Morrison Foerster’s Class Dismissed blog provides insights, recommendations, and timely reports on the latest defense news, developments, and trends in the most current class actions lawsuits and product liability issues that affect consumer-facing companies. Through Class Dismissed, attorneys from our nationally recognized Consumer Class Action and Products Liability practices offer a real-time assessment of the developments in matters that are shaping the industry. This blog examines the full spectrum of consumer-related class action and product liability lawsuits ranging from false advertising, privacy, consumer product safety, ADA, food misbranding, TCPA, environment, retail, and government actions as well as nationwide and multidistrict litigation class actions.<h2>ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster has been repeatedly recognized as one of the top 10 firms on The American Lawyer’s A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia‑Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.

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Julie Park protects her clients’ products no matter what kind of product issue they face—whether it is planning for new product development, recalling an existing product, or defending clients against product liability or consumer class actions. Drawing on her deep technical and legal expertise, Julie counsels clients on consumer product safety regulation and pharmaceutical and medical device preemption while also managing complex and multijurisdictional litigation both in state and federal court.

Julie Y. Park

<div class="videoWrapper"><iframe frameborder="0" class="sticky-video" allowfullscreen="1" title="Meet Penny Preovolos, Litigation Partner" src="https://www.youtube-nocookie.com/embed/hv7hYn-Bl7c?rel=0&showinfo=0;vq=hd1080" title="iframe"></iframe></div>Penelope has served as lead counsel in major consumer class actions and antitrust cases for more than 35 years, successfully representing high-profile defendants in antitrust, consumer fraud, and product defect matters. Her clients span a range of industries, including consumer electronics, technology, retail, publishing, food and beverage, cosmetics, and household products. According to Chambers USA, Penelope has a “great reputation for antitrust and product liability work” and is a “superb all-around antitrust lawyer.”Penelope was named the 2019 Antitrust Lawyer of the Year by the Antitrust, UCL, and Privacy Section of the California Lawyers Association. She was co-chair of MoFo’s antitrust practice for 14 years. She has served as chair of the Antitrust and Trade Regulation Section of the State Bar of California and as a member of the Ninth Circuit Advisory Committee on Local Rules and Operations. She is an editor of and frequent contributor to Morrison & Foerster’s <a href="https://classdismissed.mofo.com/">Class Dismissed blog</a>, as well as a frequent speaker about class action and antitrust issues.More About PenelopePenelope clerked for the Honorable Charles M. Merrill, United States Court of Appeals for the Ninth Circuit. She graduated cum laude from Harvard Law School, where she was executive editor of the Harvard Civil Rights – Civil Liberties Law Review. Penelope was a member of Phi Beta Kappa at the University of California, Berkeley. She was awarded the University Medal, the highest undergraduate honor at the university, as well as the English Departmental Citation (awarded to the outstanding graduate in that department).

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Senior Counsel

Penelope has served as lead counsel in major consumer class actions and antitrust cases for more than 35 years, successfully representing high-profile defendants in antitrust, consumer fraud, and product defect matters. Her clients span a range of industries, including consumer electronics, technology, retail, publishing, food and beverage, cosmetics, and household products.

Penelope A. Preovolos

Claudia focuses her practice on the defense of consumer class actions and on complex commercial litigation, including unfair business competition, false advertising, product liability, and privacy matters. She is currently representing numerous consumer goods manufacturers and retailers in false advertising and mislabeling class action lawsuits. Claudia also regularly counsels clients in the food, cosmetics, retail, and technology industries. She represents companies in false advertising disputes before the National Advertising Division (NAD) of the Council of Better Business Bureaus, Inc.<h5>More about Claudia</h5>Claudia is active in MoFo’s pro bono efforts, and recently traveled to El Paso, Texas, to work with families separated and detained at the border. She is also supervising a pro bono collaboration with Equal Rights Advocates, a nonprofit fighting for gender justice in work places and schools across the country. The initiative will help students who have been victims of sexual assault, attempted assault, or harassment find support and seek justice. Claudia is also a board member of Bay Area Legal Aid and a former board member of Equal Rights Advocates. Claudia is an editor and frequent contributor to MoFo’s <a href="https://classdismissed.mofo.com/">Class Dismissed</a> blog, which provides reports about the latest defense news, developments, and trends in class action lawsuits and product liability issues that affect consumer-facing companies. Her perspectives are also respected in the larger legal community: Claudia has published articles about class action and false advertising issues, and is a co-author of Chapter 7 — “Unfair Competition in California Business Litigation 2016” — of The Recorder. She also regularly speaks at conferences on class action and advertising trends. Claudia is currently serving as a Lawyer Representative for the Northern District of California. She received her J.D. degree in 2004 from Berkeley Law (Boalt Hall School of Law), where she was an associate editor of the Berkeley Technology Law Journal.

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Claudia focuses her practice on the defense of consumer class actions and on complex commercial litigation, including unfair business competition, false advertising, product liability, and privacy matters. She is currently representing numerous consumer goods manufacturers and retailers in false advertising and mislabeling class actions.

Claudia M. Vetesi

Alexandra Barlow is a partner in the Litigation Department of Morrison Foerster’s San Diego office.Alexandra litigates product liability matters involving medical devices, pharmaceuticals, consumer products, automobiles, and AI. Alexandra's litigation expertise spans the entire case life cycle in both state and federal courts. She handles all phases of discovery, including fact investigation and expert discovery. Alexandra has taken over twenty-five depositions, including experts, plaintiffs, treating physicians, and third-party witnesses. She drafts and argues motions of all types, including motions for summary judgment, motions to quash, and motions for preliminary injunction.Alexandra has significant trial experience. She has first-chaired a one-week jury trial and second-chaired a five‑week jury trial, both involving multiple claims and witnesses. She also has extensive experience in alternative dispute resolution, representing clients at mediations, mandatory settlement conferences, and early neutral evaluations.Alexandra enjoys tracking developments and keeping her clients updated on product liability and personal injury claims, frequently writing or presenting on emerging areas such as autonomous vehicles and smart devices. Alexandra’s experience also extends to professional liability, warranty claims, eminent domain, and construction law.Alexandra earned her J.D. from the University of San Diego School of Law. While in law school, the San Diego Law Review published her comment on the recovery of damages by plaintiffs in a persistent vegetative state, and she also served as a comment editor. She received her B.A. from the University of California, Los Angeles, where she majored in Political Science and minored in Spanish. A San Diego native, she attended a Spanish immersion school through the eighth grade. Alexandra is active in the San Diego community, advising students at a local college. She is also a member of several legal organizations in San Diego, including Lawyer’s Club, the Association of Business Trial Lawyers, and Wallace Inn of Court.

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Alexandra Barlow is a partner in the Litigation Department of Morrison Foerster’s San Diego office. Alexandra litigates product liability matters involving medical devices, pharmaceuticals, consumer products, automobiles, and AI. Alexandra’s litigation expertise spans the entire case life cycle in both state and federal courts. She handles all phases of discovery, including fact investigation and expert discovery. Alexandra has taken over twenty-five depositions, including experts, plaintiffs, treating physicians, and third-party witnesses. She drafts and argues motions of all types, including motions for summary judgment, motions to quash, and motions for preliminary injunction.

Alexandra Barlow is a partner in the Litigation Department of Morrison Foerster’s San Diego office. Alexandra litigates product liability matters involving medical devices, pharmaceuticals, automobiles, AI, and robotics. Alexandra's litigation expertise spans the entire case life cycle in both state and federal courts. She handles all phases of discovery, including fact investigation and expert discovery. Alexandra has taken over twenty-five depositions, including experts, plaintiffs, treating physicians, and third-party witnesses. She drafts and argues motions of all types, including motions for summary judgment, motions to quash, and motions for preliminary injunction.

Alexandra Barlow

Adam J. Hunt is a partner in the Litigation Department of Morrison Foerster’s New York office. His practice focuses on complex litigation, with an emphasis on class action and commercial litigation.Mr. Hunt has extensive experience representing consumer products companies, financial institutions, and technology firms in class action cases and complex commercial disputes before state and federal trial courts, as well as in arbitrations. Clients seek Mr. Hunt’s counsel for his creative, strategic thinking in high-stakes, high-profile matters. He has represented clients facing claims under false advertising, antitrust, and privacy laws throughout the country, securing wins at the pleading stage, summary judgment, and trial, in addition to negotiating favorable settlements, often early in the case. Representative experience includes successfully securing rulings dismissing two putative false advertising class action cases against one of the best-known consumer electronics companies in the world; obtaining a complete win on summary judgment for a major shipping and logistics company in a multimillion-dollar commercial dispute; appearing as counsel at trial for a leading financial institution in a $100 million commercial dispute, winning a bench trial verdict; and prevailing on motions to dismiss false advertising class actions against a leading Greek yogurt company.Mr. Hunt is also an editor of the firm’s <a href="https://classdismissed.mofo.com/" target="_self">Class Dismissed blog</a>, which provides insights, recommendations, and timely reports on the latest defense news, developments, and trends in the most current class action lawsuits that affect consumer-facing companies.Mr. Hunt maintains an active pro bono practice and is the recipient of the New York State Bar Association’s 2017 President’s Pro Bono Service Award for the First Judicial Department, the 2018 Public Service Award from New York University School of Law, and Morrison Foerster’s Kathi Pugh Award for Pro Bono Services.Mr. Hunt received his B.A. with honors from Swarthmore College and his J.D. cum laude from New York University.

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Adam Hunt is a partner in the Litigation Department of Morrison Foerster’s New York office. His practice focuses on complex litigation, with an emphasis on class action and commercial litigation.

Adam Hunt

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Alexandra Preece Barlow

Adam J. Hunt

The Future of Section 230: Protection Against Product Liability Claims?

New Wave of PFAS Legislation Aimed at Consumer Products

CPSC Releases Annual Report on Deaths and Injuries Involving Nursery Products

CPSC Proposes New Safety Rules for Infant Rockers

CPSC Commissioners Abstain from Retracting Infant Sleep Product Statements

After noting at oral argument that the plaintiff’s TCPA claim was one of the “silliest” the court had ever encountered, the Ninth Circuit issued an order affirming dismissal of the plaintiff’s suit. Roberts v. Paypal, Inc., No. 13-16304, 2015 WL 6524840 (9th Cir. Oct. 29, 2015). The plaintiff claimed that PayPal sent him a welcoming text message without his consent, thereby violating the TCPA. The panel disagreed, finding that under the FCC’s 1992 interpretation of “prior express consent” under the TCPA, in providing PayPal with his cellphone number, the plaintiff expressly consented to receive calls from PayPal. The court also rejected the plaintiff’s argument that the FCC’s interpretation of “prior express consent” was limited to “normal business communications,” but noted that, even if it adopted this position, nothing suggested that PayPal’s message was anything but “normal.” The panel accordingly affirmed the district court’s grant of summary judgment in favor of PayPal.

CCPA and Data Breach Class Action for Leading Software Company

BIPA Class Action Against Gaming and Hospitality Company

TCPA and Other Class Actions for Major Technology Company

Data Breach Class Action for Technology Company

Wiretap Act action against a Major Consumer Electronics Manufacturer

TCPA Class Action Against National Chain

In re Pharmaceutical Industry Average Wholesale Price Litigation

In re Verizon Wireless Data Charges Litigation

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Clients seek out Tiffany for her successful track record in defending class action claims on behalf of clients in a broad range of industries, including technology, healthcare, and consumer product companies. She represents numerous Fortune 500 companies in high-stakes litigation involving privacy and marketing claims in courts throughout the United States.

Tiffany Cheung

Clients seek out Tiffany for her successful track record in defending class action claims on behalf of clients in a broad range of industries, including technology, healthcare, and consumer product companies. She represents numerous Fortune 500 companies in high-stakes litigation involving privacy and marketing claims in courts throughout the United States.

Dead on Arrival

After noting at oral argument that the plaintiff’s TCPA claim was one of the “silliest” the court had ever encountered, the Ninth Circuit issued an order affirm

Dead on Arrival

On January 5, 2016, in Torrent v. Yakult U.S.A., Inc., U.S. District Court Judge Cormac J. Carney denied the plaintiff’s motion to certify a class of Yakult yogurt consumers who were allegedly misled by Yakult’s packaging and advertising claims.  The Court found that the sole named plaintiff lacked Article III standing to seek injunctive relief on behalf of the putative class because he failed to allege or offer evidence of a sufficient likelihood of future harm.  This decision is notable for its refusal to carve out an exception to Article III requirements in favor of state consumer protection laws.The named plaintiff, Nicolas Torrent, alleged that Yakult violated California’s Unfair Competition Law (UCL) by deceptively claiming that its probiotic beverages containing the Lactobacillus casei Shirota microorganism help balance the digestive system and maintain overall health.  The plaintiff sought to certify a class of all persons or entities who purchased Yakult while in the state of California since January 2011, and sought only declaratory and injunctive relief on behalf of himself and the putative class.  The plaintiff claimed that he purchased Yakult products multiple times, and “but for” Yakult’s misrepresentations about the health benefits of its products, he would not have done so.  He did not allege that he intended to buy Yakult in the future, and he did not seek restitution or money damages.The Court first considered the threshold question of whether the plaintiff had standing to bring a UCL claim for injunctive relief under Article III of the Constitution.  Judge Carney noted that Article III requires that a plaintiff seeking injunctive relief present evidence that there is a “sufficient likelihood” that he or she “will be wronged in a similar way in the future.”  Past exposure to illegal conduct does not, by itself, show a present case or controversy if there are no continuing, present adverse effects.The Court acknowledged the split within the Ninth Circuit regarding whether the Article III standing requirement for injunctive relief applies in the consumer protection context, noting that some courts have held that a plaintiff in an UCL false advertising case retains standing to pursue injunctive relief so long as the defendant continues to deceptively market and sell the products at issue.  However, the Court rejected this approach, finding “more persuasive the courts that have insisted that it is improper to carve out an exception to Article III’s standing requirements to further the purpose of California consumer protection laws.”  The Court agreed with those cases, concluding that “Article III’s standing requirements take precedence over enforcement of state consumer protection laws,” and “[b]ecause Torrent has not even alleged that he intends to buy Yakult in the future, let alone submitted evidence to that effect,” he had no standing to pursue injunctive relief.Plaintiff’s lack of standing to pursue injunctive relief doomed his class certification motion:“Owing to his lack of standing to pursue injunctive relief,” the plaintiff “failed to provide sound rationale for class certification under either [Rule 23] (b)(1)(A) or (b)(2).”

Stand Down! Court Rejects Yakult Yogurt False Advertising Class for Lack of Standing

On January 5, 2016, in Torrent v. Yakult U.S.A., Inc., U.S. District Court Judge Cormac J. Carney denied the plaintiff’s motion to certify a class of Yakult yog

Stand Down!  Court Rejects Yakult Yogurt False Advertising Class for Lack of Standing

The Third Circuit has become the first appellate court to endorse the FCC’s broad definition of “autodialer” under the TCPA. In a July 10 <a href="https://apps.fcc.gov/edocs_public/attachmatch/FCC-15-72A1.pdf">declaratory ruling</a>, the FCC defined “autodialer” as any device with the capacity to store or produce randomly or sequentially generated numbers, even if the device isn’t currently used for that purpose. Relying on the FCC’s decision, the Third Circuit reversed the district court’s order dismissing the plaintiff’s complaint, remanding to determine whether the defendant’s technology constituted an “autodialer” under the FCC’s definition. Dominguez v. Yahoo, Inc., No. 14-1751, 2015 WL 6405811 (3d Cir. Oct. 23, 2015).

Is Your Smartphone an Autodialer?

The Third Circuit has become the first appellate court to endorse the FCC’s broad definition of “autodialer” under the TCPA. In a July 10 declaratory ruling, th

Is Your Smartphone an Autodialer?

Note: In light of the FAA’s announcement of the drone registry, we’ve revisited our recent analysis of its authority to require registration.]On December 14, 2015, the FAA issued the much-anticipated “Registration and Marking Requirements for Small Unmanned Aircraft Interim Final Rule” (the “Interim Final Rule”).  The incongruously named rule requires all operators of small unmanned aerial systems (sUAS)—drones weighing between .55 and 55 pounds—to register their drones through the FAA’s new web-based process.<a href="#_ftn1" name="_ftnref1">[1]</a>  The registration process will be available starting December 21, 2015, and will apply to new and existing drones.While the FAA adopted many of the recommendations made by the Unmanned Aircraft Systems Registration Task Force Aviation Rulemaking Committee,<a href="#_ftn2" name="_ftnref2">[2]</a> the Interim Final Rule is sure to generate controversy.  From the FAA’s use of “emergency” rulemaking, to the applicability to the model aircraft community, to the efficacy of registration in addressing safety concerns, it remains highly likely that the FAA’s “interim final rule” will face legal challenges before it loses its “interim” label. In fact, the Academy of Model Aeronautics (AMA) is recommending members hold off on registering their drones for now to give the organization time to “fully consider all possible options.”The FAA’s Registration RulesBorrowing heavily from the Task Force’s final report, which reflected a “general consensus” of major industry voices from Google X to DJI, the FAA’s new Interim Final Rule includes the following:<ol><li>Only individual or recreational users who are U.S. citizens and at least 13 years old may register their sUAS using the web-based registration process. All other operators, including business entities, must continue registering through the paper-based registration process set forth in part 47.</li><li>Owners who purchased the sUAS prior to December 21, 2015 will have 60 days to register.</li><li>Owners who purchase a sUAS on or after December 21, 2015 must register the sUAS prior to operating in the National Airspace System (NAS).</li></ol> <ol start="4"><li>Online registration requires submission of the owners name, physical address, mailing address, and email address. The make, model, and serial number does not necessarily have to be provided.</li><li>Registration will cost $5 per owner, but is free until January 21, 2015. This grace period is calculated to encourage speedy registration of sUAS.<a href="#_ftn3" name="_ftnref3">[3]</a></li><li>Registrations must be renewed at least as often as every three years.</li><li>The registration number, which is unique to the owner, must be marked on each sUAS in a readily accessible manner.</li><li>Failure to register a sUAS may result in civil and/or criminal penalties. On the civil side, an operator could face up to $27,500 in penalties.  Not to be outdone, the criminal penalties range from fines of up to $250,000 to imprisonment for up to three years.</li><li>Drones that weigh 250 grams or less, including the aircraft, payload, and any other associated weight, are exempt from registration.</li></ol>While few of the requirements come as a surprise, the Interim Final Rule leaves many questions unanswered.  For example, how useful will a registration number be in the event a drone actually collides with, and is completely destroyed by, a manned aircraft?  What good is the 250 gram exemption when nearly every drone, even toys, weighs more than that?  What is the rationale that a “failure to register,” by itself, should carry the risk of three years in prison, particularly for recreational operators who have been flying their sUAS for years?  And how will the registration requirement help inform and educate new users when it will be implemented after most of the holiday season’s drones have been purchased?The FAA implicitly acknowledged some of these questions, and many more, in a FAQ it released along with the rule, but until the agency begins enforcement, it remains to be seen how effective and how onerous the requirements will truly be.  More problematic, however, are the possible legal challenges associated with the process the FAA used to promulgate the Interim Final Rule.The FAA’s “Emergency” RulemakingAccording to the FAA, registration will serve the dual goals of promoting accountability in the event of an incident and educating operators on federal regulations pertaining to sUAS.  While laudable aims, they are distinct from the justifications the agency has offered for its accelerated rulemaking process.Under the APA, the FAA cannot make rules without giving the public a 30-day period to comment.<a href="#_ftn4" name="_ftnref4">[4]</a>  In limited circumstances, however, an agency can forgo the standard notice‑and‑comment requirements and directly issuea final rule.<a href="#_ftn5" name="_ftnref5">[5]</a>  When an “agency for good cause finds … that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest,” the notice-and-comment period can be bypassed.<a href="#_ftn6" name="_ftnref6">[6]</a>Such “emergency rulemaking” usually follows situations that require immediate action (such as a natural disaster), minor technical amendments that do not affect the substantive law, or instances where Congress has directed the action in legislation.  Here, the FAA has considered the absence of rules regarding public registration of drones to be an “emergency,” and has determined that “[g]ood cause exists for making this regulation effective less than 30 days from the date of publication because it relieves a significant number of owners from the burden of complying with the paper-based, time-consuming part 47 registration process.”In other words, the FAA promulgated the Interim Final Rule without allowing for the traditional notice-and-comment period. Under the “good cause” exemption, the FAA itself has determined that it was justified in invoking emergency rulemaking, and as a result, any challenge to its decision may only be filed after the rules are promulgated.  Despite courts’ cautioning they will “narrowly construe” agency actions utilizing the emergency rulemaking exception, in reality the agency’s action is often left untouched.As evidence supporting its “good cause” finding, the FAA has noted the significant increase in sUAS expected to enter the NAS in the coming weeks and months.  Citing reports of dangerous and/or unauthorized operation of sUAS during 2015, including expressly referencing the $1.9 million enforcement action against Skypan, the FAA determined “that it is impracticable and contrary to the public interest in ensuring the safety of the NAS and people and property on the ground to proceed with further notice and comment on aircraft registration requirements for small unmanned aircraft before implementing the streamlined registry system established by this rule.”<a href="#_ftn7" name="_ftnref7">[7]</a>In this context, “impracticable” generally refers to a situation in which the required execution of agency functions would be unavoidably prevented by public rulemaking proceedings.  However, “time constraints” and the “imminence of a deadline” are considered “inadequate justifications to invoke the good-cause exemption, especially when it would have been possible to comply with [a] statutory deadline.”<a href="#_ftn8" name="_ftnref8">[8]</a>  The FAA cannot create its own “emergency” (intentionally or otherwise) by delaying announcement of proposed rules or setting an arbitrarily imminent deadline.After the FAA announced its intention to create a registration requirement, numerous organizations expressed concerns over the FAA’s fast-track approach, prior to the release of the Interim Final Rule.  To its credit, the FAA documented these concerns, but the agency failed to advance any new justification for dispensing with the required rulemaking proceedings.  Rather, the FAA supported promulgation of the Interim Final Rule with evidence regarding increasing sUAS incidents.Curiously, however, the FAA’s own evidence is far from unambiguous.  The rule states “[s]ince February 2015, reports of potentially unsafe UAS operations have more than doubled[.]”  Yet the FAA’s own information paints a murkier picture.  Far from the hockey stick line one might expect, a graph of the sUAS reports cited by the FAA shows an overall increase, but not the volume or growth one would expect from a crisis. As a result, it will be difficult for the FAA to stop critics from raising the question:  Is the Interim Final Rule valid?On February 14, 2012, in the FAA Modernization and Reform Act of 2012 (the “2012 Act”), Congress instructed the FAA to issue rules for the “safe integration” of UAS by September 30, 2015.  Although the FAA issued a Notice of Proposed Rulemaking, and the comment period has closed, the FAA has yet to finalize these rules, despite nearly four years lapsing between Congress’s mandate and today.  Because the holiday shopping “deadline” is the impetus for the FAA’s “emergency” rulemaking, it seems that the FAA is the cause of its own crisis, and its action may be vulnerable if challenged.In an analogous situation, the FAA claimed that “good cause” was present, and it bypassed the notice-and-comment requirements, when promulgating Penalty Rules for violations of FAA regulations.<a href="#_ftn9" name="_ftnref9">[9]</a>  There, a private petitioner challenged the FAA’s action and a federal appellate court held that the FAA was required to follow the APA’s notice-and-comment requirements because the rule substantially affected the petitioner’s (and others’ similarly situated) substantive rights.  The Court further pointed out that the “good cause” exception should be used for “housekeeping” matters, which are traditionally thought of as purely procedural rules.  Notably, in that case, the FAA waited only nine months to begin promulgating the rules.  Here, it has waited years.If an agency can create its own emergency to bypass the APA’s notice-and-comment requirements, public comment will effectively be optional for agencies.  This not only creates perverse incentives for agencies directed to make rules for hotly debated topics (like drones) to do so through emergency rulemaking in the hopes of avoiding extensive and controversial public comment, but it also, ironically, threatens to slow down the entire rulemaking process, as lawsuits will inevitably follow such actions.<a href="#_ftn10" name="_ftnref10">[10]</a>Hobbling the Hobbyists?In addition to the FAA’s procedural shortcuts, the issues of both who and what the registry would encompass present legal challenges.  Under the Interim Final Rule, registration applies to commercial and hobbyist users alike.Traditionally, model aircraft flown for hobby or recreational purposes have not been subject to any registration requirements.  This understanding was codified under Section 336 of the 2012 Act, which provides that “notwithstanding any other provision of law relating to the incorporation of unmanned aircraft systems into Federal Aviation Administration plans and policies . . . the Administrator of the Federal Aviation Administration may not promulgate any rule or regulation regarding a model aircraft,” so long the aircraft meet certain criteria.  Congress defined “model aircraft” under Section 336 as “an unmanned aircraft that is capable of sustained flight in the atmosphere, flown within visual line of sight of the person operating the aircraft, and flown for hobby or recreational purposes.”According to the FAA, the 2012 Act does not affect its ability to require registration of drones flown for hobby or recreational purposes.  The agency’s stance is that registration has been exempted for model aircraft only through the use of its own discretion, and that prior law unrelated to the incorporation of UAS into FAA plans and policies, specifically 49 U.S.C. 44101(a), gives it the authority to require registration of model aircraft.In fact, the FAA uses this assumption to offer another justification for ignoring the rulemaking procedures.  The Interim Final Rule notes that the burden on model aircraft and drone flyers would be enormous if they were required to register their craft using the current paper-based registration system.  To avoid that “emergency,” the FAA is justified in proceeding without the required notice-and-comment rules to relieve the burden that would otherwise fall on sUAS operators.As noted above, the FAA is facing another crisis of its own manufacture.  Model aircraft operators have never had to register their aircraft.  Absent the FAA’s decision to require registration, there would be no burden on operators.  Thus, the decision to require registration creates a burden so great that the FAA is justified in shortcutting the rulemaking process, a circular argument for the “streamlined” registration requirement.The FAA’s position is the latest move away from its hands-off attitude towards model aircraft, dating back at least to mid-2014.  In June of last year, the FAA issued its “Interpretation of the Special Rule for Model Aircraft.”  There, the FAA claimed that model aircraft are “subject to all existing FAA regulations.”  More recently, the rules proposed in the Notice of Proposed Rulemaking for sUAS exempt various types of aircraft or flying vehicles from their ambit, such as moored balloons, kits, and amateur rockets, among others, but not model aircraft.Taken together, the FAA’s actions suggest that model aircraft are likely to be subject to increasing regulation.  However, it is unclear how to reconcile the plain text of Section 336 of the 2012 Act with the FAA’s registration scheme or with the FAA’s own interpretation of Section 336, for that matter.  In the Interpretation of the Special Rule for Model Aircraft, the FAA noted that “a model aircraft operated pursuant to the terms of section 336 would potentially be excepted from a UAS aircraft certification rule[.]”  It is difficult to see how a registration requirement is different.The AMA RespondsOn Thursday, December 17, the AMA emailed its members in response to the Interim Final Rule and asked them to refrain from registering their aircraft with the FAA.  The AMA has previously taken issue with the FAA’s interpretation of the “Special Rule for Model Aircraft.”  Last August, the group filed a petition with the United States Court of Appeals for the D.C. Circuit challenging the FAA’s interpretation, a challenge that is still pending.In its email on Thursday, the AMA noted that the central issue is “whether the FAA has the authority to expand the definition of aircraft to include model aircraft; thus, allowing the agency to establish new standards and operating criteria to which model aircraft operators have never been subject to in the past.”  How the court rules on that question will determine whether model aircraft are aircraft, as the FAA views them.The AMA already instructs its members to use a variety of precautions to address the same safety and accountability objectives of the FAA’s drone registry, which puts it in a unique position of arguing against registration while explicitly recognizing some of registration’s benefits.  As the organization argued, however, “we also strongly believe our members are not the problem and should not have to bear the burden of additional regulations.”The AMA’s recommendation to refrain from registration, its pending legal challenge, and the ongoing negotiations with the FAA all highlight the uncertainty that remains (the FAA’s pronouncements notwithstanding).ConclusionThe drone registry appears simple enough, and the FAA’s desire to ensure the safety of the skies is a praiseworthy and reasonable goal.  But lurking beneath the surface are complicated issues of agency process and the FAA’s authority that threaten the registry’s launch.    <a href="#_ftnref1" name="_ftn1">[1]</a> www.faa.gov/uas/registration.<a href="#_ftnref2" name="_ftn2">[2]</a> <a href="https://www.faa.gov/regulations_policies/rulemaking/committees/documents/media/UASRTFARC-102015.pdf">http://www.faa.gov/uas/publications/media/RTFARCFinalReport_11-21-15.pdf</a>.<a href="#_ftnref3" name="_ftn3">[3]</a> Technically, all registrants will be charged $5, but this fee will be refunded if it occurs in the first 30 days of the Interim Final Rule being effective.<a href="#_ftnref4" name="_ftn4">[4]</a> See 5 U.S.C. § 553(b).<a href="#_ftnref5" name="_ftn5">[5]</a> Ibid.<a href="#_ftnref6" name="_ftn6">[6]</a> 5 U.S.C. § 553(b)(3)(B).<a href="#_ftnref7" name="_ftn7">[7]</a> Interim Final Rule, § III.  The FAA states that it “will consider additional comments received following publication of this IFR and make any necessary adjustments in the final rule,” but in all likelihood the Interim Final Rule will not be changed in any material way.<a href="#_ftnref8" name="_ftn8">[8]</a> 2 Am. Jur. 2d Administrative Law § 185 (2012) (emphasis added).<a href="#_ftnref9" name="_ftn9">[9]</a>Air Transport Assoc. of Am. v. Dep’t of Trans., 900 F.2d 369 (D.C. Cir. 1990) (“[T]he FAA is foreclosed from relying on the good cause exception [from the APA,] by its own delay in promulgating the Penalty Rules. The agency waited almost nine months before taking action to implement its authority under section 1475. At oral argument, counsel for the FAA conceded that the delay was largely a product of the agency’s decision to attend to other obligations. We are hardly in a position to second guess the FAA’s choices in determining institutional priorities. But insofar as the FAA’s own failure to act materially contributed to its perceived deadline pressure, the agency cannot now invoke the need for expeditious action as ‘good cause’ to avoid the obligations of section 553(b).”).<a href="#_ftnref10" name="_ftn10">[10]</a>  Another potential problem for the FAA is Executive Order 12866, which requires agencies to complete a cost-benefit analysis for rules that, among other things, raise novel legal or policy issues.  Given that drone registration will likely raise both novel legal and policy issues, such an analysis may be required.

FAA Announces Drone Registration, but Legal Challenges Loom

On December 14, 2015, the FAA issued the much-anticipated “Registration and Marking Requirements for Small Unmanned Aircraft Interim Final Rule” (the “Interim F

FAA Announces Drone Registration, but Legal Challenges Loom

In a surprising turn of events, Pacira Pharmaceuticals, Inc. and the Food and Drug Administration (FDA) announced that they have settled their dispute regarding the off-label promotion of Exparel, one of Pacira’s anesthetic drugs. This settlement represents the latest marker of the FDA’s diminishing power to regulate off-label promotion.BackgroundOff-label promotion is the promotion of a drug for indications not approved by the FDA, which the FDA contends is a violation of the Federal Food, Drug, and Cosmetic Act (FDCA). The FDCA prohibits the introduction into interstate commerce of any drug that is misbranded.<a name="_ftnref1" href="#_ftn1">[1]</a> Under the FDCA, a drug may be misbranded for a number of reasons, including false or misleading labeling or labeling that fails to include adequate directions for use.<a name="_ftnref2" href="#_ftn2">[2]</a>Recent case law developments have drawn attention to the issue of off-label promotion. In 2012, the Second Circuit issued a ruling in United States v. Caronia, a case involving First Amendment challenges to the regulation of off-label promotion.<a name="_ftnref3" href="#_ftn3">[3]</a> The court held that the government cannot criminally prosecute pharmaceutical manufacturers and their representatives under the FDCA for truthful, non-misleading speech promoting the off-label uses of FDA-approved drugs.<a name="_ftnref4" href="#_ftn4">[4]</a>More recently, the pharmaceutical company Amarin secured a preliminary injunction against the FDA in another case involving off-label promotion and the First Amendment.<a name="_ftnref5" href="#_ftn5">[5]</a> In Amarin, a federal district court confirmed that the FDA may not bring a misbranding action based on truthful promotional speech alone. These decisions have led many to believe that the FDA’s ability to regulate off-label promotion may be waning.Pacira’s Lawsuit Against the FDA and Subsequent ResolutionPacira’s anesthetic drug Exparel was approved by the FDA in 2011. During the approval process, Exparel was evaluated in two clinical trials involving surgery for the removal of bunions and surgery for the removal of hemorrhoids. The “Indications and Usage” section of Exparel’s label stated that Exparel is a “local anesthetic, indicated for administration into the surgical site to produce postsurgical analgesia.” However, after listing the clinical trials that evaluated Exparel, the “Clinical Studies” section of the label stated that Exparel “has not been demonstrated to be safe and effective in other procedures.”Despite this language, some of Pacira’s promotional materials suggested that Exparel could be used in various surgical procedures other than those involving the removal of bunions or hemorrhoids. In September 2014, the FDA issued a warning letter to Pacira, stating that these promotional materials misbranded the drug within the meaning of the FDCA. According to the FDA, Pacira’s promotional materials violated the FDCA by stating that Exparel was intended for new uses for which it lacked FDA approval.In September 2015, Pacira filed a lawsuit against the FDA seeking declaratory and injunctive relief. In its complaint, Pacira claimed that the FDA had violated its First Amendment rights by restricting truthful and non-misleading speech and had violated the Administrative Procedure Act by failing to observe required procedures for modifying a drug’s label. Additionally, Pacira’s complaint alleged that the FDA’s regulations were vague and operated as a retroactive, ex post facto penalty, thus violating due process under the Fifth Amendment.On December 15, 2015, Pacira announced that it had reached an amicable resolution with the FDA. In the settlement agreement, the FDA reversed its position with respect to Exparel’s approved uses. The agreement reached by the parties stated that Exparel has, since 2011, been approved for administration in a variety of surgeries, not limited to those studied in its clinical trials. Thus, the parties dismissed the lawsuit and the FDA agreed that Pacira is not restricted to marketing Exparel only for use in the surgeries tested in the drug’s clinical trials.Likely Impact of the Pacira and FDA SettlementFollowing the decisions in Caronia and Amarin, this settlement agreement may be another sign of the FDA’s waning power to regulate off-label promotion, especially in the face of First Amendment challenges. However, several factors may limit the implications of this resolution.Unsurprisingly, the FDA itself is attempting to limit the implications of the settlement agreement. The FDA noted in a statement that “this resolution is specific to the parties involved in this matter.” Furthermore, this settlement may be attributable to the existing broad language in Exparel’s label. For example, the label stated that Exparel was “indicated for administration into the surgical site to produce postsurgical analgesia.” The FDA may not have agreed to settle with Pacira if Exparel’s label did not already include this broad language of indication, which arguably included indications of use beyond those specifically tested in the clinical trials.The full impact of this resolution is yet to be seen. However, the settlement certainly continues the trend of limiting the FDA’s ability to regulate truthful, non-misleading statements regarding off-label uses.   <a name="_ftn1" href="#_ftnref1">[1]</a> 21 U.S.C. § 331(a).<a name="_ftn2" href="#_ftnref2">[2]</a> 21 U.S.C. §§ 352(a), (f).<a name="_ftn3" href="#_ftnref3">[3]</a> United States v. Caronia, 703 F.3d 149 (2d Cir. 2012).<a name="_ftn4" href="#_ftnref4">[4]</a> For more information on United States v. Caronia, see our previous client alert.<a name="_ftn5" href="#_ftnref5">[5]</a> Amarin Pharma, Inc. v. FDA, No. 1:15-cv-03588 (S.D.N.Y. Aug. 7, 2015).

Fertility Center Litigation

Fitbit

MicroPort

Leading Healthcare, Pharmaceutical, and Medical Device Company

Lethal Injection Matters – Major Pharmaceutical Company

Pain Pump Matters – Large Pharmaceutical Company

Major Technology Company

Leading Chemical Company

Security Device Company

In re Air Crash Near Peixoto de Azevedo, Brazil

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Erin Bosman is chair of MoFo’s Class Actions and Mass Torts Practice Group and is a founder and co-head of the Artificial Intelligence Group. Clients value her business strategy, seeking her comprehensive counsel throughout the product life cycle, especially in high-stakes litigation and product recalls.

Erin M. Bosman

Erin Bosman is chair of MoFo’s Class Actions and Mass Torts Practice Group and is a founder and co-head of the Artificial Intelligence Group. Clients value her business strategy, seeking her comprehensive counsel throughout the product life cycle, especially in high-stakes litigation and product recalls.

Erin Bosman

An orthopedic implant company

A children&rsquo;s monthly subscription service product

A fertility company

A major technology company

A smart fitness equipment company

Julie Park provides analytic and strategic counsel for issues in product life cycle, product liability and defective products, consumer class actions, and more.

Julie Park

Julie Park | Product Liability Lawyer

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Associate

Brittany Scheinok is an associate in the Litigation Department of the firm’s San Diego office.

Brittany Scheinok

New Settlement Highlights FDA’s Diminishing Power Over Off-Label Promotion

In a surprising turn of events, Pacira Pharmaceuticals, Inc. and the Food and Drug Administration (FDA)
announced that they have settled their dispute regarding

New Settlement Highlights FDA’s Diminishing Power Over Off-Label Promotion

Last week, the Sixth Circuit Court of Appeals issued a groundbreaking opinion in Yates v. Ortho-McNeil-Janssen Pharmaceuticals, Inc. that could change the liability landscape for brand-name drug manufacturers. No. 15-3104 (6th Cir. Dec. 11, 2015). Yates is the first federal appellate authority to recognize “impossibility preemption” of design defect claims against brand-name drug manufacturers.BackgroundThe plaintiff in Yates was a teenager who used the brand-name ORTHO EVRA patch for birth control. She conceded that she was warned of the risk of stroke by her healthcare provider. She further admitted that she would have used the patch even if she had read the warnings regarding the increased risk of stroke and blood clots. One week after she started using the ORTHO EVRA patch, the plaintiff had a stroke.Despite the label’s clear disclosure of the risk of stroke and plaintiff’s awareness of the increased risk from her healthcare provider, plaintiff sued defendants for failure to warn. She also brought claims for manufacturing defect, negligence, and breach of implied and express warranties.The Sixth Circuit affirmed the district court’s grant of summary judgment on all claims. Most importantly, the court affirmed the district court’s ruling regarding the state-law design defect claims and held that “Yates’ state law design defect claims are preempted under Mutual Pharm. Co. v. Bartlett, 133 S. Ct. 2466 (2013).”Impossibility PreemptionThe court held that plaintiff’s state-law design defect claims were preempted by federal regulation, regardless of whether the alleged defect occurred pre- or post-FDA approval. In doing so, it became the first ever circuit court of appeals to find that federal law preempts design defect claims against brand-name drug manufacturers.The court began its preemption analysis with a discussion of preemption principles: “State law claims can be preempted expressly in a federal statute or regulation, or impliedly, where congressional intent to preempt state law is inferred.” The court explained that implied preemption exists where “(1) it is impossible for a private party to comply with both state and federal law, and (2) the state law is an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” The court noted, however, that such impossibility preemption “is a demanding defense.”Relying on Wyeth v. Levine, 555 U.S. 555, 571 (2009), the court pointed out that “plaintiffs injured by brand-name prescription drugs retain state-law tort remedies against the manufacturer of those drugs, provided it is not impossible for the drug manufacturer to comply with both state and federal law.”Pre- and Post-Approval Design Defect Claims PreemptedHere, though, impossibility preemption occupied the forefront of the court’s analysis. The court characterized plaintiff’s design defect claim as being of two types: (1) post-approval design defect, whereby the manufacturer should have lowered the dosage after FDA approval; and (2) pre-approval design defect, whereby the manufacturer should have created a different form of the drug in the first place. Both imposed state-law duties that were impossible to comply with while still complying with federal law. Therefore, both were preempted under Bartlett.Post-approval design defect. Plaintiff argued that the manufacturer could have lowered the dosage of the drug to make it safer. Under applicable New York law, a product is defectively designed if it was unreasonably dangerous and a safer design was feasible. But under FDA regulations, once a drug is approved, “the manufacturer is prohibited from making any major changes to the qualitative or quantitative formulation of the drug product . . . .” 21 C.F.R. § 314.70(b)(2)(i). Changing the dosage level clearly constituted a “‘major change’ such that prior FDA approval is necessary.”The court held that, “[b]ased on the plain meaning of the regulation . . . defendants could not have altered the dosage . . . without submission to the FDA and the agency’s approval prior to distribution of the product made using the change.” In short, the manufacturer could not have distributed an altered dosage of the drug without prior FDA approval. Therefore, it would have been impossible for the manufacturer to comply with FDA regulations and still distribute to plaintiff a lower-dosage form of the drug.Pre-approval design defect. Plaintiff argued that the manufacturer should have created a different formulation of the drug in the first place. This argument, the court found, was too attenuated. The court invoked the Supreme Court’s preemption opinion in PLIVA, Inc. v. Mensing, 131 S. Ct. 2567, 2578 (2011), which rejected the notion that a manufacturer might be required to play a “Mouse-Trap game” with the FDA. A pre-approval duty would require the court to predict the outcome of too long a chain of events: that the manufacturer designed the drug differently, that the FDA would have approved the alternative design, that plaintiff still would have selected that method of birth control, and that she still would have suffered a stroke.Simply put, “[i]n contending that defendants’ pre-approval duty would have resulted in a birth control patch with a different formulation, [plaintiff] essentially argues that defendants should have never sold the FDA-approved formulation . . . in the first place.”The court rejected plaintiff’s “never-start-selling” rationale just as the Supreme Court in Bartlett rejected the argument that a manufacturer must stop selling a drug if doing so is the only way to comply with state and federal regulation. If a drug manufacturer complies with federal law, it should not be compelled to stop selling or never to sell in the first place to comply with state law.Adequacy of WarningThe court also found that plaintiff failed to meet her burden on the failure-to-warn claim. She argued that (1) defendants’ warnings were inadequate because they failed to convey the level of risk of stroke, and (2) defendants had a duty to warn plaintiff directly pursuant to FDA regulations. Ultimately these claims failed, because the label clearly disclosed the risk of stroke and plaintiff conceded she was in turn warned by her healthcare provider.On the adequacy of the warnings, plaintiff argued that the warnings failed to convey the “degree of risk.” She essentially claimed that the label “should have stated that the risk of stroke was higher than other methods of birth control, namely birth control pills.” The court easily disposed of this argument, relying on DiBartolo v. Abbott Laboratories, 914 F Supp. 2d 601 (S.D.N.Y. 2012). As the DiBartolo court made clear, the requirement of identifying comparative risks “extends to patients with different underlying risk factors, not to different drugs treating the same ailment.”Notably, the court also rejected plaintiff’s argument that “a subsequent improvement to the label, even a change that is required by the FDA, is probative evidence of the label’s previous failure to warn.” Adopting the defendants’ reasoning, the court noted that “[w]arnings can always be made ‘better,’ but ‘better’ is not the standard New York law requires—adequacy is.” Here, the warnings in place at the time were adequate. As a result, the subsequent changes to the label were irrelevant.The court also found that defendants had no duty to warn plaintiff directly under the learned-intermediary doctrine. It is well established that, “[e]xcept where FDA regulations otherwise provide, the manufacturer’s duty is to warn the doctor, not the patient.” The record was clear that plaintiff’s healthcare provider was well aware of the risk of stroke, “and plaintiff admitted to being counseled about the risk of stroke associated with ORTHO EVRA.” Accordingly, the court granted summary judgment on the failure-to-warn claim.Manufacturing Defect, Negligence, and Breach of WarrantyThe court granted summary judgment on the remaining claims. Plaintiff could not sustain a claim for manufacturing defect, because there was no evidence that the patches she received differed from “either the manufacturing specifications or from other identical units.” Her negligence claim was preempted because, under New York law, claims of negligence are preempted per se when the article in question is regulated by federal law. Here, FDA regulations govern. Finally, plaintiff’s warranty claims failed because defendants adequately warned her prescribing physician of the risks, those risks were communicated to her, and there were no other representations to plaintiff of the drug’s safety or efficacy.ConclusionYates marks a key development in the evolution of case law regarding a branded drug manufacturer’s federal and state law liability. Bartlett made clear that certain design defect claims were preempted against generic manufacturers due to their inability to deviate from the brand manufacturer’s design, including warnings. Here, the Sixth Circuit has made clear that federal regulation controls the safety and adequacy of the actual composition and design of the drug itself.Brand-name drug manufacturers cannot be expected to comply with state law when doing so would require them to design a drug that is different from the one the FDA has approved for distribution and sale. Likewise, they cannot be required to alter the suggested dosage or administration of the drug subsequent to approval to comply with state law when doing so would violate the FDA regulation governing post-approval alterations to the drug’s formulation.After Levine, liability for brand-name drug manufacturers was fraught with “what-ifs,” as manufacturers struggled to predict which FDA-approved labels might be deemed inadequate under state law. Even after Bartlett, the question of design defect remained open for brand-name drug manufacturers. The Yates decision finally offers some certainty that seeking and obtaining FDA approval can cut off certain avenues of liability. We continue to monitor these important preemption cases, as they signal meaningful changes to future liability.

Sixth Circuit Sweeps State-Law Design Defect Claims Under the Rug of Impossibility Preemption

Last week, the Sixth Circuit Court of Appeals issued a groundbreaking opinion in Yates v. Ortho-McNeil-Janssen Pharmaceuticals, Inc. that could change the liabi

Sixth Circuit Sweeps State-Law Design Defect Claims Under the Rug of Impossibility Preemption

Last week, the California Supreme Court issued a long awaited ruling on organic labeling in Quesada v. Herb Thyme Farms, Inc., No. S216305, 2015 WL 7770635 (Cal. Dec. 3, 2015). At issue in Quesada was whether consumers may bring state law fraud and misrepresentation claims to challenge herb products allegedly mislabeled as “certified organic.” The defendant, Herb Thyme Farms Inc., argued that plaintiff’s claims were preempted by the federal Organic Foods Production Act of 1990 (OFPA).