By Christine Kain, David Sudzus and Hannah Anderson

Law360 (January 8, 2021, 5:38 PM EST) --

Christine Kain

David Sudzus

Hannah Anderson

In a year where the use of the word "unprecedented" became routine, COVID-19 dominated just about every aspect of life, and its impact on drug and device law was no less encompassing.

As we bid adieu and good riddance to 2020, we pause, once again, to reflect on the most significant legal developments for our drug and device clients this year. Below is a brief recap and assessment of our top five developments in drug and device law for the year.

1. Snap removal continued its momentum.

In April, the U.S. Court of Appeals for the Fifth Circuit joined the Second and Third Circuits in upholding snap removal. Snap removal occurs when an action is removed from state court to federal court before a forum defendant is served, and it is premised on a plain reading of Title 28 of the U.S. Code, Section 1441(b)(2).

Under the statute's plain language, removal is barred only where the forum defendant has already been properly joined and served. Thus, where a forum defendant has not yet been properly joined and served, a case may still be removed to federal court.

The practice is not without its critics, who argue that applying the statute's plain language leads to absurd results by contradicting the policy reasons for diversity jurisdiction and the forum defendant rule.

The ability for snap removal is a helpful tool for drug and device defendants to combat plaintiffs' practice of suing a doctor, distributor or sales representative as a means to keeping the lawsuit in state court, with no real plan to litigate the claims against the forum defendant.

In Texas Brine Co. LLC v. American Arbitration Association Inc., the plaintiff filed an action in Louisiana state court against three defendants, two of them citizens of Louisiana.[1]

After the out-of-state defendant was served, but before either of the forum defendants had been served, the out-of-state defendant removed the case to federal court.[2] In its motion to remand, the plaintiff acknowledged the plain meaning of Section 1441(b)(2) but nonetheless argued that allowing snap removal defeats Congress's intent and would lead to absurd results.[3]

The court, in its opinion, endorsed the practice of snap removal by a nonforum defendant and concluded that the text of Section 1441(b) (2) is unambiguous.[4] It therefore declined to insert an exception into Section 1441(b) (2) that would require a reasonable opportunity to serve a forum defendant.[5]

Texas Brine represents a clear and continuing trend in upholding snap removal. However, the Fifth Circuit's decision is distinct from the Second and Third Circuit decisions in that Texas Brine concerned snap removal by a nonforum defendant while the Second and Third Circuits involved removal by forum defendants.

Nonetheless, district courts in the Fifth Circuit have subsequently relied on Texas Brine in concluding that snap removal by a forum defendant is permitted under the plain language of Section 1441(b)(2).[6]

Despite this trend in the circuit courts, district courts across the U.S. remain divided over the practice, and drug and device litigators will need to ensure that they remain up to date on the snap removal case law in their jurisdiction.[7]

2. The consumer expectations test took a hit in Florida medical device cases.

Product liability litigators that practice in Florida may recall the Florida Supreme Court's 2015 decision in Aubin v. Union Carbide Corp., in which the court adopted the consumer expectations test in an asbestos case.[8] In October of this year, Florida's Fourth District Court of Appeal became the latest court to deal a blow to the consumer expectations test in cases involving medical devices.

The Florida appellate court in Cavanaugh v. Stryker Corp. reasoned that the consumer expectations test cannot be "logically applied … where the product in question is a complex medical device available to an ordinary consumer only as an incident to a medical procedure."[9] In doing so, the court affirmed a defense verdict founded on the trial court's use of the risk-utility test rather than consumer expectations in the jury instructions.[10]

The court, in its analysis, specifically found that Aubin was distinguishable because it involved asbestos rather than a complex medical product. Moreover, the court held that Aubin did not disagree with or disapprove of other existing cases in Florida state and federal court which had recognized that some products may be "too complex for a logical application of the consumer expectations test."[11]

And, even if the consumer expectations were to apply in medical device cases, the jury instructions would require modification to inform the jury that the relevant expectations are those of the healthcare provider.[12]

The Cavanaugh decision joins the ranks of state and federal courts across the U.S. considering the impact of a product's complexity in determining whether the consumer expectations test may appropriately be applied.[13]

The decision is encouraging for drug and device clients whose products are not marketed directly to ordinary consumers, and it provides legal bite to the argument that the consumer expectations test should not apply where a medical device is available to an ordinary consumer "only as an incident to a medical procedure."[14] Stay tuned for whether this outcome gains additional momentum.

3. Are Zoom trials, depositions and hearings here to stay, or a temporary byproduct of COVID-19?

When the pandemic abruptly upended life as we know it in March, it also upended in-person proceedings in a profession not normally known for its modernity or savvy in navigating technological advances.

We won't beat the proverbial dead horse where so much has already been written on the strategies and cautionary tales of conducting legal proceedings remotely, but no year-end wrap up in 2020 would be complete without at least mentioning the rise of virtual trials, depositions and hearings.

Many of the benefits of virtual proceedings are obvious — litigators and their clients may avoid the time and expense necessary in traveling to far-off courtrooms or depositions. And, as some judges have pointed out, the ability to appear remotely has provided opportunities to younger and newer attorneys that have been previously hard to come by, which can be another cost-saving measure for clients.[15]

Despite these benefits, there are also myriad challenges to conducting remote legal proceedings. As many litigators who have conducted remote proceedings this year will tell you, a remote setup challenges a litigator's ability to use and observe the subtle cues typically present in the courtroom.

Litigators also face the challenge of adapting to a court's preferred technological platform and any connectivity problems, security concerns and document transmission issues that accompany these platforms. Litigators need also be diligent about preparing a witness virtually and in a way that assures the reliability of the witness's testimony.

The jury's still out on whether remote proceedings will outlive the pandemic, but with many courts extending such proceedings into 2021[16] it appears as though virtual legal practice won't be going anywhere anytime soon.

4. The Supreme Court showed renewed interest in the scope of state courts' personal jurisdiction.

On the relative heels of the momentous litigation tourism decision in Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco County,[17] two similar cases from Minnesota (Ford Motor Co. v. Bandemer) and Montana (Ford Motor Co. v. Montana Eighth Judicial District Court) were consolidated for hearing by the U.S. Supreme Court on Oct. 7. The court's decision is still pending.

The opposite jurisdictional scenario of BMS, these cases involve a plaintiff suing a product manufacturer in the plaintiff's home state, and the new question is whether a manufacturer is subject to personal jurisdiction there through a stream of commerce theory tied to unrelated or attenuated activities in the forum state.

Both cases involved personal injury claims against Ford Motor Co. from separate vehicle accidents, involving an air bag and a tire, respectively. Both cases also involved vehicles that were designed, manufactured and originally sold by Ford outside Minnesota and Montana, but found their way to the forum states through successive used-car sales.

Because Ford is not at home in either state, there is no general jurisdiction over it in Minnesota or Montana. Plaintiffs therefore had to show specific jurisdiction, i.e., that Ford purposefully availed itself of the privilege of doing business in the state,[18] and that the plaintiff's claims "arise out of or relate to" the defendant's activities in the state.[19]

Ford acknowledged it purposefully availed itself of doing business in both states, but denied that the plaintiffs' claims "arise out of or relate to" Ford's activities in those states, given the convoluted path of the vehicles from the original sale in a different state, before the vehicles were sold and resold in other states before winding their way to Minnesota and Montana years later.

That is, although Ford may sell other vehicles or parts in each state, including other units of the same model as the plaintiffs' vehicles, none of those activities is proximately connected to the specific vehicles at issue here.

The plaintiffs argued that the defendants can be hauled into court if the purposeful product-related activities are similar enough to the activities that caused the plaintiffs harm — such as selling the same kind of airbag that caused the injury, even if the defendant did not sell the airbag.

In this ever-growing e-commerce world, where commercial products are bought and sold across state lines, pharmaceuticals and some medical devices, like contact lenses, are available through the internet, and telehealth visits are blurring the location of the office visit, the court's decision is likely to have a big impact beyond the classic stream of commerce example of automobiles.

5. As expected, COVID-19 brought a surge in litigation.

And we now end as we began, with the all-encompassing impact of COVID-19. While we know of some examples of what has been impacted thus far, and what challenges have been attempted from a litigation perspective, the biggest issues, to quote the nonlegal scholar Axl Rose, is "Where do we go now?" 

Where are we now? 

It has been anticipated, or dreaded, that there would be a surge of COVID-19 pandemic-related litigation on various fronts. That surge has indeed already been initiated with a majority of suits directed against insurers and employers. These include:

• A variety of business interruption cases initiated by business owners against insurance companies who are denying their claims that their COVID-19-related losses are covered by business interruption insurance policies.[20]

• Employees have initiated a number of retaliatory actions against employers around the country, with allegations including: employers taking action against employees for making formal safety-related complaints or criticizing personal protective equipment and other safety measures; employers unlawfully terminating employees in retaliation for making pandemic-related leaves, requests for leave or formally requesting to continue working remotely.

• Consumers have initiated a number of failure-to-refund cases. With stay at home orders in place, and either ordered or agreed-to social distancing protocols in place, planned trips, occasions, festivals and other events were cancelled. Yet despite these cancellations consumers have initiated cases against vendors who refused to issue refunds.

• A swath of cases on behalf of incarcerated individuals were filed throughout the country alleging that the spread of COVID-19 across jails created severe health issues due to the lack of safety procedures in these facilities.  In many of these cases, the incarcerated individuals seek release due to the dangerous and potentially deadly COVID-19-related conditions.

With regard to potential claims which may be directed against drug and medical device manufacturers, it should be noted that there have already been a number of attempted personal injury/wrongful death claims, primarily initiated against employers, which generally related to employee exposure to, or contraction of, COVID-19, or death.

That said, it remains to be determined whether these suits will be barred under state workers' compensation schemes.[21] In addition, it still remains to be seen whether Congress and/or individual states will pass further legislation providing COVID-19-related liability protections and immunity for certain manufacturers and/or employers.[22] 

These laws currently enacted vary greatly as to the types of businesses covered and the extent to which businesses must follow federal and/or local health department guidance to qualify for the afforded tort immunity. Further, as a general matter, tort immunity may not apply in cases where plaintiffs allege gross negligence, willful and wanton behavior or intentional torts.

Despite any existing and/or future protections, including the aforementioned laws affording some type of immunity, drug and device manufacturers should now be bracing themselves as tort claims will emerge from this pandemic. It should be anticipated that lawsuits related to COVID-19 will include some form of the following allegations that a specific defendant:

• Defectively designed a product;

• Defectively manufactured or assembled a product;

• Sold or marketed a product with insufficient labeling, improper instructions or inadequate warnings;

• Acted with negligence by breaching a duty to the plaintiff;

• Fraudulently misrepresented a product's characteristics, efficaciousness and/or abilities;

• Breached express warranties;
  

• Breached implied warranties, including the implied warranty of merchantability or implied warranty of fitness for a particular purpose;

• Acted with gross negligence, engaged in willful and wanton activity and/or in intentionally harmful behavior; or

• Was strictly liable for a defect that made a product unreasonably dangerous.

Initially, given the anticipated surge of litigation, companies should assess any ability to invoke available civil tort immunity, whether under applicable federal or state laws. This would involve an analysis of the currently applicable laws as well as determination as to whether the company made efforts to comply with the defined, applicable government standards and guidance in effect at any given time which would allow such immunity. 

Further, manufacturers of COVID-19 vaccines and any other medications that patients may be taking along with these vaccines should now be preparing to develop an understanding of the potential risks of not only these vaccines, but also any potential interactions that may take place between the vaccines and any other medications patients may be taking.

A more vigilant and direct process of post-market surveillance, and reviewing and transparently reporting adverse events related to COVID-19 vaccines and interactions that may take place between these vaccines and any other medications patients may be taking should also now be readily deployed.

There will be a surge of product liability claims related to the COVID-19 pandemic. Companies must now be taking proactive steps to understand what claims plaintiffs might bring, understand how newly-enacted laws may protect their businesses, and take aggressive steps to limit exposure to anticipated litigation.

While taking these actions will enable companies to better protect themselves, employees, customers and third parties, in no way can they completely guarantee — again in the words of the esteemed Axl Rose — that they will take you down to the Paradise City.

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Christine Kain is a partner at Faegre Drinker Biddle & Reath LLP.

David Sudzus is a former partner who left the firm in December.

Hannah Anderson is an associate at the firm.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] Tex. Brine Co., LLC v. Am. Arb. Ass'n, Inc. , 955 F.3d 482, 483-84 (5th Cir. 2020).

[2] Id.

[3] Id. at 486.

[4] Id. at 487.

[5] Id.

[6] See, e.g., Mirman Group, LLC v. Michaels Stores Procurement Co., Inc. , 2020 WL 5645217, at *2-3 (N.D. Tex. Sept. 22, 2020); Latex Constr. Co. v. Nexus Gas Transmission, LLC , 2020 WL 3962247, at *5 (July 13, 2020); Midwest Health Grp. LLC v. eMDs, Inc. , 2020 WL 6580446, at *2-3 (Nov. 10, 2020).

[7] Faegre Drinker has compiled a complete snapshot of snap removal across the United States at https://www.faegredrinker.com/en/insights/topics/snap-removal-jurisdictions.

[8] Aubin v. Union Carbide Corp. , 177 So. 3d 489, 510 (Fla. 2015).

[9] Cavanaugh v. Stryker Corp. , -- So. 2d --, 2020 WL 5937405, at *5 (Fla. Dist. Ct. App. Oct. 7, 2020).

[10] Id. at *6.

[11] Id. at *5.

[12] Id. at *6.

[13] See, e.g., Trejo v. Johnson & Johnson , 13 Cal. App. 5th 110, 156 (2017) (finding reversible error in trial court's jury instruction on consumer expectations involving complicated products such as the over-the-counter drug at issue); Potter v. Chicago Pneumatic Tool Co. , 694 A.2d 1319, 1333 (Conn. 1997) (recognizing that "there may be instances involving complex product designs in which an ordinary consumer may not be able to form expectations of safety"); Akkerman v. Mecta Corp. , 247 F. App'x 895, 897-98 (9th Cir. 2008) (declining to apply consumer expectations test to a complicated device not even understood in the medical field); Moss v. Wyeth, Inc. , 872 F. Supp. 2d 162, 166 (D. Conn. 2012).

[14] Cavanaugh, 2020 WL 5937405, at *5.

[15] Dani Kass, "Judges Stoll, Albright Dish On Litigating During COVID-19," Law360 (December 11, 2020), available at https://www.law360.com/articles/1322486/judges-stoll-albright-dish-on-litigating-during-covid-19.

[16] See, e.g., Emily Lever, "Fed. Courts Suspend Jury Trials Again as COVID-19 Surges," Law360 (November 20, 2020), available at https://www.law360.com/articles/1331025/fed-courts-suspend-jury-trials-again-as-covid-19-surges; "Remote Arguments Will Continue Into 2021 at Supreme Court," Bloomberg Law (November 25, 2020), available at https://news.bloomberglaw.com/us-law-week/remote-arguments-will-continue-into-2021-at-supreme-court.

[17] Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco County, 137 S. Ct. 1773 (2017) (BMS).

[18] Hanson v. Denckla , 357 U.S. 235, 253 (1958).

[19] Burger King Corp. v. Rudzewicz , 471 U.S. 462, 472 (1985).

[20] Notably, in August, the Judicial Panel on Multidistrict Litigation rejected plaintiff's request for consolidation of all COVID-19 insurance coverage federal litigation and agreed to consider "mini-MDLs" regarding five specific insurers. In October, the JPML rejected mini-MDLs regarding four of five insurers, but did accept an MDL for claims directed to a single insurer.

[21] Certain states, including California, adopted a rebuttable presumption that certain categories of workers are presumed to have contracted a workers' compensation occupational disease if they become ill with COVID-19. However, most states have not adopted this rebuttable presumption and allow for employers to deny claims where the employee's infection more likely occurred outside of work.

[22] Pursuant to the Public Readiness and Emergency Preparedness Act (PREP Act), the Pandemic and All-Hazards Preparedness Reauthorization Act, and the U.S. Department of Health and Human Services (HHS) declaration, the government sought to expedite the design, development, testing, manufacture and administration of drugs and devices designed to diagnose, treat, prevent, mitigate or cure COVID-19.

On March 10, 2020, the HHS Secretary issued a PREP Act Declaration immunizing specifically defined entities and individuals from liability arising from the manufacture, testing, development, distribution, administration and use of certain COVID-19 response products. Our prior alert explained immunity under the PREP Act Declaration.

On March 27, 2020, President Trump signed the Coronavirus Aid, Relief and Economic Security (CARES) Act to provide emergency assistance for the COVID-19 response. In part, the CARES Act incentivizes businesses to produce and distribute critically needed respiratory protective equipment — like masks and respirators — by granting additional liability protection to these device manufacturers. The CARES Act extended the protections provided in the PREP Act Declaration to entities and individuals by granting additional liability protection to manufacturers of respiratory protective equipment.

A number of states have passed laws limiting tort liability for in-state businesses. To date, Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, DC, Florida, Georgia, Hawaii,  Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri,  Montana, Nebraska, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee,  Utah, Vermont, Virginia, Wisconsin and Wyoming have passed laws and/or executive orders which grant some form of immunity to specific businesses for injuries related to the transmission of COVID-19.

In July 2020, US Senate Republicans proposed dramatically more expansive tort immunity related to COVID-19 injuries in the SAFE TO WORK Act (S. 4317).  The proposed law, if enacted, would impose strict nationwide limitations on coronavirus-related tort liability with limited exceptions. As proposed, the law would preempt all other federal, state and tribal laws except those that provide even greater immunity and protection against liability. The proposed Act also would permit any covered lawsuits to be filed in or removed to a federal district court by any defendant. In addition, it would apply retroactively to pending actions and claims. Attempted progress of this legislation as remained stalled, and passage of the SAFE TO WORK Act faces significant challenges, not the least of which is the current administration change in Washington.

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