January 2019 Newsletter

A new year has arrived, and it seems we are inundated by ads for new gadgets and other nifty technology platforms. If you follow any legal tech reports or blogs, you know how much hype there is about AI and Blockchain. You also probably know by now that many states, including North Carolina, are incorporating a mandatory amount of CLE credits directed toward technology (despite the fact that our court system lacks sufficient funding to institute comprehensive electronic filing… but that’s a different soapbox).

With so many strains on the limited amount of time we have in a day, my struggle is always to figure out what things will make my job more efficient and manageable. In a small-to-medium sized law firm, it is always a challenge to find new products and technologies that will fit the balance at a reasonable cost.

As I reflect on legal technology advances over the last year, here are a few “techie” things that have made my life easier.

An Apple A Day…

I don’t know how I survived as a litigator without an iPad Pro with Apple Pencil. It is such an incredibly powerful tool and reduces stress on the mind and body. I used to carry a huge litigation bag and/or banker’s boxes of case file materials to depositions and hearings, both in state and out of state. You never knew what exhibit or piece of information might be needed, so you brought it all.

Now, not only do you have the ability to store all of those documents on your iPad, you can store the documents for all of your cases on a single device and readily access documents stored in a cloud-based document management system. This may seem like old news to a lot of people, but there are always attorneys who bring only hard copies to out-of-state depositions and cannot show a witness a document if they did not bring it with them.

With the iPad Pro, you can produce the document full sized, show it to the witness, and then email a copy to the court reporter to mark as an exhibit. No wasted trees. I can now travel to an out-of-state deposition and carry over 20,000 pages of documents in a backpack that weighs less than five pounds.

I cannot stress enough that any lawyer looking to embrace technology in his or her practice should, at a minimum, start with a mobile platform, and the iPad Pro with Apple Pencil will give you that launch pad.

There Is An App For That

In addition to documents, the apps available on the iPad make it simple to view, record, and retrieve once cumbersome files. Here are a few useful apps I regularly use:

• Osiris and Horos — Stand-alone software products that allow you to have a fully working medical imaging workstation.
• GoodNotes and Notability — Note-taking and annotation software.
• TrialPad with an Apple TV — Easy-to-use software used to organize, annotate, and present evidence.

Once you have finished taking notes or annotating a document using an app like GoodNotes, it can automatically sync to specific cloud storage systems (Dropbox, Box, OneDrive), or it can be exported directly into your document management system (DocMoto). No more notepads. No more scanning additional documents. No more pens running out of ink. No more clutter.

Copy. Paste. Repeat.

Lawyers tend to spend a lot of time typing the same things over and over and drafting similar documents. When responding to discovery, the same objections are frequently raised to multiple interrogatories and other requests. Form letters are repetitive. Every lawyer uses “go-bys” and cannibalizes from other documents and cases.

That is all well and good, but it can take valuable time to remember what case had the same issue, find a document you need, and locate the language to copy. This past year, I have made an effort to increase the use of document assembly and automation to save on time and consistency.  

DocMoto

Our document management system (DocMoto) allows us to set “tags” associated with clients, matters, or subfolders. We can create a document from a “master document” that pulls information from those tags to populate fields in the new document. It assembles what we need based on information that was input when the matter was set up.

Using a “master document” is also more useful than a “go-by” because you may have to tweak the language based on changes to the laws or regulations, or to change the style. If you rely on a “go-by,” you run the risk that it contains outdated language.

With document assembly, there is no searching, no copy and paste, and no typos. Some firms are even able to implement workflow automation, depending on the type of work. For example, the creation of a new matter can trigger the production of new documents, calendar entries, or what have you (see, for example, IFTTT, Zapier, MS Flow).  

TextExpander

One of the best automation applications I have discovered this year is TextExpander. TextExpander allows me to set up “snippets,” which may be called upon with the simple stroke of a keyboard shortcut or by clicking on a menu item. It is especially useful in drafting pleadings and discovery responses, where the same objections and responsive language is used over and over again. Instead of typing, “Objection. Defendants, through counsel, object to,” I type “xobject” and move quickly through the objection.

Additionally, there is no limit to the length of the “snippet,” so I can call upon an entire page of standard objections by simply typing “xstdobj.” This allows for uniformity, consistency, and accuracy. Technology is not fool-proof, but don’t be a fool and do everything the hard way. Embrace technology and your work will be more efficient, less stressful, and best of all, translate into money saved for your clients.

…And they’re always glad you came…Wait! I know we all love the Cheers theme song but did you see the owl AND puppies???

Like the Cheers TV show, attendees were greeted by a relaxed and friendly atmosphere that lent a hand to interaction and even a few laughs amongst the in-house counsel and law firms. Not the fake, “laugh-on-cue” laughs but genuine, heartfelt chuckles that come when friends meet for the first time or old companions get to reminisce about past expos.  Attendees can all agree that no one expected to take a selfie with an owl or play with a pack of puppies in the middle of the Law Firm Expo but the process of building rapport in this fantastic experience alongside new friends and renewed partnerships was the most advantageous take-away offered.

After finishing setup of my firm’s booth, I was afforded the opportunity to wander around the Law Firm Expo before everyone filed in the conference room for their interviews.  The excitement in the air as the marketing professionals put out the variety of tchotchkes with their firm’s logos was impressive, almost Christmas-like.  I was overcome by the feeling of purpose and comradery. 

The purpose to make connections within a specialized and goal-driven menagerie of people is a commitment made by the participating law firms, their members and attendees.  These are people that flocked at the chance and dedicated their time and resources to furthering the goal of equality in the legal field.  It takes commitment to make the long flights and coordinate marketing campaigns for months on end to make the Expo memorable.  Not only for individual firms but for the collective to commit to the idea of connecting firms from California to Mississippi and New York to Arizona.  We all recognize that we are more powerful in numbers and my firm has experienced the general support that only NAMWOLF offers.  A firm does not have to spend truckloads of money on the crazy and outlandish marketing device (even though these are always fun) to make their lasting mark.  It is all about how to show that your firm is here to work alongside their fellow members. 

Law firms’ booths ranged from the wildly colorful to the traditional and straightforward in their presentations.  Legal marketing is all about showing how your firm communicates and interacts with clients.  The Law Firm Expo was no disappointment as in-house counsel met with firms from across the nation.  It gave firms the chance not only to tell their success story but also hear what is important to the company, in-house counsel’s future objectives and what plans are in place to bridge the gap for a more inclusive legal environment.  Assurance from both sides was the common novelty that was worth any item you could throw in your bag. 

Some firms used unique swag such as Ruth Bader Ginsburg action figures (one of my personal favorites) to the more useful umbrellas or water bottles.  Some knew a snack like a cookie or box of cracker jacks would peak attendees’ interest as it showcased a flavor from the firm’s home state.  Regardless of the marketing campaign, attendees went home with a bag full of mementos that provides the afterthought of a friendly hand-shake, an inspiring conversation and maybe a few laughs. 

What an amazing group to interact with which is what marketing is all about, right?  Peaking interests by creating an experience that is memorable.  Whether you were the champion of refilling the mint bowl or being the social media star in the crown, everyone walked amongst their friends, all with the same goal – inclusion and partnership.     

The recently revised Prop 65 regulations did no favors for consumer product manufacturers and distributors, especially the new internet and catalog warning requirements for goods sold to California consumers.  But businesses who have already fallen prey to Prop 65 “bounty hunter” plaintiffs may be able to sidestep the new regulations altogether by relying on provisions in their prior Consent Judgments.

Proposition 65 Then and Now

In 1986, California voters overwhelmingly approved Proposition 65, a ballot initiative statute labeled the “Safe Drinking Water and Toxic Enforcement Act of 1986.” The official title of the measure read: “Restrictions on Toxic Discharge Into Drinking Water; Requirement of Notice to Persons’ Exposure to Toxics.” Despite having little idea what was written in the fine print, the measure was approved 63% to 37% by voters who were naturally in favor of safe drinking water and opposed to toxic substance exposure. But deep in the legalese text of Prop 65 lurked several provisions providing for Prop 65 enforcement by private parties “in the public interest.” Prop 65 supporters praised the initiative as “more than just a ‘get tough’ law,” but also an “innovative legal mechanism” for toxics regulation using “direct enforcement.”

Direct enforcement indeed.  A cottage industry of “citizen enforcers” and their law firms sprang up almost overnight. And while some of the early enforcement actions addressed real toxic water and consumer product exposures, Prop 65 soon became the main weapon to prosecute often frivolous suits against unwary makers and sellers of virtually all types of products. 

With nearly 900 carcinogens or reproductive toxicants to choose from, one would think enforcement actions filed in  California courts involve a wide array of Prop 65 chemicals. Not so.  For years, such actions have involved remarkably few chemicals, and it is not because the products which might contain these chemicals dominate the consumer product landscape. The real reason, it turns out, is that the products which can contain such chemicals are easy to identify, inexpensive to test for, and have a high likelihood of a positive test result.  In this way, the “citizen enforcers” and their counsel have learned to maximize their return on investment.

And what a lucrative investment it has been. In 2018 alone, there was a total of 818 out-of-court and court-approved Prop 65 settlements generating over $5.5M in penalties, with 75% of those penalties or $4.125M going to the State and the remaining 25% or $1.375M going to “private enforcers.”  (See, Health & Safety Code § 25249.12.) These settlements also generated nearly $32M in attorneys’ fees and costs, making an average settlement worth just over $39,000 to the 

prosecuting law firm. Of these 818 enforcement actions, the far and away great majority of them identified phthalates DINP and DEHP and lead [nearly always in the form of brass] found in a dizzying array of products from siphon pump hoses to travel pill cases, shower curtain liners, and brass cavalry bugles to name just a few. Not unlike asbestos litigation, which has, over time, created an ever-expanding ring of potential targets, so too has the Prop 65 universe of makers and sellers of products which have only trace amounts of listed chemicals – and may even be used infrequently – thereby making it virtually impossible for a person to experience chemical exposure sufficient to require a warning.  Yet the enforcement actions keep coming.

Proposition 65 Settlements — The Rise of Consent Judgments

The great majority of Prop 65 enforcement actions are resolved by way of settlement in which the product manufacturer/seller agrees to reformulate the product to reduce or eliminate the presence of a listed chemical and/or provide a suitable chemical-specific warning. Most such settlements are reduced to a Consent Judgment that is reviewed by the Court and filed as a final judgment. From that moment forward, Prop 65 compliance is governed by the terms of the Consent Judgment, including the content and format of warnings.

As an example, the firearms and ammunition industry became embroiled in a Prop 65 enforcement action surrounding the use of lead – a listed reproductive toxicant at the time – in hunting and shooting sports products. The Consent Judgment filed in Alameda County Superior Court in July 1996 included a specific lead warning all signatories were required to use from that day forward. This warning reads:

Discharging firearms in poorly ventilated areas, cleaning firearms, or handling ammunition may result in exposure to lead and other substances known to cause birth defects, reproductive harm, and other serious physical injury.  Have adequate ventilation at all times. Wash hands thoroughly after exposure.

Though it was negotiated as part of the enforcement action’s resolution, this Consent Judgment warning was very different from the Prop 65-compliant lead warning in use at the time for consumer products. (See, former 27 CCR § 25603.2, subd. (a).) This warning read:

WARNING: This product contains a chemical known to the State of California to cause birth defects or other reproductive harm.

Regardless, because the Consent Judgment adopted warning language negotiated by the parties to that action, which was then approved by the Court and entered as a final judgment, the Consent Judgment language controlled, and has continued to control in the intervening 20 years.

Consent Judgments often contain other provisions regarding the form, content and use of Prop 65 warnings.  For example, the firearms/ammunition Consent Judgment allowed certain warnings to be included in instruction manuals or on box end flaps, a practice disapproved by The Office of Environmental Health Hazard Assessment (OEHHA), the state agency charged with administering Prop 65.

Recent Changes to Prop 65 — New Rules, New Liability

In November 2015, OEHHA began the administrative process to change existing rules relating to Title 27, Article 6 of the California Code of Regulations – Prop 65’s “Clear and Reasonable Warnings.”  The revised regulations became effective on August 30, 2018, and they were monumental for two main reasons. First, the format of Prop 65-compliant “safe harbor” warnings changed to incorporate more information, a warning symbol, and a required chemical name. For example, the new “safe harbor” warning for lead became:

WARNING: This product can expose you to chemicals including lead, which are known to the State of California to cause cancer and birth defects or other reproductive harm. For more information go to www.P65Warnings.ca.gov.

In addition, a new type of warning – a “short form” version – was adopted and requires only the end point(s) of concern – e.g. cancer, reproductive harm or both – and the Prop 65 website address, but no specific chemical name. The new short-form warning for lead reads:

WARNING: Cancer and Reproductive Harm – www.P65Warnings.ca.gov.

Even more significant, though, was the 

change to require Prop 65 compliant warnings, whether safe harbor warnings or short-form warnings, for internet and catalog sales to California consumers. Given the explosive growth of e-commerce over the last decade, this new requirement constituted a seismic shift in the reach of Prop 65 and with it the potential liability of those in the e-commerce chain. Now, for example, any online retailer who sells to California consumers must have a Prop 65-compliant warning visible on the product page for covered products being sold into California. 

The New Rules And Consent Judgment Signatories — The Applicable Prop 65 Provisions 

Title 27, Article 6 of California Code of Regulations governs “Clear and Reasonable Warnings” under Prop 65. In Subarticle 1, Section 25600, subdivision (e) addresses prior Consent Judgments directly:

“A person that is a party to a court-ordered settlement or final judgment establishing a warning method or content is deemed to be providing a ‘clear and reasonable’ warning for that exposure for purposes of this article [Art. 6], if the warning complies with the order or judgment.” (Emphasis added.)

Article 6, Subarticle 2, Sections 25601 through 25603 govern “Safe Harbor Methods and Content.” There, Section 25601 addresses “Safe Harbor Clear and Reasonable Warnings – Methods and Content,” while Section 25602 dictates “Consumer Product Exposure Warnings – Methods of Transmission,” including product warning labels, internet purchases and catalog purchases. (See, 27 CCR § 25602, subd. (a) to (c).) Finally, Section 25603 governs “Consumer Product Exposure Warnings – Content” and sets forth language to be used in code-compliant safe harbor warnings and short-form warnings. (See, 27 CCR § 25602, subd. (a) and (b).)

As is evident, the new regulatory scheme sets forth the entirety of the rules relating to the method and content of Prop 65 warnings, including what compliant warnings are to look like, when they are to be displayed and, most importantly, where they are to be displayed – shelf signs/tags, posted signs, product-specific warnings, and now internet product display pages and catalog pages. (See, 27 CCR § 25602, subd. (a) to (c).) 

Though it has not formally weighed-in on the precise question, OEHHA seems to agree with this conclusion. In its “Final Statement of Reasons” regarding new Article 6 regulations for “clear and reasonable warnings” (dated September 2, 2016), OEHHA included the following response to a comment (Comment 30) regarding the proposed new Section 25600, subdivision (e):  “As stated previously, subsection 25600(f) (subsequently renumbered as subsection (e)) provides that parties to court-ordered settlements are not required to comply with the OEHHA regulations. OEHHA cannot change the terms of a court order or settlement by regulation.” (OEHHA, Final Statement of Reasons at pg. 26 of 273 [emphasis added].)

Moreover, in its August 2017 “Proposition 65 Clear and Reasonable Warnings Questions and Answers for Businesses,” OEHHA responded to the question “Does a product covered by a court-approved warning require a new warning?” as follows: “A consumer product covered by a court-approved settlement can continue to use any warning methods and content contained in that settlement.” (Emphasis added.)

Thus, it appears OEHHA interprets new Section 25600, subdivision (e) to allow for the terms of prior court-approved settlements and judgments to supersede altogether the new regulations as to warning methods and content.

Conclusion: The New Internet and Catalog Warning Rules Do Not Apply to Prior Consent Judgment Signatories For Those Products Previously At Issue

Title 27 CCR Section 25600, subdivision (e) sets forth the obligations of signatories to prior Prop 65 consent judgments and/or court-ordered settlements. It makes clear that if such a judgment or settlement establishes a warning method or content for Prop 65 warnings, the signatories using such methods or content are deemed to provide “clear and reasonable” warnings under Article 6 [“Clear and Reasonable Warnings”]. The key, of course, is whether a prior Consent Judgment’s provisions do indeed establish warning methods and/or content. Most do.

Title 27 CCR sections 25602 [“Consumer Product Warnings – Methods of Transmission”] and 25603 [“Consumer Product Warnings – Content”] are contained in Article 6. Section 25602 includes the new internet and catalog warning requirements, and Section 25603 includes the new warning formats, including “short-form” warnings. Therefore, it is clear that parties to an existing consent judgment or court-ordered settlement may continue to use both the warning method and warning content included in those documents, even if they differ greatly from the new warning conventions. Moreover, it is reasonable to conclude that those warning methods and content requirements do not now include the new internet and/or catalog warning requirements. Finally, as indicated above, OEHHA has expressed no contrary position; instead, OEHHA’s guidance seems to confirm the view that prior consent judgments and/or court-approved settlements trump the new regulations in their entirety.

Accordingly, if a prior Consent Judgment includes terms dictating the method and content of Prop 65 warnings, then they will be deemed “clear and reasonable” under the new Article 6 by virtue of Section 25600, subdivision (e), and the manufacturers/distributors/retailers who are parties to that Consent Judgment can ignore the new internet/catalog warning requirements, at least for those products previously at issue.  For new or different products not expressly covered by the prior Consent Judgment, however, the recent Prop 65 amendments would control.

Federal preemption – the pharmaceutical company’s lawyer’s best friend in defending litigation. Preemption is customarily raised in failure to warn cases wherein the pharmaceutical defendants argue they have no ability to modify the labels on their products without the FDA’s approval pursuant to the Food, Drug, and Cosmetic Act (FDCA). A preemption defense can stop a pharmaceutical products liability case cold before it ever gets off the ground. Of course, plaintiff’s counsel are not quite as enamored with preemption. So what should a defense counsel expect to receive in response to a preemption defense? Do plaintiffs have any option to defeat preemption or can the pharmaceutical companies just sit back and bask in the glow of all the decisions granting motions to dismiss? One major argument plaintiffs regularly employ, and which is the subject of a recently argued Supreme Court case, is the assertion the pharmaceutical company could have unilaterally modified its label under the Food and Drug Administration’s (FDA) Changes Being Effected (CBE) regulations.

In short, CBE regulations allow a manufacturer to change a drug label by adding or strengthening a warning label without prior FDA approval so the label will reflect “newly acquired information.” A plaintiff relying on the CBE to defeat preemption has the burden of establishing the existence of “newly acquired information,” which is defined in the CBE regulation as:

Data, analyses, or other information not previously submitted to the Agency, which may include (but is not limited to) data derived from new clinical studies, reports of adverse events, or new analyses of previously submitted data (e.g. meta-analyses) if the studies, events, or analyses reveal risks of a different type or greater severity or frequency than previously included in submissions to FDA.

21 C.F.R. 314.3(b). To try and avoid dismissal under preemption grounds, plaintiffs will do their best to allege facts demonstrating the presence of newly acquired information. However, because the FDA retains the authority to reject labeling changes, a plaintiff’s successful showing of newly acquired evidence is not automatically sufficient to overcome a preemption defense. Rather, a manufacturer may still establish an effective preemption defense by introducing clear evidence the FDA would not have approved a change to the label. As summarized in Utts v. Bristol-Myers Squibb Co., 251 F.Supp.3d 644 (S.D.N.Y. 2017), if the plaintiff can point to the existence of “newly acquired information” to support a labeling change under the CBE regulation, the burden then shifts to the manufacturer to show by “clear evidence” that the FDA would not have approved the labeling change made on the basis of this newly acquired information. Id. at 661. However, proving, by clear evidence, the FDA would not have approved the labeling change may be a herculean effort – and it may be getting harder.

In Wyeth v. Levine, 555 U.S. 555, 129 S. Ct. 1187, 173 L.Ed.2d 51 (2009), the Court rejected the manufacturer’s assertion the FDA would not have approved the label change advocated by the plaintiffs. The Court set the standard requiring manufacturers to show by “clear evidence” the FDA would have rejected the proposed change.  In finding the manufacturer failed to meet its burden, the Court highlighted the fact the manufacturer did not argue that it attempted to give the warning at issue, but was ultimately prohibited from doing so by the FDA. The Court also pointed out the manufacturer did not argue that it supplied the FDA with an evaluation or analysis concerning the specific dangers posed by a certain method for intravenously administering the manufacturer’s medication that was at issue in the litigation. Accordingly, the Court held it could not “credit [the manufacturer’s] contention that the FDA would have prevented it from adding a stronger warning about the IV-push method of intravenous administration.”  Id. at 573. 

More problematic for manufacturers is the Third Circuit’s holding in In re Fosamax (Alendronate Sodium) Products Liab. Litigation, 852 F.3d 268 (3d Cir.2017), cert. granted sub nom., Merck Sharp & Dohme Corp v. Albrecht, 138 S. Ct. 2705, 201 L.Ed.2d 1095 (2018). In re Fosamax involved products liability actions against a drug manufacturer asserting state-law failure-to-warn claims alleging that manufacturer failed to add an adequate warning of risk of atypical femur fractures to FDA-approved label for its osteoporosis drug. Prior to the litigation, the manufacturer learned Fosamax could be associated with femoral fractures. Reacting to that discovery, the manufacturer requested to amend its label to warn against the potential risk. The FDA ultimately rejected the manufacturer’s proposed changes, explaining the terms in the amended label were “imprecise” and could be “misleading.”

In the subsequent litigation, hundreds of patients who suffered atypical femoral fractures after taking Fosamax claimed the manufacturer violated state tort laws by failing to adequately warn of that risk. The district court, relying on Wyeth’s “clear evidence” standard, held the FDA’s previous rejection of the manufacturer’s proposed label change constituted clear evidence the FDA would not approve a label change. The district court agreed and concluded the state law claims were preempted.

The U.S. Court of Appeals for the Third Circuit reversed the district court’s holding, claiming the FDA’s earlier rejection of the manufacturer’s proposed changes to its warning label, without more, was not sufficient to establish the Wyeth test of “clear evidence.” The Third Circuit explained the “clear evidence” test should be treated as a “demanding” standard for preempting state law claims. Seemingly applying an even more stringent test than the Wyeth Court, the Third Circuit required the manufacturer to prove it was “highly probable” that a reasonable jury would find the FDA would have rejected a warning that was not “imprecise” or “misleading” as the initial proposed amended label was found to be. The Third Circuit added the issue of whether the FDA would have rejected a label change is a matter of fact for a jury to determine – all but assuring the denial of motions to dismiss in the Third Circuit where plaintiffs sufficiently plead the existence of “newly acquired evidence.”

The good news for manufacturers (at least in the Third Circuit), as reflected in the citation above, is the United States Supreme Court granted certiorari in the case, which is docketed as Merck Sharp & Dohme Corp v. Albrecht. The case was argued on January 7, 2019. Although the Court’s decision will be important for many reasons, affirming the Third Circuit would certainly result in a reduction of successful motions to dismiss relying on preemption. Thus, both the plaintiff and defense bar will be anxiously awaiting the decision.