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Zantac heartburn pills are seen in this picture illustration. REUTERS/Brendan McDermid
(Reuters) - In July, generic drugmakers won a big decision in the multidistrict litigation alleging that the heartburn medication ranitidine, best known under the brand-name Zantac, causes cancer. U.S. District Judge Robin Rosenberg in West Palm Beach concluded that all of the claims against companies that made generic versions of the drug were pre-empted by federal drug labeling regulations.
Now those generics defendants are trying to sock MDL plaintiffs for millions of dollars in defense costs.
Is this a brilliant strategy that will prompt future MDL plaintiffs and their lawyers to think twice about filing questionable lawsuits? Or is it a “callous and meritless” bullying scheme that will chill good-faith claims?
Right now, the fight over defense costs is focused on transparency. In August, drug makers including Apotex Inc, Sandoz International GmbH and Teva Pharmaceutical Industries Ltd advised the judge that they intended to move for plaintiffs to pay some of their costs under Rule 54 of the Federal Rules of Civil Procedure and Section 1920 of Title 28 of the U.S. Code. Among those costs, the brief said, were e-discovery fees. Each defendant’s e-discovery invoices should remain confidential, the brief said, because the companies' contracts with e-storage vendors are sensitive commercial information.
The brief also said defendants would ask for plaintiffs to pay their share of the fees for the MDL's court-appointed special master. Those invoices, defendants argued, should also be sealed, at least in early filings, because they revealed how defendants allocated the cost of the special master.
The defendants’ motion to keep its records under seal didn’t reveal how much money they plan to demand in their cost-shifting motion. But the Sept. 13 opposition brief by lead plaintiffs’ counsel in the MDL said defendants are potentially seeking “millions of dollars,” and, moreover, are going to ask for joint-and-several liability that would leave each plaintiff on the hook for all of the costs approved by the court.
Plaintiffs lawyers urged Rosenberg not to allow the generics companies to file their demand for costs under seal. The demand, argued Kopelowitz Ostrow Ferguson Weiselberg Gilbert and other lead plaintiffs firms, should be litigated openly because it will affect about 1,000 plaintiffs in this case – and because it could have a “potential deterrent effect (on) future participants in the judicial process.”
The Zantac generics companies are not the first MDL defendants to demand cost reimbursement after defeating plaintiffs’ claims. I’ve found at least two other MDLs – involving the AstraZeneca Plc drug Nexium and Pfizer Inc’s Lipitor medication – in which defendants were awarded costs under Rule 54, which permits prevailing parties to impose some of their costs on the losing side.
In the Nexium case, U.S. District Judge Dale Fischer of Los Angeles awarded AstraZeneca about $550,000 in costs in 2015, after granting summary judgment to the company. (AstraZeneca had asked for nearly $1.7 million.) Most of the awarded costs were for AstraZeneca's e-discovery that, in the judge’s view, could be categorized as “certification, exemplification, and reproduction of documents.” Those are permissible under the 9th U.S. Circuit Court of Appeals' precedent on Rule 54.
In the Lipitor MDL, U.S. District Judge Richard Gergel of Charleston, South Carolina, awarded Pfizer about $470,000 in costs for medical records, deposition transcripts and other document reproduction in 2018, after granting summary judgment. Plaintiffs lawyers in the Nexium MDL raised some of the objections that the Zantac steering committee previewed in its motion opposing a seal order, arguing that it simply wasn’t equitable to sock individual plaintiffs who had brought good-faith claims with burdensome defense costs. The judge agreed not to impose joint-and-several liability, but concluded that each plaintiff could bear a $172-per-claimant share.
Cost-shifting was litigated openly, without sealing orders, in both the Nexium and Lipitor cases. But neither decision seems to have attracted much attention from legal reporters or MDL scholars. (I should note, however, that professor Marvin Redish of Northwestern University Pritzker School of Law has been theorizing about reallocating the discovery costs for more than a decade). The rulings certainly didn’t scare plaintiffs lawyers away from filing product liability suits, considering that hundreds of thousands of cases have been consolidated in MDLs since the 2015 Nexium ruling. So it’s fair to ask whether the Zantac plaintiffs – who declined to provide a statement about the cost dispute – are overstating the potential deterrent from the generics’ bid for costs in their case.
It’s also true, though, that the Zantac generics are apparently trying to recoup more money than defendants in the other cases, and to expand the category of costs to which defendants are entitled to recovery. (I’m basing my assumption about how much money the defendants are seeking on the plaintiffs’ brief. Apotex lawyers from Blank Rome, who signed the generics’ motion to seal their bills of cost, did not respond to my email query about the dispute.) The Zantac defendants have said they plan to ask the judge to order plaintiffs to pay their share of fees and costs for the special master in the MDL. MDL maven Elizabeth Burch of the University of Georgia, who has written about the role of special masters in consolidated proceedings, told me she has not previously heard of an MDL defendant attempting to shift its share of special master fees.
Burch pointed out that it will surely be plaintiffs lawyers, rather than their clients, who actually end up paying whatever costs the court decides to award to the Zantac generics defendants. But depending on the size of the Zantac award, and the number of firms that bear the cost, a ruling for the generics could “potentially have a chilling effect,” she said, especially on claims asserting novel theories or challenging precedent.
Regardless of the merits of the generics’ bid for costs, Burch said, their demand should be litigated publicly, especially because special masters are quasi-judicial officials whose fees are a matter of public interest.
I couldn’t agree more. I’m looking forward to future reporting on the Zantac cost dispute – based on publicly filed briefs.
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