Hurdles Faced By Plaintiffs In Class Action Lawsuit for Sale and Marketing of Cold and Flu Medications Containing Vitamin C
By Guest Blogger Tyler Anderson
On November 2, we blogged about the FDA warning letter issued to Procter and Gamble for its unlawful marketing of Vicks cold and flu medications containing Vitamin C. On November 4, 2009, a putative class action lawsuit was filed against Procter and Gamble in the U.S. District Court for the Southern District of Ohio (Sixth Circuit) alleging Procter and Gamble violated federal and state consumer protection laws through false and misleading advertising practices regarding the two Vicks products mentioned in the FDA warning letter.
Regardless of the merits of their case, the plaintiffs in this action may have a hard time obtaining their desired relief. In Count 1 of the complaint, the plaintiffs allege Proctor and Gamble violated the consumer protection laws of 43 separate states. The Seventh Circuit’s holding in its Bridgestone/Firestone decision (J. Easterbrook) and its progeny, suggests that under FRCP 23(b)(3), such a class action is unmanageable. Courts point to the impracticability of one court applying the divergent laws of differing jurisdictions in circumstances such as those at bar.
“Plausibility” pleading standards (see recent discussion of Wright v. General Mills) present additional hurdles. Applying Twombly as the court did in the Wright case, to survive a motion to dismiss the plaintiffs would need to make plausible, non-conclusory allegations that the plaintiffs purchased the Vicks products because they contained Vitamin C and the cost of the product with the Vitamin C was greater than it would have been without. No such allegations exist here, so applying the holdings of Twombly and Wright to this claim indicates that it may be subject to dismissal.
“Reliance” may be yet another avenue to dismiss the action (at least in part). Many state consumer fraud statutes require reliance. This means that the plaintiffs would be required to show that each plaintiff in the action bought the product in reliance on the purported fraudulent statement. Because purchasing decisions are individual decisions, proving reliance on a class-wide basis would be an individual inquiry that would predominate over issues of fact common to the class, which would negate class treatment.
Marketing Missive: FDA Issues Warning Letter to Procter and Gamble for Unlawfully Marketing Cold and Flu Medications Containing Vitamin C
By Guest Blogger Tyler Anderson
On October 29, 2009, the FDA issued a warning letter to Procter and Gamble notifying the company that its “Vicks DayQuil Plus Vitamin C” and “Vicks NyQuil Plus Vitamin C” are illegally marketed combinations of drug ingredients and a dietary ingredient. Both of the over-the-counter (OTC) medicines, which contain Vitamin C in addition to several drug ingredients, are marketed as treatments for cold and flu symptoms. The FDA issued the warning letter (1) to clarify that these single dosage form combinations of drug ingredients and dietary ingredients cannot legally be marketed because they have not been proven safe and effective, and (2) because the agency has previously determined that there is not sufficient data to show that Vitamin C is safe and effective in preventing or treating the common cold.
Under its OTC monograph system, the FDA allows some OTC drugs to be marketed without agency approval. The FDA found the two Vicks products did not comply with the applicable FDA monograph, and therefore the products must first be evaluated and approved under the agency’s new drug approval process before they can be legally marketed.
FDA's Searchable Widget for Fraudulent H1N1 (Swine) Flu Products
Ken has previously blogged about liability issues relating to H1N1 flu, also known as swine flu. Today, the FDA has issued a widget to allow employers, consumers and others to browse and search fraudulent H1N1 influenza products and report suspected fraud. The widget can be copied onto any other Web site or blog. The FDA had previously issued a similar widget for the peanut butter recall. Additional information can be obtained from the FDA's swine flu page or flu.gov.
This is the widget:
Litigation and Insurance Coverage Risks from Swine Flu (H1N1)
For food companies (and other businesses), a dangerous and deadly flu pandemic (e.g., H1N1) can be a business disaster. Adding insult to injury is personal injury litigation and the accompanying insurance coverage nightmares that follow.
What Are the Personal Injury Litigation Risks?
For restaurants, airlines, cruiselines, supermarkets, hospitals, schools, and other institutions, risk comes from exposure if customers can link their illness with employee or staff illnesses. While proof of causation will be a hurdle for these plaintiffs, employers without clear and enforced pandemic policies (e.g., policies aimed at limited transmission and keeping sick workers home) are at risk. Large-scale deaths of healthy children and adults will raise the stakes enough to garner attention from plaintiffs’ lawyers and motivate lawsuits (whether merited or not).
While workers’ compensation statutes generally shield employers from suits by their employees (both alive and deceased), the same bar may not apply to contract employees or customers. Both may have the right to sue if they can link exposure to illness.
Will Personal Injury Claims Be Covered by CGL Coverage?
Generally, third-party claims for bodily injury against a company should be covered by Commercial General Liability (CGL) coverage. Yet coverages, exclusions, and endorsements should be read carefully. With greater frequency, insurers are including relevant (and harsh) language excluding claims related to infectious disease. For example, many policies, especially those issued to food companies, include exclusions for “organic pathogens,” which could be construed by insurers to include flu viruses.
Insureds should also evaluate whether limits and excess coverages are sufficient. Increasing limits of liability are relatively inexpensive and should be considered. It’s not difficult to imagine claims exceeding $100 million if multiple deaths of healthy individuals are involved.
Will Lost Business and/or Lost Profits Be Covered by Business Interruption Coverage?
Possibly. The lawyers at Anderson, Kill and Olick have written a nice piece on this and other swine flu coverage issues. Here’s their summary of business interruption coverage for swine flu:
Depending on the facts, it may be possible for a swine flu pandemic to give rise to business interruption coverage. Such coverage typically is purchased by businesses as part of their property insurance policies, in the form of a rider or endorsement or an optional additional coverage. Business interruption coverage is designed to protect businesses from losses that they may suffer unexpectedly due to unavoidable interruptions in their daily operations.
Business interruption coverage may apply in a variety of circumstances, such as a forced shut-down, or a substantial impairment in access to, a business’ physical plant or warehouses. Recent, infamous examples of events giving rise to such business interruptions are the events of September 11, 2001, and Hurricane Katrina in Florida.
In most property policies, business interruption coverage is only triggered when the site suffers property damage. Physical damage, however, can include contamination of equipment. Moreover, some policies, particularly those written for policyholders in the hospitality industry, do provide coverage for losses stemming from infectious disease without requiring physical damage to premises. Further, civil authority coverage, which is triggered when authorities shut off access to an area in which a business is located, can be triggered without physical damage to the policyholder’s premises.
On the brink of a season during which some predict a possible dangerous pandemic, now is an opportune time for any company to gather its insurance coverage team (lawyers, risk managers, and brokers) to review and mitigate exposures.
FDA Commissioner Nominee Faces Confirmation Hearing
Dr. Margaret Hamburg, President Barack Obama’s nominee to oversee the Food and Drug Administration, is appearing before a U.S. Senate committee this afternoon regarding her nomination. The confirmation hearing before the Senate Health, Education, Labor and Pensions Committee began at 2:00 p.m. ET. Streaming video is available here.
The Associated Press is reporting that, if confirmed, one of Hamburg’s first tasks will be overseeing development of a vaccine for the H1N1 influenza virus. In Hamburg’s opening remarks to the Senate committee that were made available to reporters earlier today, she also noted that food safety will be among her top priorities. “Important steps must be taken to better protect the nation’s food supply from farm to form,” Hamburg said.
Secretary of Agriculture Emphasizes Safety of U.S. Pork
Secretary of Agriculture Tom Vilsack issued a statement today emphasizing that U.S. pork products are safe and that there is no evidence that U.S. swine have been infected with the swine flu virus.
Calling trade restrictions on pork or pork products unnecessary, Vilsack said any such restrictions would be inconsistent with World Organization for Animal Health guidelines. “[I]t is not necessary to introduce specific measures for international trade in swine or their products, nor are consumers of pork products at risk of infection,” Vilsack said. The complete statement is available here.
A report in The New York Times notes that pork producers are questioning whether it is appropriate to call the virus “swine flu” given that there is no evidence of swine infection. The report states that officials in Thailand, one of the world’s largest meat exporters, have started calling the virus “Mexican flu.” An Israeli deputy health minister reportedly said Israel would follow suit to keep Jews from having to say the word “swine.”
