All in the Corporate Family: Attorney-Client Privilege Applies Between Parent and Subsidiaries

The District of New Jersey confirmed that members of a corporate family all are represented by the same in-house counsel, whether that counsel occupies an office within the parent company or within a subsidiary, because corporate family members are considered joint clients. Accordingly, emails sent between in-house counsel employed by a subsidiary and an executive or representative from a parent company are protected by the attorney-client privilege. See Trzaska v. L’Oreal USA, Inc., No. 2:15cv-02713 (D.N.J. January 6, 2020).

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Hierarchy of Scientific Evidence Reigns Supreme: NJ Appellate Division Affirms Exclusion of Experts in Accutane Litigation

In In re: Accutane Litigation (A-4952-16T1) — an appeal decided just 10 days after oral argument — the New Jersey Appellate Division applied the New Jersey Supreme Court’s landmark decision In re Accutane Litigation, 234 N.J. 340 (2018) (Accutane 2018), arising from the same multicounty litigation, to affirm exclusion of two of plaintiffs’ experts and dismissal of more than 3,000 cases.

The Accutane multicounty litigation involves thousands of cases in which plaintiffs claim the prescription acne medication caused inflammatory bowel disease (IBD). The litigation has been divided into two parts, based on the sub-type of IBD injury alleged: cases in which plaintiffs claim Accutane caused Crohn’s disease (CD) and cases in which plaintiffs claim it caused ulcerative colitis (UC).

Recap: The NJ Supreme Court’s Decision in Accutane (2018)

On the CD side of the litigation, in 2015 the trial court granted a motion to exclude two plaintiffs’ experts, a gastroenterologist and a statistician, from testifying that Accutane caused CD. The Appellate Division reversed.

In 2018, the New Jersey Supreme Court reversed the Appellate Division and affirmed the trial court’s exclusion of the experts. In its landmark decision, the Supreme Court reconciled New Jersey’s framework for analyzing the reliability of expert testimony set forth in N.J.R.E. 702 and 703 with the federal standard set forth in Daubert v. Merrell Dow Pharm., Inc. In particular, the Court incorporated Daubert’s factors “for use by our courts” in assessing expert testimony reliability, but stopped short of declaring New Jersey a “Daubert jurisdiction.” The Court incorporated these factors because they “dovetail with the overall goals of” New Jersey’s “evidential standard and would provide a helpful — but not necessary or definitive — guide for our courts to consider when performing their gatekeeper role concerning the admission of expert testimony.”

The NJ Appellate Division’s Application of Accutane (2018)

In 2017, while the appeal from the trial court’s order excluding the CD causation testimony was pending, the trial court conducted a 10-day Kemp hearing concerning the UC side of the litigation and granted a motion to bar two more of plaintiffs’ experts, a gastroenterologist (the “UC-gastroenterologist”) and an epidemiologist (the “UC-epidemiologist”), from testifying that Accutane caused UC. The trial court held the experts’ methodologies were unsound, in part because they “disregarded the fundamentals of the scientific method, particularly the medical-evidence hierarchy” by, for example, “[deviating] from the accepted scientific methodology in elevating case reports and animal studies above epidemiological studies.” This decision resulted in dismissal of 3,231 claims.

Initially, the UC-plaintiffs’ appeal was stayed pending the NJ Supreme Court’s decision on the CD side of the litigation. Thereafter, the Appellate Division requested supplemental briefing as to whether the newly incorporated Daubert factors applied, and whether remand was required. All parties agreed the Daubert factors applied, even though Accutane (2018) was decided after the trial judge’s decision here.

Applying Accutane (2018), the Appellate Division affirmed, finding that the trial judge did not abuse his discretion in excluding the testimony of the plaintiffs’ UC experts. The court held that although these UC experts appeared qualified, their opinions incorporated the “same methodological defects identified by the Court” in Accutane 2018, “including the disregarding of eight of the nine epidemiological studies in favor of animal studies and case reports.”

Relying on Accutane (2018) and the “Reference Manual on Scientific Evidence,” the Appellate Division underscored the accepted hierarchy of scientific evidence, with meta-analyses “at the top, followed by single randomized trials, systematic reviews of observation studies, single observational studies, physiological studies, and unsystematic clinical observations” at the bottom. The court noted that plaintiffs’ UC experts relied exclusively on lower forms of evidence, such as animal studies and individual case reports, in reaching their causation opinions, and disregarded an almost uniform body of epidemiological evidence that found no association between Accutane and UC. The UC experts also dismissed published studies that examined thousands of subjects as “underpowered,” yet relied on single case reports and small animal studies. The Appellate Division held this amounted to a failure “to apply the methodology followed by other experts in the field.”

Although epidemiological studies were “slightly more supportive of an association between Accutane” and UC than they had been of an association between Accutane and CD, the Appellate Division held there was not enough scientific evidence “of a difference between these subtypes of” IBD “to warrant excluding the causation experts’ testimony on CD while allowing similar expert causation testimony as to” UC. The court held that “the trial judge did not abuse his discretion in barring the expert testimony in question. Instead, he engaged in the very same type of gatekeeping which the Supreme Court approved in its prior decision.”

While this Appellate Division decision is unpublished, it should bring an end to the Accutane IBD litigation after more than a decade. This well-reasoned opinion, which focuses on the reliability of expert methodology, can serve as persuasive support for parties seeking to exclude unsubstantiated scientific expert testimony.

A Failure of Leakage Linkage: The District of New Jersey Sinks a Proposed Class Action under Tennessee and California Laws over Leaky Water Heaters

A New Jersey federal judge recently applied Tennessee and California law in dismissing a proposed class action concerning allegedly leaky water heater sensors/valves (valves) made by Honeywell International Inc. The decision provides a point-by-point explanation of how superficial allegations of product defect fail to satisfy federal pleading standards under the substantive product liability laws of both states.

In Butera v. Honeywell International, Inc., Civil Action No. 18-13417, the named plaintiffs were a resident of Tennessee and a resident of California whose water heaters began leaking six years after purchase. The plaintiffs filed a putative class action claiming that Honeywell’s hot water heater valves were defective. The plaintiffs alleged that the valves featured a plastic (thermowell) casing that “prematurely erodes” and deteriorates, allowing water leakage. They asserted claims under Tennessee’s Products Liability Act (TPLA) and causes of action under California common law, the California Commercial Code, and California’s Unfair Competition Law statute (UCL), sounding in breach of express and implied warranty, negligence, strict product liability and consumer fraud. Honeywell moved to dismiss for failure to state a claim. The court applied the laws of each plaintiff’s home state to their respective claims.

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FDA Warns Companies about Processing, Distributing and Marketing Unapproved Stem Cell Products

The U.S. Food and Drug Administration (FDA) has issued three letters (one warning letter and two untitled letters) over the last two months of 2019 directed at four different companies focused on the processing, distributing, and marketing of allegedly unapproved stem cell products derived from birth-related products, such as placentas, amniotic tissues, umbilical cords, and umbilical cord blood.

These products, which include human cells, tissue, and cellar and tissue-based products (also known as HCT products) are intended to treat a variety of orthopedic issues, autism, cardiac issues, dementia and arthritis. HCT products are considered “articles containing or consisting of human cells or tissues that are intended for implantation, transplantation, infusion, or transfer into a human recipient.” Examples of HCT products include “bone, ligament, skin, dura mater, heart valve, cornea, hematopoietic stem/progenitor cells derived from peripheral and cord blood, manipulated autologous chondrocytes, epithelial cells on a synthetic matrix, and semen or other reproductive tissue.”

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“Timing Is Everything” in SNAP Removal

In general, a defendant may not remove a case to federal court if the action includes a non-diverse defendant or a defendant who is a resident of the state in which the action was filed. This general rule does not apply, however, if the action is removed prior to the non-diverse or forum defendant being served. This procedure, known as “snap removal” has been endorsed by the Second and Third circuits. Continue reading

Third Circuit Clarifies Next Steps in Fosamax Decision

On remand from the U.S. Supreme Court, the U.S. Court of Appeals for the Third Circuit has in turn remanded the case to the district court to determine whether state law claims are preempted by federal law in the 500+ lawsuits pending regarding the medication Fosamax in Merck Sharpe & Dohme v. Albrecht. As previously discussed on this blog in May 2019, the United States Supreme Court held that the issue of federal preemption is one to be decided by the court and not a jury, while somewhat clarifying the “clear evidence” standard governing the analysis.

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