Drugmakers' huge win in consolidated Zantac case shows process can work for defendants

Zantac heartburn pills are seen in this picture illustration taken October 1, 2019. REUTERS/Brendan McDermid/Illustration

(Reuters) - If your only sources of information about consolidated multidistrict litigation in federal court were companies like 3M Co and Johnson & Johnson, which have turned to bankruptcy court in the face of sprawling MDLs, or defense lawyer groups such as Lawyers for Civil Justice, which insists that the MDL process is overripe for reform, you would probably be surprised to hear that a quartet of drugmakers erased about 50,000 product liability cases in one fell swoop on Tuesday.

U.S. District Judge Robin Rosenberg of West Palm Beach, Florida, held in a 341-page(!) opinion that plaintiffs lawyers failed to offer credible scientific evidence that the heartburn drug Zantac causes liver, bladder, pancreatic, esophageal or stomach cancer. Based on that conclusion, the judge granted summary judgment to the defendants, which include GSK Plc, Pfizer Inc, Sanofi SA and Boehringer Ingelheim .

Rosenberg’s decision is not the end of the Zantac litigation. Plaintiffs' lawyers, as you would expect, said they plan to appeal a ruling that they described as a “miscarriage of justice” to my Reuters colleague Brendan Pierson. The drugmakers, moreover, are still facing tens of thousands of state-court lawsuits alleging a link between Zantac and a wide range of cancers, including some that were not at issue in the MDL.

But the MDL ruling was a big enough win that GSK and Sanofi shares surged by a combined $20 billion after the news broke. At the very least, the outcome of the Zantac MDL proves that the process can benefit defendants, even when plaintiffs' lawyers have the leverage of tens of thousands of claims.

A caveat: Every MDL is different. The facts aren’t the same in any two MDLs. And the federal judges who oversee them – each of whom is hand-picked by the seven-judge Judicial Panel on Multidistrict Litigation – have wide discretion to decide how the cases will proceed. MDL critics can quite rightly argue that drugmakers’ defeat of claims in the Zantac MDL means nothing to defendants that, for instance, can’t immediately appeal adverse evidentiary rulings and can’t demand early documentary proof of plaintiffs’ claims.

That said, the Zantac case offers at least two important procedural lessons for courts, defendants and even plaintiffs lawyers (who, after all, bear the upfront cost of contingency fee litigation).

Lesson 1: Companies with strong general causation defenses should consider early concessions to get their scientific evidence before the court a soon as possible.

From the beginning of the Zantac MDL, the defendants have insisted the drug doesn’t cause cancer, despite a 2020 U.S. Food and Drug Administration request for the product to be pulled off the market. The MDL judge, Rosenberg, also considered general causation to be the key threshold issue.

In part to assure early consideration of their scientific evidence, defense counsel (including Dechert, Williams & Connolly and Arnold & Porter Kaye Scholer) agreed to a registry system for plaintiffs’ claims that would toll the statute of limitations.

The system benefited plaintiffs' lawyers, who didn’t have to worry about filing fees and time limits. Plaintiffs also agreed, however, that the plaintiffs would have to move off of the registry and into actual litigation after the judge decided general causation. That meant, in effect, that plaintiffs acceded to a process in which Rosenberg would weigh each side’s overall scientific evidence before either side dug into discovery on bellwether plaintiffs’ claims.

Front-loading consideration of general causation won’t work for defendants in every MDL, of course. But excluding plaintiffs’ experts can be a silver bullet, said MDL authority Elizabeth Burch of the University of Georgia School of Law, citing cases involving the drugs Zoloft, Mirena and Nexium, among others. “The Zantac proceeding is not an outlier in that regard,” Burch said by email.

Lesson 2: A plaintiffs’ registry system can have unforeseen benefits

Defendants’ biggest gripe with MDLs is that plaintiffs lawyers use advertising and other lead generation techniques to gin up vast numbers of unvetted claims. The sheer volume, MDL critics assert, can depress a defendants’ share price and exert settlement pressure.

The Zantac registry called for plaintiffs to answer detailed questions about their use of the drug and their cancer diagnoses. The questionnaire was intended to deter unvetted claims.

Defendants have said that the system did not work as intended. They contend that despite the registry’s questionnaire, they faced vast numbers of unwarranted claims by plaintiffs who could not meet the basic criteria of proving that they took the drug and were subsequently diagnosed with one of the forms of cancer it allegedly causes.

But there was a silver lining. Because the registry system tolled the statute of limitations (and did not require a filing fee), it incentivized plaintiffs lawyers to file claims in the MDL, rather than in state court. That, in turn, gave the MDL a head start over any competing litigation.

Tens of thousands of plaintiffs later ditched the MDL and filed in state court, many after the MDL steering committee decided to narrow the types of cancer at issue in the federal court case. By then, however, Rosenberg was already on the way to a decision on the general scientific evidence.

Future MDL defendants, in other words, should think about the benefit of keeping early-stage mass tort litigation in a single forum when they weigh the prospect of a registry system that tolls the statute of limitations and spares plaintiffs lawyers the expense of filing fees. If you’re confident that you can score an early win on general causation, the tradeoff might be worth it.

For all of the loud voices complaining about MDLs, defendants and their lawyers already know that consolidated federal proceedings are generally more fair, orderly and efficient than piecemeal litigation in courts across the country. Adam Hoeflich of Bartlit Beck, who was not involved in the Zantac case but has been a lead defense lawyer in more than a dozen MDLs, told me he’s convinced the process works.

“The vast majority of MDL judges do an excellent job,” he said. “And both plaintiffs and defendants benefit from the process.”

Read more:

GSK, Sanofi shares soar as Zantac litigation fears abate

GSK, Pfizer, Sanofi fend off thousands of U.S. lawsuits over alleged Zantac cancer link

Is 3M earplug bankruptcy the beginning of the end of mass tort MDLs?

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Alison Frankel has covered high-stakes commercial litigation as a columnist for Reuters since 2011. A Dartmouth college graduate, she has worked as a journalist in New York covering the legal industry and the law for more than three decades. Before joining Reuters, she was a writer and editor at The American Lawyer. Frankel is the author of Double Eagle: The Epic Story of the World’s Most Valuable Coin.