It’s difficult to say, at this point, whether this is a legitimate gripe or a potential $18 billion technicality. Either way, it’s got big money ramifications.
Who foots the tab for the disposal of prescription drugs that aren’t (improperly) flushed down the drain or thrown into landfill? One California county believes that such costs should fall to drug companies. Armed with that belief, county officials passed an ordinance in 2012 requiring drug companies to pay for a drug-disposal program. Last month, the Ninth Circuit upheld Alameda County’s ordinance, which drug industry groups claimed was unconstitutional. The Safe Drug Disposal Ordinance at issue mandates that companies selling or distributing prescription drugs in Alameda County fund a program to ensure safe disposal of unused drugs. The goal is to remove unused and unwanted drugs from households without contaminating water supplies. Under the law, drug companies must establish drop-off stations for the disposal of unused drugs.
Three trade groups sued Alameda County, alleging that the ordinance violated the the dormant commerce clause. If you don’t remember, the dormant commerce clause prohibits states from passing legislation that improperly burdens or discriminates against interstate commerce. The trade groups alleged that the ordinance would constitute an economic burden in the magnitude of approximately $1 million per year for each drug company required to comply. Alameda County claimed this cost was exaggerated and argued that any burden would be minimal in comparison to the nearly $1 billion in drugs sales that occurred in their county each year.
The Ninth Circuit agreed with the county and unanimously held that the ordinance did not violate the dormant commerce clause. The court further held that the ordinance treats all manufacturers equally without respect to the geographic location of the manufacturer Finally, the court held that the plaintiffs presented no evidence that the ordinance would substantially burden the flow of interstate prescription drugs. In so doing, the court observed that the U.S. Supreme Court is “reluctant to invalidate regulations that touch upon safety.” As such, it upheld the district court’s dismissal of the case. In concluding the opinion, the court stated:
Opinions vary widely as to whether adoption of the Ordinance was a good idea. We leave that debate to other institutions and the public at large. We needed only to review the Ordinance and determine whether it violates the dormant Commerce Clause of the United States Constitution. We did; it does not.
The case is PRMA, et al. v. County of Alameda, et al., No. 13-16833 (9th Circuit Sept. 30, 2014).
Last month, a jury in Georgia convicted a former peanut company executive of conspiracy and fraud charges in a case stemming from a deadly salmonella outbreak between 2007 and 2009. As a result of the outbreak, nine people died, and more than 700 others became ill. The verdict marks the first federal felony conviction for a company executive in a food safety case. The jury’s verdict came after a several week long trial for Stewart Parnell, the president of Peanut Corp. Mr. Parnell was charged with 76 federal counts linked to intentionally shipping salmonella-laced peanut products. Prosecutors presented thousands of documents and called nearly 50 witnesses to show that Parnell and others ignored safety in order to increase profits. Among other things, Mr. Parnell and Co. allegedly hid results that their peanut products tested positive for salmonella.
Perhaps the most damning evidence at the trial was a 2007 email from Mr. Parnell to a plant manager regarding the safety of the tainted products. In response to concerns from the manager over the tainted products, Mr. Parnell replied: “Just ship it.” This verdict is not insignificant, as it comes in the midst of a new focus by the Department of Justice on food safety cases brought under the Federal Food, Drug and Cosmetic Act. Last year, the owners of a cantaloupe farm pleaded guilty to misdemeanor charges related to a listeria outbreak. Earlier in this year, federal prosecutors filed charges against the executives at an egg company linked to a 2010 salmonella outbreak.
Mr. Parnell and the others convicted now await sentencing.
Painkiller abuse has become a big problem in the past decade, and now, three governmental entities are seeking to hold pharmaceutical companies responsible. The City of Chicago and two California counties have filed separate lawsuits alleging that “aggressive marketing” by several pharmaceutical companies has purportedly led to addiction and abuse of painkillers by their taxpayers. The named defendants are Jansen Pharmaceuticals, Purdue Pharma, Actavis, Endo Health Solutions Inc., and Cephalon. The core allegation in these suits is that the companies fraudulently downplayed the known risks of painkiller addiction in their marketing materials, which allegedly misled the public and led physicians to overprescribe the drugs. This conduct allegedly costs taxpayers and the government millions of dollars in the form of unnecessary prescriptions and emergency medical care. The City of Chicago’s complaint alleges that in Chicago alone there were over 1,000 ER visits attributable to painkiller abuse in 2009.
These lawsuits are an interesting attempt to regulate, through litigation, what is already one of the most heavily regulated industries in the United States. Matters relating to prescription drugs typically fall under the jurisdiction of the FDA. Moreover, federal laws and regulations already require that pharmaceutical promotional materials must be supported by substantial scientific evidence and must reflect a “fair balance” in describing the benefits and risks of the drugs. See, e.g., 21 U.S.C. 352(a); 21 C.F.R. 201(e)(g).
Not surprisingly, the pharmaceutical companies are already angling to dismiss these lawsuits. Earlier this month, they moved to dismiss the City of Chicago’s complaint on, among other grounds, the ground that this matter should be decided by the FDA under the primary jurisdiction doctrine. The primary jurisdiction doctrine is a judicial doctrine whereby a court tends to favor allowing an agency an initial opportunity to decide an issue in a case in which the court and the agency have concurrent jurisdiction.
On a roll recently, the Eleventh Circuit Court of Appeals has upheld the dismissal of a lawsuit filed against Proctor and Gamble brought by a woman claiming that she suffered from a neurological condition caused by Fixodent, a denture adhesive. The lawsuit was dismissed on the ground that Plaintiff could not prove causation because her experts were not reliable under Daubert.
One of the main components of Fixodent is zinc. Plaintiff alleged that the zinc blocked her body’s ability to use copper, leading to a neurological condition known as copper-deficiency myelopathy. According to Plaintiff, she started to develop symptoms after using up to four tubes of Fixodent per week for eight years.
Plaintiff sought to prove causation primarily through four expert witnesses (all physicians), who would have testified generally whether Fixodent could cause copper-deficiency myelopathy. However, the trial court refused to allow such testimony, finding that Plaintiff’s experts did not use reliable methodologies because they failed to show any scientific evidence as to how much Fixodent must be used, and for how long it must be used, to cause a purported copper deficiency. Moreover, the experts in question failed to show how long that copper deficiency condition must last in order to place someone at risk for developing copper-deficiency myelopathy.
The Eleventh Circuit Court of Appeals agreed with the district court’s decision to dismiss the case at the summary judgment stage.
The case is Chapman v. Procter & Gamble Distributing, LLC, — F.3d —- (11th Cir. September 11, 2014).
Big Tobacco scored a big victory when the Eleventh Circuit upheld the dismissal of nearly 750 Plaintiffs’ cases because of defects in the complaint. See 4432 Individual Tobacco Plaintiffs v. Various Tobacco Companies, Liggett Group, LLC, & Vector Group, Ltd (11th Cir. September 10, 2014). The defect stemmed from the fact that the law firm handling the case filed personal injury complaints on behalf of deceased smokers and deceased family members. Of course, a deceased person cannot a maintain claim for personal injury.
The dismissed cases were brought in 2008 as part of 4,432 claims filed by a Jacksonville law firm. The cases were filed individually after the Florida Supreme Court disbanded a state class action lawsuit and gave the plaintiffs one year to file individually. The firm apparently did not have the time or the resources necessary to contact all of the class members but filed suits on their behalf to meet the deadline. In 2012, it was discovered that 588 of the smokers who had suits filed in their name were now deceased and 160 loss of consortium claims had been filed on behalf of dead family members. The district court dismissed the cases and denied leave to amend. The court’s rationale for denying leave to amend was that the problems would have been avoided if the claims had been properly vetted in the first place.
The Eleventh Circuit upheld the decision not allow leave to amend the complaint. The court refused to take mercy on the Plaintiff’s firm, who on appeal argued that the mistakes were the result of “unique logistical difficulties” involved in handling so many cases. In reaching its conclusion, the court noted:
The solution to managing these types of mass actions is surely not that the standard of care diminishes as the number of cases grows. If we were to hold that plaintiffs’ counsel are entitled to substitution solely on account of the large volume of cases they filed, we would invite the same result in every mass tort action.
Since the deadline to file is long gone, these cases are up in smoke.
“Not in my house!” That is essentially what U.S. District Judge Lucy Koh recently said in rejecting a proposed settlement agreement in a federal case pending in California between several Silicon Valley tech giants and a class of tech employees who claimed that the companies conspired to suppress their wages. As we here at Abnormal Use previously reported in April, the companies (including Apple, Intel, and Google) and the tech workers agreed to settle their dispute for approximately $325 million. According to Judge Koh, that settlement amount ”falls below the range of reasonableness.” Once the plaintiffs’ lawyers take their slice of the pie, the settlement would have provided the class members just over $3,500. In reaching the conclusion that such an amount was unreasonable, Judge Koh noted that other class members settled the same claims last year against Pixar and Lucasfilm Ltd. more money per plaintiff, despite the fact these current plaintiffs had newly discovered evidence that made their claims even stronger. The order also notes that to reach the same level as the previously settling class members, the current class members would need to receive $380 million. Check out the order’s conclusion:
This Court has lived with this case for nearly three years, and during that time, the Court has reviewed a significant number of documents in adjudicating not only the substantive motions, but also the voluminous sealing requests. Having done so, the Court cannot conclude that the instant settlement falls within the range of reasonableness. As this Court stated in its summary judgment order, there is ample evidence of an overarching conspiracy between the seven Defendants, including the similarities in the various agreements, the small number of intertwining high-level executives who entered into and enforced the agreements, Defendants’ knowledge about the other agreements, the sharing and benchmarking of confidential compensation information among Defendants and even between firms that did not have bilateral anti-solicitation agreements, along with Defendants’ expansion and attempted expansion of the anti-solicitation agreements. Moreover, as discussed above and in this Court’s class certification order, the evidence of Defendants’ rigid wage structures and internal equity concerns, along with statements from Defendants’ own executives, are likely to prove compelling in establishing the impact of the anti-solicitation agreements: a Class-wide depression of wages.
In light of this evidence, the Court is troubled by the fact that the instant settlement with Remaining Defendants is proportionally lower than the settlements with the Settled Defendants. This concern is magnified by the fact that the case evolved in Plaintiffs’ favor since those settlements. At the time those settlements were reached, Defendants still could have defeated class certification before this Court, Defendants still could have successfully sought appellate review and reversal of any class certification, Defendants still could have prevailed on summary judgment, or Defendants still could have succeeded in their attempt to exclude Plaintiffs’ principal expert. In contrast, the instant settlement was reached a mere month before trial was set to commence and after these opportunities for Defendants had evaporated. While the unpredictable nature of trial would have undoubtedly posed challenges for Plaintiffs, the exposure for Defendants was even more substantial, both in terms of the potential of more than $9 billion in damages and in terms of other collateral consequences, including the spotlight that would have been placed on the evidence discussed in this Order and other evidence and testimony that would have been brought to light. The procedural history and proximity to trial should have increased, not decreased, Plaintiffs’ leverage from the time the settlements with the Settled Defendants were reached a year ago.
The Court acknowledges that Class counsel have been zealous advocates for the Class and have funded this litigation themselves against extraordinarily well-resourced adversaries. Moreover, there very well may be weaknesses and challenges in Plaintiffs’ case that counsel cannot reveal to this Court. Nonetheless, the Court concludes that the Remaining Defendants should, at a minimum, pay their fair share as compared to the Settled Defendants, who resolved their case with Plaintiffs at a stage of the litigation where Defendants had much more leverage over Plaintiffs.
(Quotations and citations omitted).
This ruling is not at all surprising. As we noted in our initial coverage, given the number of employees involved the settlement amounts to peanuts compared what the alleged conspiracy likely cost the workers. We’re going to go out on a limb and guess that the class members and the defendants reach new deal for exactly $380 million. The order in question is In re High-Tech Employee Antitrust Litigation, No.: 11-CV-02509-LHK (N.D. Cal. Aug. 8, 2014).
We have previously reported on Apple’s legal troubles over its mobile operating systems allegedly allowing unauthorized in-app purchases by minors. Now Amazon.com is facing similar legal problems stemming from charges incurred by minors while using “apps” and playing games. The interesting catch in the case of Amazon is the the suit was not brought by angry parents but by the Federal Trade Commission. In its lawsuit (which it brought in federal court in Washington), the FTC alleges that Amazon unlawfully billed parents for the children’s in-app purchases worth millions of dollars. These unlawful billings allegedly occurred because the set-up on Amazon’s mobile devices allowed game playing children to spend unlimited amounts of money to pay for virtual items within the apps such as “coins” or “stars.” Initially, no password was required in order for the children to make in-app purchases. In early 2012, Amazon updated its system to require an account owner – presumably, an adult – to enter a password only for individual in-app charges. However, a password was only required for charges over $20. Amazon updated its system once again in early 2013 to require a password for all such purchases. However, Amazon allegedly failed to disclose that such an authorization could open a window of up to 60 minutes during which unlimited charges could be occur without further authorization. The FTC’s lawsuit is brought under the FTC Act. Section 5(a) of the FTC Act, 15 U.S.C. § 45, prohibits “unfair or deceptive acts or practices in or affecting commerce.” According to the FTC’s complaint:
In numerous instances, Defendant has billed parents and other Amazon account holders for children’s activities in apps that are likely to be used by children without having obtained the account holders’ express informed consent. [This] constitute[s] unfair acts or practices in violation of Section 5 of the FTC Act, 15 U.S.C. § 45(a) and (n).
Regardless of the outcome of the lawsuit, this litigation risks a big PR hit for Amazon, a corporation which has always a prided itself on a “customer comes first” culture. However, the allegations contained in this lawsuit doesn’t paint the company in the best light. We wonder at this point how the publicity may affect Amazon’s litigation strategy. The complaint alleges that the Appstore manager described this situation as a “near house on fire” situation in 2011, yet it didn’t fully require parental consent for purchases until 2014.
The lawsuit is Federal Trade Commission v. Amazon.Com, Inc., No. 2:14-CV-01038 (W.D. Wash.).
In 2013, two crashes allegedly sparked fires in Tesla Model S luxury electric sedans. Those fires spurred an investigation by federal safety regulators, but ultimately, only minor changes to the cars’ underbody were deemed necessary. Now, concerns over the fire safety of the luxury electric-cars have been renewed following the fiery crash of a stolen Tesla Model S in Los Angeles.
The crash occurred over the July 4th weekend after a man stole a Model S from a Tesla service center and led police on a high-speed chase. That chase ultimately ended in high impact crash; the vehicle struck a steel pole. The force of the impact split the vehicle in half and ignited the vehicle’s lithium ion battery. Although he initially survived the accident, the driver ultimately died from injuries sustained in the accident. It is not, however, known at this time whether the fatal injuries were related to fire rather than the impact of the crash.
While these crashes certainly grab headlines given the high profile of Tesla Motors, it does not appear that electric vehicles are any less safe than gasoline-powered vehicles. As the Insurance Journal has noted, in 2012, there were 172,500 vehicle fires in the United States resulting in 300 deaths, but none of the deaths involved electric or plug-in hybrid vehicles. This is likely due to the fact that battery fires have a longer induction period than gasoline fires. In other words, a lithium battery fire takes longer to get going – so the drivers have a better chance of escaping the vehicles.
It is notable that Model S does have a 5-star safety rating from the National Highway Traffic Safety Administration. Nevertheless, the fire issues certainly have had an affect on Tesla’s stock price. Share prices took a 2.9 percent hit following the most recent accident.
As victims of identity theft can tell you, credit agencies can be difficult. The State of Mississippi feels your pain and believes that it is time to put the system on trial – starting with Experian. Last month, Mississippi filed a lawsuit against Experian alleging that it is violating the Fair Credit Reporting Act (FCRA) by failing to maintain proper procedures to verify the accuracy of credit information and correct mistakes.
The suit was initially filed by the Mississippi Attorney General in state court, but it has since been removed to federal court. The lawsuit accuses Experian of knowingly including flawed and inaccurate data in the credit reports of millions of consumers. However, as we all know, just running a shoddy business is not illegal. The legal problems come into play because Experian is allegedly offering no straightforward way for users to correct the flawed or inaccurate data in its reports. If these allegations are true, that would be a violation of the FCRA.
Experian is the largest credit reporting agency and has annual revenues of nearly $5 billion. According to the Associated Press, Experian has informed investors that although it tries to comply with the law, ”[w]e might fail to comply with international, federal, regional, provincial, state or other jurisdictional regulations, due to their complexity, frequent changes or inconsistent application and interpretation.”