Introducing Dechert Re:Torts, a monthly publication that offers a summary of significant cases, rules and pertinent issues, brought to you by Dechert’s Product Liability and Mass Torts Group. Our snapshots help you stay abreast of key developments and provide practical takeaways to help you navigate risk.

Dechert’s team is recognized as one of the best in the country. Clients come to our team for assistance on sophisticated product liability, mass tort and consumer fraud matters. For more than 40 years, our lawyers have been leading the defense of nationwide litigations involving pharmaceuticals, medical devices, cosmetics, chemicals, consumer products and more. Our award-winning group has experience in all aspects of product liability and mass tort issues, from inception to trial. We have successfully resolved some of the nation's landmark litigations, including through dismissals before the trial of a single case. With lawyers across eight U.S. offices, our partners are leaders in the field with decades of experience.

We hope you enjoy Dechert Re:Torts and find it useful. Of course, our team will continue to provide periodic client alerts for more in-depth analysis through Dechert’s OnPoints. We are always available to discuss your goals in these and any related areas.

-The Dechert Re:Torts Editorial Committee

In this issue:
More PFAS Reporting Obligations on the Horizon | The Pending Amendments to Rule 702 | Zantac MDL Judge Grants Defendants’ Daubert Motions | “Pay no attention to that man behind the curtain!”: Third-Party Litigation Financing | Products Liability Multi-District Litigation Heading into 2023 | A Proposed Rule for MDLs | Bringing Cosmetic Regulation “into the 21st Century” | FTC Updates Guidance on Health Products Advertising

Environmental Edit

More PFAS Reporting Obligations on the Horizon

In June 2021, the EPA proposed a new rule for reporting on per- and polyfluoroalkyl substances (“PFAS”) under the Toxic Substances Control Act (“TSCA”), which would impose substantial data collection and reporting requirements on a broad range of manufacturers and importers. The rule will realize one of EPA’s goals under its 2021 PFAS Strategic Roadmap, a set of policy aims for greater monitoring and regulation of PFAS. But the proposed rule is not without costs. In November 2022, the EPA released an updated economic analysis that estimated industry-wide compliance costs at US$876 million, over 80 times its previous estimate of US$10.8 million, and suggested changes to the proposed rule to reduce the cost burden.

As written, the proposed TSCA reporting rule applies to any manufacturer or importer of any of approximately 1,300 PFAS, including any material containing these substances, in any year since 2011. It would require these companies to collect and review historic records going back to the year 2011 and report a myriad of data, including information about the total amount of each substance manufactured or processed, categories or proposed categories of use, descriptions of byproducts, manner or method of disposal, all existing information concerning potential environmental and health effects, and a reasonable estimate of the number of individuals who will be exposed.

In recognition of concerns about the significant costs and other aspects of the proposed rule, the EPA’s recent analysis identifies potential changes to the rule that would soften its impact. The various alternative provisions under consideration include a limitation on the number of PFAS that are covered by the rule and a reporting threshold of either 2,500 or 25,000 pounds of a chemical substance at a given site. The comment period on the EPA’s economic analysis and proposed alternative provisions closed in December 2022.

The proposed TSCA reporting rule comes amid greater oversight of PFAS use. In November 2022, the EPA also proposed another rule that could affect companies’ PFAS reporting obligations, under the Emergency Planning and Community Right-to-Know Act and the Pollution Prevention Act, with comments due February 3. Several states have already enacted separate reporting requirements or outright bans of PFAS in various products. These are just a few examples of a company’s need to evaluate its PFAS obligations.

Takeaway: Companies who use or have used PFAS or PFAS-containing materials should stay informed of potential reporting requirements and may benefit from an assessment of relevant products and raw materials to better understand their potential regulatory obligations. These regulations highlight the importance of evaluating due diligence and recordkeeping practices to ensure that companies can meet emerging PFAS-related regulations.

Experts Examined

The Pending Amendments to Rule 702

In June 2022 the Judicial Conference Committee on Rules of Practice and Procedure approved amendments to Federal Rule of Evidence 702. The amended rule features two main changes. First, the amendments explicitly incorporate the preponderance of the evidence standard requiring a proponent of expert evidence to show it is more likely than not that the expert’s opinion is reliable. Yet, as the Committee notes, the preponderance of the evidence standard was already the proper standard. The “amendments” are really a reminder for courts that “the sufficiency of an expert’s basis, and the application of the expert’s methodology” are questions that go to admissibility rather than merely weight. Second, the amendments adjust the language relating to an expert’s reliable application of methods. Again, the Committee emphasizes this is not “new” but instead is a reminder that some experts make unreliable leaps from their reliable methodology to their opinion that jurors may lack the “specialized knowledge” to spot.

If approved, the amendments will take effect in December 2023. Yet courts have begun to cite the pending changes—and the comments—in their Rule 702 analyses. For instance, in Sardis v. Overhead Door Corp., the Fourth Circuit noted that their “insistence on district court’s compliance with rule 702’s plain gatekeeping requirement” was borne of the same concern which prompted the Committee's amendments—the failure of district courts to apply the preponderance standard. 10 F.4th 268, 284–85 (4th Cir. 2021). In holding that expert testimony was improperly admitted, the Fourth Circuit concluded that their reversal was “consistent with [] existing law—and in accordance with the Committee’s pending rule.” Id. at 285. Similarly, when a West Virginia district court was confronted with an expert opinion rife with assumptions that plaintiffs claimed the expert “was allowed to make as an expert witness,” the court cited the pending rule and its commentary that “many courts have [incorrectly] held that the critical questions of the sufficiency of an expert’s basis [for his testimony], and the application of the expert's methodology, are generally questions of weight and not admissibility.” Bishop v. Triumph Motorcycles Am. Ltd., 2021 WL 4316810, at *19 n.8 (N.D.W. Va. Sep. 22, 2021). So, too, in In re Payment Card Interchange Fee & Merch. Disc. Antitrust Litig., the district court noted that it was “mindful of the proposed amendments’ purpose of ‘emphasiz[ing] that the court must focus on the expert’s opinion, and must find that the opinion actually proceeds from a reliable application of the methodology.’” 2022 WL 15053250, at *4 n.9 (E.D.N.Y. Oct. 26, 2022) (citation omitted).

Takeaway: Some courts are already citing the amendment and commentary to Rule 702. Because the comments emphasize that the changes merely clarify the existing rules, we expect courts will continue to rely on the pending amendments over the coming year.

Zantac MDL Judge Grants Defendants’ Daubert Motions

Last month, Judge Robin Rosenberg (S.D. Fla.) granted each of Defendants’ Rule 702 motions to exclude Plaintiffs’ general causation experts in the Zantac (ranitidine) multi-district litigation (“MDL”), finding that Plaintiffs’ experts failed to offer reliable scientific evidence that ranitidine causes any of the five cancers at issue (bladder, esophageal, gastric, liver, and pancreatic cancer). The decision was delivered in a 341-page opinion that systematically reviewed various methodological flaws in Plaintiffs’ experts’ analyses and provided multiple, independent grounds for their exclusion. See In re Zantac (Ranitidine) Prods. Liab. Litig., 2022 WL 17480906 (S.D. Fla. Dec. 6, 2022). Because Plaintiffs were left with no admissible and sufficient evidence on general causation, the Court also granted Defendants’ motions for summary judgment. The decision was a major win for the Defendants, who had been steadfast in their denial that Zantac causes cancer and eager to frontload general causation.

The Court underscored several important points. First, Plaintiffs’ general causation theory was that N-nitrosodimethylamine (“NDMA”) forms in ranitidine, NDMA causes cancer and, therefore, ranitidine causes cancer. The Court framed the question more directly: does ranitidine cause cancer? The most relevant and reliable evidence to assess that question were epidemiological data in patients taking ranitidine—not studies on NDMA in other contexts. Second, even where Plaintiffs’ experts used a “weight of the evidence” approach, their litigation-driven reasoning and inconsistent methods could not pass muster. Third, Plaintiffs’ experts’ testing as to the amount of NDMA in ranitidine had many indicia of unreliability, including a lack of validation and inconsistencies with testing done by any other laboratory. Finally, the Court carefully explained that the FDA’s voluntary recall of ranitidine in 2020 was based on a conservative, protective regulatory limit on NDMA and did not reflect causation.

Ultimately, the Court emphasized that “there is no scientist outside this litigation who concluded ranitidine causes cancer” and “Plaintiffs’ scientists within this litigation systematically utilized unreliable methodologies with a lack of documentation on how experiments were conducted, a lack of substantiation for analytical leaps, a lack of statistically significant data, and a lack of internally consistent, objective, science-based standards for the evenhanded evaluation of data.” Id. at *3. In other words, though law may lag science, Plaintiffs could not escape the fact that the science that had emerged since the litigation began overwhelmingly favored Defendants.

Takeaway: The Zantac MDL Court recently excluded each of Plaintiffs’ general causation experts, finding that they failed to offer reliable scientific evidence that Zantac (ranitidine) causes cancer. The Court noted that even though ranitidine was recalled by the FDA in 2020, the scientific evidence that had developed since then did not support a finding of causation, and Plaintiffs’ experts’ opinions to the contrary were litigation-driven and unreliable.

Hot Topics

"Pay no attention to that man behind the curtain!”: Third-Party Litigation Financing

On November 4, 2022, Chief Judge Colm Connolly of the District of Delaware asked a lawyer appearing before him a simple question: “Had you ever spoken with [your client] before you filed these [patent] cases?” Order at 30, Nimitz Techs. LLC v. Bloomberg L.P., No. 1:22-cv-00413 (D. Del. Nov. 30, 2022). The lawyer had not. Rather than speaking to the sole member of his LLC “client,” the lawyer spoke with an individual at an organization named “Mavexar.” Id. Later in the hearing, another lawyer, who brought an entirely separate set of claims, represented that he also had not spoken with the sole member of his LLC “client” prior to filing his patent infringement cases. Id. at 34. He too had instead spoken with Mavexar. Id. at 34.

Further information later emerged connecting Mavexar to a “patent monetization entity,” or patent troll, known as IP Edge. Id. at 46. By the end of the day, the Court was left wondering whether there were “real parties in interest” “that have been hidden from the Court?” And significantly, did “those real parties in interest perpetrate[] a fraud on the court” that is “designed to shield those parties from the potential liability they would otherwise face . . . in litigation?” Id. at 75.

Significantly, Judge Connolly had previously issued a Standing Order Regarding Third-Party Funding Arrangements that requires parties to file a statement providing information on any individual or entity funding “some or all of the party’s attorney fees” including whether the “Third-Party Funder’s approval is necessary for litigation or settlement decisions.” Id. at 6. The purpose of that Order was to allow the Court, the public, and the parties to have a complete understanding of the true parties in interest. The Court convened the November 4 hearing specifically “to determine if [the parties] had complied with the Third-Party Funding Order.” Id. at 34. At the conclusion of November’s hearing, Judge Connolly stated that the day’s findings “give pause to anybody who really is concerned about the integrity of our judicial system, the abuse of our courts, and . . . lack of transparency as to who the real parties before the Court are, about who is making decisions in these types of litigation.” Id. at 73.

Following the hearing, Judge Connolly ordered productions of certain communications between the named plaintiffs, Mavexar and the attorneys who brought the cases. Id. at 74. One of the parties involved, Nimitz Technologies LLC, immediately sought mandamus from the Federal Circuit. Before the Federal Circuit reached a decision, another two plaintiffs, Creekview IP LLC and Waverly Licensing LLC, also filed petitions for mandamus with the Federal Circuit. The court denied all of the petitions leaving the companies to comply with Judge Connolly’s order. Order at 1, In re Nimitz Techs. LLC, 2023-103 (Fed. Cir. Dec. 8, 2022); Order at 4, In re Waverly Licensing LLC, 2023-109 (Fed. Cir. Jan. 4, 2023).

Takeaway: While only Judge Connolly and the District of New Jersey have adopted standing third-party litigation funding orders at the federal level thus far, Judge Connolly’s concerns about the lack of party transparency should be heeded. It is a fast-developing topic and one we will continue to track.

MDL Minute

Products Liability Multi-District Litigation Heading into 2023

The overall number of multi-district litigation (“MDL”) proceedings has declined over the last decade—dropping from 291 in 2013 to 171 as we started 2023. But the number of actions encompassed by active MDLs has quadrupled—rising from roughly 100,000 to just over 400,000. Among the types of MDLs currently pending, products liability MDLs are most prevalent, coming in at 37% of active cases and 90% of individual actions.

2022 MDLs: A Year In Review

In the past year, the Judicial Panel on Multidistrict Litigation ("JPML") granted over two-thirds of the new MDL petitions filed. That statistic is even higher for products liability cases, with over 90% of new petitions granted. Of the 12 products liability MDL petitions considered by the JPML in 2022, only one was denied, while the 11 below were granted:

• In re Abbott Laboratories, et al., Preterm Infant Nutrition Products Liability Litigation; MDL No. 3026 formed in N.D. Illinois before Judge Rebecca R. Pallmeyer.

• In re Acetaminophen − ASD/ADHD Products Liability Litigation; MDL No. 3043 formed in S.D.N.Y. before Judge Denise L. Cote.

• In re Arc Airbag Inflators Products Liability Litigation; MDL No. 3051 formed in N.D. Georgia before Judge Eleanor L. Ross.

• In re Chantix (Varenicline) Marketing, Sales Practices and Products Liability Litigation (No. II); MDL No. 3050 formed in S.D.N.Y. before Judge Katherine Polk Failla.

• In re Chrysler Pacifica Fire Recall Products Liability Litigation; MDL No. 3040 formed in E.D. Michigan before Judge David M. Lawson.

• In re Covidien Hernia Mesh Products Liability Litigation (No. II); MDL No. 3029 formed in D. Massachusetts before Judge Patti B. Saris.

• In re Exactech Polyethylene Orthopedic Products Liability Litigation; MDL No. 3044 formed in E.D.N.Y. before Judge Nicholas G. Garaufis.

• In re Gardasil Products Liability Litigation; MDL No. 3036 formed in W.D. North Carolina before Judge Sheryl H. Lipman.

• In re Recalled Abbott Infant Formula Products Liability Litigation; MDL No. 3037 formed in N.D. Illinois before Judge Matthew F. Kennelly.

• In re Social Media Adolescent Addiction/Personal Injury Products Liability Litigation; MDL No. 3047 formed in N.D. California before Judge Yvonne Gonzalez Rogers.

• In re Taxotere (Docetaxel) Eye Injury Products Liability Litigation; MDL No. 2740 formed in E.D. Louisiana before Judge Jane Triche Milazzo.

There were two other MDL petitions granted that touch on Products Liability issues, but were not counted as Products Liability MDLs for Judicial Panel on Multidistrict Litigation ("JPML") purposes.

In deciding to grant centralization for these products cases, the JPML most commonly cited the elimination of duplicative discovery, the prevention of inconsistent pretrial rulings, and the preservation of the resources of the parties, their counsel, and the judiciary. See e.g., In re Acetaminophen − ASD/ADHD Prods. Liab. Litig., MDL No. 3043, Transfer Order (October 5, 2022). Other factors included the number of filed cases, the progress that had already been made in such matters, and the potential for future filings.

Takeaway: The last JPML hearing was January 26, 2023, in Miami, Florida. The only products liability petition heard was filed by plaintiffs in In re: Hair Relaxer Marketing, Sales Practices, and Products Liability Litigation. If what’s past is prologue, in 2023 we can expect to see more products liability MDL petitions filed, many of them granted, and the nationwide MDL docket continue to be disproportionality comprised of products liability cases and plaintiffs.

A Proposed Rule for MDLs

The multi-district litigation (“MDL”) Subcommittee on the Federal Rules of Civil Procedure Advisory Committee is considering the addition of a new rule that would govern case management and scheduling. In non-MDL litigation, Rules 16 and 26 require the parties to confer on the procedural and substantive aspects of a case at the outset and propose an agreed schedule to the judge that will govern the action or present competing proposals if agreement cannot be reached. In MDLs, however, such procedures may be insufficient, given that a preliminary conference may have occurred before the case was transferred. As a result, the absence of a rule specific to MDLs may prevent courts from creating “an effective structure for the proceeding.”

In response, the Subcommittee has proposed Federal Rule of Civil Procedure 16.1. The Rule would merge the obligations of Rules 16 and 26 to provide the parties and the transferee judge with a list of topic points “on which the parties in an MDL could be directed to confer.” The sketch of Rule 16.1 is intended to provide transferee judges with more information about the nature of the litigation, the issues the litigants believe are most important, and the desired discovery schedule.

One of the major points of disagreement within the Subcommittee and among commentators is the nature of the conference obligation—should the rule require these scheduling conferences to take place (i.e., “must”), encourage them (i.e., “should”), or merely permit them (i.e., “may”). Some judges argue that “must” is proper because it leaves little to interpretation and ensures the ball gets rolling quickly. Other judges believe that “must” connotes a mandate, requiring judges to take actions that may not be sensible or logical depending on the nature and circumstances of a given case, and thus those proponents argue for “may” or “should.” Still others argue that “should” is appropriate to convey a sense of encouragement.

For purposes of any preliminary conference, the Subcommittee has also raised the question of how to determine who represents the claimants in an MDL (if voluminous) before formal selection of leadership has occurred. Framed as a “chicken/egg problem,” the Subcommittee has struggled with determining whether the judge should first select lead counsel or first determine how to structure the proceedings, which in turn would determine the method by which the court would appoint leadership. One suggested approach would have the court select interim or coordinating counsel to oversee preliminary conferences until formal leadership is appointed.

Takeaway: The proposed rule on MDLs could have significant effects on how courts conduct preliminary scheduling in an MDL proceeding. Practitioners should stay tuned for further developments following the Subcommittee’s next scheduled meeting in March 2023.

Regulatory Review

Bringing Cosmetic Regulation “into the 21st Century”

An amendment to the Federal Food, Drug, and Cosmetic Act (“FDCA”) modernizes the Food and Drug Administration's (“FDA”) regulation of makeup, hair products, deodorant, and other cosmetic products. On December 29, 2022, President Biden signed legislation into law, which included the Modernization of Cosmetics Regulation Act of 2022 (“MOCRA”). H.R. 2617, 117th Cong. §§ 3501-08 (2022). In addressing provisions contained in MOCRA, Senator Dianne Feinstein noted that they would bring FDA regulation of cosmetics “into the 21st century.”

MOCRA imposes new requirements on “responsible persons” (manufacturers, packers, or distributors whose name appears on the label of a cosmetic product), as well as on certain “facilities” that manufacture or process cosmetic products in the U.S., including importers. The legislation makes the following changes from existing law:

• Mandatory Reporting: While previously voluntary, under the legislation, responsible persons are required to report “serious adverse events” associated with the use of a cosmetic product including “significant disfigurement” and adverse events that require medical or surgical intervention. MOCRA § 3502.

• Mandatory Registration: All facilities (domestic and foreign) that manufacture or process cosmetic products must register with FDA and submit cosmetic product listings to the agency. This was also voluntary previously. Id.

• Mandatory Recall Authority: MOCRA provides FDA with mandatory recall authority if there is a reasonable probability that a product is adulterated or misbranded, and the use or exposure to the cosmetic will cause serious adverse health consequences or death. Before doing so, FDA must provide the responsible person the opportunity to voluntarily cease distribution and recall the product. Id. Previously FDA could only request a recall for cosmetics.

• Fragrance Allergen Requirements: Congress directed FDA to promulgate rules designating substances that are considered “fragrance allergens,” to establish threshold levels of amounts of these substances and to require cosmetic labeling to identify designated fragrance allergens. Id.

• Compliance with Good Manufacturing Practice: FDA has new authority to mandate that cosmetic facilities comply with good manufacturing practice (“GMP”) to be established by FDA via rulemaking. Id.

• Establishment of Standardized Asbestos Testing Methods: MOCRA requires that FDA promulgate regulations to establish standardized testing methods to detect asbestos in talc-containing products. Id. § 3505.

• Assessment of PFAS: FDA must issue a report assessing the safety and use of perfluoroalkyl and polyfluoroalkyl substances in cosmetic products. Id. § 3506.

Notably, these amendments include an express preemption clause, which provides that no state may establish any law or regulation that is different from or in addition to the requirements under MOCRA with respect to registration and product listing, GMP, records, recalls, adverse event reporting, and safety substantiation. Id. § 3502. The preemption clause may prove important to companies facing litigation related to their cosmetic products.

Takeaway: MOCRA establishes new statutory and regulatory requirements for cosmetic products while increasing FDA’s authority to regulate cosmetics and expressly preempting contrary or additional state law requirements.

FTC Updates Guidance on Health Products Advertising

In December 2022, the Federal Trade Commission issued its Health Products Compliance Guide, replacing its prior 1998 guidance, Dietary Supplements: An Advertising Guide. The Compliance Guide reinforces that health-related advertising claims must comply with FTC’s truth-in-advertising law but also makes several noteworthy revisions:

First, the new Compliance Guide applies to all health-related advertising claims, not just those related to dietary supplements. As such, FTC’s guidance now includes new examples related to a wide array of health-related products, including food and over-the-counter drugs.

Second, the new guidance clarifies the “clear and conspicuous” standard required of qualified disclosures. By law, companies must disclose all qualifying information relevant to the claims being made and that information must be clear, conspicuous, and easily understood by the average consumer. The Compliance Guide stresses that these disclaimers must be difficult to miss and sufficiently simple for the average consumer to understand. Vague qualifying terms—such as “may,” “helps,” “promising,” “initial,” or “pilot”— are generally not sufficient disclaimers.

Third, the new guide includes a more thorough discussion of the amount and type of evidence required to substantiate health-related claims. The Compliance Guide stresses that FTC generally expects high-quality randomized, controlled human clinical trials for all health-related claims. In limited circumstances, FTC will accept “high-quality epidemiologic evidence,” however, anecdotal evidence and public health endorsements are never sufficient to substantiate health-related claims. The Compliance Guide also includes guidance on endorsements and testimonials, claims related to traditional use of homeopathic drugs, claims related to FDA approval, and the use of third-party literature.

Takeaway: FTC has updated its compliance guide related to health product advertising. Among other revisions, the guide clarifies the “clear and conspicuous” standard for qualified disclosures and highlights that health-related claims must be substantiated by high-quality scientific evidence. Companies making health-related advertising claims should review the new guide to ensure compliance.