For The Defense, October 2010 - DRI Today

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