Product Liability Cases of Interest from 2011 and 2012 (Part 2)
WITH PROPER CONTROLS IN PLACE, DEFENDANTS CAN USE AS THEIR EXPERTS PHYSICIANS WHO HAVE TREATED PLAINTIFFS IN MASS TORT LITIGATION
In re Pelvic Mesh/Gynecare Litigation
426 N.J.Super. 167 (App.Div.2012)
Several hundred plaintiffs from many states individually filed suit in New Jersey against defendants Johnson & Johnson and Ethicon, Inc., alleging they suffered injuries caused by a line of defendants’ medical products. In February 2008, the first of the plaintiffs in these New Jersey cases filed suit against defendants alleging injuries sustained as a result of the surgical implantation of a pelvic mesh/Gynecare product. The Supreme Court assigned the cases to the Law Division, Atlantic County, for joint case management. A dispute arose over the defendants’ use as their experts any physicians who had previously treated any plaintiff.
In March 2009 defendants retained as a consulting expert Elizabeth Kavaler, M.D. In October 2009, while reviewing medical records of a plaintiff who had filed suit two months earlier, defense counsel discovered that Dr. Kavaler had surgically implanted a Gynecare product during treatment of that plaintiff. Defense counsel immediately informed plaintiffs’ liaison counsel and advised Dr. Kavaler not to disclose to the defense any information about the plaintiff she had treated. Defense counsel then discontinued discussion with Dr. Kavaler pending determination of her eligibility to serve as a defense expert. Later, the plaintiff who had been treated by Dr. Kavaler testified in deposition that she stopped seeing Dr. Kavaler in July 2008, that is, some eight months before defendants first engaged her services as an expert.
Defendants retained other consulting experts but experienced similar issues, and discontinued their discussions with those potential experts. In January 2011, defendants moved to establish a protocol similar to ones used in some federal litigation for consulting with and possibly retaining as defense experts physicians who had treated a plaintiff in the pelvic mesh litigation. Defendants proposed that a treating physician would have no communication with the defense about his or her own patient-plaintiff and would not be used as an expert witness in the patient-plaintiff’s own case. Plaintiffs’ counsel opposed the motion and cross-moved for a protective order barring defendants from retaining or consulting with any physician who at any time had treated any of the plaintiffs in the pelvic mesh litigation.
After the parties provided additional information, the trial court issued an order and written decision dated May 26, 2011 barring defendants from consulting with or retaining any physician who had at any time treated any plaintiff in the pelvic mesh litigation as identified in plaintiffs’ list. At the time of the court’s order, the number of plaintiffs had risen to more than 220. One thousand physicians were thus disqualified as potential defense experts. At the time appellate briefs were filed in December 2011, the list numbered about 450 plaintiffs and about 1,300 physicians.
In their appeal to the Appellate Division, the defendants argue that the May 26, 2011 disqualification and protective order profoundly impairs defendants’ ability to defend these lawsuits because it prevents them from employing qualified experts in cases against plaintiffs other than their own current or past patients. According to defendants, not only does the order severely limit the pool of qualified and willing physicians that defendants can consult and engage as expert witnesses but it places defendants in the precarious position of consulting and preparing experts only to have them later disqualified as new plaintiffs are added to the litigation, as already occurred with Drs. Zyczynski and Kavaler. Defendants contend the trial court’s order will force them to rely on physicians who have less direct patient experience and knowledge of their pelvic mesh products, or perhaps experts who do not practice medicine in the United States. On the other hand, plaintiffs will have the advantage of consulting with and presenting testimony at trial from American physicians who have treated patients and are personally familiar with the use of defendants’ pelvic mesh products.
The Appellate Division reviewed a host of cases concerning the use of experts and a physician’s duty of loyalty to patients and obligation to cooperate in litigation. It announced, “The key issue in this appeal is not whether the physician-patient privilege prevents engagement of a treating physician as an expert for the defense. The issue is whether some other rule or judicial or public policy categorically bars a treating physician from serving as an expert witness against the ‘litigation interests’ of his or her patient, although in a different plaintiff’s case.” The Appellate Division concluded that the trial court’s ruling was a mistaken exercise of authority to manage this litigation. The trial court inappropriately equated a plaintiff’s “litigation interest” with a patient’s “medical interests” to a preemptive level not previously recognized by binding authority.
Defendants committed to using their experts only as witnesses against plaintiffs that they had never treated and generally as consultants with respect to the nature and use of defendants’ products. With appropriate sensitivity to physician-patient confidentiality, defendants proposed a protocol and protective order that barred the expert from assisting the defense regarding a patient-plaintiff’s specific medical condition. Our system of civil justice does not bar a physician from expressing a position in litigation of one plaintiff that is contrary to the “litigation interests” of a current or past patient in another case. Plaintiffs’ argument does not give adequate consideration to binding Supreme Court and Appellate Division authority on the subject of defense access to and use of relevant information from treating physicians. In fact, the Supreme Court has not barred outright the ability of one party in litigation to take advantage of adverse opinions of another party’s professional expert because of prior contacts and consultations. The relatively insignificant risks in these cases that a treating or consulting specialist may reveal privileged information if consulted or retained by the defense, the Appellate Division noted, can be addressed through appropriate protective measures. The defense has proposed a protective order precluding those physicians from providing any information to the defense about their current or prior patient-plaintiffs.
As applied here, the Supreme Court’s discussions of related issues in Stempler, Stigliano, and Fitzgerald support the position taken by defendants that a treating physician is not categorically precluded by the physician-patient privilege, by other rules of evidence, or by case law from testifying adversely to a patient’s interests in litigation, even if such testimony might erode the patient’s trust in the physician. The Appellate Division noted that “the physician’s information that defendants seek to use is neither the particular diagnosis or condition of a patient that the physician treated nor the fruit of expert consultation to assess or prepare plaintiffs’ claims. Rather, it is the physician’s overall knowledge regarding the nature, use, risks, and safety of defendants’ pelvic mesh products and the conditions that patients may experience as a result of their use.”
The Appellate Division noted that “our mass tort procedures for managing coordinated litigation will unfairly hinder defendants’ right to defend lawsuits such as these if plaintiffs as a group may engage as experts any qualified physicians with knowledge and experience but defendants may not.” Further, the fact that plaintiffs have filed suit in this State and taken advantage of our Rule 4:38A for joint case management should not affect the availability of relevant evidence to both sides. “It should not preemptively limit defense access to the same pool of qualified witnesses and consultants knowledgeable about defendants’ products as available to plaintiffs.”
With regard to a physician’s “duty of loyalty” referenced in some case law, the Appellate Division “disavow[ed] any suggestion that a physician, or any witness for that matter, has a duty to support substantively a litigant’s claims or defenses. The duty of a witness is to tell the truth when testifying and to provide information accurately in anticipation of testimony.” The Appellate Division felt “it beyond the scope of judicial authority to impose a ‘duty of loyalty’ upon physicians to support, at least by enforced silence, a current or past patient’s claims in litigation.”
Additionally, the Code of Medical Ethics does not require that physicians avoid taking an adverse position to their patients’ “litigation interests” but that they avoid adverse effects upon their patients’ “medical interests.” Also, the Code of Medical Ethics does not expressly place constraints on the adverse participation of a treating physician in litigation if treatment of a patient has ended.
In overturning the trial court’s Order, the Appellate Division recommended “that some additional protections in the proposed protocol and protective order will serve to prevent misuse of a treating physician’s services as a defense expert. First, counsel and the trial court should fix an appropriate time for plaintiffs’ counsel to identify past or present treating or consulting physicians for any new plaintiff added to the litigation. Second … defense counsel should give notice to plaintiffs’ counsel of their intent to contact any past or current treating or consulting physician for the purposes of exploring whether that physician might be engaged as a defense expert.” Additionally, “any physician who is retained or otherwise substantively consulted by the defense shall notify any current patient-plaintiffs of that engagement and provide to the patient the opportunity to transfer her care and treatment to a different physician.” Finally, plaintiffs can apply to the trial court when they feel that the defendants’ retention of a particular treating physician will unduly prejudice a patient-plaintiff, including for example, by interference with access to that physician as a fact witness. “If plaintiffs make such a particularized showing, the court shall consider appropriate protective measures, including disqualifications where lesser measures are not sufficient or feasible.”
PLAINTIFFS FAIL TO OVERCOME PLA’S REBUTTABLE PRESUMPTION OF ADEQUACY OF FDA-APPROVED LABELING
DeBoard v. Wyeth, Inc.
422 N.J.Super. 360 (App.Div.2011)
Plaintiffs Loretta DeBoard and Dora Bailey, women who contracted breast cancer after being treated with hormone replacement therapy drugs Premarin, Prempro, and Provera, appealed orders of summary judgment in favor of drug manufacturers Wyeth, Inc., Wyeth Pharmaceuticals, Inc. (collectively Wyeth) and Pharmacia & Upjohn Company (Upjohn), entered by Judge Jamie D. Happas dismissing their product liability and other claims based on inadequate testing and warnings.
All three drugs are FDA approved and are available only by prescription. Both DeBoard and Bailey commenced taking Premarin and Provera in 1991 and were switched by their physicians to Prempro in 1996. DeBoard's breast cancer was diagnosed in August 2001, and Bailey was diagnosed in 2002. Both women ceased hormone replacement therapy upon diagnosis of their cancer.
DeBoard filed suit against Wyeth and Upjohn alleging violations of the New Jersey Products Liability Act as the result of defendants' alleged failure to warn, fraud, intentional and negligent misrepresentation, and violations of the New Jersey Consumer Fraud Act. Similar claims were asserted by Bailey and her husband approximately one year later. (See case summary below.) The two women's claims formed a part of the hormonal replacement therapy (HRT) litigation that was designated as a mass tort and assigned to Middlesex County for discovery and trial.
Following discovery, in March 2008 motions for summary judgment were filed by Wyeth and Upjohn in the Bailey matter. While those motions were pending, defendants moved for summary judgment in the DeBoard action, as well. The motions were consolidated, and following argument, in July 2008 Judge Happas granted summary judgment in a lengthy opinion in the Bailey matter, which she incorporated into a letter opinion granting summary judgment in DeBoard's case.
Plaintiffs appealed from the judge's summary judgment orders, and their appeals were consolidated. On appeal, plaintiffs challenged the presumption of adequacy that Judge Happas applied to the drug warnings, arguing first that the presumption cannot apply prior to 1995 because the combined use of estrogen and progesterone constituted an off-label use of the drugs. They then argued that the judge misconstrued established law regarding the application of the presumption, and that the judge failed to draw all favorable inferences from plaintiffs' evidence of defendants' conduct.
The Appellate Division affirmed substantially on the basis of the well-considered and exhaustive opinion of Judge Happas in the Bailey matter, which the appellate judges determined to be well supported by the evidence and legally unassailable. (See below.)
Bailey v. Wyeth, Inc.
424 N.J.Super. 278 (Law Div.2008)
The Appellate Division in 2011 approved for publication the lengthy opinion that Judge Happas drafted and entered in 2008. Judge Happas granted defendants’ motions for summary judgment in a claim by a consumer who contracted breast cancer from hormone replacement therapy regimen. All three drugs were approved by the FDA, two to treat menopausal symptoms and for prevention of osteoporosis, and one for the treatment of uterine bleeding due to hormone imbalance. Plaintiff had sued the drug manufacturer asserting claims of failure to warn under Products Liability Act (PLA), violations of Consumer Fraud Act, and common law claims of fraudulent and negligent misrepresentation. In a decision later viewed favorably by the Appellate Division in the related DeBoard case (above), Judge Happas ruled that: (1) the statutory presumption under the PLA that a drug manufacturer's warning label was adequate if approved by the Food and Drug Administration (FDA) was not limited only to cases involving direct-to-consumer prescription drugs; (2) the consumer's summary judgment evidence did not support the claim that the manufacturer deliberately concealed or failed to disclose knowledge of breast cancer risk from estrogen/progestin therapy regimen, as required for a consumer to rebut the statutory presumption under PLA; (3) the manufacturer of estrogen and single-dose estrogen/synthetic progestin hormone drugs did not manipulate the post-market approval regulatory process with the FDA, as required for a consumer to rebut the statutory presumption; (4) the consumer's claim for economic damages under the Consumer Fraud Act was subsumed by the PLA; and (5) the consumer's common law claims for fraudulent misrepresentation and negligent misrepresentation were subsumed by the PLA.
Proposed labeling is submitted as part of a New Drug Application (NDA) and reviewed by the FDA. Among other things, the labeling must contain potential safety hazards associated with the drugs’ use. Often several versions of the labeling are exchanged between the manufacturer and FDA before the final labeling is approved. The labeling must be revised to include a warning as soon as there is reasonable evidence of an association of a serious hazard with a drug. The FDA has authority to impose warnings about off-label or unapproved uses when there is evidence of a clinically significant risk. Pharmaceutical companies may distribute information regarding off-label use provided the company complies with the enumerated requirements. Physicians frequently prescribe drugs for off-label or unapproved uses. Allowing physicians to do so is an accepted and necessary corollary of the FDA’s mission to regulate in this area without directly interfering with the practice of medicine.
The FDA has promulgated class labeling guidelines for a limited number of drugs, including the three at issue in this case. A labeling guideline is a mandatory requirement.
The New Jersey Legislature went further than those in other states and accorded deference to the FDA's determination of appropriate labeling of prescription drugs by including a rebuttable presumption in the PLA. Pursuant to N.J.S.A. 2A:58C–4, defendants who comply with FDA regulations are granted a rebuttable presumption of adequate labeling. While the parties agree that the PLA accords a rebuttable presumption of adequacy based on FDA approval, they dispute the effect and operation of the rebuttable presumption. New Jersey courts have recognized that before the FDA warning presumption will be deemed rebutted, the plaintiff must produce a specific type of evidence demonstrating intentional misconduct by the manufacturer. Presently, the presumption of an adequate warning based on compliance with FDA regulations will be deemed rebutted only if the following proof is presented: (i) deliberate concealment or nondisclosure of after-acquired knowledge of harmful effects, or (ii) manipulation of the post-market regulatory process.
In the case at bar, Judge Happas ruled that Plaintiffs failed to present any evidence of deliberate concealment or nondisclosure of after-acquired knowledge by either Wyeth or Upjohn. Upon reviewing the voluminous exhibits and documents submitted by both parties, the court found no support in the evidence for plaintiffs’ claim that Wyeth manipulated the regulatory process by putting specific representations in the Prempro label which it knew to be untrue, and minimized or discounted studies that showed an increased breast cancer risk. The court also shot down plaintiffs’ attempt to overcome the presumption of adequacy by citing letters from the FDA to Wyeth concerning marketing materials. A full review of the relevant documents reveals that the FDA actively exercised its regulatory authority and took prompt and effective action. Wyeth was never issued a warning letter. Furthermore, Wyeth promptly addressed all recommendations and concerns raised by the FDA.
The decision of Bailey's physicians to prescribe Provera off-label, and the fact that the FDA had not yet approved Provera for the particular indication for which it was prescribed to Bailey, does not rebut the statutory presumption of adequacy to which the Provera labeling is entitled, the court found. During the time period when she was prescribed Provera, the drug was subject to both scientific and regulatory scrutiny. The FDA had the authority to require a specific risk of breast cancer warning in the labeling and was sufficiently knowledgeable on this issue to determine whether such a warning was necessary. The FDA's decision not to include a risk of breast cancer warning on the Provera label was deliberate and informed. Plaintiffs cannot use the fact that Provera was prescribed off-label to rebut the statutory presumption of adequacy.
The court recognized that some of the conduct of Wyeth and Upjohn cited by plaintiffs may have been less than exemplary. However, the actions and/or inactions of defendants have to be viewed in light of plaintiffs' failure to warn claim and the presumption of adequacy established by our Legislature. The court ruled that plaintiffs did not present compelling or substantial evidence of the type necessary to rebut the presumption of adequacy.
As for plaintiffs’ non-PLA causes of action, the court rejected plaintiffs’ claim that their purely economic loss arising from defendants’ alleged fraudulent misrepresentations of their product (which led to plaintiffs’ receipt of less than what they were promised) is separate and distinct from the damages they incurred as a result of Bailey’s ingestion of the products. Both the Consumer Fraud Act and negligent misrepresentation claims are subsumed by the PLA, which is the exclusive remedy for harm caused by a product.
PLAINTIFFS’ SUIT AGAINST PRODUCT-LINE SUCCESSOR SURVIVES DESPITE BANKRUPTCY SALES ORDER SPECIFICALLY PROTECTING PURCHASER FROM STATE SUCCESSOR LIABILITY CLAIMS
Morgan Olson LLC v. Frederico (In re Grumman Olson Industries, Inc.)
2012 WL 1038672 (S.D.N.Y. 2012).
Plaintiff and her husband filed suit in the Superior Court of New Jersey against Morgan Olson, LLC and other defendants alleging that she was seriously injured in 2008 by a defective truck. The truck was manufactured in 1994 by Grumman Olson. After that company went bankrupt, in 2003 Defendant Morgan Olson purchased certain assets of the debtor at a Section 363 Sale. The Sale Order purported to limit Morgan’s potential liability arising from the sale of those assets for tort claims based on allegedly defective products manufactured and sold by Grumman prior to the sale. The Sale Order specifically released Morgan from “any liability for claims against the Debtor or the Lot 2 Assets, including but not limited to, claims for successor or vicarious liability, by reason of such transfer under the laws of the United States, [or] any state.” The bankruptcy proceedings were closed in 2006. In 2008 plaintiff struck a telephone pole with the FedEx truck she was driving, which had been manufactured by the now defunct Grumman Olson. Unable to sue the debtor, in 2009 plaintiffs sued the successor Morgan Olson which had continued to manufacture Grumman’s line of trucks. The New Jersey Supreme Court had held a decade earlier that the state’s product-line exception to the general rule against corporate-successor liability applies even when the successor has purchased the predecessor’s assets at a bankruptcy sale.
Morgan re-opened Grumman’s bankruptcy case in an effort to forestall the New Jersey state court action. The Bankruptcy Court in New York had retained jurisdiction “to interpret, implement and enforce the provisions” of the Sale Order. Morgan brought an adversary proceeding in the Bankruptcy court seeking declaratory and injunctive relief barring plaintiff’s claims in the New Jersey, noting that the Sales Order specifically prohibited successor liability claims against it in any state. Both Morgan and plaintiffs cross-moved for summary judgment. The legal question was whether the Sale Order exonerated Morgan from liability to plaintiffs. Chief Bankruptcy Judge Bernstein answered that question in the negative, granted plaintiffs’ motion, denied Morgan’s motion and dismissed the adversary proceeding. See In re Grumman Olson Indus., 445 B.R. 243 (Bankr. S.D.N.Y. 2011) . Morgan appealed to the United States District Court, which reviewed the Bankruptcy Court’s purely legal decision de novo.
Relying on the Ramirez and Lefever cases, plaintiffs argued that Morgan was liable under New Jersey successor liability law because it continued to manufacture and market the same product line and actively exploited the good will in the Grumman Olson name. Further, the bankruptcy court did not “deal with” the plaintiffs’ claims (because they did not yet exist), so, under Lefever, there would be no bar to the imposition of successor liability. If the claims had been “dealt with” by the bankruptcy court, then the supremacy of federal law in the area of bankruptcy would preempt claims under the state theory of successor liability.
Morgan argued that the type of successor liability authorized by the New Jersey Supreme Court in Lefever tramples on the supremacy of federal bankruptcy law. Morgan noted that imposing successor liability would directly conflict with the Sale Order. Moreover, the imposition of successor liability on Morgan would effectively defeat the possibility of debtors selling assets “free and clear” of liabilities, which would prevent maximizing the value of debtors’ assets at the time of sale.
The district court saw this case as pitting enforcement of the Sale Order under the Bankruptcy Code versus plaintiffs’ right to due process. “The present case actually turns on the question whether, assuming arguendo that there is a viable basis for state successor liability based on prepetition conduct of the debtor, a bankruptcy court’s sale order may be enforced to extinguish those claims where no injury occurred to the claimant until after the bankruptcy closed, such that the claimant was not provided with notice of, or an opportunity to participate in, the bankruptcy proceedings that gave rise to that order.”
Plaintiffs argued that they were “future claimants” unknown during the bankruptcy, and unable to have their claim discharged in bankruptcy. The court analyzed the meaning of the term “claim” in light of the Bankruptcy Code, examined a host of decisions, and noted that a proper definition of “claim” was inextricably tied to due process and notions of fundamental fairness. Notice is the cornerstone underpinning Bankruptcy Code procedure, and obviously plaintiffs received none during the Grumman Olson bankruptcy. For due process reasons, it would be inequitable to hold plaintiffs bound by orders issued during a bankruptcy of which they had no notice. “Because parties holding future claims cannot possibly be identified and, thus, cannot be provided notice of the bankruptcy, courts consistently hold that, for due process reasons, their claims cannot be discharged by the bankruptcy courts’ orders.” The same result applied in the case before the court despite the “free and clear” provisions of the Section 363 Sale Order.
Morgan did not address plaintiffs’ due process arguments. The district court did: “Enforcing the Sale Order against the Fredericos to take away their right to seek redress under a state law theory of successor liability when they did not have notice or an opportunity to participate in the proceedings that resulted in that order would deprive them of due process.” The court also noted that no future claims representative was appointed during the bankruptcy, and no provisions were made for unrepresented future claimants.
The question was whether the Sale Order prevents plaintiffs from even bringing their state court suit against Morgan in the first place. In light of due process requirements that were not met, the court held that the Sale Order could not be enforced despite its “free and clear” provisions seemingly barring the type of claim plaintiffs pursued. In the end, constitutional requirements of due process trumped the bankruptcy court order its intent and to maximize the value of the debtors’ assets. Morgan Olson has filed an appeal with the Second Circuit which is pending. A split exists among the Circuits which may portend further appeal to the U.S. Supreme Court.