United States: If It Walks Like A Duck . . .

My grandmother used to own a large farm in Franklinton, Louisiana. One of my favorite things about visiting the farm as a child was getting to see Doc – the chicken who thought he was a dog. Doc roamed the farm with his three mutt friends, ate dog food, played fetch, and even chased after other chickens. I truly believe he would have barked if his vocal cords allowed. Until the day he died, Doc believed he was, in fact, a dog.

You may be asking yourself what Doc has to do with consumer protection act claims. But as we consider the history of these claims, including recent trends toward modeling consumer protection cases as failure to warn product liability claims, an old adage comes to mind: if it looks like a duck, swims like a duck, and quacks like a duck, then maybe it is a duck. In Doc's case, regardless of attributes on paper that made him seem like a dog, at the end of the day, he looked like a chicken, sounded like a chicken, and was a chicken. Likewise, despite the comparisons we will discuss between product liability claims and consumer protection act claims, at the end of the day, we often face consumer protection act claims pretending to be product liability claims.

The impact this can have on the pharmaceutical industry can be astronomical. Just because you have an executed global settlement of product liability claims does not mean the litigation is over just yet. Sometimes before the ink on the resolution is even dry, the next wave of lawsuits hits from an unexpected source: individual state attorneys general. And yes, that could potentially mean up to 50 separate lawsuits, filed by up to 50 different state attorneys general, alleging various violations from up to 50 different state's consumer protection acts.

History of Consumer Protection

Nearly 80 years before Doc was in the picture, President Woodrow Wilson signed the bipartisan Federal Trade Commission (FTC) Act of 1914. What was the underlying purpose of the Act, and why was it so important to President Wilson? Interestingly enough, the initial focus was to combat trusts. Over the years, however, the Act was given more teeth – including amendments in 1938 to prohibit unfair and deceptive acts and practices.1 It is this language in particular that has since been utilized to file lawsuits under the Act against pharmaceutical manufacturers.

According to the FTC's website, the FTC has a "unique dual mission to protect consumers and promote competition."2 Since its inception, and as discussed elsewhere in this publication, states around the country have followed suit, adopting state versions of the federal Act, presumably with the same goal – to protect consumers and promote competition. But in application, these acts have been used by various state attorneys general to file what is essentially a mass tort personal injury claim on behalf of an entire state under the guise of "consumer protection."

Under the plain language of the Act, the FTC is directed to "prevent . . . corporations . . . from using unfair methods of competition in or affecting commerce and unfair or deceptive acts or practices in or affecting commerce."3 This charge in the federal code makes sense when viewed in light of the organization's mission – to protect consumers and promote competition. And the same or similar language has been adopted in state consumer protection act statutes. Historically, we have seen this (at least in the pharmaceutical context) in cases brought by state attorneys general against pharmaceutical companies due to alleged price fixing or misleading price increases. But the question is – are the product liability-type cases we are seeing today brought against pharmaceutical companies in line with this mission? Is a claim that a manufacturer allegedly failed to warn of a risk of a product equivalent to a manufacturer "using unfair or deceptive acts or practices in or affecting commerce"? Or, are state consumer protection acts being used to encourage the chicken that thinks it is a dog, or in this case, the consumer protection claim that thinks it is a product liability claim?

Consumer Protection in Practice

Looking at national trends may help shed light on the discussion. What is interesting is that despite the fact that state consumer protection acts have existed for decades in many instances, pharmaceutical cases filed under state consumer protection acts are a more recent trend. Why is this? One consideration is that states are generally not subject to the same statute of limitation defenses that plaintiffs in typical product liability lawsuits find themselves fighting – so there is often no limit to how far back a state attorney general can go with respect to a consumer protection act claim. But it begs the question – particularly in the field of warning claims regarding pharmaceutical products – if the particular drug or device has been sold in a particular state for "X" number of years without the warning the state now claims is false or misleading, why wait to file suit until years after an undisclosed number of state citizens have allegedly been injured?

One potential answer is product liability litigation. We first saw the "modern" approach to consumer protection act claims in the context of tobacco litigation. In 1998, a master settlement agreement settled 46 state attorney general lawsuits against the tobacco industry, bringing in a significant amount of money to the states involved.4 Prior to this point, there were multiple waves of individual product liability claims against tobacco manufacturers, many of which were initially unsuccessful. It was actually not until after the successful master settlement that the first big win for a plaintiff in a tobacco product liability action occurred.5 But in the pharmaceutical context, the tendency is the other way around – successful product liability actions first, attempted consumer protection act claims second.

When you look at the history of these actions, this is not surprising. A quick web search reveals multiple examples of state consumer protection actions following high-dollar plaintiff verdicts in personal injury product liability claims. On a national scale, we have seen this most often in the context of air bag cases, with state consumer protection act claims filed on the heels of class action litigation that gained substantial media attention. But we are seeing it in other areas as well, including pharmaceutical product liability claims. Because of this, it is unclear how much investigative discovery state attorneys general are doing on the science behind these claims prior to filing consumer protection act lawsuits. This is particularly the case considering that private litigation attorneys (who have often worked on these same cases in the product liability context) are regularly hired as "deputized" special outside counsel to the state attorney general to work up the case.

But claims under state consumer protection acts are not product liability lawsuits, despite how much they may try to look like and act like a typical product liability lawsuit. These two legal theories are often the source of confusion, particularly when considering the evidence actually presented in these cases. Complaints against manufacturers for consumer protection act claims often cite to studies and literature that form the basis of allegations in product liability lawsuits. More importantly, company documents – only discovered through product liability litigation – are used as key evidence in consumer protection act claims. And in the course of discovery, particularly when attempting to defend the facts forming the core basis of their claims, state attorneys general often refer to successful product liability cases as "evidence" that the company defrauded or mislead consumers in that state. Ultimately, the same evidence, the same theories, the same experts, and the same legal arguments are being raised by state attorneys general (via specially-deputized personal injury lawyers) in an attempt to try what is in actuality, a very different case.

And just in case the basic issue of what these claims really are is not enough, the idea of specially-deputized attorneys general presents a whole other arena of unique challenges (and opportunities). The outside counsel hired by the attorney general are more familiar, often intimately so, with the product liability claims regarding these products, but constitutional questions can arise with respect to this deputizing process. It is important to understand the context in which this could play a role in whatever jurisdiction a lawsuit is pending. For example, the Supreme Court of Pennsylvania has noted "that substantial concern has been expressed about the use by public agencies of outside counsel, with personal financial incentives, to spearhead litigation pursued in the public interest."6 In Mississippi, contingent fee contracts with outside counsel are governed by statute.7 The statute even provides that such contingency fee contracts "shall be posted on the Attorney General's website for public inspection" unless the attorney general determines, subject to approval by a separate oversight commission, that doing so would negatively affect the state.8 In jurisdictions where this is the case, it is important to review such an agreement at the outset of the lawsuit.

We are seeing example after example of these consumer protection lawsuits being filed against pharmaceutical companies, and it is often uncertain if they are filed at the request of specially-deputized outside counsel. When there is a lot of buzz about pharmaceutical litigation, a big verdict hits the news, or even an MDL is formed, chances are high that a "consumer protection act" claim may be on the horizon, particularly in areas where attorneys involved with the product liability litigation have an influence.

Another trend we are seeing in this context deals with the ever-elusive area of Medicaid. These have come in the form of states attempting to mask consumer protection act claims as something else – subrogation claims. The importance of exposing the true nature of these claims is even more critical because subrogation claims on a state's Medicaid lien require proof of the underlying tort (i.e., the product liability failure to warn claim). But to get the information needed to defend these claims and to understand exactly what proof the state will be required to put on, it is important to expose the claims for what they truly are.

How to Expose the Duck

In consumer protection act cases alleging unfair or deceptive trade practices based on failure to warn of a pharmaceutical product's alleged risk, there are a few things that can be done to combat this merging of two very different legal theories. From the outset, it is important to use this knowledge to your advantage. Unlike most "new" litigation, early preparation can be done based on the basic theories, evidence, and experts that plaintiffs have already used in product liability claims. This can allow for more aggressive and pointed discovery. A more vigorous approach can be taken based on the language of the consumer protection act of the particular state in which the case is pending. Defense counsel should force the state to specifically identify what false, misleading, unfair, or deceptive statements were made to any individuals in that state. Force the state to admit what efforts it made prior to filing its lawsuit to determine this information. Force the state to identify every instance in which it alleges you violated that state's consumer protection act.

More often than not, when faced with questions regarding specific proof of consumer protection violations, the state will default to the same evidence raised in the product liability claims. But this cannot, and should not, be enough. Make it clear to the state from the outset that you see through its attempt to mask its claim. If it looks like a consumer protection act claim, swims like a consumer protection act claim, and quacks like a consumer protection act claim, it is a consumer protection act claim no matter how the state tries to frame it. By recognizing these disguised consumer protection act claims from the beginning, familiarizing yourself with the language of your state's consumer protection act, and understanding how the proof required is different than your typical product liability claim, you will be able to better position yourself for a strong defense.

Footnotes

1. Andrew Glass, Woodrow Wilson Creates Federal Trade Commission, Sept. 26, 1914, Politico, (Sept. 26, 2012, 04:35 AM), https://www.politico.com/story/2012/09/this-day-in-politics-081672.

2. Federal Trade Commission, About the FTC, What We Do (November 1, 2018), https://www.ftc.gov/about-ftc/what-we-do .

3. 15 U.S.C.A. 45(a)(2).

4. Richard P. Leyoub and Theodore Eisenberg, State Attorney General Actions, the Tobacco Litigation, and the Doctrine of Parens Patriae, 74 Tul. L. Rev. 1859 (2000).

5. Barry Meier, $51 Million Verdict Awarded to Smoker Is Biggest of Its Kind, The New York Times, (Feb. 11, 1999), https://www.nytimes.com/1999/02/11/us/51-million-verdict-awarded-to-smoker-is-biggest-of-its-kind.html.

6. Commonwealth of Pennsylvania v. TAP Pharmaceuticals Products, Inc., 94 A.3d 350, 364 at n. 19 (Pa. 2014).

7. Miss. Code Ann. § 7-5-8.

8. Id. at 5(a).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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