United States: A Second Look At Eye-Drop Litigation

Last Updated: November 8 2017
Article by Stephen J. McConnell

Just two days ago, Bexis lowered the boom on the Third Circuit's recent decision in Cottrell v. Alcon Labs, ___ F.3d ___, 2017 WL 4657402 (3d Cir. Oct. 18, 2017). In a 2-1 decision, the Cottrell court permitted the plaintiffs to proceed on the notion that making eye drop drips bigger than they have to be is a consumer protection violation. To Bexis's eyes, that decision was blind to the lack of standing, the absence of any "substantial economic injury," and the FDA's non-approval of eye drop drips of the "smaller" size plaintiffs claim it is somehow illegal not to make under state law. It turns out that there is someone else out there even more unhappy with the Cottrell decision than Bexis: the defendant. Now we have the defendant's Petition for Rehearing and Rehearing En Banc, https://www.druganddevicelawblog.com/wp-content/uploads/sites/30/2017/11/Cottrell-rehearing-petition.pdf which makes an insightful and compelling case for undoing the panel's decision.

Two preliminary matters are worthy of comment before we tell you what the Petition said. First, we have been so unkind about the Third Circuit's error in the Fosamax case that we managed to attract the attention of the excellent CA3 blog. In that blog, the author wondered whether our dissection of Fosamax was perhaps a bit more violent than necessary. The author also wondered whether we were coming close to accusing the court of bad faith. Yes to the former, but definitely No to the latter. As we told the CA3 blog, we took issue with what we saw as bad reasoning, but never-ever thought there was any bad faith. (The CA3 blog was generous enough to print our disclaimer. Thanks for that.) By and large, we are mighty proud of our home circuit. We know several of the judges, and every one of them is honorable, hard-working, and much smarter than we are. Sometimes we are not going to agree with the court's decisions. Luckily for us we work in a profession and live in a country where debate and criticism are allowed. Second, succeeding on a petition for rehearing and rehearing en banc is not easy. When we clerked for Ninth Circuit Judge William Norris, it seemed there was a presumption against such petitions. Who wants to admit they were wrong? And yet we remember one time our judge was on a panel where things strayed from the norm. Another member of the panel (who will remain unnamed) loved to decide cases before oral argument and draft a memorandum disposition rather than a bench memorandum. This judge prided himself on having almost no backlog. He pushed for deciding a particular contract dispute via a mere memorandum disposition, not a published opinion, because he saw the issues as being too obvious and insignificant for the Federal Reporter. And so a memo dispo issued. But then the losing party filed a petition for rehearing that was not only insistent, but it made a lot of sense. We met with our Judge in his chambers to talk it over. The telephone rang. It was the third member of the panel, who began by saying, "Bill, I think maybe we got one wrong." The two judges confabbed, and then set about persuading the third to change his mind and change the outcome. It took some arm-twisting, but in the end, justice was done. A mistake led to a proud moment. By the way, the Ninth Circuit Judge who called our Judge was Anthony Kennedy. He is now on the U.S. Supreme Court. So whenever we hear criticisms of Justice Kennedy for fence-sitting, or for grounding some of his opinions in "the right to define one's own concept of existence, of meaning, of the universe, and of the mystery of human life" or, much worse, international law, we recall his extraordinary integrity and modesty, and how he was supremely interested in getting things right.

Back to the Cottrell Petition. The main points in favor of revisiting the Third Circuit's decision are that it is contrary to Finkelman v. National Football League, 810 F.3d 187 (3d Cir. 2016), it "radically expands Article III standing," and that it directly conflicts with Eike v. Allergan, Inc., 850 F.3d 315 (7th Cir. 2017). Moreover, the plaintiff's inherently speculative theory of injury in fact was rejected by federal courts in Massachusetts and Missouri. (When a court comes out with a more pro-plaintiffy position than courts in Massachusetts and Missouri, that's really saying something.) That theory was also rejected by the district court in Cottrell. And then the Third Circuit reversed that rejection.

Remember that the Cottrell plaintiffs did not claim that the medications caused them physical harm or were ineffective in treating their eye conditions, or that the defendants misrepresented or omitted any information about the medications or the number of doses expected. Rather, the plaintiffs simply insist that smaller eye drops would have cost them less. How is that any different from the Third Circuit's earlier, controlling Finkelman case, where the plaintiffs had purchased two Super Bowl tickets on the resale market for $2,000 each, and contended that the National Football League had violated New Jersey's ticket law by not offering at least 95% of tickets to the general public and instead withholding most tickets for league insiders? The plaintiff in Finkelman alleged that the NFL's conduct had caused him injury by reducing the supply of tickets, thereby driving up the cost of tickets on the resale market. The Third Circuit in Finkelman held that the plaintiff lacked standing because the injury was wholly speculative. Sure, maybe the NFL's withholding of tickets increased prices on the resale market, but "it might also be the case that it had no effect on the resale market," and indeed tickets might even have been more expensive in plaintiff's hypothetical resale market, as members of the general public may have greater incentives than league insiders to resell at high prices. (We have to admit that, as residents of Philadelphia, where the local team has the best record in the entire NFL, the availability of Super Bowl tickets is a much, much bigger issue to us right now than the size of eye drops.)

The Petition makes the point that, just as in Finkelman, other market effects might have produced a result very different from what the plaintiffs theorized. In Cottrell, the plaintiffs essentially presumed that the defendants price their products solely according to volume, such that "changing the eyedropper size would not change the price of the medicine, while extending the useful lifespan of each bottle, driving down [the plaintiffs'] aggregate costs." But it is just as likely that use of smaller drops would prompt use of different sized containers, or that smaller drops would result in a higher price – because of more doses – for the same container. Who knows? All we do know is that the allegations of the complaint do not "affirmatively and plausibly" add up to an "injury" caused by the defendant's conduct.

The Petition nicely captures the absurdity of the Third Circuit's analysis, under which consumers suffer Article III injury from "unfairness" whenever they "walk into a supermarket and buy a product — from toothpaste, to ketchup, to deodorant, to hairspray — so long as they can then conceive of a way that the product might be dispensed more efficiently." The Petition also nicely exposes the weakness in the Third Circuit's effort to distinguish away the Seventh Circuit decision in Eike. According to the Cottrell majority, Eike "seemed to begin its standing analysis with a determination that the plaintiffs had 'no cause of action.'" But while it is true that the Seventh Circuit did (correctly) conclude that the plaintiffs had "no cause of action," the Seventh Circuit also separately held that there was no Article III injury, without ever suggesting a causal connection between the two. Eike, 850 F.3d at 318. The Seventh Circuit got it fundamentally right when it held that the fact that a seller does not sell the product that you want, or at the price you'd like to pay, is not an actionable injury; "it is just a regret or disappointment."

As residents in, and fans of, the Third Circuit, the Cottrell decision certainly is cause for "regret and disappointment." We called this post a "second look" at the eye-drop litigation. It is the second look we have taken at the Cottrell case. We hope that the Third Circuit takes a second look.

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

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