The Darvocet headache

The Ninth Circuit broadens the Class Action Fairness Act, dealing a blow to big-pharma cases

2015 February

In the past 20 years, state courts have played an important role in the resolution of mass-tort drug and medical devices’ cases. There have been notable plaintiff’s verdicts in state courts in New York City (Rezulin), Philadelphia (diet drugs, hormone replacement therapy), Atlantic City (Vioxx, Accutane, transvaginal mesh) and Los Angeles (DePuy ASR hip), to name only a few. Many of these verdicts have been returned as part of state-court mass-tort consolidations, which themselves have provided critical litigation pressure points. During this same period, plaintiffs have had decidedly mixed results in federal multidistrict litigations (MDL). In notable instances, federal courts have proven especially hostile to drug and device claims, as in the Middle District of Florida, where the Accutane litigation fell to bewildering Daubert rulings, or in the Northern District of Indiana, where Biomet M2A Magnum hip plaintiffs have recently found themselves between a lackluster settlement and an inhospitable court. In Accutane, a viable state court alternative to the MDL has proven to be invaluable. In Biomet, the lack of any state court consolidation will prove damning, leaving plaintiffs who are dissatisfied with the settlement proposal without any real option with respect to continuing litigation.

California state-court judicial council coordinated proceedings (JCCP), in particular, have played a prominent role in recent mass-tort litigations. Favorable rulings on forum non conveniens motions, the presence of critical defendants within the state and key plaintiff trial victories have all combined to make California mass-tort consolidations a focal point of recent drug and medical device cases. A recent en banc Ninth Circuit decision, however (Corber v. Xanodyne Pharm., Inc., No. 13-56306, 2014 WL 6436154 (9th Cir. Nov. 18, 2014)), threatens the viability of California as a venue for these cases. The Corber case concerned a drug mass tort, in which plaintiffs had made injury claims against the manufacturers of drugs containing propoxyphene, including the analgesic Darvocet. But the Corber decision was not focused on the admissibility of scientific evidence, or the law pertaining to products liability – issues you might expect to encounter in a mass-tort drug case. Rather, it addresses the intersection of the Orwellian titled Class Action Fairness Act (“CAFA”) with a nascent mass-tort drug JCCP. In many respects, it represents a circus “Hail Mary,” lobbed by the defendants, that was batted around the end zone before the Ninth Circuit’s arcane decision enabled a shoestring grab, inches from the turf.

CAFA enables defendants to remove class actions from state to federal court. The act applies to cases in which the claims of 100 or more plaintiffs are proposed to be tried jointly, a situation which obtains in nearly every class action where the putative class includes 100 or more members. While CAFA purports to apply to class and “mass actions,” it seemed there was no reason to assume that it would apply to mass-tort consolidations. While mass-tort cases can involve thousands of similar claims, they have never involved proposals to try 100 or more claims jointly, in a single trial. Plaintiffs would never ask for such a thing, defendants would never consent to such a thing, and the law of no state would permit such a thing. Indeed, no reasonable trial court would entertain such a request.

Notwithstanding these facts, the Corber defendants convinced the Ninth Circuit to apply CAFA to a group of more than 100 mass-tort plaintiffs, who had sought consolidation of their cases “for all purposes.” The court reasoned that “all purposes” must include trial. Thus, the court concluded, the plaintiffs had asked for it, and really had only themselves to blame for stumbling into the CAFA morass. The lesson, the Ninth Circuit seems to suggest slyly, is that if you don’t want a single trial with 100 mass-tort drug plaintiffs, don’t ask for it. Never mind that such a request has to be read into the plaintiffs’ petition, or that no such request was ever – or has ever – been made, or that the request could not, and would not, ever be granted; senseless literalism was the rule of the day, and the Corber defendants shut down a JCCP be-fore it was formed. So how did we get here?

The Class Action Fairness Act

In February 2005, in the second month of the Republican-controlled 109th Congress, President George W. Bush signed CAFA into law. It marked, he said, “a critical step toward ending the lawsuit culture in our country.” Supporters of the act insisted it was needed in order to put an end to rampant abuses of class-action litigation, like forum shopping and coupon-only settlements. Whatever perceived abuses CAFA was intended to cure, there is no mistaking from where the law came. As President Bush signed the act, Thomas J. Donohue, the president and chief executive of the United States Chamber of Commerce, looked on from the front row. (NY Times, 2/20/2005, “Taking Care of Business, His Way”). The Chamber’s history of shielding corporations from any semblance of civil justice is well documented. The organization’s legal arm has sued the S.E.C. over a rule requiring a majority of a mutual fund company’s directors, as well as its chairman, to be independent. The Chamber has also filed a brief in support of Siebel Systems, a software company that has twice been sued by the S.E.C., accused of running afoul of the rule that requires companies to disclose material information to all investors at the same time.

While supporters insisted CAFA was necessary to stem a tide of frivolous litigation, critics saw the law for what it was – a convenient way to emasculate the power of class actions. Then congressman Ed Markey (D-Mass.) called the bill “the final payback to the tobacco industry, to the asbestos industry, to the oil industry, to the chemical industry at the expense of ordinary families who need to be able to go to court to protect their loved ones when their health has been compromised.” (Kevin M. Clermont & Theodore Eisenberg, Cafa Judicata: A Tale of Waste and Politics, 156 U. Pa. L. Rev. 1553, 1554-55 (2008), citing Remarks on Signing the Class Action Fairness Act of 2005, 41 Weekly Comp. Pres. Doc. 265, 265 (Feb. 18, 2005).)

Though CAFA is larded with all manner of language about protecting class-action litigants, its true focus is to remove the bulk of class litigation from state to federal courts. The act accomplishes this by divesting state courts of jurisdiction over class actions and “mass actions” in which “monetary relief claims of 100 or more persons are proposed to be tried jointly on the ground that the plaintiffs’ claims involve common questions of law or fact.” (28 U.S.C. § 1332(d)(11)(B)(i); Corber v. Xanodyne Pharm., Inc., No. 13-56306, 2014 WL 6436154, at *1 (9th Cir. Nov. 18, 2014). This effectively allows removal of nearly every case with class members from more than one state, from state to federal court. This ensures that most class actions proceed, if at all, in federal courts – venues which are now top-heavy with appointees sympathetic to corporate litigants, and where rules of procedure and evidence are often more favorable to defendants. CAFA has been used to stymie most conceivable class actions, including employment, environmental, consumer and securities cases, all to the detriment of plaintiffs.

But only recently have defendants enjoyed success extending the act to non-class cases. They have done so by exploiting the phrase “mass action,” which appears, at least in the wording of the act, to be distinct from class actions. CAFA defines a mass action as:

[A]ny civil action ... in which monetary relief claims of 100 or more persons are proposed to be tried jointly on the ground that the plaintiffs’ claims involve common questions of law or fact, except that jurisdiction shall exist only over those plaintiffs whose claims in a mass action satisfy the jurisdictional amount requirements under subsection (a).

(28 U.S.C. § 1332(d)(11)(B)(i).)

The assumption that this language would apply principally – even exclusively – to class actions (cases in which a representative plaintiff stands in for all members of a class), as opposed to mass-tort injury cases (consolidated actions with many individual cases involving, for example, the same drug or medical device), hardly seems remarkable. Indeed, it is essentially black-letter law that cases involving personal injury are not appropriate for class treatment. For example, the Illinois Supreme Court has pointed out the “unsuitability of the class-action device for mass tort personal injury cases,” in which “individual damages cannot be determined by reference to a mathematical or formulaic calculation.” (Smith v. Illinois Central R.R., 223 Ill.2d 441, 860 N.E.2d 332, 338, 307 Ill.Dec. 678 (2006) quoting Southwestern Refining, supra, 22 S.W.2d at 436, and Steering Committee v. Exxon Mobil Corp., 461 F.3d 598, 602 (5th Cir. 2006); see also Avery v. State Farm Mutual Automobile Insurance Co., 216 Ill.2d 100, 835 N.E.2d 801, 819, 296 Ill.Dec. 448 (2005), cert. denied, 126 S.Ct. 1470 (2006).)

Historically, the consolidation of mass-tort cases has not extended to joint trials. Pursuant to the federal statutes which provide for multidistrict litigations, as well as similar state laws (such as California’s Judicial Council Coordinated Proceedings), cases involving claims made by numerous plaintiffs, concerning the same product, can be consolidated for pretrial purposes. This mechanism streamlines these complicated cases, which can involve thousands, and even tens of thousands, of plaintiffs. Consolidation saves the defendant from having to produce voluminous discovery multiple times, focuses critical pretrial issues (such as those involving general causation) before a single judge, and enables counsel for plaintiffs to collaborate to develop a general liability case. In recent mass-tort litigations, MDL and state court consolidation judges have taken the process a step further and have identified, and often even tried, so-called “bellwether” cases. These are test cases, for lack of a better phrase, which presumably help predict the outcome of subsequent trials. In this manner, consolidation answers important questions for all parties, and sheds light on the strengths and weakness of their respective cases. In so doing, consolidations promote resolution.

But while consolidation courts have recently started trying test cases, there have been limits to this. First, in the recent past, MDL bellwether trials have hardly been common. For every case in which federal bellwether trials have actually been completed (Vioxx, DePuy Pinnacle Hip) there are many more in which settlement is achieved without any MDL trials (DePuy ASR hip, Celebrex, Bextra, Yaz, Baycol, NuvaRing, most gadolinium contrast agents, Biomet M2A Magnum hip, Pradaxa, Ortho Evra, to name a few). (It is important to note that during this time there have been numerous state court trials involving some of these, and many other, drugs and devices. As discussed above, these trials have provided critical pressure points which helped achieve mass resolutions.)

Second, and most importantly for providing context for the Corber decision, bellwether trials have not changed the fact that all other cases within an MDL, or other consolidated action, proceed individually. The outcome of bellwether cases may be instructive, but the results are not considered res judicata. A verdict for a bellwether plaintiff does not settle the issue of general causation for all remaining cases. Except in very rare circumstances, MDL consolidation is limited to pretrial matters. Bellwether, and other trials, are individual affairs. And, while mass-tort trials have proceeded with more than one plaintiff, this is exceedingly rare, and these trials have not involved more than a few plaintiffs. There has never been a drug or medical device case in which the claims of 100 or more plaintiffs have been resolved by a single trial. It’s not something that is possible under the law, not something that any plaintiff’s steering committee has ever sought or – notably – not something to which any defendant would ever agree.

Against this backdrop, we now have the Corber decision. On October 23, 2012, attorneys handling a number of propoxyphene cases against Teva, Xanodyne, and other defendants, petitioned for a coordinated proceeding for all California actions, pursuant to section 404 of the California Code of Civil Procedure. The defendants responded by removing all of the cases, arguing that they should be considered a “mass action” under CAFA because the plaintiffs requested coordination of the cases “for all purposes.” The issue before the court was “whether removal [was] proper under the ‘mass action’ provision of the Class Action Fairness Act…when plaintiffs in several actions moved for coordination in the state trial court pursuant to California Code of Civil Procedure section 404 ‘for all purposes’ and justified their request in part by asserting a need to avoid inconsistent judgments.

California Code of Civil Procedure section 404.1, which sets forth the standards for coordination, provides:

Coordination of civil actions sharing a common question of fact or law is appropriate if one judge hearing all of the actions for all purposes in a selected site or sites will promote the ends of justice taking into account whether the common question of fact or law is predominating and significant to the litigation; the convenience of parties, witnesses, and counsel; the relative development of the actions and the work product of counsel; the efficient utilization of judicial facilities and manpower; the calendar of the courts; the disadvantages of duplicative and inconsistent rulings, orders, or judgments; and, the likelihood of settlement of the actions without further litigation should coordination be denied.

Following language found in nearly every mass tort JCCP petition filed in the last decade, plaintiffs requested that the cases be coordinated before one judge hearing all of the actions “for all purposes,” to address the similar causes of action, issues of law, and issues of material fact. Indeed, it would seem ill-advised for plaintiff’s counsel to omit the “for all purposes” language from any petition for coordination, as the language appears to be an integral part of the standard set out in the Code.

The district court held that it lacked jurisdiction under CAFA because Plaintiffs’ petitions for coordination were not proposals to try the cases jointly, and it remanded the cases back to state court. The defendants sought and received permission to appeal the district court’s remand orders, but a three-judge panel affirmed. (See Romo v. Teva Pharm. USA, Inc. (9th Cir. 2013) 731 F.3d 918, cert. denied).)

But the Court then agreed to decide the case en banc. In reconsidering the case, the court noted that CAFA’s mass-action language is “fairly narrow.” The provision only applies if there is an aggregate amount in controversy of $5 million or more, at least one plaintiff who is a citizen of a state or foreign state different from that of any defendant, and when “monetary relief claims of 100 or more persons are proposed to be tried jointly.” (28 U.S.C. § 1332(d)(11)(B)(i).) The court also reiterated holdings from previous cases that the proposal to try claims jointly must come from the plaintiffs, not from the defendants. The plaintiffs are the “masters of their complaint,” and do not propose a joint trial simply by structuring their complaints so as to avoid the 100–plaintiff threshold. But the court also observed wryly, while plaintiffs are the masters of their complaints, “they are also the masters of their petitions for coordination.” Thus, when it assesses whether plaintiffs have made a proposal for joint trial, the court will hold them responsible for what they have said and done.

Ultimately, the court concluded that the plaintiffs’ petitions for coordination were, in fact, proposals for joint trial. The most damning fact proved to be plaintiffs’ request for coordination “for all purposes.” Ignoring the practical realities of pharmaceutical litigation, the court reasoned that “[a]ll purposes must include the purposes of trial.” Thus, reading the petitions literally – to the point of being obtuse – the court concluded that the plaintiffs were seeking a single, joint trial for all plaintiffs.

So where does this leave mass tort practitioners in California? The simple lesson, it would seem, is to make clear in subsequent petitions for coordination that plaintiffs are not seeking trials involving 100 or more plaintiffs. To be sure, this is a bit like my 12-year-old son insisting that I not get him a Maserati for Christmas. The request is superfluous; he’s in no danger of receiving one. Still, based on Corber, this should be made clear. That said, we are still faced with the plain language of section 404 of the code, which contains the phrase “for all purposes.” As the Corber court noted, threading a needle between a request for coordination for “all purposes,” while making clear that this does not include a request for a single trial, may be difficult. The court wrote that it could envision a section 404 petition that expressly seeks to limit its request for coordination to pre-trial matters, which would avoid triggering CAFA. The problem, however, is that it is not clear whether the California Judicial Council would grant coordination for less than “all purposes.”

What would be most helpful is a decision by a court reconciling the inconsistencies between CAFA and the law providing for mass tort consolidations. Therein, a court could explain that an interpretation of CAFA which presumes a mass tort trial involving 100 or more plaintiffs is tortured, or just downright silly. The Corber court had this chance and punted. Let’s hope a future court does a better job.