Top 5 Drug and Medical Device Developments of 2021

As we ring in the new year, it is time, 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 impacting drug and device law for 2021.

1. Personal Jurisdiction Remains Top of Mind

The year 2021 served up a number of decisions impacting personal jurisdiction, with developments for both general and specific personal jurisdiction. These decisions were not limited to the U.S. Supreme Court — rather, several state courts issued decisions impacting personal jurisdiction as well. We break each of them down in turn below.

Personal Jurisdiction in the U.S. Supreme Court

The most notable personal jurisdiction decision to come out of 2021 was the U.S. Supreme Court’s March decision in Ford Motor Co. v. Montana Eighth Judicial District Court. That case considered whether Ford was subject to specific personal jurisdiction in Montana and Minnesota based on accidents that had occurred in each state involving Ford vehicles, even though Ford’s contacts within the states — generally, doing business in those states — had no causal connection to the plaintiffs’ injuries. Ford argued that because it had not designed, manufactured or sold the specific vehicles at issue in either of those states, there was no causal link between its in-state contacts and the plaintiffs’ claims.

The Supreme Court didn’t bite. In a unanimous 8-0 opinion, with Justice Amy Coney Barrett not participating, the Court held that Montana and Minnesota could exercise personal jurisdiction over Ford and rejected Ford’s causal link test. Instead, the Court held that the test is whether a claim “arise[s] out of or relate[s] to the defendant’s [forum] contacts,” and that the “relates to” portion of the phrase means that “some relationships will support jurisdiction without a causal showing.” Because Ford had “systematically served” the Montana and Minnesota markets for the exact type of cars at issue in the plaintiffs’ cases in those states, the Court concluded that a sufficiently strong relationship existed between Ford, the forum states and the litigation.

Personal Jurisdiction in the States

State courts in New Mexico¹, New York², Georgia³ and Pennsylvania⁴ also issued decisions in 2021 impacting the exercise of personal jurisdiction. The cases do, however, differ from the Supreme Court’s Ford Motor decision in that they consider questions impacting general personal jurisdiction rather than specific personal jurisdiction.

The supreme courts in all four of these states examined whether a nonresident corporation consents to general personal jurisdiction in the state when it registers to do business in the state. The high courts in New Mexico, New York and Pennsylvania answered that question in the negative, while the high court in Georgia answered in the affirmative.

In each case, the corporate defendants were neither incorporated in the states nor had their principal places of business there; but the plaintiffs nonetheless sued the defendants in those states because they had registered to do business there. The plaintiffs each argued that such registration amounted to the defendants’ consent to general personal jurisdiction in those states.

The courts in New Mexico and New York both rejected plaintiffs’ arguments and held that each respective state’s business corporation statute, which required foreign corporate defendants to register to do business in the state, did not additionally require that corporations consent to general jurisdiction in order to do business in the state. Business registration statutes in both states historically provided a mechanism for perfecting service on foreign corporations doing business there, thereby conferring general personal jurisdiction in line with Pennoyer v. Neff’s presence-based framework. But as noted in both courts’ opinions, consenting to service no longer has such an effect when read in tandem with current Supreme Court precedent — namely, International Shoe Co. v. Washington and its progeny. Each court therefore held that the defendants’ registration to do business in the states did not amount to consent to general personal jurisdiction there.

The Pennsylvania court recognized that the Pennsylvania statute may be the only statute which expressly provides that registering to do business constitutes a basis upon which all of the state’s courts can exercise general jurisdiction over a foreign corporation. The court concluded this did not comport with Goodyear Dunlop Tires Operations, S.A. v. Brown and Daimler AG v. Bauman, because it conferred general jurisdiction even where a defendant did not have the significant forum-directed activity necessary to satisfy due process. The court also rejected the arguments that registered foreign corporations constitutionally consented to general jurisdiction in the state, explaining that the statute presented a Hobson’s choice for corporations and the consent was not the requisite “voluntary, knowing and intelligent” consent.

In reaching its opposite conclusion, the Georgia court noted its hesitancy to overturn a 1992 Georgia Supreme Court decision⁵ that had held that a corporation’s registration to do business in Georgia made it a resident of the state. According to the Georgia court, overturning that 1992 decision, which was in conflict with current Supreme Court precedent, would lead to “perverse consequence[s]” when read in conjunction with the state’s long-arm statute — namely, it would exempt foreign corporations who register to do business in Georgia from both general and specific personal jurisdiction. The court therefore held that a corporation consents to general personal jurisdiction in Georgia by registering to do business there.

These state court decisions, and their inconsistent outcomes, are notable because they tee up a potential issue for the Supreme Court to consider in the future. Litigators will want to keep an eye on this development in other states.

2. Developments in Opioid Litigation

As in past years, developments in ongoing opioid litigation have received extensive coverage in 2021. Below, we break down a number of the most salient developments.

The year began with the MDL court declining to sign off on a class of plaintiffs made up of legal guardians representing infants born to mothers who had used opioids. The MDL court based its decision, in part, on concerns relating to the court’s ability to accurately identify a child’s legal guardian, which may change over time and throughout the course of litigation. The class’s definition was therefore too inconsistent and imprecise to allow for certification.

The decision declining class certification was followed in March by McKinsey & Co.’s request that the Judicial Panel on Multidistrict Litigation create a second, new MDL in the Southern District of New York, where the company has its principal place of business and where Purdue Pharma LLP, a McKinsey advisee, is currently in litigation in bankruptcy court. Opioid plaintiffs argued fervently against the creation of a second MDL, suggesting that McKinsey had failed to show why Judge Dan Aaron Polster, who has overseen the opioid MDL for several years, should not also oversee cases against McKinsey.

Nonetheless, in June, the JPML granted McKinsey’s request and created a new MDL, although it centralized cases in the Northern District of California rather than the Southern District of New York. In reaching its decision, the JPML noted that Judge Charles R. Breyer in the Northern District of California had familiarity with the existing MDL, having been a member of the JPML at the time the original MDL was centralized. It also noted that there was good reason to separate cases involving McKinsey, a consulting firm, from the cases in the original MDL, which largely involved lawsuits against opioid manufacturers, distributors, and pharmacies.

The year 2021 is also notable for a number of opioid trials that took place across the country. In May, the first bellwether trial began in federal court, in the Southern District of West Virginia. There, Cabell County and the City of Huntington’s claims against three opioid distributors were heard in a bench trial before U.S. District Judge David A. Faber. The parties, which wrapped up the trial at the end of July, await a decision from Judge Faber.

Similarly, in October, MDL Judge Polster oversaw the first bellwether jury trial involving pharmacy defendants. The trial was limited to the question of whether three pharmacies contributed to an opioid-related “public nuisance” in two Ohio counties and culminated in a jury verdict in November in favor of the Ohio county plaintiffs. Judge Polster is expected to preside over proceedings to determine the remedy in the spring of 2022. In contrast, a five-month bench trial that took place in California state court reached the opposite conclusion: in November, Judge Peter J. Wilson of the Orange County Superior Court ruled that the California municipality plaintiffs had failed to prove actionable public nuisance for which several pharmaceutical defendants were legally liable.⁶

In addition, a jury trial in New York state court that involved six months of testimony resulted in a liability verdict in favor of the plaintiffs on December 30, 2021. By the time of closing arguments, only Teva Pharmaceuticals USA, Inc., and its affiliate Anda, Inc., remained as defendants in the case, though the plaintiff state and local governments initially brought their claims against several additional manufacturers that reached settlements prior to and during trial. Teva’s motion for a mistrial remains pending. It is based on, among other issues, numbers used by the plaintiffs in their closing arguments, which incorrectly described the quantity of opioids shipped by each company. A separate trial will be held to determine the amount Teva is to pay.

The year 2021 also brought about notable developments in the world of opioid-related settlements. In July, several states reportedly reached global settlements with national drug distributors. The deal was brokered by the attorneys general of seven states, and more than 40 states have been asked to sign on to the agreement, which would terminate a large number of opioid lawsuits against distributors across the nation.⁷ Similarly in September, the Cherokee Nation announced a deal of its own with opioid distributors worth $75 million. In August, Rite Aid Corp. also struck a settlement deal with two Ohio counties to avoid going to trial as part of the pharmacy trial bellwether that took place in October. The terms of the settlement have not been disclosed, but it received immediate approval from MDL Judge Polster.

More recently, in December, Judge Colleen McMahon of the U.S. District Court for the Southern District of New York overturned a $4.5 billion settlement, which had been negotiated and approved between Purdue Pharma and thousands of state, local and tribal governments across the nation. After thousands of lawsuits were levied against it, Purdue Pharma filed for bankruptcy restructuring in September 2019, thereby putting a hold on all legal claims against the company. The Sackler family, which owned Purdue Pharma at that time but had not filed for personal bankruptcy protection, participated in the settlement negotiations and was granted immunity from all claims against them under the terms of the settlement. This release of claims against the Sackler family was at the heart of Judge McMahon’s decision to overturn the $4.5 billion settlement — in overturning the settlement, Judge McMahon noted that the federal bankruptcy code does not permit a bankruptcy judge tasked with accepting a settlement plan to grant a release to individuals not declaring bankruptcy themselves. Purdue Pharma has pledged to appeal the ruling and has indicated that it will simultaneously move forward with forging a new plan.

This year also saw the reversal of a major award levied against Johnson & Johnson after a 2019 bench trial. That lawsuit, which took place in Oklahoma state court based on claims brought by the Oklahoma attorney general, proceeded to trial against Johnson & Johnson after two co-defendants each struck a pre-trial settlement with the state totaling more than $355 million on the eve of trial. The trial resulted in a $465 million verdict in favor of the Oklahoma attorney general; and Johnson & Johnson appealed immediately, arguing such a result would invite unlimited litigation against large corporations for public health problems. The Oklahoma Supreme Court reversed the trial court, echoing these same concerns and noting that the attorney general’s theory “would create unlimited and unprincipled liability for product manufacturers.” The court also explained that the award levied against Johnson & Johnson was untenable since it relied on, and would exponentially expand, a “public nuisance” theory against product manufacturers.

3. COVID-19 Vaccine Mandates

As the nation (and world) has fought to control the COVID-19 pandemic over nearly two years, many workplaces and educational institutes implemented vaccine mandates to protect their workers and communities. Many of these mandates were announced as early as spring 2021; and in September, President Biden announced that companies with 100 or more employees were required to mandate COVID-19 vaccines or weekly testing for all workers.⁸

This month, the U.S. District Court for the Southern District of Georgia halted President Biden’s vaccine mandate for federal contractors on the grounds that he likely exceeded his authority.⁹ Plaintiffs across the country, including the New York City Department of Education, Los Angeles county public employees and United Airlines workers, among others, have filed dozens of lawsuits seeking similar relief and arguing for the right to decline vaccination.¹⁰ Yet workplace and school-related vaccine mandates have overwhelmingly survived legal challenges.¹¹

Plaintiffs in many of these initial lawsuits hung their hats on the fact that the Food and Drug Administration (FDA) had only authorized the available vaccines for emergency use and had not granted them approval.¹² These arguments, which were largely rejected by courts that initially considered the issue, lost their footing entirely once the Pfizer vaccine gained full FDA approval on August 23, 2021.¹³

Plaintiffs have also argued against mandates on constitutional grounds, based on an alleged failure to make reasonable accommodations for employees’ sincerely held religious beliefs, and a failure to provide health and disability exceptions.¹⁴ But based on the U.S. Supreme Court’s long-standing decision in Jacobson v. Massachusetts, vaccine mandates are constitutional when they are necessary for public health or safety.¹⁵

In addition, in August, the U.S. Supreme Court considered an emergency request for relief from students at Indiana University that would have blocked the university from requiring all faculty, students and staff to be vaccinated, absent a qualifying religious or medical exemption.¹⁶ Justice Barrett chose not to refer the question to the full Court and denied the students’ request, without explanation.

Decisions siding with the plaintiffs in these actions have been relatively few and far between, and have largely been limited to adjudication of religious and health care exceptions to the mandates, rather than to the issue of their permissibility. For example, in September, Judge Mark Pittman in the Northern District of Texas issued a temporary restraining order barring United Airlines from placing unvaccinated workers that have a religious or medical exception on unpaid leave.¹⁷

The Supreme Court has yet to consider the validity of a mandate that fails to provide a religious exception. Legal scholars, however, speculate that any such mandate could survive a constitutional challenge in light of the Supreme Court’s 1944 decision in Prince v. Massachusetts.¹⁸ In Prince, the Court stated “[t]he right to practice religion freely does not include liberty to expose the community or the child to communicable disease or the latter to ill health or death.”¹⁹

COVID-19 vaccines, and the mandates that have been imposed, have thrust FDA’s regulatory process into the public spotlight over the last almost two years. Whether the public fully understands the regulatory process or not, mandates like the ones we have seen related to the COVID-19 vaccine may impact the public’s perception of FDA, the process for evaluating and approving drugs and devices, and the inherent risks associated with such products. Drug and device litigators will need to remain cognizant of this public discourse and perception in this “post”-COVID world.

4. The Impact of COVID-19 on Jurors’ Perceptions in Science-Based Trials

The COVID-19 pandemic immediately and directly impacted lives across the globe. Scientists worked around the clock as the science developed. Not surprisingly, by January 2021, there were more than 90,000 scientific publications mentioning COVID-19.²⁰ The evolving nature of the science behind COVID-19, the uncertainty of the past two years, and the seemingly constant availability of information (and misinformation) begs the question: how has the pandemic impacted jurors’ perception of scientific and medical information?

While trial lawyers litigating during these uncertain times disagree on the extent to which the pandemic has impacted jurors’ belief in science, the prevailing viewpoint among trial lawyers is that political polarization and the rapidly evolving science surrounding the pandemic has resulted in mixed messages, misinformation and an erosion of public trust.²¹

Indeed, some trial lawyers believe that this skepticism has seeped into the courtroom, leaving jurors confused and more likely to distrust scientific evidence than before.²² Limited data somewhat supports this viewpoint. A survey of 3,970 jury-eligible adults showed that the evolving nature of COVID-19 science made 11% of potential jurors less trusting of scientific experts at trial.²³

However, other trial lawyers believe jurors’ perception of science-based testimony remains unchanged and favorable.²⁴ As of March 2021, a large majority of potential jurors — 70% — viewed scientists as trustworthy because they are learning more about the virus each day.²⁵ Similarly, a study by Pew Research found that from January 2019 to November 2020, the percentage of United States adults who reported that they had either a great deal or a fair amount of trust in scientists to act in the public’s best interest decreased by 2%, but remained favorable with 84% of respondents stating they still trust scientists.²⁶ And the portion of adults reporting that they had a great deal of confidence in scientists slightly increased.²⁷

One thing is clear: as a result of the pandemic, jurors are thinking more critically about scientific testimony and want to see and understand facts and data for themselves.²⁸ This show me, don’t tell me, attitude places greater emphasis on the use of graphics and visual aids to explain complex scientific or medical information, and to support expert testimony, during trial.

5. The Rise of Litigation Funding

While many sectors have been impacted by the recent economic upheaval, COVID-19 failed to slow the growth of the litigation finance industry in 2021.²⁹ Litigation funding — third-party financing of a lawsuit in exchange for a share of the proceeds in the event of a favorable outcome — arose two decades ago in Australia, where the country prohibited contingency-fee agreements. Since then, litigation funding has grown in popularity across the world. Today, it represents a multibillion-dollar industry in the United States alone.³⁰

According to data from Bloomberg Law’s 2021 Litigation Finance Survey, nearly 60% of litigation funders report that their business has increased since March 2020.³¹ And litigation funders view their role in litigation during the pandemic positively: 97% agree that they provided necessary funding, and 100% of litigation funders believe that their industry increases access to justice.³²

Defense attorneys remain skeptical. The introduction of a stranger to the attorney-client relationship — whose sole interest is financial — raises numerous concerns about the pressure litigation funding places on plaintiffs to make decisions that may prolong litigation, delay recovery, and undermine judicial efficiency and transparency. And litigation funders seem to agree, at least to some degree: 56% of funders stated that the litigation finance industry is not transparent to the general public, and 61% of funders stated that their financing agreements are either never or rarely disclosed in court.³³

Similarly, litigation funding raises ethical concerns. Defense attorneys question whether the litigation financing industry promotes the filing of frivolous lawsuits and empowers funders to exert undue influence over litigation strategy, stifling settlement efforts.

To date, only 16% of litigation funders report having provided funding in product liability matters. But this number is expected to grow in 2022 and potentially beyond.³⁴ Nearly a third of lawyers surveyed stated that they are more likely to seek litigation financing now than they were before the economic downturn, and 23% of attorneys reported being more likely to seek funding today than they were just one year ago.³⁵

Although the data shows a relatively smaller percentage of product liability cases are subject to third-party funding, the rise of litigation funding is certainly an area to watch in 2022.

Conclusion

Cheers to the new year and the drug and device field that we know and love. May 2022 bring even more interesting and positive legal developments to the profession!

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