United States: Statute Of Limitations Undoes Class Action That Has No Legs Anyway

Last Updated: March 12 2014
Article by Steven Boranian

One of the best developments in drug and device law over the last 15 years has been the demise of the class action. Although seen by plaintiffs and some commentators as convenient devices that can be used to resolve large numbers of claims in bunches, courts have generally come to understand that class actions just don't work in cases involving drugs and medical devices. The differences among the claims and the claimants are just too numerous, making class actions all but uncertifiable outside of the settlement context. (See our class certification denial cheat sheets here and here.)

When class actions are filed against drug and medical device manufacturer these days, they usually look like Plumlee v. Pfizer, Inc., No. 13-CV-00414-LHK, 2014 LEXIS 23172 (N.D. Cal. Feb. 21, 2014). A patient who had used both branded and generic Zoloft filed a class action against the innovator manufacturer, but not because there was anything allegedly wrong with the product or because she had experienced any alleged side effect. The plaintiff does not even appear to have alleged that the product failed to work as well as it was supposed to. She allegedly took the medicine for more than three years, which suggests to us that she was benefiting from the therapy. Id. at **9-10.

So what was the plaintiff's beef? Well, she alleged that the innovator manufacturer made numerous misrepresentations, basically by allegedly overstating the effectiveness of the drug in the label and in marketing. Our favorite allegation is that the manufacturer marketed the product to doctors through sales representatives who were "typically young attractive people." Id. at **8-9. Perhaps the plaintiff is referring to the 2010 motion picture Love & Other Drugs, which starred Hollywood hunk Jake Gyllenhaal as a sales rep for the drug company that also happens to be the defendant in this case. (The movie also presented a cavalier and horribly insensitive portrayal of patients with Parkinson's disease, but that's a topic for another day.) We don't know what movies the plaintiff has seen, but we do know that her objective was to recover the purchase price of the drug for herself and other patients under California's Consumer Legal Remedies Act, Unfair Competition Law, and False Advertising Law. Id. at *17.

There are so many things wrong with this lawsuit, we hardly know where to start. For one thing, we emphasize again that this plaintiff did not allege any injury. For all we know, she got exactly what she paid for, which makes us (and the defendant) wonder how she had standing to sue at all. In addition, having just read yesterday's post on statutory safe harbors for consumer claims, we wonder whether this action falls into California's safe harbor for "business practices which the Legislature has expressly declared to be lawful in other legislation," see Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., 973 P.2d 527, 542 (Cal. 1999). Plaintiff was complaining about FDA-approved labeling, and although we doubt that any safe harbor applies, maybe one should. We also wonder how the plaintiff ever hoped to get a class certified. Claims based on alleged misrepresentations, whether in the drug and device context or not, present myriad individual issues, including and particularly on causation. Did the prescriber review the label or see any marketing? Would different information on the drug's efficacy have made any impact? If the sales representative was actually as young and attractive as Jake Gyllenhaal (or his beautiful co-star Anne Hathaway), would the physician have been more or less influenced by the purported sales pitch? Good luck attempting to adjudicate these individual issues and countless others on a classwide basis.

Thankfully, it looks like we may never know the answers to these questions, because in the end, the undoing of the plaintiff's complaint was the statute of limitations. The plaintiffs' claims were subject to three-year and four-year statutes of limitations, and the most interesting part of the order is the part addressing when the plaintiff's claim accrued. This, again, was a consumer action seeking a refund of the purchase price, so the claim accrued when the plaintiff last purchased the product. Plumlee, at **22-24. This makes sense to us and apparently also to the plaintiff, who conceded that "her injury was deception at the point of sale." Id. at *24 n.5.

It also makes sense that the district court rejected the plaintiff's attempt to invoke the discovery rule to delay accrual. California's discovery rule "postpones accrual of a claim until 'the plaintiff discovers or has reason to discovery the cause of action.'" Id. at *26 (citations omitted). Under this rule, the plaintiff bears the burden of proving not only delayed discovery, but also that he or she could not have discovery the claim with reasonable diligence. As the district court held,

"A plaintiff whose complaint shows on its face that his claim would be barred without the benefit of the discovery rule must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence. The burden is on the plaintiff to show diligence, and conclusory allegations will not withstand" a motion to dismiss.

Id. at *26 (citations omitted). We are not completely convinced that discovery rules should exist at all. But if we must have discovery rules, this formulation is as good as any, particularly its allocation of a burden to specifically plead reasonable diligence.

The district court's application of the discovery rule was as good as it gets, too. The plaintiff claimed that she did not discover the alleged untruthfulness of the defendant's statements until years after she last purchased the drug. Id. at *28. But this is the age of TwIqbal plausibility, id., at *4, and that bare allegation did not meet the plaintiff's burden because she did not allege specifically the time and manner of her discovery. In other words, she failed to allege when and how she "learned" that clinical trials allegedly undermined the defendant's representations. Id. Plaintiff's allegations also did not meet her burden of reasonable diligence, and although the quote below is kind of long, it is worth reading because it provides a roadmap to responding to plaintiffs like this one:

Plaintiff pleads absolutely no facts that would support a finding that she was "not negligent in failing to make the discovery sooner and that [s]he had no actual or presumptive knowledge of facts sufficient to put [her] on inquiry." . . . To the contrary, the Complaint identifies and relies upon several published articles regarding the efficacy of [the drug] and other related drugs that were published many years before Plaintiff filed suit. . . . Plaintiff does not explain why she was unaware of these publications before "early 2012" when she allegedly discovered the misrepresentation for the first time, nor explains why these publications did not serve to put her on notice that Defendant may have made misrepresentations about [the drug's] efficacy. Furthermore, nothing in the Complaint provides the Court a basis to conclude that Plaintiff was unable to learn of [the defendant's] alleged misrepresentations and omissions until 2012 despite reasonable diligence. Plaintiff does not allege that she took any steps towards discovery.

Id. at **29-30 (emphasis in original, citations omitted). So, yes, the same tougher pleading rules can be used against plaintiffs trying to plead into discovery rules. This is about as direct a holding as you are ever going to see. It also correctly describes the standard of reasonable diligence, correctly assigns the burden to the plaintiff to plead specific facts, and correctly calls the plaintiff out for failing to meet that burden. Onto our TwIqbal cheat sheet this one goes.

The only problem we have with the order is that the court granted leave to amend. This class action has no legs, and hopefully the next motion to dismiss will put an end to the case for good. Plaintiff surely is between a rock and a hard place: She kept her allegations general and vague with the hope that omitting her specific facts would help her on class certification. But now the court has called her hand, and even if she is able to plead the specifics required for delayed discovery, the statute of limitations is the least of her problems. We don't know how this thriller ends, but we know how we would write the script if it were up to us. The End.

This article is presented for informational purposes only and is not intended to constitute legal advice.

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