U.S. Supreme Court Rules on Attorney's Fee Issue in Vaccine Injury Fund Case

The National Childhood Vaccine Injury Act of 1986 established a no-fault compensation system to stabilize the vaccine market and expedite compensation to injured parties. Under the Act, a proceeding for compensation is “initiated” by service upon the Secretary of Health and Human Services and “the filing of a petition containing” specified documentation with the clerk of the Court of Federal Claims, who forwards the petition for assignment to a special master. 42 U. S. C. 300aa–11(a)(1).

An attorney may not charge a fee for services in connection with such a petition, but a court may award attorney’s fees and costs incurred by a claimant in any proceeding on an unsuccessful petition, if that petition was brought in good faith.

In a recent opinion of the United States Supreme Court in Sebelius v. Cloer, the Court held that An untimely NCVIA petition may qualify for an award of attorney’s fees if it is filed in good faith and there is a reasonable basis for its claim.

In 1997, shortly after receiving her third Hepatitis-B vaccine, Cloer began to experience symptoms that led to a multiple sclerosis (MS) diagnosis in 2003. In 2004, she learned of a link between MS and the Hepatitis-B vaccine, and in 2005, she filed a NCVIA claim. The special master concluded that Cloer’s claim was untimely because the Act’s 36-month limitations period began to run when she had her first MS symptoms in 1997.The Federal Circuit agreed. Cloer then sought attorney’s fees and costs. The Federal Circuit ruled in Cloer’s favor. The Supreme Court affirmed.

Nothing in the attorney’s fees provision suggests that the reason for the subsequent dismissal of a petition, such as untimeliness, nullifies the initial filing. An NCVIA petition delivered to the court clerk, forwarded for processing, and adjudicated before a special master is a “petition filed under section 300aa–11.” The government’s contrary position is inconsistent with the fees provision’s purpose, which was to avoid limiting petitioners’ ability to obtain qualified assistance by making awards available for “non-prevailing, good-faith claims.”

U.S. SUPREME COURT RULES IN FAVOR OF GENERIC DRUG MANUFACTURERS

A landmark Supreme Court ruling limiting liability for generic drug makers will have a significant negative impact on litigation brought against makers of generic drugs.

In June, the U.S. Supreme Court struck down the lawsuit of Gladys Mensing, who sued a manufacturer of generic Reglan (metoclopramide) after developing a severe and permanent neurological side effect. The court ruled that the defendant Pliva Inc., was not responsible for her health problems because the company accurately reproduced the warning label distributed by the brand name manufacturer – the party liable under federal law for previously undisclosed side effects.

In a 5-4 decision, The Court reasoned that state law failure-to-warn claims against generic drug manufacturers would require greater warnings than those approved by the Food & Drug Administration (“FDA”) for the brand name version of the drug and are preempted by the Hatch-Waxman Amendments to the Federal Food, Drug, and Cosmetic Act (the “FDCA”), which require that the generic drug’s label warnings must be the same as those of the originally approved branded drug. The Court specifically found implied conflict preemption here because “[i]f the [defendants] had independently changed their labels to satisfy their state-law duty,” according to the Court, “they would have violated federal law.”

In the wake of Pliva, Inc. v. Mensing, it may be that generic manufacturers are free from liability when it comes to “side effects” litigation. Millions of Americans take advantage of generic drugs because generic manufacturers produce drugs that are almost always considerably cheaper, but just as effective as the brand name equivalent. One of the reasons for low costs is that generic drug makers are free from research and development costs. The Supreme Court ruling may serve to continue that trend.

This decision means that generic drug manufacturers can rely on a federal preemption defense to defeat state law failure-to-warn claims so long as the generic drug label at issue has met the federal requirement of being identical to the corresponding brand-name drug label.

Justice Sotomayer dissented and stated that, "As a result of today’s decision, whether a consumer harmed by inadequate warnings can obtain relief turns solely on the happenstance of whether her pharmacist filled her prescription with a brand-name or generic drug. The Court gets one thing right: This out-come 'makes little sense.'"

U.S. Supreme Court Rules Against Consumers

The U.S. Supreme Court, in a recent ruling, handed businesses such as AT&T a major victory by upholding the use of arbitration for customer disputes rather than allowing claims to be brought together as a group.

By a 5-4 vote, the Supremes ruled that the corporation could enforce a provision in its customer contracts requiring individual arbitration and preventing the pooling together of claims into a class-action lawsuit or class-wide arbitration. The plaintiffs, Vincent and Liza Concepcion, filed their class-action lawsuit in 2006, claiming they were improperly charged about $30 in sales taxes on cell phones that the AT&T Mobility wireless unit had advertised as free.

Companies and large corporations love arbitration because it is a less expensive way of settling consumer disputes, as opposed to costly class actions, which allow customers to band together and protect their interests as consumers. Customer arbitration agreements are widely used by cell phone carriers, cable providers, credit card companies, stock brokerage firms and other businesses. These arbitration agreements are so common now, they appear in almost every contract between a corporation and a consumer. They usually appear buried in the fine print of a lengthy contract agreement and consumers typically do not understand what they are signing away when signing the contract.

This may be the most important class action case ever decided by the Supreme Court because it has the potential to permit companies to escape class action liability in almost all of their activities. Not surprisingly, shares of AT&T closed up 1.55 percent at $31.42 on the New York Stock Exchange after the recent Court announcement.

AT&T praised the ruling, saying the Supreme Court recognized that arbitration often benefits consumers. "We value our customers, and AT&T's arbitration program is free, fair, fast, easy to use, and consumer-friendly," the company said. Most consumer advocates denounced the decision because class actions have been an essential tool to achieve justice in our society.

AT&T had argued that a federal law that encourages the use of arbitration, the Federal Arbitration Act, trumped a California consumer protection law at issue in the case.

In its ruling, the Supreme Court's conservative majority agreed."The California law in question stands as an obstacle to the accomplishment of the purposes and the objectives of the FAA. It is accordingly preempted," Justice Antonin Scalia said for the majority in reading his opinion from the bench. Scalia cited a federal judge's conclusion in the case that the couple was better off under the AT&T arbitration agreement than under a class action, which could take months or years and could result in their winning just a small amount of money.

The ruling, which reversed a decision by a U.S. appeals court in California, was the latest in a series by the Supreme Court in recent years that generally favored arbitration.

The court's four liberal justices dissented. "The Court is wrong to hold that the federal act preempts the rule of state law," Justice Stephen Breyer wrote in dissent. It is somewhat ironic that the majority, who claim to be advocates of States’ Rights, decided in favor or preemption.

The Supreme Court case is AT&T Mobility v. Concepcion, No. 09-893.