Courts Are Indeed Making Changes to the Law for Information-Related Tort Claims and New Article on Additional Changes and Impacts

For some time now, I've been writing about potential changes in product liability law due to rapid changes in communication and science. In a February, 2007 article for Corporate Counsel, I addressed various changes, including the widespread availability of scientific information and its impact on information-related tort claims. The article included my prediction that "sophisticated intermediary" types of defenses would change in light of all the available information. I'll pat myself on the back and note that I was right - in a drug case in 2007, the West Virginia Supreme Court cast aside the "learned intermediary defense due to the wide availability of information to consumers. See Johnson and Johnson v. Karl, 220 W.Va. 463, 647 S.E.2d 899 (2007). The Court there said many things, including the following:

"When the learned intermediary doctrine was developed, direct-to-consumer advertising of prescription drugs was utterly unknown . . . Since the 1997 proliferation of drug advertising, only four high courts have adopted the learned intermediary doctrine . . . None of those courts gave thorough consideration to the changes that have occurred in the prescription drug industry with respect to direct-to-consumer advertising. We however, find such changes to be a significant factor in deciding this issue . . "

So, with that as background, I particularly enjoyed reading an excellent new article by Sarah (Sally) Olson of Wildman regarding the Johnson case and other additional specific examples of the Internet's effect on tort claiming. The article is titled: Net's Impact on Strict Product Laibility Law. The effects she describes include increased numbers of public consumer complaints of defects, consumer input into design, whether a company needs to monitor blogs, whether a company run blog or website will produce its own liability if a company is not accurate in what it says publicly, and various other points. Ms. Olson's article is well worth reading in full and considering how it might apply in your context.

After that, think also about reading a 2008 book titled: Stop The Presses: The Crisis and Litigation PR Desk Reference. Written by Richard Levick and Larry Smith of Levick Strategic Communications, the book's chapters 7 and * deal with blog strategies and lots of other "crisis" issues that did not exist 5 years ago in any material way. Then I'd suggest reading their chapter 9 on the impacts of media as related to increased prosecutorial activity. That's a topic I've also covered in a more limited context in a 2006 Corporate Counsel article focused on "toxic torts" and criminal prosecutions.

Offtopic - Lawyers and Voters' Rights 2008 - Get Involved

The 2008 elections in the US are hard fought and important. Indeed, the President of the American Bar Association has issued a call to lawyers to get involved in 2008 elections to ensure that voting rights are honored. http://www.abanet.org/op/2008elections/%22%3Ehttp://www.abanet.org/op/2008elections/

For those who would like to get involved with voters rights issues, the following describes both nonpartisan and partisan groups focused on voters' rights.

The web pages referred to below are embedded in links, and the link addresses also are spelled out for anyone who wishes to copy and paste the information.

1) The American Bar Association has a website page specific to 2008 voting rights issues. http://www.abanet.org/2008election/
The page includes links to sign up for various different types of activities ranging from state-specific efforts to staffing a national hot line for voters with questions.

2) The National Campaign for Fair Elections is an initiative of the Voting Rights Project of the Lawyers' Committee for Civil Rights Under Law, and its website is here. http://nationalcampaignforfairelections.org/pages/about_us

That group and its efforts have been praised by the New York Times, among others, in editorials addressing some of the significant voting problems that marred the last two presidential elections. http://www.nytimes.com/2008/08/09/opinion/09sat1.html
The sign up page is located at: http://www.nationalcampaignforfairelections.org/page/s/volunteer

3) Vote Trust USA is a subgroup for the Verified Voting Foundation, which was founded by a Stanford law professor concerned about preserving an audit trail that enables meaningful recounts in the age of electronic voting. http://www.verifiedvotingfoundation.org/article.php?list=type&type=52

The Vote Trust website is at a different page, and includes substantive information and links to state-specific voting rights news and some groups involved in local voters' rights projects.
http://votetrustusa.org/index.php?option=com_content&task=blogsection&id=8&Itemid=113

4) The Brennan Center for Justice at New York University School of Law is not involved in poll watching per se, but does provides a wide-range of substantive information on voters right issues, and engages in some specific advocacy efforts in particular states.
http://www.brennancenter.org/

5) For partisan efforts, the Obama campaign is actively seeking lawyers and law students for election day poll watching and other voters rights efforts. The voters' rights sign up page is located at: http://my.barackobama.com/page/content/vrachome

6) A ten minute search of the McCain campaign website did not reveal a subgroup aimed at enlisting poll watchers. However, the website did include a September 15, 2008 press release yesterday promoting a voters' rights initiative by the campaign. http://www.johnmccain.com/Informing/News/PressReleases/Read.aspx?guid=90c928f6-38c7-4dc3-86c6-15149dbb8e07.
The press release directs readers to a website that lists various persons involved in the effort and presumably they can be contacted for further information.
http://www.johnmccain.com/honest/

Update on Entrepreneurial Claiming, Global Tort Litigation and Contingent Fees

There is renewed interest in and attention to the changes being wrought around the globe by entrepreneurial litigation claiming. I say that for many reasons, one of which is that it was a lively topic of discussion at meetings I attended the last few days in Europe with lawyers from around the world who belong to the International Business Law Consortium, commonly known as the IBLC. (Disclaimer/caveat - my law firm belongs to the group. The group's website is http://www.iblc.com/, which is here. )The topic also is currently in the news because of some $ 800 million of attorneys' fees awarded in Enron litigation, as is further described below.

The bottom line, in my view, is that entrepreneurial claiming is clearly growing all around the world and will continue to cause many changes. An interesting summer 2008 article from SJ Berwin LLP (an EU law firm with offices in several cities) explains the latest, claimant friendly ruling on UK "uplift" fees, and notes that Allianz has announced plans to raise a fund to commercial litigation cases. Also educational is a 2002 article by Professor Herbert Kritzer on myths related to contingent fees. In fact, contingent fees are permitted in many countries outside the US (including Luxembourg), as Prof. Kritzer describes in his detailed article, which is online in full text at this link.

Global litigation plainly is being fueled by claim buying, contingent fees and other entrepreneurial activities of trial lawyers. My partner, Karen Borg, and I described some of these developments in a recent article available here. The third and fourth sections include citations to find a German entity which buys antitrust claims, and describes an Illinois law firm which is pursuing tobacco litigation in Nigeria with the Nigerian government.

How well can it pay? This week news is out on attorneys' fees awards for the lawyers who helped to obtain the over $ 7 billion of recoveries from 3 major banks. A Law.com article by Amanda Bronstad states that the awards include "$688 million in attorney fees to San Diego's Coughlin, Stoia, Geller, Rudman & Robbins, lead counsel in the case. "The Court finds that in the face of extraordinary obstacles, the skills, expertise, commitment, and tenacity of Lead Counsel in this litigation cannot be overstated," wrote U.S. District Judge Melinda Harman, for the Southern District of Houston, who, in her ruling on Monday, referred to Coughlin Stoia as "a lion" in the securities bar. "Not to be overlooked are the unparalleled results, $7.2 billion in settlement funds, which demonstrate counsel's clearly superlative litigating and negotiating skills." The award gives Coughlin Stoia, which represents the lead plaintiff, the Regents of the University of California, its requested amount, which is about 9.52% of the net recovery of the settlement, the largest ever in a single class action. The firm stated that its lawyers and co-counsel, 13 firms, had spent nearly 290,000 hours on the litigation at a blended rate of $456 per hour. Coughlin Stoia was responsible for more than 85% of the time expended."


This award is hardly unique. A prior post here reviewed some other recent large awards in contingent fee litigation.

Where will it all end? I am sure I do not know, but plainly there is much more to come in this area.

Summer Break About Over

I took about 3 weeks off to enjoy the out of doors when not in the office - some golf and a week on a lake with our 11 and 13 year old daughters who love to wakeboard, tube and swim. Now, however, it's almost back to school for them, and I'm getting back into blogging mode. So, new stuff ahead !

Lawsuit Dismissed as Sanction for Breach of Confidentiality Order - Papers Leaked to Wikileaks.org

There's lots of room for debate about whether and how confidentiality orders can and should be used in tort and other litigation. That debate now includes an interesting opinion from the Northern District of Illinois by our well-respected Judge Milton I. Shadur. In the opinion, Judge Shadur dismisses a lawsuit as a sanction for apparently unquestionable leaking to Wikileaks.org of material that was subject to a confidentiality order, with that problem emerging after many deadlines were missed. The posted doceument is a "guarantee services agreement," a contract with Sallie Mae.

The opinion is summarized below in an article from the Chicago Daily Law Bulletin. The text of the article is set out below as a fair use. I've posted the opinion here.

http://www.chicagolawbulletin.com/news/gettoctext.cfm?TOCUID=22701641&SessionID=714319


Judge slams lawyer for leaks, dismisses suit
By Patricia Manson Law Bulletin staff writerCiting the need to protect the integrity of the justice system, a federal judge has thrown out a lawsuit as a sanction for the leak of confidential documents obtained during discovery.
U.S. District Judge Milton I. Shadur on Monday dismissed with prejudice a suit that Rhonda Salmeron filed under the False Claims Act against certain players in the student loan industry.
Shadur said an attorney for Salmeron, Jorge Sanchez of Depres, Schwartz & Geoghegan in Chicago, admitted that he provided to unauthorized individuals documents produced on a limited-disclosure basis.
Those individuals included Salmeron and a reporter for The Chronicle of Higher Education, Shadur said.
Shadur blamed Sanchez for the appearance of one of the documents — complete with identifying numbers that Shadur said ''unequivocally'' demonstrated its source — on the Web site Wikileaks.org.
That document was a 51-page contract between Sallie Mae Inc. and United States Aid Funds Inc., Shadur said.
He said a link to the Wikileaks article and the documents later was posted on Yahoo's finance message board.
The disclosure of the documents came after Sanchez had engaged in ''a virtually unbroken pattern of dilatory and irresponsible conduct'' during the course of the litigation, Shadur said.
He said the conduct included repeatedly missing deadlines, skipping status conferences and breaking promises to file documents in a more timely manner.
And the lawyer's argument at a hearing last month on defense motions to dismiss ''plainly evidenced his failure to appreciate the seriousness of his actions,'' Shadur said.
Shadur did note that the lead attorney for Salmeron, John Thomas Moran Jr. of Moran Law Group in Chicago, had appeared in court in her case occasionally.
And Shadur said he had not listened to tape recordings of proceedings on the dates set for hearings in the case to determine ''if any of those dates involved Moran's presence and Sanchez' absence.''
But Shadur added, ''[T]here is not the slightest question that virtually all (if not all) of the appearances that involved claimed explanations of and excuses for delayed filings were by Sanchez.''
Shadur conceded that dismissing a suit on the basis of a lawyer's behavior without deciding the merits of the case is an extreme step.
But Shadur said he did not need to decide whether the attorney's ''persistent flouting of court deadlines, coupled with periodic no-shows at scheduled status dates'' warranted throwing out Salmeron's suit.
Instead, Shadur said, Sanchez' release of confidential documents was enough by itself to support dismissal of the action.
''It is truly inexcusable, no real explanation has been offered, and its damaging effect cannot be quantified in the same way that looking at defense counsel's time charges and compelling Salmeron to pay them might provide a remedy for the earlier procedural violations,'' Shadur wrote in a 23-page opinion.
Shadur said the U.S. Supreme Court's ruling in National Hockey League v. Metropolitan Hockey Club Inc., 427 U.S. 639 (1976), left no question that he had the authority ''to order the ultimate sanction of dismissal in the face of such egregious conduct.''
And in Wade v. Soo Line Railroad Corp., 500 F.3d 559 (7th Cir. 2007), the 7th U.S. Circuit Court of Appeals affirmed ''the propriety of visiting a lawyer's sins upon the client,'' Shadur said.


The case is U.S. ex rel. Rhonda Salmeron v. Enterprise Recovery Systems Inc., et al., No. 05 C 4453.




Sanchez and Moran could not be reached for comment.
But in a filing opposing motions to dismiss, attorneys for Salmeron argued that throwing out the suit would be ''disproportionate'' to the alleged wrongdoing.
Salmeron's attorneys also contended that the defendants had not demonstrated that the contract posted on Wikileaks was confidential or would have been covered by a protective order.
And the attorneys argued that the protective order that was in place related only to defendant Enterprise Recovery Systems Inc.
''To dismiss a case for publication of a document that was not under a protective order nor even marked 'confidential' would be unprecedented,'' the attorneys said.

Italian Class Action Legislation Delayed

Business Insurance Europe is reporting 6 months of delay in implementing legislation for class actions in Italy. The delay moves the effective date from July 1, 2008 to January 1, 2009. The article presents the delays as needed to accommodate changes needed to satisfy concerns on all sides of the issues, but provides very few, if any specifics.   

Defective Drug Manufacturing Claims, Preemption, Heparin and China Connections

For those interested in "mass tort" issues, well worth reading is today's National Law Journal article regarding the recent wave of manufacturing defect product liability claims arising from drugs manufactured in China. The interesting points discussed include whether or how federal preemption principles will apply, and some aspects of claiming against Chinese entities.

Not mentioned in the article are other interesting issues. For example, down the line, these suits could produce some interesting discovery into and facts regarding the manufacturing processes in China, and the efforts of US companies and the FDA to ensure that products are made well. It will be interesting to see how their practices compare to safety practices used in other industries. Consider, for example, McDonald's and its decades of "Happy Meal" toys made in China, but distributed without incident in the US and around the globe. The great success of the McDonald's system includes the system's foresight in many years ago implementing design and manufacturing standards well above minimum standards, and having put trained observers into factories, along with using significant testing of products before they leave the manufacturing plant.

________________________________________________________________

http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202423109561



Suits roll in over recalled drugs
China may factor in heparin actions.
Amanda Bronstad / Staff reporterJuly 21, 2008

Heparin medication is used to thin blood during surgeries.CMS Photo / Newscom
Baum Hedlund's Roger DrakePlaintiffs' attorneys have filed dozens of lawsuits in recent months involving two recalled drugs, generic blood thinner heparin and prescription medication Digitek, that could signal a clean break from past actions that were far less successful against drugs Vioxx and Paxil.In short, it's a different legal ballgame, attorneys say.In contrast to past pharmaceutical tort litigation, plaintiffs' lawyers aren't alleging that a company's "failure to warn" about possible risks of a drug caused injuries and deaths. In recent years, those arguments have been challenged in court, where several judges have sided with manufacturers in upholding federal pre-emption, or the concept that U.S. Food and Drug Administration (FDA) regulations override state liability claims.Lawyers anticipate that the new defective-product claims could duck the federal pre-emption argument altogether, increasing the chances of success for more plaintiffs.Also, plaintiffs' attorneys may have another edge: The heparin suits are the first to be brought against a pharmaceutical manufacturer with ties to China, which has been linked in other litigation to dangerous products such as toys, pet food and toothpaste."This is going to be the tip of the potential iceberg in terms of Chinese manufacturing and drugs," said William M. Audet of Audet & Partners in San Francisco, a plaintiffs' lawyer who has brought several drug cases and anticipates filing up to 60 lawsuits involving heparin and Digitek.But the recent drug lawsuits aren't all easy to swallow.Theodore Mayer, a partner at New York's Hughes Hubbard & Reed who defends pharmaceutical companies, said that plaintiffs' attorneys are likely to face challenges of causation. "Part of the challenge here is to distinguish between the cases that are actually caused by this contamination and the cases where the patient is just one of many, many patients in hospitals on heparin whose outcome may or may not be good for reasons that have nothing to do with the heparin," he said. Up to 700 casesMore than 40 lawsuits have been filed against the manufacturers of heparin, which is used to thin blood during surgeries. In the past six months, about a dozen manufacturers, primarily Baxter International Inc., as well as their distributors and suppliers, have recalled much of the nation's supply of heparin after a contaminant was discovered in the drug. The contaminant was tied to a supplier in China.In recent weeks, the lawsuits against Baxter, filed on behalf of those who claim that their loved ones died following a rapid drop in blood pressure, or that they suffered allergic reactions to the contaminated drug, have been consolidated in federal court in Ohio. According to the FDA, 124 deaths have been associated with the contaminated heparin.David Zoll, a partner at Toledo, Ohio-based Zoll, Kranz & Borgess, and liaison counsel in the heparin cases, said he expects 300 to 700 claims to eventually be brought involving heparin. "We think there are important ramifications on pre-emption that are raised by this case," he said. "The doctrine of pre-emption holds that we can rely on the FDA to keep us safe from dangerous drugs; the FDA will make sure the manufacturer does its job. This case shows that was not the case."Meanwhile, the U.S. division of generic pharmaceutical manufacturer Actavis Group hf. recently announced a nationwide recall of Digitek, a prescription drug used to treat congestive heart failure and abnormal heart rhythms, after several of the bottles contained more than the dosage as labeled.More than 40 lawsuits have been filed in federal and state court in Alabama, California, Louisiana, New Jersey, Ohio and West Virginia on behalf of patients who were injured or died.Tony O'Dell of Berthold Tiano & O'Dell in Charleston, W.Va., a lead plaintiffs' lawyer in the cases involving Digitek, said Actavis "ran the pill back through the process twice and ended up having twice the amount of active ingredient."He said his firm alone is evaluating about 100 potential lawsuits.The suits have few similarities to other drug cases in which he has been involved, O'Dell said. In those cases, the allegations against the drug were focused on "the way it was being marketed or being used or the fact that they had tested enough and had reactions," he said. Digitek has "been around for a long time. And it's a drug that has very good therapeutic reasons for its use. But it's a drug [for which] this company had very poor quality assurance in place."Matthew Moriarty, a partner at Cleveland-based Tucker Ellis & West, who represents Actavis and the other defendants in the case, declined comment.In the cases involving both drugs, plaintiffs' lawyers argue that a product defect, not a "failure to warn" about possible risks, caused injuries and deaths. Although heparin and Digitek were approved by the FDA, those drugs were never intended to be sold as they were — allegedly with contaminated ingredients or in incorrect dosage amounts.The claims mark a shift in drug liability cases. "Most pharmaceutical litigation is based on a failure to warn," said Roger Drake, an attorney in the Los Angeles office of Baum, Hedlund, Aristei & Goldman who serves on the multidistrict litigation plaintiff's steering committee in the heparin cases. "This is a manufacturing defect, a different type of cause of action not subject to pre-emption problems that some of the failure-to- warn cases have," he said. "Because of that, it's unique in that respect from some of the pharmaceutical litigation out there."Although most lawyers agree that federal pre-emption could be a more difficult argument to prove in manufacturing defect cases, the legal defense remains a potentially major factor in all pharmaceutical products liability cases. Federal pre-emption has been successful in a substantial number of cases against pharmaceutical manufacturers. Even the FDA issued a preamble two years ago supporting federal pre-emption in cases involving the labeling of approved drugs.Earlier this year, the U.S. Supreme Court ruled that products liability claims against a medical device manufacturer were pre-empted by the Medical Device Amendments to the federal Food, Drug and Cosmetic Act. Riegel v. Medtronic, 128 S. Ct. 999 (2008). While the ruling is limited in scope — addressing whether claims challenging the approved design and label of a catheter that burst during surgery were subject to a specific pre-emption clause — some lawyers have interpreted the decision as having broader implications that could influence products liability claims involving drugs.Mark Robinson of Newport Beach, Calif.'s Robinson, Calcagnie & Robinson, and a member of the steering committee in the consolidated heparin cases, said the pre-emption issues in failure-to-warn cases and in cases accusing companies of design defects have little or no relevance in cases involving manufacturing defects, which allege entirely different claims."We're not claiming they designed it that way. This Chinese subsidiary, or Chinese supplier, changed the ingredients from the actual ingredient that makes the blood thin to an ingredient that looks like the same ingredient," he said. "But in reality, it's a lot cheaper version, and it doesn't thin your blood. In effect, that's a manufacturing defect."The suits involving heparin also are the first involving a pharmaceutical drug with ties to China. With the recent prevalence of defective-product cases involving China, plaintiffs' attorneys filing heparin lawsuits could have a stronger case than those concerning other drugs.Jeffrey Killino, a partner at Philadelphia's Woloshin & Killino who filed a heparin suit against Covidien Ltd., a supplier of medical devices and drugs, primarily handles cases involving defective tires and toys made in China. He said he anticipates jurors to be more receptive to the heparin cases than they were to previous pharmaceutical lawsuits. "Juries are outraged about what happened in China," he said."These pharmaceutical lawyers will get in a courtroom on a Chinese product case and be happy campers," Killino said. Zoll, liaison counsel of the heparin suits, said there is a potential for more liability suits against pharmaceutical drug manufacturers with links to China because the growth of companies in that country is "huge.""Will there be another case coming out of China? Absolutely," he said.Mayer, the defense attorney, hesitated to suggest that more suits would be filed outlining a similar set of facts that surround the heparin recalls. But, he said, the heparin suits could attract more pharmaceutical litigation, in general, involving Chinese suppliers."There's a lot of copycat effect in litigation," he said. "Once you see one of these lawsuits where people make an allegation that the Chinese supplier didn't do what it was supposed to, people may look harder at other such situations whether or not there is any basis for it."Baxter's lawyer, Leslie Smith, a partner at Chicago's Kirkland & Ellis, referred calls to a company spokeswoman, Erin Gardiner. In an e-mailed statement, Gardiner said that products liability suits generally involve allegations of a design defect, manufacturing defect or failure to warn. In this case, the heparin contaminant was the result of "deliberate and sophisticated tampering" that evaded internal tests of the drug."Because of the insidious nature of the heparin contamination that surprised heparin manufacturers around the world, we do not think the traditional product liability claims are valid," she said in the statement.Gardiner also said that, unlike other pharmaceuticals that have been on the market for years, the heparin at issue was in use for less than six months. Not all the heparin on the market was contaminated, either.Finally, she said, "we believe that only a very small number of people who received the heparin suffered significant injury caused by the contaminant, while the vast majority suffered no adverse event or only a transient reaction."A call to Michael Moeller, a partner at Kansas City, Mo.-based Shook, Hardy & Bacon, who represents Covidien, was returned by spokesman David Young, who declined to comment on the litigation.