LITIGATIONLITIGATION20052005 A Supplement to The American Lawyer & Corporate Counsel A Line in the Sand

▲ PPA, an ingredient in cold medicine alleged to cause strokes, looked like a mass tort bonanza for plaintiffs lawyers. But the defendant drug companies decided to stand their ground.

BY ALISON FRANKEL

ALL OF THE NECESSARY ELEMENTS OF A litigation filings. Newspapers picked up the story: The New York blockbuster seemed to be in place. Times and later the Los Angeles Times ran accusatory The science was good. The defendants—a handful of investigative pieces about PPA and the drug industry. Early enormous pharmaceutical companies—still deny it, but two jury research showed panels angry at perceived corporate long-term studies have shown that a tiny percentage of the cover-ups. Plaintiffs lawyers talked about PPA as the next people who took over-the-counter drugs containing a fen-phen, the next gold mine of a litigation. chemical called phenylpropanolamine (PPA) were victims It wasn’t. And though there are still a few plaintiffs firms of PPA–associated hemorrhagic stroke. According to the with significant PPA caseloads, many others are closing epidemiological studies, thousands of people who used down their PPA dockets, settling the cases for which they Anonprescription diet pills or cold remedies suffered sudden can wrest something from defendants and dismissing the bleeding into their brains as a result. rest. “PPA was not a successful litigation for us,” concedes The liability case appeared just as promising. Industry Christopher Seeger of New York’s Seeger Weiss, who has files were full of damning evidence that pharmaceutical transferred his attention to the Vioxx litigation. Adds Relkin companies had questioned PPA’s side effects long before of Weitz & Luxenberg: “It hasn’t been as profitable as we November 2000, when the Food and Drug Administration would have liked.” demanded that drugs containing the chemical be with- In some ways the course of the PPA litigation was deter- drawn from the market. Even after an industry-designed mined by factors no lawyer could control. It was difficult to and -sponsored study demonstrated the link to stroke prove that victims had taken over-the-counter medicines in 2000, drugmakers considered so safe stalled the FDA “For the Remaining Parlodel that they were rarely for almost a noted in medical ▲ year, continuing to Cases, She [Watson] Retained a charts. Moreover, ju- sell PPA–containing rors didn’t like to products until the Defense Firm She Trusted, think that everyday government called Washington, D.C.’s Spriggs & drugs they and their for their withdrawal. families had taken “We had a good Hollingsworth” without incident liability story,” says might have caused Ellen Relkin of New devastating strokes, York’s Weitz & Luxenberg, one of the plaintiffs firms that particularly when a victim’s stroke could be attributed to poured millions of dollars into PPA cases. “We were some other cause. very optimistic.” But there was another important reason for the relative The PPA litigation launched with the fanfare that always failure of the PPA mass tort, one with implications for big accompanies an incipient mass tort: the blare of lawyers product liability litigations that will begin long after the last advertising for clients and the bass line of thousands of case PPA case is over. Call it defense intransigence. Instead of LITIGATION | STRATEGY

attempting to resolve the litigation lingsworth, and instructed its lawyers quickly through a class action or mass- FOR NOVARTIS, THE STORY OF to challenge plaintiffs lawyers at every es of settlements, defendants dug in, the PPA litigation actually begins with turn. “We said, ‘Let’s make them defying conventional wisdom about a Fdrug called Parlodel. In 1996, when work.’ Why should we make it easy for the dangerous corporate implications Ciba-Geigy merged with Sandoz them?” says Watson, now vice of litigation uncertainty. Fighting, for to form Switzerland-based Novartis, president and general counsel of some of the defendants in the PPA liti- Ciba Pharmaceutical counsel Dorothy Novartis Pharmaceuticals Corpora- gation, was preferable to settling, even Watson inherited a troublesome tion. “I knew I was going to have to when fighting might be more expen- pay more up front to have a case sive, in the short term, than writing a prepared, to go through the tactical, check to make a case go away. PPA de- strategic moves, but that was ultimate- fendants Novartis Consumer Health ly going to give me more power.” and Bayer Corporation insisted on Novartis confronted plaintiffs on their bringing PPA cases before juries—and science—often persuading judges to then won them. Of nine PPA verdicts exclude plaintiffs’ experts—and on since 2000, only one was a plaintiffs individual causation. Watson did settle win, and even that award, $400,000 some Parlodel cases—most for about against Bayer in a Texas state court, $10,000—but Novartis won others at was hardly a bonanza. Novartis, Bayer, trial, even in jurisdictions that usually and the other PPA defendants have make defendants shudder. After settled, in the aggregate, hundreds of Watson initiated her aggressive the plaintiffs’ best PPA cases—without defense strategy, the corporation spent the Damoclean sword of a huge jury less than $4 million to resolve more verdict hanging over their heads. Randolph Sherman of Kaye than 100 Parlodel cases—a fraction of Settlement offers, as a result, have Scholer spearheaded the what it cost to settle that one case been low. Novartis, for example, has Novartis defense. against Joe Jamail. settled 134 of approximately 900 cas- The success of Watson’s Parlodel es. Of those 134, 60 percent settled for docket involving Sandoz’s drug defense ultimately informed Novartis’s less than $50,000. Only three Novartis Parlodel. Widely prescribed to post- approach to the PPA litigation, but not PPA cases have settled for more than partum women who wanted their milk right away. Mass torts have a sort of $1 million—and scores have been to dry up, it was alleged to cause predetermined orchestration in their dismissed by plaintiffs lawyers who strokes. Sandoz had been settling cas- early phases, and PPA followed it decided the PPA litigation simply es as they came up for trial, including faithfully. The litigation began at the wasn’t worth the risk. one for $8 million. That was not a end of 2000, after the FDA’s call for a Of course, not every burgeoning strategy to the liking of Watson, who withdrawal of PPA products. The mass tort can accommodate the PPA grew up at Ciba in what she describes agency was acting on the basis of a approach. Not every case can be as a culture of aggressive product lia- five-year study conducted by a team of defended as successfully. (Just ask bility defense. Nevertheless, Watson scientists from Yale University—under Merck & Co., Inc., in the wake of its was forced to settle her first Parlodel protocols approved by Ciba-Geigy and $253 million Vioxx loss in Texas.) But case; she did not think the firm hired another pharmaceutical company— every defendant can learn an impor- by her Sandoz predecessor, a 50- that found an increased risk of tant lesson from PPA. Mass torts are lawyer Colorado firm, was prepared to hemorrhagic strokes in women who merely agglomerations of individual go to trial in Texas against famed liti- used drugs containing PPA. (The study cases. Some plaintiffs are deserving, gator Joseph Jamail. Watson agreed to was initially designed to look only at and some are not. Some have strong pay Jamail’s client $20 million. diet drugs, but when researchers cases, and some don’t. What keeps a But after that settlement, Watson expanded it to include decongestants, mass tort from becoming a defense says, “we completely reversed course.” they found an association between debacle is proving that reality to For the remaining Parlodel cases, she stroke and the use of any PPA-contain- plaintiffs lawyers, even if doing so retained a defense firm she trusted, ing product.) The study was published seems risky and expensive. Washington, D.C.’s Spriggs & Hol- in the New England Journal of Medicine in December 2000. By the that a mass tort was coming. Kaye cided the defense’s challenge to the end of the month, Novartis and other Scholer lawyers made rough guesses science underlying claims that PPA drug companies had begun receiving of how expensive the PPA litigation caused strokes. (The U.S. Supreme notice of PPA suits. might be. Their worst-case scenarios Court set a standard to prevent so- They came as no surprise. Both of ran to about a billion dollars. called junk science claims in a 1993 Novartis’s predecessor companies had Over on the plaintiffs side, mean- case called Daubert v. Merrell Dow made products that contained PPA; while, the mass tort was playing Pharms., Inc.; defense motions to ex- Ciba-Geigy used it in an appetite allegro. Firms ran Internet and print clude plaintiffs’ experts are now called suppressant and Sandoz in the Tavist ads, and referral networks funneled “Daubert” challenges.) In the unlikely and Triaminic brands of cough and potential cases to trial firms. They, in event that the defense prevailed at cold medicine. And PPA had been turn, set up screening operations to Judge Rothstein’s Daubert hearings, controversial for more than 20 years. sift out viable clients. the PPA litigation would essentially be Then-congressman Ron Wyden of “We looked at thousands of cases,” wiped out. For a year and a half after Oregon held hearings on PPA and diet says Relkin of Weitz & Luxenberg, the MDL was established, both sides drugs in 1990, and in 1991 an FDA which ended up filing about 150 PPA immersed themselves in science, researcher undertook a review of suits. At Weitz, potential clients filled deposing the Yale study researchers reports of strokes associated with PPA. out questionnaires, which were re- and outside experts. It was an expen- It was her findings that prompted the viewed by lawyers and paralegals. sive undertaking. Alex McDonald of FDA and pharmaceutical companies Then lawyers sent for and reviewed Boston’s Robinson & Cole, one lead to work with Yale researchers in the medical records of people who plaintiffs firm, estimates that between designing and sponsoring a full-blown passed the initial screening. By the them, plaintiffs and defendants spent study of PPA’s side effects. time a PPA suit was filed, a plaintiffs $50 million on the Daubert fight. Novartis first saw a draft of the Yale firm might already have invested The MDL process tends to make study in the spring of 2000, several thousands of dollars in expenses litigation unwieldy, slowing it to lento months before its publication. The and lawyer time—but well-run firms pace. MDLs also lend a certain gravi- company was shocked at the results— considered it money well spent. “If tas to a set of cases, an acknowledg- it was expecting the study to affirm you don’t screen closely you can spend ment that a mass tort is under way. the safety of PPA—and though Novar- tens of thousands, even hundreds of That’s one of the reasons defendants tis executives found flaws in the study thousands, on cases you shouldn’t almost always oppose MDLs, as they that they believed compromised the even have taken,” says Peter Kraus of did in PPA. But once the defense lost findings, they braced for fallout. “I Dallas’s Waters & Kraus. that battle and cases were massed read it and I said, ‘mass tort,’ ” says As the litigation developed in that before Judge Rothstein, says Terry Sean Reilly, senior vice president and first year, the federal courts estab- Tottenham of Fulbright & Jaworski, general counsel of Novartis Consumer lished a PPA multidistrict litigation lead defense counsel for Bayer, “we Health, Inc. So even as Novartis and under the supervision of Seattle feder- wanted the judge to set about assuring other drug companies began debating al district court judge Barbara Roth- federal/state coordination.” Partic- the implications of the study with gov- stein. A handful of well-financed ularly with complex science at issue, ernment regulators, Novartis lawyers plaintiffs firms agreed to lead the defendants didn’t want a maverick prepared for the inevitable litigation MDL, assuring that their side would state court ruling to precede onslaught. In October, when an FDA be as formidable as the defense. (As Rothstein’s Daubert finding. In advisory committee recommended the has become common in MDLs, Judge general, Tottenham says, Rothstein withdrawal of PPA drugs, the company Rothstein established a fund—into was able to assure what he calls hired Randolph Sherman of New which 4 percent of federal court an “orderly procession” of the litiga- York’s Kaye Scholer, who had regularly settlements and 3 percent of state tion, keeping Judge Rothstein ahead represented Ciba-Geigy in commer- court settlements are paid—to of the state courts. cial and antitrust litigation, to coordi- compensate plaintiffs lawyers who The state court judges of Maine, nate its PPA defense. Novartis and worked “for common benefit” on however, prefer that plaintiffs in their Kaye Scholer began lining up experts discovery and motions in the MDL.) jurisdiction receive trials within a year to challenge the Yale study findings, Little would happen in individual of filing suit, a quirk plaintiffs lawyer and the company notified its insurers PPA cases until Judge Rothstein de- Alex McDonald planned to use to his LITIGATION | STRATEGY

side’s advantage. “I’m always looking,” land to meet with top management of stroke victims hadn’t recorded their he says, “for [an individual state court] the parent company after the Newen- use of over-the-counter medications. case you can work up at the same time ham settlement and the Daubert rul- Some could not remember exactly you saddle up for the MDL. If you ing. The Swiss were concerned. “[The which product they’d used. Some win, you can color the whole MDL.” general counsel] turned to me and were overweight or had diabetes or McDonald had found a heartbreak of said, ‘You’re good at litigation,’ ” high blood pressure or other health a case in Maine. Tricia Newenham was recalls Sherman. “ ‘We’re going to take problems that might have accounted the star of her eighth-grade class, a care of this, right?’ ” for their strokes. Some had suffered beautiful, athletic girl who mild strokes or appeared to have planned to be the first person in recovered completely. “They just her family to go to college. After straggled in,” says Paul Rheingold taking one dose of Triaminic, of New York’s Rheingold, Valet, a Novartis cold medication, Rheingold, Shkolnik & McCart- Newenham suffered a stroke ney, who settled three big-money that left her with severe brain PPA cases in the 1990s, before damage. McDonald had screened the FDA withdrawal. Rheingold his cases very thoroughly; in is the co-chair of the Association Newenham’s, as in all the PPA of Trial Lawyers of America PPA cases he filed, the medical working group. “There just wasn’t records contained a specific no- a big volume of cases,” he says. tation that she’d taken medicine Moreover, the cases were Peter Kraus: The PPA with PPA in it. Newenham’s case litigation never reached spread among several defen- was scheduled to go to trial in critical mass. dants. Bayer, for instance, was June 2003. It would have been named as a defendant in 3,000 the first PPA trial in the country. PPA cases—a number that was dan- Novartis settled it. The settlement NOVARTIS, LIKE MOST defendants gerous, but not catastrophic. Bayer is confidential, but it is widely be- facing mass torts, craved certainty, a outside counsel Tottenham says the lieved by lawyers involved in the PPA numberN defining the ceiling of its ex- number permitted Bayer to evaluate litigation to be several million dollars. posure. The company’s insurers, too, cases one by one, assessing the specif- “We were not ready to try the case, wanted to know what reserves to set. ic facts of each as it came up for trial and it was a terrible case,” says Sher- In 2003 Reilly and Watson resisted of- or mediation. Novartis ended up with man of Kaye Scholer. “You have to be fering an estimate. Too early, they about 900 PPA cases. (A smaller smart as well as tough.” said. They needed a better sense of company that manufactured appetite Rothstein’s formal Daubert opin- what plaintiffs cases looked like and suppressants, Chattem, Inc., was in ion, issued soon after the settlement of how successful their defense of more danger from the litigation; it Newenham’s case, was another blow individual claims would be. “You made a $20 million class action settle- to the PPA defense. The judge not can’t judge exposure without experi- ment deal to stay afloat.) Plaintiffs only found that the science linking ence,” Watson says. never achieved the leverage of a dev- PPA to hemorrhagic stroke was sound What was becoming clear, through astating caseload—like the tens of for both men and women, she also the number of cases being filed, was thousands of fen-phen cases Wyeth shocked the defense with a ruling that that no major pharmaceutical firm faced—against any of the big cases involving PPA and ischemic faced ruin from the litigation. The defendants. “We were always a flea strokes (strokes resulting from an epidemiology of the Yale study, says on their butt,” says plaintiffs lawyer arterial blockage) could also proceed. plaintiffs lawyer Kraus, indicated that Kraus of Waters & Kraus. “We were disappointed in that,” says there were about 10,000 victims of Novartis’s lawyers were spoiling for Tottenham, the Bayer lawyer. “I PPA-related strokes in the ten years a chance to reenact the strategy they’d suspect that the Daubert ruling was a preceding the FDA withdrawal. Plain- used so successfully in their most high point [for plaintiffs].” tiffs firms did look at many thousands recent mass tort experience, the Par- Novartis counsel Reilly and Kaye of potential cases, but good ones lodel litigation. They wanted to show Scholer’s Sherman traveled to Switzer- turned out to be hard to find. Most plaintiffs lawyers that they would fight LITIGATION | STRATEGY

weak cases all the way to a jury. “The for failing to treat her high blood muscle atrophy, sometimes leading to going-in philosophy was to play tough,” pressure instead of blaming Novartis. kidney failure or death; in March 2003 says Watson. The company first invest- Between jury research, experts, Bayer trial counsel from Bartlit Beck ed in jury research in May 2003, hiring lawyers, and trial presentations, No- Herman Palenchar & Scott won the consultants and mock-trying a number vartis spent millions on these first trials. first Baycol trial, a well-publicized vic- of cases to figure out juror-friendly “This client understands: You can’t tory in Texas against a formidable defenses. Watson, Reilly, and the Kaye skimp,” says Sherman. Ellen Relkin of plaintiffs lawyer, Mikal Watts, that Scholer lawyers settled five or six PPA Weitz & Luxenberg estimates that helped to stymie further cases. Bayer cases after the Daubert ruling, waiting Novartis forced her firm to invest lost its first PPA trial in Texas in Octo- for the right vehicle through between $60,000 and ber 2004, but considered the $400,000 which to send their message $100,000 in the New Jersey verdict a victory of sorts, since jurors of stubborn fearlessness. case just to get it to trial. found no negligence by Bayer and They got three at almost The verdicts came with- awarded no punitive damages. Bayer the same time, two in in a week of each other in followed with a pair of PPA wins in California and one in New January 2004. Novartis 2005, one in Utah and one in Florida, Jersey, at the end of 2003. prevailed in all three: As both against well-respected plaintiffs California started first— the company’s research had firms. “Our strategy has been highly two plaintiffs cases tried shown, jurors were reluc- successful in Baycol, and hopefully in before one jury. Novartis tant to find familiar prod- PPA as well,” says Tottenham. didn’t consider Los Ange- Bayer lead ucts defective, particular- Novartis tried two more PPA cases counsel Terry les Superior Court an ideal Tottenham ly when victims’ strokes in 2005. The first, against Waters & trial venue, but both plain- might have been caused by Kraus, the firm that won the Bayer tiffs were demanding more other health problems. A verdict, ended in a mistrial. Plaintiffs than $5 million to settle. “There was few months later, GlaxoSmithKline lawyer Peter Kraus says it cost him no chance of that,” says Reilly. Kaye won its first PPA trial, a case in state about $250,000 to try the case, an Scholer’s Sherman believed both court in Pennsylvania, against the investment he’ll have to add to if California plaintiffs, moreover, were plaintiffs firm Kline & Specter. (Na- Novartis continues to refuse to settle vulnerable to defense arguments. One tional coordinating counsel Charles and there’s a second trial. Meanwhile, of the women was an overweight Preuss, of the San Francisco office of Kraus says, “Novartis doesn’t care diabetic with chronic hypertension. Drinker Biddle & Reath, says that about how much they spend to try The other woman appeared only mini- Glaxo, like Wyeth, has a policy of set- these cases. . . . They want to come off mally injured—and had given an tling PPA cases in which plaintiffs make as tough and resolute.” Novartis also account of her use of Novartis medi- “reasonable demands. . . . We can’t try all won the fifth PPA trial, a diet pill case cine at her deposition that didn’t these cases.” But the Pennsylvania case, in New Jersey. (All of Novartis’s cases match what she told doctors when she he says, “didn’t have anywhere near were tried by Kaye Scholer and was admitted to the hospital. the value the plaintiffs insisted it did.” co-counsel from other firms.) The New Jersey trial began in the In general, Preuss insists, the PPA All of the defendants, Novartis in- middle of the California case. It was in defendants’ success is due more to de- cluded, have continued settling PPA a friendlier defense venue—Kaye ficiencies in the plaintiffs’ cases than cases—for amounts ranging from a Scholer’s Sherman calls Middlesex defense strategy. Still, he says, the PPA few thousand to more than a million County, where it was tried, “the bread- plaintiffs lawyers “have had to adjust dollars—while compiling their impres- basket of the drug industry”—but was their thinking. . . . This isn’t a gravy train.”) sive trial record. As several plaintiffs against a powerful opponent. Weitz & Bayer’s PPA strategy was akin to lawyers note, defendants picked the Luxenberg had a relatively large PPA Novartis’s. “Generally we believed that cases that were tried, so their success docket, and would consider this first if a case didn’t have merit, we’d try it,” isn’t entirely surprising. Lawyers at case a benchmark for future settle- says Tottenham, Bayer’s national coun- Weitz & Luxenberg, Robinson & Cole, ments. Novartis’s mock juries reas- sel. Bayer had followed a similar rule and Waters & Kraus say their firms sured Kaye Scholer: The plaintiff had with good results in its most recent made money in the PPA litigation a decade of high blood pressure read- mass tort, an anticholesterol drug despite defendants’ trial victories. ings, and mock jurors blamed doctors called Baycol that was alleged to cause But there’s no question, says Kraus, LITIGATION | STRATEGY

that the tough-guy posturing of Bayer inflated settlement demands, because the defendants have seen drastic and Novartis, backed by their trial of a fen-phen-inspired perception in decreases in their PPA dockets. Novar- record, stopped whatever momentum the plaintiffs bar that the company tis’s PPA docket is down from 900 to the PPA litigation had after the would pay out. But Wyeth changed its fewer than 110 cases, and shrinking Daubert ruling and the first settle- tactics from the fen-phen litigation, week by week. “Plaintiffs are coming ments. Settlement amounts have been settling PPA cases one by one as they in in droves,” says Sherman of Kaye palatable for defendants, who can were assigned trial dates. The compa- Scholer. “They’re settling in packages credibly threaten expensive trials. ny is willing to go to trial, Dukes says, for peanuts.” Even Wyeth, which hasn’t tried a but not unless plaintiffs make unrea- Novartis and Bayer, not surprisingly, PPA case, has reaped the benefit of sonable settlement demands. So far, attribute the falloff in PPA cases to its codefendants’ courtroom success. that hasn’t happened, Dukes says. their own resolve. Should Novartis face (Novartis believes, however, that its Moreover, settled cases are the a similar mass tort crisis in the future, settlements are lower than those of exception. The “vast majority” of its lawyers say, it will show the other defendants, because it has been Wyeth’s PPA cases, Dukes says, have same stubbornness. And other defen- the most aggressive about going to been dismissed, either by plaintiffs dants would be well advised to trial.) “We’re getting good settlement lawyers who decided not to put money heed Novartis’s experience. What results,” says Wyeth’s national PPA into the litigation or by Judge Roth- general counsel wouldn’t want to echo counsel, David Dukes of Columbia, stein of the MDL, who has dismissed Novartis’s Sean Reilly five years after South Carolina’s Nelson Mullins Riley hundreds of cases on procedural the start of a mass tort? “It’s under & Scarborough. “Mediators say, ‘You grounds. (Some of those dismissals are control,” Reilly says. “Our manage- have to look at the track record.’ ” on appeal to the U.S. Court of ment views this as a potential disaster Wyeth, Dukes says, had expected Appeals for the Ninth Circuit.) All of that didn’t happen.” ■

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