Drug & Medical Device Newsletter

July 2004
Frost Brown Todd

Using Plaintiff Firms’ Marketing Websites Against Them: Puffery and Ethical Issues
By: Doug Dennis

Often websites created by plaintiff firms are marketing tools disguised as reliable sources of information.  The attorneys using these marketing tools are often not afraid to push the edge of the envelope of what is truthful or what is allowed by the ethical rules.  Some of the things that plaintiff attorneys say in these web sites can be used in the defense of a case.

Contingent Fees
Many websites created by plaintiff firms provide only a partial explanation of how contingency fee cases work.  Attorneys will try to entice potential clients with the following statement: “The initial consultation is free of charge, and if we agree to handle your case, we will work on a contingency fee basis, which means we get paid for our services only if there is a monetary recovery of funds.”  This is a potential violation of the Disciplinary Rules in many states—including Ohio—because it fails to disclose that plaintiffs may be responsible for expenses and costs, which can stack up against a plaintiff in the complex litigation of a pharmaceutical tort lawsuit.  It also fails to disclose the immediate conflict of interest between the attorney seeking a quick settlement at low cost and the plaintiff seeking the maximum payout.  Many plaintiffs are disappointed to find that their attorney does very little to move their case forward.  Some plaintiffs’ attorneys often sit back, do as little as possible with the majority of their claims, and work on only the best claim with the hope that they can get a settlement for their entire “inventory” of cases, regardless of the merit of some of the individual claims.  Sometimes, plaintiff firms cover these issues with very tiny print at the bottom of a long web page or a second web page.

Dubious Information
Another interesting feature of the websites designed by plaintiff firms is the often misleading information provided.  For example, one site talks a great deal about the various drugs that it deems “toxic,” and then actually sells advertising to other entities based on the number of hits that such information retrieves.

Some of the information contained on such websites is intentionally dubious.  For example, another website is called “Fen-Phen-Legal-Resources.com” but directs you to what is essentially an advertisement for a national Plaintiff firm, not an unbiased information source that the address might lead you to expect.  A great deal of the information contained on sites such as this is dated, and includes op-ed pieces, media summaries, and sensationalistic headlines, with little to nothing in the way of reliable medical studies or information.

While plaintiff attorneys are not permitted under the ethical rules of most states to hold themselves out as experts in bringing lawsuits against pharmaceutical companies,  many of these marketing websites use superlatives to discuss their expertise and intentions in representing plaintiffs.  These statements are made in one place on the website, and then disclaimed in other places on the website in tiny print.  These disclaimers often state that no attorney-client relationship is formed and that the information on the website is not legal advice.  Then, the various state-required disclaimers are usually listed, but out of context from the statements that the disclaimers are intended to disclaim.

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

These marketing ploys may bring clients to their law firms.  But they might well embarrass the law firm when it comes discovery questions as to how the claimants found their law firm.

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

Additionally, assuming that the claimant testifies that it was website marketing by the plaintiff firm that led to their choice of counsel, some of this marketing may result in embarrassment to the Plaintiff law firm.  This has played well before some juries, who are increasingly skeptical about law firms that take upwards of 40% of a plaintiff’s settlement or verdict, and that operate more on claim inventory than on earnest work on behalf of claimants.
So do not forget to explore these areas and do your own investigation of your opponent’s marketing tactics—it could yield big dividends with both opposing claimants and with triers of fact.

STATE FARM v. CAMPBELL – Its Implications and Applications a Year Later
By: Steve Gracey

Over a year has passed since the United States Supreme 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 manner in which defendants facing catastrophic punitive damage claims have approached their litigation plan and strategy has changed significantly.  Campbell allows defendants to aggressively pursue various pre-trial and post-trial remedies to punitive damage claims and awards.  This article discusses the changes to these remedies in light of Campbell.

In Campbell the plaintiffs brought an action against State Farm Mutual Automobile Insurance in a Utah trial court, alleging bad faith, fraud and intentional infliction of emotional distress.  The trial court denied State Farm’s motions to exclude evidence of its dissimilar out-of-state conduct and out-of-state business practices that bore no relationship to the plaintiffs’ claims.  After considering this evidence, the jury returned a plaintiff verdict of $2.6 million in compensatory and $145 million in punitive damages.  The trial court reduced these awards to $1 million in compensatory and $25 million in punitive damages.  The Utah Supreme Court granted a writ of certiorari and reinstated the $145 million punitive damages award.

The United States Supreme Court granted a writ of certiorari on the matter.  The Supreme Court reversed and remanded the Utah Supreme Court’s reinstatement of the $145 million punitive damages award.  It held that the Due Process Clause prohibits the imposition of grossly excessive or arbitrary punishments on a tortfeasor, such as punitive damages that arbitrarily deprive a defendant of property.  The Court laid out the following three factors for consideration when reviewing a punitive damage claim or award: 1) the degree of reprehensibility of the defendant’s misconduct, 2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damage award, and 3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases.

In light of the Campbell factors, punitive damages should be awarded only if the defendant’s conduct is of such a reprehensible nature that it warrants the imposition of further sanctions to punish or deter the defendant.  A state does not have a legitimate concern for imposing punitive damages to punish a defendant for unlawful acts and conduct committed outside of the state’s jurisdiction, and punitive damages should only be awarded for conduct directed towards the plaintiff.  Further, punitive damage awards exceeding a single-digit ratio between the punitive and compensatory damages will rarely satisfy due process. 

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

Since a plaintiff is only entitled to discovery responses that are likely to lead to the discovery of admissible evidence, defense counsel should object to any discovery requests that seek information, documents, or other evidence regarding a defendant’s out-of-state conduct.  As held in Campbell, a defendant’s out-of-state conduct is not admissible to support a punitive damages claim.  Thus, these requests are not likely to lead to the discovery of admissible evidence.  Defense counsel should only produce evidence that relates to the defendant’s in-state conduct and conduct towards the plaintiff.   Therefore, early in the litigation process, defense counsel should begin the fight to prevent inadmissible evidence from ending up in the hands of the plaintiff.

A motion for summary judgment is an early and cost efficient way to defend against a punitive damages claim.  When ruling on a motion for summary judgment, the court must determine if a given factual dispute requires submission to a jury.  Anderson v. Liberty Lobby, Inc. (1986), 477 U.S. 242, 255, 106 S. Ct. 2505; 91 L. Ed. 2d 202.  This determination must be guided by the substantive evidentiary standards that apply to the case or claim.  Id.  In most jurisdictions, a plaintiff has a heightened burden that she must meet to prevail on a punitive damage claim.  A motion for summary judgment will force a court to determine at an earlier stage in the litigation whether a genuine issue of material fact exists as to whether the plaintiff will be able to meet this burden.  Not only is a motion for summary judgment an excellent way to remedy a punitive damage claim, if the motion is denied, the decision will provide critical information needed to effectively evaluate the client’s potential risk of being hit with a punitive damage judgment. 

If a motion for summary judgment is denied, the attorney should file a motion in limine to exclude certain evidence and arguments from trial.  Campbell establishes that the Interstate Commerce Clause and the Fourteenth Amendment Due Process Clause require the court to exclude certain types of evidence from a jury deciding a punitive damages claim. Specifically, a plaintiff may not introduce or argue evidence of the defendant’s net worth, capitalization, wealth, or financial condition.   Further a plaintiff may not introduce evidence of harm suffered by persons other than the plaintiff or argue that the defendant should be punished for the same.  Finally, a plaintiff is precluded from introducing evidence relating to harm suffered by persons outside of the jurisdiction. 

Defense counsel should file a motion in limine to exclude evidence and arguments regarding these facts from trial.  If a court denies this motion and a jury considers this evidence in reaching its verdict, the defendant will have a strong argument on which to appeal any punitive damages awarded by the jury.

If a jury is permitted to consider awarding punitive damages, the jury instructions submitted to the jury are of critical importance.  Defense counsel should submit an instruction stating that a jury cannot punish a defendant for any out-of-state conduct.  The jury should also be instructed to not consider the defendant’s net worth, capitalization, wealth, or financial condition. 

It is absolutely necessary to create an adequate record for an appeal.  As such, special interrogatories regarding the factors considered by a jury when awarding punitive damages are helpful.  As reiterated in Campbell, the most important factor an appellate court must consider in reviewing a punitive damages award is the degree of reprehensibility of the defendant.  An instruction requiring the jury to set forth this degree will provide a strong record for the appellate court to examine when considering an appeal of the award.  If the punitive damage award is grossly over-proportionate to the degree of reprehensibility indicated by the jury, the award should be reversed on appeal.  In addition, a special interrogatory detailing the difference between the actual or potential harm suffered by the plaintiff and the 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 damages will satisfy due process.  This ratio can easily be determined by the use of a special interrogatory.  With the proper jury instructions, defense counsel can limit the factors a jury considers when deciding a punitive damages claim, while at the same time create an adequate record for appeal.

If a jury awards punitive damages, defense counsel should immediately file motions for a judgment as a matter of law and for a new trial.  If these motions are filed, the Due Process Clause of the Fourteenth Amendment of the United States Constitution requires the trial court to conduct a de novo review of the evidence presented to and considered by the jury awarding a punitive damages award. 

To conduct this review the court must examine three factors: 1) the degree of reprehensibility of the defendant’s misconduct; 2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award; and 3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases.  If the punitive damage award is not warranted under any of the three factors, the court must grant the post trial motion or risk being reversed on appeal.

In short, Campbell and the case law leading up to it have provided defense counsel opportunities to pursue a more aggressive defense against punitive damage claims. Counsel should be aware of all of the available remedies to evaluate and defend punitive damage claims to the satisfaction of their clients.  Since these remedies are available at all stages of litigation, they should form a strategy early and should advise their clients regularly of the best ways to prevent or at a minimum reduce overwhelming punitive damage awards.

Impact of the Restatement (Third) Torts: Product Liability
By: Jack B. Harrison

Pharmaceutical companies and lawyers practicing in the area of drug and medical device product liability are certainly familiar with the Restatement (Second) Torts § 402A, along with its accompanying "comment k."  Section 402A generally imposes strict liability on pharmaceutical companies for "any product in a defective condition" even where the seller "has exercised all possible care in the preparation and sale" of the product.  However, comment k generally provides for an exemption from strict liability products, including prescription drugs, where those products are "unavoidably unsafe."

Under the "risk-utility" test set forth in comment k, in certain circumstances, it is in the public interest to allow unsafe drugs to be marketed because the benefits of the drugs justify the risks.  Application of comment k is often justified as a way to provide a balance between a pharmaceutical manufacturer’s responsibility to provide safe drugs to consumers and the encouragement of research and development of new drugs.

In the application of comment k, courts have employed various analyses, with some viewing comment k as complete protection from liability for the defective design of prescription drugs and others applying comment 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 the Restatement (Third) Torts: Product Liability with the goal of modernizing and clarifying the law of product liability.  The express stated purpose of Section 6 of the Restatement (Third) was to clarify the language of the Restatement (Second) and bring more uniformity to drug design defect law.  Section 6, "Liability of Commercial Seller or Distributor for Harm Caused by Defective Prescription Drugs and Medical Devices," provides, in part, that:

  1. pharmaceutical companies that sell or distribute defective prescription drugs are subject to liability for harm caused by the defect;
  2. a drug is defective if it is not reasonably safe due to inadequate design;
  3. a prescription drug is not reasonably safe due to defective design if the foreseeable risks of harm posed by the drug are sufficiently great in relation to its foreseeable therapeutic benefits such that reasonable health care providers, knowing of such foreseeable risks and therapeutic benefits, would not prescribe the drug for any class of patients (essentially a "reasonable physician" test); and
  4. a drug is not reasonably safe due to inadequate instructions or warnings if reasonable instructions or warnings regarding foreseeable risks of harm are not provided: a) to the health care provider, or b) to the patient when the pharmaceutical company knows or has reason to know that the health care provider will not be in a position to provide the warning, such as in the case of mass immunizations.

From the standpoint of pharmaceutical manufacturers, Section 6 can be seen as both potentially helpful and harmful.  For example, section 6(c), the “reasonable physician” test, if adopted by the courts, could prove to be helpful to pharmaceutical companies in defeating failure-to-warn claims because it appears, in theory at least, to advocate something close to a "no-defect" presumption for drug designs.  Section 6(d), on the other hand, has the potential to increase liability for pharmaceutical companies, particularly with respect to Direct-To-Consumer advertising.

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

Since being approved by the ALI in 1997, few courts have had the opportunity to address section 6(c).  For the most part, those that have addressed it have either merely mentioned the section without comment or have declined 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, the Freeman court summarized several criticisms of section 6(c). 

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

While seemingly beneficial to pharmaceutical companies because it provides a more rigid standard by which to judge the risks of a given drug, the criticisms of the first court to address the design defect portion of section 6 may have some influence on cases that follow and may ultimately detract from the strength and guidance that section 6 would ostensibly provide.  Therefore, until more courts have addressed its application, section 6(c) does not seem to provide a reliable framework by which pharmaceutical companies can predict liability for drug design defects.

Additionally, section 6(d) recognizes that a pharmaceutical company may need to warn a consumer directly when the health care provider is not in a position to provide that warning. While it is difficult to imagine a scenario where a physician would not be in a position to provide a patient with warnings and instructions for a prescription drug's use, comment e to section 6 notes that an argument can be made that pharmaceutical companies who directly communicate with consumers regarding a particular drug should not escape liability "simply because the decision to prescribe the drug was made by the health care provider."  The Restatement (Third) "leaves to developing case law" the decision whether or not a DTC advertising exception to the learned intermediary rule should be recognized.  The New Jersey Supreme Court, in Perez v. Wyeth, 734 A.2d 1245 (N.J. 1999), held that such an exception should be recognized in certain circumstances.  Like section 6(c), section 6(d) has not been widely addressed by the courts, so it remains to be seen whether a DTC advertising exception to the learned intermediary doctrine will be recognized.  Pharmaceutical companies and attorneys who advise them should nevertheless be aware of the possibility of increased liability with regard to the adequacy of their warnings under section 6.

What They Don’t Know: Using Evidentiary Law to Exclude Potentially Damaging Facts and Opinions
By: Jay Schoeny

Excluding Expert Opinions on Ethics, Morality and Motive
We find ourselves in an era of unprecedented public scrutiny and censure of corporations and corporate executives.  In this atmosphere, the plaintiffs’ bar is all the more likely to try to attack the ethics and morality underlying decision-making by corporate defendants, whether or not there is any basis to do so.  American juries, influenced by corporate scandals and growing more accustomed to viewing corporate leaders led in perp-walks and sentenced to prison terms, are becoming predisposed to a belief that corporate America is an unethical and immoral place.  It is the responsibility of defense attorneys in civil litigation to dissuade them of that belief, and the first step in doing so is to keep the plaintiffs’ bar from introducing speculative testimony to that effect.       

Plaintiffs’ experts routinely attempt to testify to alleged ethical breakdowns of pharmaceutical defendants, especially in the context of the presentation of, and reaction to, clinical testing of drugs and medical devices.  The testimony is inherently subjective and intentionally inflammatory.  It is used to elicit an emotionally charged response and thereby unfairly prejudice the jury.  It is therefore important to identify and prevent discussion of those opinions before they reach the jury.  Fortunately, because of the speculative, irrelevant, and potentially prejudicial and confusing nature of these types of opinions, they are ripe for a preemptive Daubert challenge. 

The familiar principles underlying Daubert and its progeny have been codified in FRE 702.  The Rule provides that “if scientific, technical or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue,” a witness who has been properly qualified as an expert may offer opinion testimony only if “(1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case.”

In a recent development in the Rezulin Products Liability MDL, Judge Lewis Kaplan, in a thoughtful and well-reasoned opinion in In Re: Rezulin Products Liability 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 ethical behavior for a company, as well as, the motive, intent, and state of mind of company employees, FDA employees, and authors of scientific authors. Judge Kaplan’s analysis in granting the motions was threefold by assessing lack of reliability under FRE 702 and Daubert, lack of relevance under the same, and the potential for undue prejudice and confusion under FRE 403.

At the outset, Judge Kaplan noted that the proposed ethics testimony of the plaintiffs’ witnesses was based on personal, subjective views rather than on “knowledge.”  Thus, the very core requirement of FRE 702 had not been met.  He furtherexplained thatopinions regarding the intent, motive, or state of mind of a corporation has “no basis in any relevant body of knowledge or expertise.”  Such determinations are lay matters for the jury that require no expert testimony. 

This analysis comports with the line of cases that have followed Daubert.  Issues of ethics, morality and motive are non-scientific, non-technical matters that are within the common understanding of jurors.  Expert testimony on these issues is not only unnecessary, but it also is inappropriate and almost always unfounded.  It is unfounded because few, if any, experts called in pharmaceutical litigation that are qualified in scientific or technical fields could also qualify as experts on corporate intent or the goals of maintaining a profit-making organization subject to standards, customs, rules, regulations, and influence from shareholders and public opinion. 

Furthermore, if the witness relies solely or primarily on personal experience to reach his or her opinions, then the witness must explain how that experience leads to the conclusion reached, why that experience is a sufficient basis for the opinion, and how that experience is reliably applied to the facts.  When the conclusion is as tenuous as whether or not the motive and intent underlying a business decision is ethical, it is hard to imagine a case where personal experience could provide sufficient foundation.

Even if we assumed that ethics testimony was based upon a reasonable foundation and was appropriate for expert analysis, it would not meet the second leg of Judge Kaplan’s analysis.  The testimony is irrelevant.  It cannot meet the threshold requirement of FRE 702 because it does not assist the fact-finder in determining a factual dispute at issue.  The key issues in product liability litigation are whether the defendant manufacturers breached a legal duty to the plaintiff in manufacturing, labeling and marketing their products and, if so, whether any such breach proximately caused the plaintiff’s alleged injury.  Personal opinions about ethics and morality underlying business decisions do not bear on the legal issues.  In a classic example, plaintiffs’ experts opine that profit motive leads to or indicates corruption and indifference to dangers to consumers.  Not only is the conclusion a logical fallacy, it does nothing to prove that the defendant breached a legal duty to the plaintiff. 

Testimony on ethics and morality is not only vulnerable to attack on foundation and relevance, it is also potentially prejudicial and confusing to the jury.  As mentioned above, the testimony is inflammatory and thus, emotive.  It is akin to character testimony, and by drawing on established bias against corporations, is intended to (mis-)characterize the moral fiber of the manufacturing defendant.  Also, as the previous comments on relevance imply, such testimony can easily be interpreted as alternative and improper grounds for decision on bases other than the pertinent legal standards. 

For all of these reasons, “expert” opinions on morality, ethics and motive in pharmaceutical litigation should be inadmissible.  A Daubert motion in limine will set the stage well for an early order against such testimony.  In addition, defense counsel must continue to be perceptive at trial to anticipate and preclude such testimony from reaching the jury’s ears.

Establishing an Equitable Exception to the One-Year Limitation on Removal
By: Joseph Tomain & Peter Cummins

There is a concerning trend of forum shopping in drug and medical device litigation by plaintiffs.  Specifically, plaintiffs try to avoid removal to federal court by naming a non-diverse defendant, such as the prescribing physician or pharmacy.  Yet, they have no intention of actually pursuing the non-diverse defendant and in many cases 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 in the same harm as fraudulent joinder.  Because such tactics are improper, federal courts should uniformly adopt an equitable exception to the one-year limitation on removal.  Indeed, at least one Circuit has adopted this equitable exception.

As defense attorneys, removal from state court should always be considered.  There are good reasons for removal.  First, empirical evidence shows that a defendant is more likely to prevail in a federal court than in a state court. Second, in some states like Kentucky, the state standard for summary judgment is higher than in federal courts.  Unfortunately, because of the presence of 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.  Some attorneys baldly plead a medical negligence claim against treating physicians to keep a case in state court.  Because most jurisdictions only require notice pleading, it is possible to plead such a claim without including many factual allegations.  Moreover, because the fraudulent joinder standard is so strict, defendants rarely succeed on getting a non-diverse defendant dismissed under this theory.           

A fallback strategy for defendants is to try to secure a dismissal of non-diverse defendants within the one-year period set forth in §1446(b). The natural course of litigation, however, is often so prolonged that a dispositive motion cannot be briefed and ruled upon in the one-year period.  Because of these barriers, the question becomes: “Is your client necessarily stuck in state court?”  The only circuit court to directly address the issue answered no.

In Tedford v. Warner-Lambert, 327 F.3d 423 (5th Cir. 2003), the Fifth Circuit concluded that the one-year period contained in §1446(b) is not an absolute bar to removal.  Tedford was a pharmaceutical product liability case in which a non-diverse physician was named in the complaint.  Plaintiff’s counsel, however, failed to actually pursue a claim against that defendant.  Plaintiff filed a notice of non-suit of the non-diverse physician defendant shortly after the expiration of the one-year anniversary of the commencement of the action.  Thereafter, the pharmaceutical defendant removed the case.  In affirming the district court's denial of a motion to remand, the Court of Appeals concluded that "Section 1446(b) is not inflexible, and the conduct of the parties may effect whether it is equitable to strictly apply the one-year limit."  Id. at 426.  Plaintiff's conduct showed that he manipulated the statutory removal process and wrongfully prevented the defendant to invoke his right to removal.  For this equitable reason, the court tolled the one-year limitations period.  Id. at 428-29.

An equitable exception to the one-year time limitation set forth in §1446(b) is a reasonable response to counter forum shopping tactics by plaintiffs and upholds the statutory right of removal.  But, whether the exception will be adopted in other circuits is yet to be seen.  District courts are split on the issue. Some hold that like a statute of limitations, the one-year removal period can be 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 has been applied reveals the following similarities:

When it appears that plaintiffs’ counsel is including a non-diverse defendant simply to avoid removal to federal court, defendants have reasonable grounds to argue for adoption of an equitable exception.  Indeed, Tedford provides federal appellate case law showing the necessity for and appropriateness of an equitable exception.  Such an argument is especially persuasive when the facts of a case are egregious.  For example, in In re Rezulin Prods. Liab. Litig., (Glossip), 00 Civ. 2843, Order, (S.D.N.Y. Jan. 30, 2004), the Rezulin MDL Court followed 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 is case law, which is cited in Tedford, holding that no equitable exception exists. In short, this is a clear example of unsettled law.  Therefore, when deciding to advance this argument, counsel should consider bringing their strongest cases first to secure a favorable trend in the law.

While far from set in stone, the equitable exception to the one-year period set forth in §1446(b) is a viable argument that counsel for drug and medical device manufacturers can make in cases in which non-diverse defendants are voluntarily dismissed after one year.  Adoption of such an exception would prevent the same kind of forum shopping that the fraudulent joinder doctrine was designed to prevent.

Kentucky Supreme Court Adopts Learned Intermediary Doctrine
Larkin v. Pfizer, Inc. et al., Case No. 2002-SC-0746-CL
Rendered June 17, 2004
By: Susan Wettle

In a 4-3 opinion, the Kentucky Supreme Court adopted the learned intermediary doctrine as set forth in the Restatement (Third) of Torts: Product Liability Section 6(d).  The case was before the Court on a request for certification of a question of law from the Sixth Circuit Court of Appeals.  The issue certified to the Kentucky Supreme Court was:  “Whether the learned intermediary doctrine should apply in Kentucky to a case involving an allegation that a manufacturer of a prescription drug failed to warn the ultimate consumer of risks associated with that drug, even though the manufacturer informed the prescribing physician of those risks?”  The majority’s opinion answered that question in the affirmative.

The underlying facts were straightforward.  Plaintiff Robert Larkin was being treated by his internist, Dr. Jeffrey Reynolds, for sinusitis and muscular pain in his shoulder.  Dr. Reynolds prescribed Zithromax, an antibiotic manufactured by Pfizer, Inc. for the sinusitis, and Daypro, a non-steroidal anti-inflammatory manufactured by G. D. Searle for the shoulder pain.   The prescribing information 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 associated with both drugs, as well as with most other drugs in their respective classes.  However, it was not Dr. Reynold’s normal practice to inform patients of this extremely 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 severe blisters over a large portion of his body.  Dr. Reynolds diagnosed the condition as toxic epidermal necrolysis and Stevens-Johnson syndrome, which he believed resulted from taking either Zithromax or Daypro or both.  

The plaintiff filed a product liability suit against Pfizer and G. D. Searle, asserting counts for negligence, strict liability and breach of warranty.    Following discovery, both defendants moved for summary judgment on the grounds that, under the learned intermediary doctrine, the drugs were not defective or unreasonably dangerous because full and adequate warnings had been provided to the treating physician.   Judge Thomas Russell of the Western District of Kentucky granted summary judgment for both defendants.  While noting that no appellate court in Kentucky had addressed the adoption of the learned intermediary rule,  Judge Russell’s opinion predicted that Kentucky courts would apply the doctrine to the facts before him.   The plaintiff appealed the summary judgment ruling to the Sixth Circuit Court of Appeals; following briefing and oral argument the Sixth Circuit certified the question of law to the Kentucky Supreme Court. 

The majority’s Opinion by Justice Cooper discusses three basic rationales that support the learned intermediary rule.  First, the prescribing physician is in a superior position to impart warnings concerning a drug and can provide an independent medical decision as to whether use of the drug is appropriate for treatment of a particular patient.  Second, manufacturers lack effective means to communicate directly with each patient.  Third, imposing a duty to warn upon the manufacturer would unduly interfere with the physician-patient relationship, to the point where a consumer faced with a long list of potential but rare side affects might forego beneficial or even vital medical treatment.  The Court noted that, although under the learned intermediary rule a manufacturer’s duty to warn runs only to the physician intermediary, the warning must still be adequate and sufficiently apprise physicians of the dangerous propensities of the drug. 

The Court’s Opinion notes that some exceptions to the learned intermediary rule have been recognized and in limited circumstances courts have held that the manufacturer of a drug must warn the ultimate consumer.  A few courts have invoked an exception in the case of mass immunizations, where the health care provider may not in a position to individually balance the risks for each recipient, or in the case of oral contraceptives, where the patient often plays a much greater role in choosing the drug.  The Court noted that a third exception for direct-to-consumer advertised drugs has been recognized by New Jersey only.   The Kentucky Supreme Court stated that none of the exceptions applied to the facts of the case before it and therefore declined to decide which, if any, of the recognized exceptions to the rule should be adopted in Kentucky.

The Court then acknowledged the almost universal acceptance of the learned intermediary doctrine:  The courts of 34 states have specifically adopted the rule by common law decision, two additional courts have applied the principals of the rule while not specifically adopting it, and federal courts applying the law of nine other states and Puerto Rico have predicted that those jurisdictions would adopt the rule or have interpreted the existing state law as having adopted it.  No court that has directly addressed the doctrine as an exception to the common law duty to warn has rejected the learned intermediary rule per se.

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

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

The Court also rejected the plaintiff’s alternative argument that adoption of the learned intermediary rule is a matter of public policy that should be left to the legislature.  The Court held that the adoption of an almost universally accepted exception to a common law rule was not a matter of public policy.  Only three jurisdictions have adopted the learned intermediary rule by statute, and all three enacted their statutes after their state courts had adopted the rule by common law.  Moreover, the learned intermediary rule is consistent with Kentucky’s informed consent statute, KRS 304.40-320, which anticipates that doctors will inform their patients of dangers inherent in proposed treatment.

Lastly, the Court rejected the argument that adopting the learned intermediary rule would immunize manufacturers of prescription drugs from product liability claims.  The manufacturers’ duty to warn remains; the rule merely provides that the party to be warned is the health care provider who prescribes the drug.  If the manufacturer fails to adequately warn the health care provider, the manufacturer is directly liable to the patient for resulting damages.

Three members of the Court dissented from the majority opinion, contending that a decision to adopt the learned intermediary rule was a matter solely within the discretion of the Kentucky General Assembly, and not the judiciary.  The dissent, authored by Justice Wintersheimer, argues that Kentucky’s legislature has preempted the field of products liability by enacting the Product Liability Act which applies to all claims arising from the use of products, regardless of the theory advanced.  Because the Product Liability Act does not incorporate the learned intermediary doctrine, the dissent claims that the doctrine should not be imposed “by judicial fiat.”

The dissent further argues that the doctrine should be rejected because the development of direct-to-consumer pharmaceutical advertising has indelibly changed the realities of physician/patient relationships.  Citing to various journal articles regarding direct marketing of pharmaceuticals, the dissent concludes that because manufacturers are now directly marketing to consumers and benefiting by increased sales, they must also assume an increased share in the risks and duties pertinent to selling their products.

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

In September 2002, Dr. Lester M. Crawford, Deputy Commissioner of the Food and Drug Administration, announced the consolidation of the FDA's responsibility for reviewing new pharmaceutical products into its Center for Drug Evaluation and Research. In conjunction with the announcement, Dr. Crawford noted that the "FDA's drug and biological product reviews have long been the gold standard for the world... By carefully combining part of our present biologics review operation responsibilities with our drug review operation, FDA will be optimally positioned to uphold that gold standard by continuing to review novel pharmaceutical products promptly and rigorously in an accountable and consistent manner."

While the FDA admits that the "gold standard" has been a direct result of the "vast majority of the pharmaceutical industry sharing the FDA's commitment to the health and safety of the public to produce high quality, reliable products," the communication, relationship, and exchange of information between the FDA and the industries it regulates has recently been a touchstone of great debate. Some commentators have claimed that the current regulatory system does not provide adequate incentives to reduce risks posed by regulated products. See, e.g., McGarity, "Beyond Buckman: Wrongful Manipulation of the Regulatory Process in the Law of Torts," 41 Washburn L.J. 549 (2002). Others have argued that the pharmaceutical industry has become over-regulated because states too often attempt to assume the role of "mini-FDAs" in supervising the regulation of drugs and medical devices, despite the comprehensiveness of FDA regulation. See, e.g., Semet, "Toward National Uniformity for FDA-Regulated Products," at http://leda.law.harvard.edu (a Legal Electronic Document Archive at the Harvard Law School Library). States frequently allow their legislatures and their courts to supplement or even attempt to supersede FDA determinations of safety and efficacy. Id. Manufacturers of FDA-regulated products, faced with forced compliance with different domestic and international regulatory regimes, and in defending products liability suits, are often called to meet standards of care that exceed what the FDA requires. Id.

In February 2001, the United States Supreme Court entered the fray to address whether states could permit tort claims based on allegations that a manufacturer made fraudulent representations to the FDA in order to secure clearance for a regulated medical device. Whether a consumer should have a private cause of action based on "fraud-on-the-FDA" is an issue that had split the federal circuit courts of appeal and even fragmented the Supreme Court over the previous decade.

In the landmark decision of Buckman Co. v. Plaintiffs' Legal Committee, 531 U.S. 341 (2001), the Supreme Court definitively addressed the issue by holding that state law "fraud-on-the-FDA" tort claims in a lawsuit stemming from injuries allegedly caused by a medical device were impliedly preempted by the Federal Food, Drug and Cosmetic Act, as amended by the Medical Device Amendments of 1976 ("FDCA"). The Court concluded that the FDA, and not a private litigant, was best suited and equipped to police such fraud.

Although Buckman v. Plaintiffs' Committee went a long way towards clarifying a previously convoluted and equally contentious issue, the implications and reach of the Supreme Court's decision are just now being realized. Using the Buckman rationale, manufacturers of regulated products have pushed to expand the preemption defense to other types of products, other claims, and other procedural and evidentiary areas of the law, with mixed results. More specifically, Buckman has found broad application barring fraud-on-the-FDA claims with regard to regulated pharmaceutical products as well as medical devices. In addition, manufacturers attempting to preempt other tort claims, such as failure to warn, have raised the defense; they have, however, had little success to date. More notably, Buckman has found application as a bar to fraud-on-the-FDA evidence even in the absence of fraud-on-the-FDA claims. As discussed in more detail below, a federal district judge recently excluded fraud-on-the-FDA evidence in a product liability case regarding a regulated pharmaceutical product where the evidence was offered to show that the FDA was misled, or that information was intentionally concealed from the FDA.

Given these recent developments, this article examines the implications of Buckman and its progeny by tracing the application of the preemption defense to cases involving regulated pharmaceutical products. The article will also examine the novel utilization of Buckman to bar fraud-on-the-FDA evidence, in Bouchard v. American Home Products Corp., 213 F.Supp.2d 802 (N.D.Ohio 2002).

State "Fraud-on-the-FDA" Claims Preempted by Buckman
In Buckman Co. v. Plaintiffs' Committee, a class of plaintiffs claimed injuries resulting from the use of orthopedic bone screws in the pedicles of their spines. As a result, they sued the screw manufacturer and a consultant--Buckman Company--that assisted the screw manufacturer in obtaining approval for the use of the screws from the FDA. Although the plaintiffs settled their claims against the screw manufacturer, they continued to pursue state law fraud claims against Buckman. Specifically, the plaintiffs claimed that Buckman made fraudulent representations to the FDA as to the intended use of the bone screws, and that as a result, the devices 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 reasoned that the patients' fraud claims were neither expressly nor impliedly preempted, the Supreme Court reversed, holding that the state law fraud-on-the-FDA claims were preempted by the FDCA because policing fraud against federal agencies was not a field traditionally occupied by the states. As such, the general presumption against preemption did not apply. Further, the Court concluded that fraud-on-the-FDA claims conflicted with the federal statutory scheme that empowered the FDA to punish and deter fraud against the FDA. The Court reasoned that the FDA used this authority to achieve a delicate balance of statutory objectives. By allowing state law tort claims, this balance could be skewed.

The Court identified a number of practical implications of upsetting the balance and flexibility maintained by the FDA. First, state claims conflict with the FDA's responsibility to police fraud. Thus, complying with the FDA's detailed regulatory regime in the shadow of 50 states' tort regimes would dramatically increase the burden facing potential applicants for FDA approval. Second, applicants would be discouraged from seeking approval for devices for fear that off-label uses might expose the manufacturer to unpredictable civil liability. Third, subsequent adjudication of disclosures once deemed adequate by the FDA would encourage applicants to submit enormous amounts of information in an effort to ultimately satisfy 50 states' tort regimes. Such a disclosure of information would overburden the FDA, slow the process of approval, impede competition among predicate devices, and delay health care professionals' ability to prescribe off-label uses.

Thus, the main thrust of the Court's decision in Buckman v. Plaintiffs' Committee was to restore the power to police fraud in the regulatory process solely to the FDA. The FDA alone must decide whether a manufacturer has made a full and accurate disclosure of information regarding its product. Consequently, claims based on a manufacturer allegedly defrauding the FDA are not appropriate to support a private right of action.

Extending Buckman to Drugs and Other Causes of Action
Once the Supreme Court concluded that the FDA was best suited to police fraud in the regulatory process for medical devices based on preemption principles, the push to apply these same principles to pharmaceutical products and other claims soon followed.

Less than two weeks after Buckman was decided, a drug manufacturer argued that Buckman applied equally to regulated pharmaceutical products. In Globetti v. Sandoz Pharmaceutical Corp., 2001 U.S.Dist.LEXIS 2391, 2001 Westlaw 419160 (N.D.Ala.), the plaintiff asserted various state law tort claims including misrepresentation, suppression, negligence, and inadequate warning related to her use of the drug Parlodel. In addition to the defendant's argument that the Buckman preemption doctrine applied to regulated pharmaceutical products, the manufacturer also argued that Buckman precluded any claim relating to communications with the FDA, including claims regarding the adequacy of a warning and those for direct fraud against the consumer and medical community. 2001 U.S.Dist.LEXIS 2391, at *3.

The district court held that Buckman precluded the plaintiff from seeking damages based on allegations the defendant lied to the FDA. Id. The court found no meaningful distinction between the preemption of fraud-on-the-FDA claims regarding medical devices and those regarding regulated pharmaceutical products.

However, the court in Globetti also held that Buckman did not preempt claims for inadequate warning (even though the warning itself was obviously approved by the FDA), nor was the plaintiff barred from asserting claims seeking damages for misrepresentations that the manufacturer may have made directly to the plaintiff. Id. at *5-6. The court concluded that:

Defendant owed separate duties beyond simply full and fair disclosure to the FDA, duties not to market a defective and unreasonably dangerous product, not to misrepresent or suppress the facts needed by physicians and consumers to assess the safety of a product, and to adequately warn of known risks associated with it. These duties existed irrespective of the FDCA.

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

In Brasher v. Sandoz Pharmaceuticals Corp., 2001 U.S.Dist.LEXIS 18364 (N.D.Ala.), the district court again concluded that Buckman preempted fraud-on-the-FDA claims against a drug manufacturer. However, the court refrained from concluding that the plaintiff's inadequate warning claims or fraud claims based on direct misrepresentations to the plaintiff and her physician were preempted under Buckman. Id. at *25.

Despite Globetti and Brasher, drug manufacturers continue to raise the preemption defense to claims other than those for fraud-on-the-FDA, based on the rationale out-lined by the Supreme Court in Buckman. In Caraker v. Sandoz Pharmaceuticals Corp., 172 F.Supp.2d 1018 (S.D.Ill. 2001), the plaintiff filed suit against the manufacturer of the drug Parlodel. The plaintiff asserted various 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 is that the defendant's warnings were inadequate, the defendant argued that any claim or theory based on its failure to warn is impliedly preempted under Buckman. More specifically, the defendant in Caraker v. Sandoz argued that, if Illinois law held the defendant to a higher standard of timely warning to drug users, via their learned intermediary, about the risks of taking the drug (even after new information surfaces after FDA approval), any state jury verdict based on that duty would actually conflict with the FDA's determinations initially approving the drug to be marketed with its warning label. The manufacturer also argued that allowing Illinois to enforce its traditional common law duty to warn against drug manufacturers would stand as an obstacle to the accomplishment of the federal objective of the FDA to regulate drug warning labels, a policy that stood at the heart of the Buckman decision.

In response, the plaintiffs in Caraker argued that there is no direct conflict because the FDA generally lays down "minimum standards" that do not preempt state law standards. In addition, the Illinois traditional common law duty to warn stands as no significant obstacle to the accomplishment of the federal objective, inasmuch as the federal objective is to have drug manufacturers take the initiative and attempt to strengthen existing warnings whenever they see, or should see, the need.

Adopting the minimum standards argument, the court in Caraker held that the manufacturer failed to carry its burden of showing that the plaintiff's claims based on failure to warn theories were impliedly preempted. 172 F.Supp.2d at 1032. In support of its holding, the court noted that plaintiff did not assert fraud-on-the-FDA claims. The court also stated that the defendant failed to show by clear evidence that Congress or the FDA intended to displace virtually the entire state products liability scheme with respect to prescription drugs by means of a conflict. Id. at 1033. Without this clear evidence of preemptive intent, the court refrained from holding that these claims were preempted.

Unlike Caraker, the plaintiff in Flynn v. American Home Products Corp., 627 N.W.2d 342 (Minn.App. 2001), attempted to assert common law tort and statutory consumer fraud claims based on a fraud-on-the-FDA theory. The court concluded that the pre-emption defense barred plaintiff's fraud claims. Id. at 349. It held that the existence of state law claims against applicants for, and recipients of, FDA drug approval, for alleged violation of FDA regulations conflicts with the FDA's authority to consistently police fraud within the agency's powers as explained in Buckman. Id. The court noted that:

Like the claims of fraudulent procurement of medical device approval at issue in Buckman, the existence of the federal regulations is critical to appellant's claims that those regulations were violated and caused her injuries. Moreover, the Buckman Court's observation that 50 state-law causes of action for violation of the FDA's detailed regulations would increase the burdens placed on applicants for FDA approval applies to drug manufacturers as well as to medical-device manufacturers.

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

Flynn and the other cases discussed above clearly extend Buckman beyond the medical device context to regulated pharmaceutical products. Despite the general reluctance of courts to apply the preemption defense to claims other than those for fraud-on-the-FDA, the use of the preemption defense is not limited to simply barring fraud-on-the-FDA claims. Notably, as explained below, Buckman has been applied to bar the admission of evidence of alleged fraud purportedly perpetrated by a manufacturer on the FDA, even where the plaintiff has not asserted fraud-on-the-FDA claims. 

Excluding Evidence of Fraud in State Law Claims
In Bouchard v. American Home Products Corp., 213 F.Supp.2d 802 (N.D.Ohio 2002), the plaintiff claimed that her ingestion of diet drugs resulted in injuries. As a result, she sued the drug manufacturer, asserting various product liability claims. Like the plaintiffs in Buckman, the Bouchard plaintiff also asserted state law claims for fraud. However, she contended that her claims were based on direct fraud against her and her health care provider. The plaintiff took care to argue that her claims were not based on fraud-on-the-FDA assertions. Despite the plaintiff's contention, she sought to introduce evidence alleging that the defendant misled the FDA or violated FDA regulations.

The manufacturer moved to exclude any evidence or argument that it misled the FDA. Given that the plaintiff contended that it was not asserting fraud-on-the-FDA claims, the defendant acknowledged that it was not requesting that any causes of action be preempted; rather, it was only attempting to exclude evidence that the manufacturer misled the FDA. The defendant maintained that the Supreme Court, in Buckman, held that alleged noncompliance with strictures of the FDCA, or its implementing regulations, could not serve as the basis for state law claims. Further, the manufacturer contended that the FDA and Department of Justice were empowered to determine whether federal requirements have been violated; notably, those agencies never found any such violations. Thus, any evidence allegedly showing that violations existed should be excluded.

The plaintiff argued that the Buckman principle was inapplicable to her case because: 1) Buckman stands for the proposition that claims of fraud-on-the-FDA arising only from medical devices are preempted, not claims arising from the use of pharmaceuticals; and 2) none of the causes of action in her complaint include fraud-on-the-FDA as an essential element.

The manufacturer responded by citing a number of the decisions outlined above where courts have applied Buckman's reasoning to pharmaceutical products. In addition, the defendant argued that plaintiff was making a "semantic distinction" between claims captioned "fraud-on-the-FDA" and those captioned "inadequate warning and design defect" that rely on evidence of fraud on the FDA. The manufacturer noted commentary on this issue explaining:

As a practical matter, these [fraud-on-the-FDA and inadequate warning] claims are indistinguishable, and any argument that plaintiffs can avoid preemption simply by placing a different label on their fraud-on-the-FDA arguments would render Buckman a nullity. The key danger giving rise to conflict with federal law is not the existence of a fraud-on-the-FDA claim per se, but the possibility that a jury will impose damages under state tort law premised on the argument that the FDA was defrauded.

"The Buck Stops Here: Product Liability Claims Involving FDA-Regulated Products," 69 U.S.L.W. (BNA) 2755 (June 12, 2001). The defendant contended that any attempts by plaintiff to create "shadow FDA violations" in lawsuits, especially where the FDA has found none, is prohibited by Buckman.

The Ohio federal court in Bouchard granted the manufacturer's motion to exclude the fraud-on-the-FDA evidence. In so holding, it rejected the plaintiff's contention that fraud-on-the-FDA claims are limited to the medical device context. The court stated that it need not engage in a "searching analysis of Buckman to determine that claims of fraud on the FDA are preempted," given the decision in Kemp v. Medtronic, Inc., 231 F.3d 216 (6th Cir. 2000), which barred any fraud claims premised on false representations to the FDA even though plaintiffs styled their claims as direct fraud on the consumer and health care provider.

Having concluded that private actions premised on fraud-on-the-FDA were not permitted, the Bouchard court further determined to what extent, if any, alleged fraud-on-the-FDA evidence offered by the plaintiff should be excluded. Although the court found that evidence concerning what information was or was not provided to the FDA might be relevant to the plaintiff's claims of direct fraud against her and her health care provider, the court excluded all evidence that was offered to show that the FDA was misled, or that information was intentionally concealed from the FDA. The court also held that exclusion of further evidence may be necessary to prevent confusion of the jury as to the nature of the plaintiff's claims.

It is noteworthy that the court in Bouchard excluded the evidence at issue despite the fact that the plaintiff did not assert a state law claim for fraud-on-the-FDA. In spite of the plaintiff's arguments that her claims focused only on the judgment and determinations made by the defendant, and that the evidence the defendant allegedly misled the FDA was submitted only to prove malicious 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 was intentionally concealed from the FDA." 213 F.Supp.2d at 812.

Limited Availability of Punitive Damages
In addition to the extension of Buckman to bar evidence that a manufacturer allegedly misled the FDA, even when the plaintiff was not asserting a fraud-on-the-FDA claim, the decision in Bouchard is significant when understood in the context of Ohio law on punitive damages. Ohio Revised Code §  2307.80(C) authorizes punitive damages in conjunction with a regulated pharmaceutical product liability claim only when the manufacturer misleads, or fails to disclose material information to, the FDA:

If a claimant alleges in a product liability claim that a drug caused harm to the claimant, the manufacturer of the drug shall not be liable for punitive or exemplary damages in connection with that product liability claim if the drug that allegedly caused the harm was manufactured and labeled in relevant and material respects in accordance with the terms of an approval or license issued by the federal food and drug administration under the "Federal Food, Drug, and Cosmetic Act,"... as amended, unless it is established by a preponderance of the evidence, that the manufacturer fraudulently and in violation of applicable regulations of the food and drug administration withheld from the food and drug administration information known to be material and relevant to the harm that the claimant allegedly suffered or misrepresented to the food and drug administration information of that type...

(Emphasis added). Given that evidence that the FDA was misled by a manufacturer is subject to exclusion when it is offered to show that information was intentionally concealed from the FDA, as demonstrated by Bouchard, punitive damages are arguably recoverable for a product liability claim regarding a regulated pharmaceutical only when the FDA affirmatively concludes that the manufacturer has misled the agency by formally finding a violation of the FDCA.

Such an outcome is entirely consistent with the Supreme Court's conclusion in Buckman that the FDA has the sole responsibility to police fraud according to the agency's judgment and objectives. After Buckman, the FDA, not a private plaintiff, is charged with determining whether pharmaceutical companies have complied with the FDCA and the regulations thereunder. If the FDA itself does not find a regulatory violation, which is the driving force at the heart of Buckman, then the plaintiff is not entitled to punitive damages in Ohio, or under similar statutes such as those in Arizona, New Jersey, North Dakota, Oregon, and Utah. Given that the FDA made no such determination regarding the regulated product at issue in Bouchard, the plaintiff was, arguably, not entitled to punitive damages. It seems likely that Bouchard will lead drug and medical device defendants to argue that no evidence of fraud-on-the-FDA should be admitted, nor should any plaintiff recover punitive damages in Ohio, Arizona, New Jersey, North Dakota, Oregon, and Utah, or jurisdictions with similar statutory provisions for a products liability claims regarding a regulated product absent a finding by the FDA that the manufacturer defrauded the agency.

Keep in mind, however, that Bouchard left the door open as to the admissibility of fraud evidence to support direct fraud claims. Like the decisions in Globetti and Brasher discussed above, the court in Bouchard expressly stated that it could conceive of a situation where a plaintiff alleges claims for direct fraud against her and her health care provider where evidence concerning what information was and was not provided to the FDA might still be relevant. Nonetheless, the court in Bouchard was clear that "evidence will be excluded outright when it is offered only to show that the FDA was misled, or that information was intentionally concealed from the FDA." 213 F.Supp.2d at 812.

The implications of Buckman v. Plaintiff's Legal Steering Committee on state tort law is not limited to the availability of punitive damages under the state product liability statutes discussed above. Buckman could also have the consequence of invalidating tort-reform laws in several states. See "Medical Devices: Food, Drug, and Cosmetic Act Preempts State Law Fraud Claims," 27 Am. J. L. & Med. 351 (2001). Legislatures in some states, such as Michigan and New Jersey, have permitted fraud-on-the-FDA claims in exchange for limitations on other types of suits against drug and medical device companies. 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 otherwise second-guess the FDA's policing of fraud. After Bouchard, it is conceivable to argue that all fraud-on-the-FDA evidence should be excluded at trial, whether or not such evidence is a necessary element of a state law tort claim. The extent that the Buckman decision will be applied to other procedural, evidentiary, or substantive claims apart from fraud-on-the-FDA will undoubtedly continue to evolve.

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

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