first place) for the next three years. By the court’s calculations, the attorney’s fees amount to a staggering hourly rate of $2,100. While counsel for the class defended those fees in light of the time spent on the case, drafting the settlement, and litigating the appeal, the Ninth Circuit wasn’t buying it: “one reason why those counsel had to defend this appeal is because they negotiated a deficient settlement agreement.”

Continue reading →