Source: https://www.defenselitigationinsider.com/2018/05/
Timestamp: 2019-03-24 02:28:25
Document Index: 401795320

Matched Legal Cases: ['§ 3701', '§ 1373', '§ 9', '§ 500', '§ 9', '§ 9']

May 2018 | Defense Litigation Insider
In 1992, Congress passed the Professional and Amateur Sports Protection Act (“PASPA”). PASPA makes it illegal for states to “authorize” “a lottery, sweepstakes, or other betting, gambling, or wagering scheme based” “on one or more competitive games in which amateur or professional athletes participate.” 28 U.S.C. § 3701 et seq. PASPA grandfathered in four states – Delaware, Montana, Nevada and Oregon – that already had sports gambling, and it also carved out an exception for New Jersey that would have allowed sports betting at the state’s casinos, as long as the state set up the scheme within one year after PASPA went into effect. Id. New Jersey chose not to legalize sports gambling within the statutory time constraint. Notably, PASPA does not make sports gambling a federal crime, but instead, allows the Attorney General, as well as professional and amateur sports organizations, to bring civil actions to enjoin violations. Id.
In 2014, New Jersey passed a law to repeal its ban on sports gambling with the intent of legalizing sports gambling at casinos and horseracing tracks. In response, the NCAA and professional sports leagues filed suit in federal district court to strike down the New Jersey law arguing that it unlawfully “authorized” sports betting, in violation of PASPA. Murphy, No. 16-476, at *6. The NCAA and professional sports leagues contended that the Tenth Amendment does not apply to PASPA for two reasons: (1) PASPA does not require states to take any action, and therefore no commandeering is taking place; and (2) there is a distinction between banning the states from legalizing sports gambling and banning the “affirmative authorization” of sports gambling. Id. at *8.
The U.S. District Court and the Third Circuit sided with the NCAA and professional sports leagues. Id. at *7. Ultimately, the case went before the Supreme Court to decide if PASPA violates the anti-commandeering doctrine. Id. A question before the Court was whether the federal law unconstitutionally regulated New Jersey’s exercise of its lawmaking power by prohibiting it from modifying or repealing laws prohibiting sports gambling. Id. at *8. As explained by the Supreme Court, contrary to the federal laws analyzed in New York and Printz, PASPA prohibits a state from enacting new laws, rather than compels a state to enact a federal law. Id. at *13.
The Supreme Court reversed the Third Circuit, finding that PASPA “unequivocally dictates what a state legislature may and may not do.” Id. In doing so, it declared PASPA unconstitutional, illustrating the nefariousness of the law: “It is as if federal officers were installed in state legislative chambers and were armed with the authority to stop legislators from voting on any offending proposals. A more direct affront to state sovereignty is not easy to imagine.” Id. As explained by the Murphy Court, under the anti-commandeering doctrine, there is no distinction between a federal law that commands state legislatures to enact federal law as opposed to refrain from enacting state law. Id.
The Murphy Court cited three key reasons for the anti-commandeering principle. Id. at *12. First, the rule provides a balance of power between the states and the federal government, thereby minimizing the risk of tyranny and abuse from either side. Second, it promotes “political accountability.” Id. When Congress regulates its own laws, it must account for the benefits and burdens of the regulation. Id. Voters who favor or disfavor the effects of the regulation know who to credit or blame. Id. Such accountability is distorted if the state is forced to impose the federal government’s regulations. Id. Third, the anti-commandeering principle precludes the federal government from forcing states to pay for the costs of regulating federal governmental laws. Id. In light of this, the Court expressed that Congress must assess the costs and benefits of certain programs prior to enacting them. Id.
In its decision to strike down PASPA, the Supreme Court emphasized that part of the anti-commandeering analysis is whether the federal law regulates private actors. Id. at *15. If the federal law regulates private actors, the anti-commandeering doctrine is not implicated and is likely constitutional, but if it regulates the states, then it is implicated and is likely unconstitutional. Id. PASPA is neither a regulation of private actors nor a federal restriction on private actors. Id. at *16. As such, the Supreme Court found that PASPA “leaves in place a state law that the state does not want, so the citizens of the state . . . are bound to obey a law that the state does not want but that the federal government compels the state to have.”[1]
Murphy’s Potential Impact Outside of Sports Gambling
As stated by the Supreme Court in striking down PASPA, “Congress can regulate sports gambling directly, but if it elects not to do so, each State is free to act on its own.” Id. at *20. The Murphy decision makes it clear that Congress cannot dictate policy outcomes in states without ever having to legislate on the issue directly. Had the Court found PASPA constitutional, the federal government would be able to block any state effort to legalize activities previously forbidden under state law. Accordingly, the Supreme Court’s holding may allow the states to regulate, without the threat of federal government intervention, a host of issues that are the subjects of intense public debate, including gun control, marijuana legalization, and sanctuary cities.
Going forward, the Murphy Court explains that to enact successfully federal regulations, Congress must: (1) incentivize states to adopt federal policies, or (2) prohibit certain conduct directly. Id. at *13–16. However, if it opts for prohibition, Congress must bear the cost of enforcing the regulation. Id. at *12. By way of example, marijuana is illegal under federal law. However, a growing number of states are decriminalizing the drug.[2] Based on the federal government’s lack of intervention, it can be argued that it has concluded it is not in its best interest to expend money and resources to enforce law that is in conflict with state laws. It would logically follow that, under Murphy, such states would likely not have an expectation that the federal government will compel them to apprehend their own citizens for the violation of violating federal marijuana law while in compliance with state law.
Gun regulation may exemplify another potential scenario in which states and the federal government may have opposing views. Under Murphy, a state’s decision to institute gun reform, may also escape an effort by the federal government to pass a law that makes it illegal for states to “authorize” certain gun control measures.
The Murphy ruling could also have an impact on sanctuary cities – cities that refuse to cooperate with federal immigration officials to enforce immigration laws – and the federal government’s ability to apply conditions on money grants for state and local law enforcement. Specifically, the federal government has relied on the following statute to enjoin and penalize sanctuary cities: “Notwithstanding any other provision of Federal, State, or local law, a Federal, State, or local government entity or official may not prohibit, or in any way restrict, any government entity or official from sending to, or receiving from, the Immigration and Naturalization Service information regarding the citizenship or immigration status, lawful or unlawful, of any individual.” 8 U.S.C. § 1373. This statute is similar in nature to PASPA and, under Murphy, may also be construed as a violation of the anti-commandeering doctrine if it is challenged.
The Murphy decision makes clear that Congress cannot transfer the regulatory burden to the states on polarizing matters. However, the federal government is far from powerless in its ability regulate, as it may regulate certain areas authorized by the Constitution or it may use its spending power to provide incentives to states to adopt more restrictive schemes. Nevertheless, the Supreme Court’s holding will likely have a significant impact on future state regulatory activities and legislation.
[1] Justice Anthony Kennedy during Murphy oral argument.
[2] The following states have passed laws decriminalizing certain marijuana possession offenses: Alaska, California, Colorado, Connecticut, Delaware, District of Columbia, Illinois, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Hampshire, New York, North Carolina, Ohio, Oregon, Rhode Island, and Vermont.
By Jonathan F. Tabasky & Alexander L. Zodikoff on May 14, 2018
Posted in False-Labeling Claims, Litigation Trends, Massachusetts Courts, Pharmaceutical and Medical Devices, Products Liability
The overwhelming majority of courts (including all seven federal circuits that considered the issue) have rejected the so-called “innovator liability” doctrine.[1] In 2017, however, the California Supreme Court in T.H. v. Novartis Pharm. Corp.[2] unanimously recognized the doctrine holding that brand-name prescription drug manufacturers owe a duty to warn to consumers who use generic drugs.[3] In March of 2018, the Massachusetts Supreme Judicial Court (SJC) considered the issue, and took a middle ground. Specifically, in Rafferty v. Merck & Co., Inc.,[4] the SJC held that plaintiffs who ingest the generic form of a drug may bring failure to warn claims against the brand-name manufacturer of the drug if the brand-name defendant acted recklessly by “intentionally fail[ing] to update the label on its drug while knowing or having reason to know of an unreasonable risk of death or grave bodily injury associated with its use.”[5] In so doing, the SJC reasoned that a plaintiff is, in fact, injured by a brand-name product’s label despite never having used said product because statutes require identical labeling of the generically manufactured version.[6]
In 2010, a physician prescribed Finasteride, the generic version of the brand name drug Proscar, to treat Rafferty’s enlarged prostate.[7] Rafferty experienced anticipated temporary side effects from the drug, causing him to stop taking the medication.[8] Rafferty, however, continued to experience these side effects and his physician informed him that they could actually continue “indefinitely.”[9] The potential lifelong side effects of this drug were not disclosed within the brand-name manufacturer’s nor the mirrored generic manufacturer’s warning label.[10] Rafferty presented evidence that the brand-name manufacturer became aware of these potential long-term side effects by 2008, when it updated Proscar’s warning label in select European markets to include this risk.[11]
Rafferty filed suit against the brand-name manufacturer in 2013, asserting a claim of negligence for, inter alia, failure to warn and for violation of the Commonwealth’s Consumer Protection Statute, G.L. c. 93A.[12] The Superior Court dismissed Rafferty’s claims, “ruling that [the brand-name defendant] owed no duty of care to [him].”[13] The SJC took over the case by its own motion from the Appeals Court.[14]
The SJC Weighs In
Traditionally, Massachusetts has not recognized liability for products manufactured by others.[15] However, the SJC noted that The Restatement (Third) of Torts allows a modification to this general rule in exceptional cases.[16] The SJC considered innovator liability to require such a modification given the certainty that a user of a generic drug will rely on the label fashioned by the brand-name manufacturer and as state law shields failure to warn claims from generic manufacturers, leaving plaintiffs without recourse for their injuries.[17] However, the SJC also recognized that imposing innovator liability could impact the public policy of encouraging innovation in the drug market and a potential increase in drug pricing.[18]
Balancing these competing interests, the court held that, “a brand-name manufacturer that controls the contents of the label on a generic drug owes a duty to consumers of that generic drug not to act in reckless disregard of an unreasonable risk of death or grave bodily injury.”[19] As an added protection to the manufacturers, it will be the trial judge’s responsibility to determine whether an injury constitutes an “unreasonable risk of death or grave bodily injuries.”[20] The court went on to define recklessness as an act performed while knowing or having reason to know of facts which would lead a reasonable person to realize that his or her conduct creates an unreasonable risk of physical harm to another and that such risk is substantially greater than that which is necessary to make his conduct negligent.[21] In order to meet this threshold with regard to failure to act, there must be “an intentional or unreasonable disregard of a risk that presents a high degree of probability that substantial harm will result.”[22]
The court then vacated the dismissals and remanded the case to Superior Court where the plaintiff would be granted leave to amend his complaint should he believe his claims meet the newfound threshold.[23]
In August of 2017, the United States District Court – District of Massachusetts held in In re Zofran[24] that a brand-name manufacturer is not liable for a generic version’s failure to warn claim spawning from an injury caused by the use of the generic.[25] Judge Dennis F. Saylor IV articulated this point by emphasizing the consistency of the Circuit Courts’ decisions and citing to a Sixth Circuit multi-district litigation holding “affirming the dismissal of claims against brand-name manufacturers under the laws of 22 states.”[26] Notwithstanding this majority view, in December of 2017, the Supreme Court of California held that a brand-manufacturer is liable for a failure to warn claim arising from “risks about which it knew of reasonably should have known, regardless of whether the consumer is prescribed the brand-name drug or its generic ‘bioequivalent.’”[27] Here, the SJC has offered a compromise to the majority and minority viewpoints by adopting a recklessness standard, which is a higher threshold than the minority view, while still maintaining failure to warn liability against the brand-name manufacturer, in contrast with the majority.
The court’s concern that redress be available to those who ingest generic drugs by establishing liability to the controlling brand-name manufacturer carried the day. Our hope is that innovators will continue to advance modern pharmaceutical products despite their increased potential for liability. We will be watching this space for further developments.
[1] In re Zofran (Ondansetron) Products Liability Litigation, 261 F.Supp.3d 62 (D. Mass. 2017) (citing In re Darvocet, Darvon, and Propoxyphene Products Liability Litigation, 756 F.3d 917, 938-939 (6th Cir. 2014)).
[2] 407 P.3d 18, 29 (Cal. 2017).
[4] Rafferty v. Merck & Co., Inc. & Sidney Rubenstein, No. SJC–12347 (Mass. Mar. 16, 2018).
[6]Rafferty v. Merck & Co., Inc., No. SJC–12347 at 3-4. The statutory and regulatory constructs pertaining to drug labeling are quite complicated. Relevant to the matter considered by the SJC, the Drug Price Competition and Patent Term Restoration Act, informally known as the “Hatch-Waxman Act” requires the “manufacturer of a generic drug [to] provide its users with a warning label that is identical to the label of the brand-name counterpart.” Id. at 4. In accordance with the “federal duty of ‘sameness’” the two opportunities to alter a generic manufacturers preexisting warning are to: (1) update their label in response to their brand-name counterpart’s update; and (2) per specific FDA instruction. Id. at 6-7 (citing PLIVA, Inc. v. Mensing, 564 U.S. 604, 613-616 (2011)). These federal laws makes it almost impossible for generic manufacturers to follow Massachusetts labeling laws because they do not have the unilateral power to act. See id.
[7] Rafferty v. Merck & Co., Inc., No. SJC–12347 at 8.
[10] Rafferty v. Merck & Co., Inc., No. SJC–12347 at 8-9.
[11] Rafferty v. Merck & Co., Inc., No. SJC–12347 at 9.
[12] Id. Plaintiff also asserted a G.L. c.93A § 9 Consumer Protection Act claim and a negligent failure to obtain informed consent action against his physician.
[13] Rafferty v. Merck & Co., Inc., No. SJC–12347 at 10; Rafferty v. Merck & Co., Inc. & Sidney Rubenstein, No. 2013–04459, 4 (Mass. Super. May 23, 2013) (emphasizing that because “Rafferty did not ingest the drug that Merck manufactured, Merck owes Rafferty no duty of care”).
[14] Rafferty v. Merck & Co., Inc., No. SJC–12347 at 11.
[15] See e.g. Mathers v. Midland-Ross Corp., 403 Mass. 688, 691 (Mass. 1989); Mitchell v. Sky Climber, Inc., 396 Mass. 629, 631 (Mass. 1986).
[16] Rafferty v. Merck & Co., Inc., No. SJC–12347 at 16.
[17] Rafferty v. Merck & Co., Inc., No. SJC–12347 at 17. This was especially so given generic products command approximately ninety percent of the market. Id.
[18] Rafferty v. Merck & Co., Inc., No. SJC–12347 at 20-22.
[19] Rafferty v. Merck & Co., Inc., No. SJC–12347 at 29.
[20] Rafferty v. Merck & Co., Inc., No. SJC–12347 at 30.
[21] See Rafferty v. Merck & Co., Inc., No. SJC–12347 at 29 (citing Boyd v. National R.R. Passenger Corp, 446 Mass. 540, 546 (Mass. 2006); Restatement (Second) of Torts, § 500, 587 (1965)).
[22] Rafferty v. Merck & Co., Inc., No. SJC–12347 at 30.
[23] Rafferty v. Merck & Co., Inc., No. SJC–12347 at 36. Additionally, Rafferty’s G.L. c. 93A § 9 claim was vacated because it did not satisfy the “any trade or commerce” provision, which requires that the unfair or deceptive practice is directly related to the advertising, selling, or trade of a Merck product. Id. at 38. Thus, because Rafferty used Finasteride, as opposed to Proscar, the claim is beyond the scope of G.L. c. 93A § 9. Id. at 38-39
[24] 261 F.Supp.3d 62 (D. Mass. 2017). A multi-district litigation matter regarding side effects not purported within the label of Zofran and in-turn not purported on the label of the generic version, Ondansetron.
[25] In re Zofran, 261 F.Supp.3d at 64-65.
[26] In re Zofran, 261 F.Supp.3d at 71-72 (citing In re Darvocet, Darvon, and Propoxyphene Products Liability Litigation, 756 F.3d at 938-939.
[27] T.H. Novartis Pharm. Corp., 407 P.3d at 29 (citing Dolin v. SmithKline Beecham Corp., 62 F.Supp.3d 705 (N.D. Ill. 2014); Chatman v. Pfizer, Inc., 960 F.Supp.2d 641, 654 (S.D. Miss. 2013); Kellogg v. Wyeth, Inc., 762 F.Supp.2d 694, 704 (D. Vt. 2010); Wyeth, Inc. v. Weeks, 159 So.3d 649 (Ala. 2014)). See also Conte v. Wyeth, Inc., 168 Cal.App.4th 89 (Cal. Ct. App. 2008).