Another Homework Failure By Plaintiffs

by Dechert LLP

Yesterday, we blogged about a case where plaintiff failed to do even the most basic investigation to identify the product at issue before filing suit.  She was hoping her case would survive with some vague pleadings in the alternative and a request for discovery.  Unfortunately, for now it is.  So, since that case left us feeling a little down, we decided to focus today on a case that similarly suffered from a lack of facts -- but this one got tossed out.  Happy faces back in place. 

As this blogging team is made up of parents with children of varying ages, we are all too familiar with homework.  So, we are also familiar with phrases such as:  “Take your time;” “show all your work;” “follow the directions;” and most importantly – “do your best!”  We tell our children that we understand they want to go to the park, text their friends, or drive to the mall -- but they have to do their homework.  Why?  Not just because it is required, but because they will learn something.  That’s the point of homework, isn’t it?  Not just to torture kids (and parents), but to teach them something.  Well, the same is true for lawyers – we need to do our homework.  For plaintiffs’ lawyers that means learning the basic facts that support their clients’ claims before they file their lawsuits.  And, just like kids who don’t do their homework get zeros – so should plaintiffs.
That is precisely what recently happened in the Darvocet MDL in the context of personal jurisdiction – or lack thereof.  The Darvocet litigation involves injuries alleged to have been caused by the prescription pain medication propoxyphene, which is manufactured by several pharmaceutical companies (brand and generic).  Shortly after propoxyphene was withdrawn from the market, Endo Pharmaceuticals purchased three companies that had previously manufactured or distributed the drug.  In re: Darvocet, Darvon and Propoxyphene Products Liability Litigation, MDL Docket No. 2226 (E.D. Ky. Apr. 18, 2012), slip op. at 2.  Plaintiffs filed suit against both Endo and its newly purchased subsidiaries.  Id.  
As one of several reasons why these cases should be dismissed (including our new one-two preemption punch, see prior post re: Darvocet MDL), Endo asserted lack of personal jurisdiction.  While plaintiffs bear the burden of proving personal jurisdiction, as this court recognized, the burden is “relatively slight.”  Slip op. at 4.  But slight is at least one degree up from nothing, which is what plaintiffs had. 
On specific jurisdiction, plaintiffs argued that it could be established over Endo “through successor liability or other liability theories.”  Slip op. at 6.  Plaintiffs’ sole support for their argument was the following statement in their complaints:
"The extent to which Defendant [Endo] may have assumed responsibility for the acts, omissions or liability of other . . .  Defendants, contractually or otherwise, is unknown at this time, and Plaintiff requires discovery as to this issue."
Slip op. at 7.   The court had the same question we do:  “But what facts?”  Id.   Accepting that statement as true all it establishes is that Endo “may have somehow assumed the liabilities of their subsidiaries.”  Id.  OK.  And there “may have” been a second shooter on the grassy knoll.  And “maybe” John Lennon, Elvis Presley, Andy Kaufman and Tupac Shakur are all hanging out on a deserted island in the South Pacific.  Oh, the power of “maybe.”  But it isn’t good enough to state a legal claim:
"[T]he only factual assertion [plaintiff’s allegation] contains is that the plaintiffs do not have the information they need to establish personal jurisdiction.  Thus, even if the plaintiffs were permitted to stand on their pleadings, they would fall woefully short of the necessary prima facie showing."
Slip op. at 7 (quotation marks and citation omitted).         
More to our liking than yesterday’s case, this court didn’t leave the door open:  “Nor is the Court persuaded by the plaintiffs’ insistence that jurisdictional discovery is needed, since the lenient prima facie standard is premised on the assumption that plaintiffs will not have had the benefit of such discovery.”  Slip op. at 8.  As an aside, plaintiffs’ reliance on successor liability was also misplaced because there is no successor liability if the original entity still exists.  Slip op. at 7-8.  You’ve got to do your homework, people.

Having failed on specific jurisdiction, plaintiffs turned to general jurisdiction.  After making basically the same erroneous successor liability arguments, plaintiffs also argued that jurisdiction exists because Endo has pharmaceutical representatives in the forum states.  Slip op. at 10.  Plaintiffs seemed to think that this fact alone was sufficient to confer jurisdiction under Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846 (2011).  But, since in that decision the Supreme Court rejected “a sprawling view of general jurisdiction,” “the fact that some (non-proproxyphene) products manufactured by [Endo] may have been sold in the forum states is not dispositive, as such products did not give rise to the plaintiffs’ alleged injuries.”  In re: Darvocet, slip op. at 10-11.  Thus, “the mere presence of a corporation’s sales representatives in a forum state is insufficient to establish personal jurisdiction over the company.”  Slip op. at 11.   

While we don’t like when our kids don’t do their homework, we are generally OK when plaintiffs don’t if the result is a dismissal at the pleadings stage (well, we like a dismissal at any stage really).  Congratulations to Mark Cheffo, Katherine Armstrong, and Rachel Passaretti-Wu of Skadden, Arps, Slate, Meagher & Flom LLP   for this win and to Lincoln Wilson  for forwarding it along.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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