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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On December 4, 2017, a panel of the California Court of Appeal unanimously affirmed a trial court’s denial of class certification for alleged violations of California’s unfair competition, consumer protection, and false advertising laws.  In so doing, the court upheld the lower court’s conclusions that the proposed class for Plaintiff’s UCL and FAL claims was not ascertainable and that common questions did not predominate among class members for the CLRA claim.Case background.  Plaintiff James Noel alleged that an inflatable kid’s swimming pool purchased at Defendant’s drugstore was smaller than it appeared on the pool’s packaging box.  The box also displayed the pool’s dimensions, which Noel did not contend were inaccurate.  He sued the drugstore on behalf of all consumers who had purchased the pool, claiming violations of California’s unfair competition, consumer protection, and false advertising laws.The trial court denied Noel’s motion for class certification, finding that the proposed class for the UCL and FAL claims was not ascertainable because Noel failed to establish that the other purchasers of the pool could be identified.  The court further concluded that common questions did not predominate as to the CLRA claim.  The court reasoned that some members of the class may not have relied on the picture of the pool on the packaging box but instead looked to the advertised pool dimensions.  This prevented the questions of reliance and causation from being litigated on a classwide basis.Absent class members not ascertainable under UCL and FAL classes.  On appeal, Noel insisted the proposed class was ascertainable because his class definition was clear: “All persons who purchased the Ready Set Pool at a Rite Aid store located in California within the four years preceding the date of the filing of this action.”  But the court explained that the class definition was “beside the point”; the problem was that Noel adduced no evidence of records through which to identify class members, as required by Sotelo v. Medianews Group, Inc., 207 Cal. App. 4th 639 (2012).  “While Noel was not required to actually identify the 20,000-plus individuals who bought pools,” the panel explained, “his failure to come up with any means of identifying them was a legitimate basis for denying class certification.”  The court attributed this failure to Noel’s premature filing of the class certification motion without first taking sufficient discovery to learn what records could be used to identify the purchasers.The court recognized that its reasoning existed in tension with another recent Court of Appeal decision, Aguirre v. Amscan Holdings, Inc., 234 Cal.App.4th 1290 (2015).  According to the court, Aguirre held that a class plaintiff need not establish a means of identifying absent class members at the class certification stage; rather, the method for identifying class members need only be set forth at the remedial stage when it becomes necessary to prove class membership or damages.  The court disagreed with Aguirre: “To ignore the issue of identifying class members for notice purposes gives short shrift to due process considerations in play at the certification stage.”  While recognizing that some class actions must ultimately dispense with personal notice, the court preferred a “more pragmatic and flexible approach” to class certification that leaves the trial court discretion to determine whether a method for identifying absent class members must be established during class certification proceedings.Common issues did not predominate for CLRA class.  Noel next argued that the trial court erred in finding that class issues did not predominate over individual issues for the CLRA claim.  In affirming the trial court’s denial of class certification, the Court of Appeal explained that Noel had to establish that the misrepresentation would have been material to any reasonable person; otherwise, the issues of reliance and causation would vary among consumers and thus would not be subject to common proof.  The court found reasonable the trial court’s conclusion that some consumers may have relied on the advertised dimensions instead of on the pictures on the pool’s packaging.Denial of a continuance.  At the class certification hearing, Noel’s counsel requested the opportunity to conduct further discovery so that he could more fully develop facts to support his motion.  On appeal, Noel argued the trial court erred in denying his request, citing the general rule that continuances should be liberally granted.  The court rejected this argument, succinctly explaining that “Noel’s counsel was in control of the litigation; no one forced him to file a premature class certification motion.”Takeaways.  The Court of Appeal summarized the case’s takeaway: “What occurred here provides an object lesson in the risks of brushing the issue [of ascertainability] aside in connection with class certification and leaving it to be addressed at the conclusion of the proceedings.”  A plaintiff who fails to take sufficient discovery prior to moving for class certification may be unable to show how absent class members can be identified.

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California Appellate Court Upholds Denial of Class Certification on Ascertainability Grounds

California Appellate Court Upholds Denial of Class Certification on Ascertainability Grounds

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On December 4, 2017, a panel of the California Court of Appeal unanimously affirmed a trial court’s denial of class certification for alleged violations of Cali

The Tenth Circuit recently upheld a Utah district court’s finding that a branded drug manufacturer could not be held liable for failing to warn consumers about alleged birth defect risks when the FDA had previously rejected a citizen’s petition calling for the same warnings.  Cerveny v. Aventis, Inc., No. 16-4050 (10th Cir. May 2, 2017).Factual BackgroundPlaintiffs (mother, father, and their child) alleged that the fertility drug Clomid led to the child’s birth defects due to the mother’s use of the drug before becoming pregnant.  They sued under Utah tort claims, including failure to warn, breach of implied warranty, negligent misrepresentation, and fraud.Relying on the doctrine of impossibility preemption, the district court granted the defendant’s motion for summary judgment, holding that, because the FDA “would not have approved the drug warnings that the Cervenys allege are required under Utah law,” it was impossible for Aventis to comply with both FDA regulations and state law.On appeal, the plaintiffs relied on a 1987 proposed FDA warning that “Clomid may cause fetal harm when administered to pregnant women.”  Although Aventis did not adopt the FDA’s proposed warning, and even though it only applied to those who took the drug while pregnant (unlike the plaintiff in this case), the Cervenys contended that (1) the proposed warning demonstrated the FDA’s willingness to approve warnings for women taking Clomid before becoming pregnant, and (2) Ms. Cerveny would not have taken Clomid before her pregnancy if Aventis had used the proposed warning.Impossibility PreemptionThe Cerveny court began with a discussion of basic preemption principles.  The court explained that federal law will preempt a state law when (1) the language of the federal law reveals an express congressional intent to preempt state law (express preemption); (2) federal regulation is so all-encompassing that Congress must have intended to leave no room for a state to supplement it (field preemption); or (3) compliance with both the federal and state laws is a physical impossibility (conflict preemption).  When a state’s regulations for drug labels conflict with the FDA’s, preemption issues arise.Impossibility preemption is at play when state law is preempted because compliance with both the federal and state laws is a physical impossibility – the laws are inapposite such that complying with state law necessarily results in a violation of federal law.  In Cerveny, Aventis made that very argument: it only needed to comply with the FDA regulations and not Utah state law because complying with both would be impossible.In Wyeth v. Levine, 555 U.S. 555 (2009), the Supreme Court established a loose framework for determining when federal law could preempt state law failure-to-warn claims against branded drug manufacturers.  Specifically, the defendant must present “clear evidence” that the FDA would have rejected the desired label change in order to preempt a state law failure-to-warn claim.  Id. at 571.Wyeth did not define “clear evidence,” but instead left the question to the lower courts.  A recent Third Circuit case interpreted Wyeth’s not-so-clear “clear evidence” language.  According to In re Fosamax Alendronate Sodium Prods. Liab. Litig., 852 F.3d 268, 285 (3rd Cir. 2017), the phrase “clear evidence” sets forth a standard of proof synonymous with “clear and convincing evidence” and involves a question of fact rather than a question of law.In order to preempt the state law failure-to-warn claim, a manufacturer needs to convince a factfinder that it was “highly probable” that the FDA would not have approved a change to the drug’s label.  The Cerveny court adopted this interpretation.The Court’s “Clear Evidence” AnalysisAs clear evidence that the FDA would not have approved plaintiffs’ suggested warnings, Aventis pointed to (1) the FDA’s history of approving Clomid for use by women before becoming pregnant, and (2) the FDA’s rejection of a citizen’s petition.Although the court determined that Clomid’s regulatory history did not, in and of itself, constitute clear evidence, the FDA’s rejection of a citizen’s petition did provide the requisite evidence.  In 2007, a citizen petition was filed demanding stronger Clomid warnings regarding the potential risks of fetal harm when a woman takes Clomid prior to becoming pregnant.  The FDA first denied the petition in 2009 and in 2012 declined to reconsider its original denial, reasoning that the original denial had “appropriately applied the standards in the [Federal Food, Drug, and Cosmetic Act] and FDA regulations regarding drug safety, warnings, and potential safety hazards.”The standard used by the FDA in rejecting the citizen’s petition was the same standard the FDA would have applied in evaluating a proposed label change to Clomid.  Because the FDA concluded in evaluating the citizen’s petition that the requested additional warnings were unjustified as to risks related to taking Clomid prior to pregnancy, the court determined that, had Aventis sought FDA approval to include stronger pre-pregnancy warnings, the FDA would have denied the request, just as it did the citizen’s petition.The plaintiffs argued that when the FDA considers proposed label changes, it treats manufacturers more favorably than citizen’s petitions, which “leads the FDA to accord greater deference to changes proposed” by manufacturers than those proposed in citizen petitions.  In rejecting this argument, the court explained that the FDA standard for revising a warning label “does not discriminate” between proposals submitted by manufacturers and proposals submitted by citizens.The Cervenys attempted to use the 1987 FDA proposed label change regarding use during pregnancy to argue that Ms. Cerveny would not have taken Clomid prior to becoming pregnant if Aventis had adopted the 1987 proposed label.  They argued that the proposed label would have warned women more directly about the potential harm to a fetus when a woman takes Clomid during pregnancy.  The district court agreed with Aventis that, even if Aventis accepted the proposed label change, Ms. Cerveny took Clomid prior to her pregnancy and therefore the label would not have applied to her.  Under Utah law, a plaintiff cannot allege as a defect in a label a warning that would not have applied to her.Aventis moved for summary judgment based solely on preemption.  While the Cervenys urged the district court to ignore Aventis’s state-law argument, the district court granted Aventis’ motion for summary judgment without explaining why or how a state law defense fell within the scope of the motion that was based solely on preemption.The appellate court remanded the issue because the district court did not “consider whether it could rest on [state] law when deciding a summary judgment motion that had relied solely on federal preemption.”  This leaves open the possibility that this claim could similarly be rejected based on federal preemption at the district court level.Looking ForwardThis ruling clarifies a defendant’s burden of proof in establishing a preemption defense.  It establishes that the FDA’s denial of a sufficiently similar citizen’s petition satisfies the clear-evidence standard required to successfully preempt a failure-to-warn claim.  Therefore, branded drug manufacturers have an additional evidentiary tool even when no other form of FDA decision-making exists to demonstrate that the FDA would have rejected a label change.Ultimately, if other circuits follow the Tenth Circuit’s lead, pharmaceutical companies may no longer need to demonstrate an attempt to provide the kind of warning allegedly required under state law.  We anticipate that going forward parties will disagree on the issue of how similar a citizen’s petition needs to be in order to have this preemptive effect.  Identical?  Virtually identical?  Substantially similar?  In Cerveny, the Tenth Circuit acknowledged that the citizen’s petition was “virtually identical” to the warnings the Cerveny’s advocated; however, we anticipate that courts may still find a preemptive effect when a citizen’s petition is substantially similar to proposed warnings.  So long as the substance of the proposed warning is the same, as well as its effect on the consuming public, it is unlikely that a decision will turn on semantics.*Co-author Karina Pundeff is a summer associate in our San Diego office.

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Fitbit

MicroPort

Leading Healthcare, Pharmaceutical, and Medical Device Company

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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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FDA’s Denial of Citizen’s Petition “Clear” Enough for Preemption of Failure-to-Warn Claims

FDA’s Denial of Citizen’s Petition “Clear” Enough for Preemption of Failure-to-Warn Claims

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The Tenth Circuit recently upheld a Utah district court’s finding that a branded drug manufacturer could not be held liable for failing to warn consumers about 

There has been a lot said already about the effect on product liability (especially drug) cases and “mass actions” as a result of the United States Supreme Court’s June 17, 2017 decision in Bristol-Myers Squibb Co. v. Superior Court of California, No. 16-466.  But what about consumer class actions?  California is a destination venue not just for mass tort cases.  It is also the principal destination of litigation-tourism for consumer class actions that seek nationwide classes.  For example, a recent Chamber of Commerce study reports that three-fourths of food-related consumer class actions are filed in just four states, with California (36%), New York (22%), Florida (12%), and Illinois (7%) leading the way.<a name="_ftnref1" href="#_ftn1">[1]</a>  Does Bristol-Myers have anything to teach us about the continuing viability of those suits?It does.  If you are a non-resident sued in a nationwide class action (and/or suit is brought against you on behalf of one or multiple state-only non-resident plaintiff classes), Bristol-Myers may provide relief.  The rationale of the eight-to-one decision is grounded in traditional concepts of personal jurisdiction, but make no mistake: the real message of Bristol-Myers is its rejection of “litigation tourism,” and that rationale will apply to putative nationwide consumer class actions brought against non-resident defendants.  The decision could affect hundreds of existing class action cases.  This post explains.Bristol-Myers In Brief.In Bristol-Meyers, 678 plaintiffs from 34 states (including 86 from California) brought claims in California state court alleging that they were injured by Plavix, a prescription drug manufactured by the defendant.  In the superior court, Bristol-Myers Squibb (BMS), an out-of-state company, moved to quash service of summons, arguing that the California court lacked personal jurisdiction as to claims brought by the non-California plaintiffs.  The superior court denied the motion, finding that BMS was subject to general jurisdiction in California.  The California Court of Appeal disagreed that BMS was subject to general jurisdiction but found that California courts had specific jurisdiction over the nonresidents’ claims against BMS.At the California Supreme Court, BMS argued that the non-California plaintiffs’ claims were not causally linked to BMS’s conduct in the state.  A divided California Supreme Court rejected BMS’s “causal connection” argument, applied a “sliding scale” test to determine BMS’s relation to the forum, and found that BMS’s “nationwide marketing, promotion, and distribution” of the challenged product created a “substantial nexus” between the nonresident plaintiffs’ claims and BMS’s forum activities.The United States Supreme Court overruled the California Supreme Court’s finding of specific jurisdiction over BMS, stating that the “sliding scale approach” to personal jurisdiction in California had “no support” in the Court’s past decisions.  Rather, specific personal jurisdiction requires an “adequate link” between the nonresident plaintiff’s claims and the forum state; Bristol-Myers rejects the California Supreme Court’s “sliding scale” approach to personal jurisdiction.  The firm published a Client Alert summarizing the decision, providing expert analysis and offering key takeaways on June 20, 2017.  Because there was no “adequate link” between the company’s contacts related to Plavix in the state and the plaintiffs’ claims, specific jurisdiction over non-resident claims was inappropriate.A Blow to “Litigation Tourism”Bristol-Meyers delivers a serious blow to “litigation tourism”—the all-too-common practice of class action plaintiffs bringing claims in the most favorable venue regardless of residency or company contacts with the forum.  While litigation-tourism has been most prevalent in food misbranding cases, especially to California, it extends to all kinds of class actions, including product liability and defect cases, privacy cases, financial services litigation, and cases brought under federal statues such as the Telephone Consumer Protection Act.  After Bristol-Myers, tenuous connections to the forum won’t cut it, and non-resident plaintiffs can no longer piggyback on the claims of resident plaintiffs against an out-of-state defendant to remain in the forum.  Rather, to sue in a forum other than the plaintiffs’ or defendant’s state of residence, plaintiffs must now demonstrate an “adequate link” between the defendant’s conduct in that forum and their claims.Recharging the Defense Against Plaintiffs Seeking to Import Out-of-State LawBristol-Myers is not just consistent with prior cases addressing plaintiff attempts to apply out-of-state law in a particular forum; it potentially provides those decisions with a jolt of energy.  California courts have declined to apply materially different state law to cases involving geographically diverse classes.  See, e.g., Mazza v. Am. Honda Motor Co., 666 F.3d 581 (9th Cir. 2012).  Bristol-Myers potentially bolsters this principle by giving it a due process backing.TakeawaysBristol-Myers has the potential to affect numerous pending and future class actions.  Plaintiffs will need to carefully consider the contours of their class vis-à-vis the defendant they choose to sue and the forum in which they choose to litigate or face a motion to dismiss for lack of personal jurisdiction.  The question for defendants is one of strategy: what are the consequences of such a motion?  Plaintiffs have various options: they may file a nationwide class action where the defendant resides (if the defendant is resident in the United States and its state of residence permits nationwide classes); they may file actions in all or most states where the purported class members reside; or they may limit their class to California residents.  If plaintiffs file actions in multiple jurisdictions, the end result may be MDL practice to once again coordinate the action in a single court.  Defendants thus will want to evaluate all the circumstances of their particular case in deciding whether to file a Bristol-Myers motion.<a name="_ftn1" href="#_ftnref1">[1]</a> See <a href="http://www.instituteforlegalreform.com/uploads/sites/1/TheFoodCourtPaper_Pages.pdf">http://www.instituteforlegalreform.com/uploads/sites/1/TheFoodCourtPaper_Pages.pdf</a>, at p. 2.*Co-author Spencer Sean McManus was a summer associate in our San Francisco office.

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Supreme Court Says “No” to “Litigation Tourism”

Supreme Court Says “No” to “Litigation Tourism”

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There has been a lot said already about the effect on product liability (especially drug) cases and “mass actions” as a result of the United States Supreme Cour

Introduction.  Yesterday, on June 12, 2017, the Supreme Court issued its decision in Microsoft Corp. v. Baker et al., a closely watched case in the class action world, and one on which we previously reported <a href="http://classdismissed.mofo.com/class-certification/class-dismissed-but-not-quite-supreme-court-to-review-appealability-of-class-certification-denials-when-plaintiffs-voluntarily-dismiss-case/">here</a>.  Baker presented the following question:  Can a plaintiff who is denied class-action certification and denied Rule 23(f) permission to appeal create an appealable “final judgment” by voluntarily dismissing his or her claims with prejudice?  The Supreme Court’s answer is a resounding “no.”The Court’s decision will impact a number of class certification denials currently pending in the Ninth Circuit, which plaintiffs appealed based on similar Baker dismissals.  The decision also shuts the door to plaintiffs attempting an end-run around Rule 23(f)’s permissive appeal standard.  We describe the background, decision, and implications of Baker in more depth below. Baker Background.  The fact pattern in Baker mirrors that of other class certification decisions on appeal.  Plaintiffs sued Microsoft on behalf of themselves and a putative class of similarly situated consumers after they purchased allegedly defective X-Box consoles.  The district court struck the plaintiffs’ class allegations, effectively denying class certification.  The Court of Appeals denied plaintiffs permission to appeal under Rule 23(f).  Rather than pursue their individual claims, plaintiffs voluntarily dismissed the action, but reserved the right to revive their claims if the district court’s class certification decision was reversed.  Plaintiffs appealed, the Ninth Circuit reversed the district court’s decision, and Microsoft appealed to the Supreme Court. Majority and Concurring Opinions—Same Answer, Different Reasoning.  The Supreme Court unanimously rejected plaintiffs’ voluntary-dismissal tactic, but offered different explanations for why it was impermissible.  The majority opinion, authored by Justice Ginsberg and joined by Justices Kagan, Kennedy, Sotomayor, and Breyer, concluded that plaintiffs’ voluntary dismissal does not constitute a “final judgment” under 28 U.S.C. § 1291.  The concurring opinion, issued by Justice Thomas and joined by Justice Alito and Chief Justice Roberts,<a name="_ftnref1" href="#_ftn1">[1]</a> however, found the tactic impermissible under Article III.<ul><li>Majority—No “Final Judgment.”  The majority’s decision that plaintiffs’ voluntary dismissal is not a “final judgment” required for immediate appeal under § 1291 was based on two guiding principles:</li></ul>First, in Coopers & Lybrand v. Livesay, 437 U.S. 463 (1978), the Supreme Court held that the “death knell doctrine”—i.e., that a refusal to certify could effectively end a putative class action where the cost of litigating substantially outweighed the value of the plaintiff’s individual claim—did not warrant mandatory appellate jurisdiction of an interlocutory class certification order.  The Court’s decision in Cooper was grounded in a number of factors: (i) the possibility for multiple appeals of class certification decisions based on different reasoning; (ii) the fact that appellate courts would be forced into the trial process; and (iii) the one-sidedness of the doctrine, which operated only in favor of plaintiffs despite the importance of class certification for defendants.  The availability of interlocutory review under § 1292(b)—which requires district court certification of “controlling questions of law”—would provide sufficient review of class certification order, the Coopers Court held.Plaintiffs’ voluntary-dismissal tactic, the majority in Baker held, was even more likely to invite protracted litigation and piecemeal appeals than the death-knell theory in Coopers, as courts under the death-knell doctrine could decline to hear a case if they believed the cost-benefit analysis did not apply.  Appeals courts facing voluntary dismissals similar to plaintiffs’ do not even have such a control here, the majority held.  The reasoning in Cooper, the majority concluded, accordingly applies with even stronger force here.Second, the majority looked to the purpose of Rule 23(f) for guidance.  That rule allows the court of appeal to grant permission to appeal an order granting or denying class certification.  In creating the Rule, the drafters struck a balance between the competing concerns in Coopers, providing class certification litigants with an alternative mechanism to appeal that did not require district court certification while simultaneously allowing appeals courts to control the process to prevent abusive litigation tactics.The majority held that plaintiffs’ voluntary dismissal “undercuts Rule 23(f)’s discretionary regime.”  They rejected plaintiffs’ argument that Rule 23(f) is irrelevant because plaintiffs appealed a “final judgment.”  “Plaintiffs in putative class actions cannot transform an interlocutory order . . . into a final judgment within the meaning of § 1291 simply by dismissing their claims with prejudice,” the Court held.  A decision to the contrary would undermine the purpose and process of Rule 23(f).<ul><li>Concurring Opinion—No Article III Jurisdiction.  The Concurring Opinion took a different approach, rejecting the Majority’s reading of “finality” under § 1291, and instead finding that plaintiffs’ appeal faltered under Article III of the Constitution.  When plaintiffs voluntarily dismissed their claims, they consented to judgment against them by the court, the concurrence reasoned.  After that, the parties were no longer adverse, and there was no longer a “case or controversy” as required for Article III jurisdiction.  The concurrence rejected plaintiffs’ argument that the possibility of pursuing a class action constitutes a “controversy,” as class claims require viable individual claims, which plaintiffs had relinquished.  Without an Article III “case or controversy,” the Ninth Circuit lacked jurisdiction to hear plaintiffs’ appeal.</li></ul> Takeaway.  Baker will have an immediate impact on a number of cases pending appeal, particularly in the food misbranding arena, where parties appealed based on stipulated dismissals to get clarity from the Ninth Circuit on applicable class certification standards.    Baker also removes a powerful weapon in plaintiffs’ counsel’s arsenal—they will no longer be able to force piecemeal litigation through long delays from class certification to appeal.  Overall, Baker is a win for companies facing class certification claims.<a name="_ftn1" href="#_ftnref1">[1]</a> Justice Gorsuch did not take part in the consideration or decision of the case.

Nature's Path Foods

Suja Juices

Unilever USA Inc.

Nature’s Path Foods and Sprouts Farmers Market

Iovate Health Sciences, International

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 mat

Claudia Vetesi

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Supreme Court Slams the Back Door Around Rule 23(f) in Microsoft v. Baker

Supreme Court Slams the Back Door Around Rule 23(f) in Microsoft v. Baker

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Introduction.  Yesterday, on June 12, 2017, the Supreme Court issued its decision in Microsoft Corp. v. Baker et al., a closely watched case in the class action

The Big Picture:  On Tuesday, Judge Koh granted Kellogg’s Motion to Dismiss in its entirety in Hadley v. Kellogg Sales Company, No. 5:16-cv-04955-LHK (N.D. Cal.).  Hadley is one of three cases<a href="#_ftn1" name="_ftnref1">[1]</a> against well-known cereal makers pending in the Northern District of California.  All three actions challenge various factually true “health” representations on the cereal packaging as misleading due to the amount of “added sugars” in the products.  FDA requires the total amount of sugars to be included on the Nutrition Facts Panel but does not yet require the amount of “added sugars” be broken out of the sugar category.<a href="#_ftn2" name="_ftnref2">[2]</a>While Judge Koh granted the motion in its entirety, she did not address several key arguments (e.g. preemption) and gave plaintiff leave to amend on several causes of action.  Thus, before we can play the funeral march for these “added sugars” cases, we need to see how one more round of pleadings shakes out and whether Judges Orrick and White follow Judge Koh’s lead.Key Holdings:<ul><li>“Added Sugars”—Plaintiff’s claims as to the amount of “added sugars” were dismissed with leave to amend for failing to satisfy 9(b).  Plaintiff did not plausibly allege that the various health claims were misleading because he failed to allege the amount of added sugar versus the total amount of sugar in each product and whether the amount of added sugar exceeded plaintiff’s own alleged “healthy” threshold.</li><li>Trans Fats—Plaintiff’s label challenges based on the fact that some products contained trans fats were dismissed with prejudice.  It was simply not plausible that the inclusion of trans fats made the factually true (and seemly unrelated) phrase “MADE WITH Real Fruit” misleading.</li><li>Miscellaneous Violations of FDA Regulations<a href="#_ftn3" name="_ftnref3">[3]</a>—Plaintiff’s claims based on alleged violations of FDA regulations were dismissed because plaintiff failed to plausibly plead that consumers would have been misled by the violations.  While the court generally granted leave to amend on these claims, a few were dismissed with prejudice based on futility or waiver.</li><li>Warranty Claims—Plaintiff’s express and implied warranty claims were dismissed with leave to amend because plaintiff provided a litany of statements but did not match them to the respective products.</li><li>Injunctive relief—The court found that while a willingness to consider repurchasing the product was likely sufficient to establish standing, here plaintiff’s willingness to repurchase was dependent on the products being “appropriately” priced.  Since any injunctive relief would not affect the price of the product, plaintiff lacked standing to seek such relief.</li></ul><a href="#_ftnref1" name="_ftn1">[1]</a> The other two cases are Krommenhock v. Post Foods, LLC, No. 3:16-cv-04958 (N.D. Cal. Filed Aug. 29, 2016); Truxel v. Gen. Mills Sales, Inc., No. 4:16-cv-04957 (N.D. Cal. Filed Aug. 29, 2016).<a href="#_ftnref2" name="_ftn2">[2]</a> On May 27, 2016, FDA issued a final rule on how “added sugars” should be listed on the Nutrition Facts Panel (“NFP Final Rule”).   Food Labeling: Revision of the Nutrition and Supplement Facts Panel, 81 Fed. Reg. 33,741 (May 27, 2016).  The NFP Final Rule revises the Nutrition Facts label by, among other things, “requiring the declaration of the gram amount of ‘added sugars’ in a serving of a product, establishing a Daily Reference Value (DRV), and requiring the percent Daily Value (DV) declaration for added sugars.”  Id. at 33,744.  The NFP Rule, which went into effect on July 26, 2016, does not require manufacturer compliance with the new labeling requirements until July 26, 2018.<a href="#_ftnref3" name="_ftn3">[3]</a> 21 C.F.R. §§ 101.13(e) (prohibition on the use of “free” or “low” unless product contains an altered amount of nutrient), (f) (type size of nutrient content claim), (i) (misleading nutrient content claim), 101.14(d) (limits on intervening material between health claims and required disclosures), 101.60 (calorie content claims), and 1.21 (material omissions)

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Judge Koh Issues First Blow to “Added Sugars” Plaintiffs

Judge Koh Issues First Blow to “Added Sugars” Plaintiffs

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The Big Picture:  On Tuesday, Judge Koh granted Kellogg’s Motion to Dismiss in its entirety in Hadley v. Kellogg Sales Company, No. 5:16-cv-04955-LHK (N.D. Cal.