For The Defense, October 2010 - DRI Today

DRI—The Voiceof the Defense BarVol. 52, No. 10 October 2010PresidentCary E. HiltgenOklahoma City, OklahomaImmediate Past President Marc E. WilliamsHuntington, West VirginiaPresident-Elect1st Vice President2nd Vice PresidentSecretary-TreasurerExecutive DirectorR. Matthew CairnsConcord, New HampshireHenry M. SneathPittsburgh, PennsylvaniaMary Massaron RossDetroit, MichiganCharles H. ColeChicago, IllinoisJohn R. KourisDeputy Executive Director Tyler HowesEditor-in-ChiefManaging EditorEditorProduction ManagerContributing EditorsAdvertisingRepresentativeDonald J. HirschJay LudlamMichelle ParriniJulia BergerudMarge MotluckCheryl PalombizioLaurie P. MokryFor The Defense, October 2010, Vol. 52, No. 10 (ISSN0015-6884). Copyright ©2010, DRI. All rights reserved.Published monthly by DRI, 55 West Monroe Street ~Suite 2000, Chicago, Illinois 60603. Telephone: (312)795-1101. Fax: (312) 795-0747.Periodicals postage paid at Chicago, Illinois, and atadditional mailing offices. Subscription price is $65.00per year, and, for DRI members, is included in the membershipdues. Individual copies are $7.00 for DRI membersand $12.00 for non-members, plus postage andhandling.POSTMASTER: Send address changes to For TheDefense, DRI, 55 West Monroe Street ~ Suite 2000, Chicago,Illinois 60603.Correspondence and manuscripts should be sent tothe Editor.All views, opinions and conclusions expressed in thismagazine are those of the authors, and do not necessarilyreflect the opinion and/or policy of DRI and itsleadership.IN THIS ISSUE1 On The RecordAll Good Things… Tremendous Effort and Accomplishment in a Milestone YearBy Cary E. Hiltgen, DRI President2 DRI NewsOklahoma City Hosts Meeting of DRI Leaders from theSouthwest • Members on the Move • DRI Calendar6 Affiliates in ActionAnnouncing Sister Org Leadership for 2010–2011 • 2010Updates from Oregon, Rhode Island Defense OrgsCELEBRATING 50 YEARS10 DRI’s History in the ProfessionA Past (and Future) Dedicated to Protecting Your InterestsBy R. Matthew CairnsDRUG AND MEDICAL DEVICE12 From the ChairTaking Stock in the Workof Some of the Best TrialLawyers in the CountryBy Jack B. “Skip” McCowan15 Sacking the Monday Morning QuarterbackTackling Hindsight Bias inFailure-to-Warn CasesBy Loren H. Brown, Daniel J. Cooperand Christopher G. Campbell20 What Happened to Rule 11?Baseless Pleadings andProduct IdentificationBy Amy K. Fisher27 Sales Reps in the ORThe Hunt for Non-Preempted ClaimsBy Edward W. Gerecke and David J. WalzGOVERNMENT ENFORCEMENT AND CORPORATE COMPLIANCE56 From the Chair69 The Affect of Government AwarenessGood Governance Is atImplied Certification andthe Heart of Today’s Focus the False Claims ActBy David L. DouglassBy Matthew L. Bevilleand Winifred M. Weitsen58 FCPA Enforcement ActionsManaging Risks in the73 Fraud Enforcement andGlobal MarketplaceRecovery Act of 2009By Jonathan N. RosenBanking Institutions Are Victims TooBy Robin Beardsley Mark65 “Corporate Miranda”Not Just for Criminal LawyersBy William J. Powell and Emily M. Renzelli78 Writers’ CornerBuild a Better Brief: Tips for Persuasive Legal WritingBy Kristen E. Dennison80 Think GloballyInternational Manufacturers Beware: Foreign Evidence in U.S. Product Liability LawBy Christopher T. Miller and William Seth Howard81 Defense Ethics and ProfessionalismAggregate Settlements: What They Are and What They Aren’tBy Mark J. Fucile88 Advocates and New Members32 Staying in the GameE-Discovery with a Live ProductBy Kelly E. Jonesand Daniella D. DaCunzo38 How Do I Warn Thee?Let Me Count the WaysConsumer-DirectedPharmaceutical WarningsBy Eric A. Paine43 Statutory Consumer Fraud Act ClaimsEnforcing the Reliance RequirementBy Jeffrey A. Holmstrand49 Crime and PunishmentHandling Litigation WhenCriminal Activity Is InvolvedBy Kai Peters and Andrew Cary

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D R I N E W SMembers on the MoveThe Indianapolis law firm Lewis WagnerLLP is pleased to announce four of itsattorneys who were recently selected bytheir peers for inclusion in The Best Lawyersin America 2011. Congratulations toDina M. Cox (professional malpracticelaw), Thomas C. Hays (alternative disputeresolution and personal injury litigation),John C. Trimble (insurance law and personalinjury litigation) and Robert F. Wagner(personal injury litigation).Christopher Scott D’Angelo, a partnerin the Philadelphia office of Montgomery,McCracken, Walker & Rhoads, LLP,was the moderator for the program, “TheLatest Trends in Europe and Their Implicationsin the U.S.,” that was presented atthe International Association of DefenseCounsel’s Annual Meeting in Barcelona,Spain, in July. The program examined thelatest trends and projections in Europeanlaws, how to influence their path, and theimplications for business, liability and lit-On The Record, from page 1nization and its individual members areinvaluable to me and will not be forgotten.Even though my term may be coming to aclose, I know that I still have so much moreto learn going forward. Because this is justanother beginning.It has been a pleasure working with allof the wonderful people at DRI—the executivecommittee, board of directors, committeeleaders and especially the staff. I willnever forget all the life lessons and opportunitiesthat I have gained along the way.You all have truly made this a milestoneyear for all of DRI. onigation in the European Union and theUnited States.Picadio Sneath Miller & Norton, P.C., ispleased to announce the expansion of itsPatent Prosecution and Intellectual PropertyGroup with the addition of Robert L.Wagner. Dr. Wagner holds a Ph.D. in AppliedPhysics and his practice will focus oncomplex commercial and intellectual propertylitigation. Dr. Wagner is an accomplishedlitigator with a strong backgroundin matters involving technical issues, suchas patent infringement and trade secret litigationin the computer, electrical and mechanicalfields. He is licensed to practicebefore the United States Patent and TrademarkOffice, where he will prosecute patentson behalf of clients in the optical, electrical,computer and mechanical fields.Two lawyers from the Saint Louis, Missouri,law firm of Sandberg Phoenix & vonGontard, P.C., were recently selected bytheir peers for inclusion in The Best Lawyersin America 2011. G. Keith Phoenix islisted in the areas of commercial litigation,medical malpractice law, personal injurylitigation, and product liability litigation.Peter von Gontard is listed in the areas ofmedical malpractice law, personal injurylitigation and product liability litigation.Patrick Chavez, a partner of WilliamsVenker & Sanders in Saint Louis, Missouri,was recently named as an “Up and ComingLawyer” by Missouri Lawyers Weekly.In conjunction with the recognition, Mr.Chavez will be honored at a reception onSeptember 22, 2010, along with other Missourilegal professionals named to the list.“Up & Coming Lawyers” recognizes thestate’s premier lawyers who are youngerthan 40 years old (or within their first10 of practice) and are making a positivedifference in the quality of justice, whileexemplifying the highest ideals of the legalprofession.The law firm of Gallivan, White & Boyd,P.A., announced that H. Mills Gallivan hasbeen elected as a director of the Federationof Defense & Corporate Counsel (FDCC),an international organization composedof leaders in the legal community. FDCCmembers have been judged by their peersto have achieved professional distinction,and are committed to promoting knowledge,professionalism, fellowship and thecause of justice. Mr. Gallivan will serve atwo-year term as a director of the FDCC,beginning this year.The global law firm of Thompson &Knight LLP is pleased to announce thatScott P. Stolley has been reappointed toserve a three-year term on the PatternJury Charge—Business, Consumer, andEmployment Committee for the State Barof Texas. This will be his second term withthe committee, having previously servedfrom 2007–2010. Mr. Stolley, who servesas the leader of the firm’s Appellate andSupreme Court Practice Group, is residentin Thompson & Knight’s Dallas office.He focuses his practice on the representationof appellants and appellees in stateand federal courts, including evaluationof appeals, drafting briefs, and arguingcases to appellate courts. His practice alsoincludes evaluation of insurance coverageissues for policyholders. Mr. Stolley is apast chair of DRI’s Appellate AdvocacyCommittee and current chair of its AmicusCommittee.Crowell & Moring LLP is pleased toannounce the addition of partner KevinC. Mayer to the firm’s Torts Group. Basedin the firm’s Los Angeles office, Mr. Mayerbrings more than 25 years of litigation andtrial experience to the firm’s national tortspractice, where he will represent clients asnational coordinating counsel and handlea wide range of complex commercial andmass tort litigation, including construction,toxic tort, OSHA, environmental, andproduct liability litigation.Faegre & Benson LLP is pleased toannounce that Joseph M. Price, a partnerin the firm’s Minneapolis office, hasbeen selected by PL LAW 360, from morethan 1,000 nominees, as one of the “TenMost Admired Product Liability Lawyersin the United States.” Mr. Price practicesin Faegre & Benson’s product liability practiceand is a founder of the firm’s mass tortand pharmaceutical and medical devicepractices. He is a member of the DRI Drugand Medical Device Committee’s steeringcommittee.Marge Motluck4 n For The Defense n October 2010

CalendarUpcoming eventsof interest toDRI members andother defense lawyersFor more informationabout any of theseevents, call DRICustomer Service at(312) 795-1101,or visit our website atwww.dri.org.October 20–24 DRI Annual Meeting San DiegoNovember 4 The A-B-C’s of §1983: Back to the Basics of Municipal Liability WebcastNovember 4–5 Fire and Casualty ChicagoNovember 11–12 Asbestos Medicine San DiegoNovember 18–19 Corporate Conduct: Emerging Sources of Criminal and Civil Liability London, EnglandAcross Europe for Corporations and Their Directors and OfficersNovember 18–19 Insurance Coverage and Practice New York CityNovember 18–19 Best Practices for Law Firm Profitability New York City2011January 26–28 Civil Rights and Governmental Tort Liability New OrleansFebruary 10–11 Toxic Torts and Environmental Law New OrleansMarch 10–11 Appellate Advocacy OrlandoMarch 10–11 Medical Liability and Health Care Law San FranciscoMarch 23–25 Damages Las VegasApril 6–8 Product Liability Conference New OrleansApril 27–29 Life, Health, Disability and ERISA Claims BostonMay 5–6 Drug and Medical Device Litigation ChicagoMay 18–20 Employment Law Scottsdale, AZOctober 26–30 DRI Annual Meeting Washington, DCNovember 10–11 Asbestos Medicine Las VegasDRI CalendarInvestigative Technologies Inc.TMForensic Engineering • Expert TestimonyAccident ReconstructionAreAs of expertise:• Biomechanical• Civil/structural• Construction• Consumer products• Disaster• electricalengineering• environmentalengineering• fire investigation• Human factors• industrial Machinery• Marine• Material sciences• Mold• safety/osHACompliance• slip & fall• VehicularVisit us online:• search periodicals• immediate online help• View expert profiles• press room of eventswww.cedtechnologies.com 1-800-780-4221Washington • Cleveland • Jacksonville • New York • Ft. Lauderdale • ChicagoFor The Defense n October 2010 n 5

A F F I L I AT E S I N A C T I O NAnnouncing Sister Org Leadership for 2010–2011This past April, the Associationof Defense TrialAttorneys (ADTA) heldits 2010 annual meetingin historic Boston at theBoston Marriott Copley.During the meeting, the organization’snew leaders for 2010–2011 were introduced.President: Francisco J. Colón- Pagán,Colón & Colón, PSC, San Juan, Puerto Rico.Mr. Colón- Pagán is the managing shareholderof Colón & Colón, PSC, a boutiquedefense firm in San Juan, Puerto Rico. Hehas tried many cases in local and federalcourts over a span of 29 years, specializingin product and premises liability, financiallines and insurance coverage. Mr. Colón-Pagán is a current member of the FDCCand the Trial Attorneys of America, and isthe Latin America Subcommittee Chair forDRI’s International Law Committee. He isalso a fellow of the International Society ofBarristers and a Puerto Rican Bar Associationdelegate to the ABA House of Delegates.President Elect: George M. Walker,Hand Arendall, LLC, Mobile, Alabama. Mr.Walker has a general civil litigation practicewith emphasis on defense of productliability and toxic tort cases. He is a memberof DRI’s Medical Liability and HealthCare Law, Product Liability, Toxic Tortsand Environmental Law, and Trial TacticsCommittees. He is also a sustainingmember of the Product Liability AdvisoryCouncil, participating in its Amicus CuriaeProgram, and a member of the LitigationFrancisco J. Colón-Pagán, George M. Walker, Stephen J. Heine, Robert E. Tait, Matthew W. Baileyand F. Daniel Balmert.Section of the American Bar Association.Vice President: Stephen J. Heine, HeylRoyster, Peoria, Illinois. Mr. Heine hastried cases throughout Illinois in the areasof trucking, railroad, automobile, professionalliability, product liability, constructionand first-party property insuranceclaims. He is the chair of his firm’s PropertyInsurance Practice Group. Mr. Heine isa past president of the Illinois Associationof Defense Trial Counsel and a former DRIstate representative for Illinois.Immediate Past President: Robert E.Tait, Vorys, Sater, Seymour, & Pease, LLPColumbus, Ohio. Mr. Tait is a partner in hisfirm, specializing in toxic tort, employerliability and product liability defense. Hehas conducted well over 100 jury trials andargued cases before numerous appellatecourts throughout the country. Mr. Tait isa member of DRI’s Board of Directors anda fellow of the Ohio State Bar Foundation.Treasurer: Matthew W. Bailey, Walshand Bailey, Baton Rouge, Louisiana. Mr.Bailey is the owner/managing partner ofhis firm. His areas of practice include auto/trucking defense, coverage and bad faithdefense, product liability and premisesliability. He is a member of the FDCC,DRI, the Louisiana Association of DefenseCounsel and the Louisiana Bar Association.Secretary: F. Daniel Balmert, Vorys,Sater, Seymour, & Pease, LLP, Akron, Ohio.Mr. Balmert is the managing partner of theVorys Akron office and practices in the areasof general litigation, product litigation, employmentlaw, and workers’ compensation.Founded in 1941, the ADTA is a non-profitprofessional association established to advancethe principles of courtroom fairness, justice andfellowship. Its more than 700 members areeach uniquely qualified to defend their clientsin our nation’s courtrooms. ADTA invites onlyone defense trial attorney to be its prime memberper one million in population for each city,town, or municipality across the United States,Canada, and Puerto Rico. An ADTA prime membershipis, in essence a statement of the highregard in which that defense trial attorney isheld by his or her peers in the defense trial barof their city and state or province. Visit the ADTAat www.adtalaw.com.The Federation of Defense &Corporate Counsel (FDCC)announced its 2010–2011 executiveofficers at the organization’sannual meeting at the Westin Arabellaparkin Munich, Germany, July 24–31, 2010.F. Thomas Cordell, Jr., is the new FDCCpresident. Mr. Cordell is a partner with Frailey,Chaffin, Cordell, Perryman, Sterkel &6 n For The Defense n October 2010F. Thomas Cordell, Jr., Michael I. Neil, Edward M. Kaplan andMichael T. Lucey.McCalla, LLP, in Chickasha, Oklahoma.Ninety-five percent of Mr. Cordell’s practiceis devoted to litigation, and he has a significantfederal trial practice in the areas of insurancelaw, product liability, personal injury(defense and plaintiff) and oilfieldlitigation. He has been a member ofDRI since 1984. Mr. Cordell earnedhis law degree from the Universityof Idaho College of Law.Michael I. Neil, senior partnerand trial lawyer with Neil, Dymott,Frank, McFall & Trexler APLCin San Diego, is now the FDCCpresident- elect. Mr. Neil specializesin civil litigation with emphasis inprofessional liability, products liability,government entity and wrongful terminationclaims, as well as business litigation.He is a past president of the Association of

A F F I L I AT E S I N A C T I O NSouthern California Defense Counsel andholds the rank of diplomate in the AmericanBoard of Trial Advocates. Mr. Neil isone of only 20 practicing attorneys in SanDiego inducted into the prestigious AmericanCollege of Trial Lawyers.Edward M. Kaplan, a member of Sulloway& Hollis, PLLC, in Concord, NewHampshire, is the newly elected FDCCSecretary-Treasurer. In his practice, Mr.Kaplan represents corporations, businesses,school districts, universities, andhospitals in all areas of labor and employmentlaw, products and professional liability,and related litigation. He is admittedto practice before all courts in New Hampshire,the U. S. Supreme Court, and the U.S.Court of Appeals in the First and FourthCircuits. Mr. Kaplan is a frequent lectureron employment and trial issues and hasauthored materials on sexual harassment,ADA, privacy in the workplace, and relatedemployment matters.Michael T. Lucey, a partner with Gordon& Rees LLP in its San Francisco office,now assumes the FDCC position of boardchair. Mr. Lucey is a partner with Gordon& Rees LLP in its San Francisco office. Heserved as the managing partner of the firmfor eight years; during that period he led thefirm through a transition to a national platform.Mr. Lucey has specialized in employmentlaw and related litigation. He has trieda number of high profile employment casesin California and has extensive trial experiencein both state and federal court. Mr.Lucey is a past board member of the Associationof Defense Counsel of Northern California.He is also a member of DRI.Founded in 1936, the Federation is an internationallegal organization established to furtherthe principles of knowledge, justice andfellowship. Its 1,400 members include experiencedattorneys in private practice who specializein civil litigation defense, as well asgeneral counsels, risk managers and insuranceclaims executives. Visit the Federation at www.thefederation.org.At its Annual Meeting in July,held in Barcelona, Spain, the InternationalAssociation of DefenseCounsel (IADC) electedJoseph W. Ryan, Jr., as Presidentfor the 2010–2011 term. Mr.Ryan is a partner with Porter Wright Morris& Arthur LLP in Columbus, Ohio. Hehas developed considerable proficiency inthe area of civil litigation, with an emphasison complex professional liability, wrongfuldeath, intellectual property, and commerciallaw cases. He tries cases in both stateand federal courts. He has represented Columbus-basedAmerican Electric Powerand its subsidiaries for more than 25 yearsand has handled electrical contact cases,breach of contract cases and an array ofutility-based litigation. He also representsclients throughout the country on trademark,service mark and trade dress claims.William J. Perry, Senior Partner of CarterPerry Bailey LLP in London, England, isthe new President-Elect. He is the first non-United States lawyer in history to be electedto this prestigious position in the Association.Mr. Perry’s practice centers on insuranceand reinsurance coverage issues,litigation and arbitration as well as adviceon policy wordings. He has practiced in thefield of insurance and reinsurance since theearly 1980s and acts for clients in a wide varietyof jurisdictions. He has been a LeadingIndividual included in Chambers Guide toJoseph W. Ryan, Jr., William J. Perry, James M. Campbell, Connie Lewis Lensingand Joseph E. O’Neil.the UK Legal Profession from 2001 to date,and he is recognized by the market andthat directory as an expert in the specialistfield of fine art insurance and also in Londonmarket property/casualty and film financedisputes. In reinsurance, he handlesa wide range of disputes, whether facultativeor treaty, in both litigation and arbitrationand handled the 2009 landmark Houseof Lords reinsurance case AGF and Wasa v.Lexington for successful appellants AGF. Mr.Perry is also a member of the Association ofContentious Trust and Probate Solicitors.James M. Campbell is now the ImmediatePast President. Mr. Campbell, presidentof Campbell Campbell Edwards & ConroyProfessional Corporation in Boston,focuses his practice on civil litigation andthe defense of product liability, toxic tort,pharmaceutical and professional liabilitymatters in New England and throughoutthe United States. One of the firm’sprincipal trial attorneys, he is responsiblefor supervising and coordinating litigationthroughout New England and otherregions of the country. Mr. Campbell servesas national, regional and local trial counselfor a variety of major national andinternational corporationsand insurers.He has tried morethan 100 cases in 13states. He is a fellowof the American Collegeof Trial Lawyersand a diplomate ofthe American Boardof Trial Advocates.Other officers selected at the meetingwere Connie Lewis Lensing, Vice Presidentof the Legal Department at FedExExpress in Nashville, Tennessee, who isthe new IADC Vice President of Corporate,and Joseph E. O’Neil, shareholder ofLavin, O’Neil, Ricci, Cedrone & DiSipio inPhiladelphia, who is now IADC Treasurer-Elect. Newly elected to the IADC Boardof Directors are Daniel K. Cray of CrayHuber Horstman Heil & VanAusdal LLCin Chicago, Fred M. “Tripp” Haston III ofBradley Arant Boult Cummings LLP in Birmingham,Alabama, and Susan C. Roneyof Nixon Peabody in Buffalo, New York.The International Association of DefenseCounsel has served a distinguished membershipof corporate and insurance defense attorneyssince 1920. Its activities benefit the morethan 2,400 invitation- only, peer- reviewed internationalmembers and their clients throughnetworking, education, and professional opportunities,and also benefit the civil justice systemand the legal profession. The IADC takesa leadership role in many areas of legal reformand professional development. Visit the IADC athttp://www.iadclaw.org/.For The Defense n October 2010 n 7

A F F I L I AT E S I N A C T I O N2010 Updates from Oregon, Rhode Island Defense OrgsOR EG ONThe Oregon Association of Defense Counsel(OADC) held its annual convention inJune in scenic Sunriver, Oregon. The conventionwas a great success, drawing 145attorneys from around the state. MultnomahCounty Judge Michael McShane’spresentation on tips for conducting crossexaminationat trial began the program,followed by an Oregon appellate law updateoffered by Oregon Court of Appeals JudgeDavid Brewer and Dan Lindahl of the LindahlLaw Firm. Bruce Schafer of the OregonState Bar Liability Fund providedinsight for attorneys on navigating the linebetween non-disclosure at trial and conductconstituting misrepresentation. U.S.District Court Magistrate Judge AndrewWistrich of California’s Central Districtexamined decision-making by judges, lawyersand litigants in light of contemporarypsychological research and Judge Wistrich’sown empirical evidence. A panelof Oregon Circuit Court Judges (MichaelMcShane, Janice Wilson, Henry Kantorand Karsten Rasmussen) then offered alocal perspective on this topic. Breakoutsessions included a discussion on the “vanishing”civil jury trial, defense of productliability cases, cross-examination ofexperts, mediating employment disputes,and arguing motions in limine, as well as apresentation by local design firm on understandingdesign drawings and constructioncontracts encountered in litigation.This year’s annual convention alsoincluded OADC’s first Past Presidents’meeting, as well as its first meeting of practicegroup leaders. The weekend’s entertainmentincluded a golf tournament, a funrun for attendees and family members, andkaraoke on Saturday night.On July 21, 2010, the OADC offered atwo-hour webinar titled “Handling theCase Involving a Medicare Beneficiary:Legal Nuts & Bolts—Case Resolution,Negotiation & Settlement.” The webinarwas presented by Mary Re Knack of WilliamsKastner & Gibbs. Over 30 attorneysattended. The OADC held its 2010 DefensePractice Academy on September 24, 2010,in Portland. Chairs for this year’s program8 n For The Defense n October 2010Oregon Defense Lawyers Association pastpresidents met this year as a part of the organization’sannual convention. Among thepast leaders attending were Stephen Rickles(2002), Frank E. Lagesen (1995) and StevenBlackhurst (2001).Outgoing Defense Counsel of Rhode Islandpresident Robert J. Quigley, Jr. and Brooks R.Magratten, incoming DCRI president and DRINortheast Regional Director.were Gordon Welborn of Hoffman Hart &Wagner (Redmond) and Dan Schanz ofSpooner & Much (Salem). The programwas designed for attorneys with minimaltrial experience. Trial and appellate judgesexplained the nuts and bolts of trial, andexperienced trial lawyers demonstratedbasic skills, from jury selection to closing.The OADC’s fall seminar will take placeon November 5, 2010, in Portland, chairedby David Auxier, Yturri Rose LLP (Ontario).Finally, at its April meeting, the OADCBoard of Directors voted to approve aDiversity Statement asserting the organization’scommitment to fostering diversityin the Oregon defense bar.R HODE ISL A N DThe Defense Counsel of Rhode Island(DCRI) held its Annual Meeting on June23, 2010, at the University Club in Providence,Rhode Island. The featured speakerwas Presiding Justice of the Rhode IslandSuperior Court Alice B. Gibney, who spokeabout issues facing the superior court andthe judiciary.Brooks R. Magratten, incoming DCRIpresident and DRI Northeast RegionalDirector, extended his congratulations tooutgoing president Robert J. Quigley, Jr.,on his successful tenure in office. A plaqueexpressing appreciation to Mr. Quigley wasalso presented by DCRI Executive CirectorMichael B. Isaacs.The officers for 2010–2011 are PresidentBrooks R. Magratten of Pierce Atwood LLP,President-Elect Howard A. Merten of PartridgeSnow & Hahn LLP, Vice PresidentFaith A. LaSalle of the Law Offices of FaithA. LaSalle, Secretary Rebecca McSweeneyof Jackson Lewis LLP, and Treasurer AmyBeretta of the Law Offices of Amy Beretta.New directors include Bruce J. Balon of theLaw Office of Michael D. Lynch, ThomasR. Bender of Hanson Curran LLP, Katy A.Hynes of Adler Pollock & Sheehan P.C.,John F. Kelleher of Higgins, Cavanagh &Cooney, LLP, Holly R. Rao of Olenn &Penza, LLP, and Michael J. Reed, Jr. of theLaw Offices of Michael J. Reed, Jr. Continuingon the board of directors are RobertJ. Quigley, Jr. of McKenney, Quigley, Izzo& Clarkin (Past President), Kelly MichelsSweeney (DRI State Representative), RobertP. Corrigan of Hines & Corrigan, Inc., JoelK. Gerstenblatt of Gerstenblatt Law Offices,Ltd., James V. Murray of the Law Offices ofJames V. Murray, and William F. White ofWhite, Carlin & Kelly, P.C.On August 16, 2010, the Defense Counselof Rhode Island hosted a “Night at thePawtucket Red Sox” for DCRI members,families, friends and colleagues. This is thethird year that DCRI has held this socialevent for the membership. The evening featureda barbeque and tickets to the game.

DRI is a community like no other. It’s a place whereinnovation and honesty drive justice and leadership.DRI is a community where the sharing of bestpractices demonstrates knowledge and drivesbusiness opportunities. DRI is a community forattorneys like you.Get involved.w w w . d r i . o r g

C E L E B R AT I N G 5 0 Y E A R SDRI’s History in the ProfessionA Past (andFuture)Dedicatedto ProtectingYour InterestsBy R. Matthew CairnsWhen we think about DRI today or talk about it with colleagues andpotential members, what do we say? Of course we emphasize our goldstandardeducation programs, the opportunity to work with the country’sbest defense lawyers in one of our 29 substantive committees, andFor The Defense, a premier journal of cutting edgelegal articles. But what do we say about the foundationon which the modern DRI is built? What do weknow about the last 50 years and what do the next 50years hold for us?As the organization’s full name describes, DRIbegan as a think tank, an “institute” designed toaddress cutting edge issues confronting the defenseand insurance bars in the 1960s. Calls for a nationalsystem of no-fault liability led DRI to produce publicationsdesigned to retain and improve the adversaryjuryprocess of the tort liability system. Principles toimprove the system were outlined in Justice in CourtAfter the Accident (1968) and then applied to producean 11-point position paper, Responsible Reform—AProgram to Improve the Liability Reparation System(1969). Our action program had broad-based supportfrom the national defense bar as well as over 65 stateand local defense organizations and a host of industrygroups. Through speeches, publicity, articles, anddistribution of Responsible Reform to defense lawyers,national and state legislators, and others interested inthe no-fault debate, we successfully defeated the federaleffort and promoted reform state-by-state throughthe generation of model statutes and regulationsdrafted by our Legislative Committee. You use manyof those statutes every day in your current practices.The next decades saw DRI continue its fight againstno-fault insurance, particularly in the automobileinsurance field. But the organization also broadenedits national impact by taking on the product liabilityfield, issuing a “Products Liability Position Paper,”n R. Matthew Cairns is a shareholder-director of Gallagher, Callahan & Gartrell PC in Concord, New Hampshire, where he representsthe interests of individuals, insurers, manufacturers, transportation and other companies in diverse commercial, complexand traditional litigation matters in all state and federal courts and state agencies. Currently, DRI’s president- elect, Mr. Cairns willbecome the organization’s 48th president at the 2010 Annual Meeting later this month in San Diego.10 n For The Defense n October 2010

YEARS50 CELEBRATINGLEADERSHIP ■ EXCELLENCE ■ EDUCATIONwhich contained 13 proposals for legislativereform and sample statutes. The basicmessage espoused by DRI was that a showingof negligence or some other level offault must be required before a productmanufacturer, distributor, or retailer couldbe held liable for injury suffered by a productuser.Today’s medical malpractice crisisreally is not new, at least not to DRI. In the1970s, DRI was already concerned aboutan increase in claims, disproportionateverdicts and rising premiums, which weredriving doctors from their practices. In1975, DRI sponsored a conference thataddressed the crisis in medical malpracticeinsurance, opened a dialogue between theattending groups and developed an agreementto work toward reasonable solutionsfor the benefit of the public. The conferencewas followed by preparation of the “MedicalMalpractice Position Paper,” which proposedreforms in the area without radicalsurgery. A popular monograph, Defense ofMedical Malpractice Cases, was distributedto the membership.These types of tort reform efforts andthe education of our members did not gounnoticed by the plaintiffs’ bar, which continuedto press for changes favorable totheir clients, both in the legislatures andin the courtrooms. Their campaigns metwith some success. Filing of frivolous lawsuits,abuse of the discovery process, argumentsfor liability regardless of the absenceof fault, escalating damages awards andthe increasing popularity of punitive damagesawards all were on the rise. DRI didnot sit idle. Our organization championedthe cause of sensible reform, based on thebelief that the traditional justice systemstill provided the best method for citizensto resolve their legal disputes. In 1985, DRIalong with its sister organizations formedwhat we now know as Lawyers for Civil Justiceto work on justice reform at a nationallevel, and began ramping up its amicusprogram to help create precedent favorableto our clients and practices.Of course, no discussion of DRI’s historywould be complete without mention of theNational Foundation for Judicial Excellence(NFJE). This effort developed by then-DRIPresident Richard Boyette has been one ofthe most significant efforts by the defensebar in the last decade to level the playingfield. Through its balanced approach tojudicial education, the NFJE symposiumshave educated hundreds of state appellatecourt judges on cutting edge issues that weand they face every day. The long waitinglist to attend the annual symposium andthe post program evaluations make it clearthat judges are hungry for the informationthe NFJE provides, and we are seeing theresults in decisions across the country.What do the next 50 years hold for DRIand each of us? “Only time will tell” is acliché response, and one DRI is not following.We will continue to offer the best legaleducation in the market, though it willlikely take more varied forms as technologyexpands. We will continue to identifythe cutting edge issues facing our industryand jump head first into the debate toprotect your interests. We will continue toprovide opportunities for leadership developmentthrough our committees and boardof directors. We will continue to help youin your day-to-day practice through innovationslike DRI Today (www.dritoday.org)and our legal blog. And most importantly,we will continue to be the leading organizationof lawyers defending the interests ofbusinesses, individuals and insurers in anever- evolving civil litigation landscape athome and internationally.For The Defense n October 2010 n 11

D R U G A N D M E D I C A L D E V I C EFrom the ChairBy Jack B. “Skip” McCowanWe are very lucky tobe able to say that drugand medical devicelitigation is our primaryarea of practice.Taking Stock in theWork of Some of theBest Trial Lawyersin the Country12 n For The Defense n October 2010■ Jack B. “Skip” McCowan is a partner in the San Francisco office of Gordon & Rees. He is a member of the drug and medicaldevice and commercial litigation practice groups with more than 30 years of experience. He has represented a wide variety ofcompanies in trials in federal and state courts throughout California as well as other states. Mr. McCowan also has a substantialrecord of appellate success. His leadership at the firm includes serving as chair of the Diversity Committee.

As I complete my first year as the chairof DRI’s Drug and Medical DeviceCommittee, I welcome this chanceto look back on the last 12 months totake stock in what the committee hasaccomplished, and to encourage membersof the committee to take advantage,over the next 12 months, of theopportunities to participate in the work of the committee.I invite you to join your fellow outside and in-house counselcolleagues at the 27th Annual Drug and Medical DeviceSeminar in Chicago on May 4–5, 2011. The planning is completefor what will be another outstanding program. The hallmarkof our seminar, which places it in a category with nocontenders, is our ability to offer attendees the best trial lawyersin the country who represent drug and medical devicecompanies to demonstrate their trial skills. Even the mostexperienced trial lawyers will leave our seminar with newideas for how to convince a jury of the merit of their cases.Last May in San Francisco, the 26th annual seminar tookplace as a result of the hard work of many members of theplanning committee. I cannot overstate the dedication ofthese lawyers who spent hundreds of hours on weekly conferencecalls to make sure the seminar was up to the standardsset by those who preceded me as chair of the committee.I would like to recognize the following individuals for theirwork in planning the seminar. Scott Sayler of Shook Hardy& Bacon, as the committee’s vice-chair, worked closely withJim Rogers of Nelson Mullins Riley & Scarborough, our programchair, to sift through the ideas for programs and vetthe names of potential presenters. We were lucky to have thecounsel and guidance of William Ray of Watkins & Eager,who was the Law Institute’s liaison to our planning committee.Carter Thompson of Baker, Donelson, Bearman,Caldwell & Berkowitz, with the help of Gail Rodgers of DLAPiper, did a great job marketing the seminar. Sara Gourley ofSidley Austin and Mark “Rick” Richardson of GlaxoSmith-Kline spearheaded the efforts to convince companies of thebenefits of holding panel counsel meetings at the seminar.The result of the hard work of these people was a combinationof timely presentations of the law, trial skills demonstrations,outstanding networking opportunities at DRI sponsoredreceptions and receptions co- sponsored by many law firms.Lana Varney of Fulbright & Jaworski teamed up for thefirst program with experts in trial graphics and jury researchto talk about and show examples of trial graphics that reallywork in medical device and drug cases. Tamar Halpren ofPhillips Lytle, a well-known expert on developing the “sci-For The Defense n October 2010 n 13

D R U G A N D M E D I C A L D E V I C Eence case,” provided the insights she hasgained for the best ways to defend a case onthe available science. Tamar was followed bySteve Glickstein of Kaye Scholer, who providedan in-depth presentation on the benefitsand pitfalls of seeking a change of venue.The morning session was concluded withan update on the law from Fritz Zimmer ofKing & Spalding on the increase in attackson the learned intermediary doctrine.Litigation risk assessments were expertlycovered by Sheila Anne Denton of BoehringerIngelheim and Robert Limbacherof Dechert, followed by a presentation byMark Hegarty of Shook, Hardy & Baconand Catherine Levitt of Astellas Pharmaceuticalson potential civil and criminalliability arising from clinical trials. Outstandingtrial lawyer Debra Pole from SidleyAustin followed the groundwork laidby Mark and Catherine to discuss the bestways to present clinical trial evidence to ajury. With another year of preemption decisionsbehind us following the Levine andRiegel decisions, Sandra Phillips of MorganLewis gave the audience an update on preemption.Bruce Parker of Venable then presenteda very creative program on how wemight use the history of unproven theoriesto help convince a jury that the hypothesesof plaintiff’s experts are not to be believed.The remainder of Friday’s programmingincluded outstanding presentations by VijayBondada of Pfizer and Carl Shapiro ofShapiro Rodarte & Forman on protectingyour client’s insurance coverage, by AnitaThomas of Nelson Mullins on “Hot Topics,”by Tony Vale of Pepper Hamilton on defendingconsumer protection claims, by JosephEvall of Orrick Harrington & Sutcliffe onwhat product liability lawyers should knowabout a client’s patents, by Fletcher Alfordof Gordon & Rees on innovator liability,and by John Steele on the ethical issues presentedby the virtual law firm.In keeping with tradition, the YoungLawyers Blockbuster program convenedon Thursday. Kim Clancy of Amgen andEmily Turner Landry of Baker Donelsonco-chaired the program that started withCaroline Tinsley of Baker Sterchi Cowden& Rice teaching the basic concepts of epidemiologyneeded in a drug case. Otherpresenters on topics geared for newer practitionersincluded Daniella DaCunzo ofHarris Beach (e- discovery), Diana Kotler14 n For The Defense n October 2010of Morris Polich & Purdy (medical devicerecalls), Brian Wahl of Bradley Arant BoultCummings (the treating doctor as yourally), and Perry Goldman of Actelion Pharmaceuticals,Nicole Maddox of BoehringerIngelheim and Sarah Padgitt of BaxterHealthcare (drug and device litigation inthe electronic era).This year we had to turn away peoplefrom our Diversity Luncheon, held on Fridayduring the seminar, as a sold-out crowdlistened to P.D. Villareal, senior vice president,global litigation at GlaxoSmithKline.P.D. gave a lively and thought- provokingpresentation entitled “Diversity and Inclusion,Not Just a ‘Nice to Have’ for ThoseRepresenting Corporate America.” The luncheonwas made possible by the underwritingof DLA Piper, GlaxoSmithKline,Gordon & Rees, Shook, Hardy & Bacon,Sidley Austin, and Womble Carlyle Sandridge& Rice.The days in San Francisco were reservedfor top- quality CLE programs but thenights were reserved for seeing old friendsand meeting new ones. DRI sponsorednightly receptions and there were a numberof stylish receptions co- sponsored bymany law firms. Our seminar is 48 hoursof high- energy education and networking.Besides our annual seminar there aremany other ways to become involved in thework of the committee. By the time this issueis published, our committee will havepresented its Young Lawyers Primer in Chicago,which is a day-long presentation ofbasic topics that advance the skills of someonenew to the practice of drug and medicaldevice litigation. Many outstanding triallawyers, most of whom are members of thecommittee’s steering committee, share theirknowledge and experience about epidemiology,deposing a plaintiff and a treatingdoctor, basic discovery, and other importanttopics. This program has proven to bean inexpensive way for firms to get theiryoung lawyers well-trained by experiencedlawyers from around the country.There are yet other ways you can contributeto the committee’s work. Our mostrecent webcast was held on June 15, 2010.The program, featuring Ann Byrd, DLAPiper, Allan Thoen, Pepper Hamilton, andJoe Leghorn, Nixon Peabody, focused onthe subject of “Combating New EnforcementApproaches to Pursue Off-Label Promotion.”The faculty was well- preparedand the program was well- received. Thecommittee is working on a topic for a fallwebcast. Contact Vivian Quinn at NixonPeabody at vquinn@nixonpeabody.com if youare interested in being on a program.Anne Talcott of Schwabe, Williamson& Wyatt is working hard as our new editorof the Rx for the Defense newsletter. Thespring issue was published in April utilizingDRI’s new electronic format. This alloweddirect publication via email to all committeemembers, rather than just by notice andreference to the webpage, as had been thecase in the past. The April issue included articleson medical device litigation in Canada,attacks on the learned intermediarydoctrine, changes to the much abused Minnesotastatute of limitations and an analysisof the causation requirement in statutoryconsumer fraud claims. We expect our nextissue to go out in late September of this year.In 2011 we will move from semi- annual toa quarterly publication cycle. If you are interestedin writing an article for the newsletter,contact Anne at atalcott@schwabe.com.Membership in the Drug and Medical DeviceCommittee currently stands at almost1,200. Tony Brazil of Morris Policy & Purdy,our membership chair, has done an admirablejob to encourage lawyers who practicein drug and medical device litigation to notonly join DRI, but to join our committee. Ifyou are not a member, please contact Tonyat abrazil@mpplaw.com.Ed Gerecke of Carlton Fields has coordinatedthe publication of the followingcollection of articles, which are dedicatedto drug and medical device litigation. Iam sure you will find all of the articlesto be outstanding. Ed can be reached ategerecke@carltonfields.com if you would liketo write an article for a future publication.We are very lucky to be able to say thatdrug and medical device litigation is ourprimary area of the practice of law. It givesus the opportunity to work with very interestingand talented people from all cornersof the globe in many different professionsand occupations, such as physicians andother health care providers, scientists,engineers, trial consultants, and of course,our clients. As members of the DRI Drugand Medical Device Committee, our goalis to enhance this experience for everyonewho wishes to participate.

D R U G A N D M E D I C A L D E V I C ESacking the MondayMorning QuarterbackBy Loren H. Brown,Daniel J. Cooperand Christopher G. CampbellTackling HindsightBias in Failureto-WarnCasesExamining thispsychological tendencyand offering practical tipsto mitigate its effects.In his 2003 New Yorker article “Connecting the Dots,”Malcolm Gladwell resurrected the term “creeping determinism”to describe hindsight bias. Creeping determinism,he wrote, is “the sense that grows on us, in retrospect,that what has happened was actually inevitable.”Malcolm Gladwell, New Yorker, Mar.10, 2003. Psychologist Baruch Fischhofforiginally coined the term. Gladwell tells ofFischhoff’s 1960s experiment in which, onthe eve of President Nixon’s visit to China,Fischhoff asked a group of people about theprobability of the trip’s success. After Nixon’strip received accolades as a diplomaticvictory, Fischhoff went back to those samepeople and asked them to recall their ownpredictions. Fischhoff reported that, overwhelmingly,the subjects “remembered”being more optimistic than they had actuallybeen. Those who had predicted a lowlikelihood that Nixon would meet withMao, for instance, recalled after knowingthat the meeting had occurred that■ Loren H. Brown is co-chair of DLA Piper’sproduct liability practice and a partnerin the firm’s New York City office, where hespecializes in pharmaceutical and mass tortlitigation. Daniel J. Cooper is presidentof LitStrat Inc., a jury researchand litigation consulting firm basedin New York City. Christopher G.Campbell is a partner in DLA Piper’sAtlanta office, where he specializes inproduct liability litigation.they had predicted its likelihood as high.After gathering the results of this experiment,Fischhoff wrote, “The occurrence ofan event increases its reconstructed probabilityand makes it less surprising than itwould have been had the original probabilitybeen remembered.” Id.Others have recognized this phenomenonin jurors. In his book Legal Blame: HowJurors Think and Talk About Accidents,Neal Feigenson observed that in jurors, aswell as in the population generally, “hindsightbias is one of the most consistentlyreplicated effects in the cognitive psychologyliterature and has proven fairly resistantto attempts to reduce its impact.” NealFeigenson, Legal Blame 62 (APA 2001).We face the challenge of eliminating orat least mitigating hindsight bias in jurorsas defense lawyers in failure- to- warn cases.Whether you call it creeping determinism,Monday morning quarterbacking, or simplyhindsight bias, as we will here, this psychologicaltendency presents a significantobstacle in failure- to- warn cases. This isparticularly true in pharmaceutical productliability cases. Jurors have been knownto hold manufacturers to standards of nearomniscience when drugs or devices havebeen accused of causing or contributing tohorrific injuries or deaths.For The Defense n October 2010 n 15

D R U G A N D M E D I C A L D E V I C EThis article has two purposes. The firstis to examine hindsight bias in pharmaceuticalfailure- to- warn cases and other legalcontexts. The second is to offer practicaltips to mitigate the effects of hindsight bias.Hindsight Bias in Failureto-WarnCasesFailure-to-warn cases invite hindsight bias.It is critical at the outsetof a case, or as early aspossible, to develop adefense story that willtake jurors back in time.16 n For The Defense n October 2010To establish a failure- to- warn claim in apharmaceutical product liability case, aplaintiff must prove that the defendant“knew or should have known” that thedrug in question was dangerous but failedto adequately warn either the medical communityor the public. See, e.g., Anderson v.Owens- Corning, 810 P.2d 549 1002–1003(Cal. 1991); Wolfgruber v. Upjohn Co., 423N.Y.S.2d 95, 97 (N.Y. App. Div. 1979). This“knew or should have known” standardopens the door to hindsight bias, bothwhen jurors consider liability and whenplaintiffs bring up after- the- fact- of- injuryremedial measures to establish liability.Of the two aspects of the standard, the“knew” aspect or the “should have known”aspect, it is “should have known” thatmostly leads to hindsight bias. Under the“knew” aspect of the standard, the questionis what the company actually knew atthe time of a plaintiff’s injury. This raisesan objective question. The issue turns onactual facts—such as laboratory data orclinical trial results—that show what thecompany’s state of knowledge was duringthe time in question.In contrast, the “should have known”part of the standard is subjective. As a result,there is great opportunity for hindsightbias to creep in and affect the interpretationof the facts. Under the “should have known”standard, the question is not what a companyknew, but what it might have known ifit had simply done more. In some cases, thisprovokes a moral judgment. With the introductionof morality, the question shifts fromwhether a company should have known ofthe risk to whether the company is “good”or “bad.” Jurors perceive that a “good company”would have done more studies beforeputting a drug on the market, and a “badcompany” would not. Because many jurorsalready have a negative view of the pharmaceuticalindustry, they may surrenderto hindsight bias and, on the basis of currentknowledge, find that a defendant is abad company that should have done moreto protect patients.Of course, regardless of the standard,the facts of almost any failure- to- warn casecan invite hindsight bias. Take this classicscenario: (1) a plaintiff is injured while takinga medication; (2) after the injury, dataemerges showing that the medication maycause the injury at issue; and (3) the FDAapproves a revised label—which was not ineffect when the plaintiff took the medication—warningnew patients that the injuryin question is a possible side effect.Under these circumstances, it is not difficultto understand how hindsight biascan play a role in a juror’s decision- makingprocess. Jurors exist in the present in theirown here and now. At the time when theyare asked to apply the “knew or shouldhave known standard,” they are not askedto weigh the issues in the abstract but inthe face of a living, breathing plaintiffwho claims to have been injured by a defendant’sdrug. When confronted with anactual plaintiff and an actual injury, it isdifficult for jurors to put a plaintiff’s storyaside, travel back in time mentally, and explorewhat a manufacturer actually knewor should have known at that time. On topof this, most jurors view their role as unravelingthe mystery of what happened toa plaintiff, why it happened, and decidingwhom to blame. For those jurors looking forsomeone to blame, hindsight bias makes iteasier for them to hold a defendant responsibleand to find favorably for the plaintiff.Moreover, and apart from the desire tofind someone or something to attribute aserious injury to, most of us have a difficulttime discarding some of the informationthat we have when we want to make a“correct” judgment. As Fiegenson noted,“jurors are inclined to take into accountwhatever evidence they think will helpthem reach a substantively correct result.”Feigenson, at 105. As a result, jurors tendto resist “debiasing” efforts. Even whenlegal instructions direct jurors to assessthe reasonableness of conduct from thetime before or at the time of harm, jurorsare more likely to take the ex post perspectivebecause this allows them to useall the information that they have at hand.According to Fiegenson, the psychologicalresearch teaches that jurors are morelikely to think, “If I know the outcome ofthe parties’ conduct, why make believe thatI don’t? The outcome is what really happened,and taking it into account will helpme to reach a just decision about responsibilityfor what happened.” Id.The issue of hindsight bias is furthercomplicated by the doctrine of subsequentremedial measures, which can compoundhindsight bias. A common example of asubsequent remedial measure in failure- towarnpharmaceutical cases is the existenceof a revised label after the fact that warns ofthe very injury alleged by a plaintiff. Whilethe law does not expressly permit a plaintiffto present this evidence during a trial,the plaintiff likely will have many opportunitiesto present evidence of a defendant’schanges that were made to the warningafter a plaintiff suffered an injury.The law provides an example of the broadopportunity that plaintiffs can have to presentevidence of subsequent remedial measures.See, e.g., Kimberly Eberwine, Note,Hindsight Bias and the Subsequent RemedialMeasures Rule: Fixing the FeasibilityException, 55 Case W. Res. L. Rev. 633,652–55 (2005). Although prohibited generally,plaintiffs may introduce evidence ofsubsequent remedial measures if the plaintiffseeks to prove the feasibility of a measurethat the defendant could have takenprior to the plaintiff’s injury or when thedefendant claims that “all reasonable carewas being exercised at the time.” Id. at 653(citing Kenny v. Southeastern Penn. Transp.Auth., 581 F. 2d 351, 356 (3d Cir. 1978)).Evidence introduced under this exceptioncan present challenges in a failureto-warn case, as the plaintiff might usethis exception to illustrate the relative easeby which the company could have better,or more adequately, warned the plaintiff

about the potential harm that the plaintiffsuffered. After the fact the addition to thelabel seems so simple to accomplish andis typically reinforced by the prescriberand the patient testifying that the changewould have mattered to them in their riskbenefitanalysis. Even if not taken quite sofar, the plaintiff, at a minimum, readilysuggests that the absence of the remediallanguage led the patient to believe that theprior warning did not apply to him or her.“Why not say more sooner? Why not domore if it might protect even one patientfrom the harm suffered by this plaintiff?That’s what a company that places healthover profits would do, isn’t it? Why nothere?” are often questions posed by a plaintiff’scounsel for jurors hoping to lead jurorsto conclude that it was the absence ofwill and good intentions, not the absenceof knowledge, that motivated the labelingchoices of a company.With evidence of fairly simple remedialsteps, juries may be more inclined to ignoreother evidence on the extensive researchand testing results that led a company toconclude a product exhibited no evidenceof a risk, because they know that the injuryoccurred, and the company later warned ofthe potential for this injury. See, e.g., Eberwine,at 655–58 (discussing the magnifyingeffect of subsequent remedial measuresevidence on hindsight bias in juries). Thereis often no good reply to the question, whywasn’t more done sooner, why didn’t thecompany discover the risk before it wastoo late for this plaintiff? Thus, evidence ofsubsequent remedial measures directly increasesthe impact of hindsight bias in juriesbecause it supports the assumption thatthe defendant should have known of andwarned about the injury from the outset.Hindsight Bias in Other AreasThe effects of hindsight bias are not limitedto failure- to- warn cases, and it is worthtaking a moment to discuss some of thoseother areas. See, e.g., Donald S. Davidsonand Marie K.N. DeBonis, Overcoming theEffects of Hindsight Bias, N.Y. L.J. S4, Col.1, Oct. 14, 2003; see Kimberly Eberwine,Note, Hindsight Bias and the SubsequentRemedial Measures Rule: Fixing the FeasibilityException, 55 Case W. Res. L. Rev.633, 636–37 (2005). Two areas that presentvaluable examples of the effects of hindsightbias can be found in patent and negligencelaw.In patent cases, hindsight can affect theissue of obviousness. A lack of obviousnessis one of the key requirements of patentability—thatthe technology in questionwas new and not obvious at the time ofthe invention. It is not difficult to imagine,however, that once a new inventionexists, stepping back in time and assessingwhether it was obvious invites hindsightbias. For instance, in KSR Int’l Co. v.Teleflex Inc., 550 U.S. 398, 399 (2007), theU.S. Supreme Court ruled that an inventor’smodification of an existing gas pedaldesign was an obvious change and, therefore,not deserving of patent protection. Itis easy to imagine how, when similar issuescome before a jury, hindsight bias mightaffect the outcome. Once the matter comesbefore a jury, the technology actually doesexist, and the jury is made of aware ofthe process by which the technology wasinvented, thereby potentially leading manyjurors to view the invention as more obviousthan it was at the time of its development.Gregory N. Mandel, Does HindsightBias Affect Obviousness Rulings?, Nat’l L.J.S2, Col. 1, Aug. 18, 2008.Courts and counsel dealing with theseissues in patent cases have suggested waysto mitigate hindsight bias in that context.For example, in KSR v. Teleflex, the U.S. SupremeCourt discussed a “teaching, suggestionor motivation” approach in whichthe patent is only proved obvious if priorinformation reveals some motivation orsuggestion that would have generated thetechnology in question. Patent law expertshave also suggested presenting a case thatfocuses on the problem that the inventionsolved. Mandel, Nat’l L.J. S2, Col. 1, Aug.18, 2008.At the core, jurors are often most interestedin the inventor and the inventionstory. While obviousness is the subject ofexpert analysis on the issue of what a personof ordinary skill in the art would haveFor The Defense n October 2010 n 17

D R U G A N D M E D I C A L D E V I C EExperts can emphasizethat scientific knowledge isconstantly advancing andthat it is unfair to judgeyesterday’s decisions basedon today’s knowledge.known at the time, the human interest elementis what often grabs the attention ofthe jurors—going back in time with theinventor into the lab or to the researchbench, confronting a real problem, workinghard, failing, and then finally arrivingat a valuable solution. By framing a casein this way, the experts suggest that jurorsare put in a position that is more analogousto that of the inventor at the time ofthe invention, when there was only a problemto solve and no known solution. Id. Asdiscussed below, a narrative that places thejurors in the shoes of the decision makers atthe time of decision making is an approachthat can be useful in failure- to- warn cases.In negligence and medical malpracticecases, hindsight bias can actually favoreither a defendant or the plaintiff, dependingon the facts of the case. Take a typicalslip-and-fall case. If the question is oneof notice—whether the defendant knewor should have known about a particularhazard that caused the plaintiff to fall—then hindsight bias may favor the plaintiff.Jurors may view the fact that the plaintifffell as an event that the defendant shouldhave foreseen. In contrast, if the question iswhether the hazard was so open and obviousthat the plaintiff him- or herself shouldhave seen it, then hindsight bias may actuallyfavor the defendant. See Terrence W.Campbell, Commentary: Open & Obvious:Considerations of ‘Hindsight Bias,’ Mich.Law. Wkly., 2005 WLNR 24503096, Feb.14, 2005. In other words, the fact that theplaintiff fell may lead jurors to overestimatehow open and obvious the hazard truly wasat the time of the injury, when in fact with18 n For The Defense n October 2010only foresight, the same conclusion wouldnot have been drawn. Id.Tips for Tackling Hindsight BiasYou can attack hindsight bias in five particularways: (1) develop a story throughyour defense that transports jurors back intime; (2) use discovery to develop facts tofight hindsight bias; (3) use jury selectionto identify jurors susceptible to hindsightbias; (4) during a trial, attack hindsightbias head-on; and (5) carefully craft juryinstructions.Develop a Story That TransportsJurors Back in TimeJurors respond to stories. The best triallawyers live by this creed. For example,author Jim Perdue in Winning with Storiesexplains, “So, why a story? Because storiespersuade at the subliminal level by usingthe concept of vividness. They involve theaudience. The story uses the schema formatfor storing and organizing information.The story empowers the speaker by makingthe presentation easier and enlivensby making facts fun.” Jim M. Perdue, Winningwith Stories 20 (Tex. Bar 2006). Importantly,stories are easier to remember andrepeat and, as such, become an extremelyuseable tool for jurors in deliberations. Oneinvaluable lesson for defense counsel is,replace stacking facts and arguments witha compelling, integrated narrative.It is critical at the outset of a case, or asearly as possible, to develop a defense storythat will take jurors back in time to the relevantevents or decisions and put thoseevents and decisions in context. For example,if a plaintiff claims that a companyshould have known about a harmful sideeffect, then the defendant needs a narrativethat will transport jurors back to thedrug development phase and allow jurorsto see that process through the eyes of thescientists involved at the time. In viewingthe process from a company’s perspectiveand in the appropriate historical context,jurors will be less likely to fall prey to hindsightbias. In addition, it is important to tella story about a plaintiff’s conduct before,during, and after the plaintiff and a company“collided.” A plaintiff will tell onestory on the stand, but actions speak louderthan testimony, so you must focus jurors onthe plaintiff’s actual conduct at the relevanttimes. Without attacking or explicitly criticizinga plaintiff, and adopting more of anhistorian’s demeanor than an advocate’s,you need to develop and control the characterand decision- making discernment ofa plaintiff. To do that, you need to examinein great detail a plaintiff’s history.This storytelling process should startbefore discovery. When reviewing companydocuments before discovery, forinstance, find those documents that canprovide the necessary historical contextthat show a company’s state of knowledgeat a given time period. The regulatoryrecord documentation, particularly therecord documenting a medication’s label,is a good example. It is important to showjurors how the FDA’s rulings, negotiations,and directions significantly influenced acompany’s decisions and played a key rolein a label’s final content. Ultimately, theFDA is the final arbitrator of a label’s contentand a product’s status in the market.The same principle applies to companywitnesses. When talking to witnesses,make a point of distinguishing betweenwhat the witnesses know now as opposed towhat they knew at the relevant time. Hindsightbias does not only affect jurors. Thereis a very real possibility that company scientistsand safety officers may “remember”in hindsight things that may be detrimentalto your case. For example, if a new sideeffect is revealed after a drug is put on themarket, a company scientist, especially ifhe or she wants to make a name for himorherself, may claim in e-mails to peersthat he or she predicted the side effect yearsbefore the drug was approved, but that hisor her predictions were ignored. You needto take those statements seriously, anddetermining whether they are simply theproduct of hindsight bias is critical. Focuson developing the facts needed to open awindow into the decision- making processthat took place in the laboratory or theboardroom at the time in question. Thismeans spending time with witnesses todevelop the pieces of the puzzle requiredto humanize the story and make it appealingto jurors.Use Discovery to Develop Factsto Fight Hindsight BiasThe story- building process continues duringdiscovery. Depositions will offer one of

your first opportunities to develop witnesstestimony that could mitigate hindsightbias when presented to a jury. In preparingdefense witnesses, it is important tocontinue to stress the importance of historicalcontext. For instance, prepare witnessesto testify in a way that will put theirdecisions and actions in the appropriatehistorical context. Prepare witnesses toask for clarification if a plaintiff’s attorneyasks questions that do not refer to a specifictime period by asking that attorneybefore responding, “What time period areyou asking about?”, or “As of what time?”,which will prevent the plaintiff’s attorneyfrom muddling history and will help keepthe record clear.You should consider engaging in redirectexaminations of company witnesses. Thisis a proactive step through which you canbegin to lay the groundwork for a defendant’sstory. Even a short redirect examinationcan develop testimony that humanizesa witness—something a plaintiffs’ counselwill have no interest in doing—and hopefullywill show that the witness is a realhuman being whose decisions or actionswere based on the best available informationat the time.Affirmative discovery can also advancethe defendant’s story. If you can demonstratethat a plaintiff would not have heededan additional warning, even if furnished,that is another way to tackle hindsight bias.After experiencing a side effect, generallya plaintiff will claim in hindsight that heor she would not have taken a drug if heor she had been warned. The way to defeatthat testimony is to bring up other situationsin which a plaintiff ignored warningson other products, such as smoking, takingother medications with similar warnings,or using other potentially dangerousproducts. If jurors hear that a plaintiff hasa history of ignoring warnings, then theymay approach a plaintiff’s assertions withskepticism.Use Jury Selection to Identify JurorsSusceptible to Hindsight BiasJury selection is always critical to a gooddefense. When it comes to overcominghindsight bias, the jury selection processpresents an important opportunity on atleast two fronts. The first is that you canuse the selection process to begin teachingjurors the value and importance of overcominghindsight bias. Lay the issue onthe table. The saying “hindsight is 20/20”is common, and most jurors will recognizehow hindsight bias enters their dailylives. Use an example of hindsight biasto bring the issue home. From the verybeginning, tell jurors that their responsibilityas fact finders requires viewing thefacts in the appropriate historical context.If the standard is whether the manufacturer“knew or should have known” abouta particular harm, then jurors must understandat the outset that the question thatthey will decide is tied to a particular pointin time and that the benefit of hindsightshould not sway their verdict. It is difficultfor jurors to talk about abstract concepts,values, or hypotheticals. It is easier to conductvoir dire by referring to jurors’ personalexperiences. Consider questions thatallow jurors to talk with you about theirpersonal experiences of assessing past conduct.You will note eliminate hindsight biasby instruction, lecture, or argument. Makingjurors aware of hindsight bias and howit can handicap them in their efforts toreach a correct result is a big enough challengeduring voir dire. Use jurors’ personalexperiences to elicit awareness of hindsightbias, and recognize that some jurors cannotrealistically practice impartiality, regardlessof your efforts to educate them.That means that the other importantaspect of jury selection is to identify thosejurors who are unwilling or unable to setaside their biases, including hindsight bias,to render a fair and impartial verdict. Thereare a variety of techniques to gauge a juror’ssusceptibility to hindsight bias. Decidingwhich techniques you will use will dependon the facts of a case. Approaching theproblem directly it is not particularly useful.Asking jurors directly whether theywill be able to overcome hindsight biasand decide the case based on the informationavailable at the relevant time typicallywill elicit politically correct answers aboutfollowing the judge’s instructions. Themore reliable window into bias, includinghindsight bias, is to explore relevant personalexperiences. So developing voir direquestions that explore jurors’ experiencesinvolving hindsight bias can help you tointroduce questions about hindsight bias.But to be meaningful, you will need to prepareto follow up and probe. Ask a jurorhow he or she felt about that event. Did itresult in a fair decision or an unfair decision?What did the juror learn from theexperience, would he or she approach thesituation differently today, and why, or, ifhe or she would not change a thing, whynot? For example, you might ask, “Haveyou ever made a decision that, based onIt is important to insistthat the instructions includelanguage to mitigatepotential hindsight bias.information you learned later, you wishyou could take back?” Jurors who havebeen hurt by hindsight bias are more likelyto reject it than jurors who have not beenaffected by it. If you chose to use some ofyour voir dire time on hindsight bias, probedeeply enough to know whether and how ithas affected jurors in their own lives in realand concrete terms—not as a mere theoryor hypothetical.Tackle Hindsight Bias Head-OnDuring Your TrialTrial is the time to tell the story of thecase and tackle hindsight bias head-on.An opening statement should build onthe discussion of hindsight bias from juryselection but now introduce the facts of acase. As noted, the key here is to tell thestory so that jurors are transported backin time and can view the facts through theeyes of company scientists, safety officers,and executives who will testify at the trial,as well as view the plaintiff’s conduct andthe plaintiff’s case through the same lens.During the part of the trial when the plaintiff’sattorney makes the plaintiff’s case,use cross- examination when possible tochallenge hindsight bias. For instance, if aplaintiff’s experts rely on some recent datato support their opinions, in your crossexaminationpoint out that the data wasnot available to company scientists at thetime in question.Hindsight Bias, continued on page 86For The Defense n October 2010 n 19

D R U G A N D M E D I C A L D E V I C EWhat Happenedto Rule 11?By Amy K. FisherBaseless Pleadingsand ProductIdentificationThe “sue first andinvestigate later”mentality abusesthe judicial processand drains ourclients’ resources.The Federal Rules of Civil Procedure require attorneysand their clients to “stop, think, investigate, and research”before filing papers to initiate suits or to conduct litigation.Gaiardo v. Ethyl Corp., 835 F.2d 479, 482 (3d Cir. 1987).Specifically, Fed. R. Civ. P. 11 requires anattorney—or a party, personally, if unrepresented—tosign every pleading to certifythat “to the best of the person’s knowledge,information, and belief, formed after an inquiryreasonable under the circumstances:… the factual contentions have evidentiarysupport or, if specifically so identified, willlikely have evidentiary support after a reasonableopportunity for further investigationor discovery[.]” Fed. R. Civ. P. 11(b)(3).Defense lawyers and our clients generallyassume that plaintiffs first obtain the relevantmedical records and contact medicalproviders to identify relevant products beforefiling suit. See Aaberg v. ACandS Inc.,152 F.R.D. 498, 501 (D. Md. 1994) (there isa “reasonable expectation[]… that a complaintat least identify… the specific products…that, plaintiff claims, caused hisinjury”). Yet many litigants commence legalactions without conducting research touncover the necessary information to identifythose products. Perhaps counsel signedup a client over the Internet, without screeningthe records or speaking with the client.Perhaps he or she was motivated by a rapidlyrunning statute of limitations. Perhapsplaintiff’s counsel only dabbles in pharmaceuticallitigation and has no concept of thesteps necessary to identify a product. Perhapsa provider’s notes do not definitivelyidentify a product, instead only mentioninga general, or generic, product name.Regardless of the reason, Fed. R. Civ. P. 11requires more effort—either an investigationof a patient’s pharmacy and billing recordsor a discussion with the health careprovider about a product’s identity.Nonetheless, it is in vogue in the plaintiffs’bar to file claims against a slew ofpotential defendants and sort out theright ones during discovery—an approachthat completely nullifies Fed. R. Civ. P.11(b), which mandates that before initiatinga suit, a plaintiff should engage inan “inquiry reasonable under the circumstances”to find evidentiary support for allfactual contentions. Fed. R. Civ. P. 11(b)(3). Just this year, a California district court20 n For The Defense n October 2010■ Amy K. Fisher is a partner in the Indianapolis office of Ice Miller LLP. She serves as national, coordinating, and local counselfor a variety of pharmaceutical and device manufacturers in nation- wide, complex multi- district litigation involving mass-tort andclass action product liability claims. She was recently named a 2010 Indiana Super Lawyers Rising Star. Ms. Fisher is a memberof DRI.

expressly held that those tactics ran afoulof Rule 11 when it rejected the plaintiffs’request for leave to conduct further discoveryin an attempt to amend their complaintto identify the specific medications at issueand the responsible defendants:Despite alleging no factual basis for theirclaims against [defendant] and indeedadmitting that they have none, Plaintiffsrequest discovery in order to identify theanesthetic used, arguing that discoverymay reveal which one of the eight anestheticmanufacturer defendants theysued, if any, manufactured the anesthetic[plaintiff] received. However, a plaintiffwho fails to meet the pleading requirementsof Rule 8 is not entitled to conductdiscovery with the hope that it mightthen permit her to state a claim. Further,allowing plaintiffs to file first and investigatelater, as Plaintiffs here would havedone, would be contrary to Rule 11(b),which mandates an “inquiry reasonableunder the circumstances” into the evidentiarysupport for all factual contentionsprior to filing a pleading.Timmons v. Linvatec Corp. et al., 263F.R.D. 582, 585 (C.D. Cal. 2010) (citationsomitted).As mass tort litigation has blossomedover the years, so have the number of casesin which product identification is an issue.Sadly, our pharmaceutical industry clientscan spend enormous amounts of time andmoney defending cases in which the productsat issue were not theirs. For our clientsit is crucial to quickly and inexpensivelydispose of these ostensibly frivolous caseswhile preventing future filings. The federalrules specifically disallow baseless pleadingsand, courtesy of Twombly and Iqbal,Federal Rules of Civil Procedure 8 and 12now have some teeth. There are several approachesdefense counsel can take in casessuch as these. Client goals and case- specificfacts dictate which strategy is optimal.Typically, when product identificationis an issue, a complaint’s lack of specificitywill range from identifying only a classof products to a compound name or varioustrade names. Multiple manufacturersare often named as defendants, clearly indicatingthat counsel has not conclusivelyestablished product identification and thatfurther investigation or motion practice iswarranted. If a complaint names only onedefendant but fails to identify the productby trade name, while one could assumethat the product has been identified, thecomplaint may still fail to meet pleadingrequirements. In Haskins v. Zimmer HoldingsInc., 2010 WL 342552 (D. Vt. Jan. 29,2010), the plaintiffs identified the anestheticat issue by compound name only—bupivacaine.The plaintiffs argued that their complaintsufficiently identified the product andproper defendant because the defendantwas the only bupivacaine manufacturernamed. The plaintiffs were claiming damagecaused by the administration of bupivacaine,and the relevant operative reportclearly identified the defendant’s product bybrand name. Id. at *1. The court disagreed:Plaintiffs’ arguments reveal a fundamentalmisconception of the pleadingrequirements. A document not attachedto the complaint cannot save deficientlypleaded claims. Whether AstraZenecaknows which medication was administeredto Plaintiff following her surgeryis irrelevant and does not affectwhether Plaintiffs adequately pleadedtheir claims in the complaint. Further,rather than expecting the Court to ‘inferthat [AstraZeneca] is the proper defendant,’to survive a motion to dismissPlaintiffs must at least allege in theircomplaint that an AstraZeneca productwas administered to Ms. Haskins via thepain pump following her surgery. Thisthreshold allegation is necessary to showa plausible entitlement to relief.Id. at *2 (citations omitted). See also Gilmorev. DJO Inc., 663 F. Supp. 2d 856, 862 (D.Ariz. 2009) (court disregarding extrinsicevidence on motion to dismiss “becauseeven if the [defendant] knew which medicationhas been used that would not meanthat plaintiffs’ claims were adequatelypleaded.”)Educating Plaintiffs’ CounselWhile the naming convention for drugs iselementary for defense lawyers in this practicearea, many plaintiffs’ counsel experimentingwith pharmaceutical litigationmay lack even a basic understanding ofhow drugs are named or identified. A clientmay resist doing an opposing counsel’swork for him or her, but it may be necessaryto either personally conduct product identificationresearch or educate a plaintiff’sMultiple manufacturersare often named asdefendants, clearlyindicating that counsel hasnot conclusively establishedproduct identification.counsel on how products receive namesand how to identify them.An initial pre- or postservice letter toopposing counsel, enclosing a company’sproduct guide and relevant portions ofsome or all of the items discussed below,such as a copy of an entry from the Physician’sDesk Reference, or the National DrugCode number, threatening motion practicebased on a complaint’s failure to allegea causal relationship between a productand your client, will occasionally result ina quick and clean voluntary dismissal. At aminimum, an initial meet- and- confer letteris often required by local practice priorto filing a motion to dismiss.Primer for Rookie OpposingCounsel on Drug IdentificationDrugs often have several names, and anycombination may be found in medicalrecords. A drug has a chemical or compoundname, which describes the atomicor molecular structure of the drug. Whena drug is approved by the Food and DrugAdministration (FDA), it receives a genericname and a trade name, also referred to asthe proprietary or brand name. The genericname is typically a shorthand version ofthe drug’s chemical name. The trade nameis provided by the company requestingapproval for the product and identifies theproduct as the exclusive property of thatcompany. While a drug is under patent protection,the company that holds the patentmarkets the drug under its trade name.After a patent has expired, other companiesmay produce and sell a generic versionof the drug with FDA approval. A genericdrug maker can sell the generic versionFor The Defense n October 2010 n 21

D R U G A N D M E D I C A L D E V I C Eunder its “official” generic name, which itreceived when the FDA first approved it, ora company manufacturing a generic versioncan create its own trade name, referredto as a branded generic, but it cannot usethe trade name developed by the originalpatent holder. Once a drug patent expires,the original innovator may market thecompany’s original product under eitherOccasionally the mostcost- effective route todismissal is conductinglimited, productidentification-only discovery.the generic name or the trade name. As aresult, the same generic drug may be soldunder either the official generic name orone of many trade names.Occasionally, you can simply tell anopponent that your client never sold thetype of product at issue or, at least, did notsell it during the relevant time frame. Mostcompanies publish a product guide, whichlists all of the products sold and distributedby a particular company and their NationalDrug Code numbers. Much of this informationis also available in the Physicians’Desk Reference (PDR), a widely available,annually updated, commercially publishedcompilation of manufacturers’ prescribinginformation on prescription medications.The Orange BookA lesser known source of product identificationinformation than the PDR is theApproved Drug Products with TherapeuticEquivalence Evaluations—commonlyknown as the “Orange Book.” Under federallaw, no one may market or distribute a drugthat it is not authorized to market or distribute.21 U.S.C. §355(a). The companies authorizedto market and distribute particulardrugs are listed in the Orange Book, whichfederal law requires the FDA to publish andupdate every 30 days. 21 U.S.C. §355(j)(7)(A)(ii); Eisai Co., Ltd. v. Mut. Pharm. Co.Inc., 2007 WL 4556958, at *1 (D.N.J. Dec.22 n For The Defense n October 201020, 2007) (explaining that all drug manufacturersmust submit a new drug applicationto the FDA for approval and that onceapproved, the FDA lists the drug informationin the “Approved Drug Products withTherapeutic Equivalence Evaluations, commonlyknown as the ‘Orange Book’”); In reK-Dur Antitrust Litig., 2009 WL 508869, at*2 (D.N.J. Feb. 6, 2009). The informationmaintained in the Orange Book is basedon the FDA’s own records and research.21 U.S.C. §355(j)(7)(A); 45 Fed. Reg. 72582(“[a]ll drug products on the List have beenfully reviewed and approved for safety andeffectiveness by the FDA”); see also Merck &Co. Inc. v. Hi-Tech Pharmacal Co., Inc., 482F.3d 1317, 1318 (Fed. Cir. 2007) (recognizingthat the Orange Book is a register publishedby the FDA that provides notice of patentscovering name brand drugs).The Orange Book can be very helpful indemonstrating to opposing counsel, or acourt, that your client did not market, sellor distribute either the compound at issueor a particular trade name product in therelevant time frame, but rather, the relevantproduct was sold in the United Statesexclusively by others. The Orange Bookprimarily lists all prescription drugs bychemical name. Under each chemical namecategory the book lists the various tradenames and formulations and the distributorsof each. It also includes an appendixsorting product names by applicant, listingall of the products that a particular manufactureris authorized to distribute.The Electronic Orange Book (EOB) isupdated daily and is searchable by activeingredient, proprietary name, patent,applicant holder, and application Number.U.S. Food and Drug Admin., ElectronicOrange Book: Approved Drug Products withTherapeutic Equivalence Evaluations, http://www.accessdata.fda.gov/scripts/cder/ob/default.cfm. The most recent Annual Edition andthe Current Cumulative Supplement arealso available in PDF on the FDA website.U.S. Food and Drug Admin., Orange BookPublications, http://www.accessdata.fda.gov/scripts/cder/ob/eclink.cfm. Prior to 2005, whichis when the Annual Edition and CurrentCumulative Supplement were made availableexclusively electronically, librariesdesignated as federal repositories receiveda copy of the Orange Book on microfiche.Subsequently, many of these libraries continuedto print and maintain copies fromthe Internet. Interested parties can obtaincopies of the relevant years’ Orange Booksdirectly from those libraries for copyingcosts or through the Freedom of InformationAct (FOIA), although these requestsoften take several months to process. FederalDepository Library Directory, http://catalog.gpo.gov/fdlpdir/FDLPdir.jsp.Courts may take judicial notice of theOrange Book because it is “not subject toreasonable dispute in that it is… capable ofaccurate and ready determination by resortto sources whose accuracy cannot reasonablybe questioned.” Fed. R. Evid. 201(b);see also Timmons, 263 F.R.D. at 585 (takingjudicial notice of the Orange Book andholding that “judicially- noticeable factsdemonstrate that AstraZeneca did notmanufacture or sell Marcaine in the UnitedStates during the relevant time period”);Horne v. Novartis Pharm. Corp., 541 F.Supp. 2d 768, 777 (W.D.N.C. 2008) (statingthat a court “may take judicial notice of andconsider the public records of the FDA…without transforming this motion into amotion for summary judgment”).National Drug Code SystemAnother useful tool in identifying a specificproduct and seller of a product at issue in asuit is the National Drug Code (NDC) number.The Drug Listing Act of 1972 requiresregistered drug establishments to providethe FDA with a current list of all drugsmanufactured, prepared, propagated, compounded,or processed by it for commercialdistribution. 21 U.S.C. §360. Drug productsare identified and reported using a unique,three- segment number, the NDC number,which is a universal product identifier forhuman drugs. 21 C.F.R. §§207.25, 207.35.A drug’s NDC number identifies thelabeler, product, and trade package size.The first segment, the labeler code, isassigned by the FDA. 21 C.F.R. §207.35(b)(2)(i). A labeler is any entity that manufactures,including a repacker or relabeler, ordistributes, under its own name, a drug.The second segment, the product code,identifies a specific strength, dosage form,and formulation for a particular firm. Thethird segment, the package code, identifiespackage sizes and types. The product andpackage codes are assigned by the entity. 21C.F.R. §207.35(b)(2)(ii). Information about

NDC numbers and the National Drug CodeDirectory, which the FDA updates regularly,is located on the FDA’s website. U.S.Food and Drug Admin., National DrugCode Directory, http://www.fda.gov/Drugs/InformationOnDrugs/ucm142438.htm. The fullysearchable National Drug Code Directoryis available online at http://www.accessdata.fda.gov/scripts/cder/ndc/default.cfm.Determining Product IdentityEven if your opposing counsel understandsdrug identification, you or a plaintiff’scounsel must still take steps to determineif the plaintiff’s medical provider can supplyevidence identifying the product at issue.Although you should obtain medicalrecords, as discussed below, those recordsmay not conclusively identify a product, requiringyou to search other types of records.Basic Medical RecordsObviously, the first step is to review therelevant medical records. It is necessaryto review the physician’s progress notesand the records of the pharmacy wherea prescription was filled. If a plaintiff’suse of a product stemmed from a hospitalsetting, relevant records would include(1) the physician progress notes, (2) nursingnotes, (3) the intra- operative report,(4) patient- specific billing records, and(5) patient- specific pharmacy records.Often a plaintiff’s insurance records willinclude a drug NDC number along with aproduct’s generic or trade name.A patient is typically entitled to obtainthese records without a subpoena, anddefense counsel should immediatelydemand, either informally or formally,such records. Occasionally, this is all thatis necessary because a provider’s recordsmay reveal the product’s trade name orNDC number. In those situations, Fed.R. Civ. P. 11 is clearly implicated becauseyour opposing counsel clearly has failed totake even this most basic step before filingsuit. If a plaintiff’s medical records revealthat the product at issue is not your client’s,and your opposing counsel refuses to voluntarilydismiss the suit, both a motionto dismiss for failure to state a claim anda sanctions motion may be warranted.Even with a voluntary dismissal, requestingcosts may be appropriate depending onthe law of the venue.Other RecordsIf basic medical records offer inconclusiveevidence that a provider used the drugor device at issue, you can request otherrecords, such as hospital or pharmacyinventory or national wholesale distributorshipping records. This strategy, however,has downsides. First, such recordsare never plaintiff- specific and can helpyou only if one single company suppliedthe relevant product or formulation to theprovider during the relevant timeframe.Second, if you engage in such discovery,it is difficult to contemporaneously arguein a motion to dismiss that a court shoulddismiss the complaint without leave toconduct further discovery or amend thecomplaint. However, depending on thecontrolling jurisdiction’s law, occasionallythe most cost- effective route to dismissalis conducting limited, product identification-onlydiscovery and, ultimately, filinga motion for summary judgment.Motion Practice UnderFederal Rules 8 and 12There is a developing body of case law thatsupports a swift motion to dismiss underFederal Rules of Civil Procedure 8 and 12.Rule 8 requires that a complaint set forth“a short and plain statement of the claimshowing that the pleader is entitled to relief.”Fed. R. Civ. P. 8(a)(2). To survive a motionto dismiss, “[f]act ual allegations mustbe enough to raise a right to relief above thespeculative level” and must state “enoughfacts to state a claim to relief that is plausibleon its face.” Bell Atlantic Corp. v. Twombly,550 U.S. 544, 555, 570 (2007). A complaintneed not contain detailed factual allegations,but must provide more than “a formulaicrecitation of the elements of a cause ofaction.” Id. at 555. And, as noted in Ashcroftv. Iqbal, “[a] claim has facial plausibilitywhen the plaintiff pleads factual contentthat allows the court to draw the reasonableinference the defendant is liable for themisconduct alleged.” Ashcroft v. Iqbal, 129S. Ct. 1937, 1949 (2009) (emphasis added).In filing a Rule 12 motion to dismiss inthis context, a defendant can argue that(1) the plaintiff has not demonstrated acausal connection between the defendant’sproduct and the alleged injury becausethe plaintiff’ failed to identify the specificmedication that the plaintiff received orthe specific manufacturer; (2) the pleadingsare formulaic, vague, and conclusory;(3) the allegations are not factually specificenough to state a plausible claim underFed. R. Civ. P. 8; and (4) the plaintiff hasfailed to plead individualized allegationsagainst multiple defendants. See Atuahenev. City of Hartford, 10 Fed. Appx. 33, 34 (2dCir. 2001) (affirming dismissal becauseThat “shoot first, aimlater” approach wouldviolate Federal Rule 8and be antithetical toFederal Rule 11(b).complaint “lump[ed] all the defendantstogether in each claim and pro vid[ed] nofactual basis to distinguish their conduct”).Another argument that you can offer isthat the plaintiff failed to plead facts sufficientto establish standing. See Daughteryv. I-Flow, Inc., 2010 WL 2034835, at *3 (N.D.Tex. April 29, 2010) (dismissing the plaintiff’scomplaint for lack of product identificationagainst named defendants, holdingthat plaintiff “has not pled facts sufficientto establish that he has Article III standingto pursue a direct claim against any of thedefendants for his own personal injury.”).Also, if a plaintiff does not adequatelyidentify the product at issue, fraud claims(which may lack the requisite particularityregardless of failure to plead product identification)are subject to dismissal underFed. R. Civ. P. 9(b). See Gilmore, 663 F.Supp. 2d at 860 (dismissing fraud claimsfor failure to comply with Rule 9(b)).A defendant can argue that a plaintiffhas either sued a host of defendants withoutalleging specific use of any particulardefendant’s product, or simply that theplaintiff has failed to plead in the complaintthat one particular defendant manufacturedthe product. In most cases, aplaintiff’s complaint will fall short of therequirements of Federal Rules of Civil Procedure8 and 11, even failing to plead a claim“upon information and belief.” Regardless,For The Defense n October 2010 n 23

D R U G A N D M E D I C A L D E V I C EA plaintiff cannot establishthe essential element ofcausation if discovery hasyielded no evidence that adefendant’s product wasused by the plaintiff.courts have held that determining compliancewith Federal Rules of Civil Procedure11(b) and 8 require separate inquiries;merely alleging compliance with Rule 11does not release a party from the obligationto advance sufficient factual allegations tosatisfy Rule 8. Elan Microelectronics Corp.v. Apple, Inc., 2009 WL 2972374, at *4 (N.D.Cal. Sept. 14, 2009). The pain pump litigation,as well as other helpful cases, haveyielded numerous recent district courtopinions (regarding pharmaceuticals anddevices) dismissing cases at the initialstages due to failure to plead product identification.Wolicki- Gables v. Arrow International,Inc., 2008 WL 2773721 (M.D.Fla. June 17, 2008); Sherman v. StrykerCorp., 2009 WL 2241664 (C.D. Cal. Mar.30, 2009); Dittman v. DJO, LLC, 2009 WL3246128 (D. Colo. Oct. 5, 2009); Gilmore,663 F. Supp. 2d 856; Combs v. Stryker Corp.,2009 WL 4929110 (E.D. Cal. Dec. 14, 2009);Gomez v. Pfizer, Inc., 675 F. Supp. 2d 1159(S.D. Fla. 2009); Timmons, 263 F.R.D. 582;Haskins, 2010 WL 342552; Washington v.Wyeth, Inc., 2010 WL 450351 (W.D. La.Feb. 8, 2010); Adams v. I-Flow Corp., 2010WL 1339948 (C.D. Cal. Mar. 30, 2010); Inre: Fosamax Products Liability Litigation,2010 WL 1654156 (S.D.N.Y. Apr. 9, 2010);Peterson v. Breg, Inc., 2010 WL 2044248(D. Ariz. Apr. 29, 2010); Daughtery, 2010WL 2034835; Kester v. Zimmer HoldingsInc., 2010 WL 2696467 (W.D. Pa. June 16,2010). But see Jozwiak v. Stryker Corp., 2010WL 743834, at *5 (M.D. Fla. Feb. 26, 2010)(plaintiffs plausibly established each defendants’relationship to the product atissue by alleging that each manufacturedand sold the product at issue; court rejected24 n For The Defense n October 2010as premature and assuming of facts not inevidence the defendants’ argument thatboth could not have manufactured specificproduct); Koch v. I-Flow Corp.,F. Supp. 2d , 2010 WL 2265670 (D.R.I.June 7, 2010).A defendant should further argue thata court should not allow a plaintiff additionaldiscovery. That “shoot first, aimlater” approach would violate Federal Rule8 and be antithetical to Federal Rule 11(b).As the advisory committee comment toRule 11 explained, “[t]ol er ance of factualcontentions in initial pleadings by plaintiffsor defendants when specifically identifiedas made on information and belief does notrelieve litigants from the obligation to conductan appropriate investigation into thefacts that is reasonable under the circumstances;it is not a license to join parties,make claims, or present defenses withoutany factual basis or justification.” Fed. R.Civ. P. 11 advisory committee’s note, 1993Amendments §§(b) and (c), 3 (West 2009)(emphasis added). The Supreme Court hasmade it clear that if a plaintiff fails tomeet the pleadings requirements of Fed. R.Civ. P. 8(a)(2) at the outset, a court shouldnot allow that plaintiff to proceed to thediscovery phase of the case in the hopethat discovery might provide the evidenceneeded to support a claim against the defendant.See Twombly, 550 U.S. at 559 (“[i]tis no answer to say that a claim just shyof a plausible entitlement to relief can, ifgroundless, be weeded out early in the discoveryprocess through ‘careful case management’…”);Iqbal, 129 S. Ct. at 1954–55(“[b]e cause [plaintiff’s] complaint is deficientunder Rule 8, he is not entitled to discovery,cabined or otherwise”). Grantinga plaintiff’s request for discovery “wouldallow plaintiffs to name anyone as a defendantin a lawsuit without making theallegations necessary to state a claim uponwhich relief might be granted and then toseek to discovery in hope of finding a basisfor a claim.” In re Rezulin Prods. Liab. Litig.,168 F. Supp. 2d 136, 141 (S.D.N.Y. 2001).It is widely held that although a districtcourt has discretion to allow leaveto amend a complaint under Fed. R. Civ.P. 15(a), if amendment is futile, dismissalwithout leave to amend is appropriate.See, e.g., U.S. ex rel. Roop v. HypoguardUSA, Inc., 559 F.3d 818, 822 (8th Cir. 2009)(“[f]u til ity is a valid basis for denying leaveto amend”). Drug and medical device casesare no different:Plaintiffs’ Complaint does not allege thattheir injuries were caused by [the defendant].They admit in their Oppositionthat they do not know which entity manufacturedthe anesthetic administeredto [the plaintiff]. Thus, Plaintiffs admitthat they do not have the requisite evidentiarysupport to permit them in goodfaith to amend their Complaint to statea claim against [the defendant]. Consequently,leave to amend would be futile.Timmons, 263 F.R.D. at 585–86. See alsoCombs, 2009 WL 4929110, at *2–3; Sherman,2009 WL 2241664, at *5; Dittman,2009 WL 3246128, at *3 (all grantingmotions to dismiss with prejudice andwithout leave to conduct discovery oramend complaint).Many states have adopted what severalcommentators call the “Twiqbal” interpretationof Rule 8. See Iannacchino v.Ford Motor Company, 888 N.E.2d 879, 890(Mass. 2008) (“retiring” previous standardfor evaluating adequacy of complaint articulatedby Conley v. Gibson and formallyadopting Twombly standard). Many othershave equally valuable pre-”Twiqbal” decisions.See Bockrath v. Aldrich Chem. Co.,21 Cal.4th 71, 80 (Cal. 1999) (holding thatCalifornia law requires plaintiffs to pleadthe identity of the specific, alleged injurycausingproduct, as well as the specific defendantwho manufactured and distributedthe product). Consequently, defense lawyershave forceful tools for motion practicein both federal and state courts.Summary Judgment MotionsUnfortunately, not all jurisdictions requirea plaintiff to identify a product at the initialpleadings stage. See Koch, 2010 WL2265670, at *4 (“Defendants’ assertion thatRhode Island products liability law requiresproduct identification is mistimed. Yes, theproduct must be identified, but failure to doso is not fatal at the initial pleading stage.”)In those cases, consider filing for summaryjudgment after obtaining all of the records.It is well established that to survivesummary judgment a plaintiff assertingproduct liability claims against a manufacturermust establish that the injury-causingproduct was manufactured, designed,

or distributed by the defendant whom he orshe has sued. See, e.g., Garcia v. Pfizer, Inc.,268 Fed. Appx. 270 (5th Cir. 2008) (holdingit insufficient for plaintiff to demonstratethat Wyeth distributed a substantial numberof doses of relevant vaccine to the stateduring relevant time period; rather plaintiffmust produce evidence Wyeth actuallysupplied the vaccine she ingested andwhich allegedly caused her injury); Whitev. Celotex Corp., 907 F.2d 104, 105–06 (9thCir. 1990) (affirming summary judgmentwhere plaintiffs “were unable to identifyany of the Defendants as having manufactured,sold or distributed any particular…product with which [the decedent]came in contact”). A plaintiff must demonstratethat there is at least a genuine issueof material fact about whether his or herinjuries were caused by a named defendant’sproduct. As a matter of law, a plaintiffcannot establish the essential elementof causation if discovery has yielded no evidencethat a defendant’s product was usedby the plaintiff. If awarded summary judgment,the moving party can often submit abill of costs under local rule to recover certaincosts.Costs and Sanctions MotionsIn addition to dispositive motion practice,a motion for costs or sanctions may be warranted.A courts can award attorneys’ feesand sanctions for a violation of Fed. R. Civ.P 11(c), which may be justified if the plaintiffand his or her counsel have failed tocomply with “Rule 11’s obligation to conducta reasonable inquiry into the law andfacts before signing papers filed with thecourt…” Rentz v. Dynasty Apparel Industries,Inc., 556 F.3d 389, 401 (6th Cir. 2009).Defendants must be sure to comply withFed. R. Civ. P. 11’s “safe harbor” provisionrequiring that a party seeking sanctionsfirst serve the motion to the opposing partyand then wait at least 21 days, or anotherperiod designated by the court, before filingthe motion. Fed. R. Civ. P. 11(c)(2).Moreover, a Fed. R. Civ. P. 11 motion forsanctions must be made separately fromany other motion.Courts strongly disfavor Rule 11motions, especially when used as a “bargainingchip… in hopes of securing astrategic advantage.” Bartonics, Inc. v.Power-One, Inc., 245 F.R.D. 532, 538 (S.D.Ala. 2007). Defense counsel should employRule 11 motions sparingly and considerother options, such as seeking attorneys’fees or costs under local rules or statuteswithin the body of substantive motions.Electronic Device FailureX-ray Computed Tomography (CT) scanning providesa complete 3D digital model of both the internal andexternal features of almost any part or object withoutdestroying it.CT allows you to view internal features of an objectfrom any angle with the click of a button, possiblyrevealing hidden information that may change theoutcome of your case.North Star Imaging’s Inspection Services Group canassist with:- Root Cause Analysis- Products Liability- Failure Analysis- and more...Potential PitfallsWatch out for several pitfalls when plaintiffshave inadequately identified specificproducts in their complaints. To avoid dismissal,they may try to (1) argue that theyNorth Star Imaging, Inc.is the nation’s leadingmanufacturer of X-ray andComputed Tomography Systems.North Star Imaging - Inspection Services Group • 763-463-5696www.xrayinspectionservice.comMedical Device InspectionFor The Defense n October 2010 n 25

D R U G A N D M E D I C A L D E V I C ESales Reps in the ORBy Edward W. Gereckeand David J. WalzThe Hunt forNon-PreemptedClaimsA new beatto an old tune.Suing a drug and device manufacturer’s representative hasalways been a popular tactic. After all, such lawsuits offerone of the best ways to destroy diversity jurisdiction andkeep a case out of federal court. Making a sales representa-tive a defendant and not just a fact witness,at least until the one-year removal deadline,also increases defense costs and complicatesdiscovery about training, productpromotion, and physician interaction.Events in medical device cases duringrecent years have only increased the allurethat these claims hold for the plaintiffs’ bar.The United States Supreme Court’s decisionin Riegel v. Medtronic, Inc., 128 S. Ct.999 (2008), was the catalyst. Riegel coversdevices approved under the premarket approvalprocess and addresses preemptionunder the Medical Device Amendments of1976 (MDA) to the Food, Drug, and CosmeticAct (FDCA). Riegel decided that theMDA preempted state law claims that imposerequirements relating to safety or effectivenessthat are “different from, or in additionto” federal requirements. As a result, claimsagainst manufacturers of devices approvedunder the premarket approval process arefar more difficult to plead, let alone prove.Riegel specifically declined, however, toreach the issue of “parallel claims” that are“premised on a violation of FDA regulations.”Id. at 1011. Such claims may survivepreemption arguments. Thus, the post-Riegel battle focuses on whether a plaintiffcan state a viable parallel claim. Plaintiffshave had little luck pleading manysuch claims against manufacturers directly.Courts around the country have dismissedmany claims as preempted. Other cases havemet a similar fate upon summary judgment.In response, plaintiffs have increasinglyturned their attention to sales representativesin the hunt for claims that will survivepreemption arguments. Dependingon the circumstances, representatives mayinteract with physicians on highly patientorcase- specific bases. With many devices,representatives may provide technical supportto a surgeon in the operating suite.Actions by representatives offer rich, possibletargets for creative plaintiffs’ lawyers■ Edward W. Gerecke is a shareholder and David J. Walz is an associate in the Tampa, Florida, office ofCarlton Fields. Mr. Gerecke’s practice involves product liability and mass tort litigation, with a particularfocus on pharmaceutical and medical device litigation. He is a member of DRI’s Drug and Medical DeviceSteering Committee. Mr. Walz’s practice focuses on product liability claims, primarily pharmaceutical litigationand the defense of actions involving prescription and over-the-counter products. He is a member of theDRI Young Lawyers Publications Subcommittee and the Florida Defense Lawyers Association.For The Defense n October 2010 n 27

D R U G A N D M E D I C A L D E V I C Eseeking to evade Riegel. As a result, plaintiffs’attorneys are leaving no stone, andvirtually no claim, no matter how novel,unturned in their search for claims againstmanufacturers’ representatives that willdefeat Riegel’s preemption holding.Troublesome Cases ExistPlaintiffs do have authority supportingActions byrepresentatives offerrich, possible targets forcreative plaintiffs’ lawyersseeking to evade Riegel.their arguments. Adkins v. CYTYC Corp.,No. 4:07CV00053, 2008 WL 2680474 (W.D.Va. July 3, 2008), is probably the most problematiccase. In Adkins, a manufacturers’representative attended the plaintiff’s surgeryand “advised and directed [the surgeon]on the proper way to measure thesize of [the plaintiff’s] uterus and to testthe integrity of her uterine wall, which isnecessary before using the device.” Id. at*1. Later measurements, after the plaintiffsuffered injuries during the procedure,indicated not only that the presurgery measurementswere incorrect, but that thecorrect measurements would have “preclude[d]use of the device.” Id.The plaintiff alleged an agency theory ofliability against the manufacturers for the“negligent warnings or instruction of thesurgeon by defendants’ [] representative.” Id.The claim alleged that the representative hada duty to ensure that the device worked correctlyand that the surgeon followed properprocedures for using the device. The plaintiffclaimed that the representative breachedthat duty when the surgeon incorrectly measuredthe uterus while “relying on the representationsof the corporate agent… for howto perform the measurement.” Id.While the court dismissed the productliability claims against the manufacturers,it declined to dismiss the claim related tothe representative’s actions, stating that the28 n For The Defense n October 2010“claim is not governed by Riegel’s preemptionholding.” Id. at *2. The reasoning thatthe court applied is particularly troubling:The FDA does not regulate interactionsbetween corporate representatives andphysicians on-site at a particular surgery,and where it does not mandate specialphysician training for a drug, it doesnot specify how such an interaction atsurgery must be performed. These localizedsituations are traditional mattersfor the common law, not the FDA’s regulatoryapproval process. Such a claimdoes not challenge the design, manufacture,and labeling of the [] device soas to implicate Riegel preemption, butrather challenges negligence by a corporateagent acting as a de facto physician’sassistant during a surgical procedure.Id. at *3.Thus, under Adkins, a representative’sactions are essentially unregulated activitiesfalling wholly outside the Riegel holding’srealm. If a court follows the reasoningin Adkins, then it appears that virtually anyclaim based upon a representative’s actionsmight survive preemption.Another problematic case is WilliamBeaumont Hosp. v. Medtronic, Inc., No.09-CV-11941, 2009 WL 2849546, at *7(E.D. Mich. Aug. 31, 2009). In WilliamBeaumont, the plaintiffs claimed that themanufacturer’s representative sent a freesample to the wrong hospital department.Although recognizing that “[the defendant]correctly argues that any claim by [plaintiffs]premised on an inadequate warninglabel is preempted by the [MDA],” thecourt carved out an exception based uponthe representative’s action:Plaintiffs’ claim alleging joint liabilityis premised on [the defendant’s] allegednegligence in sending free samples to ananesthesiology department at a hospitaland holding the samples out for usein a refill procedure, when in fact one ofthe samples was not intended for suchuse and should not have been sent to ananesthesiology department. Plaintiffs donot allege a failure to adequately warnclaim…. The adequacy of the label is notthe basis for [the plaintiffs’] allegationsof [the defendant’s] negligence.Id.In effect, the representative’s errorplaced the claim beyond Riegel preemption.As with Adkins, reasoning along theselines makes it difficult to understand howa state law claim implicating a representativewould ever impose requirements“different from, or in addition to” federalrequirements.A Study in Theories ofLiability and PreemptionArmed with the authority discussed above,plaintiffs have the incentive to allege a slewof theories against manufacturers’ representativesin the hopes that at least onetheory might stick just enough to bypassRiegel. The facts and resulting claims inWolicki- Gables v. Arrow Int’l, Inc., 641 F.Supp. 2d 1270 (M.D. Fla. 2009), offer anexample and are useful in examining thetypes of theories presented in cases thatdeal with preemption.In Wolicki- Gables, one of the plaintiffs,Linda Wolicki- Gables, suffered fromchronic pain and chose to have a pain pumpimplanted to deliver pain medication directlyinto her spinal canal. The pump hadtwo modes of operation: (1) a continuousinfusionfunction that delivered pain medicationin a slow, continuous release; and(2) a bolus function that allowed a physicianto inject a bolus, a single, larger quantity ofmedicine, directly into the spinal canal. Themanufacturer’s representative attended theimplant procedure and delivered the painpump. For more than one year, the pumpfunctioned properly.Then, during a routine test, Ms.Wolicki- Gables’ physician concluded thatthe pump’s bolus function might not beworking as expected. The physician contactedthe same manufacturer’s representativeand scheduled a revision procedureto replace the pump. Before that procedure,Ms. Wolicki- Gables executed aninformed consent form and specificallyrefused to consent to the admission of “personsrequired for technical support to theroom in which the procedure [was] performed.”Id. at 1278. In the same form, Ms.Wolicki- Gables also refused to “consent tothe disposal of any tissues or body parts…removed in accordance with customarypractice” and wrote in, with her initials,“We want old pump.” Id.Unaware of the consent form, the manufacturer’srepresentative attended the revisionprocedure. During the procedure, the

physician cut a catheter connector betweenthe pump and the spinal canal, after whichthe bolus function worked properly. Thedoctor replaced only that catheter connectorand reimplanted the original pump.Absent “a request to save or test the part,”the surgical facility typically discardedparts as surgical waste. Id. According tothe plaintiffs, the representative told themthat he was in the operating room duringthe procedure, took the removed catheterconnector with him afterward, andreturned it to the manufacturer for testing.Also according to the plaintiffs, therepresentative later informed them that, inaccordance with policy, the manufacturerdestroyed the removed catheter connectorafter testing. Two weeks after the revisionprocedure, Ms. Wolicki- Gables lost feelingin her legs and developed transversemyelitis.Against that factual backdrop, the plaintiffsamassed an array of negligence- basedtheories against the representative. First,the plaintiffs claimed that the representativeowed a duty to instruct and educatethe physician about the pain pump. Second,they alleged that the representative had aduty to ensure that the product was workingproperly before its implantation. Third,the plaintiffs alleged that the representativehad a duty to verify informed consentto his presence in the operating room.Fourth, the plaintiffs alleged that the representativehad a duty to verify that plaintiffsconsented to disposal of the removed part.In addition to those direct claims, theplaintiffs, the Wolicki- Gables, opposed themanufacturer’s preemption arguments forsummary judgment by targeting only therepresentative. The plaintiffs theorized thatthe representative “should have disallowedthe replacement of the connector” only.Id. at 1283. Or, the representative shouldhave “suggested replacement of the [complete]pump system.” Id. The plaintiffsargued that replacing the connector only,rather than the pump and all cathetersand connectors, was not a FDA- approvedand authorized use. Therefore, the manufacturer,“through the presence of [therepresentative] at the [revision] surgery…was directly involved in ‘off- label’ use ofthe subject product, having provided thereplacement connector to [the physician] atthat time.” Id.The court rejected all of those theoriesand held that under Riegel, the MDApreempted every claim against the manufacturers—strictliability, negligence,and vicarious liability—and the claim forKKA-ad-083110D.qxd:Layout 1 10/1/10 3:11 PM Page 1MEDICAL DEVICESARE COMPLICATED.FINDING THE RIGHT EXPERTDOESN’T HAVE TO BE.EXPERTS IN:Medical DevicesExpert Witness TestimonyFailure AnalysisEngineering ConsultingInsurance IndustrySupportWith 25+ yearsof experience.negligence against the representative. Inaddressing the argument that the representativeshould have intervened in the procedure,the court held that it knew of noevidence establishing that the represen-For The Defense n October 2010 n 29

D R U G A N D M E D I C A L D E V I C Etative had a duty to affirmatively tell thephysician while the physician was performingsurgery that the physician should notreplace only the catheter connector.On the off- label theory, the court notedthat the FDA does not regulate the practiceof medicine, and a physician may lawfully“vary the conditions of use from thoseapproved in the package insert.” Id. at 1283.Fundamentally, theFDA does regulatemanufacturer’srepresentatives through thepremarket approval process.The court reasoned that the FDA does notdistinguish between on- label and off- labeluses. Regarding the representative specifically,the court recognized that the Food,Drug, and Cosmetic Act prohibits off- labelpromotion, but no private right of actionexists to enforce the act. In any event, “acomplete absence of evidence” existed as toany claim that, by attending and observingthe revision procedure, the representativeengaged in “‘off- label’ marketing and promotion.”Id. at 1292.The court’s preemption holding hingedupon the reasoning that a jury could findliability even if the manufacturers followedand complied with all FDA regulationsand practices for the device. Hence,the claims imposed requirements “differentfrom, or in addition to” the FDArequirements. Significantly, while the bulkof the preemption analysis focused on theclaims directly against the manufacturer,the court adopted the same reasoning andreached the same conclusion regarding thenegligence claim against the representativeand the accompanying vicarious liabilityclaims.None of the factual allegations againstthe representative affected the holdingabout preemption or amounted to a parallelclaim, including the allegations regardinginformed consent and the device’s removal.Indeed, the court’s further analysis of those30 n For The Defense n October 2010claims and additional reasons for grantingsummary judgment were only alternativeholdings. Instead, the court determinedthat all of the claims related to the representativeinvolved “different from” or“additional” requirements.In this respect, Wolicki- Gables countersthe view taken in Adkins. The representativespecificclaims in Wolicki- Gables were insome instances virtually the same as thosein Adkins: the plaintiffs in both cases arguedthat the representative owed a duty toinstruct or educate the physician and a dutyto ensure that the device functioned properly.In other instances, the Wolicki- Gablesclaims were far broader than those in Adkins,encompassing consent and spoliation.Yet, regardless of the claims’ breadth, all ofthe Wolicki- Gables’ claims were preempted.The end result of Wolicki- Gables is that, if astate law claim seeks to impose liability fora representative’s actions, but nothing inthose actions results in federal regulatorycompliance transgressions by the manufactureror representative, then the statelaw claim seeks to impose different or additionalrequirements than those mandatedby federal law, and it is preempted.Additional Defense ArgumentsThe Wolicki- Gables court took a straightforwardapproach and simply comparedthe nature of the state law liability andwhether it could coexist with completeFDA compliance. While that approach isuseful, additional defense arguments existthat build more directly upon Riegel andthe MDA.The Reasoning Followed by Cases Suchas Adkins Is Inconsistent with RiegelThe essence of cases such as Adkins isthat the FDA generally does not regulatephysician- representative interaction duringsurgery. That reasoning ignores severalimportant points. Fundamentally, theFDA does regulate manufacturer’s representativesthrough the premarket approvalprocess. When the FDA approves a medicaldevice under premarket approval, the FDAapproves not only the device’s design, manufacturing,and labeling, but also considerswhether and how to regulate other areas.As a condition of approval, the FDA mayimpose various other requirements on thedevice’s sale and distribution. See 21 U.S.C.§360j(e)(1)(B) (The Secretary may impose“such other conditions” on the “sale, distribution,or use” of the device as the Secretarydeems appropriate). Those “other conditions”may include training, instructional,or tutorial requirements for physicians thatrequire a representative’s participation orguidance. In turn, those requirements maybe set forth in the premarket approval letterand the device’s labeling. For example,regarding devices approved in 2010alone, the FDA’s website indicates severalapproval letters stating that “[t]he device isfurther restricted under section 515(d)(1)(B)(ii) of the [FDCA] insofar as the labelingmust specify the specific training or experiencepractitioners need in order to use thedevice.” See http://www.fda.gov/MedicalDevices/ProductsandMedicalProcedures/DeviceApprovalsandClearances/PMAApprovals/ucm202715.htm(last accessed on September 20, 2010). Thelabeling for those devices then states thatthe physician must attend training conductedby the representative. See id. Thus,the FDA makes regulatory choices relatingto a representative’s actions and any statelaw claim that a representative should haveconveyed different or additional “otherconditions” is preempted.Similarly, premarket approval imposesspecific labeling requirements. See Riegel,128 S. Ct. at 1004–05. “The premarket approvalprocess includes review of the device’sproposed labeling. The FDA evaluatessafety and effectiveness under the conditionsof use set forth on the label, §360c(a)(2)(B), and must determine that the proposedlabeling is neither false nor misleading,§360e(d)(1)(A).” Id. Therefore, any statelaw claim that a representative should havecommunicated other instructions or warningsto a physician is an attempt to imposea requirement “different from, or in additionto” the federal requirements.Overall, then, if the FDA regulates representativesto the extent of requiring certainconduct in some situations and choosingnot to impose specific requirements inother situations, then a plaintiff’s attemptthrough a tort claim to require any otherconduct must impose a “different from”or “additional” requirement. A court cannotdeem that claim “parallel” to federalrequirements.This point recognizes that the federalpreemption of claims under Riegel is broad

and extensive. Riegel preemption covers alltort claims related to the “safety and effectiveness”of devices approved under theFDA’s premarket approval process. Notably,Riegel covers “all actions” “with respect to”a device. The Court stated:The MDA provides that no State “mayestablish or continue in effect withrespect to a device… any requirement”relating to safety or effectiveness thatis different from, or in addition to, federalrequirements. The [plaintiffs’] suitdepends upon [state law] “con tin u[ing]in effect” general tort duties “withrespect to” [defendant’s device]. Nothingin the statutory text suggests thatthe pre-empted state requirement mustapply only to the relevant device, or onlyto medical devices and not to all productsand all actions in general.Riegel, 128 S. Ct. at 1010 (last emphasisadded).Preemption under Riegel also appliesexpansively to the range of liability theoriespursued by plaintiffs. Riegel meansthat the MDA not only preempts claims forstrict liability and breach of implied warranty,but a wide range of negligence- basedclaims, including “negligence in the design,testing, inspection, distribution, labeling,marketing, and sale of the [device].”Id. at 1006. Even tort claims related onlyslightly to a device itself are preemptedunder Riegel.For example, claims that impose “statelawrequirements of general import, whichregulate a medical device only incidentally,are subject to federal pre- emption inthe same way as those state-law requirementswhich specifically target the devicein question.” Covert v. Stryker Corp.,No. 1:08CV447, 2009 WL 2424559, at *7(M.D.N.C. Aug. 5, 2009). Any other applicationis contrary to the MDA because “thefact that a state-law ‘requirement’… mayregulate a medical device only incidentally[is] too slight a distinction to meritexcluding that requirement from preemptionunder the MDA, especially given the‘unusual breath’ [sic] of the language Congressused in drafting the MDA, which is tobe interpreted ‘expansively.’” Id.This view of preemption as covering“all actions” regarding a device encompassesnot only the actions typically allegedagainst representatives who have had surgicalinteraction, but some of the more novelclaims, such as off- label use and failureto report adverse events, as well. Regardingoff- label allegations, they should failbecause that use still falls within MDA preemptionwhen devices have been approvedunder the FDA’s premarket approval process.See, e.g., Cornett v. Johnson & Johnson,2010 WL 2867811, at *17, *20 (N.J.Super. A.D. July 23, 2010) (holding that offlabeluse is regulated by the FDA premarketapproval process and the FDCA andnoting that Riegel itself involved an offlabeluse); Wheeler v. DePuy Spine, Inc.,No. 06-21245, 2010 WL 1539855, at *4 n.3(S.D. Fla. Mar. 9, 2010) (rejecting the argument“that [d]e fend ant failed to complywith conditions of the PMA by permittingusage of two discs in a patient”).Likewise, allegations that a representativefailed to report adverse events shouldnot negate preemption. Rather, those allegationsshould fail for the same reasonsthat similar allegations against manufacturersfail. See, e.g., Heisner v. GenzymeCorp., No. 08-C-593, 2009 WL 1210633, at*2 (N.D. Ill. Apr. 30, 2009) (failure to reportinformation to the FDA is not a “defect”);Lake v. Kardjian, 874 N.Y.S.2d 751, 755(N.Y. Sup. Ct. 2008) (alleged failure to complywith “reporting requirements does notconstitute a ‘parallel claim’… because suchan allegation would merely be an attemptto recast plaintiff’s state law claims as violationsof federal statutes”).Favorable Decisions in AnalogousContexts Support Broad PreemptionIn many instances, the case against a manufacturer’srepresentative really boils downto a claim for “failure to train my physician.”Courts hold those claims preempted.For example, in Mattingly v. Hubbard, No.07CI12014, 2008 WL 3895381 (Ky. Cir. Ct.July 30, 2008), the court held failure- totrain-the- physician claims preempted asa requirement “in addition to” the FDA’srequirements. The plaintiff “ar gue[d] thathis negligence claims are unaffected byRiegel since they relate to [the defendant’s]training of physicians rather than its FDAapproval for or manufacturing of the[device].” Id. While noting the argumentthat “claims of negligent failure to trainphysicians properly is separate from theFDA approval process,” the court rejectedthe plaintiff’s reasoning and held instead“that such a claim would nonethelessimpose an additional substantive requirementfor a specific device.” Id. In fact,“[g]en eral tort duties of care… directly regulatethe device itself” and “such requirementsare preempted.” Id.Even before Riegel, courts held suchclaims preempted. In Gomez v. St. JudeCasting a plaintiff’sallegations as failure- to-train or failure- to- instructclaims provides anotherroute to secure preemption.Med. Daig Div. Inc., 442 F.3d 919, 931 (5thCir. 2006), the plaintiff claimed “that thematerial [that the defendant] supplied totrain in the use of the [device] were [sic]inadequate.” Nonetheless, the court heldthat the claims were preempted because“[t]o permit a jury to decide [] claimsthat information, warnings, and trainingmaterial the FDA required and approvedthrough the PMA process were inadequateunder state law would displace the FDA’sexclusive role and expertise in this area andrisk imposing inconsistent obligations.” Id.Thus, casting a plaintiff’s allegationsas failure- to- train or failure- to- instructclaims provides another route to securepreemption. As in Mattingly and Gomez,imposing liability against a representativeconstitutes a different or additionalrequirement beyond anything required bythe FDA. Hence, courts should hold thoseclaims preempted.A Plaintiff Still Must SufficientlyPlead the ClaimFinally, as a fallback position even if Adkinsapplies, a plaintiff still must meet the pleadingrequirements under Iqbal and Twombly.Although the Adkins court concluded thatRiegel did not apply to the claims againstthe manufacturer’s representative, the courtdismissed those claims anyway, albeit withRepresentatives, continued on page 85For The Defense n October 2010 n 31

D R U G A N D M E D I C A L D E V I C EStaying in the GameBy Kelly E. Jonesand Daniella D. DaCunzoE-Discoverywith aLive ProductIn cases involving activelymarketed products,counsel must not onlyreinforce litigationholds, but also keeptrack of changes andavoid disclosure of allthings privileged.Despite the vast number of prescription and over-thecounterdrugs involved in litigation today, only a smallpercentage of those lawsuits involve products that havebeen recalled or withdrawn from the market. A recalledor no longer marketed product allows counselto sequester all potential litigation discoverymaterials at one point in time andgive appropriately measured considerationto newly created documents. In contrast,preserving and collecting electronicallystored information (ESI) in litigation presentscounsel with special challenges whenthis information involves a “live” product,meaning a product currently on the market.A live or actively marketed product requirescounsel to “stay in the discovery game” bycontinually supplementing discovery productions,often with imminent deadlines,without hindering a company’s daily functions.This article will address some of thesteps that counsel should consider whenconducting discovery for “live” products.Makers of actively marketed pharmaceuticaland medical device products may facelitigation while still in the process of modifyinglabels or designing an actual productat issue. In those cases, regulatory counselmust address regulatory issues at thesame time as liability counsel reviews documentsfor discovery purposes. These activities,together with a company’s ongoingmanufacturing efforts, generate numerousdocuments and ESI, creating an enormouschallenge. Counsel and a client must preserverelevant information and ensure thatthe collection process is as complete as reasonablypossible. To ensure faithful adherenceto the rules of ESI discovery, counselmust understand their duties and follow thesteps outlined below.Rules of the Game: Discovery UnderPension Committee and ZubulakeJudge Shira Scheindlin, author of the significante- discovery opinions in the Zubulakecases, has recently rearticulatedcounsel’s e- discovery duties in PensionComm. of the Univ. of Montreal PensionPlan v. Bank of Am. Sec., LLC, 685 F. Supp.2d 456 (S.D.N.Y. 2010), holding that partiesmust “participate meaningfully andfairly” in the discovery process. Id. at 463.32 n For The Defense n October 2010■ Kelly E. Jones and Daniella D. DaCunzo are associates of Harris Beach PLLC in New York City and aremembers of the firm’s e-info electronic information counseling and management team. They both primarilylitigate and consult in cases involving pharmaceuticals and medical devices. Ms. Jones is currently theYoung Lawyers liaison to DRI’s Drug and Medical Device Committee and the chair of the Young LawyersMembership Subcommittee.

This requires a client and counsel to produce,as well as to preserve, evidence, orface judicial sanction. See id. at 465–66.In the context of ESI, this requires counselto become actively involved in a client’sdiscovery process and to work to ensurethat relevant information is preserved andcollected. See Zubulake v. UBS WarburgLLC, 229 F.R.D. 422, 432 (S.D.N.Y. 2004)(Zubulake V). Counsel must actively participatethroughout the collection and preservationprocess by ensuring that a clientimplements a litigation hold, identifyingand communicating with personnel thatmanage the relevant data, and ensuringthis data is retained and produced for theopposing party. See id.Failure to meet these obligations willresult in harsh penalties. In the discoveryof electronically stored information, thefailure to preserve and adequately searchfor relevant material “inevitably resultsin the spoliation of evidence,” and a courtcan sanction counsel for even careless mistakesthat result from a “pure heart andan empty head.” Pension Comm., 685 F.Supp. 2d at 464 (holding the failure to preserve,collect, and review evidence resultingin loss of relevant data was at leastnegligent). These sanctions can be quitesevere and involve fines, adverse inferencejury instructions, and other costs.See, e.g., Google, Inc. v. Am. Blind & WallpaperFactory, Inc., No. C 03-5340 JF, 2007WL 1848665, at *1, 5–6 (N.D. Cal. June 27,2007) (evidentiary sanction and fine of$15,000 for willful indifference toward discoveryobligations); Phoenix Four, Inc. v.Strategic Res. Corp., No. 05 Civ. 4837, 2006WL 1409413, at *9 (S.D.N.Y. May 23, 2006)(payment of costs of bringing motion andre- depositions for delinquent production ofdocuments); Zubulake V, 229 F.R.D. at 439–40 (adverse inference instruction for failureto preserve e-mails after receiving adequatewarnings). Therefore, it is important thatcounsel identify the moment when discoveryduties arise and respond effectively.E-discovery obligations present a challengeeven with products that are no longermarketed and involve static informationgenerated from a closed group of key players.Discovery challenges increase exponentiallywith litigation involving liveproducts, as companies juggle compliancewith ongoing regulatory demands,business obligations, and personnel withchanging organizational responsibilities.These challenges require counsel to takeextra steps to respond to changes as theyoccur and to ensure confidentiality andprivilege issues are not compromised.Develop a Strong Offense andDefense—Anticipation of LitigationTriggers Counsel’s DutiesThe obligation to oversee a client’s preservationof evidence begins with the anticipationof a lawsuit: “Once a party reasonablyanticipates litigation, it must suspend itsroutine document retention/destructionpolicy and put in place a ‘litigation hold’to ensure the preservation of relevant documents.”Pension Comm., 685 F. Supp. 2dat 466 (quoting Zubulake v. UBS WarburgLLC, 220 F.R.D. 212, 218 (S.D.N.Y. 2003)(Zubulake IV)). The beginning of this dutyto preserve evidence often coincides withthe commencement of a lawsuit. But, thisduty “may arise even earlier if a party hasnotice that future litigation is likely.” CacheLa Poudre Feeds, LLC v. Land O’Lakes Inc.,244 F.R.D. 614, 621, 622–23 (D. Colo. 2007)(holding that a party’s duty to preserve wastriggered by filing a complaint rather thanby pre- filing correspondence); see Goodmanv. Praxair Servs, Inc., 632 F. Supp. 2d494, 511 (D. Md. 2009) (finding that a dutyto preserve was triggered by a letter threateninglitigation). Thus, counsel must beprepared to initiate a litigation hold at veryearly stages of a conflict or face judicialsanction. See, e.g., Doe v. Norwalk Cmty.Coll., D. Conn. 2007 (finding defendantsgrossly negligent for failure to implementa litigation hold upon initial discovery ofsexual assault allegations).Once the duty to preserve begins, counselmust not only help implement a litigationhold but also continually monitora client’s document- gathering process.Implementing a litigation hold is “only thebeginning” of counsel’s duties in the discoveryprocess. Zublake V, 229 F.R.D. at432; see also Cache La Poudre Feeds, 244F.R.D. at 630. Accordingly, it is insufficientto establish a litigation hold and merelycommunicate it to company employees.See Cache La Poudre Feeds, 244 F.R.D. at630 (holding that counsel failed to dischargediscovery obligations by directingemployees to produce relevant informationwithout overseeing and verifying theirproduction). Instead, counsel has a dutythroughout the discovery process to ensurecompliance with a hold and to oversee andmonitor a client’s efforts to retain and produceESI. Zublake V, 229 F.R.D. at 432; seePension Comm., 685 F. Supp. 2d at 473(holding a counsel’s instruction to plaintiffs,absent active supervision, failed toIt is important thatcounsel identify the momentwhen discovery duties ariseand respond effectively.meet the standard for a litigation hold).Counsel must work with a client to identifyappropriate custodians throughoutthe organization, communicate the holdto employees, interview potential custodiansand IT staff, conduct diligent inquiryof information repositories, suspend routinedeletion protocols, and frame andimplement reliable collection methodologies.See Pension Comm., 685 F. Supp. 2dat 473 n.67 (noting that attorney oversightincludes “the ability to review, sample, orspot-check the collection efforts”).For actively marketed products, thisongoing obligation provides unique challengesthroughout the litigation period.The “live” status of the relevant productrequires vigilant monitoring of a legal hold,as the product continues to be marketedthroughout litigation. Counsel must providespecific instructions on preservationof metadata and then continually monitorthe performance of a client’s personnel,verifying that a hold directive has beenextended to terminated employees and tonew hires. Attorneys should also implementprocedures that track informationand provide continuing reminders to a client.For example, counsel could track holdnotice receipts and confirmations, on paperor electronically, and use a tickler systemto implement a preestablished scheduleto send reminder notices. Counsel couldalso work with a client to schedule frequentreminders to ensure compliance andFor The Defense n October 2010 n 33

D R U G A N D M E D I C A L D E V I C Eto establish a strong, good-faith argumentthat the client complied with its preservationobligations for a court.To accomplish these tasks, attorneysshould consider requiring ongoing certificationsfrom custodians, communicatingnegative consequences for noncompliance,and utilizing audit and sampling procedures.For large-scale litigation, softwareCounsel must not onlyhelp implement a litigationhold but also continuallymonitor a client’s document-gathering process.products exist to assist attorneys with theseefforts. These products electronically monitorthe failure to receive a return confirmation,which in turn triggers an alert to theinvolved attorney to spur appropriate follow-up. Most software that manages legalholds includes a notification and follow- upcomponent, as well as an electronic log. Theefficiencies created by automation and automateddocumentation can be significant.First Steps: Identify Key Playersand Critical TeammatesCounsel’s first steps of e- discovery are toidentify the key players in a company’s litigationand establish working relationshipswith critical teammates, namely ITpersonnel.34 n For The Defense n October 2010Know Your PlayersThe duty to preserve ESI requires identifying“key players” in litigation and ensuringthat they preserve relevant documents.Counsel has the duty to ensure that allsources of potentially relevant informationare identified and preserved. See ZubulakeV, 229 F.R.D. at 432. Clients typically possessan overwhelming amount of ESI inthe form of e-mails and other documents,but the duty to preserve documents andthings for litigation is limited to materialsheld by and made for “key players,” or thoseemployees likely to have information relevantto the discovering party’s claims ordefenses. See, e.g., Goodman, 632 F. Supp.at 512, 516–17 (holding that a company’sfounder, CEO, and employee responsiblefor technical information were all key playersto whom the duty to preserve extended).Therefore, identifying and interviewingthese key players is critical to ensuringall potential sources of relevant data havebeen inspected. See In re Seroquel Prods.Liab. Litig., 244 F.R.D. 650, 663 (M.D. Fla.2007) (“Unless counsel interviews each[key] employee, it is impossible to determinewhether all potential sources of informationhave been inspected.”); Goodman,632 F. Supp. 2d at 517 (noting that the defendants’failure to issue a litigation holdto key players resulted in the loss of importantcomputer hardware). Counsel shouldinquire into key employees’ personal practicesfor document management and retention,and periodically remind them of theirobligation to preserve data. See Zubulake V,229 F.R.D. at 433–34; see also Gross Constr.Assocs., Inc. v. Am. Mfrs. Mut. Ins. Co., 256F.R.D. 134, 136 (S.D.N.Y. 2009) (requiringdiscussion between counsel and key playersto satisfy minimum e- discovery duties).The duty to interact with key playerspresents the immediate challenge oflocating these individuals. Personnel canchange quickly—especially in pharmaceuticalor medical device companies, whereemployee turnover or intra- company repositioningis common. It is, therefore, vitalfor counsel to advise the initially identifiedkey players participating in a litigation holdabout policies and procedures and periodicallyupdate the list of relevant custodians.A client must preserve documents ofemployees who leave the company or transferto a different part of the organization.See Scalera v. Electrograph Sys., Inc., 262F.R.D. 162, 176 (E.D.N.Y. 2009) (holdingthe defendants negligent, in part, for failingto preserve documents of a key employeewho left the company); Thompson v. HUD,219 F.R.D. 93, 100 (D. Md. 2003) (holdingthat former key employees’ e-mail recordsshould have been preserved even absent apreservation order).The size of a corporation can also add tothe challenge of identifying key players, ascourts often require document collectionfrom a large number of employees. JudgeScheindlin has cautioned that while the failureto collect records from key players constitutesgross negligence or willfulness, thefailure to obtain records from all employeeswho had any involvement with the relevantissues could also constitute negligence. PensionComm., 685 F. Supp. at 465; see ZubulakeV, 229 F.R.D. at 432 (“Unless counselinterviews each employee, it is impossibleto determine whether all potential sourcesof information have been inspected.”).Ideally, counsel should communicatedirectly with all key players and instructthem to produce active files and makes surethat backup media are identified and safelystored. Depending on the dispute, however,it may not be reasonable to collect from allemployees, for instance, if the relevant partyis a multinational pharmaceutical or medicaldevice company. Such a company willhave extensive employee lists and may havenumerous products on the market that haveno relevance to the product being litigated.Judge Scheindlin and others have recognizedthis problem and allow counsel to be“creative” in conducting the search for relevantinformation. See, e.g., Zubulake V, 229F.R.D. at 432 (providing the example of asystemwide, keyword search to supplementthe process of interviewing key players).Courts will consider the parties’ circumstancesin each instance to determine thesufficiency of their efforts: “The adequacyof each search must be evaluated on a caseby case basis.” Pension Comm., 685 F. Supp.2d at 473 n.68. Counsel should, therefore,adopt reasonable strategies based on a client’sresources for locating personnel andpreserving relevant ESI.Collaboration between counsel and clientwill help safeguard the process of identifyingkey players. Counsel should workwith a client to empower the organization’sgeneral counsel or head of human resourcesto communicate a litigation hold to theproper individuals and ensure that the listof key personnel is up-to-date. Anothermethod to safeguard the preservation processis to locate organizational charts oremployee rosters within a company’s databaseand use an electronic auditing systemto track and update potential changes inkey custodians. Whatever method counseland client choose, communication mustbe firmly established between the informationtechnology department, the humanresources department, general counsel,

and outside counsel: the success of a preservationand collection effort dependson their coordination. See In re Seroquel,244 F.R.D. at 662 (imposing sanctions fore- discovery failures on a party whose attorneywas ignorant of both the documentproduction team and how the productionsystem worked).Identify Critical Teammates—IT PersonnelCounsel should also communicate with thedata gatekeepers, that is, the IT personnelwho manage the resources that storethe relevant information. See Zubulake V,229 F.R.D. at 432. IT personnel can helpfamiliarize counsel with a client’s documentretention policies and data retentionarchitecture and explain systemwidebackup procedures and a company’s policiesregarding data deletion, recycling,and overwriting. Id.; see also Sedona Conference,Commentary on Achieving Qualityin the E- Discovery Process 14 (2009),http://www.thesedonaconference.org/publications_html(“[IT personnel] will be informedon the subject of what ESI is online, nearonline,and offline, what may be zipped orencrypted, and what may be found on backups,CDs, DVDs, virtual storage devices,servers, removable storage devices… andarchives of all kinds.”). Failure to communicatewith IT personnel may not onlymake e- discovery obligations more difficultto perform, but a court may considerit negligence. See Scalera, 262 F.R.D. at 177(holding defendants negligent for failingto timely communicate with IT personnel,even though a preservation duty was communicatedto most key players); PhoenixFour, 2006 WL 1409413, at *6 (noting counsel’sobligation to seek help from IT personnelwhen difficulties regarding server dataarises). Counsel should, therefore, contactIT personnel as soon as e- discovery dutiesarise to avoid the loss of relevant evidence.See Scalera, 262 F.R.D. at 177.Companies should also identify an employeeto assist counsel in litigation. Today’scompanies house hundreds, if not thousands,of terabytes of information. That informationis not always neatly organized forlitigation, and data storage places a tremendousburden on both in-house and outsidecounsel to identify and preserve the myriadof different ESI repositories. This is no easytask if they are unfamiliar with moderncomputer architecture. As a result, manycompanies create the internal position of“discovery czar.” Whether the designatedperson has a risk management, IT, or legalbackground, he or she should have broadIT comprehension. A discovery czar shouldhave passwords to all databases and servers,as well as administrative rights to theservers. This discovery czar should also beThe Most Timesaving,Cost-Effective SourceFor The Best ExpertsExpert referralsin virtually allfields, includingunique specialtiesMost referrals madewithin 24 hoursIndependent Consultingand Testifying Expertsfor any stage of your caseFlexibility for budgetsof all sizesExpert-led webinars andcase-relevant articles onwww.TASAnet.comChallenge History Reports onany Expert’s past testimony,with supporting documentsTechnical Advisory Service for Attorneys800-523-2319experts@tasanet.comwww.TASAnet.comFor The Defense n October 2010 n 35

D R U G A N D M E D I C A L D E V I C EAttorneys’ Playbook:The Xs and Os of E-DiscoveryDefine the nature, scope and total valueof the litigationIdentify potential custodians and datarepositories that may have informationrelevant to the litigationIdentify a point person in the ITdepartment who will assumeresponsibility for discovery and maypotentially testifyIssue legal hold notices to each recordcustodian and suspend routineautomated deletion for each repositoryEvaluate accessibility of each datasourceEvaluate the relevance of eachrepositoryDetermine cost, operational impact andmethods for instituting a legal holdDevelop collection methodology forresponsive data repositoriesPrioritize data collection to minimize riskof relevant data loss, while identifyingissues that may surface such as databeing encrypted or password protectedIdentify and implement other reasonablemethods to prevent the inadvertentdestruction of potentially relevantmaterialsPrepare for meet and confer withopposing counsel under FRCP Rule28(f)(2) to discuss preservation andultimate production of responsivedocumentsCraft agreement of Preservation Order,which clearly defines the measures youare taking as satisfying the preservationobligation36 n For The Defense n October 2010added to the defense team to ensure that everyoneupdated on new information, searchterms, and production efforts with any ongoingsupplemental discovery process.The plaintiffs in Pension Committee providean example of the need for a wellinformeddiscovery czar. Almost all theplaintiffs in that case failed to either carryout comprehensive searches for documentsor supervise document collectionprocesses. Pension Comm., 685 F. Supp.2d at 477. One plaintiff assigned criticalcollection duties to an employee with noexperience conducting searches and providedno training, supervision, or contactwith counsel during the search process.Id. at 483. Another plaintiff, lacking knowledgeof the electronic filing system, hadtwo employees perform searches withoutsupervision or understanding of the extentof the search. Id. at 489. The court held thatthese failings constituted negligence orgross negligence and subjected the plaintiffsto monetary sanctions. Id. at 477, 497.Had the plaintiffs used a discovery czar tooversee and direct document collection,they may have avoided those sanctions.Not only can a discovery czar help ensureproper collection of materials, but shoulda dispute arise over the collection process,he or she can provide documentation andserve as a knowledgeable witness about aclient’s efforts to meet production duties.See, e.g., Pension Comm., 685 F. Supp. 2dat 477 (holding that the plaintiffs failed toadequately prepare records and witnessesin response to the court’s request for discoverydocumentation).Second Steps: Create a Game Planto Store and Retrieve DocumentsIt is imperative for an organization to demonstratethat it has taken the appropriatesteps to ensure the integrity of the informationcovered by a legal hold. Once aparty has identified the data relevant to itse- discovery duties, it must collect and processthis data efficiently and effectively. SeePension Comm., 685 F. Supp. 2d at 465. Partiesare free to preserve e-data in many differentways. See Scalera, 262 F.R.D. at 171;Cache La Poudre Feeds, 244 F.R.D. at 628(“[I]n the typical case, responding partiesare best situated to evaluate the procedures,methodologies, and technologiesappropriate for preserving and producingtheir own electronic data and documents.”)(internal quotations omitted). However,in producing those documents, partiesmust act in an open and cooperative manner.See In re Seroquel, 244 F.R.D. at 661–62 (holding the defendants’ search of theirrepositories secretive and inadequate). Aneffective system of ESI documentation,therefore, should be both efficient and easilyaccessible.ESI documentation is essential for drugand device companies facing litigation, asdocument collection duties will invariablyinvolve large data environments. See, e.g.,In re Seroquel, 244 F.R.D. at 654 (notingthe great challenge of e- discovery in litigationinvolving “development of a drugthat spent many years in development byan international corporation and has beendistributed worldwide”). A company’s electronicallystored information may exist inmany locations, including remote officesand off-site servers that are maintained bythird parties, and contract employees mayhave the responsibility of maintaining thisESI. In litigation, parties must prove effectivemanagers of these complex data systemsor else they become vulnerable tocourt sanctions. See id. at 661–62 (listingamong the defendant’s discovery failingsan unclear method of de- duplication, lateproduction of documents, and inadequateresponses to technical issues).Companies must, therefore, establish athorough system to identify their storeddocuments. See Sedona Conference, BestPractice Guidelines & Commentary forManaging Information and Records inthe Electronic Age 11 (2d ed. 2007), http://www.thesedonaconference.org/publications_html(“An organization should have reasonablepolicies and procedures for managinginformation and records.”). Importantdata management steps include identifyingrepositories to control the flow of documentsduring litigation, and using datamaps, disaster plans, and capital acquisitionreports to identify valuable discoveryinformation. Many pharmaceuticaland device makers also keep substantialamounts of information in enterprisesresource planning (ERP) environmentssuch as the one developed by SAP.A “content map” or “data map” helpsidentify repositories by recording the attributesof an organization’s data reposito-

ies, such as the types of data, how suchinformation is governed, and where relatedinformation may be copied. A data mapshould be up-to-date, a resource that setsout significant details of an organization’sdifferent active data creation and storagesystems—e-mail, instant messaging,voicemail, network storage and file servers,application and file types, workstationdistributions, remote user setup, and distributionof mobile devices—and backupprotocols for each system involved in thelitigation. Data maps should also includedetails on the names and roles of key datagatekeepers, the IT and records managementpersonnel who manage and controla company’s document creation anddestruction technologies. Some organizationsalready have data maps of their computersystems. For those organizationsthat do not, counsel will have to interviewrecord custodians and collect informationabout where and how the organizationsstore information and then use that informationto craft a data map for the litigators.It is also important to periodicallyupdate document searches to properlyadhere to the ongoing obligation for supplementalproduction. To help satisfy thisduty, parties can collect and preserve ESIby creating defensible copies of the evidence.It is possible to make copies of filesor create images of entire disk drives, segregateand store the information in a protectedrepository, and at the same timeeliminate cumulative information. Deduplicationand date metadata will allowcounsel to quickly identify new documentsfrom ones that were previously collectedto satisfy ongoing production obligations.With live products, a useful way toensure effective supplemental productionis to record the MP5 or SHA1 hash valueof all documents. In litigation involvingactively marketed products, the same documentsare often simultaneously editedby a client and prepared for production bycounsel. A company needs the ability toconsistently identify new and altered documents.Using the MP5 of SHA1 hash values,a company can create an exception reportto determine if changes to documents mayimpact the litigation.In helping to implement these collectionand production strategies, attorneys shouldnot worry about over- preserving. It costsonly a few thousand dollars to build a largeserver to host a copy of the data created ina live “production” environment. As longas the directory format for data in the productionenvironment is kept when copyingdata to the preservation server, mostprocessing software can capture all thenecessary fields to ensure a complete production.This process will also allow counselto quickly tag the files already collectedto identify new files. When it is time tocollect, counsel can connect an encryptedUSB device to the preservation server andtransport the relevant content for reviewand production.Third Steps: Keep It Privilegedand ConfidentialCounsel can protect against inadvertentdisclosures and limit turnover by identifyingall counsel and executing nonwaiveragreements.Identify CounselParties involved in the manufacture ofpharmaceutical or medical device productsshould take care to avoid unwanteddisclosure of documents. During the discoveryfor a live product, a company cangenerate many documents due to regulatorychanges. Members of the organizationtypically will communicate with a varietyof legal actors, such as liability attorneys,regulatory attorneys, and often, documentcounsel. In that environment, there is a realrisk that some documents will may mistakenlyreceive responsive tags, resulting ininadvertent disclosure.Although a party can move for thereturn of inadvertently disclosed information,a court may deny the request and findthat the disclosure waived privilege. See,e.g., Victor Stanley, Inc. v. Creative Pipe,Inc., 250 F.R.D. 251, 267–68 (D. Md. 2008)(holding that the disclosure of 165 documentsto an opposing party waived anyprivilege or work- product protection); Figurasv. P.R. Elect. Power Auth., 250 F.R.D.94, 98 (D.P.R. 2008) (holding the circumstancessurrounding a disclosure waivedany privilege regarding an inadvertentlyproduced document); Atronic Int’l, GMBHv. SAI Semispecialists of Am., Inc., 232F.R.D. 160, 164 (E.D.N.Y. 2005) (findingthat inadvertent disclosure of e-mails constitutedwaiver of attorney- client privilege).The efficiencies createdby automation andautomated documentationcan be significant.To prevent disclosure of documentscontaining attorney- client privileged orproprietary information, it is crucial toidentify all counsel involved with a clientand ensure that they maintain opencommunication with one another. A goodprophylactic measure is to create a comprehensivelist of attorney names, firm names,attorney domains, for example, “harrisbeach.com,”and common contractionsfor all firms, such as “Harris Beach,” andthen enter these terms into the litigationdocument review platform. All documentsin the platform can then be automatically“flagged” for all of the terms on that list. Asnew attorneys become involved in the litigation,counsel can perform another searchto flag new documents for additional privilegereview. Privilege reviewers can performan additional final review to uncoverany remaining documents tagged withprivilege flag terms that escaped noticeduring earlier reviews.Utilize Nonwaiver AgreementsAnother important tool for protecting sensitiveinformation is a nonwaiver agreement.Inadvertent production of privilegeddocuments is likely to occur during discoveryof electronically stored information.See Hopson v. Mayor and City Councilof Baltimore, 232 F.R.D. 228, 232 (D. Md.2005) (noting the volume and forms ofe-material make privilege review difficultand time- consuming). To prevent inadvertentdisclosures, parties can sign anonwaiver agreement. This agreement isessentially a contract, often in the formof a court order, stipulating that inadvertentdisclosure of privileged or proprietaryinformation, trade secrets, or employeematerials will not be considered a waiver.See id. (“agreements protect respondingE-Discovery, continued on page 84For The Defense n October 2010 n 37

D R U G A N D M E D I C A L D E V I C EHow Do I Warn Thee?Let Me Count the WaysBy Eric A. PaineConsumer-DirectedPharmaceuticalWarningsEffectively presentingthe myriad warningsthat were provideddirectly to a plaintiffmay make the differencein a pharmaceuticalproduct liability case.Under the learned intermediary doctrine in effect in manyjurisdictions, a manufacturer of a prescription drug has aduty to provide an adequate warning of the risks associatedwith that manufacturer’s drug to a prescribingphysician. The learned intermediary doctrineis an exception to the general productliability rule that requires a manufacturerto warn the ultimate user directly.Regardless of the learned intermediarydoctrine’s focus on the warning provided toa physician, as a practical matter, the mantra,“I would never have taken this drugif I had known there was a risk,” can turna case into an issue about whether a consumerwas effectively warned. Whether aplaintiff received a warning may be legallyirrelevant under the learned intermediarydoctrine; however, ask yourself, howmany jurors will likely ignore that plaintiff’stestimony?As a practical matter, consumers ofprescription medications receive myriadwarnings from different sources regardingthe risks associated with their medications.These sources could reasonably be expectedto result in well- informed consumers whomake considered decisions about the risksand benefits of the drugs that they take. Asmentioned in a recent FDA report, “Whena person decides to use a medication, heor she is agreeing to take certain risks.”See Safe Use Initiative, U.S. Food & DrugAdmin., FDA’s Safe Use Initiative: Collaboratingto Reduce Preventable Harm fromMedications 4 (Nov. 4, 2009). In litigation,appropriately emphasizing the risk informationprovided to a patient may make jurorsless willing to reward a plaintiff whoclaims that he or she had no idea that riskswere associated with his or her medication.But even if a patient directly receiveswarning of the risks associated with a prescriptionmedication, the legal effect of thewarning remains unsettled in today’s productliability jurisprudence.This article will address juridical attitudestoward consumer- directed pharmaceuticalwarnings in relation to the learnedintermediary doctrine. It will then exploresome of the current ways that patientsreceive information about the health risksassociated with prescription medications.■ Eric A. Paine, a Nelson Mullins Riley & Scarborough LLP partner, practicesproduct liability and business litigation. Mr. Paine’s work focuses onthe defense of pharmaceutical and medical device cases with emphasis onscientific and medical causation issues. He is a member of DRI’s Drug andMedical Device Steering Committee and the Trial Tactics Committee.Consumer-DirectedWarnings in the CourtsSurprisingly few published opinions haveaddressed consumer- directed warnings inrelation to the learned intermediary doctrine.There is no clear consensus among38 n For The Defense n October 2010

courts that have taken up whether the doctrineinsulates drug manufacturers fromliability.One school of thought considers thelearned intermediary doctrine and warningsdirected to consumers as inherentlyinimical and that the advent of consumerwarnings on prescription medications aswarranting abolishing the learned intermediarydoctrine. The allegedly pervasiveinfluence of direct- to- consumer advertisinghas undermined the doctrine in somestates. See, e.g., Perez v. Wyeth, 734 A.2d1245 (N.J. 1999); Centocor, Inc. v. Hamilton,2010 Tex. App. LEXIS 1623 (Tex.App. Mar. 4, 2010). West Virginia has outrightrejected it. State of West Virginiaex rel Johnson & Johnson Corp. v. Karl,647 S.E.2d 899 (W.Va. 2007). Those infavor of abrogating the learned intermediarydoctrine typically claim that the doctrineis an anachronism that reflects thepaternalistic “doctor knows best” relationshipthat prevailed when the doctrine wasfirst articulated. Similarly, they emphasizethat patients have unprecedented access tomedical information today and are nowgreatly empowered to make informed decisionsabout their own health care, whichfrees them from strict and unquestioningreliance on their physicians’ advice. Inaddition, they claim that cases holding thelearned intermediary doctrine inapplicableto prescription oral contraceptives andmass vaccinations provide analogous precedentfor the inapplicability of the doctrinein other instances if warnings have beenprovided directly to patients.Relying on the underpinnings oforal contraceptive cases, the OklahomaSupreme Court in Edwards v. Basel Pharmaceuticals,933 P.2d 298 (Okla. 1997), heldthat the learned intermediary doctrine didnot automatically protect a manufacturerfrom liability when the FDA required amanufacturer to provide a warning directlyto patients. Note that in Edwards, the decedentsmoked cigarettes while wearing twonicotine patches, the professional labelingstated that an overdose of the product couldbe lethal, but the patient insert stated thatan “overdose might cause you to faint.” Id.at 299.While there is some validity to observationsregarding the evolving nature of thepatient- physician relationship, it hardlycompels the conclusion that we should discardthe learned intermediary doctrine.Prescription pharmaceuticals are, afterall, still available to patients only withprescriptions from licensed health careproviders. Even Internet savvy medicalmavens still lack the training, experience,and judgment to diagnose their own maladiesand to identify appropriate treatment,risks, and benefits.Even if an independent duty arises fromFDA- mandated, direct- to- consumer warnings,the more reasoned conclusion is thatthe learned intermediary doctrine andconsumer- directed warnings can peacefullycoexist and provide independentdefenses for pharmaceutical manufacturersdefending failure- to- warn claims.When warnings are provided directly toconsumers, why shouldn’t manufacturershave independent opportunities to avoidliability based on either of two or morewarnings advising patients about drugrisks?Rush v. Wyeth, 514 F.3d 825 (8th Cir.2008), represents a step in the right direction.In Rush, the plaintiff admittedreceiving patient package inserts with hermedication, but she testified that she didnot read them. The Eighth Circuit agreedthat, under Arkansas law, the defendant,the manufacturer, was entitled to assumethat the plaintiff would exercise ordinarycare and, therefore, that she would read theinsert’s warnings. The Eighth Circuit thenheld that although an adequate warning toa patient’s physician can suffice to defeat afailure- to- warn claim, the doctrine doesnot preclude informing a patient directly.In other words, if a patient is independentlyaware of a drug’s risk, then the drugmanufacturer’s failure to warn adequatelyof the danger is irrelevant. The Eighth Circuitin Rush concluded that the trial courtproperly instructed the jury to find for thedefendant if the plaintiff was aware of thedrug’s risks before the diagnosis of herinjury. Rush recognized that warning consumersdirectly, in addition physicians, isconsistent with underlying principles oftort law and not antithetical to the learnedintermediary doctrine.Sources of Direct-to-Consumer WarningsBegin planning your trial cross-examination of a plaintiff and identifyingthe evidence that you will need to demonstratethat he or she received an effectivewarning of the risks associated with a drugearly in your case. Generally speaking,aside from the risk information providedby a prescribing health care professional,warnings about the risks associated witha prescription drug potentially may reacha patient through four broad categories ofpatient- directed information.Patient Package InsertsPatient package inserts, sometimes abbreviatedas “PPIs,” are FDA- approved, consumerfriendly adjuncts to the approvedprofessional labeling for certain prescriptiondrugs. The FDA requires patientpackage inserts only for a few drugs. Forinstance, 21 C.F.R. §310.501 sets forth therequirements for patient package insertsaccompanying oral contraceptives, as does21 C.F.R. §310.515 for estrogen- containingmedications. Among other things, a patientpackage insert for an oral contraceptivemust contain a boxed warning, a discussionof the drug’s contraindications, astatement of the risks and benefits associatedwith the drug, and a list of potentialadverse reactions. For other drugs, thecontent of a patient package insert variesaccording to the drug and its risks. Butpatient package inserts commonly discusswhat the drug is, how it works, who shouldnot take the drug, and possibly or reasonablyanticipated side effects.Although patient package inserts arerarely required, a manufacturer may voluntarilysubmit one for FDA approval. Severaldrugs currently reach consumers accompaniedby FDA- approved patient packageinserts, including, for example, certainantibiotics, retinoids, and chemotherapeuticagents.As the name implies, a patient packageinsert is usually included in the actualpackaging intended for the consumer. Thisliterally puts risk information and warningsin a patient’s hands every time a patientfills a prescription. If a patient opens a drugpackage to take the drug, the patient can inno way avoid the insert. The more a patientrefills a prescription, the more times he orshe will receive a warning!Although they cover some of the sametopics, a patient package insert tends toFor The Defense n October 2010 n 39

D R U G A N D M E D I C A L D E V I C Ebe shorter and use less complex languagethan a drug’s professional labeling. Patientpackage inserts are intended for a differentaudience. If you question a plaintiff about apatient package insert during a deposition,ask the plaintiff specifically to identify anythinghe or she claims that he or she did notunderstand about the risks discussed in theinsert or the particular words that he or sheA patient packageinsert… literally puts riskinformation and warnings ina patient’s hands every timea patient fills a prescription.found confusing. Ask the plaintiff if he orshe called his or her doctor or pharmacistfor clarification.Once approved, a patient package insertmay be used with printed advertisementsfor the drug. See Ctr. for Drug Evaluation& Research, U.S. Food & Drug Admin.,Consumer Medication Information (CMI):Expert and Consumer Evaluation of ConsumerMedication Information 2008:Questions and Answers, http://www.fda.gov/AboutFDA/CentersOffices/CDER/ReportsBudgets/ucm163786.htm. When a plaintiff claims thata drug advertisement in a magazine eitherconvinced him or her to start taking a drugor offered “reassurance” that continuing totake the drug was a good idea, ask if he orshe read the entire advertisement. At trial,be prepared to introduce an authenticatedcopy of the entire document, which shouldinclude the patient package insert.40 n For The Defense n October 2010Medication GuidesPlaintiffs often admit that they received“printouts” or “flyers” from pharmacieswith their prescriptions. In many cases,they are describing a FDA- approved “medicationguide” created by the manufacturer.The FDA may determine that certainprescription drugs and biological products“pose a serious and significant publichealth concern” that makes a written,patient- oriented medication guide “necessaryto patients’ safe and effective use” ofthe product. 21 C.F.R. §208.1(a)–(b). TheFDA can require a medication guide in oneof three circumstances: (1) patient labelingmay help prevent serious adverse effects,(2) a drug has serious risks that patientsshould weigh against its benefits in decidingto use the drug, or (3) a drug is considered“important to health” and patientadherence to directions for use is criticalto the drug’s effectiveness. 21 C.F.R.§208(1)(c).Among other things, a medication guideis• Written in “non- technical, understandable”English;• Legible and clearly presented;• Not promotional in tone or content;• Scientifically accurate and consistentwith the professional labeling; and• Specific and comprehensive.21 C.F.R. §208.20(a). The regulations furtherspecify the formatting and requiredcontent of a medication guide. 21 C.F.R.§208.20(b).Because the primary objective of a medicationguide is to ensure that a patient iswell- advised of the risks associated withthe medication, risks are discussed inseveral different sections and subheadingsof a medication guide. See 21 C.F.R.§208.20(b)(2) (“What is the most importantinformation I should know about”the drug); 21 C.F.R. §208.20(b)(4) (“Whoshould not take” the drug); 21 C.F.R.§208.20(b)(6) (“What should I avoid whiletaking” the drug); 21 C.F.R. §208.20 (b)(7)(“What are the possible or reasonably likelyside effects of” the drug). Note that, interms of the section describing likely sideeffects, a medication guide must describeadverse “reactions that are likely to becaused by the drug product that are seriousor occur frequently.” 21 C.F.R. §208.20(b)(7)(i) (emphasis added).While a drug manufacturer is responsiblefor preparing and obtaining FDAapproval of a medication guide beforedistribution, medication guides are distributedto consumers by pharmacies, or“dispensers” or “distributors.” See 21 C.F.R.§208.24. A patient should receive a medicationguide with a new prescription andwith each refill.Medication guides were not intendedto be ubiquitous. When the final ruleestablishing medication guides went intoeffect in 1998, the FDA expected that “nomore than 5 to 10 products per year wouldrequire such information.” PrescriptionDrug Product Labeling: Medication GuideRequirements; Final Rule, 63 Fed. Reg.66479 (Dec. 1, 1998). However, in 2005, theFDA began approving classwide medicationguides. As a result, medication guidesare currently available for more than 200prescription medications and over thecounter drugs, including antidepressants,nonsteroidal anti- inflammatory drugs(NSAIDs), narcotic pain relievers, attentiondeficit hyperactivity disorder (ADHD)medications, and certain antibiotics. SeeU.S. Food & Drug Admin., MedicationGuides, http://www.fda.gov/Drugs/DrugSafety/ucm085729.htm (listing currently availablemedication guides, including .pdf images)(last visited Sept. 2, 2010).Risk Evaluation and Mitigation StrategiesThe FDA’s risk evaluation and mitigationstrategies (REMS) may be another avenuethrough which consumers receive warningsabout the risks associated with prescriptionpharmaceuticals. REMS arosefrom a new section, 505-1, of the Food,Drug, and Cosmetic Act (FDCA), under theFood and Drug Administration AmendmentsAct of 2007, which went into effectin October 2009. In September 2009 theFDA issued a draft guidance, “Format andContent of Proposed Risk Evaluation andManagement Strategies (REMS), REMSAssessments, and Proposed REMS Modifications.”U.S. Food & Drug Admin.,http://www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/UCM184128.pdf (Sept. 30, 2009).The draft guidance provides a blueprintfor developing and implementing REMS.Although the REMS provisions took effectonly recently, the FDA’s website currentlylists over 100 pharmaceutical products thathave been subject to and for which it hasapproved REMS.The FDA may require REMS for anydrug or biological product subject to a newdrug application (NDA), abbreviated newdrug application (ANDA), or therapeuticbiologic application (BLA) at any timeif it determines that (1) “new safety information”comes to light, and (2) it is necessaryto make certain that the benefits of

the drug continue to outweigh the risks.“New safety information” may developfrom adverse event reports, clinical trials,post- marketing monitoring systems, medicalliterature, or other appropriate scientificdata about a serious risk, whether previouslyknown or unknown.As with a patient package insert, theholder of a drug application may voluntarilypropose REMS and submit them tothe FDA. If the FDA approves the REMS,the manufacturer will have the same obligationsthat it would have had if the FDAhad initiated the REMS. If the FDA rejectsthe REMS, which essentially means thatthe drug does not require heightened safeguards,the manufacturer may still pursuethe strategies but without the formal obligationsof a FDA- mandated REMS. Themanufacturer may propose modificationsto approved REMS at any time.REMS include patient package insertsand medication guides. Among the currentlyapproved REMS, medication guidesand preferred package inserts are the predominantcomponents. Sometimes, adrug’s REMS may require both a patientpackage insert and a medication guide,although the FDA expects that rarely. TheFDA will regulate products with formerlyapproved patient package inserts or medicationguides that meet the REMS programstandards under the REMS provisions andrequirements from this point forward. Andthe FDA may require a manufacturer todevelop a communication plan as part ofa drug’s REMS, which can include a DearHealthcare Professional letter, web-basedproduct support, and educational materialsthat it will provide to prescribers throughprofessional associations and meetings, orthe FDA can require the communicationsplan instead of something else.The FDA may also require additionalmeasures or interventions, termed “elementsto ensure safe use,” abbreviated as“ETASU” in the REMS draft guidance, fordrugs with demonstrated efficacy, albeit“with known serious risks that would otherwisebe unavailable.” The draft guidancementions that these elements to ensure safeuse may include one or more of the following:requiring prescribers to have specialcertification, training, or experience;requiring drug dispensers, such as pharmaciesor hospitals, to have special certificationand training to dispense the drug;restricting the locations where a drug maybe dispensed, such restricting dispensingprivileges to hospitals; requiring laboratorytesting to confirm that the patients’ conditionwill allow them to use the drug safely;asking patients sign acknowledgements ofunderstanding concerning the drug’s risks;requiring periodic testing of patients tomitigate serious risk; and enrolling patientsin a drug-use registry.For example, the FDA recently approvedREMS for Onsolis, an opioid indicated forbreakthrough cancer pain, under whichOnsolis can be distributed only throughpharmacies participating in a special regis-For The Defense n October 2010 n 41

D R U G A N D M E D I C A L D E V I C Etry. Verification of an Onsolis prescriptionfrom a registered provider is required andchecked against a database, and the drugis delivered to a patient via courier onlyafter the patient participates in a telephoniccounseling session. See Questions andAnswers About Onsolis (fentanyl buccalsoluble film) (July 16, 2009), http://www.fda.gov/Drugs/DrugSafety/ PostmarketDrugSafetyInfoConsider the undeniablevalue of a plaintiff’s signedacknowledgement of adrug’s risks in front ofa jury or in support ofa dispositive motion.rmationforPatientsandProviders/ucm172039.htm;see also Ned Milenkovich, FDA- MandatedREMS Now In Force In PharmaceuticalIndustry, Drug Topics, Oct. 8, 2009.As a practical matter, a drug’s REMSmay have a two-edged blade. Requiringspecialized training, certification, or participationin registry programs may detersome physicians from prescribing medicationsthat would otherwise significantlybenefit certain patients. On the other hand,consider the undeniable value of a plaintiff’ssigned acknowledgement of a drug’srisks in front of a jury or in support of a dispositivemotion. Moreover, a physician whoparticipated in special training or held acertification would likely provide valuabletestimony concerning his or her awarenessof a drug’s risk profile, the compelling reasonsfor prescribing it to a plaintiff, and thecounseling that a patient received aboutthe drug’s risks consistent with obtaininginformed consent.Consumer Medication InformationConsumer medication information, sometimesabbreviated “CMI,” is another potentialconsumer source of risk and warningsinformation. As with a medication guide,consumer medication information is typicallyprovided to a consumer attached42 n For The Defense n October 2010to the bag containing a new prescription.Consumer medication information is usuallyprepared by an outside vendor ratherthan a pharmacy or a drug’s manufacturer.Although it is typically based on the FDAapprovedlabeling, consumer medicationinformation is not approved or regulatedby the FDA.In 1996, Congress enacted EffectiveMedication Guides, Public Law 104-180,Title VI, Sec. 601, 110 Stat. 1593 (1996).Public Law 104-180 established a series ofstaggered benchmarks for patients so thatthey would receive “useful written patientinformation” with their prescriptions: 75percent were to receive this useful informationby 2000 and 95 percent by 2006.The statute took the additional and unusualstep of prohibiting the FDA from regulatingthe format and content of consumermedication information while a committeeconsisting of consumer organizations,pharmaceutical manufacturers, health careprofessionals, consumer medical informationdevelopers, and others developed recommendations.The committee issued areport in 1996, “Action Plan for the Provisionof Useful Prescription Medicine Information,”delineating criteria for consumermedical information to meet the law’sgoals. Studies conducted by the NationalAssociation of Boards of Pharmacy evaluatedprogress toward the target goals. Thestudies released in 2002 found that whileconsumer medication information generallyreached the target proportion of theconsuming public, the “usefulness” of thatinformation lagged. In 2006, the FDA wasasked to take a more active role in meetingthe law’s objectives. Consequently, in July2006, the FDA published a guidance, “UsefulWritten Consumer Medication Information(CMI),” which is available at theFDA’s website. Ctr. for Drug Evaluation andResearch, U.S. Food & Drug Admin., http://w w w.fda.gov /downloads / Drugs / GuidanceComplianceRegulatoryInformation/ Guidances/ucm080602.pdf.The guidance considers written informationaccompanying a prescription “useful”when it reflects the components andformatting elements of the 1996 actionplan and its content is consistent with themost recent version of the manufacturer’slabeling. Specifically, “useful” consumermedication information should be scientificallyaccurate, unbiased, specific, comprehensive,understandable to consumers,and current.A follow- up study released in 2008 foundthat 94 percent of consumers received consumermedication information with newprescriptions, but only 75 percent of theCMI “met the minimum criteria for usefulness.”Thus, while these results fall shortof the 2006 target, the study did showthat the vast majority of consumers doreceive useful written information withtheir prescriptions.For your discovery planning, note thatmany retail pharmacies can reproduce theparticular consumer medication informationor medication guide that accompanieda particular prescription at a particulartime. Consider serving discovery to thevendor that produced a pharmacy’s consumermedication information if necessaryto obtain copies of the information that aplaintiff would have received.ConclusionToday there is an unprecedented amountof information available to a consumerregarding prescription pharmaceuticals.Not surprisingly, much of the availableinformation concerns the drug risks.Through patient package inserts, medicationguides, consumer medication information,and some of the REMS procedures,consumers are receiving user- friendly,patient- oriented information about therisks and benefits associated with prescriptionmedications. Effective marshallingand presenting the warnings that were provideddirectly to a plaintiff, perhaps manytimes, in many different forms, over manymonths or years, may make the differencein a pharmaceutical product liabilitycase. Ironically, in 2006, the AmericanPharmacy Association published PatientSafety Implications on Implementation ofthe Current FDA- Mandated MedicationGuide Program, which raised the concernsthat consumers may be overloaded with toomuch information from medication guides,patient package inserts, and consumermedical information, and that the directto-consumer information tended to placetoo much emphasis on risk. Id. at 7–11.What a wonderful problem for a defenselawyer to have.

D R U G A N D M E D I C A L D E V I C EStatutory ConsumerFraud Act ClaimsBy Jeffrey A. HolmstrandEnforcingthe RelianceRequirementClose examination ofthe relevant statutorylanguage is necessaryto prevent plaintiffsfrom making an endrun on the causationproof requirement.For decades, state and federal consumer fraud statuteshave declared various types of trade practices “unlawful,”and some of those statutes have provided a direct remedyto a consumer harmed “as a result” of another’s use of aprohibited practice. Until recently, thosestatutes were invoked by individual plaintiffsseeking damages on their own behalfor by government officials purporting toact with statutory authorization to obtaindeclaratory, injunctive, or other noncompensatoryrelief. Recently however, defendantsof all stripes—including retailers,product manufacturers, pharmaceuticalcompanies, and financial service providers—havefaced statutory consumer fraudact claims through which plaintiffs havesought to recover damages on behalf oflarge numbers of people. These aggregatecases can take the form of consumer classactions, third-party payor claims, or suitsby state attorneys general on behalf of astate’s citizens for monetary damages orrestitution. Because the parties for whomrelief is sought in this new form of consumerfraud suit are not limited to consumerswho sustained actual injuries, thescope of a defendant’s exposure has broadenedexponentially, especially in states permittingaggregate treatment of the claims.A typical consumer fraud act claimrequires proof that (1) a defendant engagedin some form of conduct which violatedthe statute, (2) the party seeking reliefsustained an ascertainable loss, and (3) acausal relationship exists between theallegedly unlawful conduct and the loss.See, e.g., International Union of OperatingEngineers Local No. 68 Welfare Fundv. Merck & Co., Inc., 929 A.2d 1076, 1086(N.J. 2007). In defending clients againstthese types of claims, defense attorneysoften point to four words typically foundin a consumer fraud act—“as a result of”—and argue that individualized proof of causationprecludes aggregate treatment ofsuch claims. Plaintiffs, on the other hand,have had some success arguing that aggregaterelief is available, despite this commonlanguage, by asking courts to ignore theplain meaning of the phrase or its equivalent.This article will first outline the statutorylanguage at issue and touch on somepertinent class certification rules. The secondpart will discuss a number of casesaddressing the causation requirement andsuggest ways of showing that a consumer■ Jeffrey A. Holmstrand is with the Wheeling, West Virginia office of Flaherty Sensabaugh & Bonasso PLLC, where he focuseshis statewide practice on defending product liability, mass torts/class actions, and complex insurance disputes. He serves on thesteering committee of the DRI’s Product Liability Committee and is immediate past chair of its Mass Torts/Class Action SLG.For The Defense n October 2010 n 43

D R U G A N D M E D I C A L D E V I C Efraud act claim cannot be proven on anaggregate basis.Where reliance isuncontested, courtsare reluctant to allowaggregate treatment ofa claim since individualissues will predominate.44 n For The Defense n October 2010Elements of a StatutoryConsumer Fraud Act ClaimOften modeled on the Federal Trade CommissionAct, the Uniform Consumer SalesPractices Act, the Unfair Trade Practicesand Consumer Protection Act, or the UniformDeceptive Trade Practices Act, moststates have a consumer fraud act that definesunlawful conduct in greater or lesserdetail, describes the available remedies, anddelineates who may seek them. See Comment:The Tennessee Consumer ProtectionAct: An Overview, 58 Tenn. L. Rev. 455,456–457 (Spring 1991); William A. Lovett,State Deceptive Trade Practice Legislation,46 Tul. L. Rev. 724, 730 (Apr. 1972). Becauseof these common characteristics, thelanguage used in a given state’s consumerfraud act is generally similar to that usedin other states. Many of these statutes providesome sort of private remedy enforceableby private litigants. For example, theRhode Island consumer fraud act provides:Any person who purchases or leasesgoods or services primarily for personal,family, or household purposes andthereby suffers any ascertainable loss ofmoney or property, real or personal, asa result of the use or employment by anotherperson of a method, act, or practicedeclared unlawful by [the CFA] maybring an action under Rules of Civil Procedurein the superior court of the countyin which the seller or lessor resides, isfound, has his or her principal place ofbusiness, or is doing business, or in thesuperior court of the county as is otherwiseprovided by law, to recover actualdamages or two hundred dollars ($ 200),whichever is greater.R.I. Gen. Laws §6-13.1-5.2.Other states have similar provisions authorizingprivate consumer fraud act claimswhen the protected person has suffered an“ascertainable loss” “as a result of ” the defendant’suse or employment of an unlawfulpractice, and permitting varying degrees oflegal and equitable relief. See, e.g., AlaskaStat. §45.50.531; Ark. Code Ann. §4-88-113; Conn. Gen. Stat. §42-110g; IdahoCode §48-608; 815 Ill. Comp. Stat. Ann.505/10a; Ky. Rev. Stat. §367.220; La. Rev.Stat. 51:1409; Miss. Code Ann. §75-24-15;Mo. Rev. Stat. §407.025; N.J. Stat. §56:8-19; Or. Rev. Stat. §646.638; 73 Pa. Stat.§201-9.2; S.C. Code Ann. §39-5-140; Tenn.Code Ann. §47-18-109; W. Va. Code §46A-6-106; cf., Minn. Stat. §325D.15 (any persondamaged “by reason of a violation” maysue for actual damages).A plain reading of this type of consumerfraud act suggests that an individual plaintiff’sloss must come about “as a result of”the defendant’s unlawful practice. In otherwords, a plaintiff must prove a causal nexusbetween the loss and the offending conduct.This usually means that a plaintiffmust prove that the plaintiff relied on theallegedly deceptive conduct. Where reliefis sought on behalf of a class or some othergroup of consumers, the causation requirementshould extend to each individualmember of the group, which extends tothe reliance element. Plaintiffs in aggregateconsumer fraud act claims often attempt toeliminate the reliance requirement fromthe causation analysis by essentially ignoringthe “as a result of” language found inmost statutes. Some courts have agreedthat proof of direct reliance is not alwaysrequired. But most courts that have consideredthe question have held that a relianceinquiry informs the causation analysis. Ina case brought by an individual plaintiff,the jury could determine whether to credithis or her testimony that the defendant’sconduct caused an “ascertainable loss.” Ina class action or other aggregate litigation,the ability to prove that unnamed classmembers suffered an ascertainable loss“as a result of” of the defendant’s conductin violation of a consumer fraud act implicatesthe rules for class certification.Reliance and Causation in Classand Other Aggregate LitigationThe consumer fraud acts of most states donot specify whether aggregate treatment ofclaims is permissible. Some states—Mississippi,Louisiana, South Carolina, and Tennessee,for example—explicitly precludeclass or other representative actions forconsumer fraud act claims. Even then, theSupreme Court’s recent decision in ShadyGrove Orthopedic Associates, P.A. v. AllstateInsurance Company, 559 U.S. , 130S. Ct. 1431, 176 L. Ed. 2d 311 (2010), suggeststhat a class action which otherwisemeets the applicable requirements of Fed.R. Civ. P. 23 may proceed in federal courtnotwithstanding a state law bar on classtreatment of the statutory claim at issue.In Shady Grove, a divided court upheld aplaintiff’s attempt to pursue a class actionin federal court even though the state lawwhich formed the substantive basis for itsclaim specifically precluded classwide relief.Under Shady Grove, plaintiffs in states withsimilar laws may not be able to pursue classwiderelief in state court, but the decisionmay allow them to seek class treatment infederal court in some circumstances. Thiswill obviously impact the decision whetherto remove such cases, especially where reliefis sought on behalf of putative class membersfrom more than one state.In states permitting class treatment,the question becomes whether plaintiffscan meet the requirements of the applicableclass action rules. In federal court or instates with civil procedure rules modeledon Fed. R. Civ. P. 23, a plaintiff must showthat all four requirements of Fed. R. Civ. P.23(a) are met and that the case falls withinone of the categories described in Fed.R. Civ. P. 23(b). See Alba Conte and HerbertNewberg, Newberg on Class Actions(4th ed.) §3:1 at 210 (2002). Although thedetails of these are beyond the scope ofthis article, Fed. R. Civ. P. 23(a) has fourrequirements: numerosity; commonality,typicality, and adequacy of representation.Assuming these can be met, litigants inconsumer fraud act actions often attemptto shoehorn their claims into the categoriesencompassed by Fed. R. Civ. P. 23(b)(2)(the party opposing the class has acted ongrounds generally applicable to the group)or Fed. R. Civ. P. 23(b)(3) (common questionsof law or fact predominate over indi-

vidual issues and the class action device issuperior to other methods available to adjudicatethe controversy). Both have similarrequirements to ensure the class actiondevice is appropriate for the circumstancesof a given case.The “predominance” and “superiority”requirements of Fed. R. Civ. P. 23(b)(3)attempt to ensure that the class device is notmisused. Courts have recognized that thepresence of individual issues of causationor reliance destroys predominance underFed. R. Civ. P. 23(b)(3). See, e.g., Basic Inc.v. Levinson, 485 U.S. 224, 242 (1988) (“individualissues [would overwhelm] commonones” in case where “proof of individualizedreliance from each member of [a] proposedplaintiff class” is required); Johnstonv. HBO Film Mgmt., Inc., 265 F.3d 178, 194(3d Cir. 2001) (where “plaintiffs were notentitled to a presumption of reliance,” districtcourt “did not abuse its discretion inconcluding the plaintiffs failed to establishthe predominance requirement of Rule23(b)”); Broussard v. Meineke Disc. MufflerShops, Inc., 155 F.3d 331, 342 (4th Cir. 1998)(“because reliance ‘must be applied withfactual precision,’ plaintiffs’ fraud and negligentmisrepresentation claims do not providea ‘suitable basis for class-wide relief”)(quoting Jensen v. SIPCO, Inc., 38 F.3d 945,953 (8th Cir. 1994)). Thus, where reliance isuncontested, courts are reluctant to allowaggregate treatment of a claim since individualissues will predominate.Plaintiffs seeking classwide damages forconsumer fraud act violations sometimestry to invoke Fed. R. Civ. P. 23(b)(2) whenseeking certification. Federal Rule 23(b)(2)was intended to apply primarily to equitableclaims and any monetary relief awardedwas to be incidental to the equitable, injunctiverelief sought by plaintiffs. Zinser v.Accufix Research Inst., Inc., 253 F.3d 1180,1195 (9th Cir. 2001). Thus, courts have heldthat “class certification under Rule 23(b)(2) is proper only when the primary reliefsought is declaratory or injunctive.” In reSt. Jude Med., Inc., 425 F.3d 1116, 1121 (8thCir. 2005). In fact, the United States SupremeCourt has previously held there is“at least a substantial possibility” that actionsseeking monetary damages are onlycertifiable under Fed. R. Civ. P. 23(b)(3),which provides class members with noticeand the right to opt-out. See Ticor Title Ins.Co. v. Brown, 511 U.S. 117, 121 (1994) (emphasisadded). Even assuming a case mightqualify for treatment under Fed. R. Civ. P.23(b)(2), courts have noted that because thatrule does not require notice or the right toSINCE 1980, the economistsand analysts at the Center forForensic Economic Studieshave worked closely with plaintiff anddefense attorneys from both small andlarge firms and a wide variety ofbusinesses and government agencies.We assist with discovery, uncover keydata, critique opposing claims andproduce clear, credible reports andtestimony. Attorneys and their clientshave relied on our expertise inthousands of cases in jurisdictionsacross the country.Our areas of concentration includePersonal Injury / Wrongful Death;Commercial Loss / BusinessInterruption; Damages in EmploymentLitigation; Statistical Analysis of Liabilityin Employment Claims; and BusinessValuation.opt-out, the proposed class must exhibit“cohesiveness” as a condition precedent tocertification. See Newberg §4:11 at 61 (“Rule23(b)(2) includes an implicit ‘cohesiveness’requirement, which precludes certificationEconomic Damages AnalysisLitigation consulting in injury, commercial and employment mattersContact us to discuss how we can helpyou prepare and present yourdamages case.Some senior staff membersPia Di Girolamo, PhDBernard Lentz,PhDT H E C E N T E R F O RFORENSIC ECONOMIC STUDIESThirty years of service: 1980 - 20101608 WALNUT STREET, PHILADELPHIA, PENNSYLVANIA 19103WWW.CFES.COM 800.966.6099 CFES@CFES.COMChad L. StallerMBA, JD, MACJames Markham,PhD, JD, CPCUFor The Defense n October 2010 n 45

D R U G A N D M E D I C A L D E V I C Ewhen individual issues abound.”); St. Jude,425 F.3d at 1121 (cohesiveness is more importantunder Rule 23(b)(2) than predominanceunder Rule 23(b)(3) because thereis no provision for opting out); Philip MorrisInc. v. Angeletti, 752 A.2d 200, 253 (Md.2000) (‘cohesiveness’ requirement is “similarto… predominance, yet one that is evenmore demanding and difficult to satisfy.”);Courts have stated thatthe “as a result of” languagein a state’s consumerfraud act amounts to acausation requirement.see also, Barnes v. American Tobacco Co.,161 F.3d 127, 143 (3d Cir. 1998); Santiago v.City of Philadelphia, 72 F.R.D. 619, 628 (E.D.Pa. 1976) (court should be no more acceptingof certification under Rule 23(b)(2) than23(b)(3) where there are significant individualissues).Instructive Case LawAs defendants in other industries, pharmaceuticaland medical device manufacturershave increasingly faced consumerfraud act claims over the past decade. Aplaintiff may claim a defendant violated aconsumer fraud act by misstating or misrepresentingthe risks posed by a particularprescription medicine. A plaintiff mayassert this violation entitles the plaintiffand the class that the plaintiff seeks to representto statutory damages for the purchaseand ingestion of the drug, even ifthe class members have not been physicallyharmed by ingesting the drug. Thirdpartypayors have claimed a defendant’sviolation of a consumer fraud act resultedin its over- purchasing of the prescriptionmedication for insureds. When recovery issought for purchases made by hundreds orthousands of users of a product, enforcingthe “as a result” of language of the relevantconsumer fraud act is vital.Courts have stated that the “as a resultof” language in a state’s consumer fraud46 n For The Defense n October 2010act amounts to a causation requirement.See, e.g., Hunt v. United States Tobacco Co.,538 F.3d 217, 221 (3d Cir. 2008) (stating thatPennsylvania courts have “categoricallyand repeatedly” identified that languageas a “causation” requirement). As such,plaintiffs in these states must prove “justifiablereliance” on the defendant’s allegedlyfraudulent conduct. See, e.g., Hunt, 538F.3d at 221 (citing Schwartz v. Rockey, 593Pa. 536, 932 A.2d 885, 897 n.16 (Pa. 2007)(stating that “the justifiable reliance criterionderives from the causation requirementwhich is express on the face” of theconsumer fraud act)). Even in states wherethe state consumer fraud act has beeninterpreted to eliminate a direct “reliance”requirement, that issue usually remainsrelevant to the causation inquiry.For example, the Eighth Circuitaddressed this issue in In re St. Jude MedicalInc. Silzone Heart Valve Products Litigation,522 F.3d 836 (8th Cir. 2008). There,the putative class sued under Minnesota’sconsumer fraud act and consisted of peoplewho were implanted with an allegedlyunsafe heart valve. The Minnesota SupremeCourt had previously held the language ofthe state’s consumer fraud act did not containa direct reliance element. Group HealthPlan, Inc. v. Philip Morris Inc., 621 N.W.2d2 (Minn. 2001). The Group Health courtnonetheless held that causation was a necessaryelement of a damages action underthe Minnesota consumer fraud act and thatsome proof of reliance was still required aspart of the causation analysis. 621 N.W.2dat 13. The district court in St. Jude certifieda class under Minnesota’s consumer fraudact, rejecting the defendant’s argumentthat the need for some proof of reliance aspart of the causation analysis precluded afinding of predominance.On appeal, the Eighth Circuit reversedthe district court’s certification order,agreeing with the defendant that individualizedissues would predominate. Interestinglyfor the defense practitioner, the EighthCircuit relied in part on evidence profferedby the defendant showing that neither individualplaintiffs nor their physicians hadrelied on any particular representation thathad allegedly violated the consumer fraudact and calling such evidence “highly relevantand probative on the question whetherthere is a causal nexus between alleged misrepresentationsand any injury.” St. Jude,522 F.3d at 840. It further stated:Whatever Group Health means about theneed for these plaintiffs to present directevidence of individual reliance, it doesnot eliminate the right of a defendant topresent evidence negating a plaintiff’sdirect or circumstantial showing of causationand reliance. Given the showingby St. Jude that it will present evidenceconcerning the reliance or non- relianceof individual physicians and patients onrepresentations made by St. Jude, it isclear that resolution of St. Jude’s potentialliability to each plaintiff under theconsumer fraud statutes will be dominatedby individual issues of causationand reliance. The need for such plaintiffby-plaintiff determinations means thatcommon issues will not predominate theinquiry into St. Jude’s liability.Id. See also Zekman v. Direct Am. Marketers,Inc., 286 Ill. App. 3d 462, 221 Ill. Dec.570, 675 N.E.2d 994 (Ill. App. Ct. 1997),appeal denied, 173 Ill. 2d 549, 226 Ill. Dec.140, 684 N.E.2d 1343 (1997), rev’d on othergrounds, 182 Ill. 2d 359, 231 Ill. Dec. 80, 695N.E.2d 853 (1998) (although direct relianceis no longer a requirement under Illinois’consumer fraud act, reliance falls with theparameters of proximate cause and, therefore,a private party must have relied on thewrong to some extent in order to establishproximate cause).In International Union of Operating EngineersLocal No. 68 Welfare Fund v. Merck& Co., Inc., 929 A.2d 1076 (N.J. 2007), theplaintiff, a third-party payor, contended itsuffered losses as a result of the defendant’sallegedly fraudulent marketing scheme. Itsought to represent a nationwide class ofall third-party payors that had paid for theprescription medicine at issue. The plaintiffcontended the defendant violated theNew Jersey consumer fraud act because it“marketed its product as a safer and moreeffective alternative to other traditionalpain medications, thus driving the priceof its product substantially higher thanthe price charged for similar medications”and that it “did so through an aggressivemarketing campaign undertaken at a timewhen defendant was aware that its productwas neither more effective nor saferthan other available products.” 929 A.2dat 1079. The plaintiff claimed it and other

class members either would not have authorizedthe drug’s inclusion in their formulariesor would have placed it in a tier thatwould have discouraged consumers frompurchasing it had they known of the truerisks. Thus, the plaintiff claimed, the defendant’salleged misrepresentations causedit to purchase more of the drug than it andthe class members would have otherwise.929 A.2d at 1082.The New Jersey Supreme Court consideredwhether the proposed consumer fraudact class action could meet the requirementsfor predominance and superiority.A consumer fraud act claim under NewJersey law requires a plaintiff to allege andprove “three elements: (1) unlawful conduct…;(2) an ascertainable loss…; and(3) a causal relationship between the defendants’unlawful conduct and the plaintiff’sascertainable loss.” Engineers LocalNo. 68, 929 A.2d at 1086 (quoting N.J. CitizenAction v. Schering- Plough Corp., 842A.2d 174 (N.J. Super. Ct. App. Div. 2003),cert. denied, 837 A.2d 1092 (N.J. 2003)).Even though it had previously held that“reliance” was not an element of a consumerfraud act claim in Thiedemann v.Mercedes- Benz USA, LLC, 183 N.J. 234, 246,872 A.2d 783 (N.J. 2005), the court in EngineersLocal No. 68 nonetheless recognizedthat the causation requirement had teeth:Although the record does not identifythe members of the proposed class, otherthan the named plaintiff, with any precision,the available information makesit plain that they are a diverse group ofentities. More important to our analysis,however, plaintiff does not suggestthat each of these proposed class members,receiving the same informationfrom defendant, reacted in a uniformor even similar manner. Rather, therecord speaks loudly in its demonstrationthat each third-party payor … madeindividualized decisions concerning thebenefits that would be available to itsmembers for whom [the drug] was prescribed.The evidence about separatelycreated formularies, different types oftier systems, and individualized requirementsfor approval or reimbursementimposed on various plans’ membersand, to some extent, their prescribingphysicians, are significant. That evidenceconvinces us that the commonalityof defendant’s behavior is but a smallpiece of the required proofs. Standingalone, that evidence suggests that thecommon fact questions surroundingwhat defendant knew and what it didwould not predominate.929 A.2d at 1087. Note how the defendantsuccessfully demonstrated the relevant differencesamong proposed class membersusing the causation analysis.The Engineers Local No. 68 court also addressedwhy the “fraud on the market” theoryfound in federal securities litigation didnot apply to consumer fraud claims. The EngineersLocal No. 68 court described thattheory as allowing plaintiffs to demonstratethat they were damaged simply because adefendant engaged in behavior otherwiseprohibited and because there was a changein the price of the security. 929 A.2d at 1088.Noting that the theory “presumes reliance,”the court rejected the suggestion that mereproof that the price charged for the medicinewas higher than it should have been asa result of the defendant’s allegedly fraudulentmarketing campaign was sufficient underthe consumer fraud act. Id. Instead, itreiterated that a plaintiff “must nonethelessplead and prove a causal nexus between thealleged act of consumer fraud and the damagessustained.” Id.The court also rejected the argumentthat proof of damages could be shownthrough the use of an expert testifyingabout the effect on pricing of the defendant’smarketing campaign, stating thatsuch proof would “be the equivalent” of animpermissible fraud on the market theory.Id. See also, In re Neurontin Mktg., SalesPractices & Prods. Liab. Litig., 257 F.R.D.315 (D. Mass. 2009) (discussing predominanceand superiority in a suit involvingoff- label uses of a prescription medicineand relying on Engineers Local No. 68 inrejecting a fraud on the market theory);Clark v. Pfizer, Inc., 2010 PA Super 6, 2010Pa. Super. LEXIS 7 (Pa. Super. Ct. 2010)(relying on Neurontin to reject certificationof a claim under the Pennsylvania CFA);Ironworkers Local Union No. 68 v. Astra-Zeneca Pharms. LP, 585 F. Supp. 2d 1339,1344 (M.D. Fla. 2008) (causation requirementwould necessarily require inquiryinto a physician’s independent judgmentand would be influenced by a number ofthings, only one of which may be representationsby a manufacturer as to a particulardrug’s relative safety and efficacy);but see, Plubell v. Merck & Co., 289 S.W.3d707, 714 (Mo. Ct. App. 2009) (applyingMissouri law and holding that class membersare not individually required to showwhat they would or would not have donehad the product not been misrepresented);White v. Wyeth, West Virginia SupremeCourt Docket No. 35296 (certified questionargued May 4, 2010 asking whether relianceis an element of a consumer fraud actclaim under West Virginia law).Two recent decisions from different federalcircuits illustrate the continuing battleover the language in consumer fraud acts.The first, a panel decision from the UnitedStates Court of Appeals for the Ninth Circuit,Yokoyama v. Midland National LifeInsurance Company, 594 F.3d 1087 (9thCir. 2010), illustrates a successful effortto convince a court to read causation outof a state’s consumer fraud act. There, theplaintiff contended he had purchased adeceptively marketed annuity and soughtrelief under Hawaii’s consumer fraud acton his own behalf and on behalf of a classof annuity purchasers. The district courtheld the plaintiff could not meet Fed. R.Civ. P. R23(b)(3)’s predominance requirementbecause it concluded, among otherthings, that the state consumer fraud actrequired proof of a causal link (i.e., reliance)between an allegedly deceptive actand the damages each class member sustained.Yokoyama v. Midland Nat’l Life Ins.Co., 243 F.R.D. 400, 411–12 (D. Haw. 2007).The Ninth Circuit reversed, holding thatHawaii did not require proof of individualreliance and that class relief was availablewhenever the act at issue was “likelyto mislead consumers acting reasonablyunder the circumstances.” 594 F.3d at 1089(citing Courbat v. Dahana Ranch, Inc., 141P.3d 427, 435 (Haw. 2006). This test, it held,is “an objective test, and therefore actualreliance need not be established.” Id. As aresult, it reversed the district court’s denialof class certification. It reached this conclusionwithout analyzing the pertinent languageof Hawaii’s consumer fraud act.In contrast, the district court’s decisiondenying class certification had focused ontwo sections of the statute at issue. The first,Haw. Rev. Stat. §480-2, simply declaresvarious trade practices to be “deceptive”For The Defense n October 2010 n 47

D R U G A N D M E D I C A L D E V I C ECrime and PunishmentBy Kai Petersand Andrew CaryHandling LitigationWhen CriminalActivity Is InvolvedWith the promiseof increased FDAprosecution, it is wise tobecome aware of potentialor actual criminal aspectsof civil litigation.With zealous plaintiffs’ attorneys, massive document productions,numerous witnesses, punitive damages, and theinvolvement of complex and cutting-edge medical and scientificproducts and issues, defending pharmaceutical andmedical device manufacturers in productliability and other actions can be, to saythe least, complex. That representation becomeseven more complex when potentialor actual criminal action against employees,executives, and a company is involved.Corporate criminal actions intertwinedwith civil litigation are nothing new, andwe have plenty of recent examples of pharmaceuticaland medical device companiesthat have become embroiled that way, compellingcorporations, sales representatives,and executives to pay substantial monetarypenalties. These criminal actions haveoften involved prison time as well. In thecoming years, the Food and Drug Administration(FDA) plans to increase prosecutionsof pharmaceutical and food industryexecutives in efforts to refocus its criminaldivision, and this threat promises toincrease the frequency with which civil litigatorswill need to contend with potentialor actual criminal acts when defending clients,which makes understanding how tobest handle civil matters warranted whenthe specter of criminal actions loom.Exemplar Criminal Prosecutionsin Recent YearsThere has been a plethora of criminal actionsinvolving pharmaceutical and medicaldevice companies in recent years. Recentindictments of companies and executivesserve as cautionary examples because theypromise to continue in the future.For example, in October 2009, a criminalindictment was brought against a biotechlimited liability company, StrykerBiotech, LLC, and four top-level executives,including the president, the national salesdirector, the Western regional manager, andthe Southeast regional manager of sales oncharges of wire fraud, conspiracy, distributionof a misbranded device, and makingfalse statements. The defendants potentiallyface up to 20 years in prison and substantial■ Kai Peters and Andrew Cary are partners in the San Francisco office of Gordon & Rees LLP and membersof the firm’s drug and medical device group. Mr. Peters has extensive experience in and specializes in complexlitigation, including product liability and mass torts, and pharmaceutical and medical device law. Mr.Cary’s practice involves representing businesses in a broad range of litigation matters with a primary focuson product liability cases involving pharmaceuticals and medical devices. Both are members of DRI’s Drugand Medical Device Committee.For The Defense n October 2010 n 49

D R U G A N D M E D I C A L D E V I C Efines. The federal government alleged thatfrom 2005 until 2008 the defendants marketedand promoted mixing each of two ofits bone-growth stimulating products witha third product, a bone void filler, for bonerepairs, which the FDA had not approved,to boost sales. The two bone growth stimulatingproducts were approved only underFDA humanitarian device exemptionsThe FDA plans toexpand prosecutions ofpharmaceutical and foodindustry executives aspart of efforts to refocusits criminal division.(HDE) with a stated, permissible UnitedStates market of 4,000 people, and the otherproduct had clearance under section 510(k)of the Food, Drug, and Cosmetic Act.The government alleged that adverseevents resulted from the promoted offlabeluse of the products, which includedmigration of the combined products fromthe wound site, revision surgery, removalof bone growth, drainage, impaired woundhealing, and inflammation. The governmentfurther alleged that the promotion ofthe products to surgeons and surgical staffcontinued another two years, even thoughStryker knew about the adverse events,did not have FDA approval for the combineduse, which accounted for the vastmajority of sales of the products with theHDE approval, and admonitions of potentialexposure to the company and criminalprosecution of individuals for promotingthe mixture. The indictment also claimedthat despite a recommendation by a seniorsales manager that the company cease promotingthis use and notify surgeons in a“Dear doctor” letter about adverse experiences,two of the indicted sales managersargued against disclosure, in part, to avoidthe adverse effect on sales and the anger ofsurgeons, as well as to keep institutionalreview boards from pulling the products.50 n For The Defense n October 2010In addition, the indictment alleged thatthe president engaged in a scheme to concealthat Stryker sold the products withthe HDE approvals to more than 4,000patients per year. To that end, the governmentalleged that the president providedfalse information that Stryker could notaccurately estimate usage per patient to anoutside law firm to obtain a “bogus legalopinion” and obtained advice on how toword an annual report to the FDA, basedon the false information provided by thepresident. See Indictment in United Statesv. Stryker Biotech, LLC, et al., No. 09-CR-10330-GAO, Oct. 28, 2009 (D. Mass.). Theparties reported to the federal court onSeptember 14, 2010, that they had discussedthe possibility of an early resolutionof the case without trial but did notbelieve that any such resolution could beachieved. There have been various civillawsuits pending against Stryker since theinvestigation began. Stryker Biotech alsorecently agreed in a consent judgment topay $1.35 million to the Commonwealthof Massachusetts to resolve state allegationsof improper marketing of its bonegrowth products and related allegations,as reported by the Massachusetts AttorneyGeneral on August 26, 2010.Stryker executives are not the onlyexecutives facing criminal prosecution.In June 2009, another company, Synthes,Inc., a medical device manufacturer, andits wholly owned subsidiary, Norian Corporation,and four executives of Synthesentities, a president, senior vice presidentof global strategy, vice president of operations,and director of regulatory and clinicalaffairs, were indicted under allegationsof organizing and sponsoring an illegal testmarket for bone cement products for spinalrepairs rather than obtaining an investigationaldevice exemption (IDE) from theFDA. According to the indictment, in internalcommunications recommending thatSynthes pursue an IDE, which it did not,Synthes personnel stated that the company“is at an increased legal risk with regards toproduct liability and medical malpractice.”The allegations in this case include aclaim that three patients died after applicationof an unapproved mixture of thebone cement products to the spine duringprocedures when company sales representativeswere present. The governmentmaintains that Synthes failed and refusedto comply with the FDA’s Medical DeviceReporting (MDR) requirement regardingthe first death, concealing it from the FDA,spine surgeons, and from its own salesforce. The government further maintainsthat the company’s reports for the secondand third deaths were brief, vague, and didnot mention that the product was used offlabel,to conceal the off- label use from theFDA and spine surgeons. The indictmentalso notes that the defendants concealedthat the label of one of the products specificallymentioned that it was not intendedfor the test treatment.Norian also faces 52 counts of conspiracyto defraud the United States and its agenciesby impeding, impairing, and defeatingthe lawful functions of the FDA toprotect the health and safety of the public,making false statements, concealing materialfacts in connection with the FDA, andintroducing into interstate commerce adulteratedand misbranded medical deviceswith the intent to defraud. The parent company,Synthes, is charged with 44 countsof introducing into interstate commerceadulterated and misbranded products thatlacked adequate directions for use withoutqualifying for exemption and securing therequired premarket approvals permittingmarketing for the intended uses. The executiveswere each charged with one count ofintroducing adulterated and misbrandedproducts. The indictment was based onan investigation that began in 2006. SeeIndictment in United States v. Norian Corporation,Synthes, Inc., et al., No. 2:09-cr-00403-LDD, June 16, 2009 (E.D. Penn.).The FDA Plans to IncreaseCriminal ProsecutionsAs mentioned, the FDA plans to expandprosecutions of pharmaceutical and foodindustry executives as part of efforts torefocus its criminal division in response tocriticism in a recent government report. Ina recent letter to Senator Charles Grassley,the ranking member of the Senate FinanceCommittee, the FDA described how itplanned to respond to the GovernmentAccountability Office (GAO) report titled,Food and Drug Administration: ImprovedMonitoring and Development of PerformanceMeasures Needed to Strengthen Oversightof Criminal Misconduct Investigations.

U.S. Gov’t Accountability Office, GAO-10-221 (2010), http://www.gao.gov/products/GAO-10-221. The report raised “concerns aboutthe oversight of the Office of CriminalInvestigations (OCI) by the FDA, in particularthe lack of performance measures toassess OCI’s success.” In the letter to SenatorGrassley, FDA Commissioner MargaretHamburg responded that the FDA wasputting in place “significant efforts thataddress the issues.” Letter from MargaretA. Hamburg, Comm., U.S. Food and DrugAdmin., to Sen. Charles A. Grassley (Mar.4, 2010). The FDA indicated that it planned“to increase the appropriate use of misdemeanorprosecutions… to hold corporateofficials responsible.” Id. Under a theoryof strict liability, the government assertedthat it had authority to prosecute corporateexecutives and that under that theory thegovernment did not have “to show intentto defraud.” Alicia Mundy, FDA CriminalDivision to Increase Prosecutions, Mundy,Wall St. J., Mar. 4, 2010, http://online.wsj.com/article/SB10001424052748703862704575099942109582112.html.Under a theory of strict liability, a defendantdoes not have to participate in oreven have knowledge of a violation; rather,a jury must find that a defendant had a “responsiblerelation” to the situation, and thedefendant had authority and responsibilityto address the conditions based on his or herposition. See United States v. Park 421 U.S.658, 673–74 (1975). The government mustshow that a drug or medical device wasadulterated or misbranded and shipped ininterstate commerce. 21 U.S.C.A. §331. Althoughonly a misdemeanor violation, iffound guilty, a person may be imprisonedfor up to one year and be subject to a monetaryfine. 21 U.S.C.A. §333. If a personcommits such a violation with the intent todefraud or mislead, that person can be imprisonedfor up to three years or fined up to$10,000, or both. Id. Companies may alsobe subject to large monetary penalties andother penalties. 21 U.S.C.A. §333.RecommendationsThe specter of a criminal action can rearits ugly head in many ways. Past criminalactions, detection of potential pastor ongoing criminal activity, governmentinvestigations, indictments against lowlevelemployees, and full, ongoing criminalprosecutions against past or currentcompany executives and the company allcan become situations that a civil litigatormust contend with.When potential or actual criminalactions are involved, you must heightenyour case evaluation. Following are 10 generalrecommendations for the civil litigatorto consider when confronting potential oractual criminal actions.Evidence DatabaseDeposition VideoManagementPocketVideo forDepositionsScanning and ImagingElectronic BriefsActively Preserve EvidenceOne recent case offers a cautionary notesignaling the need to take steps to preserveevidence, which can be difficultwith numerous disparate and geographicallydiverse actors involved. Even wellintentionedactors can find themselveswith “the short end of the stick” when theyact with apparently good intentions afterevidence has been destroyed.In the sentencing memorandum in arecent, well-known, criminal action againsta regional sales manager of a pharmaceuticalcompany, the government notedthe irony that the manager had been singledout. She was the lone sales managercharged with off- label promotion, eventhough she was not the only employeeengaged in this activity. When she heardin September 2004 that three sales representativesin one of her districts haddeleted information from their computers,she immediately reported this informationto her direct superior. Her good faithact, reporting this to her supervisor, likelyled to the government investigation thatfocused on her region. She even testifiedvoluntarily before the federal grand jurywithout requesting immunity and readilysigned tolling agreements requestedby the government. Unfortunately for thisemployee, her cooperation did not dissuadethe government from charging her with offlabelpromotion. The charge was a strict liabilityoffense similar to the strict liabilityoffenses that the FDA recently stated thatit would pursue more aggressively. Crimi-CommunicationtechnologySeamless delivery in the courtroomis critical.Our technology consultants have an average ofover 10 years experience in the courtroom.They will support you throughout yourengagement, providing expertise in evidencedatabase development, video management,warroom logistics and trial support.Your trial team will have the ultimate flexibilityin the courtroom with a comprehensivedatabase operated by one of the mostexperienced professionals in the industry.1.800.781.3591 / www.resonantlm.comWASHINGTON D.C. | PRINCETON | SAN FRANCISCO | DALLASFor The Defense n October 2010 n 51

D R U G A N D M E D I C A L D E V I C Enal intent was not relevant. Her lawyer saidthat she was finished in the pharmaceuticalindustry. The pharmaceutical companyalso agreed to pay $2.3 billion to settle civiland criminal allegations. According to theDepartment of Justice, six whistleblowerswere to collect $102 million from the federalshare of the funds alone, with one formersales manager collecting $50 million.Discovering hidden,incomplete, or delayedadverse event reportsare red flags indicatingdeeper problems than youmay have anticipated.You can learn one very important lessonfrom this scenario: when you represent acompany in civil litigation before criminalmatters have exploded, you should adviseyour client and all potential witnesses topreserve all documents and evidence andnot to destroy evidence or otherwise alterdocuments. This may require good coordinationbetween you and in-house counselor your in-house contacts to ensure thatyour client practices preservation, such asissuing litigation holds. You may need toexplain in-depth to small- to medium- sizedcompanies the duty to preserve evidence asthey may not be as familiar with litigationnor have as extensive in-house legal departmentsas larger entities. Preservation ofevidence is not unique to cases with possiblecriminal allegations. However, due tothe serious repercussions of failing to preserveevidence and the increased incentiveof certain individuals to attempt to destroyevidence, it is helpful to emphasize preservation’snecessity. Remember employeelaptops, text messages, and current communicationmodes.It hardly needs be said that initially somepeople become fearful of criminal overtonesin a case and will react by trying to covertheir tracks, whether they have somethingto hide or not. Accordingly, in appropriate52 n For The Defense n October 2010cases, when discussing the evidence preservationobligation with your client andwitnesses, it is helpful to emphasize thatfederal authorities and savvy plaintiffs’ attorneyscan and often do uncover attemptsto destroy, or actual destruction of, evidence,including alteration or deletion ofe-mails, electronic communications, anddocuments. You can tell your client andwitnesses that their hard drives may be inspectedin discovery and may be seized byauthorities, leading inspectors to uncoverattempted destruction. Furthermore, independentthird parties, such as ISP providersor related persons or entities, may receivesubpoenas, again leading opponents to discoverthe evidence that your client or witnessesattempted to destroy.It is important to emphasize thatattempting to destroy evidence can lead tocriminal charges of obstruction of justicewith possible monetary penalties and sentences.When handling civil actions, youshould make company contacts aware thatsuch behavior generally compounds theseverity of a situation for both individualsand a company, sometimes even resultingin terminating sanctions.As a civil litigator, if you become awarethat documents have been destroyed, donot ignore the situation. How you handleevidence destruction or alteration requiresa highly fact- specific evaluation, but youmust still deal with it, even if no ill will wasinvolved. You, of course, will have an obligationto perform a diligent search for documents.If documents have been destroyed,you may have to advise responsible partiesto secure personal counsel.Limit Document RequestsIn the event that your client has alreadyprovided documents to the government,obtain inventory lists of the documentsfrom criminal counsel so that you can evaluateappropriately the risk in the civil matterand whether they have use in the civillitigation. Expect a plaintiff’s counsel torequest these documents and be preparedto assert appropriate objections to preventwholesale production of documents. Limityour obligations to produce evidence to theextent that you can through objection, limitationof the scope of discovery, and agreementwith opposing counsel.Plaintiffs’ counsel might also file Freedomof Information Act requests fordocuments produced in government investigations.Production of documents inresponse to such requests are often slow,though, and an aggressive plaintiff’s counsel’sbest source of documents is the civildiscovery process. Regardless, you willwant to know which documents a plaintiff’scounsel may already have or will have accessto through Freedom of Information Actrequests or from third parties. Demand alldocuments obtained by a plaintiff’s counselso that you know what he or she knows.That said, if documents have been collectedin a criminal action, think aboutwhether you may use those documents tosimplify the discovery process in the civilmatter if warranted. At times, you will findthe documents for the criminal action toolimited or too sizable for efficient use in acivil action. However, a company may haveexpended significant effort and expense torespond to government subpoenas addressinga similar matter already so the companycan realize significant cost savingsif civil and criminal council collaborate tocoordinate discovery.Uncover Adverse Events andFDA Warning LettersLong before indictment or your client’sand its executives’ criminal woes hit theWall Street Journal and the nightly news,you may unearth clues that more complicatedissues underlie your case than youinitially thought from which you must protectyour client. To uncover those areas andto properly protect and advise your client,you will need to investigate your client’sadverse event reports, both those reportsthat have been made publicly available andthose that as yet have only been disclosedinternally within the company. It is prudentat the outset of a case to obtain alladverse event reports about alleged injuriesand alleged product defects in yourcivil case. Your pharmaceutical or medicaldevice client will undoubtedly havean extensive adverse event reporting system,as required under applicable federallaw. To the extent that these adverse eventreports refer to related investigations andcorrective actions, know them inside andout. Discovering hidden, incomplete, ordelayed adverse event reports are red flagsindicating deeper problems than you may

have anticipated. If you discover a numberof similar adverse event reports existbut that reporting to the FDA about theadverse events has been incomplete, determinethe reporting criteria for your clientbecause inconsistently maintaining standardsfor reporting certain adverse events tothe FDA is a pitfall.Perform a parallel investigation of thepublic, federal, Manufacturer and UserFacility Device Experience (MAUDE) database,or a comparable database for theproduct at issue and the alleged productdefect. Remember that those informationsources are public, readily available toyour opponent, and favored by plaintiffs’attorneys.Even more important, in cases involvingpotential or actual criminal actions,investigations, or indictments, you shouldobtain relevant FDA warning letters andForm FDA-483s and review them. Theymay provide notice to you about potentialor upcoming criminal charges. A Form 483is the form that the FDA uses to providea manufacturer with a report identifyingand discussing deficiencies in manufacturing,labeling, and other issues after inspectionof facilities as is required under section704 of the Food, Drug, and Cosmetic Act.An experienced plaintiff’s counsel will alsorequest and pursue warning letters andall related documents. FDA warning lettersand 483 forms are also publicly available.Thus, a plaintiff’s counsel may be wellaware of the information that they containif your client has received any. Accordingly,review publicly available information, forexample, information made available bythe FDA, to identify relevant documents.Unlike finding adverse event reports,finding warning letters often signifies thatyour client faces a situation closer to apotential criminal action. For example, theFDA issued a warning letter to Stryker onApril 25, 2008. The warning letter was sentabout 10 months before the governmentcharged a low-level Stryker sales representativeand about a year and a half beforeStryker and four of its executives wereindicted. See Waiver of Indictment, UnitedStates v. Demming, No. 08-CR-10379-NG,Feb. 6, 2009; Agreed Statement of Facts,United States v. Demming, No. 08-CR-10379-NG, Feb. 10, 2009 (D. Mass.). Thiswarning letter was extensive.The FDA warned Stryker in the letterthat Stryker had failed to obtain an investigationaldevice exemption (IDE) beforeinitiating a clinical investigation. The FDAalso noted that it was aware that some ofthe sales force submitted false InstitutionalReview Board (IRB) documentationregarding IRB approval of the company’sproducts. The FDA further wrote thatStryker had failed to adequately establishand maintain procedures to ensure complaintanalysis and complaint files, qualityaudit reports, quality records, returnedproducts and other sources of informationto identify existing and potential causesof nonconforming product, and it identifieddeficiencies in Stryker’s correctiveand preventive action (CAPA) system. TheFDA inspection discussed in the letter hadfound that Stryker’s products were misbrandedbecause it did not meet its MDRrequirements after it received a report suggestingthat devices were involved in adeath or serious injury. The letter alsorevealed that the FDA had not been notifiedor had been notified late of 33 reportableadverse events. Clearly, you shouldconduct research into a warning letter’sdetails involving the product at issue inyour case to make sure that you understandthe dangerous areas in your civil litigation,namely whether risk stems fromsales and promotion, design, FDA compliance,clinical trials, adverse event reporting,manufacturing, or another area. Also,identify the potential individuals involved,including whistleblowers and individualswho the government will probably investigateor charge with crimes because theseindividuals can become key targets for theplaintiffs in your case.Know the Criminal AllegationsIf one of your client’s employees is indictedduring the course of your litigation or hasalready been indicted, research the indictmentand the underlying basis. Determinewhether the same or a substantially similarproduct is involved in both the indictmentand the civil action that you havebeen asked to defend. Identify those individualsinvolved in the indictment. Identifyhow the claims at issue in your case areimplicated, if at all. If the civil and criminalcases are unrelated, you will have toassert appropriate objections to discoveryFinding warning lettersoften signifies that yourclient faces a situation closerto a potential criminal action.requests from the plaintiff, limiting discoveryto the product at issue, and readyyourself to fight all discovery requests forinformation related to the indictment andrelated facts, as well prepare to challengethe admissibility of that discovery.If the criminal allegations are clearlyon point, determine how your case isimpacted. For example, in the case involvingStryker, the criminal allegationstouched on numerous potential civil, legalissues, including failure to warn, defectivedesign, negligence, failure to comply withFDA rules and regulations, fraud, misrepresentation,and punitive damages claims,among others.Exercise Care with Depositionsand InterrogatoriesWhen you uncover criminal issues inyour litigation it is important to take intoaccount potentially incriminating evidencein responding to civil discovery requests,particularly before answering interrogatories,to questions during depositions, orbefore responding to requests for admissions.In appropriate circumstances, considerfiling a protective order to limit thescope of discovery or to address potentiallyincriminating testimony. That said, youmust aggressively defend the company inthe civil actions, which necessitates meetingyour discovery obligations.Pursue a detailed, stipulated protectiveorder to preserve the confidentialityof confidential documents and controversialtestimony. Firmly enforce the order,filing documents under seal as necessary.However, be wary because a grandjury subpoena for testimony may supersedea protective order, making that orderunenforceable, unreliable, and affectingFifth Amendment rights against selfincrimination.In Re Grand Jury SubpoenasFor The Defense n October 2010 n 53

D R U G A N D M E D I C A L D E V I C EDuces Tecum Special Grand Jury, Sept., 1986Term, 659 F. Supp. 628 (D. Md. 1987); butsee Martindell v. International Tel. and Tel.Corp., 594 F.2d 291, 295–296 (2d Cir. 1979).Coordinate with Criminal CounselIt is most important that you ensure thatthe defenses in civil and criminal actionsare consistent. If a company has hiredBe wary because agrand jury subpoena fortestimony may supersedea protective ordercriminal counsel to represent its interestsin criminal proceedings, coordination iscrucial. You will need to help the companyfight a two-front war, coordinating of positionsand defenses when possible to ensureconsistency in theme and positions.Be Skeptical—Question Your SourcesThe U.S. Securities and Exchange Commission(SEC) files a civil complaint againstthe manufacturer of a synthetic blood substituteand several of its corporate officersalleging that they fraudulently misrepresentedthe status of applications for FDAapproval of its product. Your client is oneof the executives, a senior vice presidentof regulatory affairs for the company. Yourclient could face civil penalties and administrativedebarment. Dr. Ras, your client’sphysician, calls you at the behest of yourclient to tell you that your client has cancer.Specifically, Dr. Ras tells you that yourclient was diagnosed with stage III colorectalcancer that has spread to his stomachand abdominal cavity. Your client providesyou with a letter from Dr. Ras stating thatyour client is undergoing surgery and chemotherapy.You move to sever your clientfrom the criminal action. Over the ensuingmonths, your client’s physician tells youthat the cancer has spread to your client’slymph nodes and subsequently provides anaffidavit stating that your client’s cancer isnow a stage IV cancer, your client is undergoingchemotherapy, radiation, and tumor54 n For The Defense n October 2010removal surgery, and your client has an 8 to15 percent- chance survival rate. You periodicallyprovide information to the court.The court severs your client’s action fromthe SEC litigation, stays the action, andlater stays final judgment, effectively endingthe litigation against your client. Otherexecutives, including the senior vice presidentand general counsel and the formerpresident and chief executive officer, signconsent decrees and agree to pay civil penaltiesof $40,000 to $120,000.Unfortunately, you learn that you haveeffectively perpetrated a fraud on the court.Your client does not and did not have terminalcancer. The “Dr. Ras” who called youwas actually your client. The affidavits thatyou submitted were actually phony affidavitsfrom your client. Your client ultimatelyconsents to a judgment in the SEC case,agrees not to work for any publicly tradedcompany, and to pay a $150,000 fine. He iscriminally indicted and ultimately is sentencedto 36 months in prison and fined$50,000 for concocting his terminal cancerstory.Sound far-fetched? It actually happened.Biopure Corp. was the company underinvestigation for its company’s Hempopureblood substitute in 2005, and Howard P.Richman was the former senior vice presidentof regulatory affairs who was ultimatelysentenced in 2009. Ex- Biopure ExecGets 36 Months In Jail For Faking TerminalCancer, 14 Mealey’s Emerg. Drugs &Devices, Issue # 20 (2009); see also Indictmentin United States v. Howard P. Richman,No. 1:08-cr-10282-MLW-1, Sept. 24,2008; Sentencing Hearing in United Statesv. Howard P. Richman, No. 1:08-cr-10282-MLW-1, Oct. 5, 2009.Your witnesses also may have countervailinginterests. Before indictments andwell before a company may even know thatthe government has initiated investigations,the government may have interviewed witnessesand obtained information. Well overseven months before Stryker and its seniormanagers were indicted in October 2009, aterritory manager agreed to waive indictment,submitted an agreed statement offacts, and pled guilty to a count of misbrandinga medical device. See Waiver ofIndictment, United States v. Demming, No.08-CR-10379-NG, Feb. 6, 2009 (D. Mass);Agreed Statement of Facts, United States v.Demming, No. 08-CR-10379-NG, Feb. 10,2009 (D. Mass.). Phones or communicationdevices of employees and witnesses mayalso be tapped. Current employees may alsoseek to be whistleblowers, whether yourclient engaged in truly actionable conductor not, for moral or monetary reasons andmay file a lawsuit under the qui tam provisionsof the False Claims Act.So what is the point? It is without questioncritical to locate and interview ordepose key witnesses with knowledge ofthe facts who will certainly be involved inyour case. However, witnesses will havecountervailing interests if criminal chargesrear their head, complicating your client’sdefense of the civil action. Be carefulwith and skeptical of information that youreceive from your clients when criminalactions exist or loom. As you gather factsfrom key witnesses, conscientiously delveinto the possible personal motivations of acompany’s employees. As you collect documentsfrom employees, impress uponthem that a plaintiff’s counsel will oftenuncover misrepresentations and obfuscations,which will make matters worsefor the company. Thoroughly review documentsand follow up in missing areas.Perform independent investigations andmeet with witnesses personally as necessaryto ensure that your defense theme anddefense of the case is based on fact, not outlandishtales.As for potentially hostile witnesses, usethe discovery process to determine a plaintiff’sawareness of and contact with potentiallyadverse witnesses so that you can findthose witnesses and possibly depose them.Advise on the Need for Separate CounselMake sure that you advise employee witnessesthat you represent the company.Absent potential or actual criminalaspects, company counsel can often representemployees of the company in depositionsand other proceedings. However, ifyou anticipate potential criminal actions,advise involved employees to obtain personalcounsel to protect their interests.If an employee hires a personal attorney,coordinating defenses is still possible,although it clearly raises concernsof the confidentiality of communicationswith defense counsel for that employee.Criminal, continued on page 86

Robson ForensicDrug & Medical Device ExpertiseBiomechanical EngineeringExpert: Mari S. Truman, P.E.• Orthopedic medical devices: Instruments andimplants for skeletal trauma/joint reconstruction• Design safety assurance• Device performance requirements• Product warnings• Biomechanics: Impact & injuryMari has nearly 30 years experience in product design and developmentin orthopedic medical devices, including implants and instruments.Mari draws on her strong knowledge of design controlprocesses, failure modes and effects analysis, clinically relevant tissueloading, design safety assurance including device performancerequirements and warnings, during her medical device litigation reviews.Mari has qualified as an expert in biomechanics in variousstate and federal courts.MariS.Truman@robsonforensic.comBiomechanical EngineeringExpert: Valentina Ngai, Ph.D.• Medical devices: instruments, implants andassistive devices• Premarket & postmarket wear testing• Kinematic & kinetic testing• Device performance requirements• Biomechanical implants & instrumentsDr. Ngai is an expert in biomechanical engineering. She has beenconducting research in biomechanics for nearly a decade, includingfive years of research conducted for the Department of OrthopedicSurgery at Rush University Medical Center. Dr. Ngai provides investigations,reports, and testimony toward the resolution of disputes andlitigation involving the testing and performance of medical implantsand devices. She has been published in the Journal of Biomechanics,Wear, and the Journal of Engineering in Medicine.vngai@robsonforensic.comToxicologyExpert: Michael J. McCabe, Jr., Ph.D.• Autoimmune & chronic inflammatory diseases• Allergies and other hypersensitivity reactions• Immunotherapeutic drugs and biologicals• Vaccine efficacy and safety• Chemotherapeutic agents• Vitamins and supplementsDr. McCabe is a nationally-recognized immunologist and toxicologist.His experience includes more than 25 years as a biomedicalresearcher and teacher in academia. He served on numerousgovernment review panels charged with assessing the safetyof xenobiotics that target immune/inflammatory processes. Heapplies his knowledge and experience to a broad array of drughypersensitivity and toxicity matters. Dr. McCabe has providedexpert testimony in both state and federal courts.mmccabe@robsonforensic.comEngineers, Architects, Scientists & Fire InvestigatorsBiomechanical EngineeringExpert: Jamie R. Williams, Ph.D.• Medical devices: instruments, implants andassistive devices• Premarket & postmarket mechanical testing• Foreseeable use and misuse• FDA submissions & recalls• Biomechanics: impact & injuryDr. Williams has nearly 15 years experience conducting mechanicaltesting on a variety of medical devices. As a biomedical engineer shehas investigated numerous medical device cases involving metal andnonmetal devices, including meshes. Her extensive background intissue biomechanics allows her to analyze complex cases, while herbackground in teaching provides the experience to explain these difficultconcepts in an easily understood way. Dr. Williams has qualifiedas an expert in biomechanics in various state and federal courts.jwilliams@robsonforensic.comBiomedical EngineeringExpert: Larry Fennigkoh, Ph.D., P.E.• Electrical medical devices: instruments & implants• Medical instrumentation & equipment• Biomedical engineering design• Product applications & warnings• Human physiology• Non-medical electrical devicesDr. Fennigkoh is a biomedical and electrical engineer who hasinvestigated numerous injuries and deaths associated with avariety of medical and non-medical electrical devices. Havingworked in hospitals for over 20 years, he understands not onlythe pathophysiology of injuries, but also the many ways in whichthey may be caused. Dr. Fennigkoh is a professor of biomedicalengineering, a Registered Professional Engineer and is boardcertified in clinical engineering.LarryFennigkoh@robsonforensic.comDrug WarningsExpert: William J. Vigilante, Jr., Ph.D.• OTC & prescription medication labeling• Warning & instruction design• Risk perception• Consumer knowledge & understanding• Product design and product usability• DTC advertising of prescription medicationDr. Vigilante has numerous scientific presentations and publicationsexamining the factors that affect consumers ability to readand understand OTC and prescription medication instructions andwarnings. His research has been presented to and utilized by theFDA in the formulation of OTC medication labeling requirementsand ensuring the fair balance of risk and benefit information inprescription drug advertising. Dr. Vigilante has testified in manystate and federal courts.wvigilante@robsonforensic.comwww.robsonforensic.com800.813.6736

G O V E R N M E N T E N F O R C E M E N T A N D C O R P O R AT E C O M P L I A N C EFrom the ChairBy David L. DouglassGood Governance Is atof Today’sFocusGiven the dramaticincrease in enforcement,our committee is pleasedto offer topical analysisof enforcement trends.White collar enforcement has become a regulatory tool tosecure broad internal reform within industries and companies.In this hyper-intensive environment of corporatescrutiny, the Department of Justice is acting as the preem-inent federal regulator of corporate culture.As a result, corporations and their officers,directors and management face enormousrisks. For companies, these risksinclude the draconian prospect of anindictment, monumental fines, unfetteredcourt or other third-party supervision ofthe businesses, loss of reputation in themarketplace and the cost—in economicand human capital—of defending themselves.For individuals, the risks includeincreasingly harsh and staggering terms ofimprisonment, fines and loss of livelihood.First, a little history. In 2002, in responseto the WorldCom and Enron scandals,President Bush created a Corporate FraudTask Force to enhance the DOJ’s prosecutionof corporate entities. Based on thisinitiative, the government pursued a moreaggressive enforcement response to corporatefraud. The idea was to improve coordinationamong federal officials, accelerateinvestigations and prosecutions, motivatelocal U.S. Attorneys to bring complexfraud cases and convince corporations tocooperate.56 n For The Defense n October 2010■ David L. Douglass is a partner in the Washington, D.C., office of Shook, Hardy & Bacon where he co-chairs the firm’s GovernmentEnforcement & Compliance Group. Mr. Douglass’s practice focuses on defending companies and corporate executivesfacing criminal investigations as well as civil and regulatory government enforcement actions, including false claims act (whistleblower)suits.

the HeartThe Corporate Fraud Task Force’semphasis on “real time enforcement” nettedhundreds of corporate fraud guiltypleas or trial convictions in the years followingits creation. Months after allegationsof accounting fraud at Adelphiainitially surfaced and only two weeksafter the task force’s creation, for example,77-year-old John Rigas, then Adelphia’sCEO, was arrested in a publicizedhandcuffing before the media. He was latersentenced to 15 years in prison. Moreover,white collar prosecutions, which had traditionallybeen the province of the SouthernDistrict in New York, became a nationalphenomenon as the task force encouragedgreater coordination between the SECand local U.S. Attorneys’ offices across thecountry. See, e.g., Birmingham, Alabama(HealthSouth Corp.), Harrisburg, Pennsylvania(Rite Aid Corp), Houston, Texas(Arthur Anderson LLP) and Alexandria,Virginia (AOL).The most enduring legacy of the corporatefraud scandals in the early 2000swas an increasing emphasis on corporateself- disclosure. Corporate self- disclosurebecame codified in certain statutes andmade a part of certain regulations. Forexample, the Sarbanes- Oxley Act imposeda complex web of certification and selfdisclosurerequirements on corporate officers,directors and counsel, including theso-called “reporting up” rules that obligatecounsel to report to superiors evidenceof financial or fiduciary breaches discoveredby counsel, and to make such a reportto the SEC if the corporate response wasunsatisfactory.The task force’s most important workwas its revision of the DOJ’s guidelinesfor corporate prosecutions. Despite subsequentiterations, these guidelines, as initiallyrevised by the task force, expect acompany seeking leniency from the governmentto conduct and disclose the resultsof a rigorous internal investigation intocorporate wrongdoing. These guidelinesspawned a “culture of waiver” as companiesused self- disclosure to avoid and/or mitigate the risks of an enforcementaction. Armed with privileged corporateinformation once deemed off limits to federalprosecutors, the government began tosuccessfully prosecute those specific gatekeepersand profiteers whom it deemedresponsible for any corporate wrongdoing.The collapse of the financial sector in2006 made increased enforcement evenmore popular with the public. Passedamidst the fallout from the subprime mortgageand credit market crisis, the FraudEnforcement and Recovery Act of 2009(FERA) ushered in an era of unprecedentedinteragency collaboration in the government’swar on corporate fraud. In additionto increased law enforcement personnel,FERA has been used to replace the CorporateFraud Task Force with the FinancialFraud Enforcement Task Force. Unlikethe Corporate Fraud Task Force, whichprimarily relied on the DOJ and FBI, thisnew Financial Fraud Enforcement TaskForce includes representatives from 23 federalagencies and their inspectors general,which allows it to investigate and prosecutea wider range of financial crimes.Given the dramatic increase in enforcementagainst both companies and seniorcorporate executives, the DRI GovernmentEnforcement and Corporate ComplianceCommittee is pleased to contribute to thismonth’s edition of For The Defense, offeringtopical analysis of these enforcementtrends. Jonathan N. Rosen’s article examiningthe increasingly expansive enforcementof the Foreign Corrupt Practices Act(FCPA) captures much of what we are seeingin the government’s overall war oncorporate crime, including the use of additionalresources to fight foreign bribery,the trend to hold management strictly liablefor corporate misconduct, the increasein self- reporting, penalties and individualprosecutions, and the use of clandestineinvestigative techniques historically associatedwith non-white collar cases. WilliamJ. Powell and Emily M. Renzelli reviewthe ethical challenges faced by companycounsel charged with managing internalinvestigations. Their article exposes therisk faced by company counsel who failto properly advise witnesses during thecourse of an internal investigation in whichthey may find themselves at the center ofa criminal investigation and any parallelcivil proceedings. Matthew L. Bevilleand Winifred M. Weitsen discuss the everexpansive application of the False ClaimsAct (FCA) and some important developmentsto defeat and or mitigate FCA liability.Robin Beardsley Mark analyzes theeffects of FERA on today’s white collarenforcement climate, including its impacton the mortgage industry and mortgagelenders, in particular.As these articles demonstrate, today’senforcement actions are not solely aboutdiscrete issues of culpability. An investigationof past wrongdoing leads to a focuson corporate culture and individual professionalresponsibility. In addition toother best practices, today’s business leadersmust educate all relevant corporateemployees about the legal risks attendantto a company’s business operations, institutea procedure for company personnel tolodge complaints internally before the governmentgets involved, investigate allegationsof corporate misconduct and reportmaterial misconduct to the board, auditcommittee or other reporting authority.Good governance is at the heart oftoday’s focus on corporate compliance andrequires nothing less than a genuine commitmentat the top to set the right tone forthe entire company, its officers, directors,stakeholders and agents.For The Defense n October 2010 n 57

G O V E R N M E N T E N F O R C E M E N T A N D C O R P O R AT E C O M P L I A N C EFCPA EnforcementActionsBy Jonathan N. RosenManaging Risksin the GlobalMarketplaceAn examination of keyprovisions of the ForeignCorrupt Practices Actand specific strategiesto manage the legalrisks associated withenforcement trends.The past several years have witnessed an explosion of ForeignCorrupt Practices Act (FCPA) enforcement actionsbrought by the U.S. Department of Justice (DOJ) and theU.S. Securities and Exchange Commission (SEC). Thistrend will probably continue unabated asaggressive U.S. enforcement and prosecutionis enhanced by international cooperationarising from heightened internationalanti- bribery standards and parallel investigationsin foreign jurisdictions. U.S. companiesdoing business abroad now face thegreatest level of government resources tocombat bribery since the FCPA became lawmore than 30 years ago.The global investigations of Siemens AGare illustrative. In December 2008, afterfacing action initiated by the DOJ andthe SEC, Siemens, a German company,and three of its subsidiaries pled guilty toFCPA violations. In a press release, the DOJacknowledged the assistance of the Munichpublic prosecutor’s office, which alsobrought charges against Siemens involvingcorrupt payments to foreign officials. SeeDOJ Press Release No. 08-1105, Siemens AGand Three Subsidiaries Plead Guilty to ForeignCorrupt Practices Act Violations andAgree to Pay $450 Million in CombinedCriminal Fines (Dec. 15, 2008), http://www.justice.gov/opa/pr/2008/December/08-crm-1105.html, and SEC Litigation Release No. 20829,SEC Files Settled Foreign Corrupt PracticesAct Charges Against Siemens AG forEngaging in Worldwide Bribery With TotalDisgorgement and Criminal Fines of Over$1.6 Billion (Dec. 15, 2008), http://www.sec.gov/litigation/litreleases/2008/lr20829.htm. TheSiemens case, involving a total penalty of$1.6 billion, was the first-ever, simultaneousresolution of domestic and foreign anticorruptioncharges.As the Siemens case demonstrates, companiesmust determine whether their foreignbusiness operations properly addresscorruption risks. The question is no longerwhether, but how, a company with foreignsubsidiaries, branch offices and thirdpartydistributors manages the FCPA risksengendered by its business operations.The stakes are clearly high for a company,its officers and its directors. A substantialpercentage of FCPA settlements have involveddeferred prosecution agreements,which, in addition to imposing unprece-58 n For The Defense n October 2010■ Jonathan N. Rosen is a partner in the Washington, D.C., office of Shook, Hardy & Bacon, LLP, where he specializes in FCPAmatters. Mr. Rosen is a former federal prosecutor who led FCPA investigations and prosecutions on behalf of the United StatesAttorney’s Office in Washington, D.C. He is the publications chair of DRI’s Government Enforcement and Corporate ComplianceCommittee.

dented corporate fines, can put in place independentmonitoring relationships conferringwide latitude to monitors to review businessoperations and report to the government.However, the most remarkable trendsin FCPA enforcement are that corporateexecutives have been subject to increasedscrutiny and amplified prospects of imprisonment.As recently described by LannyBreuer, Assistant Attorney General for theDOJ Criminal Division, the “cornerstone”of the “FCPA enforcement policy” is…the aggressive prosecution of individuals.Put simply, the prospect of significantprison sentences for individualsshould make clear to every corporateexecutive, every board member, andevery sales agent that we will seek tohold you personally accountable forFCPA violations. As we focus on theprosecution of individuals, we will notshy away from tough prosecutions, andwe will not shy away from trials.Lanny A. Breuer, Assistant Attorney Generalfor the Criminal Division, U.S. Dep’tof Justice, Remarks at the ABA White CollarCrime National Institute (Feb. 25, 2010),transcript available http://www.justice.gov/criminal/pr/speeches-testimony/2010/02-25-10aag-AmericanBarAssosiation.pdf.The government’s previously successfulprosecutions of Frederic Bourke, Geraldand Patricia Green and former CongressmanWilliam Jefferson, a current prosecutionof six former executives of ControlComponents Inc. for one count of conspiracyand an undercover sting against22 individuals in the military and defenseindustry all underscore the government’spolicy of holding not only corporationsbut also managers and board membersaccountable for FCPA violations.The purpose of this article is to identifykey provisions of the FCPA and specificstrategies to manage the legal risks associatedwith FCPA enforcement trends.The FCPA’s Anti-bribery ProvisionsThe FCPA criminalizes bribing a foreignofficial to secure business. In particular, theFCPA prohibits paying, offering or authorizingpayment of money or anything ofvalue to a foreign official for the purposes ofinfluencing any act or decision or securingan improper advantage to obtain or retainbusiness. See 15 U.S.C. §§78dd-1 to -3.The FCPA’s anti- bribery provisions applyto (1) “issuers,” defined as a company andits agents with a class of securities registeredwith the SEC or required to filereports with the SEC; (2) “domestic concerns,”defined as a company and its agentswith a principal place of business in theUnited States or organized under U.S. law,and any other U.S. citizen or resident alien;and (3) “other persons,” meaning foreignpersons acting within U.S. territory.Business leaders surely recognize thatthe FCPA prohibits offering a suitcase ofcash to a foreign ministry official to securea government contract. Yet, it may surprisemany business executives to learn that theFCPA more broadly applies to almost limitlesscircumstances involving administrativeand regulatory matters. To protectagainst FCPA liability, business leadersshould understand firmly the recent enforcementtrends concerning the followingelements of a FCPA violation: (1) “foreign official,”(2) “anything of value,” (3) “obtain orretain business” and (4) “any acts within theterritory of the United States.”Foreign OfficialThe FCPA’s definition of a “foreign official”is very broad. Under the FCPA, a foreignofficial does not have to be elected oreven appointed to a government ministryor agency. An individual can be deemed aforeign official even though he or she is notconsidered a foreign official under local law.The definition of “foreign official” includes“any officer or employee of a foreigngovernment or any department agency, orinstrumentality thereof… or any person actingin an official capacity for or on behalf ofany such government or department, agencyor instrumentality….” 15 U.S.C. §78dd-1(f)(1). In other words, a person may qualify asa foreign official simply by virtue of his orher employment with an “instrumentality”of a government—a term that is neither definedby the FCPA nor clarified by the act’slegislative history. Once a foreign companyis deemed an “instrumentality” of a foreigngovernment, every employee of that companyis a foreign official under the FCPA.Generally, businesses must monitorall internal operational interactionswith host governments or state-ownedor state- controlled enterprises. An entitymay become an “instrumentality” whenOnce a foreigncompany is deemed an“instrumentality” of a foreigngovernment, every employeeof that company is a foreignofficial under the FCPA.the government holds the majority of anenterprise’s subscribed capital, controlsthe majority of an enterprise’s shareholdingvotes or can appoint a majority of themembers of an enterprise’s administrativeor managerial body or supervisory board.An entity may also be deemed a state instrumentalityif that entity performs a “publicfunction.” A public function may be inferredfrom preferential subsidies or otherprivileges that indicate that an entity doesnot function on a normal commercial basis.Dangers particularly exist for pharmaceuticaland medical device companiesthat make payments to doctors employedby state-owned or state- controlled hospitals.In June 2008, after voluntarilydisclosing and cooperating with governmentinvestigators, AGA consented to athree-year, deferred- prosecution agreementwith the DOJ and agreed to pay a$2 million criminal penalty in connectionwith improper payments made byAGA’s Chinese distributor to physiciansemployed by Chinese government- ownedor government- controlled hospitals. SeeDOJ Press Release No. 08-491, AGA MedicalCorporation Agrees to Pay $2 MillionPenalty and Enter Deferred ProsecutionAgreement for FCPA Violations (June 3,2008), http://www.justice.gov/opa/pr/2008/June/08-crm-491.html. Diagnostic ProductsCorporation agreed to settle a FCPAenforcement action in connection withimproper payments to physicians and laboratorypersonnel employed by governmentownedhospitals in China. See DOJ PressRelease No. 05-282, DPC (Tianjin) Ltd.Charged With Violating the Foreign CorruptPractices Act (May 20, 2005), http://For The Defense n October 2010 n 59

G O V E R N M E N T E N F O R C E M E N T A N D C O R P O R AT E C O M P L I A N C Ewww. justice.gov/opa/pr/2005/May/05_crm_282.htm, and SEC Litigation Release No. 51724(May 20, 2005). In another case, the SECfiled a settled civil injunctive action againstMonty Fu, the founder and past chairmanof Syncor International Corporation,in connection with improper paymentsmade to doctors in state-owned hospitalsin Taiwan. See SEC Litigation Release No.“Anything of value” hasbeen broadly construedto include politicalcontributions, entertainment,travel, meals and lodging.20310, SEC Files Settled Books and Recordsand Internal Accounting Controls ChargesAgainst Former Chairman of Syncor InternationalCorp. (Sept. 28, 2007), http://www.sec.gov/litigation/litreleases/2007/lr20310.htm. Asthese cases illustrate, any company doingbusiness in China must determine whetherit is doing business with a state-ownedenterprise. See United States v. SSI InternationalFar East Ltd., No. 3:06-cr-00398 (D.Ore. 2006) (defendant company consentsto a deferred- prosecution agreement withthe DOJ for payments made to managersof government- owned steel mill in China).More recently, the DOJ has used theFCPA’s expansive definition of foreign officialto announce an industrywide investigationof the pharmaceutical industry.In a speech on November 12, 2009, tothe Tenth Annual Pharmaceutical Regulatoryand Compliance Congress and BestPractices Forum, Lanny Breuer warnedthat “[o]ur focus and resolve in the FCPAwill not abate, and we will be intenselyfocused on rooting out foreign briberyin your industry. That will mean investigationand, if warranted, prosecution ofcorporations to be sure, but also investigationand prosecution of senior executives.”Lanny A. Breuer, Assistant Attorney Generalfor the Criminal Division, U.S. Dep’tof Justice, Keynote Address at the TenthAnnual Pharmaceutical Regulatory and60 n For The Defense n October 2010Compliance Congress and Best PracticesForum (Nov. 12, 2009), http://www.justice.gov/criminal/pr/speeches-testimony/documents/11-12-09breuer-pharmaspeech.pdf. Mr. Breuer highlightedthe potential problems of engagingin business with foreign health care systemswhen he said that “under certaincircumstances and in certain countries,nearly every aspect of the approval, manufacture,import, export, pricing, salesand marketing of a drug product in a foreigncountry will involve a ‘foreign official’within the meaning of the FCPA.” Id.Of course, risks involving state-ownedor state- controlled enterprises are not limitedto the pharmaceutical or medical deviceindustry. In February 2009, KelloggBrown & Root LLC pled guilty to multipleFCPA- related criminal charges and settled aparallel SEC proceeding in connection withimproper payments to Nigerian governmentofficials, including employees of stateownedenterprises, the Nigerian NationalPetroleum Corporation and the Nigeria LNGLimited, to win and retain engineering, constructionand procurement contracts.Given the broad definition of “foreignofficial,” every company should knowwhether its business partners are employedby a state-owned or state- controlled enterpriseor if they perform public duties for aforeign country.Anything of ValueAlthough neither defined in the FCPA normade clear in the legislative history, “anythingof value” has been broadly construedto include political contributions, entertainment,travel, meals and lodging. Iteven includes intangible benefits, such asenhanced prestige associated with a charitablecontribution.What qualifies as “anything of value”is mutable because determining whethersomething of value has been offered or conferred,as well as its value, depends on thepersonal valuation of the receiving official.For example, an ostensibly routine businesstrip to the United States to visit a factorymay become the trip of a lifetime toa foreign official if Las Vegas and DisneyWorld are also on the itinerary. A FCPAviolation is not triggered by receipt by a foreignofficial of some objectively determinedpayment amount or a “gift” worth someobjectively determined amount.The outer reaches of “anything of value”has been highlighted in one enforcementaction involving a charitable donation, Inthe Matter of Schering- Plough Corp., FileNo. 3-11517 (June 9, 2004). In that case, theU.S. government took the position that adonation to a bona fide charitable organizationestablished to restore castles and otherhistoric sites violated the FCPA. A Polishsubsidiary donated to a foundation, and itsfounder became director of a governmenthealth fund. The donations constituted athing of value to the government healthofficial because they were subjectively valuedby the official and provided him withan intangible benefit, enhanced prestige.The Schering- Plough case shows that evendonations to bona fide charities that do notpass directly or filter indirectly to governmentofficials may violate the FCPA.Paying the expenses of certain individuals,such as travel and lodging, may also violatethe FCPA. On December 21, 2007, theSEC and the DOJ filed and settled chargesagainst Lucent Technologies Inc., whichspent over $10 million in travel, lodging,entertainment and related expenses for approximately1,000 employees of a Chinesestate-owned enterprise from which Lucentsought business. See DOJ Press Release No.07-1028, Lucent Technologies Inc. Agrees toPay $1 Million Fine to Resolve FCPA Allegations(Dec. 21, 2007), http://www.justice.gov/opa/pr/2007/December/07_crm_1028.html, andSEC Litigation Release No. 20414, SEC FilesSettled Action Against Lucent TechnologiesInc. in Connection With Payments of ChineseOfficials’ Travel and EntertainmentExpenses; Company Agrees to Pay $1.5Million Civil Penalty (Dec. 21, 2007), http://www.sec.gov/litigation/litreleases/2007/lr20414.htm. The trips were primarily for sightseeingand leisure rather than business purposes,although the expenses were notedin expense records as “factory inspections,”but in locations where no factories existed.Id. Similar trips were booked as “trainingexpenses” by UTStarcom, Inc., which latelast year resolved its FCPA matters with theDOJ and the SEC. See SEC Litigation ReleaseNo. 21357, SEC Charges California TelecomCompany with Bribery and Other FCPA Violations(Dec. 31 2009), http://www.sec.gov/litigation/litreleases/2009/lr21357.htm.The FCPA contains an affirmative defenseto a violation charge for expenditures

for the “promotion, demonstration, or explanationof products or services” or the“execution or performance of a contract.”15 U.S.C. §§78dd-1(c)(2)(A) to -1(c)(2)(B).However, a company must show that the expenseswere “reasonable” and “bona fide”and “directly related” to a business purpose.The Schering- Plough, Lucent andUTStarcom cases alert business leaders tothe fact that FCPA enforcement will subjecta wide variety of business practices toreview. To use an affirmative defense forbusiness expenditures, companies mustretain some control over the expendituresto ensure that they have legitimate businesspurposes.Obtain or Retain BusinessOne common misperception about theFCPA is that improper payments must berelated to securing government contracts.In fact, the FCPA is more broadly focused onpayments that grant companies improperadvantages over competitors, regardless ofwhether government contracts are, in fact,in play. As a result, business leaders mustunderstand the administrative and regulatorypractices of the foreign countrieswhere they do business.United States v. Kay, 359 F.3d 738 (5thCir. 2004), was the seminal decision thatclarified the breadth of the FCPA’s “obtainor retain” violation element. In Kay, thecourt held that payments to lower corporatetaxes and custom duties could violatethe FCPA. In other words, the FCPA doesnot simply criminalize making paymentsto secure government contracts. Paymentsoffered for many other purposes also areillegal under the FCPA.Since the Kay decision, the SEC andthe DOJ have initiated several FCPAenforcement matters involving improperpayments to obtain various foreign governmentlicenses, permits and certifications.In July 2009, for example, Helmerich& Payne Inc. consented to a two-year,deferred- prosecution agreement with theDOJ under which it would pay a fine of$1 million dollars, and it settled a parallelaction with the SEC by consentingto a disgorgement of $375,681, includingprejudgment interest, in connection withimproper payments made through custombrokers to custom officials in Argentinaand Venezuela to expedite the importationand exportation of certain equipmentand other materials. See DOJ Press ReleaseNo. 09-741, Helmerich & Payne Agrees toPay $1 Million Penalty to Resolve Allegationsof Foreign Bribery in South America(July 30, 2009), http://www.justice.gov/opa/pr/2009/July/09-crm-741.html, and SEC NewsDigest, Enforcement Proceedings, In theMatter of Helmerich & Payne, Inc. (July 30,2009), http://www.sec.gov/news/digest/2009/dig073009.htm.Business executives must understandthe FCPA- related violation risks associatedwith routine business activities such asexporting products into foreign markets.The following is a list of relevant questions:• Does local law require a license, permitor certification?• Is a company relying on a third partyto obtain various licenses, permits orcertifications? If so, has the companyperformed due diligence to ensure complianceby that third party with theFCPA?For over 25 years, LMI has provideddefendants with award winningrecord acquisition, medical recordanalysis, complex litigation anddocument management services,all delivered via LM[I]SIGHT,our secure client site designedexclusively for the defense.Our experienced medical and legalprofessionals stand ready to deliver theinsight you need, when you need it.• Who is interacting with foreign officialsto obtain licenses, permits or certifications?Has that employee requested anyunusual reimbursements?• Will the company issue payment to alicensing agency or to an individual official?Issuing payments to individuals isinadvisable.• Have the licensing agencies providedinvoices or other supportingdocumentation?Any Acts Within the Territoryof the United StatesIn 1998, several amendments expandedthe power of the Foreign Corrupt Practices.As a result, a foreign business or individualbreaks the law under the Foreign CorruptPractices Act if they cause, directly orthrough another, an act to further a corruptpayment that takes place within theUnited States.Recently, the government has aggressivelypursued FCPA criminal prosecu-Elizabeth B. Juliano, Founder & Chief Executive Officer1 9 8 4-2 0 0 9CELEBRATING 25 YEARSTRANSFORMING INFORMATION, DELIVERING INSIGHTwww.medicineforthedefense.com1 800.778.5424For The Defense n October 2010 n 61

• A history of corruption exists in thecountry in question• An intermediary is a government official,related to a government official orrecommended by a government officialor works for a company owned in partby a government official• A fair- market valuation exists forany service that an intermediary willperform• An intermediary requests excessivelyhigh commissions, unusual discounts ormid-stream, up-front or cash payments• An intermediary objects to anticorruptionstandards and representations,audit rights and termination rights in acontract• An intermediary is not competent toperform the requested service becausehe or she does not have the necessaryqualifications or resources• Accounting and expense records lacktransparency or an intermediary hasrequested that a company preparefalse invoices or any other type of falsedocuments• An intermediary refuses to discloseowners, partners or principals• An intermediary uses shell or holdingcompanies that obscure ownershipwithout credible explanation• The press has reported of improprietiesconcerning the intermediary.FCPA’s Expansive Booksand Records ProvisionsAnother area of aggressive FCPA enforcementinvolves the FCPA’s provisions designedto ensure that businesses will nothide improper payments in books and recordscommitting accounting fraud. Theseprovisions reinforce the government’s expectationsthat companies will implementcompliance programs and auditing proceduresto deter and identify FCPA violationsin their overseas operations.The FCPA requires that security issuers“make and keep books, records, andaccounts, which, in reasonable detail, accuratelyand fairly reflect the transactionsand dispositions of the assets of the issuer.”See 15 U.S.C. §78m(b)(2)(A). The FCPA alsorequires that security issuers “devise andmaintain a system of internal controls sufficientto provide reasonable assurancesthat transactions are executed in accordancewith management’s general or specificauthorization.” Id. at §78m(b)(2)(B)(i).The purpose of these provisions is toensure that shareholders receive an accurateassessment of a company’s expendituresby preventing the accounting fraudassociated with improper payments. Acompany facing a FCPA enforcement actionmay, therefore, also be sued under securitieslaw by shareholders claiming to havepurchased their shares at an inflated priceand in derivative actions brought by shareholdersto recover for alleged wrongdoingby officers and directors.The FCPA’s book and records provisionsonly apply to security issuers and requireno proof of a U.S. territorial nexus. Giventhe expansive reach of the FCPA’s accountingprovisions, business leaders shouldrecognize the risks that a parent companybears for the accounting practices of its foreignsubsidiaries.Strict LiabilityA U.S. parent is liable for the accountingfraud of its foreign subsidiary whetheror not the parent has knowledge of theaccounting fraud. There is no scienterrequirement nor is there a materialityrequirement.For example, in its settlement with thegovernment, Siemens acknowledged thatit violated the FCPA’s book and recordsprovisions when it incorporated the booksand records of several of its subsidiariesthat participated in the United Nations Oilfor Food Program into its own books andrecords. The subsidiaries falsely characterizedkick-back payments to the Iraqi governmentas “commissions” in their booksand records, which were later entered in thebooks and records of the parent.Merely consolidating a subsidiary’s bogusentries with a parent’s own books andrecords is sufficient to establish FCPA liability.Dow Chemical Co. settled a civil actionwith the SEC for allegedly violatingthe FCPA’s books and records and internalcontrol provisions. See SEC LitigationRelease No. 20000, SEC Files Settled EnforcementAction Against the Dow ChemicalCompany for Foreign Corrupt PracticesAct Violations (Feb. 13, 2007), http://www.sec.gov/litigation/litreleases/2007/lr20000.htm. Dowconsented to pay a $325,000 civil penaltyin connection with improper payments byone of its foreign subsidiaries to public officialsin India. The improper payments weremade through third-party intermediariesof the foreign subsidiary and without theknowledge of the U.S. parent.As a result, problematic foreign paymentsthat may not seem chargeable underthe anti- bribery provisions of the FCPAcan still result in liability under the FCPA’sBusiness leaders shouldrecognize the risks that aparent company bears forthe accounting practicesof its foreign subsidiaries.books and records provisions if a companymischaracterizes the payments in itsaccounting records. For instance, recently,NATCO Group Inc. settled a SEC books andrecords enforcement action in connectionwith foreign payments motivated by extortionrather than corrupt intent. See SECLitigation Release No. 21374, SEC Files SettledCivil Action Charging NATCO GroupInc. with Violations of the Foreign CorruptPractices Act (Jan. 11, 2010), http://www.sec.gov/litigation/litreleases/2010/lr21374.htm.Increased Risks of Parent Companyfor Foreign Subsidiary’s Books andRecords and Internal ControlsThe following high- profile FCPA enforcementactions underscore the government’sleverage to extract a fine from a U.S. parentcompany for failing to maintain financialand auditing controls over a foreignsubsidiary.• In February, 2009, ITT Corp. settleda SEC books and records and internalcontrols enforcement action by agreeingto disgorge $1,041,112 together withprejudgment interest of $387,538.11 andto pay a $250,000 civil penalty in connectionwith improper payments byforeign subsidiaries to Chinese governmentofficials. See SEC Litigation ReleaseNo. 20896, SEC Files Settled ChargesAgainst ITT Corporation for ViolationsFor The Defense n October 2010 n 63

G O V E R N M E N T E N F O R C E M E N T A N D C O R P O R AT E C O M P L I A N C Eof the Books and Records and InternalControls Provisions of The ForeignCorrupt Practices Act (Feb. 11, 2009),http://www.sec.gov/litigation/litreleases/2009/lr20896.htm.• On October 1, 2007, York Internationalsettled a SEC books and records enforcementaction by agreeing to the disgorgementof $8,949,132 in profits, plusA FCPA complianceprogram must focus onidentifying “risk- creating”expenditures that couldfinance improper payments.$1,083,478 in interest, and a $2,000,000civil penalty in connection with improperpayments made to an Iraqi public officialby an intermediary of a foreign subsidiary.See SEC Litigation Release No. 20319, SECFiles Settled Foreign Corrupt PracticesAct Charges Against York InternationalCorporation (Oct. 1, 2007), http://www.sec.gov/litigation/litreleases/2007/lr20319.htm.• On April 26, 2007, Baker Hughes settledan enforcement action with the SEC andDOJ by agreeing to pay a record $44.1million in connection with alleged briberypayments by its foreign operationsin Kazakhstan, Nigeria, Indonesia, Uzbekistan,Russia and Angola. The SECcomplaint alleged FCPA violations undercircumstances that reflected a failureto implement sufficient internal controlsto determine whether the payments werefor legitimate services, whether the paymentswould be shared with governmentofficials or whether the payments wouldbe accurately recorded in Baker Hughes’books and records. See DOJ Press ReleaseNo. 07-296, Baker Hughes SubsidiaryPleads Guilty to Bribing Kazakh Officialand Agrees to Pay $11 Million CriminalFine as Part of Largest Combined SanctionEver Imposed in FCPA Case (Apr. 26,2007), http://www.justice.gov/opa/pr/2007/April/07_crm_296.html, and SEC v. BakerHughes, No. 07-cv-1408 (S.D. Tex. 2007).64 n For The Defense n October 2010Each instance signifies the government’saggressive enforcement of the FCPA basedon dubious accounting practices in the foreignoperations of security issuers subjectto the FCPA. In each case, the security issuer’sinadequate internal controls providedthe government with an aggravating circumstanceto enhance the penalty.Control Person LiabilityOne enforcement action concluded in 2009against Nature’s Sunshine Products Inc.and two of its officers underscores the government’saggressive use of strict liabilityto pursue corporate agents for FCPA violations.In that enforcement action theSEC charged the company with variousFCPA books and records violations resultingfrom payments by a subsidiary to customsbrokers. See SEC Litigation ReleaseNo. 21162, SEC Charges Nature’s SunshineProducts, Inc. with Making Illegal ForeignPayments (July 31, 2009), http://www.sec.gov/litigation/litreleases/2009/lr21162.htm. The SEC,however, took the additional step of chargingthe company’s chief executive officerand chief financial officer with books andrecords and internal control violationsbased on their positions as “control persons”under Section 20(a) of the SecuritiesExchange Act, even though those seniorexecutives had no knowledge of the subsidiary’sactions. The SEC concluded that bothexecutives failed to supervise their personnelto ensure that the company’s books andrecords were accurately prepared and thatan adequate system of internal controlswas in place.This represented the first time that thegovernment used a “control person” theoryof liability to hold United States-basedexecutives responsible for corrupt paymentsmade by a foreign subsidiary whenthe executives did not have knowledge ofthe payments or even direct responsibilityfor the company’s records and filings.Before this case, the SEC targeted executiveswho had direct knowledge of bribepayments or books and records violations.Now, however, a company’s senior executivesmay be held personally responsiblefor the misconduct of subordinate employeesand managers who have much greaterday-to-day responsibility for ensuring thatthe company’s books and records are accuratethan senior executives.Importance of Internal AuditorsThe expansive reach of the FCPA accountingprovisions presents formidablechallenges to businesses with foreign operations.While the varied elements of a FCPAcompliance regime are beyond the scope ofthis article, business leaders must ensurethat internal auditors are trained to identifythe evidence necessary to establishFCPA violations in foreign operations.To comply with the FCPA, a companywill need to do more than train managersor third-party intermediaries or periodicallyengage independent auditors to completeaudits. The day-to-day gatekeepersoverseeing a company’s expenditures mustalso receive FCPA compliance training.To amount to more than a “paper program,”a FCPA compliance program mustfocus on identifying “risk- creating” expendituresthat could finance improper payments.Toward that end, internal auditorsshould establish accounting controls forsuch items as charitable contributions,gifts and cash expenditures. A companymust retain back-up documents alongwith strong cash controls to minimize thepresence of and access to cash accounts.Financial personnel must complete regularaccount reconciliations for petty cash.Moreover, transaction process controlsshould also identify the “who, what andwhy” of all gifts and cash expenditures.Financial and audit personnel shouldclosely review expenses to ensure the bonafides, searching for expenses recorded asconsulting, licensing or promotional paymentsto intermediaries. Personnel inbusiness operations should look for the followingred flags:• A request for an in-cash payment or fora payment to a numbered account or fora payment to the account of a third party• A request to forward a payment to acountry other than the intermediary’scountry of residence or the territory ofthe sales activity, especially, if that countryhas little banking transparency• A request for payment in advance or apartial payment immediately before aprocurement decision• A reimbursement request for extraordinary,ill- defined or last minute expenses• A payment request that lacks supportingdocumentationFCPA Compliance, continued on page 87

G O V E R N M E N T E N F O R C E M E N T A N D C O R P O R AT E C O M P L I A N C E“Corporate Miranda”By William J. Powelland Emily M. RenzelliNot Justfor CriminalLawyersIf a civil investigationturns into somethingmuch more serious,appropriate warningsat the outset may avoidpotential problemsdown the road.The corporation you have represented for the past 20 yearsis the subject of an accident investigation. Everyone fromsenior management to administrative support staff rushesto you, “their lawyer,” wanting to tell their stories. Whocan you talk to and what should you say?White collar defense lawyers have frequentencounters with the limitationsimposed upon an attorney while dealingwith employees of his or her client. Instraightforward criminal investigations,the issues are often easily anticipated. However,government agencies have becomeaggressive in reviewing routine civil mattersto determine if there are potentialcriminal issues. What were once strictlycivil investigations now carry an increasedchance of having criminal ramifications.The environmental, health care, safety andhealth, and financial arenas all occasionallyinvolve internal investigations and arefraught with potential problems. Whilethere was a time when civil lawyers did nothave to think much about their interviewswith employees during a “run-of-the-mill”health care or environmental matter, therecent emphasis by government agenciesto make criminal referrals makes any lackadaisicalapproach dangerous for not onlythe client, but for the lawyer.This article will attempt to identify theapplicable legal and ethical standards, thelikely scenarios one would confront in hisor her practice and some practical advicefor those conducting fact- finding interviews.It should be noted, as evidenced bythe cited case law, that very good lawyershave fallen prey to situations that put themand their clients in very difficult situations.Experienced civil lawyers who conductemployee interviews are often afraid to setthe wrong tone or cause undue concernduring the interview. While the odds aregood that a civil matter will not turn intoanything criminal, if you take the risk, theresulting ethical and legal problems for youor your client could provide a very harshlesson—one that can be avoided.Realistic ScenarioYour contact for a long-term firm client is■ William J. Powell is a Member of Jackson Kelly PLLC and manages the Martinsburg, West Virginia, office.He has handled the defense of clients in civil litigation, white collar and internal investigation matters for 25years. He is chair of the White Collar Criminal Defense Committee for the West Virginia State Bar, a memberof DRI, ADTA and Defense Trial Counsel of West Virginia. Emily M. Renzelli is a former summer associateat Jackson Kelly PLLC in Charleston, West Virginia, and currently a second-year student at the Universityof Virginia School of Law.For The Defense n October 2010 n 65

G O V E R N M E N T E N F O R C E M E N T A N D C O R P O R AT E C O M P L I A N C Ein upper- level management. You have notonly spent work time with this person, youhosted him on social events for the past20 years. You consider him a friend anda client. Your client’s business is a highlyregulated one. An accident has occurredat your client’s plant and will require aninvestigation of the alleged regulatory violationsand the cause of the accident. It is aCourts will look tosee whether or not areasonable person wouldbelieve that an attorney-client relationship existed.standard case: you have seen similar factsmany times. This particular accident willinvolve safety issues and policies that havebeen put in place by the company, someof which your client contact has had thesupervisory responsibility for implementing.Moreover, you know many of the linesupervisors from your past work.Your firm is retained to represent thecompany in dealing with this matter andsome type of internal investigation willneed to be conducted to determine what ledup to the accident, what caused it, and whois responsible. You have not been retainedto represent individuals, but your first contactis your client contact of more than 20years, who has asked you to get involved onbehalf of the company. You will also havethe line supervisors on the witness interviewlist. The following guidelines mayassist you in conducting the investigation.The PrivilegeThe attorney- client privilege is the oldestof privileges for confidential communications.It must be protected by attorneyson behalf of their clients. United StatesAttorneys’ Manual, Principles of FederalProsecution of Business Organizations,§9-28.000, §9-28.710 (2010).The warnings commonly given during acorporate internal investigation are colloquiallyreferred to as “Corporate Miranda,”66 n For The Defense n October 2010and stem from the Supreme Court’s decisionin Upjohn v. United States, 449 U.S.383 (1981). Upjohn is the foundation ofthe explanation of the corporate attorneyclientprivilege. Prior to Upjohn, somecourts extended the privilege of communicationsbetween an attorney and themembers of the so-called “control group”of the corporation. General Electric Companyv. Kirkpatrick, 312 F.2d 742 (3d Cir.1962). Other courts used the “subject matter”test, which examined the nature of theinformation rather than the identity of thesource. Harper & Row Publishers, Inc. v.Decker, 423 F.2d 487 (7th Cir. 1971).In Upjohn the Supreme Court rejectedthese tests and extended the privilege tolower level employees. The Court foundvalid attorney- client privilege where:(a) communications were made byUpjohn employees;(b) the counsel for Upjohn acting assuch;(c) at the direction of the corporatesuperiors;(d) in order to secure legal advice fromcounsel;(e) concerning matters within the scopeof the employee’s duties; and(f) the employees “were sufficientlyaware that they were being questionedin order that the corporationshould obtain or could obtain legaladvice.”Upjohn, 449 U.S. at 394.Courts will look to see whether or nota reasonable person would believe that anattorney- client relationship existed. In InRe Grand Jury Subpoena: Sealed, 415 F.3d333 (4th Cir. 2005) the court needed todetermine whether or not an employee’sclaim of attorney- client relationship withAmerica Online’s (AOL) corporate counselexisted and if the Upjohn warnings wereadequate. One of the warnings: “We representthe company. These conversationsare privileged, but the privilege belongsto the company and the company decideswhether to waive it. If there is a conflict,the attorney- client privilege belongs to thecompany.” 415 F.3d at 336.The court noted that outside counsel,who conducted the interviews, also mentionedthat counsel “could” represent theemployees as well, as long as no conflictappeared. Though finding that the instructionswere “watered down,” it rejected theemployee’s argument that he could havereasonably believed that an attorney- clientrelationship existed.Ethical ConsiderationsThe ABA Model Rules of Professional Conductwere rendered after Upjohn, andappear to contain language from theUpjohn decision. The Rules provide ethicalguidelines for attorneys dealing with individualswho work for their client’s company.In particular, ABA Rules 1.7, 1.13(f),4.2, and 4.3 directly address this matter.Rule 1.7 prohibits a corporation’s attorneyfrom representing any other clientwhose representation would create a concurrentconflict of interest. Such conflict occurswhen, “the representation of one clientwill be directly adverse to another client; orthere is a significant risk that the representationof one or more clients will be materiallylimited by the lawyer’s responsibilitiesto another client, a former client or a thirdperson or by a personal interest of the lawyer.”Model Rules of Prof’l Conduct R.1.7. Simply put, an attorney may not jettisona client in favor of another. In re Grand JurySubpoena, 415 F.3d 333, 340 (4th Cir. 2005).Rule 1.7 does not completely forbidattorneys from representing clients withconflicting interests. Part (b) of the ruleallows for such representation if:(1) the lawyer reasonably believes thatthe lawyer will be able to providecompetent and diligent representationto each affected client;(2) the representation is not prohibitedby law;(3) the representation does not involvethe assertion of a claim by one clientagainst another client representedby the lawyer in the same litigationor other proceeding before a tribunal;and(4) each affected client gives informedconsent, confirmed in writing.Model Rules of Prof’l Conduct R. 1.7.In comments to the rule, the ABAimplied that courts should be stringent infinding any exceptions to it. The commentsstate that “informed consent” requires thatattorneys make their clients aware of anyand all ways that the conflict could affecttheir ability to represent them. ModelRules of Prof’l Conduct R. 1.7 cmt. In

Sharp v. Next Entm’t Inc., 163 Cal. App.4th 410, 430 (Cal. Ct. App. 2008), the courtfound that this meant a client had to consent,“On the basis of adequate knowledgeof the facts and an awareness of the consequencesof the decision.” Additionally, theconsent has to be in writing and may berevoked at any time by the client.Often mentioned in conjunction withRule 1.7, Rule 1.13(f) deals with situationsin which an attorney is dealing with amember of an organization that the attorneyrepresents. The rule provides, “Indealing with an organization’s directors,officers, employees, members, shareholdersor other constituents, a lawyer shall explainthe identity of the client when the lawyerknows or reasonably should know that theorganization’s interests are adverse to thoseof the constituents with whom the lawyeris dealing.” Model Rules of Prof’l ConductR. 1.13 (f). The language of 1.13(f)illustrates the ABA belief that a corporationis a lawyer’s sole client, despite the factthat a corporation is comprised of a groupof individuals. Professional Service Industries,Inc. v. Kimbrell, 758 F. Supp. 676, 681(D. Kan. 1991).As mentioned earlier, issues often arisein ascertaining the identity of a client inthe corporate context given that a corporationis an object. Therefore, it is essentialto apply the appropriate test for determiningwhether an agent of a corporation qualifiesas a client in order to provide properwarnings to those who do not. Upjohnaddresses this issue and clearly lays outthe procedure.Rule 4.3 places restrictions on an attorney’scommunications with a corporation’sunrepresented employees. It requiresan attorney to disclose his or her role andrepresentative capacity to the unrepresentedperson and to let him or her knowthat the attorney is not disinterested. In reEnvironmental Insurance Declaratory JudgmentAction, 252 N.J. Super. 510, 600 A.2d165, 170–77 (Law Div. 1991). The purposeof the rule is to ensure that attorneys don’texploit unrepresented employees, causingthem to make ill informed admissions.Again, Upjohn and post- Upjohn decisionsmake the procedure clear. The intervieweesmust be told who you represent, thatyou do not represent them, and you cannotthen engage in legal advice once theinterviewees know that you do not representthem, except insofar as you may tellthem that they have a right to obtain theirown counsel. This is not to say that a jointrepresentation cannot take place; but if it isIs yourcoveragesomehowless than youexpected?Take a closerlook at Catlin.done, everyone must be made aware, preferablyin writing, of the ramifications ofjoint representation.Violations of the aforementioned rulescan lead to significant sanctions. An oppos-As a lawyer, you understand your clients’ needs and you work diligently on theirbehalf. You also understand that your work carries serious risks that could affectyou both personally and professionally.In response to your needs Willis Programs and Catlin are offering LawyerGuard,one of the broadest lawyers’ professional liability policy forms on the market today.This program evolved from over 20 years of experience with defense attorneys andis the only lawyers’ professional liability program offered to DRI members. Defensefirms, in particular, are eligible for special coverage enhancements and price creditsthrough this program.With LawyerGuard you can have the most comprehensive coverage available.Why take the risk with any other insurance policy?LawyerGuard Your Best DefenseInsurance products offered by Catlin Insurance Company, Inc.Have your broker request a quote from LawyerGuard today!www.lawyerguard.comFor The Defense n October 2010 n 67

G O V E R N M E N T E N F O R C E M E N T A N D C O R P O R AT E C O M P L I A N C EAttorneys must be carefulto check their own states’rules before dealing withtheir clients’ employees.ing attorney has the authority to make amotion for disqualification of counsel orfor sanctions when he or she believes thathis or her opponent has committed ethicalviolations. If a court finds an ethical violation,it may disqualify the attorney (and hisor her firm) from participating in the case,exclude the improperly obtained information,or prohibit any further ex parte contact.Many courts have been cautious todisqualify a party’s counsel for minor violationsdue to the delay and unfairness tothe attorney’s client that it would cause. Bycontrast, motions to suppress evidence andprohibit contact have been freely granted.Id. at 113. McCallum v. CSX Transp. Inc.,149 F.R.D. 104, 113 (M.D. N.C. 1993).It is important to note that these rulesdo not cover all situations in which a judgemight deem an attorney’s actions in relationto attorney- client privilege unethical.Also, some states have their own ethicsrules. Therefore, attorneys must be carefulto check their own states’ rules before dealingwith their clients’ employees.Applications to Real WorldToday’s legal environment is highly regulated.The current administration has madeclear that health care, energy, environmental,financial and other industries will beunder increased scrutiny. It is thereforelikely that internal investigations by lawyerswill become more common. The disclosureof internal investigation results,including witness statements and the identificationof “culprits” will likely be consideredbecause these actions are part of thegovernment’s cooperation analysis. SeeMemorandum from Deputy Attorney PaulJ. McNulty, Re: Principles of Federal Prosecutionof Business Organizations (December12, 2006); United States Attorneys’Manual, Principles of Federal Prosecution68 n For The Defense n October 2010of Business Organizations §9-28.720 (2010).While the Department of Justice’s positionis that the waiver of an attorney- client privilegeis not a prerequisite to cooperation,it would be foolish to believe that it wouldnot become at least a discussion issue inevery serious internal investigation involvingpotential criminal charges. When oneconsiders that individuals, and not corporations,go to jail, the interest of the individualin keeping information provided tocompany lawyers confidential is obvious.A scenario similar to the one identifiedin the beginning of this article playedout quite poorly in U.S. v. Henry T. Nicholas,et al., 606 F. Supp. 2d 1109 (C.D. Cal.2009), rev’d on other grounds, sub. nom.U.S. v. Ruehle, 583 F.3d 600 (9th Cir. 2009).In Nicholas, outside counsel for Broadcominvestigated allegations of illegal stockoptions and back- dating. Counsel interviewedthe company’s chief financial officer,Ruehle. Information obtained duringthe interview process was later disclosedto the government. The CFO objected onthe grounds of attorney- client privilegeand that the disclosure was unauthorizedand should be suppressed. The districtcourt found in favor of the CFO andordered the suppression of the statements,in part because the court found that theCFO had been represented by the same lawfirm in his personal capacity. The districtcourt further found the oral Upjohn warningsto be insufficient. The court noted thatthe warnings were not part of the lawyer’snotes and no written records of the warningsexisted. Nicholas, 606 F. Supp. 2d at1116. The Ninth Circuit reversed the districtcourt, but left in place the factual findingsthat the Upjohn warnings had not beengiven. The Ninth Circuit, notwithstandingits refusal to disturb the Upjohn warningfinding, found that the CFO understoodthat the communication with the law firmwas not confidential. Ruehle, 583 F.3d at612.Given the guidelines, what do you dowith your client contact who has hired youto investigate the accident? First, your contactmust understand that you will be representingthe company and not him. Theissue over the scope of one’s representationoften arises among even the most sophisticatedbusiness people. See United States v.Stein, 463 F. Supp. 2d 459 (S.D.N.Y. 2006).There is a reasonable potential for conflictbecause his actions are arguably at issue.Second, you interview him as you wouldthe others, and in a manner that protectsthe privilege for your client and complieswith your professional rules of conduct.A failure to follow the proper game planin employee interviews leads to very practicalproblems. Perhaps the most problematicis that an attorney may unknowinglycreate an attorney- client relationship withtheir client’s employees. If that relationshipis adverse to the one with the corporationhe or she represents, it creates aconflict of interest, and the attorney wouldbe required to withdraw his or her representationof both parties. See In re GrandJury Subpoena: Under Seal, 415 F.3d 333,340 (4th Cir. 2005).In civil trials, a conflict of interest cansometimes be waived, even if it appears tobe against a party’s best interest. In criminaltrials, however, a judge will strictlyscrutinize a defendant’s decision to waivethe conflict before granting the waiver,due to the special interests at stake. Wheatv. United States, 486 U.S. 153, 160 (1988).In making this determination the courtwill first determine whether the conflictwill prevent the defendant from having aneffective advocate and then decide whetherthe public interest would be served betterby the attorney’s dismissal. If the conflictappears too great, counsel may be dismissedand recommended for sanctions.In addition to breach of confidentiality andconflict of interest issues, the newly createdattorney- client relationship could meanthat disclosures made by an employee constituteadmissions on the part of a corporation.McCallum, 149 F.R.D. 104 at 111.Practical GuidelinesWhether or not a criminal investigationis the primary purpose of questioningthe employees of your client, care shouldalways be taken to make sure that everyoneknows exactly where the attorney- clientprivilege stands and who is the client. Thereare many instances in which a seeminglystraightforward civil matter regarding aviolation of some regulations turns intosomething much more serious down theroad. If the investigation did not includeappropriate warnings to those being inter-Miranda, continued on page 82

G O V E R N M E N T E N F O R C E M E N T A N D C O R P O R AT E C O M P L I A N C EThe Affect ofGovernment AwarenessBy Matthew L. Bevilleand Winifred M. WeitsenImplied Certificationand the FalseClaims ActCompanies should beaware that they maybe able to use theiralleged civil or criminalliability to defeat arelated FCA claim.Fueled primarily by aggressive qui tam relators, FalseClaims Act (FCA) liability continues to evolve to addressnovel allegations of fraud and falsity. While courts havelargely settled the standards of liability for typical falseclaims violations—such as claims for goodsor services that were never delivered, claimsfor worthless goods or services, or claimsthat overbill the government—recent trendsin FCA litigation impose, or attempt to impose,liability far outside of these traditionalviolations. This article addresses the intersectionof two of these trends: the impliedcertification doctrine, which deems someclaims false if they are associated with statutoryor regulatory violations, and what affect,if any, the government’s awareness ofthe underlying regulatory violation has ona defendant’s liability.Though the case law is less than clear,companies and individuals facing FCA liabilityfor allegedly violating an applicablestatute or regulation may have at leasta partial defense to liability if the governmentwas aware of the alleged violation—even if the government was independentlyinvestigating or prosecuting it. This is particularlyimportant as companies can nowexpect that a qui tam suit will routinely followcivil or criminal government enforcementactions. Indeed, while nearly everycriminal pharmaceutical case involves anFCA component, relators have alleged thatdrug recalls or even Food and Drug Administrationwarning letters are sufficientto establish FCA liability. However, the lawsuggests that companies should not be subjectto FCA liability when the governmentaccepts payment for claims with full knowledgeof the alleged falsity, especially if theexistence of an undisclosed violation is thesole reason the claim is allegedly false. Thisarticle first provides a short summary of theFCA and the implied certification doctrine,followed by an analysis of how the government’sknowledge could, in some instances,effectively bar FCA liability.The False Claims ActThe FCA prohibits knowingly submittingfalse or fraudulent claims to the government,as well as using false or fraudulentstatements material to a claim submittedby a third party; however, the statute isnot designed to “reach every kind of fraudpracticed on the government” or police“technical compliance with administra-■ Matthew L. Beville is an associate and Winifred M. Weitsen is a senior associate in Venable LLP’s Washington,D.C., office and members of the firm’s SEC and White Collar Defense Group. Both authors are membersof DRI and its Government Enforcement and Corporate Integrity Committee.For The Defense n October 2010 n 69

G O V E R N M E N T E N F O R C E M E N T A N D C O R P O R AT E C O M P L I A N C Etive regulations.” United States v. McNinch,356 U.S. 595, 599 (1958); United States exrel. Lamers v. City of Green Bay, 168 F.3d1013, 1020 (7th Cir. 1999). Rather, “[t]hestatute attaches liability, not to the underlyingfraudulent activity or to the government’swrongful payment, but to the‘claim for payment.’” Harrison v. WestinghouseSavannah River Co., 176 F.3d 776,The court found that“withholding informationcritical to the decisionto pay” is the “essenceof a false claim.”785 (4th Cir. 1999) (quoting United Statesv. Rivera, 55 F.3d 703, 709 (1st Cir. 1995)).Thus, to succeed under the FCA, the governmentor relator must prove that the defendantknowingly made a false statementor engaged in a fraudulent conduct, whichwas material to the government’s decisionto pay money or to forfeit money due. SeeUnited States ex rel. Godfrey v. KBR, Inc.,360 Fed. App’x 407, 410 (4th Cir. 2010).For purposes of this article, we are primarilyconcerned with two provisions ofthe FCA. First, Section 3729(a)(1) of theFCA prohibits knowingly presenting, orcausing to be presented, false or fraudulentclaims for payment. While most courts findthat the “presentation” element requires“some degree of participation in the claimsprocess” to establish liability, others havefound that operating “under a policy thatcauses others to present false claims” is sufficient.See United States v. President & Fellowsof Harvard College, 323 F. Supp. 2d 151,186–87 (D. Mass. 2004).Second, Section 3729(a)(2) prohibitsknowingly making, or causing to be made,false records or statements material to afalse or fraudulent claim. Until recently,Section 3729(a)(2) prohibited knowinglymaking, using, or causing to be made orused, a false record or statement to get afalse or fraudulent claim paid or approvedby the government. Id. However, as this70 n For The Defense n October 2010previous version of section 3729(a)(2) prohibitedknowingly using “a false record orstatement to get a false or fraudulent claimpaid or approved by the government,” theSupreme Court unanimously held a defendantmust submit a false claim with theintention that it would be paid by the government.See Allison Engine v. United Statesex rel. Sanders, 128 S. Ct. 2123, 2129 (2008).In response, Congress eliminated the “toget” requirement. See Fraud Enforcementand Recovery Act of 2009, Pub. L. No. 111-21, §4, 123 Stat. §1617 (2009).The FCA also prohibits diverting governmentproperty; falsely certifying thatgoods were delivered to the government;knowingly buying or receiving governmentproperty from anyone who may notlawfully sell or pledge it; knowingly usinga false record or statement to decrease oravoid an obligation owed to the government,and conspiring to violate the FCA.31 U.S.C. §3729(a)(1). However, these subsectionsaddress fairly specific misconductand have not been as liberally interpretedas Subsections (a)(1) and (2).Implied CertificationFalsity is, of course, an essential element ofa FCA violation. Claims may be actionableif they are factually or legally false. A claimmay be factually false if it contains objectivelyfalse statements. This covers the typicalFCA claims, such as claims for goods orservices that were never provided, claimsthat were overbilled, or claims for worthlessgoods or services. However, courtshave found that a claim may be legallyfalse, even if factually accurate, if the defendantexpressly or impliedly certifiedthat it complied with applicable statutes orregulations. While this category typicallycovers instances where the defendant submittedclaims obtained through bribes orkickbacks, courts have extended the doctrineto a variety of other violations.The concept of legal falsity was developedin response to FCA claims allegingthat defendants obtained governmentfunds through submitting claims, whichwhile factually true, concealed fraudulentconduct that, if known, would havecaused the government to reject the claim.For instance, in the earliest case, a constructioncompany won a government contractby participating in the Small BusinessAdministration’s (“SBA”) minority- ownedenterprise program. See Ab-Tech Const.,Inc. v. United States, 31 Fed. Cl. 429, 431–33 (Fed. Cl. 1994). As part of the contract,the company was required to certify its“understanding of, and promised compliancewith, the program’s requirements forcontinuing eligibility,” including requiringSBA approval for any management agreementor other agreement that could affectthe company’s performance of the contact.Id. However, the company entered,and fraudulently concealed, a joint venturewith a non- minority- owned enterprise,rendering it ineligible to receive fundsunder the SBA contract. Id. Accordingly,the Court of Federal Claims found thatbecause the company fraudulently concealedthat it was ineligible to receive paymentunder the contract, its claims werefalse. Id. at 434. The court found that “withholdinginformation critical to the decisionto pay” is the “essence of a false claim.” Id.Several courts extended this reasoningto claims obtained in violation of the MedicareMedicaid Anti- Kickback Statute. E.g.,United States ex rel. Pogue v. Am. Healthcorp(Pogue I), 914 F. Supp. 1507, 1513 (M.D.Tenn. 1996); see also United States ex rel.Pogue v. Diabetes Treatment Ctrs. of Am.,Inc. (Pogue II), 238 F. Supp. 2d 258 (D.D.C.2002) (reviewing Pogue I after transfer ofvenue); 42 U.S.C. §1320-7b(b). In Pogue, therelator alleged the defendants engaged in animproper patient referral scheme. Pogue I,914 F. Supp. at 1508. In denying a motionto dismiss, the court found that the FCAprohibited “not only situations in which aclaimant makes a false statement or submitsa false record in order to receive payment,but also those situations in which the claimantengaged in fraudulent conduct in orderto receive payment.” Id. at 1511. Accordingly,the court found the complaint stateda claim, as the relator “alleged that the governmentwould not have paid the claimssubmitted… if it had been aware of the allegedkick-back and self- referral violations.”Id. at 1513. Though not expressly stated, thecourt agreed with the relator’s argumentthat by submitting claims, the defendants“implicitly stated they had complied withall statutes, rules, and regulations governingthe Medicare Act.” Id. at 1509.While Ab-Tech and Pogue I stated thedoctrine of legal falsity in broad terms,

later cases have significantly narrowedthe doctrine. See, e.g., KBR, Inc., 360 Fed.App’x at 411–12; Mikes v. Straus, 274 F.3d687, 696–97 (2d Cir. 2001). Ab-Tech andPogue I imply that a company implicitlycertifies that it has complied with all relevant“statutes, rules, and regulations” andprovided “all information critical to thedecision to pay.” Pogue I, 914 F. Supp. at1508; Ab-Tech, 31 Fed. Cl. at 431–33. However,courts have since clarified that a falsecertification, express or implied, “cannotform a viable FCA cause of action unlesspayment is expressly conditioned on thatcertification.” KBR, Inc., 360 Fed. App’x at411–12; see also United States ex rel. Grossv. AIDS Research Alliance- Chicago, 415F.3d 601, 604 (7th Cir. 2005); Mikes, 274F.3d at 700. Thus, a defendant is only liablefor falsely certifying “compliance witha particular statute, regulation or contractualterm” if “compliance is a prerequisiteto payment.” Mikes, 274 F.3d at 698. Similarly,implied certification is appropriate“only when the underlying statute orregulation upon which the plaintiff reliesexpressly states the provider must complyin order to be paid.” Id. at 700.These holdings are consistent with thefacts of Ab-Tech and Pogue I, if not theirlanguage. In Ab-Tech, the defendant expresslycertified that it would comply withthe SBA’s “requirements for continuing eligibility”in the SBA minority- owned enterpriseprogram. Ab-Tech, 31 Fed. Cl. at431–33. Thus, the defendant not only submittedclaims that contradicted its expresscertification, but its violations rendered itexpressly ineligible to receive payment underthe program. Id. Similarly, while thePogue I court implied that a submission ofpayment certified compliance with all statutesand regulations generally, the defendants’violations were expressly prohibited bythe Medicare Medicaid Anti- Kickback Statute.See 42 U.S.C. §1395nn(g)(1) (prohibitingpayment of Medicare and Medicaid claimsfor services obtained from bribes or kickbacks);see also Pogue I, 914 F. Supp. at 1508.More importantly, courts tend to interpret“express condition” strictly; if the governmentwould have discretion to accept orreject a claim if it knew of the alleged violationthen payment is not “expressly conditioned”on compliance. See United Statesex rel. Conner v. Salina Reg’l Med. Ctr., Inc.,459 F. Supp. 2d 1081, 1086–88 (D. Kan.2006); United States ex rel. Swan v. CovenantCare, Inc., 279 F. Supp. 2d 1212, 1222(E.D. Cal. 2002). In Swan, the court heldthat a nursing home did not submit falseRESPONDING TO YOUR NEEDSERI Quality and Serviceclaims when it failed to meet the Departmentof Health and Human Services’(“HHS”) statutory quality of care guidelines.279 F. Supp. 2d at 1222. The courtfound that because HHS could “impose aWhy spend valuable hours of your staff’s time trying to locate the rightexpert? With over 30,000 areas of expertise in our registry, helping youfind the right expert is rarely a problem.EXPERTS ON EXPERTS ®HELP YOU NEED…WHEN YOU NEED IT SINCE 1979800-383-48571225 EAST SAMUEL AVE. • SUITE B • PEORIA HEIGHTS, IL 61616-6455Fax 888-815-2778 • www.expertresources.comFor The Defense n October 2010 n 71

G O V E R N M E N T E N F O R C E M E N T A N D C O R P O R AT E C O M P L I A N C Evariety of sanctions on nursing homes forfailing to meet the quality of care guidelines,”including exercising its discretion“not to impose sanctions in a particularcase,” payment was not “expressly conditioned”on compliance with the quality ofcare guidelines. Id. The court found thatallowing “FCA suits to proceed where governmentpayment of Medicare claims is notDefendants may beable to use a previousresolution of a criminal orcivil enforcement actionsto aggressively defendsubsequent qui tam cases.conditioned on perfect regulatory compliance”would “improperly permit qui tamplaintiffs to supplant” an agency’s regulatorydiscretion. Id.Further, the Second Circuit has goneeven further and found that the impliedcertification doctrine does not evenextend to general conditions of participation.Mikes, 275 F.3d at 701–02. In Mikes,the Second Circuit found that a defendantdid not submit false claims for medicaltests that were conducted with negligentlymaintained equipment. Id. The court foundthat even if the defendant’s testing proceduresdid not meet the required standardof care, payment was not expressly conditionedon compliance with the quality ofcare provisions. Id. Rather, the court foundthe quality of care provisions were “conditionsof participation” and not conditionsof payment. Id. Under the quality of carerequirements, providers may only be sanctionedif their violations are gross, flagrant,or occur “in a substantial number of cases”and the government had substantial discretionwhether to impose a variety of sanctions,including restitution. Thus, the courtfound the quality of care requirementswere designed as requirements for “continuingeligibility” and not “any individualincident of noncompliance.” Id.72 n For The Defense n October 2010Government KnowledgeAs a predicate matter, the government’sknowledge that claims are false is not anabsolute defense to FCA liability. UnitedStates v. Southland Mgmt. Corp., 288 F.3d665, 680–81 (5th Cir. 2002); but see Boisjolyv. Morton Thiokol, Inc., 706 F. Supp.795, 809–10 (D. Utah 1988) (holding that“no claim has been stated” if the “governmentknew of those very facts or characteristicswhich allegedly made the claimfalse”). However, courts have recognizedseveral ways the government’s knowledgecan serve as at least partial defenses toFCA actions.There is no FCA liability if the governmentinstructed the defendant to submitthe allegedly false elements of a claim. SeeUnited States ex rel. Durcholz v. FWK Inc.,189 F.3d 542, 545 (7th Cir. 1999). Whileseemingly obvious, qui tam relators havechallenged allegedly false claims submittedaccording the government’s expressinstructions. In Durcholz, the Seventh Circuitfound there was no FCA liability forfalse line-items in a contract when thegovernment directed the defendant to usethe particular line-items to avoid havingto re-bid the contract. Id. The court foundthat since the “government knew what itwanted, and got what it paid for,” the “government’sknowledge [was] an effectivebar” to liability. Id. Though the case lawis not well developed, a defendant may beable to argue that this exception equallyapplies in situations where the governmentrequests good or services when it has actualknowledge of a defendant’s alleged statutoryor regulatory violations.Next, a defendant will generally notbe liable if the government was not onlyaware of the alleged violation at the timethe claims were paid, but also cooperatedwith the defendant to fix the problem. SeeLamers, 168 F.3d at 1019–20 (finding defendantdid not violate FCA as governmentaudit revealed violations, but agencydecided to demand compliance rather thanpenalizing it). Indeed, in one Fifth Circuitcase, the government brought FCA claimsagainst a subsidized housing provider forfalsely certifying its housing was “decent,safe, and sanitary.” Southland Mgmt., 288F.3d at 668–70. The defendant moved forsummary judgment, claiming that the governmentwas aware of the alleged violation.Id. The court denied the motion, findingthat the government did not have to electbetween immediately ceasing payments,which would likely put the defendant’s residentson the street, and waiving its rightsunder the FCA. Id. at 683–84. However,the court emphasized that the governmentonly sought penalties for claims submittedafter the defendants’ refused to cooperate;the government did not attempt to hold thedefendant liable for false claims while they“were participating in good faith in thecooperative remedial process.” Id.Further, a defendant cannot form therequisite scienter to defraud the governmentif it has voluntarily provided thegovernment with truthful informationregarding its alleged violations. See, e.g.,United States ex rel. Burlbaw v. Orenduff,548 F.3d 931 (10th Cir. 2008); United Statesex rel. Butler v. Hughes Helicophers, Inc.,71 F.3d 321, 327 (9th Cir. 1995). As defendantsmust act knowingly to incur FCA liability,a defendant cannot be said to haveknowingly submitted a false claim if it hasvoluntarily given the government the factssufficient to evaluate the alleged false statementor omission. For instance, in Butler,the Ninth Circuit found that the government“had so completely cooperated andshared all information during the testingthat [the defendant] did not ‘knowingly’submit false claims.” 71 F.3d at 327. Stateddifferently, while the government’s knowledgeof the alleged falsity is not sufficientto defeat FCA liability, a defendant cannotform the requisite scienter to defraud thegovernment if it voluntarily provides thegovernment with evidence of its allegedviolations.These considerations are particularlyapplicable to the implied certification doctrine.Under the implied certification doctrine,claims are deemed legally false ifa defendant impliedly certifies “compliancewith a particular statute, regulationor contractual term” when “compliance isa prerequisite to payment.” Mikes, 274 F.3dat 698. Further, many jurisdictions haveinterpreted implied certification strictlyand found that compliance is not a prerequisiteto payment if the government hadany discretion to accept or reject a claim.See Salina Reg’l Med. Ctr., 459 F. Supp. 2dat 1086–88. Accordingly, relators, or theFalse Claims Act, continued on page 82

G O V E R N M E N T E N F O R C E M E N T A N D C O R P O R AT E C O M P L I A N C EFraud Enforcement andRecovery Act of 2009By Robin Beardsley MarkBankingInstitutionsAre Victims TooCriminal mortgagefraud cases presentunique challenges fordefense counsel.If you have picked up a paper, surfed the web or listened toa morning news program in the past year, you’ve no doubtencountered the headlines “Mortgage Banking Fraud.”While there has clearly been a significant amount of talkabout mortgage banking institutions, includingblame for the economic downturn,we know as lawyers that there isalways another side to the story. Whilemost attention seems to be focused on thealleged fraudulent acts of mortgage bankinginstitutions, there is a trend of recentfederal indictments pursuant to the FraudEnforcement and Recovery Act where themortgage banking institution is the not thedefendant, but the victim.Recently, criminal mortgage fraud investigationsand indictments have includedthe likes of borrowers, lenders, investors,real estate professionals, appraisers, realestate brokers, home builders and attorneys.The rise in mortgage fraud investigationsand prosecutions increases thechance that lawyers practicing in the fieldsof mortgage banking, commercial or financiallitigation who are less familiar withwhite collar criminal defense may be calledupon to represent clients who find themselvesas the subject of a criminal mortgagefraud investigation.Initially, you may believe that your clientis a not a target of the investigation,but rather may be a mere witness or possiblythe victim of a mortgage fraud scheme.However, a defense lawyer should not beso quick to assume that his or her client isnot involved in the mortgage fraud scheme.Criminal mortgage fraud cases typicallyinvolve multiple parties engaged in a conspiracyto commit mortgage fraud that hasnumerous moving parts. If you suspect orhave any reason to believe that your clientmay be involved in or the subject of criminalmortgage fraud, it is important to evaluatethe case and move quickly to protectyour client’s interests. The rules of civil procedureare not in play when facing a criminalinvestigation and possible indictment.Therefore, an understanding of the criminaldefense basics is increasingly importantto the civil defense litigation counsel.■ Robin Beardsley Mark is a partner with the law firm of Sirote & Permutt, P.C., in Birmingham, Alabama, where she practicesin the areas of mortgage banking litigation, commercial litigation, bankruptcy, and white collar criminal defense. Ms. BeardsleyMark is an adjunct professor of law, teaching the basic skills of trial advocacy at Cumberland School of Law. She is a memberof the DRI Government Enforcement and Corporate Compliance Committee, and serves on the steering committees for both theDRI Young Lawyers and Alternative Dispute Resolution Committees.For The Defense n October 2010 n 73

G O V E R N M E N T E N F O R C E M E N T A N D C O R P O R AT E C O M P L I A N C EDefense counsel will needto balance the sophisticatedfinancial aspects of thecase with the street crimenature of the investigationand prosecution of the case.Recent Legislation Explainsthe Increase in Prosecutionof Mortgage Fraud CasesOn May 20, 2009, President Obama signedinto law the Fraud Enforcement and RecoveryAct of 2009 (FERA). FERA providesthe federal government with new andimproved tools to investigate and prosecutemortgage, corporate and other financialfrauds. The purpose of FERA is toincrease enforcement oversight over thetypes of financial frauds that contributed tothe current economic crisis. Among otherthings, FERA:• provides substantial funding andresources to the Justice Department,the FBI, the U.S. Postal Inspection Services,the U.S. Secret Service, and theInspector General for the Departmentof Housing and Urban Development forenforcement activities, including $50million per year to the U.S Attorney’soffices to staff the FBI’s fraud strikeforces, and $40 million to Departmentof Justice criminal, civil and tax divisionsto provide litigation and investigativesupport in fraud cases;• modifies the definition of “financialinstitutions” in the criminal code toinclude mortgage lending businessesthat are not directly regulated or insuredby the federal government. FERA §2(a)(modifying 18 U.S.C. §20);• amends the false statements in mortgageapplications statute to criminalize makinga material false statement or willfullyovervaluing a property in order toinfluence any action by a mortgage lendingbusiness. FERA §2(c) (modifying 18U.S.C. §1014);74 n For The Defense n October 2010• strengthens the Civil False Claims Act(31 U.S.C. §3729 et seq.) to ensure thatthe government can recover taxpayerdollars purportedly lost to fraud andabuse; and• establishes a Financial Crisis InquiryCommission (the “Commission”) toinvestigate the causes of the currentfinancial and economic crisis. The Commissionhas the power to hold hearingsand to compel production of documentsand testimony. The Commission willsubmit a report on December 15, 2010,that will contain findings and conclusionsregarding the causes of the currentfinancial and economic crisis.Prior to FERA, private mortgage lenderswere not subject to the same kind of oversightand regulations as traditional financialinstitutions. FERA extended criminallaws to cover private mortgage companies—to“level the playing field”—in thesame way that existing regulations applyto federally insured and regulated financialinstitutions.On November 17, 2009, President Obamasigned an executive order establishing anew interagency Financial Fraud EnforcementTask Force (“Task Force”) to combatfinancial crime. The Task Force was established“to lead an aggressive, coordinated,and proactive effort to investigate and prosecutefinancial crimes.” The Task Force isdesigned to strengthen collective efforts offederal, state and local agencies to investigateand prosecute significant financialcrimes relating to the current financial crisis;to recover illegally obtained funds; andto ensure just and effective punishment forthose who perpetrate financial crimes.The Department of Justice and FBI fieldoffices worked to establish more than 75regional task forces and working groupsaround the country. These efforts have successfullytargeted real estate professionalsincluding bankers, brokers, appraisers andlawyers who allegedly engaged in fraudulentactivities. On December 9, 2009, LannyBreuer, Assistant U.S. Attorney General,reported the following task force results tothe United States Senate Committee on theJudiciary:• On October 8, 2009, in the Southern Districtof Texas, a jury convicted a Houstonloan officer at a financial institutionfor submission of fraudulent loan applicationsand packages to residential lendersacross the country resulting in over$24 million dollars in fraudulent loans.The defendant and her co- conspiratorsmisrepresented the credit- worthiness ofindividual borrowers who were recruitedto purchase multiple properties.• On August 10, 2009, in the Central Divisionof California, two real estate professionalswere convicted for their roles ina massive mortgage fraud scheme thatcaused more than $40 million in lossesto federally insured banks. The jury convicteda prominent Beverly Hills realestate agent and licensed appraiser oncharges of conspiracy, bank fraud andnumerous loan fraud charges for theirroles in the mortgage fraud scheme.Eight other real estate professionals pledguilty to federal felony charges for theirroles in this scheme.• In November 2009, the Middle Districtof Florida announced the resultsof a nine-month long “Mortgage FraudSurge” that resulted in charges againstmore than 100 defendants involvingmore than $400 million in loans onmore than 700 properties.On June 17, 2010, members of the TaskForce released the results of a nationwideinitiative called “Operation StolenDreams,” that targeted mortgage fraudstersthroughout the country. Operation StolenDreams is the largest collective enforcementeffort to confront mortgage fraud. SeeDepartment of Justice Press Release datedJune 17, 2010. From March 1, 2010, throughJune 17, 2010, “Operation Stolen Dreamshas involved 1,215 criminal defendantsnationwide, including 485 arrests, who areallegedly responsible for more than $2.3billion in losses. Additionally, … the operationhas resulted in 191 civil enforcementactions which have resulted in the recoveryof more than $147 million.” Id. In a pressconference announcing the results of OperationStolen Dreams, FBI Director RobertS. Mueller III stated that “[f]rom homebuyers to lenders, mortgage fraud has hada resounding impact on the nation’s economy.”Mueller issued a warning: “[t]hosewho prey on the housing market shouldknow that hundreds of FBI agents on taskforces and their law enforcement partnersare tracking down your schemes and youwill be brought to justice.”

The Task Force helped to identify mortgagefrauds such as loan originationschemes, short sales, property flipping,and equity skimming. As part of OperationStolen Dreams, on June 17, 2010, theFBI reported the following examples of thetypes of mortgage fraud cases that were targetedin this operation:• Two people were arrested in Miami forpreying upon the Haitian- Americancommunity by offering to assist themwith immigration and housing issues.Instead the fraudsters used the Haitian-American’s personal information toproduce false documents to obtainmortgage loans.• In California, a prominent home builderused straw buyers to sell his houses at inflatedprices. The scheme inflated priceson other homes in the area, creating artificiallyhigh comparable sales and affectingthe overall new-home market.• In Detroit, FBI agents arrested severalindividuals in a $130 million schemeorganized by a local motorcycle gang.The gang members fraudulently representedthemselves as mortgage brokers,appraisers, real estate agents, andtitle agents and used straw buyers toobtain around 500 mortgages on only180 properties.See FBI Press Release on Operation StolenDreams dated June 17, 2010.White Collar DefenseWhile you may be an attorney skilledin handling commercial, financial, andmortgage banking litigation matters, youmay soon need to learn about white collarcriminal defense to fully represent yourcurrent clients. Criminal mortgage fraudcases present unique challenges for defensecounsel. On one hand, a criminal mortgagefraud case may involve numerous documentsand transactions that are familiar toa civil defense attorney who is experiencedwith commercial, financial, and mortgagebanking litigation cases. On the otherhand, the opposing side is not a local plaintiff’sattorney, but an assistant U.S. attorneywith the support of nationally trainedand experienced task force agents with proactiveinvestigative techniques includingundercover operations, wiretaps, and surveillance.Defense counsel will need to balancethe sophisticated financial aspects ofthe case with the street crime nature of theinvestigation and prosecution of the case.Who Is a Target?Mortgage fraud has been defined as a “materialmisstatement, misrepresentation, oromission relied upon by an underwriteror lender to fund, purchase or insure aloan.” See Financial Crimes Section, FBI,FBI Financial Crimes Report to the Public(September 2006) (hereinafter “2006FBI Financial Crimes Report”). The targetsof these serious federal investigationsinclude borrowers, lenders, investors, realestate professionals, appraisers, and real estatebrokers. Many cases involve multipleco- conspirators involved in the underlyingmortgage fraud scheme. In some cases it isnot obvious which participants are involvedin the conspiracy as participants and whichpersons may be innocent bystanders or additionalvictims. It is crucial that you knowand understand the roles of the participantsin assessing your client’s role in a criminalinvestigation or indictment.The InvestigatorsThe Justice Department is not sympatheticto anyone perpetuating mortgagefraud crimes. In white collar crime, it’s onestrike and you’re out. FBI agents are utilizingintelligence, enhanced surveillance,and undercover operations to identify keyplayers behind large scale fraud and identifytrends. Rest assured that the TaskForce and numerous local and regionaltasks forces targeting mortgage fraud areequipped with experienced personnel andadvanced investigative tools.Federal prosecutors are developing andmaintaining relationships with communitygroups that come in contact with mortgagefraud victims, which helps prosecutorsidentify potential schemes. “Legal servicesattorneys, housing counselors, and housingactivists … have direct, personal contactwith the people that mortgage fraud affects.By contacting [the U.S Attorneys’ office]right away when someone comes to them,they can save … the time of searching outvictims.” See Michael S. Blume and RichardJ. Zack, Using Community Outreach toFind and Prosecute Mortgage Fraud, UnitedStates Attorneys’ Bulletin, May 2010.“Mortgage fraud is no different from anyother scheme to defraud; it is about lyingor hiding the truth for money. The factthat mortgage fraud occurs in the businessenvironment is actually a huge plus for theinvestigation and… prosecution. The businessenvironment requires documentation,and documentation means the fraudhas left tracks.” See Barbara E. Nelan, Findingthe Smoking Gun, United States Attorneys’Bulletin, May 2010. Prosecutors haveWell before indictment,the prosecutors have alreadyidentified and catalogued allthe smoking gun documentsnecessary for prosecution.the subpoena power and the investigativetools necessary to gather all relevant documentsand piece together the documentpuzzle before the defendants and theircounsel even know that they are under afederal investigation. Well before indictment,the prosecutors have already identifiedand catalogued all the smoking gundocuments necessary for prosecution.The CrimeHistorically, mortgage fraud cases are generallydivided by law enforcement investigationsinto two basic categories: fraud forhousing and fraud for profit. See 2006 FBIFinancial Crimes Report; see also FFIECFraud Investigations Symposium, The Detection,Investigation, and Deterrence ofMortgage Loan Fraud Involving Third Parties:A White Paper 2 (Oct. 27–Nov. 7, 2003)(hereinafter “FFIEC Mortgage Loan WhitePaper”). Fraud for housing is typically perpetratedby an individual borrower whowants to purchase property that the borrowerwould not otherwise qualify to purchase.On the other hand, fraud for profitis a scheme where the purpose is to profitfrom either creating fictitious properties orfalsely creating high property values andthen looting the values of the properties.Mortgage fraud schemes can come in allshapes and sizes depending upon the ingenuityof the participants. However, there areFor The Defense n October 2010 n 75

G O V E R N M E N T E N F O R C E M E N T A N D C O R P O R AT E C O M P L I A N C Ecertain schemes that may be identifiable,including but not limited to, the following:• Property flipping occurs when propertyis purchased and then its value is artificiallyinflated through false or fraudulentappraisals before being quicklyresold. The purpose is to acquire asmuch money from the property as possible.The process may be repeated withMany civil defenseattorneys find themselvessurprised by the speedof criminal investigationsand indictments.co- conspirators or straw buyers untileventually the property is foreclosed.Unfortunately, the end buyer of theproperty may be an innocent bona fidepurchaser of the property. Sophisticateddefendants may use identity theft, strawbuyers or shell companies to assist in theflipping schemes. See 2006 FBI FinancialCrimes Report.• Equity skimming occurs when the fraudster/investorrecruits a straw buyer (ornominee) to obtain a mortgage in thestraw buyer’s name. After closing thestraw buyer signs the property over tothe investor by quit claim deed. Theinvestor rents the property and pocketsthe rental income, and makes no paymentson the mortgage. Eventually theproperty is foreclosed by the lender fornon- payment. Even worse, the unknowingtenants may continue to pay rent tothe fraudster for a period of time duringthe foreclosure process. See 2006 FBIFinancial Crimes Report.• Chunking occurs when a fraudsterrecruits homebuyers or investors to buyinvestment rental property for a commission.The investor is promised someincentive such as no down payment; thefraudster will find tenants, manage theproperty and re-sell the property aftera designated period of time. In reality,the fraudster fails to find tenants, fails76 n For The Defense n October 2010to make mortgage payments, and failsto sell the property. See FFIEC MortgageLoan White Paper at 14.• Foreclosure fraud, also known as “mortgagerescue” fraud, occurs when fraudstersidentify homeowners who are atrisk of default, or who are in need of helpwith a property that is close to foreclosure.The fraudster offers help by havingthe borrower surrender title of the propertyto the fraudster with promises of refinanceor securing a better interest rate.The homeowner agrees to pay rent to thefraudster and buy back the property overa long period of time. The borrower isthen unable to meet the terms of the buyback and the homeowner is stripped ofboth ownership and equity in the home.See 2006 FBI Financial Crimes Report;see also Steve Tripoli and Elizabeth Renuart,Nat’l Consumer Law Ctr. Report,Dreams Foreclosed: The Rampant Theftof Americans’ Homes Through Equity-Stripping Foreclosure “Rescue Scams” 8(June 2005).Strategy for Preparing a DefenseTypically, by the time you learn of theinvestigation or indictment, the governmenthas already gathered all relevantinformation and evidence for prosecutionof the case. Many civil defense attorneysfind themselves surprised by the speed ofcriminal investigations and indictments,but that’s due in part to the fact that thegovernment has already been working thecase for a period of time before the civildefense attorney finds out. Additionally,civil defense counsel are comfortable withthe rules of civil procedure that allow fordiscovery and exchange of information.Such is not the case in a criminal casewhere discovery is severely limited in comparisonto the rules of civil procedure.Unfortunately, many clients will clingto denials saying that they “are innocent,”“didn’t start out intending to do anythingwrong,” “it wasn’t my idea,” or believingthat they will ultimately prevail at trial. Ifthe client has not been indicted, then youmay still have some time to evaluate andconduct your own investigation into thecase. However, defense counsel should notwait on indictment to evaluate and begindefending the case.A good defense strategy should focus onquickly evaluating and determining yourclient’s involvement. Interviewing the clientis the first step, but the client’s versionof the story will undoubtedly needto be verified by performing independentinvestigation of the allegations and the coconspirators.Defense counsel should workto obtain all relevant documents from allpossible participants including the client,the lender, the broker, the appraiser, thereal-estate agent, the closing agent and/orattorney, the borrower, and the seller. Tothe extent possible, defense counsel shouldconsider interviewing as many other playersas possible. It is the inconsistencies inthe documents and information from eachof the relevant players that will be crucialto evaluating the case.The next step is to follow the money.This may include hiring a forensic accountant,a consultant, or other appropriateinvestigator to trace the funds connectedto the baseline property transaction. Theamount of money flowing to various playerswill be critical to evaluating the caseand will undoubtedly be central to thegovernment’s investigation and later prosecution.Furthermore, it is necessary fordefense counsel to understand the flow ofmoney to determine your client’s culpability,knowledge, credibility, and the potentialfor criminal charges.After you have reviewed and consideredthe facts and all relevant documents it istime to engage in an honest assessmentof your client’s potential risks and culpability.Unfortunately, defense counsel maynot be able to fully investigate the case andthere may be documents and informationthat are unavailable for evaluation. Defensecounsel should remember that the governmenthas information and documentsthat the client and defense counsel willnot be able to review. However, an accurateassessment of the client and the client’sinvolvement and culpability is crucialto representation of your client.If not already engaged, at this point,defense counsel will likely need to engageexperienced white collar counsel and considerwhether the client should cooperatewith the government. Determining whethercooperation is the right strategic move foryour client can only be determined onan individual case basis. In federal cases,FERA, continued on page 85

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W R I T E R S ’ C O R N E RBuild a Better BriefTips for Persuasive Legal WritingBy Kristen E. Dennisonn Kristen E. Dennison is an associate practicing with Campbell Campbell Edwards& Conroy PC in Wayne, Pennsylvania, where she concentrates in trial and appellatework for manufacturers and other companies in tort and product liability matters. all instances of passive voice, and then change the lan-She is a member of DRI’s Product Liability and Appellate Advocacy Committees. Writers’ Corner, continued on page 8778 n For The Defense n October 2010For the most part, practicing attorneys each had anintroduction to legal writing as a first-year student inlaw school. After law school, attorneys have to put topractical use what they had previously used only in atheoretical sense. Over the years, attorneys pick up badwriting habits or just become too busy to put the necessarytime and attention into good writing, and sometimesthe output makes someone wonder, did counselsimply dictate stream of consciousness without botheringto read the final product?Writing is an essential part of an attorney’s role. Nomatter how good or bad an attorney might be on his orher feet in an oral argument, a court has already formedan opinion on the merits of a case from the briefingsubmitted to the court. Often a court will not even hearan oral argument and simply decide an issue based onthe briefs. Given that a brief is the first opportunity toimpress a court, clear and persuasive brief writing is afundamental tool that too many attorneys let go by thewayside.Be ConciseAll too often lawyers fall into the trap of using excessverbiage in brief writing. You receive no extra points forusing extra words. The only thing gained by foregoingsimplicity is confusing the reader. As E.B. White quotedWilliam Strunk, Jr.,:Vigorous writing is concise. A sentence should containno unnecessary words, a paragraph no unnecessarysentences, for the same reason that a drawingshould have no unnecessary lines and a machine nounnecessary parts. This requires not that the writermake all sentences short or avoid all detail and treatsubjects only in outline, but that every word tell.E.B. White, Introduction to William Strunk, Jr., and E.B.White, The Elements of Style, at xv–xvi (4th ed. 2000).It sounds so simple, yet it can be so difficult to achieve:“Writing good standard English is no cinch, and beforeyou have managed it you will have encountered enoughrough country to satisfy even the most adventurousspirit.” Strunk and White, The Elements of Style, at 84(4th ed. 2000).Omit excess words. Don’t write, “the question as towhether”—just write “whether.” Strike “the fact that”from your briefs. Don’t write “in regard to” or “withregard to”—“regarding” is all that you need. Use plainEnglish and avoid legalese. Using plain English doesn’tmean it has to be boring. Grab a court’s attention. Makeit interesting. But use everyday, ordinary words to makeit happen.ProofreadProofreading is one of the essential elements of writingtaught at an early age. And for most attorneys it is secondnature to take that last important step before signinga brief and filing it, usually to avoid embarrassment ofputting our names to sloppy work. Failing to proofread,however, may have more dire consequences than simpleembarrassment. For instance, one court slashed attorneys’fees after reviewing the moving papers and lambastingthe attorney for numerous typographical andother errors riddled throughout, commenting,A long time ago in a galaxy far, far away, each lawyerknew he or she could not nail any old slap-dashparchment to the church door and expect someoneelse to pay for it. Most lawyers who practice in thiscourt also know that.They all should.McKenna v. City of Philadelphia, No. 07-110, 2008 WL4435939, at *17 (E.D. Pa. Sept. 30, 2008).Let this be a lesson—courts do look, and do care,about the quality of the briefing they are asked to read.Avoid the Passive VoiceTake a famous example of the passive voice, a phrase oftenused in the political arena: “Mistakes were made.”Interestingly, in the McKenna case, the attorney usedalmost that exact language when asked to comment onthe court’s decision to reduce attorneys’ fees: “There weremistakes, but they were caught.” Shannon P. Duffy, Typosand Errors Lead to Slashed Fees for Attorney, 238 The LegalIntelligencer 6876 (2008). These examples use passivevoice as a defensive mechanism to shift attention awayfrom a speaker or a writer. In persuasive writing, however,you want to focus on your point. You definitely shouldnot shift a court’s focus away from an issue by using thepassive voice. Before filing a brief, read through it seeking

T H I N K G L O B A L LYInternational Manufacturers BewareForeign Evidence in U.S.Product Liability LawBy Christopher T. Miller and William Seth Howardn Christopher T. Miller is a partner with SmithAmundsen LLC in its Chicago officeand vice chair of the firm’s Product Liability Group. He is an experienced trial lawyer,and his practice focuses on product liability and construction litigation. WilliamSeth Howard is an associate in SmithAmundsen LLC’s Chicago office wherehis practice focus is product liability, construction litigation and corporate/businessservices. He is a member of DRI’s International Law and Product Liability Committees.Scott Blake, a law clerk with SmithAmundsen LLC, assisted in the preparationof this article. Think Globally, continued on pagestandard by which manufacturers are judged in U.S.8480 n For The Defense n October 2010In this global economy manufacturers are compelledto produce many alternative product lines, includingone intended to comply with American laws andsafety standards and others intended to comply withforeign laws and standards. Recently, plaintiffs in theUnited States have attempted to use foreign standardsor foreign product models to prove that (1) reasonablealternative designs existed, (2) a manufacturer hadknowledge of an alternative design or potential defect,(3) a manufacturer failed to warn the consumer of alternativedesigns, or (4) a defendant breached a standard ofreasonable care in a negligence claim.A manufacturer presently has two arguments to barthis type of evidence. First, Federal Rule of Evidence402 provides that “evidence which is not relevant is notadmissible.” Second, Federal Rule of Evidence 403 precludesadmission of evidence that would have a tendencyto confuse or mislead a jury. American courts have unequivocallyand consistently held that foreign design andsafety standards are not admissible because they are notrelevant and will have a tendency to confuse a jury. SeeDeviner v. Electrolux Motor, 844 F.2d 769, 770 (11th Cir.1988); In re Baycol Products Litigation, 532 F. Supp. 2d1029, 1054 (D. Minn. 2007). However, the admissibility ofevidence of a foreign product itself has been another story.Foreign Product Designs Evidence AdmissibilityMany American courts have admitted evidence of foreignproducts with additional safety devices or differentdesigns. Alternative designs sold abroad are usuallyadmitted to show the feasibility of an alternative designor knowledge of a defect. For example, in Sherry v.Massey- Ferguson, Inc., the defendant manufactured twodifferent tractors; one model with a passenger seat thatwas sold in Europe, and an American model withouta passenger seat. 1997 U.S. Dist. LEXIS 10752, at *4–5(W.D. Mich. June 5, 1997). The court admitted photographsillustrating the alternative tractor designs thatwere sold in Europe because “[e]vi dence that an alternatetractor design was in production at the time of thesubject tractor’s manufacture unquestionably is relevantto the feasibility of plaintiff’s design theory.” Id. at*5. That is, the court believed that the alternative, foreigndesign was relevant to prove the feasibility of alternativedesigns and to show that the defendant knew ofalternative designs. See also Cantrell v. Hennessy Indus.,Inc., 829 S.W.2d 875 (Tex. Ct. App. 1992). In Cantrellv. Hennessy, the plaintiff used the European model ofdefendant’s tire- changing machine, which contained apressure- limiting device, as evidence that the alternativedesign was technically feasible and available yearsbefore the allegedly defective American product wasmanufactured. Id.Courts Should Discontinue AdmittingAlternative Foreign Design EvidenceU.S. courts clearly will not admit foreign standards andlaws as evidence but they may admit evidence of specificproducts manufactured for foreign sale. In attemptingto try to exclude the latter, a defendant should assertthat the plaintiff is trying to admit foreign standards, asopposed to alternative design evidence. That is, a manufacturerusually creates alternative designs only to meetthe requirements of the foreign laws where it sells theproduct. By admitting foreign, alternative designs as evidence,a court, by default, will also admit evidence of theforeign standards that required those designs, and thejudiciary, in effect, will have supplanted the U.S. legislativeprocess, essentially holding U.S. manufacturers tothe stricter requirements of foreign jurisdictions.The authors recognize that complying with domesticsafety standards does not absolve a manufacturer fromliability in most jurisdictions. But, the policy reasons fordenying requests to admit alternative, foreign designsdiffer from the policy reasons for allowing evidence ofdomestically produced alternative designs.Further, if alternative, foreign designs become the

D E F E N S E E T H I C S A N D P R O F E S S I O N A L I S MAggregate SettlementsWhat They Are and What They Aren’tBy Mark J. FucileGroup” settlements are becoming common in manypractice areas, ranging from product liability to employment.This trend, in turn, raises the question of whichmultiple settlements fall within the “aggregate settlementrule,” the ABA’s Model Rules of Prof’l Conduct R.1.8(g) and its state counterparts. The rule imposes strictrequirements:A lawyer who represents two or more clients shall notparticipate in making an aggregate settlement of theclaims of or against the clients, or in a criminal casean aggregated agreement as to guilty or nolo contenderepleas, unless each client gives informed consent,in a writing signed by the client. The lawyer’s disclosureshall include the existence and nature of all ofthe claims or pleas involved and of the participationof each person in the settlement.The distinction between simply settling multipleclaims and an “aggregate settlement” is not academic.An improperly handled aggregate settlement can exposeclaimants’ counsel to possible professional discipline andcivil damage claims. See, e.g., In re Hoffman, 883 So. 2d425 (La. 2004) (professional discipline); see, e.g., Waggonerv. Williamson, 8 So. 3d 147 (Miss. 2009) (civil damageclaims). Indeed, defense counsel run the risk that asettlement categorized as “aggregate” cannot be enforcedif it was not properly documented. See, e.g., Tax Authority,Inc. v. Jackson Hewitt, Inc., 898 A.2d 512 (N.J. 2006).Oddly, however, neither Model Rule 1.8(g) nor itsaccompanying Comment 13 defines “aggregate settlement.”In this column, we’ll look at what does anddoesn’t fall within the rule.What They AreThe ABA has acknowledged that the rule and commentfail to define “aggregate settlement” and has attemptedto fashion one:An aggregate settlement… occurs when two ormore clients who are represented by the same lawyertogether resolve their claims[.] It is not necessarythat all of the lawyer’s clients… having claims againstthe same parties… participate in the matter’s resolutionfor it to be an aggregate set tle ment[.] The ruleapplies when any two or more clients consent to havetheir matters resolved together.ABA Comm. on Ethics & Prof’l Responsibility, FormalOp. 06-438 (2006) at 2 (footnote omitted).Despite its seeming breadth, the definition offeredin Formal Ethics Opinion 06-438 remains tethered toModel Rule 1.8’s role as a specialized conflict rule:Unlike Model Rule 1.7 of the Model Rules of ProfessionalConduct which is a general rule governing conflictsof interest relating to a lawyer’s current clients,Rule 1.8 provides specific rules regarding… types ofconflicts of interest. As noted throughout the commentsto Rule 1.8, the rule supplements duties setforth in Rule 1.7.ABA Comm. on Ethics & Prof’l Responsibility, FormalOp. 06-438 at 1.Comment 13 to Model Rule 1.8 makes this same pointby describing the aggregate settlement rule as a “corollary”to the basic conflict rule stated in Model Rule 1.7.The title to Model Rule 1.8 underscores this further:“Conflict of Interest: Current Clients: Specific Rules.”In short, an “aggregate” settlement must involve apotential conflict. The conflict can either be explicit orimplicit. A classic explicit conflict arises when a settlementoffer is framed as “all or nothing.” In that situation,explicitly linking all of the cases together can pit theclaimants against each other and can compromise theirlawyer’s professional judgment and duty of loyalty. Animplicit, but still real, conflict arises when a lump sumis offered for multiple cases and the claimants’ lawyer—rather than the clients, by prior agreement on a divisionor a mechanism for doing so—is left to allocate the overallamount among the clients. In that situation, the lawyeris placed in the position of choosing among his or herown clients, when the lawyer owes each client a duty ofundivided loyalty.What They’re NotTwo categories of collective resolution are not includedin the aggregate settlement rule. The rationale variesfor each.First, settlements allowing individual claimants to“opt out” are not “aggregate” even if they are “collective”because they do not create a conflict. For example,multiple cases involving common facts, claims, or par-n Mark J. Fucile of Fucile & Reising LLP in Portland, Oregon, focuses on professionalresponsibility and product liability defense throughout the Northwest. He is amember of the International Association of Defense Counsel and DRI’s Product Liabilityand Lawyers’ Professionalism & Ethics Committees. Ethics, continued on pageties are often mediated at the same time. If the individual85For The Defense n October 2010 n 81

False Claims Act, from page 72government, should face considerable difficultyarguing that compliance was a prerequisiteto payment if the government wasaware of the violation and continued topay the defendants’ claims. Indeed, unlessthe government exceeded its discretion,accepting payment after learning of theviolation should be a complete defense toliability in jurisdictions that strictly interpretimplied certification.Similarly, the government’s knowledgeof the underlying violation may present astrong defense even in jurisdictions thatfollow Ab-Tech’s “information critical tothe decision to pay” test: even assumingstrict compliance was not required, thegovernment could not have considered theinformation “critical” to its decision to pay,if the decision to pay was unaffected by theinformation. Ab-Tech, 31 Fed. Cl. at 431–33. Further, defendants may have strongarguments that government’s knowledgecuts off liability from that forward. As falsitydepends on implicitly certifying compliancewith a prerequisite to payment, aclaim is simply not false if the governmentaccepted claims after learning that the defendantwas allegedly violating of the statuteor regulation is at issue.Critically, these considerations applyregardless of the source of the government’sknowledge, including to informationgained through a civil or criminalinvestigation or enforcement action. Whilethe government necessarily has someknowledge of a defendant’s alleged violationsonce it begins its civil or criminalinvestigation, defendants should includepotential FCA liability into their calculuswhen determining whether, and howmuch, information to voluntarily discloseto the government. In addition to the potentialto defeat an implied certification claim,full disclosure may effectively cut off futureliability, as a company may be unable toknowingly submit false claims once it fullydiscloses all of its records regarding itsalleged misconduct. Butler, 71 F.3d at 327.Indeed, the value provided by even a partialFCA defense may be comparable to thebenefit a company receives for cooperatingunder the sentencing guidelines.Once the government is aware of thealleged violation, a company should determinewhether the government will continueto accept claims, whether there areany pending qui tam actions, and whetherthe government intends to intervene,assuming an action is pending. Whilemany high- profile cases, such as the Pfizerand Eli Lilly matters, are global resolvedwith criminal plea agreements and FCAsettlements, the government’s knowledgemay still be effective leverage at the negotiatingtable. Further, as the governmentdeclines to intervene in a majority of quitam actions, defendants may be able to usea previous resolution of a criminal or civilenforcement action to aggressively defendsubsequent qui tam cases.However, defendants must also be awarethat this defense is not absolute and thatgovernment knowledge alone is not suffi-cient to defeat FCA liability. While defendantshave successfully defeated FCAclaims based on the government’s knowledgeof an alleged violation, the cases donot follow consistent or predictable reasoning.Further, these arguments assume thata claim is rendered false solely because ofthe alleged statutory or regulatory violation;this defense is unlikely to be successfulif the alleged violation rendered thedefendant’s product or service defective orworthless. However, for those defendantshaled into court solely because they failedto comply with an applicable statute or regulation,the government’s knowledge maybe a successful way to mitigate or eliminateliability.ConclusionThough the FCA is liberally construed,companies should be aware that liabilityis not absolute. Further, as relators continueto push the boundaries of the FCA,defenses to liability become more robust.Though courts have relied on the impliedcertification doctrine to find that statutoryor regulatory violations can serve asthe basis for FCA liability, they have alsofound that the government’s knowledgemay sometimes act as a complete or partialdefense. As qui tam actions now routinelyfollow any civil or criminal enforcementaction involving a government contractor,companies should be aware that they maybe able to use their alleged civil or criminalliability to defeat a related FCA matter.Miranda, from page 68viewed, the table has been set for potentialproblems. Here are a few practicaltips for those engaging in such internalinvestigations:• Be consistent. Have a set format of whatyour warning will be. Write it down soeveryone can say it the same way to thewitness.• Keep good notes. Record the fact that theUpjohn warning was given and that anagreement was obtained from the intervieweeto go forward, and that he or sheunderstood the instruction. Withoutnotes, questions regularly arise amongthose involved about whether or not thewarning was given.82 n For The Defense n October 2010• Do not “soft pedal” the warning. Thereshould be no confusion created afteryou have given the warnings. Lawyerssometimes create issues when they supplementwarnings. If the lawyer statesthat he or she “could” also be the lawyerof the interviewee “if no conflict arises,”he or she is inviting future problems. Ifyou do decide to jointly represent theemployee, an appropriate engagementletter is recommended.• Be ready for questions. You will get questions.Commonly, you will be asked: “DoI need a lawyer?” “Am I in trouble?” “DoI have to cooperate?” or “Is this confidential?”Answers to these questionsshould be consistent among the interviewinglawyers.• Obtain separate counsel. If the matterwarrants, it is not uncommon for thecompany to pay separate counsel to representindividuals. That lawyer can createand attorney- client privilege with theindividuals, even if the company is payingtheir fees. Joint defense agreementswill then also become a consideration.• Prepare. Prior to the investigation, theteam of lawyers who will be doing theinterviews should meet and make sureeveryone is clear on exactly what theissues are and how the interviews will beconducted. This will help avoid inconsistencyin the approach.

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Identification, from page 26are usually fact- and jurisdiction-specific.Often, the time for filing crossclaims hasalready expired, or under the law of thejurisdiction agreeing to stipulate to a dismissaldoes not waive a nonparty defense.If your client has filed neither answer norsummary judgment, remind the plaintiff’scounsel of the availability of volun-tary dismissal under Fed. R. Civ. P. 41(a)(1)(A)(i), in which the stipulation of the otherappearing parties is unnecessary nor couldbe held against them.ConclusionThe “sue first and investigate later” mentalityabuses the judicial process and drainsour client’s resources. As compliance withFed. R. Civ. P. 11 erodes, perhaps the strategiesidentified above will assist you toachieve dismissal, or even sanctions, opinionsthat will deter plaintiffs from filingsuits absent good-faith bases. At the veryleast, these tools should ensure that onlythose claims proceed against our clients inwhich products have been definitively identified.Think Globally, from page 80courts, then international manufacturerswould suffer economic disadvantages.That is, a global corporation would, persuadedby the threat of litigation, probablythink that it needed to manufacture itsgoods in compliance with the internationalcommunity’s highest safety standard, or atleast persuaded by the threat of litigation,whereas a corporation that manufacturedsolely for the domestic market would onlyneed to abide by U.S. law. It would becomemuch easier to show that an internationalmanufacturer had notice of an alternativedesign when it designed its foreign product.Therefore, a corporation manufacturingfor the international market would losethe ability to compete in its domestic marketdue to the increased cost burden, whichdirectly bears on the risk- utility test thatmost jurisdictions apply.As long as sovereign nations retain theright to determine product quality andsafety standards, as they well should, corporationsmanufacturing in the internationalmarket will have continue to complywith a variety of standards. Given this fact,“it is manifestly unfair… as well as an inappropriateusurpation of a foreign court’sproper authority to decide a matter of localinterest, for a court in this country to seta higher standard of care than is requiredby the government of the country in whichthe product is sold and used.” Harrisonv. Wyeth Lab. Div. of Am. Home ProductsCorp., 510 F. Supp. 1, 9–10 (E.D. Pa. 1980).That same principle applies to admittingevidence of alternative, foreign designs inU.S. courts.E-Discovery, from page 37parties from the most dire consequencesof inadvertent waiver by allowing them to‘take back’ inadvertently produced privilegedmaterials if discovered within a reasonableperiod, perhaps thirty days fromproduction.”). This agreement usually providesspecific procedures by which the disclosingparty can demand the return of thedisclosed materials.Although Federal Rule of Evidence502(b) provides for the protection of inadvertentdisclosure of privileged informationor work product, parties should seekthe additional protection of a nonwaiveragreement. To prevent an opponent fromusing mistakenly disclosed documentsunder Fed. R. Evid. 502(b), a disclosingparty must satisfy three requirements:(1) the disclosure must have been inadvertent,(2) the party must have taken reasonablesteps to prevent the disclosure, and(3) the party must have taken reasonablesteps to rectify the error. Fed. R. Evid.502(b); see Amobi v. D.C. Dep’t of Corr., 262F.R.D. 45, 52 (D.D.C. 2009) (holding workproduct protection waived for an attorneymemorandum because the disclosingparty did not demonstrate reasonableefforts to prevent disclosure); United States84 n For The Defense n October 2010v. Sensient Colors, Inc., No. 07-1275 (JHR/JS), 2009 WL 2905474, at *3, 5 (D.N.J. Sept.9, 2009) (finding a waiver of privilege fordisclosed documents disclosed by a plaintiffwho did not take reasonable precautionsto rectify the error). Under Fed. R.Evid. 502(e), however, parties may executea binding agreement on “the effect of disclosureof a communication or informationcovered by the attorney- client privilege orwork product protection.” Parties can takeadvantage of this provision by negotiatinga nonwaiver agreement during the pretrialconferencing and discovery plan developmentstages of suits, which provides plentyof opportunity to seek a court order. SeeFed. R. Civ. P. 16(b)(3)(iv); Fed. R. Civ. P.26(f)(3)(D).When drafting a nonwaiver agreement,attorneys must remember that it is not alicense to indiscriminately produce documents.Courts may not honor nonwaiveragreements that are overly broad or contain“blanket” disclosure provisions. SeeSensient Colors, 2009 WL 2905474, at *3(“[S]uch blanket provisions, essentiallyimmunizing attorneys from negligent handlingof documents, could lead to sloppyattorney review and improper disclosure,which could jeopardize clients’ case.”).With e- discovery, creating a nonwaiveragreement may require the help of experiencede- discovery legal experts.ConclusionJudicial precedence has established newstandards for e- discovery by putting theonus directly on counsel to not only diligently,but absolutely vigilantly undertakee- discovery duties. When faced withthe task of e- discovery in a case with anactively marketed product, it is counsel’sduty to maintain absolute conscientiousnessthroughout the litigation by not onlyreinforcing the litigation hold, but alsokeeping track of all changes, from custodiansto search terms, an from relevantregulations to trade secrets, and avoidingdisclosing all things privileged. Therequired effort is monumental and oftendistracts from defending the merits of acase. However, if e- discovery is not properlyeffectuated, litigants and counselalike may have to endure a court’s arsenalof sanctions. Counsel must safeguardthe e- discovery process, and the best wayto do it is to clearly understand the discoveryplaying field and have e- discoveryexperts readily available to guide a companythroughout litigation.

Representatives, from page 31leave to amend. The court reasoned that thecomplaint lacked “any facts that explainwhat [d]e fend ants’ representative did orfailed to do as part of his alleged duty,” sothat nothing “more than mere suspicion of acognizable right of action” existed. Adkins,2008 WL 2680474, at *3. Pleading only “thatdefendants’ agent failed to ‘take the necessarysteps’ to protect [the plaintiff] from the[] device” was insufficient because it left the“necessary steps… entirely to the imaginationof the [c]ourt.” Id.Therefore, even under Adkins, a plaintiffstill must pass an initial hurdle. Adkinssettled and was dismissed before theplaintiff filed an amended complaint, so thecase offers no guidance on what allegationsagainst the representative would be sufficient.Nonetheless, challenging such claimsat the pleadings stage regarding whetherthey allege sufficient facts against the representativespecifically may be the key todefeating representative- based claims whena court seems inclined to follow Adkinson preemption. Indeed, as Riegel preemptiondevelops, courts have grown accustomedto addressing preemption issues atthe motion- to- dismiss stage. See, e.g., Rileyv. Cordis Corp., 625 F. Supp. 2d 769, 789(D. Minn. 2009); Horowitz v. Stryker Corp.,613 F. Supp. 2d 271, 282–84 (E.D.N.Y. 2009).Thus, even if a preemption argument doesnot apply to the representative under Adkins,a court may still be ready to examinethe pleading of that claim while consideringand dismissing other claims.ConclusionNo matter how many claims a plaintiffmight allege involving a manufacturer’srepresentative, under whatever factual allegationsand asserting whatever theories ofliability, those claims almost inevitablyattempt to impose some requirement thatis “different from, or in addition to” federalrequirements. The claims also almostinvariably challenge some action “withrespect to” the device. As a result, no matterhow novel the claim itself, under Riegelfederal law should preempt it.Ethics, from page 81claimants have the ability to say “no” withoutaffecting other claimants, then there isno conflict because the claimants are notpitted against each other.Second, Comment 13 to Model Rule 1.8specifically exempts class and derivativeactions from the aggregate settlement rule,and Formal Ethics Opinion 06-438 effectivelyputs bankruptcy claims in the samecategory. The reason is that settlements inthese contexts all involve close court reviewand approval, which supplies the protectionotherwise afforded by the aggregatesettlement rule.Summing UpGroup settlements—whether “aggregate”or not—can offer important benefits toclaimants and defendants alike. But, counselneed to either carefully tailor multipleresolutions to avoid the aggregate settlementrule altogether or ensure complianceif it comes into play.FERA, from page 76defense counsel should consider takingappropriate and timely action based uponthe defense counsel’s own investigation,culpability assessment, and serious discussionswith the client. Depending uponthe timing and stage of the investigation,a meeting with the prosecuting or investigatingauthority may be useful. If the meetingoccurs pre- indictment when defensecounsel may not yet be entitled to full disclosureof all the facts and discovery, themeeting can provide potentially valuableinformation.Timing is crucial to obtaining the fullbenefit of cooperation for the client. Ifyour client has information that is usefulto the investigators and chooses to cooperateagainst other participants in a mortgagefraud scheme, then defense counselshould start that process as soon as possible.On the other hand, the longer a clientwaits to cooperate, the more likely it isthat other participants will meet with prosecutorsand the value of the client’s informationmay diminish. Additionally, it isnecessary to maintain a realistic approachwith the client and know that cooperationdoes not necessarily mean that the clientwill be exempt from punishment.PunishmentThe Department of Justice has sought significantjail sentences in mortgage fraudcases. On May 4, 2010, Assistant AttorneyGeneral Lanny Breuer, before theUnited States Senate Committee on theJudiciary Subcommittee on Crime andDrugs, stated “Our prosecutors and agentsare determined to ensure that wrongdoersare punished. This means seeking jailtime whenever appropriate. We believe thatthese efforts are critical to restoring investorconfidence in the markets and ensuringthat our corporate citizens play fair. Recognizingthe deterrent value of jail time, thedepartment has sought significant prisonsentences against white collar criminals.”Breuer went on to state that punishment forfraud can mean “significant statutory penalties,for example, up to 20 years for eachcount of wire fraud and up to 25 years foreach count of securities fraud.” Additionally,the Federal Sentencing Guidelinesallows for consideration of other factors,including the amount of loss, which canresult in significant guideline sentencingranges. Following the U.S. Supreme Court’sdecision in the Booker case, the FederalSentencing Guidelines are advisory. UnitedStates v. Booker, 543 U.S. 220 (2005). Therefore,sentencing judges are not required toimpose a sentence that falls within the FederalSentencing Guideline range, and mayresult in harsher sentences than those setforth in the Federal Sentencing Guidelines.In addition to seeking jail time in mortgagefraud cases, the Department of Justiceis also seeking substantial fines and forfeituresagainst individuals and corporationsinvolved in mortgage fraud schemes.ConclusionIt is troubling that many individualsbelieve that banks and lending institutionscannot be victims because the banksare considered to be alleged perpetrators.However, the unrelated wrongs of banksor lending institutions do not excuse thefraudulent acts of individual defendantswho engage in mortgage fraud schemesFor The Defense n October 2010 n 85

Carefully Craft Jury InstructionsDon’t forget the jury instructions. Thewords in your closing argument are notthe final words. Jury instructions are thefinal words. While most trial lawyers havemixed feelings at best about jury instructions,these instructions have the potentialto play a key role in the deliberationprocess. For that reason, it is importantto insist that the instructions include languageto mitigate potential hindsight bias.An obvious example is an explicit instructionthat acknowledges the potential forhindsight bias and advises jurors that theymay not rely on information developedafter the fact to judge a company’s conductat a particular point in the past. A lessdirect approach is to ask that the instructionsrefer to the point in time that is relthattarget the banks and lending institutions.The government is calling for aggressiveand well coordinated law enforcementresponse to the financial crisis, includingthorough investigation and prosecutionof all instances of mortgage fraud by anyindividual or corporation engaged in activityto defraud customers. These mortgagefraud schemes not only prey upon unsuspectingand innocent homeowners, theseschemes prey upon lenders and jeopardizeproperty values and billions of dollars ofprivate and public money. If you find thatone of your clients is the subject of a criminalmortgage fraud investigation, the bestadvice is to quickly investigate the case andbe prepared to provide your client withadvice that will help your client maneuverthrough difficult decisions and develop thebest defense strategy for facing a criminalmortgage fraud case.Criminal, from page 54As a general rule, you should understandthoroughly the joint defense doctrine ofthe state where your litigation is pendingso that you understand whether and howcommunications between the company’scounsel and an employee’s counsel can beprotected. Furthermore, evaluate whetherto communicate regarding defenses at all,especially if you think that the governmentwill indict low-level sales representativeswith incentive to provide information togovernment investigators. It is always bestto maintain client confidences because thelegal landscape can easily change.Request a Stay of Civil ProceedingsConsider filing a motion to stay civil proceedingsduring the pendency of criminalactions. When criminal proceedings haveactually been instituted, in some casescourts will view a stay of civil proceedingsas eminently reasonable and persuasive,and you will have good arguments to makea court. For example, if the governmenthas seized key evidence from a companyor individuals and your client or key individualswill plead the Fifth Amendment,you should strongly consider a motion tostay the action. The grounds for a stay ofan action vary in different states. In California,there is no absolute right to a stayof the civil action, but a court may grant astay in the interests of justice.Explore Settlement OptionsIn appropriate cases, explore settlements.When you know that the governmentintends to issue subpoenas or has intensifieda criminal investigation, settling apending civil matter before a plaintiff’scounsel learns of those circumstance couldoffer advantages to your client.On the other hand, concluding a largescalesettlement at the first hint of potentialtrouble can invite a rash of lawsuits. Beforesettling, find out about possible insurancecoverage issues. Exclusions to insurancecoverage or pay-back provisions for settlementsmay apply if criminal behavior, convictions,admissions, final adjudications,or decisions establishing criminal conductare involved in a case. You will need to beaware of these issues because they mayaffect a settlement decision. Deciding tosettle a case is highly fact- specific, but youshould explore it.Conclusion: CriminalEnforcement Is Here to StayWith the FDA promising to increase criminalprosecutions of pharmaceutical andmedical device companies and recentexamples of the FDA pursuing companyexecutives, it is wise to become aware ofthe potential or actual criminal aspects ofcivil litigation. While the fact patterns willvary, consider the general practices outlinedabove in all cases.Hindsight Bias, from page 19capable of discussing in detail the decisionsthat a company made and the basis for thosedecisions at the time. Effective live witnesseswho are able to tell a story can assistin breaking down prematurely constructedcausal links between a plaintiff’s injuryand the product and can help jurors judgethe case from the perspective of foresight,as opposed to hindsight. Philip G. Peters,Hindsight Bias and Tort Liability: AvoidingPremature Conclusions, 31 Ariz. St. L.J.1277, 1287 (1999). These witnesses can contributeto your attempts to recreate the atmosphereand conditions of a company’sdecision- making process before a plaintiffwas injured. Research has shown that placingjurors in the situation of a company canmitigate hindsight bias, as discussed above.Expert witness testimony can also helpmitigate hindsight bias. Choosing theright expert—both in terms of credentials86 n For The Defense n October 2010and the ability to connect with jurors andtransport them back in time—is important.A good teacher is far more compellingthan the smartest guy in the room. Becausethey do not work for a company, expert witnessescan furnish the perspective of outsideobservers, commenting on the stateof knowledge at the time of a particularcompany decision. If the issue is whethera company “should have known” of a possibleside effect of a drug, an expert cancontrast what is known today with whatwas known at the time that the drug wasdeveloped, even highlighting the eventsthat led to improved knowledge. In thisrole, experts can emphasize that scientificknowledge is constantly advancing andthat it is unfair to judge yesterday’s decisionsbased on today’s knowledge.A closing argument then presents yetanother opportunity to communicate thedefendant’s story and to emphasize thefacts and themes developed to mitigatepotential hindsight bias.

evant to a case. To maximize the effect ofcarefully crafting instructions, you mightalso consider requesting that jurors receivepreliminary instructions before a trialbegins, which provides yet another opportunityto mitigate potential hindsight bias.ConclusionSacking the Monday morning quarterbackis no easy task. Whether predicting the successof Nixon’s trip to China or sitting on ajury in a pharmaceutical failure- to- warncase, the potential for hindsight bias existsin all of us. As defense attorneys, it is crucialto recognize hindsight bias from thestart and to formulate a strategy that placesa company’s decisions and actions in theappropriate historical context to mitigatethe bias as much as possible.FCPA Compliance, from page 64• A payment request that is excessivegiven past payments for similar servicesNew Whistleblower ProtectionsA new law raises the specter of increasedenforcement litigation against public companiesbased on alleged violations of theForeign Corrupt Practices Act. Under section922 of the recently passed Dodd-FrankWall Street Reform and Consumer ProtectionAct of 2010, Pub. L. 111-203, H.R. 4173,signed into law by President Obama, whistleblowerswho provide information leadingto recovery of $1 million or more arenow entitled to receive a bounty of 10 to 30percent of the total fines collected by theSEC and DOJ for FCPA violations.The whistleblower provisions only applyto tips providing “original information,”that is, information “derived from theindependent knowledge or analysis of thewhistleblower” and not already known bythe government or derived from informationfrom existing government investigations.To receive an award, a tip must resultin (1) a successful enforcement action bythe SEC or a “related action” by the DOJ orother appropriate state or federal agency,and (2) monetary sanctions in excess of $1million. “Monetary sanctions” is broadlydefined to include “penalties, disgorgement,and interest.” Importantly, the newlaw protects employees who report wrongdoingfrom retaliation and affords employeesthe private right of action in federalcourt to obtain compensation for litigationcosts, reinstatement and double back pay.The government has never before had awhistleblower program to assist with enforcingthe FCPA. Given the dramatic increase inpenalties for FCPA violations, the new whistleblowerprovisions will incentivize companyemployees and other agents who mayhave previously paid scant attention to FCPAissues. Now foreign tipsters and companyemployees, along with their counsel, may beginto submit potentially exaggerated allegationshoping to achieve massive recoveries.ConclusionIn today’s global marketplace, businessleaders face a Herculean task in managingpotential FCPA- related risks due to theirforeign business operations. The governmentexpects that a corporation will conductthe appropriate due diligence andimplement the necessary internal controlsto identify problematic areas and remedythem to prevent FCPA violations. Giventhe dramatic increase in FCPA enforcementagainst both companies and senior corporateexecutives, business leaders must educatethemselves and their employees on theindustry- specific FCPA risks attendant totheir foreign business operations.Writers’ Corner, from page 78guage to active voice. Those changes alonewill go a long way toward making the briefclearer, more concise, and more persuasivethan if you had let the passive voice stand.Pay Attention to StyleAt the 2008 DRI Appellate Advocacy Seminar,Ruth Anne Robbins presented aprogram titled, “The Beautiful Brief—Persuasionthrough Appearance.” It was a fantasticpresentation, and emphasized thatthe way your brief looks is, in fact, important.If it looks organized, coherent, andhas a layout that makes it easy to read, youwill better help yourself to get your pointsacross to a reader.Read Local RulesMany local rules contain specific requirementsfor font, margins, page limits, andbinding, which, if disregarded, can resultin a court tossing your brief. No matter howbeautiful, how persuasive, how interesting,or how free of error, your brief will remainunread, at the bottom of a trashcan. ReadStatement of Ownership, Management, and Circulation(All Periodicals Publications Except Requester Publications)2. Publication Number 3. Filing Date1. Publication TitleFor The Defense 0 0 1 5 _ 6 8 8 4 10-1-104. Issue Frequency 5. Number of Issues Published Annually 6. Annual Subscription Price$65 included inMonthly 12membership dues7. Complete Mailing Address of Known Office of Publication (Not printer) (Street, city, county, state, and ZIP+4®) Contact PersonDefense Research Institute, Inc.Julia Bergerud55 West Monroe Street, Suite 2000Telephone (Include area code)Chicago, IL 60603-5121312-698-62168. Complete Mailing Address of Headquarters or General Business Office of Publisher (Not printer)Defense Research Institute, Inc.55 West Monroe Street, Suite 2000Chicago, IL 60603-51219. Full Names and Complete Mailing Addresses of Publisher, Editor, and Managing Editor (Do not leave blank)Publisher (Name and complete mailing address)Defense Research Institute, Inc.55 West Monroe Street, Suite 2000Chicago, IL 60603-5121Editor (Name and complete mailing address)Jay Ludlam, Defense Research Institute, Inc.55 West Monroe Street, Suite 2000Chicago, IL 60603-5121Managing Editor (Name and complete mailing address)Jay Ludlam, Defense Research Institute, Inc.55 West Monroe Street, Suite 2000Chicago, IL 60603-512110. Owner (Do not leave blank. If the publication is owned by a corporation, give the name and address of the corporation immediately followed by thenames and addresses of all stockholders owning or holding 1 percent or more of the total amount of stock. If not owned by a corporation, give thenames and addresses of the individual owners. If owned by a partnership or other unincorporated firm, give its name and address as well as those ofeach individual owner. If the publication is published by a nonprofit organization, give its name and address.)Full NameDefense Research Institute, Inc.11. Known Bondholders, Mortgagees, and Other Security Holders Owning orHolding 1 Percent or More of Total Amount of Bonds, Mortgages, orOther Securities. If none, check boxFull NameComplete Mailing Address55 West Monroe Street, Suite 2000Chicago, IL 60603-5121x NoneComplete Mailing Address12. Tax Status (For completion by nonprofit organizations authorized to mail at nonprofit rates) (Check one)The purpose, function, and nonprofit status of this organization and the exempt status for federal income tax purposes:x Has Not Changed During Preceding 12 MonthsHas Changed During Preceding 12 Months (Publisher must submit explanation of change with this statement)PS Form 3526, September 2007 (Page 1 of 3 (Instructions Page 3)) PSN 7530-01-000-9931 PRIVACY NOTICE: See our privacy policy on www.usps.comyour local rules, and make sure that yourbrief complies.13. Publication Title14. Issue Date for Circulation Data BelowFor The Defense September 201015.Extent and Nature of Circulationa. Total Number of Copies (Net press run)b. PaidCirculation(By MailandOutsidethe Mail)Mailed In-County Paid Subscriptions Stated on PS(2) Form 3541 (Include paid distribution above nominalrate, advertiser's proof copies, and exchange copies)c. Total Paid Distribution (Sum of 15b (1), (2), (3), and (4))d. Free orNominalRateDistribution(By MailandOutsidethe Mail)e. Total Free or Nominal Rate Distribution (Sum of 15d (1), (2), (3) and (4))h. Total (Sum of 15f and g)Mailed Outside-County Paid Subscriptions Stated onPS Form 3541(Include paid distribution above nominalrate, advertiser's proof copies, and exchange(1)copies)Paid Distribution Outside the Mails Including Sales(3) Through Dealers and Carriers, Street Vendors, CounterSales, and Other Paid Distribution Outside USPS®(4) Paid Distribution by Other Classes of Mail Throughthe USPS (e.g. First-Class Mail®)Free or Nominal Rate Outside-County(1)Copies included on PS Form 3541Free or Nominal Rate In-County Copies Included(2)on PS Form 3541(3) Free or Nominal Rate Copies Mailed at OtherClasses Through the USPS (e.g. First-Class Mail)(4)Free or Nominal Rate Distribution Outside the Mail(Carriers or other means)f. Total Distribution (Sum of 15c and 15e)g. Copies not Distributed (See Instructions to Publishers #4 (page #3))i.Percent Paid(15c divided by 15f times 100)16. Publication of Statement of Ownershipx If the publication is a general publication, publication of this statement is required. Will be printedin the ________________________ October 2010issue of this publication.17. Signature and Title of Editor, Publisher, Business Manager, or OwnerPS Form 3526, September 2007 (Page 2 of 3)Average No. Copies Each IssueDuring Preceding 12 MonthsNo. Copies of Single IssuePublished Nearest toFiling Date27,509 23,25925,627 21,4600 00 0698 64526,325 22,1050 00 0Publication not required.I certify that all information furnished on this form is true and complete. I understand that anyone who furnishes false or misleading information on thisform or who omits material or information requested on the form may be subject to criminal sanctions (including fines and imprisonment) and/or civilsanctions (including civil penalties).For The Defense n October 2010 n 872785333126,65685327,509Date2724531722,42283723,25999 99Managing Editor October 1, 2010

A D V O C AT E S A N D N E W M E M B E R SEach month, DRI welcomes new members from the United States and Canada and abroad. Some of these newmembers have been recommended by current members actively involved in advancing goals shared by DRI. Anyindividual who recommends a new member is recognized as an “Advocate” for DRI.AdvocatesSandra Adams,Palm Beach Gardens, FLAlison Y. Ashe-Card,Winston Salem, NCHeidi A. Barcus, Knoxville, TNA. Richard Blaiklock,Indianapolis, INGeorge A. Burgott,Eugene, ORWilliam A. Chittenden III,Chicago, ILCharles H. Cole, Chicago, ILJill Stricklin Cox,Winston Salem, NCLee Craig, Tampa, FLPaul Manuel Da Costa,Newark, NJKevin Driskill,Oklahoma City, OKChad S. Godwin,Birmingham, ALRobert D. Hoisington,Oklahoma City, OKWilliam J. Hubbard,Cleveland, OHMark E. Jones,Columbia, MOBruce L. Kamplain,Indianapolis, INBeth W. Kanik, Atlanta, GARobert J. Kopka,Buffalo Grove, ILJohn F. Kuppens,Columbia, SCRobert A. Luskin, Atlanta, GAJames H. MacMaster,Vancouver, BCAndrew R. McCumber,Tampa, FLDavid K. McPhail,Oklahoma City, OKBlanche Rose Miller,Atlanta, GALaurie K. Miller, Cary, NCJennifer Muse,Los Angeles, CAAlison Newstead,London, EnglandLisa A. Powell, Houston, TXCarlos Rincon, El Paso, TXGail Rodgers, New York, NYJacqueline Renee Sheridan,Cincinnati, OHScott Burnett Smith,Huntsville, ALSidney R. Steinberg,Philadelphia, PASandra Tvarian Stevens,Washington, DCJames M. Tanski,Hartford, CTMary T. Torres,Albuquerque, NMMarisa A. Trasatti,Baltimore, MDWinifred Marie Weitsen,Washington, DCTroy Allen Williams,Houston, TXGlenn M. Zakaib,Toronto, ONNew MembersAlabamaEric D. Bonner,BirminghamJ. Scott Evans, BirminghamCole R. Gresham,BirminghamBryan G. Hale, BirminghamKathryn H. Rowan,BirminghamCynthia Norman Williams,BirminghamArizonaLindsay H.F. Rich,CottonwoodJulie E. Maurer, PhoenixKristina Pywowarczuk,PhoenixLisa Wahlin, PhoenixJo A. Saint-George,ScottsdaleCaliforniaKelly Flanagan, EmeryvilleTimothy Collins, EscondidoJoseph D. Cooper, FresnoStacy Lynne Douglas,Los AngelesAnthony J. Ellrod,Los AngelesViiu Spangler Khare,Los AngelesAmy B. Lindsey-Doyle,SacramentoJennifer Marquez,SacramentoJeffrey F. Oneal, San JoseRobert H. Stellwagen, Jr.,South PasadenaElisabeth M. D’Agostino,TorranceLonnie S. Yu, Walnut CreekColoradoDeana R. Dagner, DenverLisa F. Mickley, DenverConnecticutPaul T. Nowosadko, HartfordRobert D. Silva, HartfordA. Robert Fischer, StamfordDelawareJames J. Freebery,WilmingtonKathleen H. Melucci,WilmingtonDistrict of ColumbiaMatthew L. Beville,WashingtonMelissa H. Brown,WashingtonKatherine J. Henry,WashingtonDeanne E. Maynard,WashingtonFloridaAnne C. Sullivan,Coral GablesMichael D. Pierce, GainesvilleShari Gerson, HollywoodJason D. Holbrook,JacksonvilleMichael J. Lynott, MiamiJohn C. Wien, MiamiCourtney F. Smith, PensacolaE. Patrick Buntz, TampaDavid A. Mercer, TampaGeorgiaKeith R. Blackwell, AtlantaRichard J. Fortwengler,AtlantaEllen Malow, AtlantaKatherine L. Miller, AtlantaAshley Phillips Purcell,AtlantaKevin A. Spainhour, AtlantaJessica Wilson, AtlantaChristina S. Lee, BrunswickScott Eric Anderson, MaconIllinoisStanley E. Freeman,ChampaignCraig M. Bargher, ChicagoJustin K. Beyer, ChicagoEdgar A. Blumenfeld,ChicagoAlexandra Buck, ChicagoMargaret Fitzsimmons,ChicagoBrad M. Gordon, ChicagoMindy M. Medley, ChicagoShaun M. Raad, ChicagoJames F. Smith, ChicagoJill C. Taylor, ChicagoThomas N. Anger, EvanstonIndianaCynthia E. Lasher,IndianapolisStephen E. Reynolds,IndianapolisChristopher D. Simpkins,IndianapolisRyan J. Vershay, IndianapolisIowaSarah A. Zawada,Cedar RapidsNathan J. Overberg,Des MoinesAndrew Tice, Des MoinesThomas L. Hillers,MarshalltownRobert N. Stewart, Sioux CityKentuckyAshley O. Hopkins, LexingtonJunis L. Baldon, LouisvilleLynn K. Fieldhouse, LouisvilleValerie W. Herbert, LouisvilleVeronika Willard, Villa HillsLouisianaJoel P. Babineaux, LafayetteMax J. Cohen, New OrleansJennifer McNamara,New OrleansMarylandNicholas B. Holtz, AnnapolisJason A. Steinhardt,AnnapolisMichael von Diezelski,AnnapolisEric S. Mueller, BaltimoreScott D. Nelson, RockvilleThomas Dunlap, TownsonElliott D. Petty, TowsonMassachusettsDavid B. Chaffin, BostonTimothy Scannell, BostonChristopher M. Tauro,BostonMichiganRobert Abramson,Farmington HillsMissouriConnie Morley, ColumbiaBrian Waller, ColumbiaKatherine Clevenger,Kansas CityDione Greene, Kansas CityPeter W. Gullborg, OaklandErika N. Reynolds,Saint LouisDerek Patrick Ruzicka,Saint LouisMontanaThomas Lee Mahlen, Jr.,BillingsNew HampshireKenneth C. Bartholomew,ConcordNew JerseyRobert Novack, MadisonKenneth M. Van Deventer,MorristownNew MexicoBrandon Huss, AlbuquerqueNew YorkSean P. Beiter, BuffaloElisha J. Burkart, BuffaloMatthew C. Van Vessem,BuffaloRobert M. Leff, HawthorneStuart Cotton, New YorkWayne Glaubinger, New YorkConstantine Dino Haloulos,New YorkPenny M. Hahn,PoughkeepsieNorth CarolinaLenor Marquis Segal,RaleighNorth CarolinaCorena Norris-McCluney,Winston SalemKimberly Beck, CincinnatiOhioBrian DeSoto, CincinnatiBarbara Lum, ClevelandDustin B. Rawlin, ClevelandJustin E. Rice, ClevelandPreston J. Garvin, ColumbusJohn D. Goodman,North CantonOklahomaChristopher Boyer,Oklahoma CityDanielle Fielding,Oklahoma CityAshley L. Little,Oklahoma City88 n For The Defense n October 2010

Anthony Scott Moore,Oklahoma CityNancy R. Potter,Oklahoma CitySean P. Snider,Oklahoma CityJames Michael Webster,Oklahoma CityOregonDavid A. Jacobs, EugeneMatthew Hedberg, PortlandPennsylvaniaSunshine Miller, HarrisburgKevin C. Cottone,PhiladelphiaRoss G. Currie, PhiladelphiaSara Anderson Frey,PhiladelphiaNicholas Poduslenko,PhiladelphiaDaniel L. Rivetti, PittsburghRobert L. Wagner, PittsburghChristopher J. Watson,PittsburghDaniel J. Kain, WayneRhode IslandMelissa E. Darigan,ProvidenceSouth CarolinaWilliam D. Harter, ColumbiaTennesseeMichael J. Blake, KingsportLeslie Tentler Ridings,KingsportJames H. London, KnoxvilleTexasNatalie M. Butler, DallasPaul N. Jaquez, El PasoRichard A. Howell, HoustonDale Jefferson, HoustonEthel J. Johnson, HoustonDenise L. Nestel, HoustonHeather Niemeyer, HoustonDarren Michael Poutra,HoustonAna Soileau, San AntonioJ. Robert White, San AntonioVermontMatthew Palmer, BurlingtonVirgin IslandsGabriel Major, Saint ThomasVirginiaDante M. Filetti, NorfolkJessica Hacker, RichmondNancy F. Reynolds, RoanokeWashingtonAllison K. Miller, SeattleWest VirginiaAsad U. Khan, CharlestonMelissa T. Roman,ClarksburgWisconsinKristi L. Fry, Fond Du LacSherry D. Coley,Green BayA DVA N C E R E G I S T R AT I O N D E A D L I N E : O C T O B E R 2 2 , 2 0 1 0EXPERT SPEAKERSERSINCLUDINGINGRENOWNEDNEDPATHOLOGISTSOGTSSPECIALIST INOCCUPATIONALALMEDICINEINENATIONALLYNALLYLYRECOGNIZEDINDUSTRIAL HYGIENISTSSPROFESSOR SOROFPSYCHOLOGY ANDNEUROSCIENCECETOP LITIGATORSIGATORSTRIAL CONSULTANTASBESTOSSTMEDICINESEMINARREASONS TO ATTENDHear both sides of the debate on causation and thechrysotile defense from nationally recognized physiciansPoint/counterpoint on dose and allegedly dangerousproducts from industrial hygiene expertsLearn about the anticipated tidal wave of foreignlitigants and the accompanying choice-of-law issuesStay current on litigation, legislation, medical defenses,plaintiff bar strategies and Medicare requirementsRefresh your knowledge on the basics of asbestoslitigation defenseLisa M. Russell, MadisonDavid G. Peterson,WaukeshaCanadaNOVEMBER 11–12, 1–12,12 2010HILTON SAN DIEGOBAYFRONTSAN DIEGO,CALIFORNIAIAA DVA N C E R E G I S T R AT I O N D E A D L I N E : O C T O B E R 2 9 , 2 0 1 0EXPERT SPEAKERSINCLUDINGIN-HOUSE COUNSELDIVERSITYCONSULTANT ANDEXPERTLAW FIRM MANAGERSLAW OFFICETECHNOLOGYCONSULTANTS ANDEXPERTSRAINMAKING,RECRUITING ANDRETENTION EXPERTSBEST PRACTICESFOR LAW FIRMPROFITABILITYSEMINARNOVEMBER 18–19, 2010SHERATON NEW YORKHOTEL & TOWERSNEW YORK, NEW YORKREASONS TO ATTENDFoster and strengthen relationships tosucceed in a changing global economyParticipate in dynamic workshopsand breakout sessionsAlbertaAlanna L. Adamic,CalgaryBritish ColumbiaLeon Beukman, VancouverChristopher Anthony Rhone,VancouverOntarioJason Joseph Annibale,TorontoJason Beitchman, TorontoASBESTOS MEDICINENOVEMBER 11–12, 2010HILTON SAN DIEGO BAYFRONTSAN DIEGO, CALIFORNIAINSURANCECOVERAGEAND PRACTICENOVEMBER 18–19,2010SHERATON NEWYORK HOTEL &TOWERSNEW YORK, NEW YORKREGISTER ONLINE: http://www.dri.org/open/SeminarListing.aspxSaskatchewanKeith D. Kilback, ReginaEnglandJennifer Anne Hillier,LondonIsraelAvi Ordo, Tel-Aviv A D VA N C E R E G I S T R AT I O N D E A D L I N E : O C T O B E R 2 9 , 2 0 1 0EXPERT SPEAKERSINCLUDINGINSIGHTFULINSURANCE CLAIMSPROFESSIONALSSKILLEDINSURANCEREGULATORSNATIONALLYRECOGNIZEDATTORNEYSBEST PRACTICES FOR LAWFIRM PROFITABILITYNOVEMBER 18–19, 2010INSURANCECOVERAGEAND PRACTICESYMPOSIUMNOVEMBER 18–19, 2010SHERATON NEW YORKHOTEL & TOWERSNEW YORK, NEW YORKREASONS TO ATTENDLearn about the cutting-edge developments in liabilityand first-party coverageHear practice tips from skilled practitioners to prepareyou for the most difficult coverage litigation challengesMeet the industry regulators and share their insights onthe changes in the insurance industryShare in networking, education and businessdevelopment opportunities while enjoying autumn inNew York CitySHERATON NEW YORK HOTEL & TOWERSNEW YORK, NEW YORK

My time is precious and my resources are limited.I want to attend seminars that not only provide mewith top quality education but put me in touch withlike-minded defense attorneys.Learning and engaging with others builds my practiceand provides me with referrals which I can only getfrom my peers.I am a DRI lawyer and I attend DRI Seminars.w w w . d r i . o r g