United States: Bootstrapped Claim Against The FDA Gets The Boot

Last Updated: October 17 2016
Article by James Beck

We're pleased to report the demise of a plaintiff's firm's attempt to punish the FDA for rejecting the firm's attempt to force the agency to create evidence helpful to plaintiffs in litigation. The ploy began in 2012, when "a law firm that represents hundreds" of plaintiffs in prescription drug mass tort litigation "on a contingency fee basis" "filed a citizen petition with the [FDA]."  Sheller, P.C. v. U.S. Dep't of HHS, 119 F. Supp.3d 364, 368 (E.D. Pa. 2015). Plaintiff sought agency action that it could, in turn, parade before juries in the underlying mass tort, specifically: "that the FDA immediately revoke the [relevant] indication for the . . . [d]rugs" at issue or alternatively "require that labeling for those drugs include a black box warning based on the lack of sufficient data to prove their safety."  Id.  In addition, the plaintiff law firm sought to enlist the FDA in evading a confidentiality order (originally agreed to by the law firm) that protected discovery which the defendant in the underlying litigation had provided.  Id.

So far, so what?  While annoying, attempts of this nature to embroil the FDA in mass tort prescription medical product litigation are part of the other side's play book.  (((Bexis))) recalls similar machinations during the Bone Screw litigation whereby the plaintiffs did everything they could (ultimately unsuccessfully) to prevent the Agency from adding to those products' labeling previously off-label uses that had become the medical standard of care – because the Bone Screw plaintiffs' litigation strategy was based on the procedures in question being off label.

The Bone Screw plaintiffs failed, 63 Fed. Reg. 40025-41 (FDA Jul. 27, 1998) – as did the law firm plaintiff in Sheller (119 F. Supp.3d at 368) – since the FDA normally has little patience for the junk science that the other side routinely peddles in mass tort litigation.  The plaintiff law firm in Sheller would have been off not filing the petition at all, since according to plaintiff, "the FDA decision to deny its petition "has been used as the basis to assert federal preemption and other [defense] arguments against [plaintiff's] clients in [mass-tort] litigation."  Id.

No kidding.  That's the down side this sort of litigation strategy.  Attempts to involve the FDA in litigation have the risk that, if one loses, the FDA's actions can create a positive narrative for the other side.

But plaintiffs believe in the doctrine of "heads I win; tails you lose."

So in Sheller the plaintiff law firm attempted to gin up, from their failed strategy, a tort cause of action – not an administrative claim – against the FDA.  Talk about a bootstrap.  The plaintiff law firm was the one that involved the FDA in the first place.  The bizarre theory of liability postulated that, if the FDA wouldn't cooperate in creating pro-plaintiff evidence/themes in the underlying litigation, that required the plaintiff law firm to work harder and spend more money to come up with something that juries might believe.  So the law firm sued the FDA to recover its purportedly increased litigation costs:

Plaintiff [claims] . . . that the FDA denial of [its] citizen petition increased [its] costs in litigating [because] . . . the defendant . . . has argued that the FDA's denial of the Petition proves, as a matter of law, that the [drug's] label is adequate. . . . Plaintiff argues that it must continue to expend resources in defending against that argument, and it faces the risk that a Court will accept it, lowering [plaintiff's] contingent fee recovery.

Sheller, 119 F. Supp.3d at 369-70 (quotation marks omitted).

The district court held that this purported "injury" was too remote and tangential to create standing to sue as government agency for not doing what a law firm wanted.  Even if lost profits from contingent fees could be an "injury," it wasn't the FDA's fault that mass tort defendants took advantage of the law firm's failed citizen-petition-based litigation strategy:

Plaintiff asserts that it has satisfied the causation requirement because by wrongfully denying the Petition based on a biased and incomplete factual record, the FDA created an incorrect legal argument that [the firm] is required to defend against in other litigation. But as [FDA] highlight[s], even Plaintiff's own formulation of this "causal chain" belies its position that the FDA and not an outside party caused its injury. . . . [A]lthough [the mass-tort defendant's] argument may rely on the FDA's actions, Plaintiff does not allege that the FDA directly influenced [defense] litigation strategy. [The mass-tort defendant's] independent litigation decisions therefore constitute an intervening cause of Plaintiff's purported injury. . . . Plaintiff's adversaries would vigorously litigate the [underlying] matters with other arguments, even if not with the particular strategy based on the FDA decision that Plaintiff labels "incorrect" and "without legal merit." Plaintiff's "causal chain" is too attenuated to show that Defendants caused Plaintiff's contingent fee injury.

Id. at 371-72 (citations and quotation marks omitted).

Nor can the FDA (or anyone) be charged with responsibility for additional expenses caused by a law firm's (in this case, unavailing) choice of litigation strategies for its clients. Otherwise, its choice of a "certain fee structure" – contingent fees – would "set[] the stage for economic injury whenever it expends additional resources in litigation, regardless of the causes for the expenditure."  Id. at 372.  The court was not about to start down that slippery slope of assessing "damages" every time a contingent fee lawyer lost some issue that potentially lessened that lawyer's take.  Even if arguments made by a defendant were "incorrect" and "meritless," no relief against the FDA is going to stop mass tort defendants from pursuing them.  Id.

Nor did plaintiff's complaining about supposed "procedural violations" by the FDA during consideration of the citizen petition create standing to sue the Agency in tort:

[I]t is well-settled that procedural violations in agency proceedings do not themselves inflict injury for which a party would have Article III standing to bring suit, absent concrete injury. . . . [T]he nature of Plaintiff's asserted contingency fee injury does not justify the lower bar for which Plaintiff advocates.  Plaintiff does not assert an injury based on any concrete right that the FDA's procedures are intended to protect. Instead, the cognizable injury that Plaintiff alleges is several steps attenuated from the decision on the petition itself, much less the procedures governing the agency consideration of the petition.

Id. at 372-73 (citation omitted).

The FDA's refusal to interfere with the confidentiality of discovery in the underlying litigation likewise provided no basis for standing.  Insofar as "advocacy" was concerned, the plaintiff law firm agreed to the confidentiality arrangements it later attempted to enlist the FDA to evade:

Plaintiff was bound by the confidentiality agreement to which it refers prior to the citizen petition; presumably, the limitation that Plaintiff would call an injury occurred at that time. That the FDA did not remove this apparent burden − an action which it does not obviously have the authority to take − did not injure Plaintiff, as it did not change the status quo. To the extent that the confidentiality agreement impairs Plaintiff's interests, the injury is the agreement itself, not [the FDA's] decision declining to direct private entities . . . to release Plaintiff from the agreement.

Id. at 373 (citation omitted).

Finally, the plaintiff law firm had no business asserting any harm "to the general population of potential victims."  Id.  A "risk to parties with a generalized professional interest" in a subject was "too probabilistic to be sufficient as an injury for the basis of standing." Id.

Plaintiff's assertion that it suffers an injury based on its inability to publicly disclose information is similarly speculative.  In essence, Plaintiff's argument relies on individuals suffering harm because they lack certain information apparently in Plaintiff's possession. . . .  Plaintiff offers no indication that an injury to these individuals works an injury on Plaintiff itself.

Id. at 374.  Indeed, preventing injury altogether is not in the interest of a plaintiff law firm, since such firms exist to seek damages, not to prevent them:

Plaintiff's professional interest in those [uninjured] individuals evaporates, as the would-be victims would lack a claim on which Plaintiff might represent them. Thus, Plaintiff's asserted injury based on the general population of potential victims is self-defeating.

Id.  None of the plaintiff law firm's arguments established standing to sue the FDA for denying its citizen petition, so the action was dismissed.

In another unwise litigation decision, the law firm appealed.

And lost.

Last week a unanimous Third Circuit panel affirmed.  See Sheller, P.C. v. U.S. Dep't of HHS, ___ F. Appx. ___, 2016 WL 5846219 (3d Cir. Oct. 6, 2016).

First, there was no injury.  Plaintiff chose to file the citizen petition, lost, and thus handed mass tort litigation defendants a weapon the they were entitled to use in their own defense:

[The mass tort defendant's] litigation strategy would not be illegal in the absence of the Petition's denial; [it] is entitled to defend itself against [plaintiff's] lawsuits regardless of whether the FDA grants or denies the Petition. Thus, the government action (denial of the Petition) does not authorize third-party conduct ([the mass tort defendants' arguments in the [underlying] Litigation) that would otherwise be illegal in the absence of such action, and [plaintiff] cannot maintain standing on these grounds.

Id. at *4.  Litigation strategy isn't heads I win, tails you lose.

Second, the panel agreed with the district court on the causation aspect of standing:

[T]here is no "substantial evidence of a causal relationship between the government policy and the third-party conduct, leaving little doubt as to causation and likelihood of redress. . . . [The mass tort defendant] could not defend such claims without arguing that [the drug's] labeling is adequate, and its use of the FDA's Petition denial as support for its argument does not transform [the defense] argument into a harm caused by the FDA.

Id. (footnotes and quotation marks omitted) (emphasis original).

Third, the relief sought against the FDA would not "redress" the plaintiff law firm's purported injury:

[Plaintiff's] injury − increased . . . [l]itigation costs − depends heavily on the actions of both [opposing litigants], not the FDA, and granting the Petition produces only a chain of contingencies which amounts to mere speculation about how [the litigants] will conduct the [underlying] Litigation and accrue associated litigation costs. There is simply no basis to say that a favorable decision in this case is "likely" to redress [plaintiff law firm's] injury.

Id. (footnote and quotation marks omitted).

Good riddance.

Thus, another abusive lawsuit comes to an end, and rightfully so.  If the FDA is to maintain its status as a neutral third party in prescription medical product liability litigation, then it cannot be subject to lawsuits seeking "damages" for increased litigation costs based on use of contingent fee arrangements.  That's a classic "one-way" argument available to plaintiffs but not defendants.  As the District Court recognized, lawyers litigating "on an hourly fee basis . . . would presumably benefit from, not be injured by, the additional effort."  119 F. Supp.3d at 372. Thus, only contingent fee lawyers would be able to threaten the FDA in this fashion. This litigation was really an elaborate attempt by the other side to put a thumb on the scale of FDA regulatory actions beyond the ability of their junk science to influence.

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

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