These claims can have a significant impact on mass torts litigation. Often there are settlements of traditional product liability claims, closely followed by a wave of lawsuits from state attorneys general alleging violations under different states’ consumer protection acts.
History of Consumer Protection
Nearly 80 years before Doc was in the picture, President Woodrow Wilson signed the bipartisan Federal Trade Commission (FTC) Act of 1914. What was the underlying purpose of the act, and why was it so important to President Wilson? Interestingly enough, the initial focus was to combat trusts. Over the years, however, the Act was given more teeth—including amendments in 1938 to prohibit unfair and deceptive acts and practices. This language in particular has since been used to file lawsuits under the act against product manufacturers.
According to the FTC’s website, the FTC has a “unique dual mission to protect consumers and promote competition.” Since its inception, and as discussed elsewhere in this article, states around the country have followed suit, adopting state versions of the federal act, presumably with the same goal—to protect consumers and promote competition. But in application, these acts have been used by various state attorneys general to file what are essentially mass tort personal injury claims on behalf of an entire state under the guise of “consumer protection.”
Under the plain language of the act, the FTC is directed to “prevent . . . corporations . . . from using unfair methods of competition in or affecting commerce and unfair or deceptive acts or practices in or affecting commerce.” 15 U.S.C.A. § 45(a)(2). This charge in the U.S. Code makes sense when viewed in light of the organization’s mission—to protect consumers and promote competition. And the same or similar language has been adopted in state consumer protection act statutes. Historically, we have seen this in cases brought by state attorneys general against pharmaceutical companies for alleged price fixing or misleading price increases. But the question is this: Are the product liability–type cases we are seeing today brought against pharmaceutical companies in line with this mission? Is a claim that a manufacturer allegedly failed to warn of a risk of a product equivalent to a manufacturer “using unfair or deceptive acts or practices in or affecting commerce”? Or are state consumer protection acts being used to encourage the chicken that thinks it is a dog or, in this case, the consumer protection claim that thinks it is a product liability claim?
Consumer Protection in Practice
Looking at national trends may help shed light on the discussion. It is interesting that despite state consumer protection acts having existed for decades in many instances, pharmaceutical cases filed under state consumer protection acts are a more recent trend. Why is this? One consideration is that states are generally not subject to the same statute of limitation defenses applicable to plaintiffs in typical product liability lawsuits—so there is often no limit to how far back a state attorney general can go with respect to a consumer protection act claim. But it begs the question—particularly in the field of warning claims regarding pharmaceutical products—if the particular drug or device has been sold in a particular state for x number of years without the warning the state now claims is false or misleading, why wait to file suit until years after an undisclosed number of state citizens have allegedly been injured?
One potential answer is product liability litigation. We first saw the “modern” approach to consumer protection act claims in the context of tobacco litigation. In 1998, a master agreement settled 46 state attorney general lawsuits against the tobacco industry, bringing in a significant amount of money to the states involved. See Richard P. Leyoub & Theodore Eisenberg, “State Attorney General Actions, the Tobacco Litigation, and the Doctrine of Parens Patriae,” 74 Tul. L. Rev. 1859 (2000). Prior to this point, there were multiple waves of individual product liability claims against tobacco manufacturers, many of which were initially unsuccessful. It was actually not until after the successful master settlement that the first big win for a plaintiff in a tobacco product liability action occurred. But in the pharmaceutical context, the tendency is the other way around—successful product liability actions first, attempted consumer protection act claims second.
Upon review of the history of these actions, this is not surprising. A quick web search reveals multiple examples of state consumer protection actions following high-dollar plaintiff verdicts in personal injury and product liability cases. On a national scale, we have seen this most often in the context of air bag cases, with state consumer protection act claims filed on the heels of class action litigation that gained substantial media attention. But we are seeing it in other areas as well, including pharmaceutical product liability claims. Because of this, it is unclear how much investigative discovery state attorneys general actually do on the science behind these claims prior to filing consumer protection act lawsuits. This is particularly the case considering that private litigation attorneys (who have often worked on these same cases in the product liability context) are regularly hired as special outside counsel to the state attorney general to work up the case.
But claims under state consumer protection acts are not product liability lawsuits, despite how much they may try to look like and act like a typical product liability lawsuit. These two legal theories are often the source of confusion, particularly when considering the evidence actually presented in these cases. Complaints against manufacturers for consumer protection act claims often cite studies and literature that form the basis of allegations in product liability lawsuits. More importantly, company documents—only discovered through product liability litigation—are used as key evidence in consumer protection act claims. And in the course of discovery, particularly when attempting to defend the facts forming the core basis of their claims, state attorneys general often refer to successful product liability cases as “evidence” that the company defrauded or misled consumers in that state. Ultimately, the same evidence, the same theories, the same experts, and the same legal arguments are being raised by state attorneys general (via specially deputized personal injury lawyers) in an attempt to try what is, in actuality, a very different case.
There are also special considerations applicable to the deputized personal injury lawyers who are brought in from prior mass tort litigation to assist with states’ consumer protection act claims. The outside counsel hired by the attorney general are more familiar, often intimately so, with the product liability claims, but constitutional questions can arise with respect to this deputizing process. For example, the Supreme Court of Pennsylvania has noted “that substantial concern has been expressed about the use by public agencies of outside counsel, with personal financial incentives, to spearhead litigation pursued in the public interest.” Commonwealth of Pennsylvania v. TAP Pharm. Prods., Inc., 94 A.3d 350, 364 n.19 (Pa. 2014). In Mississippi, contingency fee contracts with outside counsel are governed by statute. Miss. Code Ann. § 7-5-8. The statute even provides that such contingency fee contracts “shall be posted on the Attorney General’s website for public inspection” unless the attorney general determines, subject to approval by a separate oversight commission, that doing so would negatively affect the state. Id. at § 7-5-8(5)(a). In jurisdictions where this is the case, it is important to review such an agreement at the outset of the lawsuit.
Identifying the Duck
In consumer protection act cases alleging unfair or deceptive trade practices following mass tort litigation (particularly in the pharmaceutical arena), several things can be done to identify the merging of two very different legal theories. In such cases, as distinct from most “new” litigation, early preparation can be done based on the basic theories, evidence, and experts that plaintiffs have already used in product liability claims. This can allow for more aggressive and pointed discovery. A more vigorous approach can be taken based on the language of the consumer protection act of the particular state in which the case is pending. Defense counsel should force the state to specifically identify what false, misleading, unfair, or deceptive statements were made to any individuals in that state. Force the state to admit what efforts it made prior to filing its lawsuit to determine this information. Force the state to identify every instance in which it alleges the company violated that state’s consumer protection act.
When faced with questions regarding specific proof of consumer protection violations, states will often default to the same evidence raised in the product liability claims. But this is often not enough given the differences between the product liability framework and the state-specific consumer production statutes. As a result, this is often the focus of significant discovery necessary to defend against these claims. If it looks like a consumer protection act claim, swims like a consumer protection act claim, and quacks like a consumer protection act claim, it is a consumer protection act claim, no matter how the state tries to frame it. By recognizing these disguised consumer protection act claims from the beginning, familiarizing yourself with the language of your state’s consumer protection act, and understanding how the proof required is different from the proof required for the typical product liability claim, you will be able to better position yourself for a strong defense.