Banner Settles In Chinese Drywall Litigation

Judge Fallon last week gave preliminary approval to a $54.5 million settlement between Banner Supply and thousands of homeowners the company supplied with defective Chinese drywall. Most of the affected properties are located in Southwest Florida. Judge Fallon presides over more than 10,000 drywall cases merged in multidistrict litigation in New Orleans. However, like the Inex “settlement”, the preliminary approval does not mean it is a done deal.

Banner, based in Miami, purchased about 1.4 million sheets of Chinese drywall, but says it didn't know of defects. It is estimated that 3,000 homes in Florida have Chinese drywall supplied by Banner.

Meanwhile, some attorneys believe the settlement as it stands is full of unanswered questions and looks like a raw deal. Unless those questions are answered, they will advise their clients to opt out.

There have been many criticisms of the settlement including:

- An estimated payout of $4,000 to $6,000 per homeowner, way short of the amount of money needed to fix drywall-damaged homes.

Homeowners won't be told what amount they will receive until the deadline passes for them to decide whether to take the settlement. The deadline will be in mid-August.

- The settlement terms allow for attorney fees of as much as 32 percent of the $55 million, and no limit on administrative costs.

- Banner is not required to contribute its corporate assets to the settlement fund. The $55 million would come only from four Banner insurers: Chartis, FCCI Insurance Co., Hanover American Insurance Co. and Maryland Casualty Co.

Attorney fees are actually in the control of Judge Fallon. The amount fluctuates from hourly fees to percentages of 40 percent or more among the law firms involved. What Fallon has indicated is that he will not approve any fee that is more than 32 percent.

As to unanswered questions, Fallon will hold a fairness hearing before the settlement is finalized so anyone with objections can have them addressed.

In a statement provided by a spokesman, Banner attorney Michael Peterson of Miami said that Banner "has been severely harmed by misrepresentations made to it."

The toxic and corrosive drywall, imported mostly between 2005 and 2008, emits sulfur compounds that corrode air conditioning coils, electrical wiring, plumbing fixtures and other metal items in the home. Homeowners complain of health problems from respiratory illness to nosebleeds.

There are some dangerous consequences for those Plaintiffs who opt out of the proposed settlement. The biggest problem would be if Banner filed for bankruptcy and Plaintiffs had to pursue their claims through bankruptcy court, which could take years and yield nothing. Plaintiffs would be left holding the bag if no other defendants settles or if any judgment was uncollectible.The alternative of taking some money, no matter how little, looks like a much better decision than opting out of this settlement.

Venue Selection for Multi-District Litigation

             The use of Multi-District Litigation as an efficient method for handling complex litigation has been around since 1968 and is becoming more and more popular. Everything from the BP oil spill disaster to Chinese drywall to the DePuy hip recall has found its way into a Multi-District Litigation (MDL) setting. 

           

            Congress authorized the formation of an MDL in Title 28 U.S.C. 1407. Subpart (a) states that, “When civil actions involving one or more common questions of fact are pending in different districts, such actions may be transferred to any district for coordinated or consolidated pretrial proceedings.” Typically, litigation that qualifies for an MDL involve complex disputes between many similarly situated plaintiffs located in various districts across the country and common defendants. One of the advantages of an MDL is lower costs for litigation due to the streamlining of discovery and the cutting down of duplicative discovery. Another is that an MDL creates a forum where all parties are under one roof which helps to facilitate settlement. If settlement is not reached by a certain point, the cases filed in the MDL are transferred back to their respective venues for trial.

            An MDL setting is also beneficial to those plaintiffs who have filed similar claims in state court which are not acceptable for transfer to the MDL. Recently, an emphasis has been placed on coordination between the two jurisdictions, allowing for discovery coordination and settlement negotiations. An August 23, 2010 article on www.law.com emphasized this importance by reporting on In re Total Body Formula, an MDL assigned to Judge David Proctor in the Northern District. Judge Wong of DeKalb County Georgia presided over several similar lawsuits which were filed in Georgia state court. Judge Wong noted that District Judge Proctor actively promoted cross-jurisdictional cooperation and invited him to participate in the mass mediation that resulted in a settlement of the cases consolidated in the MDL and some of the cases pending in various state courts. The article noted that the lawyers appreciated the electronic document repository that the federal court created for all pending cases, whether filed in federal court or state court.

            As authorized under Title 28 U.S.C. 1407(d), the MDL panel consists of seven circuit and district judges throughout the country who are appointed by the Chief Justice of the United States Supreme Court. No two judges can be from the same circuit and a concurrence of four members of the panel shall be necessary for any action. Once civil actions are docketed with the MDL panel, the panel is tasked with making the decision of which venue to transfer the MDL. The MDL panel also decides the particular judge who will preside over the MDL in the chosen venue.

            Parties file memorandum briefs with the panel advocating for the transfer of the MDL to certain venues and even certain judges within those venues. Each filing party is also permitted to file a separate statement limited to one page setting forth reasons why oral argument should, or need not, be heard. Requests for hearings are typically granted, but oral argument is brief. A party is generally given no more than two to three minutes to present their oral argument in front of the panel.

            Multiple factors are considered by the panel in deciding which district court to assign an MDL. A list of what appears to be the most important current factors include: (a) significant pretrial progress of an action pending in the transferee district; (b) the docket conditions or resources of the transferee judge or district; (c) the geographic centrality or proximity of the transferee district to the filed actions; (d) the proximity of the transferee forum to relevant documents or potential witnesses; (e) the general experience of the transferee judge; (f) the familiarity of the transferee judge with the factual or legal issues in the MDL due to presiding over a previous action involving similar issues; (g) the accessibility of the transferee district court; and (h) the proximity of the transferee district to the conduct or event at issue.

            The panel has broad discretion in determining the district to which an MDL is transferred. The weight given to each factor depends on the issues and facts of the MDL. However, one of the most important factors appears to be the experience of the transferee judge. In In re Silicone Gel Breast Implants Prods. Liab. Litig., Docket No. MDL-926, the panel transferred pending breast-implant litigation to the Northern District of Alabama and assigned the litigation to Judge Samuel Pointer, a former member of the MDL panel, even though no action was currently pending in that district. The panel stated that they assigned the MDL to Judge Pointer because of his experience and ability to handle such an important and challenging assignment. Another important factor is the docket conditions of the transferee judge and district. In practice, the panel evenly spreads MDL’s throughout the country, thus ensuring that a single district is not strapped unnecessarily with a heavier load of multi-district cases.

            MDL’s can be a great avenue for your client’s case. They can potentially cut down on costs, expenses and time. Although determining where an MDL will be transferred is not an exact science, it is important to understand the factors that go into that decision.

            (portions of this post appeared in an article written by Booth Samuels

             for the Alabama Association for Justice Journal)

Evaluating a Potential Fosamax Case

How should you evaluate a potential Fosamax case? 

The length of time a person took Fosomax is likely the most important factor in determining whether a person has a claim. The magic number is five years. This number comes from an FDA warning issued on October 13, 2010 to patients and health care providers about the possible risk of atypical thighbone (femoral) fracture in patients who take bisphosphonates. According to the FDA warning, the optimal use of bisphosphonates use for osteoporosis is unknown and the FDA is highlighting this uncertainty because these fractures may be related to use of bisphosphonates for longer than five years. Furthermore, the FDA recommends that health care providers consider periodic reevaluation of the need for continued bisphosphonate therapy for patients who have been on bisphosphonates for longer than five years.

Why five years? While there is no doubt that use of Fosomax increases bone density that however “does not necessarily equate with good bone quality.” The problem is that “turnover is a natural part of maintaining bone health.” The use of Fosomax however reduces osteoclast activity and bone resorption. As a result, bone formation is also reduced, thus over a long period of time microdamage, that naturally occurs in bones, that would otherwise be normally repaired by the body, begins to accumulate.  

What is also significant is that merely ceasing to take Fosomax or its generics, does not remove a person from the adverse effects of Fosomax. To the contrary, biphosphates, such as Fosomax, are stored in a person bones for up to ten years. In effect, early studies indicated that alendronate accumulates in the bone and re-circulates when bone containing the alendronate is remodeled. In fact, this quality was originally touted as one of the possible benefits of alendronate because “many years of treatment may produce self-sustaining concentrations.” (Study funded by Merck). Interestingly, this very same article published in 1998 noted that while the effects of alendronate may continue after a person has stopped treatment, “if alendronate were to cause an adverse effect that has not yet been recognized, endogenous exposure to alendronate would also continue after stopping treatment.” Thus, Merck clearly knew as of 1998 that absent studies of the long term effects of alendronate, Merck would essentially be gambling by continuing to manufacture and distribute Fosomax.

Our firm is currently investigating claims for those people who have taken Fosamax and have been injured. If you would like a free case evaluation, please contact Booth Samuels at toll free 1-866-515-8880 or at booths@pittmandutton.com.

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.'"

Pfizer Spend $3.8 Million Lobbying in First Quarter

In our globalised world, there are few industries that come close to the pharmaceutical industry in the reach and the impact it has on the lives of ordinary citizens. Economic heavyweights can easily get their voices heard within political arenas, because economic and political interests are always intertwined. Pfizer is said to be the most powerful political lobbyist of the pharmaceutical industry, and the drug giant is constantly using this power to influence regulations, laws and policies that suit its own interest. Pfizer Inc. spent $3.79 million in the first fiscal quarter this year lobbying the federal government on issues from drug pricing and patents to tax rates and aspects of the 2010 healthcare overhaul, according to a quarterly disclosure report.

Pfizer, the world's biggest drugmaker by revenue, lobbied on Medicare prescription drug coverage and rebates paid for drugs bought through Medicaid, reform of patent laws and handling of patent disputes, and implementation of the health care overhaul. It also lobbied on extending and improving the federal tax credit for research and development spending, taxes on repatriation of income earned overseas and deferral of taxes on some earnings.

Pfizer lobbied on free-trade agreements with Korea, and on market access and regulatory issues involving the E.U., Japan, India and other countries. It also lobbied on the fees the government charges to review and approve experimental drugs, rules for producing generic versions of biologic drugs, and on research required under the health overhaul to compare effectiveness of drugs and other treatments.

Pfizer also sought to influence legislation concerning ways to fight the growing problem of microbes becoming resistant to drug treatment, and on rules restricting sales of cough medicines containing the ingredient dextromethorphan, which is included in over-the-counter medicines such as Robitussin.

Pfizer has not only been lobbying Congress and the White House, but other government agencies whose list reads like an alphabet soup. Pfizer lobbied the Food and Drug Administration, the Patent & Trademark Office, the Centers for Medicare and Medicaid Services and the Departments of Commerce, State and Health & Human Services, according to a disclosure report filed April 20 with the House clerk's office.

A federal law enacted in 1995 requires lobbyists to disclose activities that could influence members of the executive and legislative branches.