Two of our favorite themes in the drug and device world intersected a few weeks ago in the Third Circuit—class actions and “no injury” lawsuits. We don’t see many drug and device class actions these days, which we view as one of the more notable accomplishments of the drug and device defense bar over the last 20 years. In fact, it is difficult to understand why anyone ever thought that personal injury class actions would be a good idea in the first place. Personal injury cases are different—everything from the patients, to the doctors, to the information available, to the products used, and the injuries alleged. Those facts leave you with a Hobson’s choice: Either you take all the individual factors into account, in which case you have defeated the whole point of a class action; or you gloss over it all and pretend everyone is the same, which violates the rules and is downright unfair to everyone involved. Either way, class actions don’t work.
“No injury” lawsuits are similarly vexing. They generally come in two forms—medical monitoring lawsuits, where the plaintiff has experienced no drug or device complication but wants the defendant to pay for future medical care anyway, and lawsuits alleging only some form of economic loss. At the risk of oversimplifying, we generally view these cases with a “no harm, no foul” attitude. It particularly grabs our attention when “no injury” claims are brought as class actions. You might call it a mashup of bad ideas, which adds up to a really bad idea. Sort of like Kim Kardashian marrying Kanye West. Or Donald Trump using Twitter. Or the upcoming Superman v. Batman movie. (Actually, that would be two good ideas adding up to a really bad idea, but we digress.)
Two bad ideas added up to a really bad idea in the Avandia MDL, and the district court and the Third Circuit correctly shut it down. In In re Avandia Marketing & Sales Practices and Product Liability Litigation, No. 15-2145, 2016 WL 559216 (3d Cir. Feb. 12, 2016), the plaintiff used Avandia to treat her Type II diabetes, and the drug worked as it should have with no complications. You might think that this individual would be focused on living a healthy life, but instead she filed a lawsuit. Worse yet, she filed a class action on behalf of herself and other Avandia users, who also experienced no complications. Her claim was that the manufacturer knew the drug had “dangerous propensities” and “engaged in misrepresentations, and failed to adequately advise consumers and medical providers of the risks.” Id. at *1.
Although styled as a consumer protection action under the Missouri Merchandising Practices Act (“MMPA”), this looks a lot like a failure-to-warn case. But what was the alleged injury? Because the “actual value” of the drug allegedly was less than the value “as represented” by the manufacturer, the plaintiff claimed the difference between the drug’s “actual value” and the value “as represented.” Id. Query how that damages theory could ever be proved for one person, let alone an entire class. Fortunately, we don’t need to go there because the manufacturer moved to dismiss for lack of standing and for failure to state a claim, and the district court granted the motion. According to the district court, the plaintiff had no claim because she “received all of the benefits of taking Avandia without suffering any harm and thereby sustained no ascertainable loss.” Id. The district court called the case “absurd” and denied leave to amend. We commented on that order here.
The Third Circuit affirmed the dismissal, and it did so on the incredibly straightforward basis that the plaintiff received everything she could have expected. As the Court held,
[The plaintiff] received the drug she was prescribed, the drug did the job it was meant to do (i.e., controlled her blood sugar levels), and it caused no apparent physical injuries. Under such circumstances, there could be no ascertainable loss. “[S]he ‘received all the benefits [she] desired and [was] unaffected by Defendants’ alleged concealment.’” . . . In short, [the plaintiff] received the benefit of the bargain and accordingly sustained no ascertainable damages under the MMPA.
Id. at *3 (quoting the district court). This holding is couched in terms of the Missouri statute, but its reasoning has broader appeal. This plaintiff was prescribed medicine that effectively treated her Type II diabetes with no ill effects. That is to say, the drug worked—as it did with all other “similarly situated” members of the plaintiff’s proposed class. Even placing the issue into a “consumer fraud” context, the plaintiff got what she (or her insurer) paid for. Imagine the alternative of no treatment at all, under which her Type II diabetes would have been uncontrolled, placing her health actually at risk. Regardless of the applicable law, the district court’s and Third Circuit’s reasoning should apply to cut off these kinds of claims.
The Third Circuit also affirmed the denial of leave to amend because the plaintiff could not say how an amendment could correct the “fundamental ‘ascertainable loss’ deficiency.” Id. at *3. This is the correct result, too. Count this one in the win column, and call it a lawsuit that never should have been filed.