Several significant decisions have recently emerged from the In re Zantac MDL, No. 2924. We gave you a "bare bones" rundown of the first four of them right away. But now we'd like to discuss them in more detail.
We start with In re Zantac (Ranitidine) Products Liability Litigation, ___ F. Supp.3d ___, 2020 WL 7866660 (S.D. Fla. Dec. 31, 2020), which as our bare bones post mentioned, gave the boot to the plaintiffs' innovator liability claims. This opinion has us bloggers jumping for joy for several reasons.
Innovator liability is involved in the Zantac MDL because that claimed product defect (a breakdown product that allegedly "increase[s] the risk of cancer," id. at *1) was not discovered until well after the relevant patents had expired and generic versions of the product had captured most of the market share. Id. This type of substance – nitrosamines − is something anyone who consumes bacon, beer, or cheese has already been exposed to for many years (pills being a lot smaller).
The Zantac plaintiffs sued everyone they could think of, including the original branded manufacturers on claims of "innovator" liability:
Under this theory of liability, the consumers of a generic drug product may hold a brand-name drug manufacturer liable for failing to warn of a defect in the product − a product that the brand-name drug manufacturer did not itself make, sell, or distribute.
Id. at *3. As the Zantac opinion states, and our innovator liability scorecard confirms, only two states in the country allow any form of this benighted and dangerous form of liability – California, and to a somewhat lesser extent Massachusetts. Id.
That only two states allowed this novel form of liability did not stop the Zantac MDL plaintiffs from arguing that the MDL court could predict that virtually every other state would do so, too. This is an MDL, and MDL are notorious for ignoring state limits to liability. See, e.g., In re Fluoroquinolone Products Liability Litigation, 2021 WL 396819 (D. Minn. Feb. 4, 2021) (MDL abuse on this very issue).
Not this time.
First, plaintiffs' claims were whittled down a bit. Initially they conceded "that their theory of liability is not viable under the laws of Alabama, Iowa, West Virginia, or Florida." Id. at *4 n.5. After supplemental briefing was ordered, plaintiffs backtracked some more and decided not to contest Georgia, Idaho, Indiana, Kansas, Kentucky, Louisiana, New Jersey, Ohio, Tennessee, Texas, and Washington. Id. That still left the Zantac plaintiffs arguing that innovator liability should be allowed in 35 jurisdictions: Alaska, Arizona, Arkansas, Colorado, Connecticut, Delaware, the District of Columbia, Hawaii, Illinois, Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, New York, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, South Dakota, Utah, Vermont, Virginia, Wisconsin, and Wyoming. Id. at *6 n.6.
Since almost the day it was founded, the Blog has argued that it is improper under Erie Railway Co. v. Tompkins, 304 U.S. 64 (1938), for federal courts sitting only in diversity jurisdiction (which is the case in almost every drug/device MDL) from predicting that states would adopt novel theories of tort liability. See our Erie Doctrine posts. Zantac backed that position to the hilt:
[W]hen a federal court is called upon to recognize a cause of action under a state's laws that the state itself has yet to recognize, "considerations of comity and federalism counsel that [the federal court] proceed gingerly when venturing into uncharted waters of state substantive law." Guarino v. Wyeth, LLC, 719 F.3d 1245, 1251 (11th Cir. 2013) (declining to "manufacture" a law making brand-name manufacturers liable for the injuries of generic consumers "out of whole cloth," in part, because no Florida state court had adopted such law); see also City of Miami v. Bank of America Corp., 800 F.3d 1262, 1289 (11th Cir. 2015) (declining "to invent a novel basis for unjust enrichment under Florida law" because the Florida Supreme Court had not yet ruled on whether such law existed and because of "the complete lack of supporting Florida caselaw"). . . . The Court has the task of making an Erie prediction as to whether the highest courts of 35 jurisdictions would recognize Plaintiffs' theory of liability. In making its Erie predictions, the Court follows the Erie analysis steps set forth by the Eleventh Circuit.
2020 WL 7866660, at *6 (footnote omitted).
Thus, Zantac ruled that none of the 35 jurisdictions would dispense with the fundamental product liability requirement that the defendant have made that allegedly injurious product in order to impose on branded manufacturers liability for injuries caused by competing generic products. An "overwhelming national consensus" has rejected innovator liability. Id. The most directly on point case was Guarino, in which the Eleventh Circuit had drawn this conclusion for Florida. The most analogous case was In re Darvocet, Darvon & Propoxyphene Products Liability Litigation, 756 F.3d 917, 941–54 (6th Cir. 2014) – another MDL in which the plaintiffs had tried the same thing on a slightly smaller scale, and had been shot down under the laws of 22 states. Zantac, 2020 WL 7866660, at *6.
If innovator liability is "construed" as a product liability claim, "then for those claims to be viable under the laws of jurisdictions that require product identification, Plaintiffs must allege that the drugs that caused their injuries were made, sold, or distributed by Defendants." Id. at *7 (citation omitted). If such claims are construed as some sort of separate negligence/misrepresentation claim, then "Plaintiffs must establish that Defendants owed Plaintiffs a duty sufficient to trigger liability." Id.
Plaintiffs lost both ways. "]T]he highest courts of all 35 jurisdictions examined would hold that it is settled law that product identification must exist for a products liability claim to succeed." Id. Seven states with product liability statutes, Arizona, Arkansas, Colorado, Connecticut, Mississippi, North Carolina, and Oregon, "would hold that Plaintiffs' negligence-based claims are, in reality, products liability claims because all of Plaintiffs' claims stem from an injury caused by a product." Id. So plaintiffs in those states lost without the need to examine negligence/misrepresentation separately. Zantac examined the negligence and misrepresentation precedents of the remaining 28 states separately and:
predict[ed] that the highest courts of each of these jurisdictions would determine that Defendants do not owe a duty to Plaintiffs. This prediction comports with the principles of comity and federalism, which counsel federal courts to proceed gingerly when venturing into uncharted waters of state substantive law. Furthermore, this prediction is consistent with the majority view and is appropriate given the absence of any strong evidence that these jurisdictions would join the minority view. Plaintiffs' claims of general negligence . . . and negligent misrepresentation . . . against Defendants fail under the laws of these jurisdictions. In conclusion, the Court predicts that none of the highest courts of the 35 jurisdictions would recognize Plaintiffs' theory of liability.
Zantac, 2020 WL 7866660, at *8 (citations and quotation marks omitted). Zantac included a lengthy appendix examining each state's law separately. We've added these state-specific discussions to our 50-state survey of innovator liability, so we'll just provide the relevant citations here, so readers can check out the states that interest them most. Alaska, 2020 WL 7866660, at *12-13; Arizona, 2020 WL 7866660, at *14; Arkansas, 2020 WL 7866660, at *15; Colorado, 2020 WL 7866660, at *15-16; Connecticut, 2020 WL 7866660, at *16-17; Delaware, 2020 WL 7866660, at *17; District of Columbia, 2020 WL 7866660, at *17-18; Hawaii, 2020 WL 7866660, at *18; Illinois, 2020 WL 7866660, at *18-20; Maine, 2020 WL 7866660, at *20; Maryland, 2020 WL 7866660, at *20-21; Michigan, 2020 WL 7866660, at *21-22; Minnesota, 2020 WL 7866660, at *22; Mississippi, 2020 WL 7866660, at *22-23; Missouri, 2020 WL 7866660, at *23-24; Montana, 2020 WL 7866660, at *24-25; Nebraska, 2020 WL 7866660, at *25-26; Nevada, 2020 WL 7866660, at *26; New Hampshire, 2020 WL 7866660, at *26-27; New Mexico, 2020 WL 7866660, at *27-28; New York, 2020 WL 7866660, at *28-29; North Carolina, 2020 WL 7866660, at *29; North Dakota, 2020 WL 7866660, at *30; Oklahoma, 2020 WL 7866660, at *30-31; Oregon, 2020 WL 7866660, at *31; Pennsylvania, 2020 WL 7866660, at *31-32; Puerto Rico, 2020 WL 7866660, at *32; Rhode Island, 2020 WL 7866660, at *32-33; South Carolina, 2020 WL 7866660, at *33-34; South Dakota, 2020 WL 7866660, at *34-35; Utah, 2020 WL 7866660, at *35; Vermont, 2020 WL 7866660, at *36-37; Virginia, 2020 WL 7866660, at *37; Wisconsin, 2020 WL 7866660, at *37-38; Wyoming, 2020 WL 7866660, at *38-39.
That alone is a significant victory, but Zantac wasn't done yet. Back in 2018, before any directly on point precedent existed, the Blog proposed that personal jurisdiction could be a good defense to innovator liability claims under Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017):
[W]e (well, Bexis) had been thinking about precisely that – the "suit-related conduct" in innovator liability cases does not take place in the plaintiff's forum state (MA or CA) because the branded defendant didn't sell the injurious product, so unless that defendant is unfortunate enough to be "at home" in those states, there shouldn't be case-specific personal jurisdiction either. Without a product sale there's not even a stream of commerce argument.
Zantac adopted this argument as well, holding that plaintiffs from California and Massachusetts asserting innovator liability claims had to be dismissed for lack of personal jurisdiction. The defendants were not "at home" (incorporated or with a principal place of business) in those states, and there was no specific forum-related conduct that those plaintiffs could assert.
Plaintiffs fail to allege specific, non-conclusory facts demonstrating that any of Defendants' actions, including marketing and labeling decisions, took place in any state or territory, including California or Massachusetts, the only two states that recognize Plaintiffs' theory of liability. To establish specific personal jurisdiction based on Defendants' activities in a particular state, Plaintiffs must allege that those activities were the "but-for" cause of Plaintiffs' ingestion of generic ranitidine products and injuries. Plaintiffs have failed to do so. Additionally, Plaintiffs must allege that Defendants should have foreseen that their activities regarding their brand-name ranitidine products in that state could expose them to liability for injuries sustained from the ingestion of generic ranitidine products. Again, Plaintiffs have failed to do so.
Zantac, 2020 WL 7866660, at *10 (citations omitted). So, just as we thought they should, innovator liability claims brought under the laws of the only two states allowing such claims fail because, without a relevant sale or use of the defendant's product, there was no forum-specific conduct allowing exercise of specific personal jurisdiction.
But, this is an MDL, so plaintiffs advanced yet another bizarre theory – this time that something called "legislative jurisdiction" allowed California and Massachusetts to assert innovator liability on an "extraterritorial" basis. Id. at *11. Nope. Before a state can impose any form of liability, Due Process requires that it first be able to exercise personal jurisdiction.
"[F]or the same reasons that Plaintiffs failed to establish a prima facie case of specific personal jurisdiction over Defendants in any state or territory, the Court similarly holds that Plaintiffs have not established sufficient minimum contacts between Defendants and the states of Massachusetts or California, such that neither state may apply their substantive law extraterritorially in accordance with the Due Process Clause."
Id. at *12.
A great win: innovator liability, Erie conservatism, and personal jurisdiction all in the same decision. Stay tuned for the next installment of the Zantac chronicles.
Originally Published by Reed Smith, February 2021
This article is presented for informational purposes only and is not intended to constitute legal advice.