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The New Jersey Supreme Court’s Oct. 3 decision arising from the Accutane multi-county litigation (MCL) has cemented the Supreme Court’s clear preference for the application of New Jersey law in New Jersey courts, and bright line rules that can be easily applied, simplifying trials and the appellate process. The decision combines with two other recent Accutane decisions from the Supreme Court to determine several of the core issues at the heart of these large litigations, and in some cases in individual tort actions as well. Taken together, these decisions signal a policy decision by the court, favoring predictability and efficiency in the management of MCL’s and complex tort actions, and a preference for New Jersey law as opposed to federal law and the laws of other states.

The Accutane MCL ultimately grew to encompass thousands of cases brought by plaintiffs claiming that Hoffmann-La Roche, the manufacturer of Accutane, failed to adequately warn that the medication, prescribed to treat severe acne, caused or contributed to irritable bowel syndrome, including ulcerative colitis and Crohn’s disease. The litigation was recently brought to a head when the defense filed litigation wide challenges to the methodologies applied by the plaintiffs’ general causation experts, and the legal viability of the failure to warn claims.

First, in In Re: Accutane Litigation, 234 N.J. 340 (2018) (“Accutane I”), the Supreme Court reaffirmed the standard applicable to the evaluation of the reliability of the methodology utilized by an expert witness, by reference to a longstanding chain of New Jersey precedents, including Rubanick v. Witco Chem. Corp., 125 N.J. 421 (1991), Landrigan v. Celotex Corp., 127 N.J. 404 (1992), and Kemp ex rel. Wright v. State, 174 N.J. 412 (2002). The court highlighted New Jersey’s integral role in shaping the law in this area, observing that, “Our Court was among the foremost to shift from exclusive reliance on a ‘general acceptance’ standard for testing the reliability of scientific expert testimony to a methodology-based approach.” Accutane I, at 347, citing Landrigan, 127 N.J. at 414, and Rubanick, 125 N.J. at 447. The court even pointed out that the federal Daubert standard, which the court was urged to adopt by certain parties to the appeal, followed New Jersey’s establishment of the methodology based approach. Accutane I, at 383. Although allowing our trial courts the discretion to utilize Daubert factors if and as “helpful,” the court’s intention to maintain the autonomy of New Jersey law was unequivocal: “In adopting the use of the Daubert factors, we stop short of declaring ourselves a ‘Daubert’ jurisdiction.” Accutane I, at 398-399. The court’s decision to maintain New Jersey law as controlling on this important question was unmistakable, affirming the trial court’s decision to exclude the experts based on,  “the principles of Rubanick, Landrigan, and Kemp.” Accutane I, at 396.

In its most recent decision from the Accutane litigation, the Supreme Court addressed two significant questions in reviewing Roche’s motion for summary judgment on the failure to warn claim, which was filed in 532 cases, involving plaintiffs from 45 states. The issues included: (1) what state’s substantive law controls, and (2) what is the standard for a plaintiff to overcome the New Jersey Product Liability Act’s (PLA) rebuttable presumption of adequacy applicable to the warnings for an FDA approved drug. In Re: Accutane Litigation, ___ N.J. ___, 2018 WL 4761403 (Oct. 3, 2018) (“Accutane II”).

The court first addressed the choice of law analysis in the context of an MCL. The court undertook the full choice of law analysis and, applying Restatement Section 146, Sections 6 (f) and (g), found that the administrative efficiencies gained through application of New Jersey law to all cases in an MCL outweighed the factors that favored application of the law of the plaintiff’s home state. Justice Albin, writing for the court, was clear in expressing the court’s rationale: “There can be no question that administrative ease and efficiency favor the application of New Jersey’s PLA,” as this will, “ensure predictable and uniform results—rather than disparate outcomes among similarly situated plaintiffs …. Removed from the equation will be the fortuity of the place where individual plaintiffs reside and where the injury occurred.”  Accutane II, at *20.

The choice of law decision in Accutane II was actually foreshadowed in 2017 when the Supreme Court held that New Jersey statute of limitations law should be applied to tort cases filed in New Jersey by out of state plaintiffs against a New Jersey manufacturer, absent exceptional circumstances. McCarrell v. Hoffman-La Roche, 227 N.J. 569 (2017). The decision was characterized as, “a further refinement of our choice-of-law jurisprudence that will guide judicial discretion toward more predictable and just outcomes.” Id. at 599. Accutane II completes the circle, so that New Jersey law will control all substantive and procedural issues in our MCL’s.

The practical result of the court’s decision to apply New Jersey substantive law across MCL’s was the dismissal of 532 failure to warn claims, based on the court’s application of the rebuttable presumption of adequacy to the warnings at issue, pursuant to N.J.S.A. 58C-4. However, the court’s analysis of the rebuttable presumption refined the standards to be met in order to rebut the presumption, and changed the playing field for ongoing and future litigation. The court found that its initial explication of the standard to rebut the presumption in Perez v. Wyeth Labs, 161 N.J. 1 (1999), was superseded by later developments, including: (1) subsequent recognition by the United States Supreme Court of the manufacturer’s independent duty, “to update label warnings under FDA regulations in the postmarketing phase”; and (2) “close scrutiny of the FDA and its regulatory power in a labeling context [which] commenced only after Perez was decided, and that scrutiny disclosed flaws in the regulatory system.” Accutane II, at *24, citing McDarby v. Merck & Co., 401 N.J.Super. 10, 64 (App. Div. 2008). The court recognized significant deficiencies in the FDA’s post-market surveillance of adverse events and updating of labels to disclose risks, stating that, “the FDA’s monitoring is far from foolproof.” Accutane II, at *23., citing Wyeth v. Levine, 555 U.S. 555, 578-579 (2009). On this basis, the court expanded the “pathways” to overcome the rebuttable presumption. Accutane II, at *26. In addition to the pre-existing grounds to rebut the presumption, proof of “deliberate concealment or nondisclosure of after-acquired knowledge of harmful effects,” and “economically-driven manipulation of the post-market regulatory process,” the court created an additional exception:

We hold that the rebuttable presumption of adequacy attaching to an FDA-approved drug label is overcome when a plaintiff presents clear and convincing evidence that a manufacturer knew or should have known, based on newly acquired information, of a causal association between the use of the drug and “a clinically significant hazard” and that the manufacturer failed to update the label accordingly.

Accutane II, at *26, citing 21 C.F.R. Section 201.57(c); 21 C.F.R. Section 314.70(c). Though the court found that this standard was not met in the Accutane litigation, based on a comparison of Roche’s knowledge as reflected in internal documents and available studies and literature, against the extensive warnings found in the Accutane label, this new avenue to rebut the presumption will certainly be an important battleground in other litigations. Internal company documents that demonstrate internal knowledge, as well as publicly available information including medical literature, regarding undisclosed or inadequately described risks, are the likeliest routes to satisfy this new standard to rebut the presumption of adequacy, although other creative avenues will certainly be explored. Perhaps most significant, this new standard does not require a culpable state of mind, as with the first two avenues, but rather is an objective test intended to evaluate the labeling disclosures in light of what was known or what should have been known.

The court also addressed the future application of its decision. Though the choice of law decision in Accutane II benefitted the defendant, the court made clear that it was, “not picking sides or winners,” and presciently noted, “Today, plaintiffs complain about the application of New Jersey law in this MCL case. Tomorrow, in another such case, defendants may be the disappointed party.” Accutane II, at *20. And it did not take long for that prediction to bear out.  On Oct. 19, just a few weeks after the decision was issued, an order was entered by the Hon. Rachelle L. Harz, J.S.C., in the C.R. Bard pelvic mesh MCL, applying Accutane II, and determining—over the defendant’s objection—that New Jersey substantive law would apply in an upcoming trial involving California plaintiffs, Sandra and Ernest Rios v. C.R. Bard, et al., as well as across the MCL. C.R. Bard, apparently perceiving that New Jersey law is more favorable to the plaintiffs than California law in this medical device litigation, has filed a motion for leave to appeal, arguing against the position that the defendant prevailed on in Accutane II.

The Accutane decisions are generational, settling important questions. More than a trend, taken together the decisions represent an established philosophy that will shape the outcomes of significant litigation in New Jersey for years to come.

 

Adam M. Slater is a partner in Mazie Slater Katz & Freeman in Roseland. He argued Accutane II in the Supreme Court on behalf of amicus curiae New Jersey Association for Justice, and he is plaintiffs’ lead counsel in the Bard and Ethicon MCL’s, and trial counsel in the Rios v. C.R. Bard case.