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.

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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.

Asian Nations Experimenting with Jury Trials in Criminal Cases

Perspective matters. In the US, we hear a fairly steady stream of criticism of civil and criminal juries. It's interesting, then, that in some Asian nations, they are experimenting with implementing jury trials as perhaps desirable legal system changes. In general, the proponents argue that juries serve as a bulwark against the government and allow expression of the views of the "common man." The critics generally complain that juries are too unpredictable and do not understand complex issues.

For specifics, the NYT has a July 18, 2008 article about recent high-speed jury trials in criminal cases in South Korea. The International Herald Tribune also has published an article about the jury trial experiments in Korea, Japan and elsewhere. Likewise, a recent article on Law.com described US lawyers traveling to Japan to consult with Japanese lawyers in light of Japan's experimentation with jury trials for serious criminal cases. The experiment in Korea with juries for criminal cases also is the subject of Korean law blog commentary.

Interesting Opinions

2009 Wisconson Supreme Court opinion holding that manufacturers of white lead pigment could not be held laibile for design defect since the abensce of lead would change the product. The court resolved only the one limited issue and declined to adopt the Restatement (Third) of Torts.

More Asbestos Claiming ? British Government Asks for Views on Pleural Plaques Compensation Issues

Global tort litigation issues continue to evolve. Last fall, the UK's highest court decided that it would not permit recovery of money as compensation for persons found to have "pleural plaques." Pleural plaques are generally deemed benign markers of past inhalation of asbestos fibers. Now, on July 9, the British government issued a request for comments on whether to use legislation to overturn the decision precluding damages.


Specifically, the "consultation" process calls for interested persons to submit views on whether persons with "pleural plaques" should be allowed a chance to recover damages for the physical change in the lungs or anxiety. The consultation paper, number 14/08, is viewable here.

So, what's at stake? In dollars, it's some number of billions; current estimates probably will prove to be too low, just like most other estimates of asbestos costs. In lives, the issue may or may not have significance. Pleural plaques generally are thought not to impair life function in any way, but they generally are considered a marker for past asbestos inhalation. Some may argue that finding those people now will help them later avoid premature deaths by leading them to annual health screenings with a focus on their particular risks.

Back to dollars. The consultation likely will become a fight between insurers and insureds as to which entities pay how much. Insurers and reinsurers will have issues between them. The process also will include battles between solvent entities and entities that claim to be insolvent or are pursuing "schemes of arrangement." Schemes of arrangement? They are end of corporate life financial engineering tools. Insurers like to say that the schemes free up capital to return to the marketplace and stimulate business. Insureds like to say that schemes improperly allow insurers to avoid IBNR claims, which are claims that are foreseeble based on past events, but that have not yet been filed because, for example, the future claimant does not yet know that a mesothelioma tumor already has formed and is growing, at a microscopic level.

Note also that government agencies will have a financial stake. Legislation may help them avoid paying the massive health care costs that may accrue when a mesothelioma is found "early."

The issues also may be described more broadly. This could be a chance to find a fair compensation and medical treatment plan that avoids the many flaws in the current American systems, and to think carefully about how one defines who is "sick" or when they are "injured." This could be a chance to limit attorneys' fees to modest amounts. This could be a chance to take a long term view. This could be a chance to look for new answers.

Update - Japanese Asbestos Litigation Ramps Up - Suit by 178 Plaintiffs Names 46 Companies and Government as Defendants

In a prior article of May 18, we noted an asbestos lawsuit in Japan. Since then, the lawsuit has not received much press, nor has there been a public annoucment of the filing of the second lawsuit that was indicated when the existing lawsuit was filed. My efforts to obtain the complaint from the plaintiff's firm were turned down by that firm, citing ethical issues since I represent defendants. One wonders what issues are involved in providing a copy of a public document. In any event, it appears that the plaintiff's firm also is not sharing the complaint with Laurie Kazan Allen or others on the plaintiff's side since her website now refers to the lawsuit, but only to the original press release/article in Wikipedia. http://ibasecretariat.org/lka_jap_cause_effect.php. The complaint also has not appeared in Mealeys, HarrisMartin or other publications that follow asbestos litigation.

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Asbestos litigation is ramping up in Japan. The English language version of a Japanese newspaper article reports that a lawsuit was filed in Japan late last week on behalf of 178 contruction workers (or their heirs) against 46 building products companies and agencies of the Japanese government. The article does not identify the defendants, or the lawyers. The articel also says that "About 40 construction workers from Kanagawa Prefecture will also file a similar suit at the Yokohama District Court in June."

A parallel article on Wikinews adds some quotes from workers, but not much more.

Surprisingly, the website of the International Ban Asbestos Secretariat does not yet include an article on the topic. That may well change.

The Increasing Intersection of Criminal Law and Tort Law

A significant topic for at least the next decade will be the interesection of criminal law, tort law and civil law (including the law on punitive damages). The issue is growing in prominence for many reasons, including new UK legislation on corporate manslaugher and U.S. Senate hearings held a couple of years ago on possible new criminal law legislation in the US for product liability claims. The topic will be covered here in more detail in future articles.

For now, however, a recent news article makes the general point as it describes the manslaughter indictment of a Connecticut area swimming pool contractor (that is, a seller of a service and a seller of component products) for a child's drowning death said to arise from failure to install a mandatory drain cover.

Is the indictment fair or "right?" Various people can and will argue a range of positions on that topic. One interesting and arguably well-informed view is set out in the the May 1, 2008 American Lawyer interview of Robert Bennett. Mr. Bennett, of Skadden Arps, was interviewed in connection with his autobiographical new book about his work as a white-collar defense lawyer, which included working for the Seante Ethics Commitee in prosecuting the Keating 5 and defending numerous cases for corporate America. Bennett expressed the view that indeed criminal law sanctions can and do change corporate behavior. He is quoted as having said:

R: You write that you are shocked by the rise in white-collar prosecutions. Why do you think it's happening? Are corporations more corrupt? Have prosecutors gotten bolder?

B: I don't think that companies have gotten more corrupt. I think it's more the approach taken by law enforcement. Years ago, when I was a federal prosecutor, a lot of these corporate issues were handled by regulatory agencies. Now, law enforcement is trying to reform how business is done. There is probably less corruption today because of the government's aggressive approach. [Corporate executives] know it's not just a matter of paying fines anymore.