Class Action Defense Cases–Fellner v. Tri-Union Seafoods: Third Circuit Reinstates Class Action Holding FDA Regulations Did Not Preempt Class Action’s State Law Claims Alleging Failure To Warn Of Mercury In Tuna

Class Action Claims Against Tri-Union Seafoods (dba Chicken of the Sea) not Preempted by FDA Regulations or Opinions Expressed by FDA Commissioner in Letter to State Attorney General Third Circuit Holds

Plaintiff filed a class action lawsuit in New Jersey state court against Tri-Union Seafoods, doing business as Chicken of the Sea, “seeking damages for harm she allegedly sustained as a result of her consumption of methylmercury and other harmful compounds contained in Tri-Union’s tuna fish products.” Fellner v. Tri-Union Seafoods, LLC, ___ F.3d ___ (3rd Cir. August 19, 2008) [Slip Opn, at 3]. Specifically, the class action complaint alleged that defendant’s tuna products contained chemicals that could cause mercury poisoning and that plaintiff suffered mercury poisoning from consuming defendant’s tuna, and alleged negligence and violations of New Jersey’s Products Liability Act based on defendant’s alleged “failure to warn of the risks incurred in consuming its products.” _Id._, at 3-4. Defense attorneys removed the class action to federal court and then filed a motion to dismiss the class action complaint on the ground that the regulatory actions of the Food and Drug Administration preempt the class action’s claims. _Id._, at 3. In part, the defense relied on a letter sent by the FDA Commissioner to California’s Attorney General in connection with a 2004 “Proposition 65” lawsuit (_see_ Cal. Health & Safety Code § 25249.6) that the State of California brought against Tri-Union and other defendants and that sought an injunction and civil penalties based on for defendants’ “failure to warn consumers that their tuna products contain dangerous mercury compounds.” _Id._, at 4. The Commissioner’s letter opinion that the State’s lawsuit was preempted by prior regulatory actions taken by the FDA. _Id._ The letter stated in part that the State’s lawsuit would “frustrate the [FDA’s] carefully considered federal approach” to the issue of mercury in fish. _Id._, at 5 (citing _People v. Tri-Union Seafoods_, 2006 WL 1544377 (Cal. Super. Ct. May 12, 2006)). The California court ultimately ruled that the State’s lawsuit was preempted. _Id._, at 5. (citation omitted). The New Jersey district court granted defendant’s motion to dismiss the class action, also ruling that the class action claims “are preempted by the FDA’s ‘regulatory approach’ to the risks posed by mercury compounds in tuna fish.” _Id._, at 3. The Third Circuit reversed.

The Circuit Court explained that “[t]he sole question presented in this appeal is whether [plaintiff’s] state claim for damages is preempted by federal law.” Fellner, at 6. In support of the district court’s ruling, defense attorneys advanced three preemption arguments: “(1) that the FDA has adopted a ‘pervasive regulatory approach’ – embodied in the FDA’s Advisory, backgrounder and internal enforcement guideline – with which Fellner’s state lawsuit actually conflicts; (2) that the FDA has ‘reject[ed] the use of warning labels’ in favor of a more ‘nuanced’ approach – that is, that the FDA has reached a decision that warnings should not be regulated, a decision which preempts the state from entertaining a claim based on a duty to warn theory; and (3) that the FDA would have rejected any warning as ‘misbranding,’ a determination which preempts Fellner’s failure-to-warn claim.” Id., at 6-7. After reviewing the doctrine of federal preemption, the Third Circuit explained that defendant does not assert either express preemption or field preemption, and that “[i]f preemption exists in this case it must be conflict preemption. Id., at 8-9. This issue, as in all preemption cases, turns on Congressional intent, id., at 9 (citation omitted).

Class Action Court Decisions Uncategorized

New Class Action Lawsuits Involving Labor Law Claims Again Hold Top Spot Among Class Action Filings In California State And Federal Courts

As a resource to California class action defense attorneys, we provide weekly, unofficial summaries of the legal categories for new class action lawsuits filed in California state and federal courts in the Los Angeles, San Francisco, San Jose, Sacramento, San Diego, San Mateo, Oakland/Alameda and Orange County areas. We include only those categories that include 10% or more of the class action filings during the preceding week. This report covers August 15 – 21, 2008, during which time 36 new class action lawsuits were filed.

Class Actions In The News Uncategorized

Class Action Defense Cases—In re Countrywide Financial: Judicial Panel On Multidistrict Litigation (MDL) Grants Plaintiffs’ Motion To Centralize Class Action Litigation But Transfers Class Actions To Western District of Kentucky

Judicial Panel Grants Plaintiffs’ Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407, Over Objection of Responding Class Action Defendants, but Rejects All Recommended Transferee Courts and Transfers Class Actions to Western District of Kentucky Three class actions – one each in California, Illinois and Massachusetts – were filed against various defendants, including Countrywide Financial Corp., Countrywide Home Loans and Countrywide Bank, FSB (collectively “Countrywide”); the class action complaints, each purportedly seeking to represent a nationwide class, alleged that Countrywide “engaged in discriminatory residential lending practices, including the imposition of discretionary fees/charges, which increased the cost of financing and resulted in higher loans for minority borrowers than similarly situated non-minority borrowers.

Class Action Court Decisions Multidistrict Litigation Uncategorized

Class Action Defense Cases–In re Nortel Networks: Second Circuit Affirms Attorney Fee Award Of 3% Of Class Action Settlement Value Finding No Abuse Of Discretion In Rejecting Negotiated Fee Following Settlement Of Securities Class Action

District Court Carefully Analyzed Requisite Factors in Determining Reasonable Attorney Fee Award in Securities Class Action and did not Abuse its Discretion in Awarding Class Counsel 3% of the Value of Class Action Settlement Rather than 8.5% Requested by Class Counsel, even though Lead Plaintiffs in Class Action Supported 8.5% Award Second Circuit Holds

Plaintiffs filed a class action against Nortel Networks alleging violations of federal securities laws (Nortel I); specifically, the Nortel I class action complaint alleged that Nortel “knowingly and recklessly issued false and misleading statements and engaged in various accounting manipulations causing its stock price to be inflated between October 24, 2000 and February 15, 2001.” In re Nortel Networks Corp. Securities Litig., ___ F.3d ___ (2d Cir. August 19, 2008) [Slip Opn., at 2]. Plaintiffs in the Nortel I class action were represented by Milberg Weiss & Bershad LLP, _id._ After several years of litigation, the district court approved a class action settlement of almost $439 million in cash, plus more than 300,000,000 shares of Nortel common stock valued at more than $700 million at the time the class action settled was approved. _Id._ As part of the “same overall settlement,” Nortel settled a separate action securities class action lawsuit (Nortel II); the terms of that class action settlement involved common stock also valued at more than $700 million plus $370 million in cash (roughly $68.5 million less than the Nortel I class action settlement). _Id._, at 2-3. The district court in Nortel II awarded class counsel 8% of the settlement value in attorney fees, but the Nortel I court awarded Milberg attorney fees amounting to only 3% of the settlement value. _Id._, at 3. Milberg Weiss appealed the attorney fee award, and the Second Circuit affirmed.

Milberg argued on appeal that they were entitled to 8.5% of the value of the class action settlement they obtained in prosecuting the private securities class action and that the district court erred in reducing the award to only 3%. In re Nortel, at 2. Milberg argued that it had a “negotiated fee” which, under the terms of the Private Securities Litigation Reform Act of 1995 (PSLRA), should have been deemed “presumptively reasonable.” Id. The Second Circuit held that Milberg waived its PSLRA argument because it failed to raise it in the district court, id. The Circuit Court’s analysis of the waiver issue may be found at pages 5 through 8.

Class Action Court Decisions PSLRA/SLUSA Class Actions Uncategorized

Class Action Defense Cases–In re Parmalat Securities: New York Federal Court Grants Summary Judgment On Class Action Claims Holding Plaintiffs Failed To Establish Reliance To Support Class Action’s Securities Fraud Claims

Defense (Bank of America, Citigroup and Pavia e Ansaldo) Entitled to Summary Judgment on Securities Fraud Claims because Plaintiffs Failed to Establish Reliance on any Deceptive Acts by Moving Defendants New York Federal Court Holds Plaintiffs filed a class action complaint against various defendants, including various Bank of America entities, various Citigroup entities, and Pavia e Ansaldo, alleging violations of federal securities laws; specifically, the Third Amended Consolidated Class Action Complaint alleged violations of Rule 10b-5 and Section 10(b) “on behalf of purchasers or securities of the international dairy conglomerate Paramalat Finanziaria S.

Class Action Court Decisions PSLRA/SLUSA Class Actions Uncategorized

Class Action Defense Cases–In re Genetically Modified Rice: Missouri Federal Court Denies Class Action Certification of Class Action Complaint Seeking Damages By Producers For Contamination Of Rice

Class Action Claims by Rice Growers Seeking Damages Arising from Contamination of U.S. Rice Supply by Non-Approved Genetically Modified Strains of Rice not Appropriate for Class Action Treatment because Substantial Differences in Individual Damages and Proof of Damages Defeat Rule 23(b)(3) Requirement for Predominance and Superiority Missouri Federal Court Holds

Various class action lawsuits were filed against Bayer CropScience and others seeking to recover for damages allegedly when “the defendants contaminated the U.S. rice supply with non-approved genetically modified strains of rice, thereby affecting the market price for plaintiffs’ crops.” The class action complaints were filed after the U.S. Department of Agriculture announced, in August 2006, that trace amounts of a rice seed developed by Bayer CropScience and “designed to be resistant to a Bayer herbicide, Liberty Link,” had been found in the U.S. rice supply. In re Genetically Modified Rice Litig., 251F.R.D 392 (E.D. Mo. 2008) [Slip Opn., at 1-2]. (The rice strain at issue in the class actions “is now deregulated by USDA, [but] at the time of the contamination it was not approved for human consumption.” Id., at 2.) The Judicial Panel on Multidistrict Litigation consolidated the class actions for pretrial purposes in the Eastern District of Missouri, and plaintiffs’ filed a master consolidated class action complaint. Id., at 1. “The plaintiffs in the master consolidated class action complaint are rice producers from five U.S. states where rice is grown and harvested: Arkansas, Louisiana, Mississippi, Missouri and Texas.” Id., at 3.Plaintiffs’ lawyers moved for class action certification; defense attorneys opposed class action treatment on the grounds that individual issues predominate over common issues. Id., at 1. The district court agreed that class action treatment was not warranted, concluding that class action certification was “inappropriate…because plaintiffs’ varying claims for damages are not amenable to class-wide adjudication.” Id.

According to the master class action complaint, world-wide reaction to the announcement directly affected the market for U.S. long grain rice: Japan barred further imports of such rice, the European Union required that all U.S. rice be “tested and certified as free of genetically-modified traits,” and several other countries – including Russia, Canada, the Philippines, Taiwan and Iraq – “imposed restrictions on U.S. rice imports.” In re Genetically Modified Rice, at 2-3. The class action alleged that “the U.S. market price for rice dropped dramatically as a result of Bayer’s contamination of the rice supply.” Id., at 3. The U.S. produces 13% of the world’s rice and exports nearly half of its rice, id. The class action relies on the market price for rice as listed on the Chicago Board of Trade (CBOT) for the period of August 18-23, 2006 to support its claim that the “dramatic price drop” is attributable to the announcement concerning the discovery of the contaminated rice. Id., at 4. The class action alleged further that economic harm continued beyond August 2006, id.

Certification of Class Actions Class Action Court Decisions Multidistrict Litigation Uncategorized

Class Action Defense Cases–In re Gilead Sciences: Ninth Circuit Reverses Dismissal Of Securities Fraud Class Action Holding Class Action Complaint Adequately Alleges Loss Causation Under Dura Pharmaceuticals

Securities Fraud Class Action Complaint Adequately Alleged Loss Causation when Facts were Considered as a Whole so District Court Erred in Granting Defense Motion to Dismiss Class Action Complaint Ninth Circuit Holds

Plaintiffs, a group of investors, filed a class action against Gilead Sciences, “a biopharmaceutical company that specializes in developing and marketing treatments for life-threatening diseases,” alleging violations of federal securities law; specifically, the class action complaint alleged that defendants “misled the investing public by representing that demand for its most popular product” – Viread, an antiretroviral agent used to treat HIV – was “strong without disclosing that unlawful marketing was the cause of that strength.” In re Gilead Sciences Securities Litig., ___ F.3d ___ (9th Cir. August 11, 2008) [Slip Opn., at 10322-23]. Viread accounted for almost two-thirds of Gilead’s total revenues, and the fourth amended class action complaint alleged that defendants Gilead and “some of its top officers” violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by aggressively promoting Viread for “off-label” uses, that is, for uses that had not been approved by the FDA, _id._, at 10323-24. The class action complaint outlined an alleged scheme to promote off-label uses and further alleged that ultimately “75% to 95% of Viread sales resulted from off-label marketing efforts.” _Id._, at 10324-25. Defense attorneys moved to dismiss the class action under Rule 12(b)(6) for failure to adequately allege loss causation; the district court agreed and dismissed the class action complaint. _Id._, at 10323. The Ninth Circuit reversed.

As with all securities fraud cases, the specific facts detailed in the class action complaint are central to the Circuit Court’s analysis of the district court order dismissing the class action with prejudice. In this case, those facts span more than 9 pages of the appellate court’s opinion. See In re Gilead Sciences, at 10323-31. We do not summarize those facts here, noting only that, according to “two confidential witnesses who served as Gilead salespeople,” the off-label marketing efforts “took three forms: (1) marketing to HIV patients co-infected with Hepatitis B; (2) marketing Viread as a first-line or initial therapy for HIV infection; and (3) marketing against Viread’s safety profile,” and that, ultimately, “75% to 95% of Viread sales resulted from off-label marketing efforts.” Id., at 10325 (footnote omitted). The FDA sent Gilead a letter in March 2002, accusing the company of off-label marketing, id., and in August 2003 the FDA made public a July 2003 “warning letter,” but the investing public did not yet appreciate the letter’s significance, id., at 10328-29. According to the class action complaint, Gilead also encouraged overstocking of Viread but publicly stated that overstocking was not a basis for Viread’s increased sales, id., at 10326-27. It was not until October 2003 that investors realized the impact of off-label marketing on Viread sales, id., at 10330. The district court dismissed the class action with prejudice on the ground that plaintiffs “failed to adequately plead loss causation” under Dura Pharmaceuticals, Inc.. v. Broudo, 544 U.S. 336 (2005), because the class action complaint failed to “connect the following chain of events…: 1) that [the] alleged failure to disclose the off-label marketing scheme caused a material increase in sales; 2) that practitioners materially decreased their demand for Viread due to the publication of the FDA Warning Letter; and most importantly, 3) that the alleged decrease in sales due to the FDA letter proximately caused Gilead’s stock to decrease three months later,” id., at 10331. The Ninth Circuit explained that the district court order rested entirely on its conclusions concerning loss causation, id.

Class Action Court Decisions PSLRA/SLUSA Class Actions Uncategorized

New Labor Law Class Action Lawsuits Continue Dominance Among Class Action Filings In California State And Federal Courts

As a resource to California class action defense attorneys, we provide weekly, unofficial summaries of the legal categories for new class action lawsuits filed in California state and federal courts in the Los Angeles, San Francisco, San Jose, Sacramento, San Diego, San Mateo, Oakland/Alameda and Orange County areas. We include only those categories that include 10% or more of the class action filings during the preceding week. This report covers August 8 – 14, 2008, during which time 37 new class action lawsuits were filed.

Class Actions In The News Uncategorized

Class Action Defense Cases—In re Vytorin/Zetia: Judicial Panel On Multidistrict Litigation (MDL) Grants Class Action Plaintiffs’ Motions To Centralize Class Action Litigation And Transfers Lawsuits To District of New Jersey

Judicial Panel Grants Plaintiffs’ Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407, Unopposed by Responding Defendants, and Agrees with Defendants that District of New Jersey is Appropriate Transferee Court Thirty-three (33) class actions lawsuits were filed in 17 federal district courts against numerous defendants, including various Merck and Schering-Plough entities, arising out of the use and/or marketing of the drugs Vytorin and/or Zetia. In re Vytorin/Zetia Marketing, Sales Practices & Products Liab.

Class Action Court Decisions Multidistrict Litigation Uncategorized

Class Action Defense Cases—In re Trasylol: Judicial Panel On Multidistrict Litigation (MDL) Grants Defense Motion To Centralize Class Action Litigation But Transfers Class Actions To Southern District of Florida

Judicial Panel Grants Defense Request for Pretrial Coordination of Class Action Lawsuits Pursuant to 28 U.S.C. § 1407, Unopposed by Certain Class Action Plaintiffs but Opposed by Others, but Concludes Class Actions should be Transferred to Southern District of Florida Eighteen class actions were filed in 14 different federal district courts against various defendants, including Bayer Corp., Bayer Healthcare Pharmaceuticals, Bayer Healthcare, LLC, Bayer AG, and Bayer Healthcare AG (collectively “Bayer”), alleging product liability claims based on the safety of the Bayer drug Trasylol.

Class Action Court Decisions Multidistrict Litigation Uncategorized