Class Action Bill Will Harm Consumers and Benefit Large Corporations

By Joseph Rainsbury, an appellate attorney in Roanoke, VA

Congressman Bob Goodlatte is the chair of the House Judiciary Committee. Earlier this year, he introduced a bill (H.R. 985) that, if passed, will deprive consumers of a valuable tool for combating corporate misconduct — the modern class action.

Goodlatte’s website says that his “Fairness in Class-Action Litigation Act of 2017” will “protect innocent individuals and small businesses who have become the targets of frivolous suits.” In reality, the bill will protect large corporations from meritorious lawsuits brought by consumers whom they have cheated and injured.

Class actions allow plaintiffs with similar claims to pool their litigation efforts against a single defendant. Suppose your cable company, without your permission, adds a $5 channel to your bill every month. It makes no economic sense for you to sue the cable company. Your attorney’s fees would dwarf any recovery. But if the cable company is doing the same thing to a million other customers, and you can join with those other customers in a single action, a lawsuit becomes economically viable.

Keeping large corporations honest

The real value of class actions, however, is not in the resulting recovery — which often is only a few dollars per customer. Rather, their real value is that the threat of such actions keeps large corporations honest. It deters them from nickeling and diming us to death.

Congressman Goodlatte’s bill, however, would kill federal class actions as we know them. Here’s how. For a class-action to proceed in federal court, the judge has to “certify” the class, which means he decides whether the plaintiffs’ claims have enough in common to justify their proceeding as a class.

Up until now, plaintiffs seeking class certification merely had to show “commonality” in one aspect of their case (e.g., they are all complaining about the same corporate misconduct). Goodlatte’s bill changes that. It requires that plaintiffs show commonality in all aspects of their cases, including damages. In opaque legalese, buried in the middle of the bill, it requires that the “entirety of the cause of action” satisfy the commonality requirement. Yet it is virtually never the case that class members have identical damages.

In the example above, the cable company might overcharge different consumers by different amounts, for different channels, or for different lengths of time. And where the class action involves corporate practices causing personal injuries, each class member is always going to be unique in terms of medical expenses, lost wages, pain, etc. Requiring commonality in all aspects of the class members’ cases would effectively destroy federal class actions as a way to police the misconduct of large corporations.

Not a reform bill

It is distressing that this has been proposed by Congressman Goodlatte. His Class Action Fairness Act of 2005 provided welcome reforms to many of the unsavory practices of class-action plaintiffs’ lawyers. By conferring federal jurisdiction over class actions with aggregate claims of over $5 million, the 2005 Act allowed corporate defendants to escape notorious state-court “judicial hellholes” (such as Madison County, Illinois) where corrupt state judges systematically favored equally corrupt plaintiff’s lawyers. It allowed such corporations to get a fair hearing in federal court.

It is distressing that this has been proposed by Congressman Goodlatte. His Class Action Fairness Act of 2005 provided welcome reforms to many of the unsavory practices of class-action plaintiffs’ lawyers. By conferring federal jurisdiction over class actions with aggregate claims of over $5 million, the 2005 Act allowed corporate defendants to escape notorious state-court “judicial hellholes” (such as Madison County, Illinois) where corrupt state judges systematically favored equally corrupt plaintiff’s lawyers. It allowed such corporations to get a fair hearing in federal court.

Goodlatte’s current bill, by contrast, is not a reform bill. It throws the baby out with the bathwater. Are there problems and abuses in modern class-action litigation? Sure. But the correct approach is to make targeted repairs, not to junk the whole system. Contrary to the claims on Goodlatte’s website, the “Fairness in Class-Action Litigation Act of 2017” will harm, not protect, individuals.

Large corporations, no longer fearing class-action suits, will go back to chiseling consumers and introducing harmful products into the marketplace. So if the “Fairness in Class-Action Litigation Act Of 2017” passes, and the president signs it into law, you will know who to thank when you see that extra five dollar charge on your cable bill, when your loved one suffers a bad reaction to a mass-marketed drug, or when your airbag fails to deploy during an accident: your Congressman, Bob Goodlatte.

Consumers File Class Action Lawsuit Against Equifax in Security Breach

Chicago law firm Corboy & Demetrio filed a federal class-action lawsuit on behalf of Scott Meyers, Judy Meyers, Karl Gordon Eikost, and consumers nationwide whose sensitive personal data was collected and stored by Equifax on servers that were hacked in a massive security breach discovered on July 29, 2017.

The lawsuit was filed on Sept. 14, 2017 in U.S. District Court for the Northern District of Illinois by attorneys Thomas A. Demetrio and Kenneth T. Lumb. The firm has been involved in several recent high-profile cases, including representing airline passenger Dr. David Dao and more than 100 former NFL and NHL players in concussion litigation against both Leagues.

The lawsuit accuses Equifax of failing to have reasonable procedures to protect the plaintiffs’ and class members’ private information and failing to timely notify or warn them of the breach. Several Equifax executives sold stock valued at $1.8 million in the days before the breach was made public in media reports.

“The scope and breadth of the breach is really massive and the failure to prevent it simply inexcusable,” Lumb said.

In addition, the lawsuit accuses Equifax of attempting to induce consumers to sign a waiver and arbitration agreement by falsely representing it was offering a complimentary one-year enrollment of its TrustedID Premier product for affected persons.

“The offer was a deceptive, coercive and an unconscionable effort to trick customers to get them to give up important rights and remedies,” Lumb said.

Plaintiffs have filed more than 70 class actions over the massive data breach. This week, lawyers filed motions before the U.S. Judicial Panel on Multidistrict Litigation to have all the cases transferred to Georgia. Many of the class actions brought over the data breach have focused on the Fair Credit Reporting Act specifically, that Equifax failed to protect customer data and furnished sensitive information to third parties in violation of the statute.

The hacked information includes names, full Social Security numbers, birth dates, addresses, driver’s license numbers and possibly one or more of their credit card numbers.

The Chicago case is Scott Meyers, Judy Meyers and Karl Gordon Eikost, Individually and on behalf of those similarly situated v. Equifax Info. Services, LLC, 1:17-cv-06652.

Corboy & Demetrio is one of the nation’s premier law firms. It represents individuals and their families in serious personal injury and wrongful death cases and is renowned for its achievements in the courtroom and for its contributions to the community.

Federal Court Approves $142 Million Settlement in Wells Fargo Unauthorized Accounts Scandal

The federal court overseeing the first class action lawsuit filed against Wells Fargo, related to unauthorized accounts, granted preliminary approval to a $142 million settlement designed to compensate Wells Fargo customers nationwide.

The court also appointed Keller Rohrback L.L.P., to represent the class of bank victims. The national consumer class action firm brought the case, captioned Jabbari, et. al. v. Wells Fargo & Company and Wells Fargo Bank, N.A., Case No. 3:15-cv-02159-VC, in the United States District Court for the Northern District of California in 2015.

The Court found on July 8, 2017, that for the purpose of preliminary approval, it is satisfied that the revised settlement is fair, reasonable, and adequate within the meaning of Rule 23.

The settlement compensates customers for fees charged on Wells Fargo unauthorized consumer or small business checking or savings accounts, unsecured credit cards, or unsecured lines of credit, compensates them for damage to their credit resulting from any unauthorized accounts, and provides additional compensation to all class members based on the number of unauthorized accounts opened in their names.

“We are pleased that the court has preliminarily approved this groundbreaking settlement that provides substantial monetary benefits and first-of-its-kind credit repair damage to customers. The settlement is an important component of holding Wells Fargo accountable for its abuse of its customers’ trust,” said Derek Loeser, a partner at Keller Rohrback L.L.P. and lead attorney for the plaintiffs.

Information will soon be sent to class members about the settlement benefits. Potential class members can also go to the settlement website, www.WFSettlement.com, or call (866) 431-8549 for more information. The court is scheduled to hold a final fairness hearing to decide whether to grant final approval on January 4, 2018.

The class covered by the settlement consists of people for whom Wells Fargo opened a consumer or small business checking or savings account, an unsecured credit card, or an unsecured line of credit, or submitted an application for one of these, without the customers consent during the period from May 1, 2002, through April 20, 2017. The class also consists of people who obtained Wells Fargo’s Identity Theft Protection Services during the same time period.

Plaintiffs are represented by:

Derek W. Loeser
Gretchen Freeman Cappio
Daniel P. Mensher
Keller Rohrback L.L.P.
1201 Third Avenue, Suite 3200
Seattle, WA 98101

Matthew J. Preusch
Keller Rohrback L.L.P.
801 Garden Street, Suite 301
Santa Barbara, CA 93101

Jeffrey Lewis
Keller Rohrback L.L.P.
300 Lakeside Drive, Suite 1000
Oakland, CA 94612

Keller Rohrback L.L.P. is a consumer-rights class-action law firm with offices in 6 locations. Its trial lawyers have obtained judgments and settlements on behalf of clients in excess of $18 billion.

$60 Million Verdict for Consumers Misidentified as Terrorists

WASHINGTON, D.C. – A jury awarded $60 million jury on Tuesday to consumers whose credit reports misidentified them as terrorists and criminals.

It could have been blocked by forced arbitration or a class-action ban, showing the importance of a rule expected to be finalized this summer by the U.S. Consumer Financial Protection Bureau (CFPB), according to the Fair Arbitration Now coalition.

The verdict could have been blocked by forced arbitration or a class-action ban, showing the importance of a rule expected to be finalized this summer by the U.S. Consumer Financial Protection Bureau (CFPB), according to the Fair Arbitration Now coalition.

The jury award came in a nationwide class action for more than 8,000 consumers, finding that the credit reporting agency TransUnion violated the Fair Credit Reporting Act when it carelessly misidentified the consumers as terrorists and criminals when people sought auto loans or bank accounts, confusing the consumers with similarly named people on a government watch list.

“People who were falsely labeled as terrorists or drug dealers would have been blocked from their day in court if TransUnion had slipped in a forced arbitration clause as it has tried to do in the past,” said Remington A. Gregg, Counsel for Civil Justice and Consumer Rights for Public Citizen’s Congress Watch division.

The CFPB has proposed a rule that would prohibit forced arbitration clauses with class-action bans in consumer financial contracts. A final rule is expected this summer, but Congress may attempt to block it.

Forced arbitration clauses are fine-print clauses in contracts that prohibit consumers from suing in court and force them to bring disputes before a private arbitrator, often chosen by the company. Forced arbitration clauses are often combined with class-action bans, which prohibit people from banding together to address widespread wrongdoing.

“Class actions are critical to stop widespread wrongdoing. TransUnion was sued years ago for confusing a consumer with a terrorist, but the company kept up its reckless practices, making this class action essential to helping the 8,000 people who were harmed,” said Lauren Saunders, associate director of the National Consumer Law Center.

TransUnion has tried to bind people to forced arbitration when they use its website or sign up for its credit monitoring services. But in this case, lead plaintiff Sergio Ramirez did not have to contend with a forced arbitration clause or a class-action ban because there was no agreement between him and TransUnion.

“In most cases, people can’t avoid fine-print forced arbitration clauses in bank accounts, credit cards and other loans, taking away their day in court when the company violates the law,” said Saunders.

The case is Sergio L. Ramirez v. TransUnion LLC in the U.S. District Court for the Northern District of California.

Fair Arbitration Now is a coalition of more than 75 organizations and people who support ending the predatory practice of forced arbitration in consumer and non-bargaining employment contracts.

U.S. Chamber of Commerce Undermines Business Interests in Push for Mandatory Disclosure of Litigation Funders

The U.S. Chamber of Commerce submitted a letter on June 1, 2017 ,to the Committee on Rules of Practice and Procedure to force mandatory disclosure of litigation finance.

In submitting the letter, which renews the 2014 petition to the Committee on the same subject, the Chamber proves once again that its true motives run counter to many of the lofty pro-business, pro-innovation goals that it touts.

Three full years after filing the original petition, the Chamber is unable to assert any new reasons for reconsideration of its request, save for the growth of the litigation finance industry.

“It is ironic that the industry growth which the Chamber identifies as justification for the renewed petition seeking mandatory disclosure of litigation finance actually proves how funding is serving a need: namely, facilitating access to an expensive legal system that otherwise only the most well-moneyed players are able to afford,” said Allison Chock, Bentham IMF’s Chief Investment Officer.

Protecting big business

The contradictions in the Chamber’s positions on litigation finance compared with its stated objectives to promote “fair, efficient and innovative capital markets,” and to fight “for the kind of financial rulemaking that protects consumers and investors, encourages reasonable risk taking, {and} doesn’t constrain innovation and growth,” (see https://www.uschamber.com/financial-regulation) belie its true motives.

“It seems the only interests the Chamber is really trying to protect are those belonging to its big business members, who are eager to retain an advantage they typically enjoy in high-stakes commercial disputes: superior financial resources to litigate,” said Ms. Chock. “Providing a level of financial parity for the parties enables disputes to be decided on their true legal merits,” she continued.

Although the Chamber cites the increase in the use of litigation finance by law firms as a cause for alarm, the reality is that those law firms are, in most cases, using such financing to serve precisely those same underserved and underfunded clients — small-to-mid-size businesses and individuals — who cannot otherwise afford to pay a top-tier law firm on an hourly-fee basis to litigate their claims.

“The fact of the matter is, the larger the potential damages and more complicated the case, the harder it is to win. Commercial litigation finance allows all plaintiffs with strong, meritorious claims access to the tools necessary to hold wrongdoers accountable for their actions in court,” Ms. Chock added. “What we’re seeing in the Chamber’s latest petition is prioritization of big-business interests and an attempt to protect the Chamber’s largest and most profitable members from legal accountability under the guise of protecting the public from ‘third parties interested solely in profit.’”

The Chamber’s proposed rule is also unfairly one-sided. If a plaintiff must disclose the terms, amount, and source of its financial backing for its lawsuit, a truly balanced approach would require defendants to make similar disclosures, including how much they can or intend to spend on the case, their own legal departments’ annual internal and external counsel budgets, their law firms’ projected budgets for the case, hourly billing rates, and the like. “Upon looking more closely at the Chamber’s petition, it becomes clear that a proposed rule change requiring mandatory disclosure of litigation finance should, once again, be rejected by the Committee,” said Ms. Chock.

Notice of Class Action Lawsuit over PACER Fees

If you paid fees to access federal court records on PACER at any time between April 21, 2010, and April 21, 2016, a new class action lawsuit may affect your rights.

Nonprofit groups have filed a lawsuit against the United States government, claiming that the government has unlawfully charged PACER users more than necessary to cover the cost of providing public access to federal court records. The lawsuit, National Veterans Legal Services Program, et al. v. United States, Case No. 1:16-cv-00745-ESH, is pending in the U.S. District Court for the District of Columbia. The Court decided this lawsuit should be a class action on behalf of a “Class,” or group of people that could include you. There is no money available now and no guarantee that there will be.

Are you included? Records of the Administrative Office of the U.S. Courts show that you paid to access records through PACER (the Public Access to Court Electronic Records system) between April 21, 2010, and April 21, 2016. The Class includes everyone that paid PACER fees between April 21, 2010, and April 21, 2016, excluding class counsel in this case and federal government entities.

What is this lawsuit about? The lawsuit claims that Congress has authorized the federal courts to charge PACER fees only to the extent necessary to cover the costs of providing public access to court records, and that the federal courts are charging more than necessary to recover the costs of PACER. The lawsuit further alleges that the federal courts have used the excess PACER fees to pay for projects unrelated to providing public access to court records. The lawsuit seeks the recovery of the excessive portion of the fees.

The government denies these claims and contends that the PACER fees are lawful. The Court has not decided who is right. The lawyers for the Class will have to prove their claims in court.

Who represents you? The Court has appointed Gupta Wessler PLLC and Motley Rice LLC to represent the Class as “Class Counsel.” You don’t have to pay Class Counsel or anyone else to participate. If Class Counsel obtains money or benefits for the Class, they will ask the Court for an award of fees and costs, which will be paid by the United States government or out of any money recovered for the Class. By participating in the Class, you agree to pay Class Counsel up to 30 percent of the total recovery in attorneys’ fees and expenses with the total amount to be determined by the Court.

What are your options? If you are a Class Member, you have a right to stay in the Class or be excluded from the lawsuit.

OPTION 1. Do nothing. Stay in the lawsuit. If you do nothing, you are choosing to stay in the Class. You will be legally bound by all orders and judgments of the Court, and you won’t be able to sue the United States government for the claims made in this lawsuit. If money or benefits are obtained, you will be able to get a share. There is no guarantee that the lawsuit will be successful.

OPTION 2. Exclude yourself from the lawsuit. Alternatively, you have the right to not be part of this lawsuit by excluding yourself or “opting out” of the Class. If you exclude yourself, you cannot get any money from this lawsuit if any is obtained, but you will keep your right to separately sue the United States government over the legal issues in this case. If you do not wish to stay in the Class, you must request exclusion in one of the following ways:

1. Send an “Exclusion Request” in the form of a letter sent by mail, stating that you want to be excluded from National Veterans Legal Services Program v. United States Case No. 1:16-cv-00745-ESH. Be sure to include your name, address, telephone number, email address, and signature. You must mail your Exclusion Request, postmarked by July 17, 2017, to: PACER Fees Class Action Administrator, P.O. Box 43434, Providence, RI 02940-3434.

2. Complete and submit online the Exclusion Request Form found here by July 17, 2017.

3. Send an Exclusion Request Form, available here, by mail. You must mail your Exclusion Request Form, postmarked by July 17, 2017, to: PACER Fees Class Action Administrator, P.O. Box 43434, Providence, RI 02940-3434.

If you choose to exclude yourself from the lawsuit, you should decide soon whether to pursue your own case because your claims may be subject to a statute of limitations which sets a deadline for filing the lawsuit within a certain time.

How do I find out more about this lawsuit? For a detailed notice and other documents about this lawsuit and your rights, go to www.PACERFeesClassAction.com, call 1-844-660-2215, write to PACER Fees Class Action Administrator, P.O. Box 43434, Providence, RI 02940-3434 or call Class Counsel at 1-866-274-661, 1-844-660-2215 or www.PACERFeesClassAction.com

Legal Implications of a Deregulated FDA

President Trump, who has stated that 75% to 80% of all governmental regulations are unnecessary.

This article is reprinted from the Spring 2017 issue of The Trial Lawyer, which can be read online here.

By Joseph DiNardo, Esq. and Erin Delaney, Esq.

There is much uncertainty throughout the pharmaceutical industry as a new U.S. Food and Drug Administration (FDA) Commissioner is chosen and steps are taken to deregulate government agencies.

President Donald Trump has stated one of his goals is to speed up the drug approval process to lower drug prices, promote competition, benefit small start-ups and bring innovative new treatments to market faster.

However, many industry leaders are concerned that dramatically speeding up the current approval process could put patients at risk. This, in turn, could subject manufacturers to costly litigations.

CEO of Pfizer favors deregulation

The high cost of obtaining approval for a new drug, estimated at $2.6 billion, has been blamed for hindering pharmaceutical start-ups from entering the market. As a result, certain pharmaceutical executives, like the CEO of Pfizer Inc., have publicly favored deregulation, claiming it will help create more competition and lower drug prices.

Others in the pharmaceutical industry disagree, opining that current FDA rules and regulations provide a level playing field for both small and large companies. Lowering the bar for drug approvals, they contend, would allow the wealthiest pharmaceutical companies to inundate the market with countless new drugs and associated advertising, eclipsing any potential advances of smaller companies.

President Trump, who has stated that 75% to 80% of all governmental regulations are unnecessary, issued an executive order on January 30, 2017, aimed at significantly reducing them. The order requires all executive government agencies identify at least two regulations to be repealed for each newly-proposed regulation.

FDA may not be affected

While not immune to the executive order, the FDA, which regulates food, drugs, medical devices, blood donations, vaccines, biologic products, animal and veterinary products, cosmetics and tobacco products, may not be markedly affected by it. Many FDA regulations deal with process and merely codify or interpret the law. Accordingly, even if certain agency regulations were repealed, congressional mandates, including statutory safety and efficacy standards under the Food, Drug and Cosmetic Act (FDCA), would not change.

Further, a number of regulations are no longer applicable and could be repealed without consequence. Arguably, some existing regulations could even increase protection and transparency for the public if rescinded.

It is not the executive order that has the industry buzzing, however, but rather the potential actions of the new FDA commissioner under the Trump administration, who is likely to share the President’s goal of streamlining the FDA’s drug approval process to decrease the amount of time it takes for new drugs and medical devices to get to market. In an attempt to restructure and quicken the process, the commissioner may choose to institute various levels of approvals, focusing on biomarkers and short-term surrogate endpoints.

Although legislation is in place that requires substantial evidence of a drug’s efficacy prior to it being sold in the marketplace, some suggest if the new commissioner were so inclined, the commissioner need only to interpret existing regulations loosely to weaken the efficacy standard.

12 years from lab to patient

Under the current system, it takes a new drug, on average, 12 years to make it from a research lab to the patient. The FDA’s role is minimal throughout the preclinical research stage, which can take one to six years, but increases if the drug is successful and the FDA approves the commencement of human trials.

Phase one allows researchers to test the drug for the first time in a small group of healthy volunteers, identifying side effects and basic product characteristics, adjusting dosages and evaluating safety. Phase two involves evaluating

Phase two involves evaluating efficacy and short-term side effects for different dosages within a larger randomized or controlled group of people, often measuring biomarkers or laboratory results rather than clinical outcomes. Phase three, a large clinical trial, uses a group of people more similar to those to whom the product would be marketed to determine a risk/benefit ratio. Each phase takes about one to two-and-a-half years.

Ninety percent of the drugs and biologics that proceed through clinical trials fail, whether it’s due to safety or efficacy. If a drug completes phase three of the trials, the manufacturer will file a New Drug Application with the FDA, getting a response, on average, in about 12 months for standard review and eight months for priority review.

Nevertheless, according to 2016 data, the majority of new drugs are approved through an expedited approval process. The approval process has also already been shortened for certain drugs and medical devices by the 21st Century Cures Act, which was signed by President Barack Obama last year.

Safety and efficacy

Some experts argue that safety and efficacy go hand-in-hand; side effects that would never be approved for an over-the-counter drug may be approved for a drug that treats a life-threatening illness if it were proven to be an effective treatment. The type, nature, length and size of clinical trials are already becoming increasingly flexible, allowing deviations from the typical structure on a case-by-case basis in consideration of factors such as whether the condition is widespread, rare, chronic, short-term or life-threatening, the frequency of the symptoms, and the toxicity of the drug on test subjects. For instance, the FDA may approve orphan drugs, which treat diseases that typically affect less than 200,000 people, based on only one positive clinical trial and/or on surrogate endpoints, while mass-market drugs typically require two to three trials to prove safety and efficacy. In doing so, the FDA provides patients access to a drug, often where there was a previously unmet medical need, while the company continues to study its clinical benefits.

Even so, the FDA maintains that “a randomized, controlled, clinical trial… of a size and duration that reflect the product and target condition remains the gold standard for determining whether there is an acceptable benefit/ risk profile for drugs and biologics.” A neurologist at the Mayo Clinic told Business Insider he commends the idea of speeding up the development of new treatments, but worries that in doing so patients could be exposed to “costly, ineffective and potentially dangerous drugs.” Likewise, the CEO of Ovid Therapeutics Inc., a pharmaceutical company that develops drugs for rare diseases, told Reuters, “any change at the FDA that allows drugs to be tried out on patients without clinical evidence is a damaging approach.”

In a January 2017 FDA evaluation of 22 case studies with divergent results, early clinical studies were promising. Should the commissioner decide to base approval on initial safety reports or on surrogate endpoints, these drugs could have been approved. However, “[p]hase 3 studies did not confirm phase 2 findings of effectiveness in 14 cases, safety in 1 case, and both safety and effectiveness in 7 cases… In two cases, the phase 3 studies showed that the experimental product increased the frequency of the problem it intended to prevent.” The side effects of these drugs in phase three trials ranged from mere uselessness to serious adverse events, including death.

Testing requirement

Further, removing the requirement of extensive clinical testing could mean that courts will see more lawsuits and multidistrict litigations similar to those currently filed against 3M involving its Bair Hugger Forced Air Warming device. In that litigation, it is alleged that the company knew of the threat of contaminants due to the device, and the risk of infection, but failed to warn of the risk. The plaintiffs further allege that 3M continued to market its product as safe for use during surgeries and attempted to “conceal and discredit peer-reviewed scientific studies that undermined their ability to market the Bair Hugger.” Notably, the FDA approved the Bair Hugger device for use in 1987 under Section 510(k) of the FDCA, which is an expedited process that allows for less clinical testing if a substantially similar device is already on the market.

It is also unclear how rules and regulations that promote a quicker approval process will affect the doctrine of federal preemption. Just like Bayer Corp. has done with some success in suits alleging injuries sustained from the implantation of Essure Permanent Birth Control, a manufacturer’s defense often rests on the fact that the FDA approved the drug or device’s design, manufacturing method, labels, warnings and instructions for use prior to its release into the market.

This defense has held up in the past, especially for devices approved in the premarket approval process, based on the FDCA’s statutory requirements for safety and effectiveness, with defendants arguing the FDA subjected their product to the “highest level of scrutiny that exists in the federal regulatory system.” If the statutory requirements for a new drug’s approval are weakened, this defense may prove futile for pharmaceutical companies in future litigations to the advantage of plaintiffs.

40 MDLs

Congruently, there are currently 40 multidistrict litigations pending with the Judicial Panel on Multidistrict Litigation in which plaintiffs allege the defendants engaged in false and misleading marketing and sales practices, including those for Vioxx, Tylenol, Celexa, Lipitor, Avandia and Plavix, to name a few. Allowing a pharmaceutical company to advertise a drug for potentially ineffective uses without proper testing could open the floodgates of similar litigation should the drug fail to work, or worse, cause fatalities, while costing patients hundreds of thousands of dollars per year. For example, Sarepta Therapeutic’s orphan drug, Exondys 51, which the FDA approved for use in September 2016 based on surrogate endpoints, runs patients about $300,000 per year with little to no insurance coverage, but it has not yet been proven effective.

Industry heads such as the CEO of Alnylam Pharma and the head of research and development at Merck and Co Inc. have also expressed concern about how a manufacturer must be able to show insurers and physicians alike through a risk/benefit profile that their drug has value, rather than leaving them to make such a determination on their own. Further, even if deregulation lowers costs to pharmaceutical companies, there have been no assurances that these reduced costs will be passed on to patients. A first-to-market advantage will not do pharmaceutical companies much good if the product is too expensive for patients to afford and insurance companies are not willing to cover the cost.

If current pre-market clinical requirements are reduced, it could arguably endanger patients, who are often the most vulnerable. It may also make it more difficult for pharmaceutical companies to differentiate effective products from new, less effective — or ineffective — treatments flooding an easy-to-enter market. On the other hand, greater flexibility could allow for innovative new products to enter the market faster and reach those waiting on new therapies or a cure. Until the right balance has been struck, the industry may be in for a bumpy, litigation-filled ride.

Court Approves $15 Million Settlement Against Shire for Paying Off Drug Rivals

Attorney Conlee S. Whiteley of Kanner & Whiteley, L.L.C. in New Orleans

Attorney Conlee S. Whiteley of Kanner & Whiteley, L.L.C. in New Orleans

After three years of contentious litigation, a Florida judge approved a nearly $15 million settlement ending a consumer class action accusing Shire U.S., Inc. of paying rival pharmaceutical companies to delay selling cheaper generic versions of its attention deficit drug, Adderall XR®.

U.S. District Judge Joan A. Lenard ruled that the settlement, reached in April, was fair, reasonable and adequate.

Class Counsel Conlee Whiteley of Kanner & Whiteley, LLC says, “We’re happy to have reached this resolution.  It’s been a long time coming. The class members should be paid in full, and we hope to implement that quickly.”

The settlement administrator has received more than 23,450 claims requesting reimbursement for more than 855,000 prescriptions of the attention deficit hyperactivity disorder drug.  Judge Lenard said during her ruling, “It’s a very good response, from my experience.”

The pattern of behavior alleged in the suit against Shire pertains to “pay-for-delay” settlements. These settlements allow drug makers to sidestep competition by offering patent settlements that pay other generic companies not to bring lower-cost alternatives to market, effectively blocking all other generic drug competition for branded drugs.

Pay-for-delay settlements have become a recent top priority for the Federal Trade Commission.  According to a FTC study, these anticompetitive deals cost consumers and taxpayers $3.5 billion in higher drug costs every year. Suits such as the AXR case help protect consumers, and deter pharmaceutical companies from entering into such agreements to delay generic entry in the future.

The case is Barba, et al. v. Shire U.S., Inc., et al., No. 1:13-cv21158, in the U.S. District Court of Southern District of Florida.

 

$1.3M Verdict Against Big Tobacco Upheld in Florida

big tobaccoA Florida appeals court has upheld a judgment for a smoker’s estate in an Engle progeny case, rejecting arguments by Big Tobacco that federal law implicitly preempts relevant state-law tort claims and what the companies described as an effective ban on selling cigarettes, according to Law360.

Florida’s Second District Court of Appeal upheld a jury verdict for James H. Lourie, the personal representative of the estate of Barbara Ruth Lourie. He argued that cigarette makers Philip Morris USA Inc. and R.J. Reynolds Tobacco Co. concealed the dangers of smoking while furthering his wife’s addiction, causing the lung cancer that led to her death in 1997. A jury awarded the family more than $1.3 million in 2014.

On appeal, the tobacco companies argued that Lourie’s negligence and strict liability claims should be preempted by federal law that prohibits states from banning cigarette sales, saying earlier findings in the Engle case amount to a ban on selling cigarettes.

However, the panel ruled on August 10, 2016 that this argument is barred by principles of res judicata, because the Florida Supreme Court already rejected the argument when hearing the case as a class action. Also, the federal preemption arguments were wrong because federal law does not prohibit states from banning cigarette sales and earlier case findings do not amount to a ban on all cigarettes, the panel said.

Concussion Class Action Suit Proceeds Against the NHL

hockeyplayerThe National Hockey League will face similar allegations from players as the NFL. A U.S. District judge in Minnesota allowed the case filed by former players to proceed. The players alleged the league failed to protect them from injuries that caused concussions.

More than 100 players filed a class action against the NHL, many who suffer from traumatic brain injuries. The league attempted to dismiss the lawsuits by arguing protection from any injuries should be addressed in the players contracts and collective bargaining agreements rather than in court.

Judge Susan Nelson, disagreed by saying the CBA’s vary and the league is aware of the differences. She believed that additional evidence should be uncovered before preventing the case from proceeding.

The NHL also argued the players were aware or should have been aware of risk of playing professional hockey.

The Washington Post reported the story of Larry Zeidel a player for the Philadelphia Flyers. HE was among the first hockey players to have a diagnosis for the degenerative brain condition known as CTE or Chronic Traumatic Encephalopathy.

Zeidel had over 100 concussions, and the trauma manifested itself after his retirement from the league. Gary Leeman, once a high profile player for the Maple Leafs also joined the lawsuit. Leeman sustained a cracked skull after being hit by a hockey puck.

Leeman was out for 15 games following the incident and he complained of memory loss, fatigue, and depression. Leeman joined the lawsuit in 2014.

In this lawsuit, the players allege the NHL withheld information about research and science linking brain injuries to lifelong neurological issues. The players allege the league failed to take any precautions to improve protection for the players.

The U.S. District judge did not rule out the case being dismissed at a later stage, just not at this stage of the proceedings.