Monthly Archives: January 2016

PRODUCT LIABILITY UPDATE-Footnote 1

 

Machine

The Twombly-Iqbal pleading standards were explained by Magistrate Judge Shushan in Brocato, 2015 WL 854150 (E.D. La. 2015):When reviewing a motion to dismiss, courts must accept all well-pleaded facts as true and review them in the light most favorable to the non-moving party. Baker v. Putnal, 75 F.3d 190, 196 (5th Cir. 1996). However, “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Gonzales v. Kay, 577 F.3d 600, 603 (5th Cir. 2009) (quoting Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009)) (internal quotation marks omitted). The Supreme Court in Iqbal explained that Twombly promulgated a “two-pronged approach” to determine whether a complaint states a plausible claim for relief. Iqbal, 129 S.Ct. at 1950. First, courts must identify those pleadings that, “because they are no more than conclusions, are not entitled to the assumption of truth.” Id. Legal conclusions “must be supported by factual allegations.” Id. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. at 1949.

Upon identifying the well-pleaded factual allegations, courts “assume their veracity and then determine whether they plausibly give rise to an entitlement of relief.” Id. at 1950. A claim has facial plausibility when the Plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”   Id. at 1949. This is a “context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. The plaintiffs must “nudge[]their claims across the line from conceivable to plausible.” Twombly, 550 U.S. at 570.

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PRODUCT LIABILITY UPDATE-Footnote 2

MachineWatson v. Bayer Healthcare Pharmaceuticals Inc., No. 13-212, 2013 WL 1558328 (E.D. La. April 11, 2013) (Feldman,J.)

Plaintiff failed to state a claim for relief in her Complaint against Bayer Healthcare Pharmaceuticals, Inc. (“Bayer”), the maker of the Mirena intrauterine contraceptive, Id. at *5, and her case was dismissed, without prejudice, pursuant to Rule 12(b)(6) FRCP.

Plaintiff used a Mirena intrauterine contraceptive from 2007 until 2012 when she underwent surgery to have the Mirena removed because it had become embedded in her uterus. Id. at *2. Plaintiff sued Bayer, alleging that the Mirena device was defective under the Louisiana Products Liability Act (“LPLA”), along with theories of negligence, breach of implied warranty, breach of express warranty, negligent misrepresentation, fraudulent misrepresentation, and concealment. Id. Because Plaintiff’s claims arose out of her use of the Mirena product, the LPLA establishes her exclusive avenue of recovery. Accordingly, the court held that Plaintiff could not recover on any theory of recovery besides her claims under the LPLA. Id. at *3.

Next, Judge Feldman considered whether Plaintiff had alleged sufficient facts, if true, that stated a “plausible” claim for relief as required under

Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009). The Court found that Plaintiff failed to state a claim under the LPLA because she failed to state how the Mirena device deviated from its intended design, failed to allege how the device was improperly designed, how the alleged defect caused her injuries, and failed to state how any allegedly inadequate warnings caused her injuries. Id. at *4-5. The Court ruled that the Plaintiff could seek leave to file an amended complaint. Id. at *5.

Hargrove v. Boston Scientific Corp., 2014 WL 4794763 (E.D. La. 2014)

Once upon a time, federal court product liability and toxic tort practice involved “notice” pleading: a plaintiff filed a complaint identifying defendant and mentioning a LSA C.C. art. 2315 and maybe a statute or two – and that was all you needed to “notice” plead. Specific facts to support the claims would be developed in discovery.

In 2008-2009, the Supreme Court refined “notice” pleading in the Ashcroft v. Iqbal, 556 U.S. 662 (2009) and Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) cases. Defendants in products and toxic tort cases have used the new “notice” pleading in Rule 12(b)(6) motion to dismiss practice to require a plaintiff to make detailed, fact-specific allegations on technical matters involving the product at issue, e.g., pharmaceutical or chemicals, that historically were developed in fact discovery. The penalty for failure to make these fact-specific allegations is dismissal of part or all of Plaintiff’s suit before discovery even starts.

In Hargrove, Plaintiffs, a husband and wife, alleged that the wife developed chronic pancreatitis after a medical device manufactured by defendant broke apart in her body. Plaintiffs filed suit based on the LPLA in federal court. Defendant filed a motion to dismiss under Fed. R. Civ. P. Rule 12(b)(6), because the Complaint failed to state a claim upon which relief could be granted.

The court first dealt with Defendant’s assertion that Plaintiffs’ claims had prescribed. Noting that federal Fifth Circuit jurisprudence holds dismissal based on prescription under 12(b)(6) is improper if “prescription presents questions of fact that cannot be conclusively resolved on the face of the pleadings,” the court denied Defendant’s motion to dismiss on the basis of prescription. It held that the facts alleged in the Complaint supported application of contra non valentem to toll the running of prescription while Plaintiffs attempted to determine what had gone wrong with the device and by whom it was manufactured.

The court next examined whether Plaintiffs had alleged specific facts for their claims falling under the LPLA. The allegations were sufficient to state a claim that the product was unreasonably dangerous in construction and composition because Plaintiffs alleged that the product was “not properly manufactured,” was “inadequate or insufficient to maintain its integrity,” and was “sold in a defective condition.” But, the court then held that the Plaintiffs failed to specifically allege facts sufficient to state a claim under the other three theories of liability.

On the design defect claim, although the Plaintiffs’ allegations “address[ed] the [product’s] design,” Plaintiffs failed to allege an alternative design existed and could not elevate their allegation above a speculative level by stating that defendants committed “other acts and failures” in the design as would be learned in discovery.

  • Plaintiffs failed to state a claim for inadequate warning based on the “learned intermediary doctrine,” under which manufacturers must only warn the doctor, not the patient. The court held that because Plaintiffs’ Complaint alleged that Defendant failed to warn the “end user” of the risks of using the product, Plaintiffs failed to address whether “a proper warning would have changed the decision of the treating physician” and thus failed to state a claim under the inadequate warning prong of LPLA.
  • On the warranty claim under the LPLA, the Court found no facts alleged to support these claims.

Finally, all of Plaintiff’s non-LPLA claims were dismissed: “to the extent that the [plaintiffs] have alleged independent causes of action for negligence, deceptive practices, ‘inherently dangerous’ product liability, and breach of implied warranty, their claims are not cognizable under the LPLA. And because the LPLA is the exclusive remedy for product liability tort claims under Louisiana law, the [plaintiffs’] tort claims sounding in these theories are dismissed.”

Jenkins v. Bristol-Myers Squibb, 2015 WL 5012130 (E.D. La. 2015)

The Jenkins case illustrates a more traditional, related notice pleading standard.

In Jenkins, Plaintiff alleged that ingestion of the drug Abilify caused him to develop Tardive Dyskinesia, a “neurological disorder characterized by involuntary movements of the face and jaw.” Plaintiff asserted liability under LPLA for failure to warn and defective design.

Defendants moved to dismiss the defective design claim under Fed. R. Civ. P. Rule 12(b)(6), arguing that Plaintiff merely pled that Defendants failed to consider an alternative product design and the LPLA requires that such design exist at the time the product left the control of the manufacturer and that the danger of the damage outweighed the burden of adopting the alternative design. Defendants argued that Plaintiff’s claim for failure to warn should be dismissed because the Complaint failed to mention the adequacy of warnings provided to Plaintiff’s prescribing physician, nor did it allege that the physician would have prescribed a different drug with a different warning.

In opposition, Plaintiff argued that Louisiana law recognizes “much of the evidence in pharmaceutical products liability cases may be in the defendant’s possession, and thus, without the benefit of discovery, stating more specific allegations may be nearly impossible” at the motion to dismiss stage. On the failure to warn claim, Plaintiff argued that his reference to “health-care providers” should be read to include his prescribing physician, but if the court finds this to be unclear Plaintiff requested leave to amend his petition.

Judge Fallon granted, in part, the motion to dismiss based on Plaintiff failing to plead that an alternative design existed that could have prevented Plaintiff’s injuries. The court expressly stated that it did not agree with Defendants’ assertion “that it is necessary at this early stage for Plaintiff to plead specifics about the alternative design,” because “such a requirement would place a near-impossible burden on Plaintiffs in pharmaceutical litigation.” On the element of showing that the burden of adopting the alternative design was outweighed by the danger of using the chosen design, the court recognized that Plaintiff “may be unable to assert specific allegations without the benefit of discovery,” but this Plaintiff failed to “articulate even a bald claim” on this element. The court granted Plaintiff’s motion to amend his Complaint to address factual deficiencies because “[c]ourts should ordinarily grant a Plaintiff at least one opportunity to amend his complaint before dismissing the complaint with prejudice for failure to state a claim.”

On the failure to warn claim, the court applied the learned intermediary doctrine, which requires Plaintiff to “show that the defendant failed to warn (or inadequately warned) the physician of a risk associated with the product that is not otherwise known to the physician,” and that the failure to warn was the proximate cause of Plaintiff’s injury. The court stated that Plaintiff did not need to identify his treating physician in the pleading, and that the allegation “healthcare providers” included his physician. The court expounded,

To allege a failure-to-warn claim upon which relief can be granted under the LPLA, Plaintiff is not required to detail what an adequate warning would be and how an adequate warning would have caused Plaintiff’s treating physician to act differently. Plaintiff is merely required to allege that Defendants did not adequately warn Plaintiff’s treating physician and that the inadequate warning constituted the proximate cause of Plaintiff’s injuries.

 

PRODUCT LIABILITY UPDATE-Footnote 3

MachineRhodes v. Bayer Healthcare Pharmaceuticals, Inc., No. 10-1695, 2013 WL 1282450 (W.D. La. March 28, 2013).

A manufacturer’s motion for summary judgment was granted following the Court’s exclusion of Plaintiff’s expert causation witnesses. Id. at *4.

Plaintiff sued Bayer Healthcare Pharmaceuticals, Inc. (“Bayer”) alleging that taking two antibiotic Avelox caused her permanent nerve damage. Id. at *1. The Court excluded Plaintiffs’ first expert causation witness, a professor emeritus of pharmacy, finding him unqualified to testify. Id. at *2. In opposing Defendant’s motion for summary judgment, Plaintiff relied on her second medical causation expert, her neurologist, who diagnosed Plaintiff with neuropathy. Id. However, Plaintiff failed to connect this diagnosis to the use of Avelox, the doctor was not designated as an expert, and the Court found the doctor’s “medical impressions” to be inconclusive. Id. The Court held that the doctor’s medical impressions were not valid expert causation evidence. Id.

After excluding Plaintiff’s second expert witness, Judge Hicks determined that Plaintiff had no evidence to support causation, an essential element of her LPLA claims against Bayer. The Court reached this result after ruling that Plaintiff’s claims required expert evidence from a physician on medical causation, including proof that Plaintiff’s treating physician would have changed his prescription of the Bayer drug if he had read the warning at issue.

Yolande Burst v. Shell Oil Company, et al, C.A. No. 14-109 (E.D. La. 8/8/2014)

In Burst the court granted partial summary judgment after ruling that one or more of the plaintiffs’ experts could not testify on causation in each case. Using this strategy, defendants focus the court on a single, essential element of a plaintiff’s claims, i.e., causation, and ask it to determine if there is sufficient evidence for plaintiffs to prove causation on their tort claims.

In Burst, supra, the plaintiffs brought a product liability action against Shell Oil Company, Chevron USA, Inc. (as successor to Gulf Oil Corporation), and Texaco, Inc., alleging that the deceased was exposed in 1958-1971 to a benzene-containing product, i.e., gasoline, while working as a gas station attendant and mechanic. The benzene exposures allegedly caused the deceased’s leukemia that led to his death.

The manufacturer defendants moved for partial summary judgment on several grounds, including that plaintiff failed to offer expert opinion evidence on the issue of general causation. General causation is whether a substance is capable of causing a particular injury or condition. The defendants argued that expert medical testimony was required on the issue of general causation about whether exposure to gasoline could cause leukemia and if this was within the common knowledge of jurors.

Plaintiff argued that the defendants have agreed to general causation by a general stipulation that stated “very high levels of exposure to benzene over a long duration [a]re capable of causing some sub-types of acute myeloid leukemia.” Defendants took the position that the proper general causation question was whether exposure to gasoline, not benzene, can cause leukemia, because the plaintiff’s husband had been exposed to benzene-containing gasoline manufactured and sold by the defendants.

United States District Judge Sarah Vance agreed with the defendants and held that plaintiff had failed to carry her burden with respect to general causation and offer admissible expert opinion testimony that “the substance at issue,” i.e., benzene-containing gasoline, is capable of causing the kind of harm alleged by plaintiff, relying in part upon the Seaman v. Seacor Marine, LLC, 326 Fed. App’x. 721, 723 (5th Cir. 2009) (in a toxic tort suit plaintiffs “cannot expect lay fact-finders to understand medical causation; expert testimony is thus required to establish causation).

Hinson v. Techtronic Industries Outlets, Inc., 2015 WL 5024588 (W.D. La. 2015)

 The Hinson case is a textbook example of the danger a Plaintiff faces under the Louisiana Products Liability Act (“LPLA”) in failing to satisfy the proof requirements to establish a claim under the exclusive theories of liability under the LPLA.

*          *          *          *

 The Plaintiff in Hinson sustained injuries while using a pressure washer manufactured by defendant, Techtronic. Plaintiff, a self-employed stock broker, attempted to get the pressure washer to start, and the handle used to crank the engine broke in his hand, resulting in a shard piercing his index finger. He filed a product liability action against the pressure washer manufacturer, the manufacturer of a component part of the washer (Honda), and the seller of the fully-assembled product (Home Depot).

Defendants moved for summary judgment on the ground that Plaintiff could not prove any elements essential to his products liability claims, and the court granted the motion:

  • On his defective construction claim, the Plaintiff “did not have the handle inspected and did not have any expert testify as to how the handle was defective.” However, Defendants proffered experts who inspected the handle and found that it had visual deformities and abrasions that were the result of the handle impacting harder surfaces, which was a post-manufacturing problem.
  • On his defective design claim, Plaintiff failed to show any evidence of an available alternative design for the handle and thus could not prove that a design defect caused his injury. In contrast, Defendants’ experts offered uncontroverted evidence that the design of the handle was proper and made of material commonly used for handles because of its high strength, toughness, and chemical resistance.
  • Plaintiff similarly failed to show that Defendants were liable due to a failure to warn under the LPLA. Defendants argued that Plaintiff should have known that the handle was durable but not indestructible, that Plaintiff received an operator’s manual with the pressure washer, and that he failed to read it.
  • Defendants said that because Plaintiff failed to read the operator’s manual, which contained a warning to wear rubber gloves and instruction on the proper handling and storage of the washer, that there was “no basis to believe the Plaintiff would have heeded a warning about the handle had one been included in the operator’s manual, and that any warning about the handle would have been futile.” The court concluded that any presumption that Plaintiff would have read the warning had one been provided was rebutted by Defendants’ evidence that such warning would have been futile, and ignored by Plaintiff.
  • Finally, Defendant failed to show that the washer failed to conform to an express warranty because the warranty on the pressure washer did not implicate any damage to the handle, only to the pressure washer itself.

Plaintiff argued that res ipsa loquitor should be invoked to show that Defendants were at fault. However, Defendants submitted uncontroverted evidence that plausibly explained the accident involving the handle. Thus, the court found that the allegations by Plaintiff were not so unusual to support the use of the res ipsa locquitor doctrine that “the only reasonable and fair conclusion is that the accident resulted from a breach of duty or omission on the part of the defendant.”

PRODUCT LIABILITY UPDATE-Footnote 4

MachineReynolds v. Bordelon, 2014-2371 (La. 6/30/15), 172 So. 3d 607 (2015)

 A product liability claim under the LPLA requires strict compliance with the evidentiary requirements for each theory of liability under the Act. But, a litigant should not overlook the basic evidentiary requirements for admissible summary judgment evidence, as occurred in the Bordelon case.

  • Plaintiff, Reynolds, owned a Nissan sedan with supplemental side airbags. In rear and front-end collisions, the side airbags would not deploy.
  • Plaintiff sued Nissan for injuries he sustained when his side airbags failed to deploy. The manufacturer was granted summary judgment at the trial level based upon evidentiary rulings, and the Louisiana Supreme Court affirmed.
  • Plaintiff presented unverified and unauthenticated post-accident photographs of his vehicle as summary judgment evidence. The Supreme Court agreed that the lack of verification (by affidavit or testimony) rendered the photographs inadmissible.
  • Plaintiff offered an airbag service bulletin printed from the National Highway Traffic Safety Administration, but failed to produce any corroborating testimony or affidavit of the bulletin’s authenticity and failed to avail himself of any self-authenticating public document exception to its inadmissibility.
  • Plaintiff next attempted to admit “other incident” investigation reports prepared by Nissan in an attempt to show its knowledge of an ongoing problem with its airbags, but the reports pertained to “varying makes and models of vehicles in varying years in varying locales” and were thus irrelevant.
  • Plaintiff sought to introduce pre-accident invoices for service performed on his vehicle but the court excluded this evidence because Plaintiff failed to introduce an affidavit of the custodian of the invoices to meet the business records hearsay exception.

In opposition of Defendant’s motion for summary judgment, Plaintiff filed an affidavit from his expert in accident reconstruction, Dr. Richard Baratta. The trial court excluded Dr. Baratta’s curriculum vitae as inadmissible because it was unsworn and uncertified, as was the data reviewed by Dr. Baratta in forming his opinion.

Plaintiff failed to show a disputed issue of fact for trial that there was a defect in construction or composition in his car. The vehicle’s manual stated plainly that the airbags “may not inflate” in some front-end collisions, and were designed to inflate in “higher severity side collisions.” The court held that Plaintiff could not show that his collision was of a type for which the airbags should have deployed.

Dr. Baratta was no help to Plaintiff’s case because: (1) his CV was inadmissible and thus he was not established as an expert, and (2) his conclusory opinions were unsupported “by any factual evidence and contained no explanation as to how he reached his conclusion.”

Plaintiff similarly failed to show a design defect because Plaintiff’s expert “proposed no other design for the product, and, indeed, admitted that he did not develop an alternative design.”

On Plaintiff’s warning claim, Plaintiff’s expert did not specify what warning was inadequate, did not offer a proposed adequate warning, and did not provide any evidence to support this claim. The court further noted that the car’s operator manual states the side airbags ordinarily do not inflate in front or rear-end collisions, which were the impacts suffered by Plaintiff’s vehicle, and thus the warning was adequate.

Plaintiff’s express warranty claim under the LPLA failed because he did not point to a specific warranty that induced him to buy the car, did not prove that such warranty was untrue, and did not show that the failure to conform to a warranty caused his injuries. Plaintiff’s claim that “he, as a consumer, bought the vehicle because [the manufacturer] warranted that ‘[the vehicle] will perform like it is supposed to’” was deemed a “general warranty” that could not be accepted for the purposes of an express warranty claim.

Underlying and undermining each of Plaintiff’s claims was a fatal flaw, raised by the court, that Plaintiff failed to present evidence that the vehicle’s airbag system “was in substantially the same condition as it was when it left its manufacturer’s control and that there were no alterations or modifications to the vehicle’s air bag system.” Plaintiff did not even present evidence that the alleged defect was not caused by the accident itself.

In dissent, Justice Hughes noted that summary judgment was not proper because the CV was excluded as unsworn and unverified. Rhetorically, Judge Hughes asked “[m]ust an affidavit be obtained from each school and each publisher?” Judge Hughes further noted that “assessing the credibility of experts is the province of the fact finder, and there may be no “greater gift to a defense attorney than a Plaintiff’s expert with an inaccurate C.V.”

 

PRODUCT LIABILITY UPDATE-Footnote 5

Machine

Payne v. Gardner, 2010-2627 (La. 2/18/11); 56 So. 3d 229.

Payne involved injury to a 13 year-old boy who climbed onto an oil well pump’s pendulum to ride it up and down like a seesaw. During this ride, the plaintiff’s pants caught in the pump and he was hurt.

Plaintiff sued the pump manufacturer for manufacturing an unreasonably dangerous pump (in the 1950s when the pump was built). The manufacturer was granted a summary judgment in its favor based upon the fact that plaintiff’s use of the pump as a seesaw was not a “reasonably anticipated use” that the manufacturer foresaw. In the words of the court, “reasonable persons could reach only one conclusion, i.e., riding the pumping unit was not a reasonably anticipated use of the unit at the time it was manufactured.” Payne, 56 So. 3d at 232.

Matthews v. Remington Arms Co., 641 F. 3d 635 (5th Cir. 2011).

The plaintiff in Matthews, supra, lost an eye when the Remington rifle he had borrowed exploded in his face. When plaintiff pulled the trigger on the rifle, it was missing a pin that was approximately 7/10” long and 1/4” in diameter. The manufacturer apparently conceded that the rifle would either misfire or explode if it was fired without the pin in place.

 In a judge trial, the district court found that the pin was missing and the gun manufacturer, Remington, had no liability under the LPLA because it did not “reasonably anticipate” that a user would pull the trigger without a pin in place. Based upon the clearly erroneous rule, the appellate court declined to reverse the district court’s finding of fact on “reasonably anticipated use.”

 Batiste v. Brown, 11-609 (La. App. 5 Cir. 1/24/12); 86 So. 3d 655.

In Batiste, the plaintiff worked at a steel plant. In performing his job, plaintiff occasionally had to stand 40 feet above the plant floor on a 14” wide beam to screw in electrode cylinders that were used in the steel furnaces. In order to install the replacement electrodes into place, plaintiff also had to use a chain wrench to tighten the electrode. Plaintiff slipped on the electrode as he was tightening it, and fell 40 feet to the plant floor, injuring his spine in the accident.

Plaintiff sued the manufacturer of the electrode and the manufacturer of the chain wrench under the LPLA.

Plaintiff brought a defective design claim against the wrench manufacturer. This claim was dismissed on the grounds that plaintiff’s employer was not in compliance with OSHA regulations for working in high places, and the wrench manufacturer did not reasonably anticipate that someone would use the wrench “… to do something for which it was not intended, under circumstances which were not in compliance with OSHA regulations and which even the plaintiff knew to be highly dangerous.”

The electrode manufacturer was sued based on a failure-to-warn claim. Under the LPLA, a manufacturer need not give a warning where the user or handler knows or reasonably should know of the characteristic of the product that may cause damage. Here, it was undisputed that the plaintiff had actual knowledge of the dangers associated with installing an electrode 40 feet above the floor, and therefore, there was no need to warn the plaintiff of the potential hazard of falling while installing an electrode by standing on a 14 inch wide beam 40 feet above the floor without railings or a safety harness.

McDaniel v. Terex USA, LLC, 466 Fed. App’x 365 (5th Cir. 2012).

 In McDaniel, supra, the plaintiff was injured when a drilling bit fell onto him. In order to do his job, the plaintiff had to work under the suspended drill bit. The manufacturer of the drill bit (and related equipment) argued that the operator’s manual for the drilling machinery warned against workers working underneath the drilling bit, and therefore plaintiff’s work under the bit was not a “reasonably anticipated use” of the bit.

Based upon the en banc decision of the U.S. Fifth Circuit, Kampen v. American Isuzu Motors, Inc., 157 F.3d 306 (5th Cir. 1998), the district court granted a judgment as a matter of law at the close of plaintiff’s case-in-chief dismissing plaintiff’s claim under the LPLA on the grounds that the use of the drill with the plaintiff working underneath the drilling bit was not a “reasonably anticipated use.”

The U.S. Fifth Circuit reversed the trial court dismissal and held that a jury should have decided what the “reasonably anticipated use” of the drilling bit was, particularly where there was evidence in the record that the normal operating procedure for the drilling machinery required that workers – like plaintiff – work under the drill bit suspended overhead. The Fifth Circuit found that plaintiff had presented evidence in his case-in-chief that the manufacturer should have known that persons were acting contrary to the operator’s manual warnings to not work underneath the drill bits. It also distinguished the Kampen case on the grounds that the manufacturer in Kampen was unaware that users were ignoring the express warnings by the manufacturer in the operator’s manual for that product.

 

 

PRODUCT LIABILITY UPDATE- Footnote 6

Crowd_wild

JAPANESE DRUG MANUFACTURER, TAKEDA, HIT WITH A $6 BILLION PUNITIVE DAMAGE AWARD BASED ON ALLEGED SPOLIATION AND CONCEALMENT OF EVIDENCE (AND THE PASSION AND PREJUDICE OF THE JURY).

In reliance on recent Supreme Court decisions, manufacturers may have thought that punitive damage awards hundreds of times the compensatory damages in a case were not supposed to happen anymore. But a jury in Lafayette, Louisiana thought differently on April 7, 2014 when it awarded punitive damages of $6 billion (or 6,100 times the compensatory award) against Takeda, a manufacturer of the drug Actos®, and $3 billion against Eli Lilly. In Re Actos (Pioglitazone) Products Liability Litigation, MDL No. 6:11-md-2299, Rec. Doc. 4108 (W.D.La..A. April 7, 2014).

Takeda Pharmaceutical Company, Ltd. (and related companies) and Eli Lilly & Company are defendants in multi-district litigation (“MDL”) in federal court related to the drug Actos®. This drug is used by diabetics in hopes that they achieve better cardiovascular outcomes. Takeda allegedly learned and then concealed internal 2004 studies showing there was a very high rate of bladder cancer associated with use of Actos®. This information did not come to light until 2011 when a French scientist wrote about his findings concerning the relationship between bladder cancer and the use of Actos®.

Two individual “Actos®” plaintiffs, Mr. and Mrs. Allan, proceeded to trial in April 2014 in the federal MDL proceedings in Lafayette, Louisiana. One of the principal issues in the trial was quantification of punitive damages against Takeda. Plaintiff introduced evidence that:

  • Takeda hid its 2004 clinical trial data showing that Actos® causes bladder cancer;
  • Takeda concealed statistical data showing an almost 200% increase in the number of bladder cancer adverse event reports from the use of Actos® (for over six years and $10 billion in sales of Actos®);
  • Takeda failed to disclose epidemiological studies that showed an extremely high risk of bladder cancer from use of Actos®;
  • Takeda engaged in the spoliation of the e-mail files of nine top-level Japanese executives, five company officers in Europe, and thirty-two U.S. officers, sales representatives and other employees;
  • Takeda was involved in “ghost writing” of publications, including scientific documents, sent to the FDA to dispel the bladder cancer issue involving use of Actos®;
  • and Takeda fired a doctor who refused to downgrade serious adverse event reports about the risk of bladder cancer from use of Actos®.

See Rec. In Re Actos (Pioglitazone) Products Liability Litigation, MDL No. 6:11-md-2299, Rec. Doc. 4423, Opposition of Plaintiffs to Motion for New Trial by Defendants. Takeda’s evidence and its denials of these claims were unconvincing to the jury, which awarded $6 billion in punitive damages against Takeda.

In post-trial briefs, Takeda argued that the punitive damage award should be reduced to the amount of the compensatory damage award of $1.475 million because:

  • The punitive award was grossly excessive in violation of its constitutional rights to due process, as articulated in State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 416 (2003) and BMW of N. America v. Gore, 517 U.S. 559, 574 (1996);
  • Takeda’s conduct was not reprehensible and therefore punitive damages are not permissible. In support of this argument, Takeda argued that Actos® is still on the market, the Actos® label contained FDA-approved warning information about bladder cancer, and the alleged spoliation of e-mails was “no harm, no foul” because Takeda had disclosed certain clinical trial data and epidemiological studies (and there was no evidence offered that the “spoliated” e-mails contained any relevant information.)

Note: Takeda apparently faced an “up-hill battle” with respect to spoliation of its employee e-mails based upon the district court’s allowing an adverse inference instruction for the jury to use in considering the alleged destruction of e-mail evidence and the alleged failure of Takeda to abide by its internal litigation holds.

Takeda filed a Motion for a New Trial under Fed. R. Civ. P. 59 for a new trial on all of the Plaintiffs’ claims, or for a reduction of the punitive damages award. The motion was granted in part and denied in part. The Court reduced the “runaway” jury verdict, though not to the “single-digit ratio” that would satisfy Due Process requirements, as recommended by the Supreme Court in State Farm v. Campbell. Instead, the Court imposed punitive damages of $27,656,250.00 against Takeda and $9,218,750.00 against Eli Lilly, amounting to a 25:1 ratio of punitive to compensatory damages.

PRODUCTS LIAIBLITY UPDATE-Footnote 7

Evidence_Spoil

SPOLIATION OF EVIDENCE- TEXAS SUPREME COURT TAKES THE SPOLIATION DECISION AWAY FROM THE JURY AND PROVIDES A WAY TO “GUT” THE SPOLIATION REMEDY IN OTHER COURTS AROUND THE COUNTRY

The loss or destruction of evidence―from physical evidence to e-mails and surveillance videos―often results in claims of spoliation of evidence against defendants. Based simply upon an accusation of spoliation, courts routinely allow the jury to decide whether a defendant engaged in the spoliation of relevant evidence by instructing the jury it can draw an adverse or negative inference against the defendant because it may have lost or destroyed “missing” evidence in the case.

An adverse inference jury instruction can be fatal to a defendant’s defense on the merits of litigation against it. Juries presented with an allegation of spoliation by a defendant often focus on the defendant’s alleged wrongful conduct in failing to preserve evidence―not the merits of the defendant’s defense to the case. Smart plaintiff’s counsel with weak cases on liability “play the spoliation card” to distract, prejudice and inflame the jury against a defendant who allegedly spoliated evidence.

NOTE: In a multi-billion dollar jury award reported in the August 14, 2014 E-Update, “A Louisiana Federal Court Jury ‘Goes Wild’ With Multi-Billion Dollar Award,” a Louisiana jury was given the adverse inference instruction with respect to a manufacturer’s alleged spoliation of internal e-mails about the hazards of its pharmaceutical product. This jury awarded punitive damages that totaled 6,100 times the compensatory damages in the case, and spoliation is central to the jury’s verdict.

Recently, the Texas Supreme Court in Brookshire Bros. Ltd. v. Aldridge, et al., 438 S.W. 3d 9 (Tex. 2014), severely restricted the availability of the “adverse inference” instruction for spoliation of evidence by requiring the judge, not jury, to decide in a pre-trial hearing whether spoliation occurred and to impose the adverse jury instruction as a discovery sanction by the court. Under this procedure, the jury hears no evidence of whether spoliation, in fact, occurred, and that an adverse inference can be drawn against the party that spoliated evidence in the case. In doing so, the jury focuses on the merits case without being prejudiced by the alleged spoliation of evidence, and the party who spoliated the evidence is severely punished by by application of the adverse inference instruction.

The Brookshire case involved a slip-and-fall injury in the defendant’s grocery store. Plaintiff’s fall was recorded on video surveillance. The store manager preserved video of one minute before and seven minutes after plaintiff’s fall, but plaintiff claimed two hours of video before and after the fall was relevant and should have been preserved. Plaintiff argued that the defendant grocery store, therefore, spoliated this “missing” evidence, and asked the jury to draw an adverse inference against defendant for spoliation of the “missing” surveillance tape.

The trial court gave the “adverse inference” instruction on spoliation of evidence, and the jury verdict was in favor of plaintiff. Affirmed on appeal, the Texas Supreme Court reversed and remanded.

In its decision, the Court explained that the purpose of the adverse inference instruction is “. . . to compensate for the absence of the evidence that a party had a duty to preserve, [and] its very purpose is to ‘nudge’ or ‘tilt’ the jury toward a finding adverse to the alleged spoliator . . . . Thus, an unfortunate consequence of submitting a spoliation instruction is that it ‘often ends litigation’ because ‘it is too difficult a hurdle for the spoliator to overcome.’” The Texas Supreme Court then fashioned a remedy to “neutralize” or “gut” the harm caused a litigant who allegedly spoliated evidence, and held:

  • Spoliation of evidence is a pre-trial discovery abuse that deprives a party of relevant evidence at trial;
  • The trial court, not jury, must make a pre-trial fact determination in an evidentiary hearing if a party spoliated evidence, and treat spoliation as a discovery sanction;
  • The party claiming spoliation has the burden of proving that the spoliating party had a duty to preserve certain evidence and breached the duty to preserve that evidence;
  • To prove intentional spoliation, there must be proof that the spoliating party was in bad faith (similar to the burden of proof in a federal “death penalty” discovery sanction) and had a subjective intent to conceal or destroy the evidence; and
  • In rare circumstances, a court may allow an adverse inference instruction for negligent spoliation by a party if the non-spoliating party is irreparably deprived of any meaningful ability to present a claim or defense by the absence of the “missing”

With this ruling, the Texas Supreme Court has helped level the playing field in spoliation disputes by eliminating the potential jury prejudice from the jury deciding whether spoliation occurred and distracting them from the merits of a case. Other states should follow the lead of the Texas Supreme Court in the Brookshire decision based upon the road map laid out by the court using general principles of discovery and evidence currently available in federal and state courts throughout the country.