Consumer Class Actions and Mass Torts : Class Action Lawyer & Attorney : J. Russell Jackson : Skadden Law Firm : Complex Class Actions : Consumer Class Actions & Mass Torts Law Blog

I've previously opined on this blog and elsewhere that global warming litigation -- at least cases in which individuals seek damages from companies that emit greenhouse gasses -- has no leg to stand on because causation is so attenuated and the issue is tied up with important political questions that are committed to the expertise of federal agencies like the EPA, as well as Congress.

My viewpoint was confirmed a few years ago in a case called Comer, in which a Mississippi federal court dismissed a class action filed by Hurricane Katrina victims who sought to blame their loss on various energy and mining companies.  The trial court had held that the chain of causation was too attenuated to confer constitutional standing on the plaintiffs, and it further held that the case should be dismissed under the political question doctrine because it required the federal court to decide policy questions about greenhouse gas emissions that were committed to the province of the political branches.

Comer had a curious subsequent history.  Plaintiffs appealed to the Fifth Circuit, where they won a partial victory, with the appellate court reversing the judgment on the state law claims of public and private nuisance, trespass, and negligence.  The defendants, however, petitioned for rehearing en banc, and the Fifth Circuit granted the petition and vacated the three-judge panel's decision.  Then, a Fifth Circuit judge was recused, resulting in the loss of a quorum for an en banc panel to act.  The Fifth Circuit thus dismissed the appeal and reinstated the District Court's opinion.  Plaintiffs did not petition the U.S. Supreme Court for certiorari, but instead petitioned for a writ of mandamus to require the Fifth Circuit to reinstate the appeal.  The Supreme Court denied plaintiffs' petition, and thus the District Court's opinion dismissing the lawsuit remained the law of the case.

In May 2011, Ned Comer and the other plaintiffs filed a virtually identical lawsuit in the same District Court asserting the causes of action the three-judge panel had said should have been remanded:  public and private nuisance, trespass, and negligence.  Plaintiffs sued the same defendants, and added a few more.  Feeling as if it was Groundhog's Day, the defendants once again moved to dismiss.

Yesterday the court issued an opinion unsurprisingly granting the defendants' motion to dismiss.  See Comer v. Murphy Oil USA, Inc., No. 1:11CV220-LG-RHW, Slip op. (S.D. Miss. Mar. 20, 2012).  The court's primary holding is that the suit is barred by the doctrines of res judicata and collateral estoppel.  The 11 plaintiffs in Comer I are the same plaintiffs who have brought Comer II.  The district court's order in Comer I was a final order dismissing the case for lack of jurisdiction, which is a decision on the merits for the purposes of res judicata.  Plaintiffs had a full and fair opportunity to argue the issue in the first suit.  The two suits involve the same "transaction," namely damages arising out of the occurrence of Hurricane Katrina.  Moreover, the admitted purpose of the second lawsuit is to convince the court that it was wrong in the first lawsuit.

The district court's res judicata holding should have ended the issue.  However the court, "out of an abundance of caution," went on to address the defendants' additional arguments.

The court held that plaintiffs lacked Article III standing to assert their state law claims.  The court focused on the causation element of the standing inquiry.  It noted that the U.S. Supreme Court found that a state had standing to bring a lawsuit to force the EPA to issue greenhouse gas regulations in Massachusetts v. EPA, 549 U.S. 497 (2007).  However, the Supreme Court gave special deference to a state  suing in its capacity as a quasi-sovereign, and expressly reserved the question of whether an individual would have standing to bring a global warming claim.  Moreover, the Supreme Court had acknowledged that causation regarding greenhouse gases emissions was a difficult global problem, and that any domestic reductions in emissions likely would be offset by increases in developing countries.

The district court also observed that in American Electric Power Co. v. Connecticut, 131 S. Ct. 2527 (2011), the Supreme Court was equally divided on the question whether states had standing to file lawsuits against corporations to reduce greenhouse gas emissions, and it expressly reserved the question whether individuals could assert such standing.

The plaintiffs in Comer II relied on authorities under the Clean Water Act finding standing where the defendants were merely alleged to have contributed to plaintiffs' injuries.  The district court distinguished their authorities, relying in part on Native Village of Kivalina v. Exxonmobil Corp., 663 F. Supp. 2d 863 (N.D. Cal. 2009), which had explained that CWA cases only find "contribution" standing where a presumption of standing arises as a result of a defendant's violation of federally-mandated pollution limits.  Where, as here, there is no such federally-mandated limit on greenhouse gases (and thus no such violation), no presumption can arise.  Moreover, even the CWA cases recognized that a point of discharge can be too remote from the plaintiff's injury to be legally recognized as a contributing cause.  See slip op. at 21-22 (citing Friends of the Earth, Inc. v. Crown Cent. Petrol. Corp., 95 F.3d 358 (5th Cir. 1996) (plaintiffs whose injury was 18 miles from discharge did not have standing to sue over the discharge)).

Ultimately, the Comer II court recognized, even plaintiffs admit that global warming is attributable to numerous natural and man-made causes that interact cumulatively over the period of centuries to create climate effects:

The plaintiffs cannot allege that the defendants' particular emissions led to their property damage.  At most, the plaintiffs can argue that the types of emissions released by the defendants, when combined with similar emissions released over an extended period of time by innumerable manmade and naturally-occurring sources encompassing the entire planet, may have contributed to global warming, which caused sea temperatures to rise, which in turn caused glaciers and icebergs to melt, which caused sea levels to rise, which may have strengthened Hurricane Katrina, which damaged the plaintiffs' property.

It is insufficient for the plaintiffs to allege that the defendants' emissions contributed to the kinds of injuries that they suffered.

Slip op. at 20-21.  The court concluded that such tenuous causation should not allow plaintiffs to send the defendants on a discovery odyssey "that will likely cost millions of dollars."

The district court in Comer II also held that plaintiffs' claims were non-justiciable under the political question doctrine as established in Baker v. Carr.  Plaintiffs argued that Massachusetts v. EPA had rejected that argument.  But the district court held that Massachusetts v. EPA was fundamentally different because it involved the proper construction of a congressional statute.  Here, the policy judgments regarding greenhouse gas emission levels were expressly committed to the EPA.  Indeed, the district court noted, the Supreme Court had stated "that it possessed neither the expertise nor the authority to evaluate the policy judgments that EPA offered as justification for refusing to regulate motor vehicle emissions, such as issues involving foreign relations."  Slip op. at 26.  The Comer II court concluded:

[T]he plaintiffs are asking the Court, or more specifically a jury, to determine without the benefit of legislative or administrative regulation, whether the defendants' emissions are "unreasonable."  Simply looking to the standards established by the Mississippi courts for analyzing nuisance, trespass, and negligence claims would not provide sufficient guidance to the Court or a jury. . . .

. . . The Supreme Court held that judgments concerning the reasonableness of greenhouse gas emissions are properly committed to the EPA, and if district courts were to make such judgments, those judgments would interfere and potentially conflict with the EPA's actions.

. . . The Court finds that the claims presented by the plaintiffs constitute non-justiciable political questions, because there are no judicially discoverable and manageable standards for resolving the issues presented, and because the case would require the Court to make initial policy determinations that have been entrusted to the EPA by Congress.

Slip op. at 28-29.

The district court in Comer II also concluded that plaintiffs' state law causes of action are preempted by the Clean Air Act and the EPA actions that it authorizes, relying primarily on American Electric Power Company v. Connecticut.  That case had held that the CAA preempted a federal common law right to seek abatement of carbon dioxide emissions from power plants.  The Comer II court reasoned that plaintiffs' state law claims here required the court to do the same thing the federal common law claim would have in Connecticut:  determine the reasonableness of the defendants' greenhouse gas emissions.  Accordingly, it held that the state law claims were similarly preempted.

The district court in Comer II also held that plaintiffs' claims were barred by Mississippi's three-year statute of limitations.  Katrina had hit in 2005, but the lawsuit was filed in 2011.  Plaintiffs argued that Mississippi's savings statute operated to toll the statute of limitations.  The savings statute gives a plaintiff a year to commence a new suit where the prior suit has been dismissed or abated because of a defect or other matter not affecting the merits.

The district court held the savings statute did not apply because there was a judgment of dismissal with prejudice entered in Comer I.  Plaintiffs could have asked the U.S. Supreme Court for a writ of certiorari, but they did not.  Accordingly, the judgment was final.

There is, however, a slim reed of hope for plaintiffs to file a Comer III.  In ruling on the statute of limitations, the court concluded that plaintiffs' allegations about their future risk for more severe storms and loss of property are not yet actionable, in part because plaintiffs did not seek injunctive relief.  "As a result, the Court finds that the only actionable claims filed by the plaintiffs are the claims concerning Hurricane Katrina, and those claims are barred by the statute of limitations."  Slip op. at 33.  Could another storm or another theory of injury produce a Comer III?  It shouldn't.  But with these Plaintiffs, who knows?

Finally, the district court granted the defendants' motion to dismiss regarding proximate cause, which is a required element of each of plaintiffs' state law claims.  Mississippi defines proximate cause as a cause "'which in natural and continuous sequence unbroken by any efficient intervening cause produces the injury and without which the result would not have occurred.'"  Slip op. at 34 (citation omitted).  The court held that plaintiffs' theory couldn't meet this standard as a matter of law:

The assertion that the defendants' emissions combined over a period of decades or centuries with other natural and man-made gases to cause or strengthen a hurricane and damage personal property is precisely the type of remote, improbable, and extraordinary occurrence that is excluded from liability.

Slip op. at 35.

Judge Louis Guirola's opinion in Comer II is a strong reminder of the many difficulties that private plaintiffs would have trying to impose legal liability on companies for the purported effects of global warming.  Although I do not expect plaintiffs' counsel to simply vacate the field in the wake of this opinion, the strength of the arguments against liability suggest why there has been no great rush of firms to file suits asserting these theories of liability.

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Previously I have discussed the federal doctrine of so-called American Pipe tolling, in which a legal fiction is employed to toll the running of the statute of limitations on absent class members' federal causes of action during the pendency of the class action -- at least until certification is denied or something else occurs (such as dismissal) that would make it unreasonable for an absent class member to think that her interests are continuing to be protected by the class action lawsuit.  The whole doctrine is based on the legal fiction that absent class members actually are aware of the pending class action suit and would seek to intervene in it unless class action tolling of the statute of limitations applied to their claims.  

American Pipe tolling is a judicially-created exception to federal statutes of limitations in federal courts.  Whether a previously-filed class action has any effect on the running of the statute of limitations on a state law cause of action is for each state to decide.  Most states have not directly considered the question.  Of those that have, many do not give any tolling effect to class actions filed outside of the state, i.e., they reject cross-jurisdictional class action tolling.  This makes sense, of course, when you remember that the whole tolling doctrine is premised on the fiction that absent class members are actually aware of the putative class action.  That is much less likely where the class action was filed in another state far away.

Recently, the MDL transferee in the Fosamax litigation certified two tolling questions to the Virginia Supreme Court.  The MDL transferee was faced with a motion for summary judgment on four individual claims brought by Virginia residents.  Each was clearly outside the statute of limitations unless tolling was applied.  Plaintiffs argued that the prior pendency of a putative nationwide class action filed in the Middle District of Tennessee operated to toll the running of the statute of limitations on their Virginia law claims for strict liability, negligence, and medical monitoring.

Virginia law doesn't even allow class actions in state court.  So the MDL transferee asked two questions of the Virginia Supreme Court:  (1) does equitable tolling apply to extend the statute of limitations during the pendency of a putative class action, and (2) does the statute of limitations itself allow for tolling during the pendency of a putative class action.  The Virginia Supreme Court answered with a resounding "no."  See Casey v. Merck & Co., No. 111438, Slip op. (Va. Mar. 2, 2012).

It first held that Virginia law is clear that there are no equitable exceptions to the statute of limitations.  It then looked at the text of the statute of limitations itself.  The statute does allow for credit to be given to a previously-filed action, but that previously-filed action must have been the same party as the party to the later suit.  Here, different named plaintiffs had filed the Tennessee action -- albeit as putative representatives of all people who took Fosamax.  The Virginia Supreme Court noted that Virginia law does not allow class actions and thus does not recognize such "representative" status.  Accordingly, it held that there was no statutory authority for tolling the statute of limitations here because the parties to the two actions were different.

Casey thus squarely places Virginia in the camp of states that have rejected not only cross-jurisdictional class action tolling, but any form of class action tolling whatsoever.

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On Monday, Law 360 reported that the judge in the Ford E-350 Van MDL denied class certification.  The opinion -- although it is designated "not for publication" -- is a strong and important reminder of why consumer fraud and warranty suits present individual issues that often preclude any ability to certify a class.  In re Ford Motor Co. E-350 Van Prods. Liab. Litig., MDL No. 1687, Civ. A. No. 03-4558, Slip op. (D.N.J. Feb. 6, 2012).

Plaintiffs alleged that Ford's "15-passenger" vans had a high center of gravity that leads to an unusually high risk of rollover, particularly where the van is full of passengers.  Of course, they brought a "diminished value" class action that excluded anyone who ever actually experienced a rollover.  Instead, the class sought recovery of the "diminished value" of the vans, as measured either in a decrease in the resale value or by the cost of a retrofit package that would add an additional axle and wheels to the vehicle.

The case had a tortured history of motions to dismiss and motions for summary judgment, such that the chart of remaining claims for plaintiffs from various states looked like a target shot full of birdshot.  Plaintiffs ultimately moved for certification of: (1) a breach of implied warranty class for residents of NY, NJ, PA, GA, and MI, (2) a consumer protection statute class for residents of NY, FL, and TX, and (3) an unjust enrichment class for residents of CA, GA, and PA.  In the alternative, they moved for certification of 8 statewide classes of "all purchasers" or others who acquired the vans within the class period.  The class period was defined as 1991 to 2005 for all proposed classes.  Slip op. at 5.

The court, citing Hydrogen Peroxide, recognized that it must give rigorous scrutiny to whether the plaintiffs had actually proven that the class action prerequisites were met.  It ultimately concluded that plaintiffs had not proven that the predominance requirement was met, and thus refused to certify the class action.  In doing so, it looked at each element of proof of each state law cause of action.  Although that led to a bit of repetition in the 86-page opinion, the court's decision can be boiled down to the following basic points.

1.  There was no uniform misrepresentation that every class member saw.  Sales brochures changed over time, some class members saw no representations, others received oral representations from salesmen, and the safety disclaimers changed over time.  And advertising changed over time for the product.  Ultimately, proof of the representation would have to be an individual issue.

2.  Class members were going to have to prove that they were actually deceived and acted to their detriment because of it.  Plaintiffs who never received a misrepresentation were not deceived.  Similarly, plaintiffs who read or heard the many media articles about the problem, or who -- incredibly -- had experienced rollover previously in other vans were not actually deceived.  Indeed, one plaintiff, in negotiating the price, warned the salesman that the vans could only be driven by experienced, trained drivers like himself.  These presented individual issues.  See Slip op. at 33 ("Considering that Plaintiff's primary theory of damages at the class certification stage is a common benefit-of-the-bargain injury, it stands to reason that the consumers who saw these reports and understood the E-350 van to have significant handling problems will have a difficult time proving causation, and in doing so, they would not rely on common proof.").  The court noted that --particularly in light of the published media reports about rollover and handling issues -- "Ford would be entitled to examine which class members had knowledge of the E-350's handling characteristics at the time of purchase, the extent of such knowledge, [and] whether the knowledge was derived from personal use or published reports."  Id. at 43; see also id. at 51.

3.  Plaintiffs would have to prove either that the product actually failed (e.g., exhibited a defect), or that they actually incurred repair costs or diminished value as a result of the defect.  Sliip op. at 35.  That is an individual injury.  The court noted that a so-called "reputational injury" that somehow inhibits resale value does not injure those plaintiffs who have no intention of selling their vans, and there was no evidence that the proposed retrofit would cure the speculated reputational injury.  Slip op. at 39.  Citing New York law, the court noted that a prior judge in this case had "properly recognized that [New York law] stopped short of requiring manifestation of the defect; yet, in the absence of such manifestation, [it] still required the plaintiff to present evidence of an actual injury, in the form of out-of-pocket repair costs or a sale at a loss."  Slip op. at 39-40.  The court also noted that "'[a] plaintiff who purchases a [product] that never malfunctions over its ordinary period of use cannot be said to have received less than what he bargained for when he made the purchase.'"  Id. at 41 (citation omitted).

These basic problems permeated the various causes of action:  implied warranty, consumer protection acts, and unjust enrichment.  Moreover, the court noted that in order to prove reliance on an "omission" under Texas's Deceptive Trade Practices Act, the plaintiffs would have to establish that they would not have bought the product if the information had been disclosed.  The record in this case clearly indicated that some plaintiffs bought the vans with full knowledge of handling problems and rollover risks -- primarily because they believed themselves qualified to drive the vehicle with the requisite skill.  As such, the reliance element of the DTPA presented individual issues that precluded class certification.  Slip op. at 56.

The court also noted at the end of the opinion that statute of limitations issues -- particularly on the warranty claims -- presented individual issues that also would be incapable of being proved on a classwide basis.

The court's opinion is another strong reminder that even in cases of so-called "omissions," the individual issues can preclude class certification.  The court explained that its "ruling reflects the unique and highly individualistic experiences of consumers, many of whom were not actually deceived and many of whom have suffered no actual injury as a result of Ford's conduct."  Slip op. at 79.

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A recent decision out of the Eighth Circuit reminds us that God is in the details.  In Summerhill v. Terminix, Inc., No. 09-3691, Slip op. (8th Cir. Mar. 24, 2011), the plaintiff alleged that Terminix did not completely encircle his home with a chemical barrier prior to 1996 as it was required to do under Arkansas law.  There was no question that plaintiff's causes of action were barred by the statute of limitations, except that plaintiff pled fraudulent concealment.  The district court had held that he failed to meet the Rule 9(b) standard for pleading fraud, but gave him a second chance.  Plaintiff pled:  (1) Terminix failed to disclose that it was required by law to provide a complete chemical barrier, and (2) because the chemical barrier is invisible, the layman plaintiff could not discover that Terminix failed to provide it.  Sounds simple enough, right? 

Wrong!  The district court dismissed the case on statute of limitations grounds, and the Eighth Circuit affirmed.  It began by noting that the burden of proof on tolling rests with plaintiff.  He must plead and prove:  "'(1) a positive act of fraud (2) that is actively concealed, and (3) is not discoverable by reasonable diligence.'"  Slip op. at 4 (citation omitted).

The district court had held that the "failure to disclose" a breach of contract is not the kind of conduct that rises to the level of fraudulent concealment.  The Eighth Circuit took a pass on that issue, going instead for the area where there were no facts pled whatsoever:  criterion 3, reasonable diligence.  The court explained:

Assuming arguendo that Summerhill sufficiently pled that Terminix engaged in affirmative and fraudulent acts of concealment, the applicable statutes of limitations would only be tolled "until [Summerhill] discover[ed] the fraud or should have discovered it by the exercise of reasonable diligence."  Martin, 3 S.W.3d at 687 (emphasis added) (quotation omitted).  By failing to allege when and how he discovered Terminix's alleged fraud, Summerhill has failed to meet his burden of sufficiently pleading that the doctrine of fraudulent concealment saves his otherwise time-barred claims.  See Wood v. Carpenter, 101 U.S. 135, 140-41, 143 (1879) ("If the plaintiff made any particular discovery, it should be stated when it was made, what it was, how it was made, and why it was not made sooner. . . .  The circumstances of the discovery must be fully stated and proved, and the delay which has occurred must be shown to be consistent with the requisite diligence.") . . .

Slip op. at 5 (citations omitted).

Summerhill is an important reminder that claims of fraudulent concealment can be defeated where the plaintiff does not adequately plead how he discovered his cause of action and why it reasonably took him so long to do so.

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When I first ran across Tennille v. Western Union Co., 2010 WL 4609732 (D. Colo. Nov. 8, 2010), I worried that Toni Tennille -- or worse yet, her husband/accompanist, the perpetually mute Captain -- had fallen on hard times and needed each of their remaining fans to wire them 20 bucks.  Then, I read the caption more closely and saw that the plaintiff was James P. Tennille.  A son, perhaps?  Toni Tennille is now 70, lives in Prescott, Arizona, and just celebrated her 35th anniversary of being married to The Captain.  (35 years?!  Talk about "Love Will Keep Us Together.")

Tennille v. Western Union is, in fact, about wire transfers.  Mr. Tennille apparently seeks to represent a class of people who wired money that was never claimed at the other end of the transaction.  Tennille claimed that the defendant had a duty to notify the senders that their funds had failed to go through or went unclaimed.  Instead, the defendant allegedly held on to unclaimed funds, accruing interest on them in interest-bearing accounts "until individual state unclaimed property laws trigger a notification obligation."  Id. at *1.  The defendant allegedly then attempted to return the principal, but retained the accumulated interest for itself.  Id.

Plaintiff seeks to represent a nationwide class of wire transferors, asserting claims for conversion, fraud, and unjust enrichment.  The defendant moved to dismiss, and the trial court denied the motion.

The court first determined that it would not matter what state's law governed the claim, since the laws that possibly applied (Colorado, Missouri, Illinois and Alabama) did not differ materially.  Then, in analyzing the unjust enrichment cause of action, the court reasoned that, regardless of which state's law applies, "[t]he essence of the claim is the retention of a benefit under circumstances where it would be unjust to return it."  Id. at *2.  The court rejected the defendant's argument that unjust enrichment could not apply because the underlying transaction was governed by a written contract.  Its reasoning, however, seems to articulate an exception that would swallow the rule:

While it is true that neither equity nor tort law provides a means for shifting risk one has assumed under contract, that maxim does not prevent recovery where the wrong alleged falls outside or exists independently of that contract. . . .  Here, where the terms and import of any express contract between the parties is in dispute, Plaintiffs' claims for unjust enrichment are not barred under any of the applicable states' common law.

Id. at *3 (citations omitted).  But how "in dispute" could the terms of this written contract really be?  Western Union is full of sharp employees.  It has to anticipate that customers may attempt to hold the company liable for funds that are not claimed, and you can bet that the form written agreement a customer signs addresses the issue of how that money will be handled, including interest.  If all that a plaintiff must do is merely plead that an agreement does not exist in order to get around the contractual bar to the equitable remedy of unjust enrichment, then the contractual bar is essentially worthless.

The court also adopted a novel approach to the defendant's statute of limitations challenge.  Although plaintiffs' claims were premised -- at least in part -- on the failure to notify the sender that the transfer did not go through, the court did not measure the three-year statute of limitations from the date of the transfer.  Rather, it chose to measure the accrual of the claim from the date years later when the defendant notified class members that the transfers did not go through.  Why?  "Because Western Union continued to generate and retain interest on Plaintiffs' unclaimed funds until such time as they notified Plaintiffs that their deposits had not been redeemed, Plaintiffs' claims did not accrue for statute of limitations purposes until then."  Id.

In addition, the court denied defendant's motion to dismiss the conversion claim, reasoning that it was essentially identical to the unjust enrichment claim, even though it had different elements.  The defendant had argued that the plaintiffs had failed to plead a demand and refusal for the interest, as required for conversion.  The court held -- with little analysis -- that "[i]f a technical 'demand and refusal' is necessary to state a claim for conversion of that interest, then the filing of these lawsuits clearly satisfies this requirement."  Id. at *4.

The court held the fraud claim in abeyance, and encouraged the parties to settle:  "Specific consideration should be given to resolving this case short of protracted litigation based on the rulings issued to date."  Id.

Ultimately, the decision in Tennille leaves me with same incomplete feeling I had when I first listened to Muskrat Ramble in the Seventies.  There's more to the defenses than is articulated in this opinion.

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These days, the common offshoot of a manufacturer's settlement with a regulator or an attorney general is a wave of copycat lawsuits brought by lawyers who merely duplicate the allegations in the plea agreement or the government's case and paste them willy-nilly into a class action complaint.  Often, these lawyers have not even gone to the trouble of finding plaintiffs who can support the allegations with respect to the products at issue.  And when the defendant moves to dismiss, as defendants inevitably do, the retort is typically something like:  "They paid lots of money in fines to the government, so there simply must be a class action here."

Recently, some of my colleagues at my firm succeeded in obtaining the dismissal of a class action that had followed on the heels of a settlement with the government.  See Zafarana v. Pfizer Inc., Civ. A. No. 09-cv-4026 (E.D. Pa. July 19, 2010). 

In Zafarana, the manufacturer of prescription medicines had settled with the US Department of Justice allegations that it had engaged in various unlawful methods of promoting 12 of its medicines for so-called "off-label uses," i.e., uses that had not yet been approved by the Food and Drug Administration.  The settlement had involved a fine that was reported to be over $2 billion.

Of course, regular readers of this blog know that it is not illegal for doctors to prescribe medicines for off-label uses.  In fact, they do so all of the time.  Accordingly, the fact that a manufacturer may violate the Food, Drug, and Cosmetics Act in promoting a medicine for an unapproved use does not mean that people necessarily have been injured by such conduct.  Indeed, the use of medicines for off-label purposes can be standard medical care for certain health conditions.

In Zafarana, after the defendant's settlement with the government, two plaintiffs sued the defendant in a copycat class action, claiming to represent all people who had ingested all 12 of the medicines covered by the settlement.  (Of course, the two plaintiffs had not themselves ingested all 12 medicines and thus could not possibly be class representatives for the medicines they had not taken themselves.)

Plaintiff Zafarana had taken the medicine Lyrica for roughly a year for the off-label purpose of treating idiopathic torticollis.  She pled that she received no medical benefit from the medicine and suffered two of its side effects:  weight gain and blurred vision.  She also alleged that she paid more for Lyrica than an alternative treatment of Tylenol and stretching.

Plaintiff Dumville had taken Geodon for a short, undisclosed period of time for the off-label purpose of treating his depression.  (Geodon had been approved by the FDA to treat schizophrenia.)  He alleged that he received no benefit from the medicine and immediately stopped taking it because of "a number of severe side effects."  He also alleged that there were cheaper alternative treatments.

Plaintiffs alleged violations of various states' consumer protection statutes, "conspiracy/concert of action/aiding and abetting," and unjust enrichment.

The District Court began by considering the defendant's argument that the lawsuit was really just an attempt to enforce the FDCA.  There is no private right of action in the FDCA.  The District Court ultimately rejected this argument, finding that plaintiffs could sue on independent state law causes of action that were not merely premised on FDCA violations.  

The court also rejected the defendant's argument that the case was barred by the statute of limitations, reasoning that there was an issue of fact as to the "discovery rule," i.e., when plaintiffs knew or should have known that they had a cause of action.  Notably, the court held that fraudulent concealment would have been unavailable to toll the statute of limitations because the complaint did not point to any separate act of fraud committed by the defendant to conceal the injury.  Slip op. at 14.

The court next analyzed the amended complaint count by count.  Plaintiff Zafarana was a New Jersey resident and had sued under New Jersey's Consumer Fraud Act (the "NJCFA").  The defendant argued that her claim was barred by the New Jersey Product Liability Act (the "NJPLA"), which applies to any claim for personal injury or property damage allegedly caused by a product.  Analyzing the terms of the statutes, the court concluded that Ms. Zafarana's NJCFA claims that the medicine did not cure her health problems and that it caused side effects were barred by the NJPLA.  However, the court held that the NJCFA claim that she paid more for Lyrica than she should have was not barred by the NJPLA because it did not involve personal injury or property damage.

Ultimately, however, the court held that the "inflated cost" claim was barred by the terms of the NJCFA because it failed to allege in the amended complaint an "ascertainable loss" that was "caused by" the challenged conduct.  The court noted that New Jersey's Supreme Court has rejected a fraud-on-the-market theory, and thus plaintiff must plead a real loss and that the loss was caused by the defendant's conduct.  Ms. Zafarana did not do this:

Plaintiffs, however, simply have not stated any facts that make it plausible that a less expensive alternative would have been prescribed.  Plaintiffs seem to ignore the role played by the prescribing physician in this case.  They have not stated, and likely cannot state, that they would have been prescribed other, less costly medications, but only that they could have been prescribed such medications.  It is also true, however, that they could have been prescribed a more expensive medication, or a combination of other medications that , while individually less expensive, were cumulatively more expensive.  Due to the discretion of the prescribing physician, the injury alleged is entirely hypothetical, and cannot provide the basis for a claim under the NJCFA.

Slip op. at 20.

Analyzing Plaintiff Dumville's statutory claim, the court first had to determine what law applied.  Although Dumville was now a resident of Wisconsin, he was treated and consumed the product in Pennsylvania.  Thus, Wisconsin's consumer fraud statute was irrelevant; the court applied Pennsylvania's instead.

Pennsylvania's Unfair Trade Practices and Consumer Protection Law (the "UTPCPL") also requires plaintiff to plead an ascertainable loss "as a result of" the allegedly deceptive conduct.  The court held that Mr. Dumville had failed to plead causation because he could not establish his own justifiable reliance on the defendant's statements -- as required by Pennsylvania courts interpreting the statute -- because of the role of the prescribing doctor as a learned intermediary.  Slip op. at 23-24.

The District Court made quick work of plaintiffs' conspiracy allegations.  The court rejected the claims under New Jersey and Pennsylvania law, respectively, because the complaint failed to plead an underlying independent cause of action, which is required for civil conspiracy claims.  Moreover, Pennsylvania requires that the conspiracy have as its sole purpose injuring the plaintiffs; plaintiffs could not plead that the defendant's sole purpose in engaging in the challenged conduct was to injure them.  Rather, they had alleged the defendant had a profit motive for promoting the off-label use of its products.

The court similarly dismissed the "aiding and abetting" causes of action.  There is no such cause of action for aiding and abetting fraud under Pennsylvania law.  And in New Jersey, to the extent there is one, the aidor and abettor must be supporting the commission of an underlying tort, which the court held was not properly pled in the amended complaint.  Slip op. at 28.

Finally, the court rejected plaintiffs' unjust enrichment claims.  First, it noted that unjust enrichment is not a substitute for a tort claim, and where there is no underlying tort, there can be no unjust enrichment.  Second, the court observed that there was no direct relationship between the manufacturer and the plaintiff-patients, making this a particularly inappropriate instance in which to create quasi-contract liability.

Notably, the court rejected plaintiffs' request for leave to amend the complaint.  It observed that plaintiffs already had amended the complaint after the defendant filed the first motion to dismiss.  Indeed, they added over 140 pages to the complaint, to bring it to a whopping 178 pages.  Moreover, the court concluded there simply was nothing more plaintiffs could add that would give rise to a claim.

The Zafarana decision is an important reminder that just because a manufacturer may settle a qui tam claim with the government, that does not automatically mean that the manufacturer should be subject to civil liability in a class action.  In such situations the individual claims still deserve close scrutiny.  Where, as in Zafarana, they fail to causally connect any harm to the alleged misconduct, they should be dismissed.

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Mass tort and product liability lawyers are all too familiar with the tragic facts surrounding Factor VIII cases.  In the early 1980s, as HIV was first being identified and viable tests for the disease were being developed, some HIV-contaminated blood was used to make a blood clotting agent -- Factor VIII -- that was used by hemophiliacs to control bleeding and extend their lives.  As a result, a number of hemophiliacs were exposed to and developed the disease.  The cases were consolidated in an MDL in the Northern District of Illinois, and most of them had long ago been resolved.  Last year, however, the Seventh Circuit decided Abad v. Bayer Corp., 563 F.3d 663 (7th Cir. 2009), in which it affirmed the forum non conveniens dismissal of a series of cases brought by Argentine plaintiffs.

Last Friday the Seventh Circuit decided a parallel case, Chang v. Baxter Healthcare Corp., Nos. 09-2280, 09-3020, Slip op. (7th Cir. Mar. 26, 2010).  Chang was brought by Taiwanese residents who had been exposed to contaminated blood clotting agents in the 1980s.  Most of them had signed a 1998 settlement with the defendant in which they received $60,000.  Feeling cheated by that amount, they filed suit in California in 2004 and the cases subsequently were transferred to the MDL in Chicago.

The district court held that plaintiffs' tort claims were barred by the statute of limitations.  California uses the "discovery rule," meaning that the state's two-year statute of limitations for personal injury actions does not begin to run until the plaintiff reasonably should have suspected that a wrong may have been done to him.  But plaintiffs had signed a settlement agreement with defendants in 1998, which should have put them inquiry notice of their claims more than six years before they filed suit.

Plaintiffs argued that the defendant's denial of liability in the settlement was "fraudulent concealment."  Judge Posner -- who wrote the opinion -- rejected this out of hand:  "Denial of liability when negotiating a settlement is the norm; it is not evidence of fraudulent concealment of anything."  Slip op. at 6-7.

The Seventh Circuit also held that the district court was correct when it concluded, alternatively, that California would use its borrowing statute to apply Taiwan's 10-year statute of repose to bar all claims older than ten years.  Slip op. at 7.

The district court also had dismissed some of the Taiwanese plaintiffs' claims on forum non conveniens grounds, reasoning that they had arisen in Taiwan and the witnesses and evidence were in Taiwan.  In particular, the court dismissed the breach of contract claim in favor of litigation in Taiwan.  The contract had a "most favored nation" clause, which required defendants to increase the compensation in the settlement to match those offered to other claimants.  Judge Posner held that the contract was ambiguous in that it did not specify whether the reference was to other Taiwanese claimants or other world claimants.  Judge Posner held that to "disambiguate" this clause would require testimony from witnesses residing almost exclusively in Taiwan.  Slip. op. at 11.

Ultimately, the Seventh Circuit affirmed forum non conveniens dismissal in favor of Taiwan, even though plaintiffs' claims likely would be time-barred in Taiwan.  The court noted that the statute of repose and the short statute of limitations "expresses a substantive policy that the plaintiff is trying to avoid.  Refusing to invoke forum non conveniens would give the plaintiff a gratuitous substantive advantage.  Convenience favors Taiwan and the statute of limitations applicable to this suit will be the same whether the case is tried there or in California."  Slip op. at 16.

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Recently the federal multidistrict transferee addressing Fosamax litigation, Judge John F. Keenan, adopted the majority rule and refused to apply cross-jurisdictional tolling of a state's statute of limitations in a products liability action.  See In re Fosamax Prods. Liab. Litig., 2010 WL 908926 (S.D.N.Y. Mar. 15, 2010). 

In Fosamax, a number of Virginia plaintiffs had brought personal injury actions for jaw injuries allegedly caused by the osteoporosis medicine Fosamax.  Each of the plaintiffs' causes of action was untimely under Virginia's two-year statute of limitations.  Plaintiffs argued that this was okay because, prior to the running of the statute of limitations, some Tennessee plaintiffs had brought a nearly identical action under Tennessee law as a class action, and it had been transferred to the federal MDL.  Accordingly, they argue, they were entitled to toll the statute of limitations during the pendency of state law claims in the Tennessee class action.  See id. at *2 (citing American Pipe & Constr. Co. v. Utah, 515 U.S. 538 (1974)).

The Fosamax court correctly recognized that very few states have adopted the rule of "cross-jurisdictional" tolling; although they might allow a prior class action in their own state to toll the statute of limitations for subsequent individual claims filed in that state, they generally have not allowed prior pending class actions in other states or in the federal system to toll the statute of limitations on individuals' claims in their state.  See id. at *3.  Class action tolling, you see, is a based on a complete fiction:  namely, that absent class members actually know about the prior class action and are holding off filing new claims because they are relying on the class action to protect their rights.  This is, of course, for the most part totally bogus.  No absent class member is actually aware of the previously-filed class action.  And although it may be one thing to follow this legal fiction for classes previously-filed in your own state of residence, it is something quite different to give tolling effect to class actions that were previously filed many states away or in the federal system.  Are we really supposed to buy the fiction that some group of litigants actually knew about such foreign class actions and delayed taking action to enforce their rights because they were relying upon the previously-filed foreign class action to do so?

The Fosamax court said no, recognizing that courts that reject cross-jurisdictional tolling do so, in part, because to recognize such tolling would encourage forum shopping in the jurisdiction.  Moreover, for a state like Virginia -- which does not recognize class actions generally -- giving a foreign class action such tolling effect would run contrary to the state's fundamental policy choices.

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A recent report and recommendation from a US Magistrate Judge raises the question:  Does a group of patients who were exposed to pathogens but never developed a disease have a cause of action?

In Descoteau v. Analogic Corp., 2010 WL 325933 (D. Me. Jan. 21, 2010), Magistrate Judge John Rich III suggests that they do, although he clearly seems to stretch Maine law in order to find a cause of action for a bad factual situation.  If this report and recommendation is affirmed by the District Court, it will not be the first time hard facts have made bad law.

The facts are not pretty.  Plaintiff is one of some 23,000 veterans who were potentially exposed to HIV, Hepatitis B, Hepatitis C, and other bloodborne viral pathogens when they underwent diagnostic procedures and biopsies at VA hospitals using a rectal probe made by the defendants.  Both the operation manual for the rectal probe -- as well as the oral instructions from the device representative who demonstrated it at the VA hospital that treated plaintiff -- indicated that the probe could be cleaned by flushing it with a syringe full of detergent and water.  Years after the hospital bought and began using the defendants' rectal probe, the hospital's staff discovered that blood and fecal matter remained in the probe even after it had been cleaned according to the manufacturer's instructions -- without using a brush.  The VA conducted a systemwide review and notified some 23,000 veterans nationwide of the potential exposure and their need to receive testing for bloodborne pathogens and disease.  Plaintiff received his notice on April 14, 2006, was tested on April 27, 2006, and was notified that fortunately his test results were negative on May 11, 2006.  Plaintiff sued on behalf of a class of 528 veterans who were potentially exposed to bloodborne pathogens at the Togus VA Medical Center in Augusta, Maine, asserting causes of action for strict liability and negligent infliction of emotional distress.

The defendants moved to dismiss, asserting Maine's 6-year statute of limitations, arguing that plaintiff's original diagnostic procedure occurred more than six years prior to his filing suit.  The Magistrate Judge easily dispatched of that challenge, holding that plaintiff's cause of action for emotional distress did not accrue until he was notified in 2006 that he might be infected.  Thus, the suit was well within the statute of limitations.

Defendants also moved to dismiss the strict liability count, citing the language of Maine's strict liability statute, which provides:

One who sells any goods or products in a defective condition unreasonably dangerous to the user or consumer or to his property is subject to liability for physical harm thereby caused to a person whom the manufacturer, seller, or supplier might reasonably have expected to use, consume or be affected by the goods, or to his property, if the seller is engaged in the business of selling such a product and it is expected to and does reach the user or consumer without significant change in the condition in which it was sold. 

Id. at *5 (quoting statute).

The defendant argued that a prerequisite to a strict liability claim is physical harm or impairment, and that plaintiff -- who contracted no disease and suffered no impairment -- thus could not bring a claim.  Plaintiff argued, however, that the needle stick required for the HIV and Hepatitis testing qualified as "physical harm" sufficient to support a strict liability claim.  The court -- striving to find a cause of action for an obviously-inconvenienced plaintiff -- bought the argument, observing that "[t]he defendants cite no authority in support of the proposition that a needle stick or blood draw constitutes insufficient physical harm, as a matter of law, to support a strict liability claim, and I find none."  Id.

But the rule of strict liability is not available for all types of harm; rather, it is reserved for physical injury and damage to property.  The Restatement defines physical injury as a "detrimental change in the physical condition of a person's body."  Id. at n.4.  The court's stretching of the definition of physical injury to encompass a subsequent needle stick effectively reads the physical injury element out of the statute.  Nevertheless, the court recommended that the strict liability claim should survive the motion to dismiss.

The defendants also moved to dismiss the negligent infliction of emotional distress ("NIED") claim.  The court began by opining that the plaintiff had sufficiently alleged a count for negligence for physical injury (i.e., the needle stick).  But as for emotional distress, the court was bound by Maine precedent that reserves the cause of action for defendants who are in a special relationship with the plaintiff.  Maine courts have found such special relationships in very limited circumstances (e.g., doctor-patient, counselor-patient, hospital-decedent's family).  Id. at *6.  The court held that because its research had not uncovered an instance where the Maine courts had found a special relationship between a manufacturer and an end user, the NIED claim must be dismissed.

It remains to be seen whether the District Court will adopt the report and recommendation in Descoteau, which effectively reads the physical injury requirement out of Maine's strict liability statute and thereby would impose upon manufacturers strict liability for purely emotional harm.  Even if it did, however, it is difficult to fathom how 528 people's emotional harm could be adjudicated on a classwide basis consistent with the requirements of Rule 23.

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A New Yorker brings a tort action in a New York state court for injuries caused in New York by a drug prescribed in New York. 

What law applies?  Why New York's, of course!

The action is pending for a few years, some documents are produced and depositions taken, and then the defendant says in a letter that it will move for summary judgment based on New York's 3-year statute of limitations. 

Well, when the going gets tough, the tough plaintiffs go forum shopping!  And I hear Minnesota is lovely this time of year.  They have the Mall of America, the world's largest booming Prairie Chicken, and a 6-year statute of limitations that, as the Drug and Device Law Blog explains, they are willing to let any foreigner take advantage of.  (Reasoning that statutes of limitations are "procedural," and not "substantive," Minnesota courts have applied that forum's 6-year statute of limitations to foreigners' tort claims filed in Minnesota courts.)  Minnesotans are a generous people, indeed.

The question is, should a New York court allow the plaintiff to voluntarily discontinue her action and go forum shopping, thereby avoiding summary judgment? 

That was the question facing Justice Martin Shulman in In re New York Hormone Replacement Therapy Litigation, Case Management Index No. 763000/06 (N.Y. Sup. Ct. -- N.Y. Cty. Nov. 30, 2009).  Justice Shulman, the coordinating court for New York State hormone replacement therapy cases, answered it with a resounding "no."

In his decision, Justice Shulman acknowledged that plaintiffs generally are allowed to voluntarily dismiss an action when they want to because a plaintiff cannot be compelled to litigate.  Slip op. at 6.  However, under New York precedents, prejudice to the defendant flowing from the dismissal can justify a court's denial of leave to voluntarily discontinue an action.  Id. 

Plaintiffs argued that because the defendant had not yet brought the summary judgment motions and discovery was not yet closed in the matter, they were free to dismiss their product liability actions at will, re-file them in federal court in Minnesota, and then have them transferred to the federal HRT multidistrict litigation in the Eastern District of Arkansas.  The court disagreed:

On this record, while plaintiffs' position is superficially reasonable, still, under the circumstances presented it is truly difficult for this court to fathom anything more prejudicial to defendants than being deprived of their right to judgment on the merits dismissing these clearly time-barred actions. . . .  [H]aving established the right to judgment in their favor, the court finds that defendants will be severely prejudiced if plaintiffs' [without prejudice] discontinuance motions are granted.

Id. at 8.

The court proceeded to analyze the parties' statute of limitations arguments.  Under the New York CPLR, the products liability causes of action were clearly subject to a three-year statute of limitations.  The plaintiffs had been diagnosed with breast cancer between 1987 and 2002, but each commenced their actions in 2004 and 2005, more than three years after diagnosis.  Thus, the viability of their claims depended upon there being an applicable exception to the three-year rule.

Plaintiffs first argued that CPLR section 214-c(4) applied.  This provision gives an additional one-year period where the "technical, scientific, or medical knowledge and information" was not known within the statute of limitations period.  The court looked at the available scientific evidence and concluded that the publication of the National Institutes of Health's "Women's Health Initiative Study" -- which "actually caused [defendant] to change its HRT product labels inter alia to include a black box warning" -- "indubitably linked HRT to breast cancer."  As such the publication date for the WHIS, July 9, 2002, was the trigger of the one-year period, and no plaintiff had filed her claim within that time.  Indeed, the court concluded that "the fact that taking HRT exposes the consumer to the potential risk of breast cancer . . . was a matter of public knowledge for decades and duly disclosed after the publication of the WHIS on [defendant's] HRT product labels themselves."  Slip op. at 18.

Plaintiffs next argued that one of the defendants was equitably estopped from asserting a statute of limitations defense because it had acted to fraudulently conceal the cause of action.  Justice Shulman noted that there is a sharp distinction between underlying fraud and fraudulent concealment, and the conduct supporting the latter must be different from that pled for the former.  Id. at 19.  Here, it was not.  Plaintiffs alleged that a defendant concealed that HRT increased breast cancer risk and sought to ghostwrite scientific articles promoting the use of HRT medicines.  That did not prove fraudulent concealment of a cause of action.  As the court noted, the complaint did not plead that plaintiff could not learn about an association between HRT medicines and breast cancer prior to the WHIS study's publication, and not one plaintiff alleged that she was "lulled by [defendant's] alleged misleading tactics and/or deliberate concealment of scientific information to refrain from timely filing their claims."  Id. at 20. 

The court observed that the evidence merely reflected a medical debate about whether the benefits of hormone replacement therapy are worth the risks:

Though this debate does not appear to be settled, the potential risk of contracting breast cancer from taking HRT medication was well known and at all times out there in the stream of public information.  On this record, this court simply cannot conclude that [defendant] engaged in any intentionally fraudulent or deceptive act which ostensibly lulled plaintiffs into inactivity and induced them to refrain from filing timely actions.

Id. at 21-22.

The third argument plaintiffs advanced to escape the effect of the statute of limitations was American Pipe tolling, i.e., that the pendency of a prior class action tolled the statute of limitations for all absent class members.  This tolling rule is part of federal common law, and is based on the fiction that absent class members are aware of the pendency of the class action and would otherwise seek to intervene in it but for American Pipe tolling. 

Here, the prior class actions were filed in federal courts in Illinois and West Virginia.  Justice Shulman was faced with deciding whether New York law would adopt an American Pipe tolling rule and, if so, apply it to the two foreign federal class actions.  As Justice Shulman noted, there is no binding appellate authority on whether New York would adopt American Pipe tolling.  He decided to align himself with the many federal decisions refusing to read this decidedly federal rule into state law.  Id. at 23-24.

Justice Shulman's opinion is an important example of a court applying anti-forum-shopping principles to enforce the statute of limitations and prevent litigants from gaming the system.  Many of the plaintiffs in this case already had filed duplicative federal actions in Minnesota, and it remains to be seen how difficult enforcing Justice Shulman's judgment will become.

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A recent statute of limitations decision out of the Southern District of Illinois highlights the duties that plaintiffs have to investigate their causes of action and bring them in a timely manner. 

In Wetherell v. ClimateMaster, Inc., 2009 WL 4043539 (S.D. Ill. Nov. 20, 2009), the plaintiffs had bought a geothermal heating and cooling unit for their home in June of 1999.  They did not sue the manufacturer in a putative class action, however, until over 8 years later, in September 2007.  The defendant, understandably, challenged the timeliness of suit under the statute of limitations.  Plaintiffs responded, asserting the discovery rule and charging that the defendant had fraudulently concealed plaintiffs' causes of action.  The court granted the defendants' motion to dismiss, holding that plaintiffs' claims were untimely filed and that the fraudulent concealment doctrine did not apply.

Notably, the only causes of action remaining at the time the defendant moved for summary judgment were violation of the Illinois Consumer Fraud Act and unjust of enrichment -- both of which triggered the running of the statute of limitations on the "accrual" of a cause of action under the discovery rule, i.e., when the plaintiff knew or reasonably should have known of his injury and that it was wrongfully caused.  (We do not know from the opinion whether plaintiffs previously had pled breach of warranty causes of action, but their absence is not surprising, since the statute of limitations for warranty claims runs from the date of sale, not the date of "accrual" under a discovery rule.)  The statute of limitations on the ICFA claim is 3 years from accrual; for unjust enrichment, it is 5 years from accrual.

In determining when the causes of action reasonably accrued, the court looked to plaintiffs' deposition testimony.  Within 2 years they had begun experiencing problems with the unit.  In September 2001, the installer had to return and add three pounds of refrigerant.  Then, on March 15, 2002, the installer discovered a leak in the unit's air coil and replaced the coil with another.  The unit continued to have problems, and in February 2005, the installer added another pound of refrigerant, and in late 2005 it once again replaced a leaky air coil and added refrigerant.

Apparently ClimateMaster's air coils were not coated with enamel and, as a result, had a tendency to corrode in the Illinois climate.  ClimateMaster knew this fact, and its employees had recommended coating its coils with enamel to remedy the problem.  Slip op. at *2.  The court found that "ClimateMaster never disclosed the fact that they knew its air coils tended to leak to any Illinois consumers, nor did it issue a standard communication to those consumers or dealers about the problems with the air coils."  Id. 

So when did plaintiffs' causes of action accrue?  If it was late 2005, then plaintiffs' claims would be timely.  If, however, it was when the first coil was replaced in 2002, they would not.

Plaintiffs' testimony was the key.  Mrs. Wetherell testified that she knew in March 2002 that the reason for the problems she had experienced was a failed air coil, and she suspected that ClimateMaster -- and no one else -- was responsible for the unit's failure.  Id.  Mr. Wetherell testified that he knew in March 2002 that he could take legal action against someone, but later in his deposition he seemed to recant this position.  Id. at 4.  Nevertheless, the court concluded, his failure to further investigate the cause of injury in 2002 was constructive knowledge that the injury was wrongfully caused.  Id.  As the court explained, "the need to discourage delay and encourage diligence" means that the statute is triggered once plaintiff knows that he is wrongfully injured, not when he recognizes the full extent or cause of his injuries.  Id. at *3.

Plaintiffs sought to avoid summary judgment by arguing that the repeated failure of the unit was a "continuing violation" so that triggering of the statute of limitations should be held in abeyance until the last injury occurred.  The court flatly rejected this argument, noting that this was not a continuing violation" because plaintiffs did not continue to purchase heating and cooling units; rather, they serially attempted to remedy the "'continual ill effects from an initial violation,' which is not a continuing tort."  Id. at *5.  Moreover, the "continuing violation" theory has not been applied to ICFA causes of action in Illinois.  Id.

Plaintiffs also sought to forestall the effect of the statute of limitations by arguing that ClimateMaster fraudulently concealed the causes of action plaintiffs had against it.  The court quickly rejected this argument.  Fraudulent concealment, it noted, involves "'efforts by the defendant, above and beyond the wrongdoing upon which plaintiff's claims is founded to prevent, by fraud or deception, the plaintiff from suing in time.'"  Id. at *6 (citation omitted).  But the only evidence plaintiffs provided was that ClimateMaster failed to disclose the defects in its coils when it sold and serviced the unit.  Remaining silent, however, is not fraudulent concealment unless the defendant has a fiduciary or other confidential relationship with the plaintiff placing upon the defendant a legal duty to speak.  And ClimateMaster, as a product seller, has no confidential relationship with the buyer and thus has no legal duty to speak; therefore, its mere silence about the alleged defect cannot be fraudulent concealment.  Id. at *7.  Accordingly, the ordinary statute of limitations applies, and plaintiffs' decision to wait to file suit more than 5 years from when they first understood that they had experienced a wrongful injury bars their claim.

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Asbestos is a law unto itself.  There are plenty of reasons why.  Most people exposed to it never develop a debilitating injury; for those that do, the latency period between exposure and debilitating harm can be over twenty years.  Mesothelioma is said by many to be a "signature" injury that results from asbestos exposure.  As a result of these and other factors, the law surrounding asbestos has developed somewhat differently than traditional product liability law.

This is particularly true with the statute of limitations.  Statutes of limitations are important rules.  They serve to prompt plaintiffs to bring claims while evidence and memories are are still fresh and cases are capable of being adjudicated.  They also provide defendants with finality -- repose.  

Asbestos, however, presented courts with a Hobson's choice.  If the law required plaintiffs to bring suit upon discovery of non-debilitating injury relating to asbestos -- such as the condition "asbestosis," which can involve an asymptomatic thickening in the lungs -- then the plaintiffs would not recover for more serious injuries that they might develop ten, twenty, or even thirty years down the road.  But, if the plaintiffs waited to sue until they suffered physical symptoms, they would face motions to dismiss on statute of limitations grounds, arguing that they had first "discovered" their injuries and started the statute of limitations running years before.

States have approached this problem differently.  Some have created registries where plaintiffs who are asymptomatic may file a notice when they first discover their potential cause of action, but then may actually bring suit only if they develop physical injuries.  Others, like Pennsylvania, have adopted the "two disease rule," which allows an asbestos plaintiff to sue for non-malignant harm, and subsequently to sue for damages if he develops asbestos-related lung cancer.

Recently the Pennsylvania Supreme Court added a twist to its special asbestos "two disease rule," allowing a plaintiff to sue for asbestos-related lung cancer a defendant that it had never originally identified or sued for non-malignant harm decades before.  See Abrams v. Pneumo Abex Corp., No. 17 EAP 2008, Slip op. (Pa. Oct. 21, 2009).

In Abrams, plaintiffs were diagnosed with nonmalignant asbestos-related disease in 1984 and 1985.  Within two years, they filed complaints against a host of defendants seeking damages for increased risk and/or fear of cancer.  The lawsuits were settled in 1993.

In 1996, the Pennsylvania Supreme Court clarified the "two disease rule" that had been applied by the lower courts of that state.  It concluded that a person's diagnosis of asymptomatic pleural thickening did not start the statute of limitations running on a claim for "nonmalignant physical impairment."  Simmons v. Pacor, Inc., 674 A.2d 232, 237 (Pa. 1996).  And it, of course, would not impact the statute of limitations for a later-developed cancer.

But it also held that asymptomatic plaintiffs could no longer sue for emotional distress caused by a fear of cancer because it would "erode[] the integrity of and purpose behind the two disease rule."  Id. at 239.  Rather, those who develop cancer can recover for their emotional distress when they bring their cancer claim.  The court's holding in Simmons, however, did not alter the plaintiffs' 1993 settlement of their fear of cancer claims.   

In 2002, plaintiffs were diagnosed with lung cancer.  They filed their second suits in 2003 against a variety of companies -- including a new defendant, Crane Company, that had not been sued in the previously-settled cases.

Crane moved for summary judgment, arguing that the statute of limitations barred plaintiffs' claims because plaintiffs had not identified and sued Crane within two years of first discovering that they had an asbestos-related claim.  Crane argued that the risk of cancer claims brought by plaintiffs in the early 1980s were premised on the assertion that plaintiffs would later contract cancer and thus involved the same malignant asbestos-related disease as the 2003 suits.

The Pennsylvania Supreme Court rejected Crane's argument:

We reiterate that Appellants' cause of action against Crane is an individual one, separate and distinct from the causes of action asserted by Appellants against other defendants in the 1980s; thus, the fact Appellants previously asserted risk of cancer claims against other defendants does not preclude a subsequent timely action against Crane for actual cancer. . . .

We reject the Superior Court's conclusion that Appellants' present claims for damages for lung cancer are identical to their previously-litigated risk of cancer claims, and thus had to have been raised at the same time as their risk of cancer claims.  Cancer and non-cancer diseases clearly give rise to separate claims.  Appellants' causes of action for asbestos-related lung cancer accrued in December 2002, when they were diagnosed with lung cancer.  Furthermore, Appellants' claims for damages for lung cancer are clearly separate and distinct from any claims for risk or fear of cancer that may have existed in the 1980s.  Accordingly, the statute of limitations for Appellants' claims against Crane for lung cancer did not begin to run until December 2002.

Slip op. at 18-19 (citations omitted).

Justice Saylor dissented on the ground of repose.  Plaintiffs had an obligation to name all defendants who were responsible for their harm in their first suit.  When they failed to do so and the statute of limitations ran, "Crane became entitled to the repose afforded by the statute of limitations."  Slip op., Dissent at 4.  According to Justice Saylor, "when a party's right to institute and maintain a suit arises, the legal landscape is fixed in the sense that recognized causes of action in favor of the injured party may not subsequently be removed.  By the same token, defendants and potential defendants also become vested in the defenses available to them at that juncture."  Id. (citations omitted).  Thus, when Crane was not named in the original suit, "it was able to rely upon the statute of limitations in order to arrange its affairs going forward."  Id. at 6.

What neither the majority nor the dissent addressed was how the majority's rule advanced the purposes of the statute of limitations.  Clearly, it does not.  Plaintiffs' earlier lawsuit served to preserve evidence of product identification and presented the defendants who were sued there with the opportunity to challenge documents and recollections at a time that was relatively close to exposure.  To allow a plaintiff who previously had the opportunity to name all potential defendants the chance to add new potential defendants nearly 15 years later is fundamentally unfair.  Crane -- the new defendant -- has no ability to defend itself in the same way.  Pennsylvania's new twist on the two disease rule is fundamentally at odds with the evidence preservation goals of the statute of limitations.

But, as they say, asbestos is a law unto itself.

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Today the Supreme Judicial Court of Massachusetts issued an opinion in Donovan v. Philip Morris USA, Inc., 2009 WL 3321445 (Mass. Oct. 19, 2009), recognizing a cause of action under Massachusetts law for medical monitoring.  Because colleagues at my firm were involved in this case, I'll just stick to some selected quotations with no commentary.

A federal district court had certified two questions to the Massachusetts Supreme Judicial Court:

"1.  Does the plaintiffs' suit for medical monitoring, based on subclinical effects of exposure to cigarette smoke and increased risk of lung cancer, state a cognizable claim and/or permit a remedy under Massachusetts state law?

"2.  If the plaintiffs have successfully stated a claim or claims, has the statute of limitations governing those claims expired?"

The state court answered the first question "yes," and the second question "no."

On medical monitoring, the court stated:

When competent medical testimony establishes that medical monitoring is necessary to detect the potential onset of a serious illness or disease due to physiological changes indicating a substantial increase in risk of harm from exposure to a known hazardous substance, the element of injury and damage will have been satisfied and the cost of that monitoring is recoverable in tort.  No particular level or quantification of increase in risk of harm is necessary, so long as it is substantial and so long as there has been at least a corresponding subcellular change.  This should address any concern over false claims, . . . yet permit a genuinely injured person to recover legitimate expenses without having to overcome insurmountable problems of proof in this difficult and complex area. . . . The expense of medical monitoring is thus a form of future medical expense and should be treated as such.

In conclusion, each plaintiff must prove the following:  (1)The defendant's negligence (2) caused (3) the plaintiff to become exposed to a hazardous substance that produced, at least, subcellular changes that substantially increased the risk of serious disease, illness, or injury, (4) for which an effective medical test for reliable early detection exists, (5) and early detection, combined with prompt and effective treatment, will significantly decrease the risk of death or the severity of the disease, illness, or injury, and (6) such diagnostic medical examinations are reasonably (and periodically) necessary, conformably with the standard of care, and (7) the present value of the reasonable cost of such tests and care, as of the date of the filing of the complaint.  Proof of these elements usually will require competent expert testimony.

2009 WL 3321445 at *7-*8 (citations omitted).

On the statute of limitations issue, the court said:

In this case, it is not merely the risk of cancer of which the plaintiffs have notice, but the substantial increase in the risk of cancer, as reflected in their complaint.  Because the harm involves subclinical changes that only will be discovered by a physician, notice most likely will take the form of advice by a physician, together with a recommendation for diagnostic testing conformably with the medical standard of care.  In short, the statute [of limitations] begins to run when (1) there is a physiological change resulting in a substantial increase in the risk of cancer, and (2) that increase, under the standard of care, triggers the need for available diagnostic testing that has been accepted in the medical community as an efficacious method of lung cancer screening or surveillance.

Id. at *9.

The court noted that its "opinion addresses only individual claims, not a class action.  We express no view about the superiority of a class action (the use of a court-supervised medical monitoring program) over an individual adjudication of claims and an award of monetary damages."  Id. at n.10.  The court also advised that the medical monitoring claim "would, of course, remain subject to all affirmative defenses, such as contributory negligence."  Id. at n.11.

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In states like Illinois, which have relatively short (2-year) statutes of limitations for strict liability and negligence, there often is a lot of litigation over the "discovery rule."  The discovery rule is designed to relieve the harshness of a tort statute of limitations by essentially tolling the running of the statute until the plaintiff was put on inquiry notice about her cause of action.  Put differently, "the cause of action accrues [and the statute of limitations begins running] when the plaintiff knows or reasonably should know of an injury and also knows or reasonably should know that the injury was caused by the wrongful acts of another."  Nolan v. Johns-Manville Asbestos, 421 N.E.2d 864, 868 (Ill. 1981).

The court in Orso v. Bayer Corp., 2009 WL 249235 (N.D. Ill. Feb. 2, 2009) recently applied the discovery rule to grant summary judgment on statute of limitations grounds.  In Orso, plaintiff had been using Neo-Synephrine on a daily basis since 1990, despite the product's explicit warning that it should not be used for more than three days.  Plaintiff had visited a doctor in 1991, explaining that without Neo-Synephrine, "if someone were to put their hand over my mouth, I would have died . . . [My nose] is so swollen inside, I can't breathe."  Id. at *1.  The doctor recommended other medication and discussed strategies for giving up the medicine, but plaintiff returned to using it even though the doctor "'thought that [plaintiff] shouldn't be using it."

Nearly a decade later, in September 2000, a second doctor consulted with plaintiff.  He described plaintiff as having "'chronic rhinits with likely addiction (physiologic) to nasal decongestant drops.'"  Id.  The doctor prescribed a substitute medication and warned plaintiff of "rebound congestion," namely, that people coming off of medicines like Neo-Synephrine may develop severe congestion. 

Faced with the evidence, the court quickly concluded that plaintiff had been on inquiry notice much more than 4 years before filing suit in 2004:

The record shows that, possibly as soon as 1991 and definitely no later than September 2000, Urso knew that she had a medical condition, namely, a stuffy nose and breathing difficulties, that her condition was relieved only by the use of Neo-Synephrine, and that she felt she was unable to discontinue her use of Neo-Synephrine despite her doctors' advice and prescrptions for other drugs.

Id. at *4.

The court rejected plaintiff's arguments regarding her lack of knowledge, observing that the knowledge necessary to start the running of the statute of limitations does not require an accurate medical diagnosis or a definitive understanding of causation.  Suspicion starts the clock running, and the plaintiff is under a duty to conduct an inquiry to see if she has a cause of action.

Orso is unremarkable jurisprudentially, but it is a good workmanlike example of the discovery rule's application in statute of limitations motions.

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