Justia U.S. 3rd Circuit Court of Appeals Opinion Summaries

Articles Posted in Products Liability

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Whether a third-party payer (TPP) will cover the cost of a member’s prescription depends on whether that drug is listed in the TPP’s formulary. Pharmacy Benefit Managers prepare TPPs’ formularies of drugs approved for use by TPP members by analyzing research regarding a drug’s cost effectiveness, safety and efficacy. In 1999, the FDA approved Avandia as a prescription for type II diabetes. TPPs included Avandia in their formularies and covered Avandia prescriptions at a favorable rate. GSK downplayed concerns about Avandia’s heart-related side effects. In 2010, the FDA restricted access to Avandia in response to increasing evidence of its cardiovascular risks. TPPs (union health and welfare funds) sued GSK on behalf of themselves and similarly situated TPPs. asserting that GSK’s failure to disclose Avandia’s significant heart-related risks violated the Racketeer Influenced and Corrupt Organizations Act based on predicate acts of mail fraud, wire fraud, tampering with witnesses, and use of interstate facilities to conduct unlawful activity. They also claimed unjust enrichment and violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law and other states’ consumer protection laws. The Third Circuit affirmed the district court’s finding that the TPPs adequately alleged the elements of standing. View "In Re: Avandia Mktg.,Sales Practices & Prod. Liab." on Justia Law

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A.S., who suffers from a congenital birth defect, and his mother, Miller, who ingested Paxil while pregnant, sued GSK in the Philadelphia County Court, alleging that all parties were citizens of Pennsylvania. GSK removed the case based upon diversity. On plaintiffs’ motion, the case was consolidated with other Paxil cases before a district court judge who had previously held that GSK was a citizen of Pennsylvania and who remanded A.S.’s case and the other consolidated cases to state court. The case returned to state court on January 4, 2012. On June 7, 2013, the Third Circuit issued its opinion in Johnson, which held that GSK was a citizen of Delaware. Less than 30 days after the Johnson decision, GSK filed a second notice of removal in A.S.’s case and in eight other cases with the same procedural posture. The district court denied the motion and certified its order for interlocutory review. The Third Circuit directed remand to state court, holding that the second removal request was untimely under 28 U.S.C. 1446(b) because there had been a final order. View "A.S. v. SmithKline Beecham Corp" on Justia Law

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In 1995 the FDA approved Fosamax® to treat or prevent osteoporosis and Paget’s Disease. Teva developed alendronate sodium, a generic form of the branded drug, and obtained FDA approval on its abbreviated new drug application in 2008. Other generic manufacturers subsequently obtained approval for formulations. The drugs act by inhibiting bone resorption or absorption and suppressing bone turnover; they also inhibit primary mineralization, which is involved in the formation of new bone. Meanwhile, secondary mineralization of existing bone continues, which increases the bone’s mineral content and results in higher bone mineral density. According to the plaintiffs, higher bone mineral density does not necessarily correspond with reduction of fracture risk but can make bone highly mineralized, homogenous, brittle, and more susceptible to fracture. According to some studies, the effects of alendronate sodium linger, with one study reporting that bone turnover may be inhibited by 50% five years after discontinuing treatment. The district court granted judgment on the pleadings in favor of the generic manufacturer defendants finding that state-law strict liability claims were pre-empted by federal law. The Seventh Circuit affirmed. Manufacturers have no control over the design or labeling of generic drugs; the plaintiffs failed to identify anything the generic defendants could do to reconcile their conflicting duties under state and federal law.View "In re: Fosmax (Alendronate Sodium)" on Justia Law

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In the late 1990s, people who had taken the prescription diet-drug combination Fen-Phen began suing Wyeth, claiming that the drugs caused valvular heart disease. A 2000 settlement included creation of the Fen-Phen Settlement Trust to compensate class members who had sustained heart damage. Claims required medical evidence. Attorneys who represented certain claimants retained Tai, a board-certified Level 2-qualified cardiologist, to read tests and prepare reports. Tai read 12,000 tests and asserted that he was owed $2 million dollars for his services. Tai later acknowledged that in about 10% of the cases, he dictated reports consistent with the technicians’ reports despite knowing that the measurements were wrong, and that he had his technician and office manager review about 1,000 of the tests because he did not have enough time to do the work. A review of the forms Tai submitted found that, in a substantial number of cases, the measurements were clearly incorrect and were actually inconsistent with a human adult heart. Tai was convicted of mail and wire fraud, 18 U.S.C. 1341 and 1343, was sentenced to 72 months’ imprisonment, and was ordered to pay restitution of $4,579,663 and a fine of $15,000. The Third Circuit rejected arguments that the court erred by implicitly shifting the burden of proof in its “willful blindness” jury instruction and applying upward adjustments under the advisory Sentencing Guidelines for abuse of a position of trust and use of a special skill, but remanded for factual findings concerning whether Tai supervised a criminally culpable subordinate, as required for an aggravated role enhancement. View "United States v. Tai" on Justia Law

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Decades ago, BASF’s predecessor, Engelhard, discovered that its talc products contained disease-causing asbestos. Plaintiffs allege that Engelhard, with the help of the Cahill law firm, destroyed or hid tests and reports that documented the presence of asbestos in Engelhard talc; when new plaintiffs focused on Engelhard’s talc as a possible cause of their disease, Engelhard represented that its talc did not contain asbestos and that no tests ever said it did. Most of the original plaintiffs have died. Spurred by recent testimony that Engelhard’s talc contained asbestos and that the company knew it, survivors and successors brought claims of fraud, fraudulent concealment, and violation of the New Jersey Racketeer Influenced and Corrupt Organizations Act. The district court dismissed, finding that each was inadequately pled or barred by law. The court found the requested declarations and injunctions-ranging from an injunction against the future invocation of res judicata to a declaration that BASF and Cahill committed fraud—beyond its power to grant, but rejected defendants’ argument that the Rooker-Feldman doctrine deprived it of jurisdiction. The Third Circuit reversed as to the fraud and fraudulent concealment claims, but affirmed dismissal of the RICO claim. To the extent that plaintiffs attempt to have the court decide, now, statute of limitations, laches, and preclusion issues that will arise in future cases, they fail to present a whole or ripe controversy. View "Williams v. BASF Catalysts LLC" on Justia Law

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In 1975, a pistol manufactured by MKEK malfunctioned, firing a bullet through Ohntrup’s hand while he loaded the gun. The court held the seller, Firearms Center and MKEK, which is wholly owned by the Republic of Turkey, jointly liable for $847,173.97 and required MKEK to indemnify Firearms Center. The Morgan law firm represented MKEK, but after appeal, sought to withdraw. The court permitted the individual lawyers to withdraw but required the firm to remain as counsel of record until MKEK hired substitute counsel. The Third Circuit affirmed, characterizing MKEK as an intractable litigant and stating that a communication gap would hamper post-judgment proceedings. The Ohntrups tried to collect their judgment; MKEK disregarded the Ohntrups’ discovery requests. The Ohntrups sought assistance from the State Department and pursued MKEK in Turkish courts, to no avail. In 2007, Ohntrup’s widow obtained a $16 million civil contempt judgment against MKEK that grows by $10,000 annually. Ohntrup’s judgments against MKEK are now worth about $25 million. In 2011, Ohntrup’s lawyers learned of a $16.2 million transaction in which a Minneapolis-based company. (Alliant), agreed to sell munitions manufacturing components to MKEK. Ohntrup obtained some discovery from Alliant, but the district court denied subsequent discovery requests. When Ohntrup renewed her post-judgment discovery efforts, Morgan was granted leave to withdraw. The Third Circuit affirmed the order granting leave to withdraw, but remanded the discovery order. The court erred when it relied upon the uncertainty surrounding the judgment creditor’s ability to attach the targeted property. View "Ohntrup v. Makina Ve Kimya Endustrisi Kur" on Justia Law

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For more than 30 years, Grace has defended itself against asbestos-related lawsuits filed by building owners seeking redress for costs involved in removing Grace products. AMH owns a hospital complex that used Grace products in its construction and filed a class action lawsuit in South Carolina state court. Before resolution of that litigation, Grace filed a petition for Chapter 11 protection. After about 10 years, most property damage claims against Grace had been settled, contingent on approval of an 11 U.S.C. 524(g) trust and an injunction channeling property damage claims against Grace to that trust for payment. AMH did not settle. The Bankruptcy Court confirmed Grace’s reorganization, including a trust and channeling injunction, over AMH’s objections. The district court and Third Circuit affirmed, rejecting arguments that the reorganization plan did not meet the requirements of section 524(g), which provides a mechanism for handling overwhelming asbestos-related liabilities in Chapter 11 proceedings; that the plan failed to provide equal treatment as required by 11 U.S.C. 1123(a)(4), (C) ; that Grace did not show that the Plan was proposed in good faith under 11 U.S.C. 1129(a) and did not show that the Plan is feasible. View "In Re: W.R. Grace & Co." on Justia Law

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Grace has manufactured and sold specialty chemicals and construction materials for more than 100 years. The company began facing asbestos-related lawsuits in the 1970s, based on several products and activities, including operation of a Montana vermiculite mine that released asbestos-containing dust into the atmosphere and sale of Zonolite Attic Insulation (ZAI). Montana and the Crown (Canada) have been sued for alleged failure to warn citizens of the risks posed by Grace’s products and activities. Montana settled its cases for $43 million in 2011. The Crown is a defendant in lawsuits arising from the use of ZAI. Montana and the Crown sought indemnification from Grace. Grace sought protection under the Bankruptcy Code, 11 U.S.C. 524(g), which allows a company to establish a trust to handle such liabilities. Montana and the Crown objected to confirmation of a Plan of Reorganization that will send all asbestos claims to two trusts, allowing protected parties to be “unconditionally, irrevocably and fully released.” The personal injury trust is funded by $ 1.5 billion from settlements with Grace’s insurers and former affiliates, an initial payment from Grace of $ 450 million, a warrant to acquire 10 million shares of Grace common stock at $ 17 per share, and annual cash payments from Grace of $100-110 million through 2033. The property damage trust is funded by an initial payment of 180 million dollars, and a subsequent payment of 30 million dollars. The two trusts have separate mechanisms for resolving claims. The bankruptcy court, the district court, and the Third Circuit confirmed the plan. View "In re: W.R. Grace & Co." on Justia Law

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The 12 plaintiffs are represented by CVLO, which serves as counsel in approximately 2000 cases pending in multidistrict asbestos litigation. The CVLO cases represent the second largest land-based group of cases to remain in the litigation. The district court dismissed the plaintiffs’ cases, for failure to comply with orders requiring submission of medical reports and histories of exposure to asbestos in compliance with “generally accepted medical standards [that] call for information regarding duration, intensity, time of onset, and setting of exposure to asbestos.” The Third Circuit affirmed, characterizing the court orders as “typical … in the context of the management of multidistrict litigation.” In dismissing plaintiffs’ cases, the court considered and weighed the relevant factors, viewing the dilatory and prejudicial aspects as outweighing all others. The flaw in the submissions went to the very heart of the “meritorious” aspect, making the weighing of that factor impossible. View "In re: Asbestos Prod Liab. Litig." on Justia Law

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Between 1994 and 1997 Wyeth’s predecessor sold fenfluramine and dexfenfluramine, prescription weight loss drugs. After the drugs were linked to valvular heart disease and an FDA public health advisory, Wyeth withdrew the drugs from the market in 1997. Thousands of individuals filed suit; the cases were consolidated. In 1999, Wyeth entered into a Settlement Agreement; in 2000, the court certified the class, approved the Agreement, and retained jurisdiction. The Agreement enjoins class members from suing Wyeth for diet drug-related injuries, but allows class members to sue Wyeth if they can demonstrate that they developed PPH (a condition that deprives the lungs of oxygen) at a specified level through the use of the diet drugs. In 2011, Cauthen sued, alleging that she developed PPH. She produced a pulmonary consultation prepared by Fortin, a cardiologist. Because Cauthen’s report showed that lung capacity of less than 60 percent of predicted at rest, Wyeth sought to enjoin the state court lawsuit for failing to satisfy the precondition provided by the Agreement. Dr. Fortin asserted that comparing individual lung capacity with average capacity of persons having a similar demographic profile is not determinative in diagnosing PPH. The district court enjoined the suit. The Third Circuit affirmed. View "In Re: Diet Drugs Prod. Liab. Litig." on Justia Law