FDCC BLOG

Alabama Supreme Court Determines that Brand-Name Manufacturer May be Held Liable to Consumer

Thu, 16 May 2013 03:21:07 -0400

Title: Alabama Supreme Court Determines that Brand-Name Manufacturer May be Held Liable to Consumer of Generic Drug on Basis of Fraud or Misrepresentation

In Wyeth v. Weeks,2013 WL 135753 (Supreme Court of Alabama, January 11, 2013), the Alabama supreme court was asked to determine whether a drug company may be held liable for fraud or misrepresentation (by misstatement or omission), based on statements it made in connection with the manufacture or distribution of a brand-name drug, by a plaintiff claiming physical injury from a generic drug manufactured and distributed by a different company. Writing for the court, Judge Bolin opined in the affirmative.

Plaintiffs, Danny and Vicki Weeks, filed an action against five (5) current and former drug manufacturers for injuries that Mr. Weeks allegedly suffered as a result of his long-term use of the prescription drug product metoclopramide, which is the generic form of the brand-name drug Reglan^®. The Weekses claimed that two (2) companies—Teva Pharmaceuticals USA and Actavis Elizabeth, LLC—manufactured and sold the generic metoclopramide that Mr. Weeks ingested. The Weekses conceded that Mr. Weeks did not ingest any Reglan^® manufactured by the three (3) brand-name defendants, Wyeth LLC, Pfizer Inc., and Schwarz Pharma, Inc. Nonetheless, the Weekses asserted that the brand-name defendants were liable for Mr. Weeks’s harm on fraud, misrepresentation, and/or suppression theories because, at different times, these companies manufactured or sold brand-name Reglan^® and purportedly either misrepresented or failed adequately to warn Mr. Weeks or his physician about the risks of using Reglan^® long-term. The brand-name defendants moved to dismiss the claims against them, arguing, among other things, (1) that the Weekses’ claims, however pled, were in fact product liability claims that were barred for failure of “product identification”; and (2) that they had no duty to warn about the risks associated with ingestion of their competitors’ generic products.

On March 31, 2011, the Alabama supreme court granted in part and denied in part the brand-name defendants’ motion, holding that the Weekses might be able to state a claim for relief under Alabama law if they could prove that the brand-name manufacturers had a duty to warn Mr. Weeks’s physician about the risks associated with long-term use of brand-name Reglan^® and, further, that the Weekses, as third parties, had a right to enforce an alleged breach of that duty. Acknowledging an intrastate split on this issue, the supreme court opined that certification was appropriate to resolve the disagreement among the federal district courts within Alabama and to prevent both federal courts within the State and State courts around the country from having to “mak[e] unnecessary Erie guesses” about unsettled questions of Alabama law.

After restating the lengthy and complex history of pharmaceutical drug regulation in the United States, the Alabama court noted that unlike other consumer products, prescription drugs are highly regulated by the FDA. Before a prescription drug may be sold to a consumer, a physician or other qualified health-care provider must write a prescription. Citing to the United States Supreme Court decision in Wyeth v. Levine, however, the Alabama court stated that Congress did not preempt common-law tort suits, and the FDA traditionally regarded state law as a complementary form of drug regulation. Therefore, according to the Alabama court, state law tort suits are necessary to uncover unknown drug hazards and provide incentives for drug manufacturers to disclose safety risks promptly and serve a distinct compensatory function that may motivate injured persons to come forward with information.

Second, the court opined that in the context of inadequate warnings by the brand-name manufacturer, which are placed on a prescription drug manufactured by a generic-drug manufacturer, it is not fundamentally unfair to hold the brand-name manufacturer liable for warnings on a product it did not produce because the manufacturing process is irrelevant to misrepresentation theories. These misrepresentation theories are not based on manufacturing defects in the product itself, but on information and warning deficiencies when those alleged misrepresentations were drafted by the brand-name manufacturer and merely repeated by the generic manufacturer. The court determined, therefore, that liability for such inadequate warnings is properly placed upon the brand-name manufacturer.

Finally, the court stated that a brand-name drug manufacturer could reasonably foresee that a physician prescribing a brand-name drug or a generic drug to a patient would rely on the warning drafted by the brand-name manufacturer even if the patient ultimately consumed the generic version of the drug. Thus, where the alleged misrepresentations were drafted by the brand-name manufacturer and merely repeated by the generic manufacturer, a brand-name drug company may be held liable for fraud or misrepresentation (by misstatement or omission), based on statements it made in connection with the manufacture or distribution of a brand-name drug, by a plaintiff claiming physical injury from a generic drug manufactured and distributed by a generic drug company.

Submitted by: Marisa A. Trasatti & Jhanelle A. Graham of Semmes, Bowen & Semmes

First Circuit Affirms 140 Million Verdicts

Thu, 09 May 2013 10:00:00 -0400

Title: First Circuit Affirms $140 Million Verdicts in Off-label Neurontin Marketing Scheme

In Kaiser Foundation Health Plan v. Pfizer, Inc.,Nos. 11-1904 (United States Court of Appeals for the First Circuit, April 3, 2013), the Court of Appeals for the First Circuit affirmed the district court’s judgment, awarding over $140 million to Plaintiff,Kaiser Foundation Health Plan (“Kaiser”), a major health plan provider and insurer, for the injury it suffered by its payment for four (4) categories of off-label Neurontin prescriptions which had been induced by a fraudulent scheme of Defendant, Pfizer Inc. (“Pfizer”), the manufacturer of Neurontin. Specifically, the appellate court held: (1) the district court correctly concluded that plaintiff met the proximate causation requirement; (2) there was sufficient evidence to support “but for” causation; (3) the totality of the evidence strongly supported a conclusion that Neurontin was not effective for the four (4) off-label conditions as to which the district court and jury found liability; (4) the district court did not err in accepting Kaiser’s expert’s methodology for calculating damages; and (5) the district court did not err in denying Pfizer’s motions to transfer venue before trial or for a new trial.

On February 1, 2005, Kaiser Foundation Health Plan, Inc. and Kaiser Foundation Hospitals (together, “Kaiser”) filed a complaint in the U.S. District Court in Massachusetts against Pfizer, Inc. and Warner-Lambert Company (together, “Pfizer”), asserting injury from the fraudulent marketing of Neurontin for off-label uses. Parke-Davis, an operating division of Warner-Lambert Company, developed Neurontin during the 1980s and early 1990s as an anti-epileptic drug. To secure approval from the Food and Drug Administration (“FDA”) for a drug for a particular indication, a drug manufacturer must submit two (2) favorable double-blind randomized controlled trials. On December 30, 1993, the FDA approved Neurontin as an adjunctive therapy in the treatment of partial seizures in adults with epilepsy, setting the maximum dose at 1800 mg/day; however, the FDA found that certain patients taking Neurontin experienced depressive side effects, and the FDA issued a warning to physicians in January 2008 to “[b]e aware of the possibility of the emergence or worsening of depression, suicidality, or any unusual changes in behavior” resulting from the use of anti-epileptic drugs including Neurontin.”

In 1994, Parke-Davis estimated that Neurontin would generate $500 million in profits over the duration of its patent. In 1995, to increase Neurontin’s earning potential, Parke-Davis began to develop marketing strategies for off-label uses of Neurontin. This marketing included, but was not limited to: (1) direct marketing (or “detailing”) to doctors, which misrepresented Neurontin’s effectiveness for off-label indications; (2) sponsoring misleading informational supplements and continuing medical education (“CME”) programs; and (3) suppressing negative information about Neurontin while publishing articles in medical journals that reported positive information about Neurontin’s off-label effectiveness. Pfizer acquired Warner-Lambert in 2000.

Kaiser sued Pfizer for alleged fraudulent marketing of Neurontin for off-label uses. Beginning on February 22, 2010, the district court held a jury trial on Kaiser’s claims against Pfizer, and after a five-week trial, the jury found that Pfizer violated the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1962, with respect to its promotion of Neurontin for off-label uses. The verdicts in the district court followed a settlement that Warner-Lambert, a subdivision of Pfizer, had reached in a qui tam action brought by the United States, in which Warner-Lambert pled guilty to two (2) counts and agreed to pay $240 million concerning the off-label marketing of Neurontin. Pfizer agreed to pay an additional $190 million in civil fines.

On appeal to the First Circuit, Pfizer’s primary argument was that, as a matter of law, there could be no proximate causation because there were too many steps in the causal chain connecting its misrepresentations to the injury to Kaiser, particularly because that injury rested on the actions of independent actors—namely, the prescribing doctors. With respect to “but for” causation, Pfizer argued that its evidence at trial “falsified” Kaiser’s theories of causation, and that some of the evidence Kaiser presented to prove but-for causation was inadmissible.

First, the appellate court noted that Pfizer always understood the structure of the American health care system, such that physicians would not be paying for the drugs they prescribed. Thus, the First Circuit determined that Pfizer’s fraudulent marketing plan, which was meant to increase its revenues and profits, only became successful once Pfizer received payments for the additional Neurontin prescriptions it induced. Those payments came from Kaiser and other third-party payors. Additionally, with respect to the mechanisms by which Pfizer marketed Neurontin to doctors through detailing and educational programs, Pfizer fraudulently marketed to physicians with the intent that those physicians would write prescriptions paid for by Kaiser. The fraudulent scheme worked as intended, inducing a huge increase in Neurontin prescriptions for off-label uses. According to the appellate court, upholding the finding of proximate cause here would “protect[] the ability of primary victims of wrongful conduct to obtain compensation; simplif[y] litigation; recognize[] the limitations of deterrence . . . and eliminate[] some actual or possible but probably minor causes as grounds of legal liability.” Therefore, the First Circuit held that the district court correctly concluded that Kaiser met the proximate causation requirement.

According to the appellate court, “but for” causation was proven by several categories of evidence provided by Kaiser at trial, which indicated that: (1) Kaiser’s employees directly relied on Pfizer’s misrepresentations in preparing monographs and formularies, which, in turn, influenced doctors’ prescribing decisions; and (2) Pfizer’s fraudulent off-label marketing directed to physicians caused the doctors to issue more Neurontin prescriptions than they would have absent such marketing. For these reasons, the First Circuit affirmed the district court’s finding that “Kaiser relied on Pfizer’s misrepresentations and omissions during the development of drug monographs in both June and September 1999,” and that Pfizer’s misrepresentations “directly affected decisions about Neurontin’s placement on formulary without restrictions.”

Submitted by: Marisa A. Trasatti & Jhanelle A. Graham of Semmes, Bowen & Semmes

Utah Supreme Court "Weighs In" On Advertising Injury

Mon, 29 Apr 2013 21:35:24 -0400

The Supreme Court of Utah just handed down an interesting decision concerning advertising injury. Basic Research v. Admiral Insurance Co., 2013 UT 6 (2013).

The policyholder marketed a weight-loss product using the slogans "Eat All You Want And Still Lose Weight" and "And we couldn't say it in print if it wasn't true!" The policyholder had licensed the use of this slogan from another company.

Customers, alleging that the product didn’t work, filed suits.

The policyholder claimed the suits were covered as Advertising Injury.

The policy defined "Personal and advertising injury" to mean injury “arising out of one or more of … use of another's advertising idea in your ‘advertisement.’"

The policyholder argued that since the weight loss slogan was another’s advertising idea, the suits arose out of advertising, and the claims should be treated as an “advertising injury.”

The Utah Supreme Court found for the insurance company. The court ruled that “the underlying claims must allege ‘personal and advertising injury’ that occurred as a result of the ‘use of another's advertising idea.’"

The key is use: “the underlying causes of actions were in no way dependent on the source or ownership of those slogans. In fact, if the underlying claims were to go to trial, the plaintiffs would never be required to prove the original source of the slogans. They would need to prove only that … [the policyholder] used the slogans to market a defective product. None of the plaintiffs alleges injury ‘as a result of’ … having misappropriated or otherwise wrongfully used the advertising slogan of ‘another.’"

This policyholder was trying to stretch the policy far beyond its intended coverage. Fortunately, the Utah Supreme Court reached the right result.

Fourth Circuit Expands Remedies Available to ERISA Plaintiffs

Mon, 29 Apr 2013 21:35:13 -0400

Title: Fourth Circuit Expands Remedies Available to ERISA Plaintiffs

The Fourth Circuit has recently broadened remedies available to ERISA Plaintiffs in breach of fiduciary duty cases. In McCravy v. Metro. Life Ins. Co. [McCravy II], Nos. 10-1074 and 10-1131 (U.S Court of Appeals for the Fourth Circuit, July 5, 2012), Plaintiff was a participant in her employer’s Life Insurance and Accidental Death and Dismemberment Plan, which was issued and administered by Metropolitan Life Insurance Company (“MetLife”). Under the plan, she purchased accidental death and dismemberment coverage for “eligible dependent children.” She obtained such insurance coverage for her daughter and paid premiums which were accepted and retained by MetLife.

While named as a covered dependent on the insurance plan, Plaintiff’s daughter was murdered at the age of 25. Plaintiff filed a claim for benefits, which was denied by MetLife because the daughter did not qualify for coverage under the Plan’s “eligible dependent children” provision. The Plan defined eligible dependent children as unmarried dependents who are under the age of 24 if enrolled full-time in school. Because the daughter was 25 at the age of her death, she no longer satisfied the definition of eligible dependent children. Accordingly, MetLife denied Plaintiff’s claim and attempted to refund paid premiums.

Plaintiff refused the refund check and instead filed suit in federal court alleging that MetLife breached its fiduciary duties under the Employee Retirement Income Security Act (“ERISA”). Plaintiff sought payment for the coverage she argued she was entitled to under 29 U.S.C. § 1132(a)(3). The trial court ruled that Plaintiff was not entitled to recover the full benefits under this particular provision but that she could recover the premiums withheld by MetLife for coverage she never actually held on the life of her daughter.

Plaintiff appealed to the Fourth Circuit and argued that under Section 1132(a)(3), that she was entitled to “appropriate equitable relief” which was the payment of the full benefits under the Plan. In a decision dated May 15, 2011, the Fourth Circuit affirmed. The same day however, the Supreme Court of the United States decided CIGNA Corp. v. AMARA, 131 S. Ct. 1866 (2011), which stated in dictum that equitable remedies like surcharge, were available to plan participants in breach of fiduciary duty cases. Following AMARA, Plaintiff asked the Fourth Circuit to reconsider its ruling. The Fourth Circuit did permit a rehearing, and in a decision issued on July 5, 2012 (McCravy II), vacated its prior ruling, and concluded that Plaintiff was entitled to more than a mere premium refund. Overall, the Court endorsed the proposition that surcharges, resembling monetary/legal relief, are available to plan participants suing plan administrators for breach of fiduciary duty in ERISA cases

Submitted by: Marisa A. Trasatti & Colleen K. O’Brien of Semmes, Bowen & Semmes

Ninth Circuit Affirms dismissal of Complaint Alleging Fraudulent Off-Label Device

Fri, 19 Apr 2013 20:20:22 -0400

Title: Ninth Circuit Affirms Dismissal of Complaint Alleging Fraudulent Off-Label Device Use on Grounds of Standing and Preemption

In Perez v. Nidek Co., LTD, No. 10-55577 (9th Cir., March 25, 2013), a three (3)-judge panel of the United States Court of Appeals for the Ninth Circuit affirmed the dismissal of a complaint brought by plaintiff-patients who suffered no injuries but who were subject to the off-label use of a medical device for eye surgeries, where the Food and Drug Administration (FDA) status of the device was not disclosed to the plaintiff-patients. The appellate court arrived at its decision upon determining that: (1) the complaint did not state a claim under the California Protection of Human Subjects in Medical Experimentation Act (“Human Subjects Act”) because the surgeries were not “medical experiments” subject to the protection of the Act; (2) Plaintiff Perez did not have standing to sue for injunctive relief under the California Consumers Legal Remedies Act (CLRA); and (3) plaintiff Perez’s common law fraud by omission claim was expressly preempted by the Federal Food, Drug, and Cosmetic Act (FDCA); alternatively, even if it were not expressly preempted by the FDCA, it would be impliedly preempted because it amounted to an attempt to privately enforce the FDCA.

Robert Perez, Nancy Art, and Brett Harbach (collectively,“Perez”) each sought and received Laser in Situ Keratomileusis (“LASIK”) eye surgery with a Nidek EC-5000 Excimer Laser System (“the Laser”) to correct farsightedness. The Plaintiffs claimed that, at the time of their surgeries, they did not know the FDA had not approved the Laser for this use. According to the Complaint, had they known, they would not have consented to the surgeries. Perez sued on behalf of himself and a class of similarly-situated individuals who received hyperopic surgery (surgery to correct farsightedness) with the Laser between February 1996 and October 2006, but he neither alleged any injury stemming from surgery nor claimed that his or any other surgery was ineffective. Instead, he asserted claims under the Human Subjects Act and the CLRA, as well as common-law claims of fraud by omission, civil conspiracy, and aiding and abetting. Perez brought these claims against various Nidek corporate entities (“Nidek”), named and unnamed physicians who allegedly used the Laser for unapproved purposes on individuals in the purported class (“Physician Defendants”), named and unnamed medical centers where these procedures were allegedly performed, and other unnamed persons and entities who allegedly participated in the conduct at issue. Of the named Physician Defendants, only two performed LASIK surgery on the named plaintiffs.

As a Class III medical device under the FDCA, Nidek was required to get premarket approval (“PMA”) from the FDA before it could sell or distribute the Laser. 21 U.S.C. § 360e. Between 1998 and 2000, Nidek obtained three PMAs for treating nearsightedness with the Laser, but the Laser was not approved for treating farsightedness until October 2006. The PMAs restricted the Laser from being used for hyperopic corrections outside of approved investigations. During the class period, however, use of the Laser for farsightedness was being investigated in FDA-approved clinical trials, which required full disclosure of the device’s experimental use and informed consent from patients receiving treatment.

On appeal, the Ninth Circuit first determined that Perez had standing to sue the two (2) doctors who performed surgery on the named plaintiffs, but he had no standing to sue the second group of Physician Defendants, which included named and unnamed doctors who performed no surgery on the named plaintiffs but who allegedly performed surgery on other individuals in the proposed class. According to the appellate court, Perez’s allegations against this group were “no more than conclusory and bare bones words and phrases without any factual content.” As such, any claims against these Physician Defendants were insufficient to establish standing or to survive a motion to dismiss.

Similarly, the appellate court held that Perez did not have standing to sue any of the defendants under the CLRA. The Complaint requested only injunctive relief under that statute, but Perez did not demonstrate that he faced “a real or immediate threat of an irreparable injury.” Hangarter v. Provident Life & Acc. Ins. Co., 373 F.3d 998, 1021 (9th Cir. 2004). The Ninth Circuit reasoned that Perez did not allege that he intended to have further hyperopic surgery; the Laser has been approved for hyperopic use since 2006; and no post-2006 conduct was alleged.

With respect to Perez’s claim under the Human Subjects Act, the appellate court explained that the Act lays out detailed guidelines for informed consent, which is required before a person can be “subjected to any medical experiment.” Cal. Health & Saf. Code § 24175(a). After thoroughly parsing through the statute’s definitions of “medical experiment,” the court determined that Perez’s claims did not fall within the statute.

Finally, the Ninth Circuit addressed Perez’s allegation of common-law fraud by omission. Perez contended that the defendants misled the proposed class by failing to disclose that the Laser was not FDA-approved for hyperopic surgeries, even though Nidek and the doctors knew or should have known that the proposed class members believed the Laser was FDA-approved for such surgeries. Relying on the express preemption provision of the Medical Device Amendments to the FDCA (“MDA”) (1976), as well as Supreme Court cases and the Ninth Circuit’s recent analysis in Stengel v. Medtronic, Inc., 704 F.3d 1224,1228 (9th Cir. 2013) (en banc), the appellate court held that Perez’s claim of omission was expressly preempted by MDA. According to the court, Perez effectively sought to write in a new provision to the FDCA that physicians and medical device companies must affirmatively tell patients when medical devices have not been approved for a certain use, but such a requirement is preempted because it is “in addition to” the current federal requirements.

Alternatively, the Ninth Circuit stated that even if Perez’s fraud by omission claim were not expressly preempted, it would be impliedly preempted because it conflicted with the FDCA’s enforcement scheme. The appellate court reasoned that the FDA is responsible for investigating potential violations of the FDCA, and although citizens may petition the FDA to take administrative action, private enforcement of the statute is barred under 21 U.S.C. § 337(a). For these reasons, the Ninth Circuit affirmed the district court’s dismissal of Perez’s complaint.

Submitted by: Marisa A. Trasatti & Jhanelle A. Graham of Semmes, Bowen & Semmes

Tips for Young Lawyers - Preparing Your Client for Deposition - Part 12

Wed, 10 Apr 2013 00:39:21 -0400

Notices of deposition directed to corporate parties often ask for the person with the most knowledge regarding a given topic or series of topics. Choosing the right person from the company to answer the call is crucial. On the one hand, you want someone who knows the areas outlined in the notice of deposition. On the other hand, sometimes the person with the most knowledge makes a terrible witness. In addition, the notice may outline several disparate areas which will require more than one corporate representative. And of course, the corporate representative's testimony binds the company. What he says, the company says. Therefore, "I don't know" to questions he should know may not play well before a jury. Work with your client to decide which person (or persons) is the most suitable to be deposed. Interview the candidates and decide with the client who is the person with the most knowledge who will also make a good witness. The best witness is one who understands the company, understands why it did what it did and has a cogent, logical story to explain the corporation's behavior and who will provide a human face to the company. The law recognizes corporations as persons. It is your job to humanize the company through a corporate representative who personifies the company, its values and ideals and is someone with whom the jury will feel comfortable and trust.

Indiana Supreme Court Recognizes An Interesting Aspect of Rescission

Wed, 10 Apr 2013 00:38:53 -0400

The Indiana Supreme Court just recognized an interesting twist on rescission. Dodd v. American Family Mutual Insurance Co., 983 N.E. 568 (IN 2013). An insurance company sought to rescind a policy on the grounds that the policyholders failed to disclose prior fire losses in their application. The court noted that insurers must tender a return of the premiums to rescind a contract. But, “such a tender is not necessary where … the insurer has paid a claim thereon which is greater in amount than the premiums paid.” I had never heard that before, but it certainly makes sense.

PA District Court Grants Summary Judgment on Design Defect Claim

Fri, 05 Apr 2013 03:50:24 -0400

Title: Pennsylvania District Court Grants Summary Judgment on Design Defect Claim for Lack of a Safer Alternative

Submitted by: Marisa A. Trasatti & Jhanelle A. Graham of Semmes, Bowen & Semmes

In Kordek v. Becton, Dickinson and Co., 2013 WL 420332 (E.D. Pa. Feb. 4, 2013), the United States District Court for the District of Pennsylvania granted summary judgment in favor of Defendant, Becton, Dickinson and Company (BD), where there was no evidence that BD could have created a safer alternative to its surgical product.

The casearose out of injuries sustained by Plaintiff, Diane Kordek, while removing a shield from the blade of a scalpel manufactured and sold by BD. Diane Kordek was a surgical technician by Albert Einstein Medical Center in Philadelphia, Pennsylvania. As a surgical technician, Kordek was responsible for setting up and preparing the operating rooms in the Labor and Delivery unit of the hospital, which included gathering surgical instruments that were needed for child delivery procedures.

On the evening of September 11, 2008, Kordek prepared a room for an urgent Cesarean section delivery. One of the surgical instruments that she handled was a disposable scalpel with a fully removable shield covering the blade. According to Kordek, the scalpel’s shield was difficult to remove, and Kordek had to wrap all of her fingers around the shield and pull on it several times to remove it. In the course of removing the shield, Kordek lacerated her hand and arm. She testified that as a result of the scalpel injury, she now suffers from reflex sympathetic dystrophy (RSD) and complex regional pain syndrome (CRPS), such that she is permanently disabled.

Kordek brought suit alleging strict products liability and negligence causes of action. BD moved for summary judgment on both counts, arguing that: (1) the plaintiff's sole expert witness should be excluded under Fed.R.Evid. 702; and, (2) in the alternative, even including the expert witness’s opinion, the plaintiff's claims should fail because Kordek did not demonstrate the existence of a reasonable alternative design. The district court granted BD’s motion as to Count Two (2), but denied its motion as to Count One (1).

In arriving at its decision, the Pennsylvania district court found that Kordek’s expert witness testimony provided a narrow “reasonable alternative” analysis that was sufficiently reliable. Kordek’s expert, Brian Benda, Ph.D, confined his definition of “reasonable alternative” to the issue of whether the retractable shield product would have protected Kordek from the injuries she sustained by using the conventional product. Although the court found Dr. Benda’s answer in the affirmative to this limited question to be of little guidance, the court determined that such testimony should not be precluded on these grounds. Thus, the court denied BD’s motion to preclude Kordek’s expert’s opinion and proceeded to a substantive analysis of the facts.

With respect to Kordek’s strict liability state law claim, the court determined that this claim failed because Kordek did not establish sufficient facts for a reasonable jury to conclude that a reasonable alternative design existed. According to the court, the presence of a reasonable alternative design is a central issue for determining whether a design is defective under either the Restatement (Third) or Restatement (Second) of Torts. Kordek failed to meet this crucial burden.

With respect to Kordek’s negligence claim, the court found that Kordek’s relationship to BD was that of a foreseeable consumer of its product, which would likely be sufficient to establish a duty of care; nonetheless, the court concluded that no reasonable jury could find that BD breached its duty of care by manufacturing the conventional scalpel that injured Kordek. Thus, the court denied BD’s motion to preclude the expert opinion of Dr. Brian Benda, but granted BD’s motion for summary judgment as to the plaintiff’s strict liability and negligence causes of action.

Tips for Young Lawyers - Preparing Your Client for Deposition Part 11

Fri, 05 Apr 2013 03:50:04 -0400

When preparing a corporate client for deposition, conduct one of the meetings at the corporate representative's office. You want to see the office first hand, see how they conduct business and see where they keep their records. A client can explain her business to you and explain the facts of a case as they relate to that business, but until you see your client in her company setting, you will not gain a full appreciation of what she does or what her company does. It is this background information which will help you better serve your client and better prepare her for her deposition, including developing themes for the case. Ask for a tour of the company and ask to see what documents it creates and where they maintain them. By doing so, you'll gain a better appreciation of why your client behaved as it did in this case.

Maryland Court of Appeals Slashes Jury Verdicts in Exxon Gas Leak Cases

Tue, 26 Mar 2013 21:59:12 -0400

Title: Maryland Court of Appeals Slashes Jury Verdicts in Exxon Gas Leak Cases

In these companion cases, Exxon Mobil Corp. v. Albright, Slip Op. No. 15 (Maryland Court of Appeals, Feb. 26, 2013) and Exxon Mobil Corp. v. Ford, Slip Op. No. 16 (Maryland Court of Appeals, Feb. 26, 2013), Maryland’s high court reversed more than $1 billion in punitive damages awarded by a Baltimore County jury to Jacksonville, Maryland residents and businesses. The damages were in connection with a 26,000 gallon gas leak at an Exxon Mobil-owned gas station in 2006. The Court also reversed a large number of the compensatory damages, which originally totaled around $500 million.

In Albright, the Court of Appeals reversed the fraud verdict. Plaintiffs’ fraud theory was based on allegedly fraudulent statements that Exxon made to government officials. Plaintiffs contended that the public officials relied on Exxon’s false statements to the detriment of them—i.e., the public. The Court held that Maryland does not allow a third party to recover damages for fraud purely on the basis of a fraudulent statement made to the government. Overall, the Court held that none of the Plaintiffs were able to prove any of their fraud theories by clear and convincing evidence. Because the fraud verdicts were reversed, all the punitive damages stemming therefrom were reversed as well. In addition, because of the absence of fraud, there was no permissible recovery for emotional distress attendant to property damage. The Court therefore reversed jury awards on that basis as well.

In both Albright and Ford, the Court also considered whether emotional distress damages could be awarded due to the Plaintiffs’ fear of contracting cancer arising from the leak. The Court held that a Plaintiff can recover emotional distress damages for fear of contracting a latent disease if Plaintiff demonstrates: 1) he was actually exposed to a toxic substance due to the defendant’s tortious conduct; 2) which lead him to, objectively and reasonably, fear that he would contract a disease; and 3) as a result of the objective and reasonable fear, he manifested a physical injury capable of objective determination. The Court reversed jury awards to many of the Plaintiffs due to their failure to prove the elements of this cause of action.

The Plaintiffs were also awarded damages for medical monitoring in connection with the gas leak, although Maryland courts have never explicitly recognized a cause of action for medical monitoring. The Court held that in Maryland, a Plaintiff may recover damages for medical monitoring costs, usually through the administration of an equitable fund, upon a showing that: 1) the plaintiff was significantly exposed to a proven hazardous substance through the defendant’s tortious conduct; 2) that as a proximate result of the significant exposure, the plaintiff suffers a significantly increased risk of contracting a latent disease; 3) that the increased risk makes periodic diagnostic medical examinations reasonably necessary; and 4) that the monitoring and testing procedures exist which make early detection and treatment of the disease possible and beneficial. Again, the Court reversed jury awards to many of the Plaintiffs in the case for their failure to prove the elements of this cause of action.

The Court also held that the Plaintiffs should not have been allowed to recover damages for both diminution in property value AND past loss of use and enjoyment of real property as the recoveries were duplicative. The Court held that Plaintiffs could only recover damages for diminution in property value and reversed the verdicts for past loss of use and enjoyment.

Overall, many of the damages awarded to the Plaintiffs in these cases ended up being overturned.

Submitted by: Marisa A. Trasatti & Colleen K. O’Brien of Semmes, Bowen & Semmes

Must Exclusions Be Brought to Policyholders Attention

Mon, 25 Mar 2013 05:44:00 -0400

On February 6, 2013, West Virginia’s highest court addressed an unusual concept: to enforce an exclusion, is an insurer required to bring this provision to the insured’s attention? American States Insurance Co. v. Surbach, 2013 W. Va. LEXIS 49 (Feb. 6, 2013).

The policyholder argued that the exclusion could only be enforced if the insurer told the policyholder about the exclusion verbally.

The insurer argued that if the exclusion was clear and conspicuous, it had to be enforced, without regard to whether the policyholder had had been notified. In the alternative, the insurer argued that if special disclosure was required, the insurer made the required disclosure.

To my surprise, the court held that West Virginia requires that “an insurer seeking to invoke exclusions ‘must bring such provisions to the attention of the insured.’” The court said that this issue is rarely addressed because most policyholders do not raise the issue.

The court then cited two notification efforts. First, the insurer sent the policy with a cover letter stating: “Please read your policy carefully. In the event of a loss your insurance coverage will be controlled by the terms.”

Additionally, the top of the policy itself read that “Various provisions in this policy restrict coverage. Read the entire policy carefully to determine, rights, duties and what is and is not covered.”

The court held that these notices satisfied the insurer’s obligation to notify the policyholder of exclusions. The court held that “there is no basis to suggest that American States had to do more than demonstrate that it communicated in writing to [the policyholder] that he should read the policy and its exclusions and contact American States if he had concerns.”

In effect, the court retained an anachronistic requirement, but it set a low standard for satisfying this requirement.

Jury Verdict Upheld in Product Liability Suit by Major League Baseball Umpire

Tue, 19 Mar 2013 20:27:29 -0400

Title: Jury Verdict Upheld in Product Liability Suit by Major League Baseball Umpire

In Wilson Sporting Good Company v. Edwin Hickox, et ux., Case No. 11-CV-0445 (District of Columbia Court of Appeals, Jan. 31, 2013), the Court affirmed the Superior Court’s ruling that the Plaintiff’s expert’s opinion had adequate foundation and that Defendant was not entitled to an assumption of the risk jury instruction.

The Plaintiff, Edwin Hickox, a Major League Baseball umpire, was injured while working as a home-plate umpire and wearing a mask manufactured by Wilson Sporting Goods Company (“Wilson”). Mr. Hickox wore a Wilson mask while umpiring a game in Washington, D.C. Specifically, he was struck in the mask by a foul-tip. The impact of the ball caused Mr. Hickox a concussion and damage to a joint between bones in his inner ear. The Plaintiff claimed permanent hearing loss of mild to moderate severity. He and his wife filed a products liability claim against Wilson.

The mask was equipped with a newly designed throat guard that angled forward instead of extending straight down. The Plaintiffs alleged that this allowed the ball to be trapped temporarily by the throat guard instead of deflected away, and caused the ball’s energy to be concentrated at Plaintiff’s jaw. The Plaintiff argued that safer alternative masks and throat guards were available, and that Wilson failed to test the mask that it manufactured for this type of impact.

Wilson argued alternatively that it had field tested and lab tested the masks, that Mr. Hickox would have sustained the same injury if wearing another type of mask, and that “Mr. Hickox was an experienced umpire who knew that participating in sports creates the risk of injury, that no face mask can guarantee safety, and that injury is more likely without protective equipment.” Wilson Sporting Goods at *5.

At the close of trial, the jury rendered a verdict for the Hickoxes on claims of defective product, design defect, negligent design, failure to warn, and breach of implied warranty. They awarded $750,000 to Mr. Hickox and $25,000 to his wife. Wilson appealed on the basis that the testimony of Plaintiff’s expert, Dr. Igor Paul, was not supported by adequate data and lacked a scientific foundation. Wilson also argued that it was entitled to have the jury instructed on an assumption of risk defense, and that there was insufficient evidence to support the jury verdict.

The Court of Appeals found no error in the trial court’s decisions and affirmed the jury award. The Court noted that Dr. Paul based his opinions on various information including: freeze-frame and slow-motion analysis of video of the incident, a calculation of a baseball’s energy when pitched at various speeds, published results of impact testing on various helmet styles, and his own examination of the mask at issue as well as other baseball masks. The Court held that Dr. Paul’s failure to conduct his own testing was not fatal as “there is no requirement that an expert perform tests, particularly where the expert relies on published data generated by another expert in the pertinent field.” Wilson Sporting Goods at *8.

Wilson argued further that Dr. Paul did not adequately explain the reasoning behind his opinions at trial. The Court noted, however, that gaps or inconsistencies in an expert’s testimony go to the weight of the expert’s testimony, not its admissibility. As such, the Court found no error in permitting Plaintiff’s expert to testimony at trial.

The Court also determined that there was no error in the trial court’s failure to give an assumption of the risk instruction. The Court stated that an assumption of risk instruction is warranted in a design-defect case when the defendant offers evidence that the plaintiff knew about the specific alleged defect and the associated danger. Therefore, the assumption of the risk did not come from an umpire knowing a ball could strike him in the face, but rather that the mask and throat guard’s design could increase the risk of injury.

Finally, the Court determined that there was sufficient evidence presented in the case to support the jury’s finding of liability on the various product liability claims at issue.

Submitted by: Marisa A. Trasatti and Eric M. Leppo of Semmes, Bowen & Semmes

Pastime is Not Special in Idaho-Supreme Court Rejects Baseball Rule Limiting Owners Liability

Tue, 19 Mar 2013 20:25:00 -0400

On February 22, 2013, the Supreme Court of Idaho declined to adopt the “Baseball Rule.” Rountree v. Boise Baseball, LLC, 2013 Ida. LEXIS 555 (Feb. 22, 2013).

The facts are simple. At a Boise Hawks baseball game, a ball hit a fan. The fan lost his eye. He sued.

The Hawks argued that the court should adopt the Baseball Rule, which limits the stadiums’ duties to injured spectators. Essentially, if a stadium provides screened seats for as many spectators as may be reasonably expected to request these seats, management is not liable to spectators hit by balls. The Idaho Supreme Court found that most states have adopted some form of the Baseball Rule.

The stadium owner, however, did not persuade the Supreme Court: “Our Legislature can create a similar rule if it chooses. However, no compelling public policy rationale exists for us to do so. Thus, we decline to adopt the Baseball Rule.” The court found that stadium owners’ liability should be evaluated under standard tort principles.

Tips for Young Lawyers - Preparing Your Client for Deposition Part 10

Tue, 12 Mar 2013 23:17:12 -0400

Additional rules of the road for your client for her deposition:

31. Don't take notes during your deposition. The interrogator will you ask you about them.

32. Be careful of questions that use absolutes, like "never" and "always."

33. Don't assume anything you say is "off the record."

34. Don't object to questions. That's what your lawyer is there for.

35. Only bring those documents to a deposition your lawyer asked you to bring. Before the deposition, show your lawyer what you brought.

36. Don't discuss the deposition in the bathroom, hallway or on the phone. You never know who may be listening.

37. Be yourself.

38. Don't let the attorney's pregnant pauses or silence compel you to keep talking. Once you're done with your answer, stop. Don't continue explaining it.

39. If the interrogator is confused or lost, don't help him.

40. Your conversations with your lawyer are privileged. Don't offer them up in deposition.

41. Avoid superlatives.

42. Whatever you say to opposing counsel will find its way into the record. Do not fraternize with opposing counsel during breaks.

43. Ask to read the deposition at the end. Do not waive the reading of the deposition.

44. If you made a mistake or misspoke during the deposition, let your attorney know before the deposition is over.

45. Try to remain relaxed while remaining vigilant.

Colorado Adopts Broad Interpretation of Pollutant

Tue, 12 Mar 2013 23:16:58 -0400

On February 25, 2013, the Colorado Supreme Court found for insurers on the question of whether pollution exclusions apply to common everyday waste products. Mountain States Mutual Casualty Co. v. Fitz-Gerald, 2013 CO 14; 2013 Colo. LEXIS 166 (2013).

The insured, a restaurant, dumped cooking grease into the sewer system. The insurer found that the grease was a “pollutant.”

The trial court agreed with the insurer.

The intermediate appellate court found for the policyholder. The court held that applying pollution exclusions to kitchen grease would lead to absurd, overbroad applications of the exclusion.

The Colorado Supreme Court reversed to find for the insurer. The decision is interesting on several levels.

The Supreme Court did not dismiss the appellate court’s concern about exclusions being overbroad: “we are mindful of the concerns expressed by the court of appeals….” But, the Supreme Court was persuaded by two factors. First, the disposal was huge; it created an eight-foot clog. Second, the restaurant’s conduct violated a local ordinance.

Ultimately, the court said that it was applying the exclusion “under the circumstances of this case.” Of course, all decisions are under the circumstances of the presented case. But, the court seemed to be emphasizing the circumstances here.

This decision will not be the last word on the meaning of “pollutant,” but it is an important victory for insurers.