October 30, 2018
New Jersey’s Supreme Court recently handed down another business-friendly decision, arising out of the Multi-County Litigation concerning the prescription medication Accutane, which is consolidated in Atlantic County. In a unanimous decision, the Court reinstated the trial court’s dismissal of 532 lawsuits against Hoffman-La Roche, Inc. and Roche Laboratories, Inc. (“Roche”), arising from alleged gastrointestinal side effects from taking the prescription acne medication Accutane, which was developed, manufactured, marketed, and distributed by Roche in New Jersey. The Court determined that New Jersey’s Product Liability Act (“PLA”) applied to each of the 532 suits, and that plaintiffs had failed to overcome the PLA’s rebuttable presumption of adequate product warnings that attach to prescription drugs when the FDA has approved the warning labels.
The fundamental question before the Court was a choice-of-law issue. Of the 532 plaintiffs, only 18 ingested Accutane in New Jersey. The remaining 514 ingested Accutane in some 44 other jurisdictions. The trial court had determined that the PLA applied to each claim, and entered summary judgment accordingly after finding that the rebuttable presumption of adequacy of the drug label warnings had not been overcome. On appeal, a panel of the Appellate Division determined that the law of each of the 45 jurisdictions should apply, and thus determined that only claims arising from certain jurisdictions – not including New Jersey – should have been dismissed.
In reviewing the below decisions, the Supreme Court conducted its own conflict of laws analysis. It determined that there was an actual conflict in the laws of the various states having interests in the litigation, finding that New Jersey’s presumption of adequacy of drug warning labels was apparently a stronger protection than that provided in many states. The Court noted that its treatment of the laws of the other 44 jurisdictions was “far from comprehensive or definitive,” but proceeded under the assumption that the application of the PLA may lead to outcomes different from the laws of other jurisdictions.
Assuming, therefore, that a conflict existed, the Court applied the “most-significant-relationship” test established in the seminal case of P.V. ex rel. T.V. v. Camp Jaycee, 197 N.J. 132 (2008), which was the “paradigm for deciding which state’s substantive law applies in personal injury cases involving more than one state.” However, the Court also noted its decision in Ginsberg v. Quest Diagnostics, Inc., 227 N.J. 7 (2016), where it held that “a defendant-by-defendant choice-of-law analysis is not feasible in every matter,” particularly in complex matters. The Court noted that its analysis began with the presumption that the law of the state where the injury occurred applied. However, that presumption would be overcome if some other state had a more significant relationship with the parties and the occurrence “based on an assessment of each state’s contacts.”
The Court noted that although ingestion, purchase, and prescription of the medication likely happened in at least 45 different jurisdictions, the manufacturing and labeling of Accutane occurred in New Jersey – which was, allegedly, the conduct causing the injury. The Court acknowledged that had plaintiffs brought their actions in the states in which they were prescribed, and took, Accutane, that those state courts would likely have applied their own jurisdictional law. As such, the Court determined that the Restatement’s test did not point to one single result. The Court then looked to whether New Jersey “has a more significant relationship … to the occurrence and the parties.” The relevant factors are:
(a) The needs of the interstate and international systems;
(b) The relevant policies of the forum;
(c) The relevant policies of other interested states and the relative interests of those states in the
determination of the particular issue;
(d) The protection of justified expectations;
(e) The basic policies underlying the particular field of law;
(f) Certainty, predictability and uniformity of result;
(g) Ease in the determination and application of the law to be applied.
The Court noted that these factors should not be applied in a way that would discriminate against out-of-state residents, to preserve comity between the states. The same general goals underlay every jurisdiction’s tort systems – ensuring that pharmaceutical companies market drugs that are reasonably safe for consumption, and that drugs’ label warnings adequately inform physicians and patients of the risks and potential benefits of the drugs.
Ultimately, the Court determined that plaintiffs who voluntarily filed claims in New Jersey, as part of a Multi-County Litigation, elected to participate in a procedure that was designed to have uniform results and to gain practical and administrative efficiencies by having uniform application of the law to each case. The Court noted that the resolution of the dispute may favor defendants in this context, but would favor plaintiffs in others. Ironically, the Court noted, it was the same Roche defendants in the infamous McCarrell v. Hoffman-La Roche, Inc. case who argued against application of New Jersey law, and for the application of the law of the plaintiff’s home state. The Court ultimately determined that New Jersey had the most significant relationship to the occurrence and to the parties, and overcame the presumption that the law of the place of injury governed.
After determining, then, that New Jersey’s PLA applied, the Court set forth the standard for overcoming the rebuttable presumption of adequacy of FDA-approved drug warning labels. The Court reiterated the two ways that earlier decisions had indicated the presumption could be overcome; 1) evidence of deliberate concealment or nondisclosure to the FDA of after-acquired knowledge of harmful side effects of drugs; and 2) proving “economically driven manipulation of the post-market regulatory process.” The Court added a third means for plaintiffs to overcome this presumption – by presenting clear and convincing evidence that a manufacturer knew, or should have known, based on newly acquired evidence, of a causal association between the use of the drug and a clinically significant hazard, and a subsequent failure to update the drug warning label accordingly. “A manufacturer that acts in a reasonable and timely way to update its label warnings with the FDA, in accordance with its federal regulatory responsibilities, will receive the protection of the rebuttable presumption. If not, it cannot seek shelter behind it.” *62.
The Accutane Plaintiffs did not meet present sufficient evidence to demonstrate or meet any of the bases to overcome the rebuttable presumption, and that the Roche warning were therefore adequate, as a matter of law. The Court noted that the evidence plaintiffs had presented – internal memoranda from Roche – did not rise to the level of “clear and convincing evidence” that Roche’s warnings about associations between Accutane and inflammatory bowel syndrome were inadequate.
The Accutane litigation has continued to serve as a means for New Jersey’s highest court to create precedents that may actually make New Jersey a more business-friendly venue. This decision stands for the proposition that Plaintiffs who consolidate massive pieces of litigation in New Jersey cannot pick and choose the laws they want to apply to particular cases; and that summary judgment under the Products Liability Act for drug manufacturers, who already jump through significant regulatory hoops, may in fact be a viable remedy.