Where Drugmakers Can Be Sued Still Unresolved

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By Julie A. Steinberg

The U.S. Supreme Court’s Bristol-Myers ruling leaves open big questions related to the kinds of activities that could subject a drugmaker to suit in a state ( Bristol-Myers Squibb Co. v. Superior Court for the Cty. of San Francisco , 2017 BL 208398, U.S., No. 16-466, reversed 6/19/17 ).

California courts didn’t have jurisdiction, or authority, to hear the suits filed by non-Californians against Plavix maker Bristol-Myers Squibb Co., the Supreme Court said.

No nexus existed between the plaintiffs’ personal injury claims and the drugmaker’s alleged conduct in California, and it wasn’t enough that Californians were already suing the drugmaker there.

But the court didn’t say what facts would provide enough of a link with a particular state to make it fair for a corporation to defend a suit in that state.

That leaves plaintiffs’ attorneys plenty of room to argue that in-state manufacturing, distributor activities, or even clinical drug trials are enough to sue a drugmaker in a state where they choose.

And companies have already started analyzing the application of the Bristol-Myers decision to pending drug and device litigation.

Defense attorney Andrew Pincus of Mayer Brown in Washington acknowledged the opening.

“Because there was no connection at all between California and the claims of the non-California plaintiffs, the Court was not required to decide how much of a connection is required to permit the assertion of personal jurisdiction,” Pincus said in a statement emailed to Bloomberg BNA.

“That question is likely to be the focus of attention in lower court litigation,” said Pincus, who wrote an amicus brief for the U.S. Chamber of Commerce supporting Bristol-Myers.

The U.S. Supreme Court, in its June 19 ruling, reversed the California top court’s finding that Bristol-Myers’s marketing, distribution and research activities in California provided the necessary connection to the Plavix plaintiffs’ claims to support jurisdiction.

“BMS did not develop Plavix in California, did not create a marketing strategy for Plavix in California, and did not manufacture, label, package, or work on the regulatory approval of the product in California,” the court said.

Some of those open questions about how much drugmaker contact, and what kinds, are needed to establish state jurisdiction are raised in a petition for review currently before the top court in GlaxoSmithKline LLC v. M.M.

The Supreme Court is slated to weigh whether to accept that petition, which involves jurisdiction over a Paxil birth defect case in Illinois based on in-state clinical drug trials, during its Sept. 27 conference.

One Door Closes But Many Still Open?

Defense attorneys were quick to say that the Bristol-Myers decision limiting where plaintiffs can sue corporations has tremendous implications for many other drug and medical device cases, a number of which are filed in state courts.

The decision shuts the door on “litigation tourism,” James M. Beck of Reed Smith in Philadelphia, wrote in a blog post. Beck is co-founder of the Drug and Device Law Blog.

The ruling is the latest in a series of Supreme Court cases saying it’s unfair and a violation of due process to make corporations defend cases in states where they have few or no connections.

But plaintiffs’ attorneys downplayed the top court’s ruling as a continuation of established legal principles.

They said there is still room for a court to have jurisdiction related to a company’s contacts with the state, including those based on an in-state distributor’s activities, or based on the maker’s own actions such as manufacture or conducting clinical drug studies.

“The decision was not unexpected and we believe the court set forth a clear path for establishing jurisdiction where a distributor is involved. We intend to proceed with these cases,” one attorney for the Plavix plaintiffs told Bloomberg BNA.

As for where the cases might be refiled, the plaintiffs are considering their options, Hunter Shkolnik of Napoli Shkolnik in New York said.

Plaintiffs allege Bristol-Myers failed to disclose side effects of the billion-dollar blood thinner, such as stroke and internal bleeding. Also named as a defendant in the suits is McKesson Corp., a major distributor headquartered in California.

A plaintiffs’ attorney not involved in the Plavix case agreed the Supreme Court followed settled law concerning a court’s authority to hear a case based on a company’s conduct in the state.

The only new ground broken by the opinion was the Supreme Court’s rejection of the California court’s approach that found jurisdiction, said Max Kennerly, of Kennerly Loutey in Philadelphia, who represents plaintiffs in drug and medical device cases.

“The court did not say that, for example, research or clinical trials related to the drug in question would be insufficient for jurisdiction,” he told Bloomberg BNA.Kennerly also said the Bristol-Myers decision could prove a double-edged sword for defendants.

“A motion to dismiss based on jurisdiction is subject to jurisdictional discovery, which means that plaintiffs would immediately get a chance at depositions and discovery into what a particular defendant did regarding a particular product in a particular state—something that could, by itself, uncover a lot of evidence the defendant would rather keep to itself.”

Additionally, “if they push it too hard, they could end up splitting cases, so that plaintiff has a case in one court against some defendants and a case in another court against other defendants for the same injury,” he said.

Ongoing Large Proceedings

Large state-court proceedings expected to be affected by the Bristol-Myers decision include litigation over Johnson & Johnson talcum powder in state court in Missouri, and suits involving Bayer Corp.'s Essure permanent contraceptive in Missouri and California courts.

Already, Johnson & Johnson raised the Bristol-Myers ruling and won a mistrial in a state court in St. Louis. The trial involved one Missouri resident and two non-residents.

J&J faces suits by thousands of talc plaintiffs, including about 1,000 in Missouri. Talc verdicts of $110 million, $72 million, $55 million, and $70 million came from juries in the St. Louis court. The company has claimed the suits were improperly before the court.

Also pending in the St. Louis court and in a California state court are thousands of suits, many by non-residents, over Essure.

Essure consists of two coils that get implanted in the fallopian tubes and cause tissue inflammation, creating a barrier to fertilization.

Women allege they suffered adverse events including allergic reactions to nickel in the coils, pain, and perforation of other organs when the device migrated.

A plaintiffs’ attorneys told Bloomberg BNA the Bristol-Myers decision actually helps the Essure plaintiffs in Missouri.

“Missouri was the epicenter for Essure activity, including it being the location of the pivotal [device] trial and many other clinical trials, the location of the first commercial launch and Essure implant nationwide,” Eric D. Holland of the Holland Law Firm in St. Louis said.

“Bad defendant conduct related to the case in state court and/or development, marketing, manufacturing, labeling, packaging, or regulatory work on this product in state court will satisfy the requirements of BMS, all of which we have here, " Holland said.

Bayer, though, lauded the Supreme Court for reining in some overreaching state judges.

The decision “is a necessary check on state courts that have inappropriately broadened their jurisdiction to cover cases that have no connection to their states,” Bayer said in a statement emailed to Bloomberg BNA.

Bayer is “evaluating its options to apply this precedent to relevant cases,” including the Essure litigation, the company said.

Illinois: Next Case Up?

In the petition for review currently before the Supreme Court, Paxil Plaintiffs sued GlaxoSmithKline in Illinois. GSK is a Delaware company with headquarters in Pennsylvania and North Carolina.

GSK challenges the Illinois appeals court’s decision finding jurisdiction over the non-residents’ suits based on injuries allegedly arising from in-state clinical studies of the antidepressant.

Plaintiffs allege that the flaws in the clinical trials in Illinois led to inadequate warnings, which caused their children’s heart malformations and other birth injuries.

GSK drew safety conclusions from the data, which was aggregated with data from other study locations, plaintiffs say.

But the drugmaker argues the connections are too tenuous.

The clinical trial program had “only the barest of connections” to Illinois: It involved hundreds of trials conducted at thousands of study sites across the nation and around the world, with only a handful of sites in Illinois, the company says in its petition for review.

GSK sought review in March, after the Supreme Court agreed to hear the Bristol-Myers case.

Under both the Illinois court’s approach and the now-rejected California court’s approach, a large company with nationwide operations is subject to jurisdiction on essentially any claim in essentially any state, GSK says.

Companies have to conduct multiple studies before obtaining approval to sell a drug, so a study in a state is less of a connection, for jurisdiction analysis, than manufacture of a drug there, Beck, the defense attorney, said.

These studies are often nationwide, over many states, “so you run into the same kind of due process issues the Supreme Court was concerned about” in Bristol-Myers, Beck said.

The court’s action in the Paxil case “could give you some indication as to at least what the Supreme Court might think about those types of situations,” he said.

If the court grants the petition for review and vacates the ruling with instructions for the Illinois court to reconsider in light of Bristol-Myers Squibb, “then they are at least not shutting the door on that,” he said.

If they grant the petition and outright reverse the Illinois appeals court, then it’s likely they don’t think those kinds of connections have a chance, he said.

To contact the reporter on this story: Julie A. Steinberg in Washington at jsteinberg@bna.com

To contact the editor responsible for this story: Steven Patrick at spatrick@bna.com

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