Pepper Hamilton’s strength in products liability litigation has included resolving much of the diabetes drug Avandia litigation for GlaxoSmithKline without any trials.
The settlement strategy for a litigation that included federal multidistrict litigation before U.S. District Judge Cynthia M. Rufe of the Eastern District of Pennsylvania was to get rid of the people who posed the biggest threat – the people on the plaintiffs side who had the most experience, the strongest claims and “deepest bench” to pursue the litigation – Pepper partner George A. Lehner said. Lehner has worked at the firm since 1989, except for the two years he led a U.S. Department of State team responding to a claim filed by the Islamic Republic of Iran before the Iran-U.S. Claims Tribunal.
Resolving the litigation without trials involved working up the cases and exposing weaknesses in them early on, Lehner said. For example, Pepper won pretrial rulings that excluded much of the plaintiffs’ expert testimony regarding heart disease.
Pepper’s Avandia team had talks with the plaintiffs’ lawyers that suggested, “while a trial might be one way to establish values, a conversation might be a way to establish reasonable values. I think we were able to show that a trial would pose a great risk for plaintiffs.”
The Avandia litigation also involves third-party payor and consumer fraud class actions, state attorneys general litigation and federal and state government investigations.
Pepper counsels its clients to not just think about the products liability claims it is facing but to think about the kinds of investigations and ligation that could be brought by the federal Department of Justice, state attorneys general and by shareholder securities litigators, Lehner said.
Pepper’s “product liability lawyers don’t just think of themselves as product liability lawyers,” Lehner said. “They think of themselves as counselors for companies facing litigation problems.”
When P.D. Villarreal became GSK’s senior vice president in charge of global litigation in November 2009, Pepper Hamilton was already in place as the national coordinating counsel regarding the Avandia litigation. “I was extremely impressed with the team that Pepper had,” Villarreal said. “If I were around then [when Pepper was hired] I hope I would have had the smarts to hire them. I am certainly proud that I have the smarts to retain them.”
The firm has a “set of superstars starting with Nina Gussack” and others, Villarreal said. “George Lehner is another one. They have a sort of group of first-chair product liability litigators who can lean on a matter and try cases if necessary.” Gussack is chair of the firm’s executive committee.
Some of the more innovative products liability work that Pepper has done, particularly in the area of mass torts, is early case assessment, getting a grip on the dimensions of the litigation’s key science issues, and offering clients the opportunity “at a very early stage” to make assessments about the overall strengths and weaknesses of products liability claims, Lehner said.
Pepper is one of three or four firms that have a strategic perspective on managing a mass tort rather than just planning on handling litigation case-by-case even if there are 10,000 lawsuits in the wings, Villarreal said.
While Pepper is a big firm, it is able to provide the lowest possible cost per claim because the firm has a lot of information about what elements of litigation may cost and the firm has developed discovery teams using outside contract lawyers, Lehner said.
“It’s really a conversation with clients,” Lehner said. “They need to be really invested and understand what you’re doing and why you’re doing it.”
Pepper focused on the cost-effective, global resolution of mass torts, Villarreal said.
“The other thing I like about them: They do this in a cost-effective manner,” he said. “This stuff is expensive and we pay Pepper a lot of money. I never got the sense they were milking the cases.”
Pepper also has a track record of challenging plaintiffs experts on science and medical issues.
“You really have to have what I call, short-hand, the ‘science of the product’ well understood and well developed,” Lehner said. “That allows you to very effectively challenge, whether in a Daubert hearing or in the context of a state court Frye hearing, experts who will be coming in from the plaintiffs side about the strength of the science.
“While it may be a lot of headlines around this issue, when you look at this science, it’s more interesting and complicated than the headlines suggest. There is reason to believe … plaintiffs lawyers have to believe the experts they are advancing may not make it to the finish line because a court is willing to step in [if] … there is not an adequate basis for the science they’re offering.”
Pepper also has lawyers with strong backgrounds in science, Lehner said.
Pepper is one of a relatively small cohort of law firms that are comfortable with science, Villarreal said. Many lawyers went to law school because they were not science-oriented.
Pepper also is very good about staffing GSK’s matters with attorneys from a diverse background, and they work well with other law firms, which is important in staffing a large litigation like Avandia, Villarreal said.
Another litigation in which Pepper has had great success is its representation of Eli Lilly and Co. regarding the atypical antipsychotic medication Zyprexa. Gussack serves as Eli Lilly’s national counsel for the Zyprexa litigation.
About 50 percent of the claims were resolved early on in one master settlement, Lehner said. Zyprexa is Eli Lilly’s best-selling drug.
After developing the science and defending the product itself, “we were able to demonstrate that the Zyprexa story was a very compelling story, that it was a very important pharmaceutical product, that it was widely useful and widely valued by doctors,” Lehner said. That led to being able to bring together a mass of plaintiffs counsel and resolve their clients’ claims, Lehner said.
By resolving so many claims, Eli Lilly and its counsel were able to establish the values of the Zyprexa cases without having to go to trial.
“Through the give-and-take process of negotiation we have been able to establish the value of these cases in the marketplace,” Lehner said.
After the large-scale settlement, many other individual cases settled for less because plaintiffs counsel did not want to invest the resources necessary to push an individual case to trial, Lehner said.
When the first and only Zyprexa case went to verdict last year in Los Angeles Superior Court, Pepper partners Andrew Rogoff and Anthony Vale successfully defended Eli Lilly.
“When you can’t reach a settlement you need to put on a defense at trial,” Vale said.
The case of Tadai v. Ely Lilly and Co. involved a single plaintiff, a young man who died from uncontrolled diabetes, but the jury determined the “potential side effects were adequately known for the prescriber to use the drug safely,” Vale said.
Pepper also had success in representing Eli Lilly when the drugmaker was sued in a third-party payor litigation by union pension funds and insurers alleging they overpaid for Zyprexa prescriptions. While the class action of UFCW Local 1776 v. Eli Lilly and Co. originally was certified by the district court judge, the U.S. Court of Appeals for the Second Circuit reversed the certification and the U.S. Supreme Court declined certiorari in the case.
“The gist of that one was a group of third-party payors brought a class action against Lilly alleging that the fraudulent marketing of Zyprexa had caused more Zyprexa prescriptions to be written and that the third- party payors had therefore paid for more prescriptions at a higher price than they would have had the marketing been honest,” Vale said.
Lilly defended the class action on the ground that the marketing of Zyprexa was not fraudulent and that the plaintiffs’ aggregate approach to proving the case was impermissible, Vale said.
The Second Circuit found that the “plaintiffs’ overpricing theory was not valid, that the case could not proceed as a class action,” Vale said. “The Second Circuit therefore decertified the class and directed the entry of summary judgment in favor of Eli Lilly on the overpricing theory.”