SEATTLE - Student loan borrowers and a subsidiary of SLM Corp. yesterday agreed to settle claims that the subsidiary violated the Telephone Consumer Protection Act (TCPA), 47 U.S.C.S. § 227, by making a number of non-emergency autodialed calls and/or automated text messages to the borrowers' cellular telephones in an attempt to collect on outstanding student loan debt, according to documents filed in a Washington federal court (Mark A. Arthur, et al. v. Sallie Mae Inc., No. 10-0198, W.D. Wash.).
Follow this link to view a complimentary copy of the complete Mealey's article.
Under the terms of the settlement, which is subject to final approval, Sallie Mae will pay $24.15 million to the borrowers that received the autodialed calls or automated text messages to their cellular phones by Sallie Mae Inc.
The borrowers sued Sallie Mae in the U.S. District Court for the Western District of Washington on behalf of a class of those similarly situated. They alleged that Sallie Mae's representatives made numerous non-emergency autodialed calls and issued numerous automated text messages to borrowers with outstanding debts via their cell phones in violation of the TCPA.
In a Jan. 10 order, Judge James L. Robart held that although certification of a provisional settlement class is appropriate and that the amended settlement between the parties is fair, changes to the proposed forms of class notice were necessary before preliminary approval of the settlement could be granted.
The borrowers are represented by Beth E. Terrell, Michael D. Daudt and Marc C. Cote of Terrell Marshall Daudt & Willie in Seattle; Jonathan D. Selbin and Alison Stocking of Lieff, Cabraser, Heimann & Bernstein in New York; Daniel M. Hutchinson of Lieff Cabraser in San Francisco; David P. Meyer and Mathew R. Wilson of David P. Meyer & Associates Co. in Columbus, Ohio; Joshua Swigart, Robert L. Hyde and David C. Leimbach of Hyde & Swigart in San Diego; Douglas J. Campion of San Diego; and Abbas Kaserounian of Kaserounian Law Group in Santa Ana, Calif.
Sallie Mae is represented by Lisa M. Simonetti of Stroock & Stroock & Lavan In Los Angeles.
[Editor's Note: Lexis subscribers may download the document using the link above. The document(s) are also available at http://www.mealeysonline.com/ or by calling the Customer Support Department at 1-800-833-9844.]
Mealey's is now available in eBook format!
SACRAMENTO, Calif. - A California federal judge on Sept. 6 denied a defendant's request for an emergency stay in a longstanding trademark infringement case (CytoSport Inc. v. Vital Pharmaceuticals Inc., No. 08-2632, E.D. Calif.). Subscribers may view the decision available within the full article.
PHILADELPHIA - A panel of the Third Circuit U.S. Court of Appeals on Sept. 10 dismissed as moot a creditor's motion seeking an emergency stay of a bond order in the Chapter 11 bankruptcy proceeding of Tribune Co. (In Re: Tribune Company, No. 12-3437, Chapter 11, 3rd Cir.). Subscribers may view the order available within the full article.
LOS ANGELES - The Ninth Circuit U.S. Court of Appeals on Sept. 6 accepted Lorillard Tobacco Co.'s appeal of a remand order and ordered expedited briefing but denied its emergency motion seeking to stay the state court asbestos case set for trial (Dimitris O. Couscouris, et al. v. Hatch Grinding Wheels Inc., et al., No. 12-56446, 9th Cir.).Subscribers may view the order available within the full article.
SAN BERNARDINO, Calif. - The City Council for San Bernardino, Calif., on Sept. 5 approved an emergency budget that will reduce expenses by 30 percent and aims to reduce the city's $45 million deficit to slightly more than $16.42 million (In Re: City of San Bernardino, California, No. 12-28006, Chapter 9, C.D. Calif. Bkcy.). Subscribers may view the emergency budget available within the full article.
SEATTLE - Lead plaintiffs and defendants in a securities class action lawsuit against two subsidiaries of Washington Mutual Bank and certain of its officers and directors have agreed to a $26 million settlement on claims that the defendants misrepresented the investment quality of certain mortgage-backed securities in violation of federal securities law, according to court documents filed in Washington federal court on Sept. 4 (in re Washington Mutual Mortgage-Backed Securities Litigation, No. 09-0037, W.D. Wash.).
According to the settlement memorandum, which was filed in the U.S. District Court for the Western District of Washington by lead plaintiffs Doral Bank of Puerto Rico, Policeman's Annuity Benefit Fund of the City of Chicago and Boilermakers National Annuity Trust, defendants WaMu Asset Acceptance Corp., WaMu Capital Corp., David Beck, Diane Novak, Rolland Jurgens and Richard Carreaga have agreed to the settlement in exchange for dismissal of claims brought against them for violation of Sections 11, 12 and 15 of Securities Act of 1933, 15 U.S.C.S. § 77a.
The settlement is subject to court approval.
The lead plaintiffs filed a second amended complaint in the District Court on April 1, 2010, alleging that the defendants misrepresented the underwriting practices used in originating the mortgage-backed securities that comprised a number of certificates that were sold to shareholders in violation of the Securities Act of 1933, 15 U.S.C.S. § 77a.
On Oct. 21, 2011, Judge Marsha J. Pechman certified a class consisting of "all persons or entities who purchased or otherwise acquired the following Certificates: 2006 AR-7 tranche 2A; 2006 AR-12 tranche 1A1; 2006 AR-16 tranches 2A1, LB1, LB2, LB3, 3B1, 3B2, and 3B3; 2006 AR-17 tranche 1A; 2006 AR-18 tranche 2A1; and 2007-HY1 tranches 1A1 and 3A3 on or before August 1, 2008 pursuant and/or traceable to their Registration Statements and accompanying Prospectuses filed with the SEC and who were damaged thereby."
Then, on July 23, Judge Pechman denied the defendants' motion for summary judgment, and the parties began settlement negotiations.
The lead plaintiffs are represented by Beth Kaswan and David R. Scott of Scott & Scott in New York; Anne L. Box and John T. Jasnoch of Scott & Scott in San Diego; Steven J. Toll, Joshua S. Devore and S. Douglas Bunch of Cohen Milstein Sellers & Toll in Washington, D.C.; Christopher Lometti and Daniel B. Rehns of Cohen Milstein in New York; and Kim D. Stephens and Janissa A. Strabuk of Tousley Brain Stephens in Seattle.
The defendants are represented by Louis D. Peterson and Brian C. Free of Hillis Clark Martin & Peterson in Seattle, John D. Pernick, David M. Balabanian and Frank Busch of Bingham McCutchen in San Francisco and Evan R. Chesler, Daniel Slifkin, Michael A. Paskin and Wes Earnhardt of Cravath, Swaine & Moore in New York.
[The document(s) are also available at http://www.mealeysonline.com/ or by calling the Customer Support Department at 1-800-833-9844.]
NEW YORK - A federal judge in New York on Wednesday granted preliminary approval of a $590 million settlement between shareholders, Citigroup Inc. and certain of its current and former executive officers and directors on claims that the defendants misrepresented Citigroup's exposure to billions of dollars of risky collateralized debt obligations that were backed by residential subprime mortgages (In re Citigroup Inc. Securities Litigation, No. 07-9901, S.D. N.Y.).
U.S. Judge Sidney H. Stein of the Southern District of New York issued the order preliminarily approving the settlement between shareholders and Citigroup and current and former officers and directors Charles Prince, Robert Druskin, Gary Crittenden, Thomas Maheras, Michael Klein, David Bushnell and Robert Rubin (collectively, Citigroup defendants).
The settlement is subject to final approval.
The shareholders filed an amended complaint in the District Court, alleging that Citigroup, four of its five divisions and 14 current and former officers and directors misrepresented Citigroup's business and financial condition in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5.
In particular, the shareholders contend that the defendants concealed Citigroup's exposure to billions of dollars of residential subprime mortgage-backed securities.
The shareholders are represented by Roger W. Kirby, Ira M. Press, Peter S. Linden, Henry Telias and Edward M. Varga III of Kirby McInerney in New York; James Allen Sr. of Allen Brothers in Detroit; Kenneth Gold of Saugatuck, Mich.; Lionel Glancy and Andrew Sohrn of Glancy Binkow & Goldberg in Los Angeles; Ann K. Ritter of Motley Rice in Mount Pleasant, S.C.; Alan L. Kovacs of Boston; and Kenneth A. Elan of New York.
The Citigroup defendants are represented by Brad S. Karp, Richard A. Rosen, Susanna M. Buergel and Karen R. King of Paul, Weiss, Rifkind, Wharton & Garrison in New York and Lawrence B. Pedowitz, George T. Conway III, Jonathan M. Moses and John F. Lynch of Wachtell, Lipton, Rosen & Katz in New York.
SAN FRANCISCO - After three days of deliberations, a California federal jury on Friday awarded Apple Inc. $1,049,343,540 in its high-stakes lawsuit with Samsung Electronics Co. Ltd., deeming the software giant's patents both valid and infringed (Apple Inc. v. Samsung Electronics Co. Ltd., No. 11-1846, N.D. Calif.)
Jurors empanelled before U.S. Judge Lucy H. Koh of the Northern District of California also sided with Apple on the question of the plaintiff's registered trade dress, finding that Samsung copied and ultimately diluted the look and feel of Apple's popular iPhone with Samsung products like the Galaxy Prevail and Nexus S 4G.
By contrast, Samsung's counterclaims of patent infringement failed to sway the nine-member jury, which rejected each count levied at Apple by its South Korean competitor.
Although Apple emerged from the three-week trial the clear victor, it indicated in filings before Judge Koh that it would seek $2.5 billion in damages from Samsung, which it had called "one of the principal imitators" of "innovative technology" in an April 2011 complaint. According to Apple, Samsung and two of its American subsidiaries (Samsung, collectively) infringed eight utility patents and seven design patents. Apple additionally claimed that Samsung is liable for trade dress infringement in connection with its product packaging and trademark infringement related to various icons "used in the user interface in the iPhone, iPod touch and iPad products."Samsung filed counterclaims alleging that Apple infringed 12 of its patents, including some related to the Universal Mobile Telecommunications Standard (UMTS). Apple filed answering counterclaims alleging that Samsung violated both federal and California antitrust laws and California Business and Professions Code Section 17200, which is the state's unfair competition law. Apple alleges that Samsung defrauded the European Telecommunications Standards Institute, one of the standard-setting organizations that set the UMTS standards, by inducing it to adopt Samsung's "declared-essential patents" and then later refusing to license them under "fair, reasonable, and non-discriminatory terms" (FRAND terms).
Following various pretrial rulings, the case presented to the jury was whittled down to seven Apple patents and five Samsung patents, along with Apple's allegations of trade dress infringement and antitrust violations. Trial began July 31 and ended with closing arguments Aug. 21; jurors began their deliberations Aug. 22.
Zoom, Bounce Features
According to the verdict, all 19 Samsung products accused of infringing claim 19 of Apple's U.S. patent No. 7,469,381 do, in fact, infringe. The claim relates to a "bounce-back" or "rubber-banding" feature, whereby a user scrolling through a series of images will bounce back upon reaching the last image. Regarding claim 8 of Apple's U.S. patent No. 7,844,915 - which relates to a pinch-to-zoom feature - jurors found that although Samsung's Galaxy Ace, Intercept and Replenish devices do not infringe, 21 other Samsung products do.
Furthermore, the Droid Charge, Galaxy S 4G, Mesmerize and 16 other Samsung devices infringe the "double tap" feature embodied in claim 50 of Apple's U.S. patent No. 7,864,163, jurors held. Additionally, the jury concluded that Samsung should have known it was inducing infringement by others with regard to all accused products and the '381, '915 and '163 patents and that Samsung's infringement of the same three utility patents was willful.
The jury reached similar findings of liability with regard to Apple's asserted design patents D'677, D'087 and D'305 and D'889, which relate to the front face of an electronic device, the ornamental design of a smartphone and the use of rounded square icons.
All seven Apple patents at issue in the case were upheld as valid.
Sherman, Lanham Acts
Turning to Apple's Lanham Act claims, jurors deemed Apple's registered trade dress valid, famous and diluted by Samsung products like the Galaxy S, Fascinate and Vibrant. Furthermore, Samsung's infringement of Apple's registered trade dress was willful, the jury later found.
Samsung prevailed with regard to Apple's unregistered trade dress for the iPad and "combination" iPhone designs, however, with jurors finding that the claimed features are not entitled to protection. In other success for Samsung, a fourth Apple design patent - D'889 - was deemed noninfringed by accused Samsung products Galaxy Tab 10.1 WiFi and Galaxy Tab 10.1 4G Lite. Additionally, while the jury rejected Samsung's claim of infringement by Apple, it upheld the validity of Samsung's patents while also rejecting Apple's claim that the defendant violated Section 2 of the Sherman Act by monopolizing certain technology markets related to the UMTS standard.
In assessing damages, the jury's award ranged from a high of $143,539,179 for Samsung's Fascinate product to a low of $833,076 for Samsung's Galaxy Tab 10.1. Just five of 28 total accused products did not result in an award for Apple, according to an amended verdict.
In a statement, Samsung called the jury's findings a "loss for the American consumer" and warned that "this is not the final word in this case."
"It is unfortunate that patent law can be manipulated to give one company a monopoly over rectangles with rounded corners, or technology that is being improved every day by Samsung and other companies. Consumers have the right to choices, and they know what they are buying when they purchase Samsung products. . . . Samsung will continue to innovate and offer choices for the consumer," Samsung maintains.
Apple is represented by Harold J. McElhinny, Michael A. Jacobs and Richard S.J. Hung of Morrison & Foerster in San Francisco, William F. Lee of Wilmer Cutler Pickering Hale and Dorr in Boston and Mark D. Selwyn of Wilmer Cutler in Palo Alto, Calif.Charles K. Verhoeven of Quinn Emanuel Urquhart Oliver & Sullivan in San Francisco, Kevin P.B. Johnson and Victoria F. Maroulis of Quinn Emanuel in Redwood Shores, Calif., and Michael T. Zeller of Quinn Emanuel in Los Angeles represent Samsung.
NEW YORK - The CEO of bankrupt Hostess Brands Inc. on Aug. 20 sent a letter to employees indicating that the company had reached a breakthrough with its largest union regarding modification to the collective bargaining agreement (CBA), which may help pave the way for Hostess to emerge from bankruptcy (In Re: Hostess Brands Inc., No. 12-22052, Chapter 11, S.D. N.Y. Bkcy.).
TRENTON, N.J. - The New Jersey Supreme Court yesterday ruled that some failure-to-warn claims and some breach of warranty claims involving the Cordis Cypher drug-coated coronary stent may survive federal preemption, a ruling that applies to 47 state court cases in which plaintiffs claim that they were injured or that family members died after being implanted with the now-withdrawn stent (Vonnie Cornett v. Johnson & Johnson, et al., No. A-88/89 September Term 2010 066671, N.J. Sup.; 2012 N.J. LEXIS 831).
The ruling came in a master complaint for 48 cases. While it dismissed the lead plaintiffs' claim for missing the statute of limitations, the court ruled on preemption issues affecting the remaining plaintiffs.
In 2008, Vonnie Cornett sued Cordis Corp. and parent company Johnson & Johnson in the Middlesex County Superior Court, alleging that her husband, Billie Cornett, died in 2004 five months after being implanted with a Cypher stent. The plaintiff alleged that a blood clot formed near the site of the stent and that Billie Cornett suffered a subacute stent thrombosis.
Drug-Coated Stent Design
The Cypher stent was coated with Sirolimus, a chemotherapy drug. Called a drug-eluting stent, it was designed to release Sirolimus inside a coronary artery to inhibit or prevent the artery from narrowing by inhibiting cell growth.
Vonnie Cornett alleged that the polymer used to bind the Sirolimus to the bare metal of the stent irritated the arterial wall. She also alleged that Sirolimus prevents endothelial cells from growing over the stent and created a substantial risk of abrupt clot formation on the stent.
In addition, Cornett alleged that the use of the Cypher stent in patients with coronary heart disease and diabetes, such as her husband, is off-label.
In 2011, Cordis and Johnson & Johnson announced that they were exiting the stent business.
Master Complaint For 48 Cases
At the same time Cornett filed her complaint, 47 other complaints were filed in New Jersey state court by plaintiffs from 16 states. Cornett's amended complaint was designated as the master complaint in the Cypher litigation.
The Superior Court dismissed the master complaint in its entirety. On appeal, the Superior Court Appellate Division affirmed that Cornett's complaint was time-barred but held that these plaintiff claims were not preempted: manufacturing defect; failure to warn of approved and off-label uses that failed to satisfy federal disclosure requirements or federal limits on off-label promotion with the statutory safe harbor; and breach of express warranty based on voluntary statements about approve and off-label uses outside the safe harbor.
Cornett and the defendants cross-appealed.
Lead Plaintiff Time-Barred
The Supreme Court first addressed whether Cornett's case was timely filed. It concluded that Kentucky's one-year statute of limitations, rather than New Jersey's two-year statute, applies.
Although Kentucky recognizes a discovery exception to its statute of limitations for latent injuries, the Supreme Court said "a reasonable person exercising reasonable diligence should have discovered by December 2006 that the drug-eluting stent implanted in December 2004 may have caused the May 18, 2005 thrombosis."
Turning to preemption, the court found that that the great bulk of the plaintiffs' state statutory and common-law claims are preempted by federal law.
Nonapproved Information Not Preempted
However, the court said there is an exception to preemption of failure-to-warn claims "to the extent it involves wrongdoing apart from defendants' failure to comply with FDA [Food and Drug Administration] disclosure requirements and for off-label use of the stent to the extent defendants improperly promoted that device."
The court said the plaintiffs allege that the defendants withheld information from the medical community and the public that was not part of the premarket approval process with the FDA. It said that the failure-to-warn claim as stated by the plaintiffs overcomes the rebuttable presumption by the New Jersey Product Liability Act that FDA-approved warnings are adequate.
The court added a caveat that its ruling is based on the plaintiffs' claims at an early stage of the litigation and said the defendants' have not filed an answer. It said that the master complaint contains a "colorable claim" that avoids the case law bar against private enforcement of claims of fraud on the FDA.
If discovery reveals that the plaintiffs' claims are nothing more than private fraud actions, the court said the defendants may move for summary judgment "and the trial court should not hesitate to grant such relief."
Deviating, Voluntary Statements Actionable
In addition, the Supreme Court said there is also an exception to preemption of breach of warranty claims "for voluntary statements to third parties that deviate from the approved label and packaging information material." It said that such an express warranty claim does not impose additional requirements or obligations on the defendants.
Again, the court said that if discovery shows that the warranty claims are based on statements derived from the FDA-approved label or packaging, "a motion for summary judgment would be appropriate."
The opinion was written by Judge Mary Catherine Cuff of New Jersey Superior Court Appellate Division, temporarily assigned to the Supreme Court. The other court members were Judges Dorothea O'C. Wefing, Ariel A. Rodríguez and Jose L. Fuentes, all of the Appellate Division and all temporarily assigned to the Supreme Court, and Supreme Court Justice Jaynee LaVecchia.
Supreme Court Chief Justice Stuart Rabner and Justices Barry T. Albin, Helen E. Hoens and Anne M. Patterson did not participate in the case.
Cornett is represented by Bruce D. Greenberg and Mayling C. Blanco of Lite DePalma Greenberg in Newark, N.J., and Peter E. Seidman and Alastair Findeis of Milberg in New York.
The defendants are represented by Peter C. Harvey of Patterson, Belknap, Webb & Tyler in New York.
Ellen Relkin of Weitz & Luxenberg in New York represents amicus curiae Kentucky Justice Association.
NEW YORK - Shareholders and defendants in a securities class action lawsuit against a chemical company, certain of its officers and directors and others have agreed to a $37 million settlement of all federal securities law claims, according to court documents made available on Tuesday (In re Tronox, Inc. Securities Litigation, No. 09-6220, S.D. N.Y., View related prior history, 2011 U.S. Dist. LEXIS 739.).
According to the stipulation of settlement, which is subject to court approval, defendants Tronox Inc. and certain of its officers and directors, including director Robert M. Wohleber; Tronox's controlling entity, Kerr-McGee Corp., and certain of its officers and directors, including CEO Luke R. Corbett and General Counsel Gregory F. Pilcher; Kerr-McGee successor-in-interest Anadarko Petroleum Corp. and certain of its officers and directors; and Tronox outside auditor Ernst & Young LLP (E&Y) will pay the settlement amount in exchange for a release of all claims against them.
Shareholders filed a first amended class action complaint in the U.S. District Court for the Southern District of New York on behalf of all purchasers of Tronox common stock from Nov. 21, 2005, to Jan. 12, 2009.
Exchange Act Claims
The shareholders allege that the defendants misrepresented Tronox's business and financial condition in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. In particular, the shareholders contend that the defendants misrepresented issues with Tronox's environmental remediation and related tort liabilities.
The defendants filed separate motions to dismiss the Section 20(a) claims, and Judge Shira A. Scheindlin preserved a majority of the claims in a Jan. 5, 2011, opinion granting in part and denying in part the motions.
The lead plaintiffs are represented by Solomon B. Cera, Gwendolyn R. Giblin and Thomas C. Bright of Gold Bennett Cera & Sidener in San Francisco.
Anadarko and KMG are represented by Jay B. Kasner, Susan Saltzstein and Joseph A. Matteo of Skadden Arps, Slate, Meagher & Flom in New York.
Defendants J. Michael Rauh, Corbett, Pilcher and Wohleber are represented by Gandolfo V. DiBlasi, Penny Shane and Jessica M. Klein of Sullivan & Cromwell in New York.
Defendants Thomas W. Adams, Mary Mikkelson and Marty J. Rowland are represented by Matthew D. Parrott of Katten Muchin Rosenman in New York and David H. Kistenbroker and Joni S. Jacobsen of Katten Muchin in Chicago.
E&Y is represented by Robert A. Atkins, Brad S. Karp and Claudia Hammerman of Paul, Weiss, Rifkin, Wharton & Garrison in New York.
[Editor's Note: Lexis subscribers may download the document using the link above. The document(s) are also available at http://www.mealeysonline.com/ or by calling the Customer Support Department at 1-800-833-9844.]
TRENTON, N.J. - A New Jersey state appeals panel today vacated an $11.8 million Accutane verdict after finding that under controlling Florida case law, three plaintiffs had not established that a failure to warn about the risk of inflammatory bowel disease (IBD) by defendant Hoffman-La Roche Inc. was the proximate cause of their injuries (Lance Sager v. Hoffman-La Roche Inc., et al., No. A-3427-09T4, Jordan Speisman v. Hoffman-La Roche Inc., et al., No. 3428-09T4, Kelly Mace v. Hoffman-La Roche Inc., et al., No. A-3702-09T4, N.J. Super., App. Div.). View related prior history, 2012 N.J. Super. Unpub. LEXIS 634.
Lance Sager, Jordan Speisman and Kelly Mace, all Florida residents, sued Hoffman-La Roche Inc. and related entities in the Atlantic County Superior Court, alleging that their use of Accutane caused them to develop a variant of IBD. In 2008, a jury found that Roche failed to warn them about the risk of IBD.
Sager was awarded $2.6 million, Speisman $8.6 million and Mace $1.6 million, later reduced to $578,000 by the trial judge.
Roche appealed, arguing that the plaintiffs' claims were barred by New Jersey's two-year statute of limitations, citing the Appellate Division's ruling in another Accutane case, Kendall v. Hoffman-La Roche Inc. (No. A-2633-09, N.J. Super., App. Div.; See 8/19/10, Page 12). It also argued that it is entitled to judgment under controlling Florida law about proximate causation, since each treating dermatologist testified they would have prescribed Accutane even if there was a stronger warning about the risk of IBD.
Statute Of Limitations
The appeal had already been sent back to the trial court on the statute of limitations issue and that court found that the statute of limitations was tolled.
In its per curiam decision, the Appellate Division panel said the trial judge's "fact-sensitive determinations warrant our deference, particularly in light of the fact that the judge had the opportunity to evaluate the credibility of all three plaintiffs at the pretrial Lopez hearing [Lopez v. Swyer, 62 N.J. 267, 272-75 (1973)]."
The panel rejected Roche's argument that all three plaintiffs had not read the Accutane warnings. The panel noted that all three relied on their parents to obtain Accutane due to their young age.
In addition, the panel said the plaintiffs were not diagnosed with IBE until after they stopped Accutane and even then were not told that the drug may have caused their conditions. "There was a sound basis for the judge to conclude that a reasonable person in their shoes would not have made a litigational connection between the drug and their injuries within the ordinary limitations period," the panel said.
Doctors Wouldn't Change
Roche, the panel continued, was not prejudiced by the plaintiffs' delay in filing their lawsuits, noting that the defendant was able to "marshal considerable defense proofs at trial."
However, the Appellate Division panel concluded that because Florida precedent in Hoffman-La Roche Inc. v. Mason (27 So. 3d 75 [Fla. Dist. Ct. App. 2009]; review denied, 37 So. 3d 848 [Fla. 2010]; See 11/2/09, Page 7) is controlling, Roche is entitled to judgment in each case as a matter of law and the judgments are reversed.
"In the three cases before us, it does not appear that plaintiffs' prescribing dermatologists had independent knowledge of Accutane's claimed potential to induce IBD," the panel held. "The question then becomes whether, under Florida law, the allegedly defective warnings that those physicians received could be the proximate cause of plaintiffs' injuries."
Mason, the panel said, created an important consideration about "whether the doctors would have still prescribed the drug to plaintiffs, even if the manufacturer had supplied a more pointed warning." The panel said Mason is controlling and must be applied on the proximate cause issue.
The Atlantic County trial judge, the panel said, concluded that Mason is an "outlier decision." "It is not our place, however, to second guess the appellate courts of Florida and the wisdom of their decisions," the panel said.
"The published opinion in Mason, short and unsigned as it may be, is binding Florida precedent," the panel said. "Only the Florida Supreme Court can overturn Mason or repudiate it. That has not yet occurred."
Citing testimony by the three treating dermatologists, the panel said that "clearly establishes that all three plaintiffs cannot surmount Mason's binding legal test for proximate cause in a Florida learned intermediary situation. Although the outcome under New Jersey products liability law may well have been different, the inescapable conclusion is that the trial proofs failed in this case to establish proximate causation under controlling Florida precedent."
The panel consisted of Judges Jack M. Sabatino, Victor Ashrafi and Douglas M. Fasciale.
Roche is represented by Paul W. Schmidt and Michael X. Imbroscio of Covington & Burling in Washington, D.C., and Michelle M. Bufano of Gibbons in Newark, N.J.
The plaintiffs are represented by David R. Buchanan of Seeger Weiss in New York and Michael D. Hook of Hook & Bolton in Pensacola, Fla.
RIVERSIDE, Calif. - The City of San Bernardino, Calif., last night filed its much-anticipated petition for Chapter 9 bankruptcy in the U.S. Bankruptcy Court for the Central District of California, citing more than $1 billion in debt (In Re: City of San Bernardino, California, No. 12-28006, Chapter 9, C.D. Calif. Bkcy.). The San Bernardino City Council voted July 24 to adopt an emergency three-month fiscal plan that would suspend debt payments, freeze hiring for jobs that were still vacant and stop payments into the retiree health fund while the city developed a bankruptcy plan.
RIVERSIDE, Calif. - The City of San Bernardino, Calif., last night filed its much-anticipated petition for Chapter 9 bankruptcy in the U.S. Bankruptcy Court for the Central District of California, citing more than $1 billion in debt (In Re: City of San Bernardino, California, No. 12-28006, Chapter 9, C.D. Calif. Bkcy.).
The San Bernardino City Council voted July 24 to adopt an emergency three-month fiscal plan that would suspend debt payments, freeze hiring for jobs that were still vacant and stop payments into the retiree health fund while the city developed a bankruptcy plan.
The city had declared a financial crisis on July 18 when it became apparent that it no longer had cash reserves and the city projected that its spending in the fiscal year, which began July 1, would exceed revenue by $45 million.
San Bernardino, which has 211,000 residents, is the third California municipality to file for Chapter 9 bankruptcy since June 28. The cities of Stockton and Mammoth Lakes also have filed.
At the time the City Council declared the fiscal emergency, it said the financial burden on the city was the result of a decline in revenues related to a drop in property values. Specifically, the city said it has lost between $10 million and $16 million in annual revenue as a result of the worsening economy.
Moreover, despite a 20 percent reduction in the city's workforce over the last four years, San Bernardino did not have enough money on hand to meet its obligations, the City Council said, referring to a report issued by the city attorney.
The city is represented by Paul R. Glassman of Stradling Yocca Carlson & Rauth in Sacramento, Calif.
NEW YORK - Lead plaintiffs in a securities class action lawsuit against The Goldman Sachs Group Inc. and others have agreed to settle their claims for more than $26 million, according to court documents filed yesterday in a New York federal court (Public Employees' Retirement System of Mississippi v. Goldman Sachs Group, Inc., et al., No. 09-1110, S.D. N.Y., Prior history, 2012 U.S. Dist. LEXIS 13548).
According to a footnote contained in the memorandum in support of the motion for preliminary approval of settlement, "the total settlement amount is $26,612,500.00, which consists of: (i) a fund of $21,312,500.00, subject to a $1,312,500.00 reduction if Stichting APB, which has filed a private action against Goldman Sachs, elects to exclude itself from the Class; and (ii) a fund of $5,300,000.00 for attorneys' fees, litigation expenses, and claims administration expenses, subject to Court approval."
Lead counsel for the shareholders, attorney David L. Wales of Bernstein Litowitz Berger & Grossmann, sent a letter to U.S. Judge Harold Baer Jr. of the Southern District of New York on July 17 stating that both sides had accepted the terms of the settlement and that settlement documents would be filed in the District Court by July 31.
Lead plaintiff Public Employees' Retirement System of Mississippi (MissPERS) filed a second amended complaint in the District Court on behalf of all purchasers of mortgage pass-through certificates issued pursuant or traceable to GS Mortgage Securities Corp.'s Aug. 15, 2005, registration statement.
MissPERS alleged that Goldman Sachs Group, offering sponsor Goldman Sachs Mortgage Co., depositor GS Mortgage, Goldman, Sachs & Co. Inc. and GS Mortgage officers and directors Daniel L. Sparks, Mark Weiss and Jonathan S. Sobel (collectively, the GS defendants) and ratings agencies Moody's, The McGraw-Hill Cos. Inc. and Fitch Inc. (collectively, the rating agency defendants) issued false and misleading statements concerning the subprime exposure of the mortgage-backed securities issued in the offering in violation of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, 15 U.S.C.S. § 77a.
On Jan. 12, 2011, Judge Harold Baer Jr. granted in part and denied in part the defendants' motions to dismiss, ruling that MissPERS lacks standing to bring claims against the Goldman Sachs defendants and failed to properly bring its claims against the ratings agency defendants for securities it did not purchase.
On Feb. 2, Judge Baer granted MissPERS's motion to certify a class of all purchasers of "all persons or entities that purchased or acquired publicly offered certificates of GSAMP Trust 2006-S2 and who were damaged thereby", and to appoint itself as lead plaintiff and the Bernstein Litowitz as lead counsel.
MissPERS is represented by David R. Stickney, Timothy A. DeLange, Elizabeth Lin and Matthew P. Jubenville of Bernstein Litowitz in San Diego and Bruce D. Bernstein of Bernstein Litowitz in New York.
The GS defendants are represented by Richard H. Klapper, Michael T. Tomaino Jr., Patrice A. Rouse and Harsh N. Trivedi of Sullivan & Cromwell in New York.
Moody's is represented by Joshua M. Rubins and James J. Coster of Satterliee Stephens Burke & Burke. Fitch is represented by Martin Flumenbaum, Roberta A. Kaplan, Andrew J. Ehrlich and Tobias J. Stern of Paul, Weiss, Rifkind, Wharton & Garrison. The McGraw-Hill Cos. are represented by Floyd Abrams, S. Penny Windle, Adam Zurofsky and Tammy L. Roy of Cahill Gordon & Reindel. All are in New York.
PHOENIX - Matrixx Initiatives Inc. will pay $4.5 million to settle claims with shareholders that it violated federal securities law by concealing side effects of a cold medication it developed and marketed, according to documents filed Friday in Arizona federal court (James V. Siracusano v. Matrixx Initiatives, Inc., et al., No. 04-00886, D. Ariz.)
The settlement is subject to approval by the U.S. District Court for the District of Arizona.
Lead plaintiff NECA-IBEW Pension Fun filed its class action complaint on behalf of Matrixx shareholders in the District Court. It alleged that Matrixx violated Section 10(b) of the Securities Exchange Act of 1934 by failing to disclose that the cold remedy Zicam allegedly causes anosmia, or loss of smell.
Judge Mary H. Murguia granted Matrixx's motion to dismiss, holding that the allegations of user complaints regarding Zicam's side effects were not material because they were not statistically significant. She also held that the plaintiffs failed to plead scienter.
On appeal, the Ninth Circuit U.S. Court of Appeals reversed and remanded, and Matrixx appealed to the Supreme Court, which granted Matrixx's petition on June 14, 2010. The Supreme Court heard oral argument on Jan. 10, 2011.
On March 22, the Supreme Court unanimously affirmed that the pension fund properly showed that Matrixx had violated Section 10(b) of the Exchange Act.
Judge Neil V. Wake granted the pension fund's motion for class certification on Feb. 27, defining the class as "all persons or entities who, between October 22, 2003 and February 6, 2004, inclusive, purchased the publicly traded securities of Matrixx Initiatives, Inc. and who were damaged thereby."
Judge Wake also appointed the pension fund as lead plaintiff, named the law firm of Robbins Geller Rudman & Dowd as class counsel and named the law firm of Fairbourn, Friedman & Balint as liaison counsel.
The pension fund is represented by Andrew S. Friedman and Francis J. Balint Jr. of Bonnett, Fairbourn, Friedman & Balint in Phoenix, Darren J. Robbins, Scott H. Saham and Lucas F. Olts of Robbins Geller Rudman & Dowd in San Diego and Samuel H. Rudman and David A. Rosenfeld of Robbins Geller in Melville, N.Y.
Matrixx is represented by David B. Rosenbaum and Maureen Beyers of Osborn Maledon in Phoenix and Michael G. Yoder, Amy J. Longo and Molly J. Magnusson of O'Melveny & Myers in Newport Beach, Calif.
WASHINGTON, D.C. - The Department of Health and Human Services is authorized to exclude three former Purdue Pharma executives from participating in federal health care programs, but it must explain why it thinks they should be excluded for 12 years, a fractured District of Columbia Circuit U.S. Court of Appeals panel ruled today (Michael Friedman, et al. v. Kathleen Sebelius, et al., No. 11-5028, D.C. Cir.)
Michael Friedman, Paul Goldenheim, M.D., and attorney Howard Udell were executives for Purdue Pharma, also known as Purdue Frederick Co. In 2007, Purdue pleaded guilty to fraudulent misbranding of OxyContin, a prescription narcotic pain drug.
The three executives pleaded guilty to a misdemeanor charge of misbranding a drug as responsible corporate officers.
Thereafter, Health and Human Services excluded the three from participating in federal health care programs for 12 years. The executives pursued administrative appeals then filed suit in the U.S. District Court for the District of Columbia.
The District Court upheld the exclusions, and the executives appealed.
The Circuit Court panel held that federal law authorized the department's exclusion but that its decision was "arbitrary and capricious for want of a reasoned explanation for the length of their exclusions." The panel reversed the District Court's judgment and remanded the case for further proceedings.
Term Might Be Justified
The panel said it did not suggest that 12 years might not be justified. Instead, it said the department did not justify the term of exclusion.
Senior Circuit Judge Douglas H. Ginsburg wrote the opinion. Chief Judge David B. Sentelle and Senior Circuit Judge Stephen F. Williams concurred in part and dissented in part.
Judge Sentelle agreed that the department is authorized to exclude executives convicted of a misdemeanor but dissented from the reversal of the term of the exclusions. He said he is concerned that the exclusions will have an adverse effect on Social Security disability claims.
Judge Williams did not agree that the department is authorized to impose exclusions and said he would remand for an interpretation.
Friedman, Goldenheim and Udell are represented by Joseph R. Guerra, Matthew D. Kruger and Carter G. Phillips of Sidley Austin and Jonathan L. Abram and Jonathan L. Diesenhaus of Hogan Lovells, both in Washington.
The government is represented by Robin M. Meriweather, Ronald C. Machen and R. Clair Lawrence of the U.S. Justice Department in Washington.
[Editor's Note: Lexis subscribers may download the document using the link above. The document(s) are also available at http://www.mealeysonline.com/ or by calling the Customer Support Department at 1-800-833-9844.]
Mealey's is now available in eBook format!
ST. LOUIS - In a 2-1 ruling July 26, the Eighth Circuit U.S. Court of Appeals reversed summary judgment in two Prempro bellwether cases that involve the risk of *** cancer in women who took the hormone replacement therapy drug for less than three years (Pamela Kuhn v. Wyeth, Inc., et al., No. 11-1809, Shirley Davidson v. Wyeth, et al., No. 11-1815, 8th Cir.)
Pamela Kuhn took Prempro for three years and 28 days, and Shirley Davidson took it for one years and nine months. Kuhn argued that she took the drug for more than three years, but defendant Wyeth (now Pfizer Inc.) argued that she took it for less than three years.
Both plaintiffs developed *** cancer and filed separate lawsuits against Wyeth in the U.S. District Court for the Western District of Arkansas, where the Prempro multidistrict litigation is located, alleging that the drug increased the risk of *** cancer and that Wyeth failed to adequately warn of the risk.
Kuhn's and Davidson's cases were selected as bellwether cases on the issue of *** cancer caused by short-term use of Prempro. The plaintiffs named David F. Austin, M.D., an epidemiologist, as their expert on the issue of causation by short-term use of Prempro.
Joint Daubert Hearing
While Kuhn's and Davidson's cases were pending in the MDL, Wyeth was facing a trial in the District of Puerto Rico in a Prempro case that also involved short-term use. Since Wyeth planned to challenge the expert testimony in the Puerto Rico case, it suggested that the MDL court conduct a joint Daubert (Daubert v. Merrell Dow Pharmaceuticals, Inc. 509 U.S. 579 ) hearing.
Wyeth argued that there is no reliable scientific basis for plaintiff experts to conclude that taking Prempro for less than three years increased the risk of *** cancer. It added that the Women's Health Initiative (WHI), which found a link between Prempro and *** cancer, did not show that fewer than three years' use increased the risk and that studies that plaintiff experts relied on were methodologically flawed.
The plaintiffs argued that Prempro is a growth-promoting agent that causes cancer-susceptible cells to become cancerous, even with short-term use.
Magistrate Judge Joe J. Volpe granted Wyeth's motion to exclude Austin's testimony, finding that it was not sufficiently reliable to meet the admissibility standard of Daubert. The District Court adopted the recommendation and granted summary judgment.
Kuhn and Davidson appealed, arguing that the magistrate judge abused his discretion by precluding Austin's testimony and recommending summary judgment.
Magistrate Abused Discretion
In a 2-1 ruling the Eighth Circuit panel majority noted that the magistrate judge did not address Austin's testimony that women who took Prempro had lower recorded rates of *** cancer in the first two years, not three years. It said that although Austin distinguished between annual incidents of *** cancer and cumulative incidents, the magistrate judge addressed only the testimony about cumulative incidents.
"We conclude that the magistrate judge abused his discretion in deciding that Dr. Austin's criticisms of the WHI study were unfounded and inconsistent with his reliance on the study in other hormone therapy cases," the majority said. Citing Austin's testimony, the majority said, "In light of this testimony and its supporting evidence, Dr. Austin's reliance on the WHI study to prove general causation does not foreclose his opinion that the study did not accurately assess the risk of *** cancer associated with the short-term use of Prempro."
While Wyeth/Pfizer can challenge Austin's credibility based on his previous testimony, the majority said, "his previous reliance on and testimony regarding the WHI study does not render his opinion inadmissible, as it was not his burden to disprove the WHI's finding that short-term use of Prempro does not increase the risk of *** cancer."
Credibility, Not Admissibility
The majority said the magistrate judge erred in factoring in the haste in which Austin's opinion was written and the involvement of plaintiffs' counsel. It said those issues go to the credibility of Austin, not the admissibility of his opinion.
Austin's reliance on epidemiological studies compiled by plaintiffs' counsel and supporting observational studies "provide adequate foundation for Dr. Austin's testimony," the majority said.
"Dr. Austin's testimony is admissible because the studies upon which he relied were sufficient to support his opinion that short-term use of Prempro increases the risk of *** cancer," the majority said. It said the observational studies "constitute appropriate validation of and good grounds for Dr. Austin's opinion. The studies' limitations may be presented to the jury, and Dr. Austin's reliance on the studies may be tested through the traditional means of cross examination and presentation of contrary evidence."
Wyeth/Pfizer also argued that Austin cherry-picked information from the observational studies. The majority rejected that: "There may be several studies supporting Wyeth's contrary position, but it is not the province of the court to choose between the competing theories when both are supported by reliable scientific evidence."
Because Austin's opinion is admissible, the majority reversed summary judgment. Also, the majority said it did not need to address Kuhn's argument that she used Prempro for more than three years.
The cases were remanded to the MDL court for further proceedings.
Circuit Judge Roger L. Wollman wrote the majority opinion. Joining him was Circuit Judge Raymond W. Gruender.
Circuit Judge James B. Loken dissented, saying the District Court's Daubert analysis was supported by the record and "properly focused on the gate-keeping function mandated by the Supreme Court and by [Federal] Rule [of Civil Procedure] 702."
Judge Loken said the majority applied an overly stringent review and failed to give the trial court's ruling deference.
Kuhn and Davidson are represented by Russell T. Abney, Ted G. Meadows and Navan J. Ward of Beasley Allen in Montgomery, Ala.; W. Gary Holt of Gary Holt & Associates in Little Rock, Ark.; Breean Walas of North Little Rock, Ark.; and Erik B. Walker of Hissey & Kientz in Austin, Texas.
Defense, Amicus Counsel
Wyeth/Pfizer is represented by Loren H. Brown and Christopher G. Campbell of DLA Piper in New York; Catherine M. Corless, Lyn Peoples Pruitt, Mary C. Way and Leigh A. Yeargan of Mitchell & Williams in Little Rock; David E. Dukes, Michael W. Hogue, John M. Jones of Nelson & Mullins in Columbia, S.C.; and F. Lane Heard III of Williams & Connolly in Washington, D.C.
Amicus Arkansas Trial Lawyers Association is represented by Brian G. Brooks of Greenbrier, Ark.
[Editor's Note: Lexis subscribers may download the document using the link above. The document(s) are also available at www.mealeysonline.com or by calling the Customer Support Department at 1-800-833-9844.]
SAN BERNARDINO, Calif. - The San Bernardino City Council on July 18 voted 5-2 to declare a fiscal emergency, which allows it to file Chapter 9 bankruptcy without first negotiating with its creditors. City officials said they expect to file a petition in the next 30 days.
SAN BERNARDINO, Calif. - The San Bernardino City Council last night voted 5-2 to declare a fiscal emergency, which allows it to file Chapter 9 bankruptcy without first negotiating with its creditors. City officials said they expect to file a petition in the next 30 days. The city has a population of 211,000. On July 10, the City Council took a preliminary vote to move toward Chapter 9 bankruptcy.
SAN BERNARDINO, Calif. - The San Bernardino City Council last night voted 5-2 to declare a fiscal emergency, which allows it to file Chapter 9 bankruptcy without first negotiating with its creditors. City officials said they expect to file a petition in the next 30 days.
The two councilmen who opposed the motion to declare a fiscal emergency are John Valdivia, representative for the city's Third Ward, and Chas A. Kelley, who represents the Fifth Ward.
The city has a population of 211,000.
On July 10, the City Council took a preliminary vote to move toward Chapter 9 bankruptcy.
The vote taken last night comes after city officials, including the finance director, issued a report indicating that the city was facing insolvency and that its expenditures were projected to exceed revenues by $45 million.
Moreover, the report said that between $10 million and $16 million in annual revenue had stopped in recent years as property values plummeted.
Despite a 20 percent reduction in the city's workforce over the last four years, San Bernardino did not have enough money on hand to meet its obligations, according to the report.
MONTGOMERY, Ala. - In a 7-1 vote, the Alabama Supreme Court on July 13 vacated a $78.4 million verdict drug-pricing verdict against generic drug maker Sandoz Inc., finding that the state government knew that the reported drug prices were not accurate and that the state based its reimbursement decisions on reasons other than prices reported by Sandoz (Sandoz, Inc. v. State of Alabama, No. 1081402, Ala. Sup.; 2012 Ala. LEXIS 88).
In 2005, Alabama sued more than 70 drug manufacturers in the Montgomery County Circuit Court, alleging that the defendants purposefully reported inflated prices published in third-party drug price lists, causing the state Medicaid department to overpay for drug reimbursements. Sandoz was one of the defendants.
The state alleged that the defendants provided false or inflated average wholesale price (AWP) and wholesale acquisition cost (WAC) information about their drugs to First DataBank, which published the list of drug prices. The state said the reported drug prices greatly exceed the actual prices that hospitals or pharmacies were charged.
Further, the state alleged that the defendants did not disclose discounts, rebates or other inducements that lowered the actual sales prices.
Similar To AstraZeneca Case
The case against Sandoz went to trial, and a jury awarded the state $28,443,572 in compensatory damages and $50 million in punitive damages. Sandoz appealed.
In a per curiam opinion, the Supreme Court majority reversed the verdict and entered judgment in favor of Sandoz on much the same grounds as it did for three other drug-pricing defendants in 2009 in another case, AstraZeneca LP v. State (41 So. 3d 15 [Ala. 20099]; See 11/2/09, Page 32). In AstraZeneca, the court vacated a $274 million verdict against defendants AstraZeneca LP, SmithKline Beecham (now GlaxoSmithKline PLC) and Novartis Pharmaceuticals Corp.
"Alabama law requires that a party claiming to be the victim of fraud must have actually relied on the false information it received and that such reliance must have been reasonable," the majority wrote. "Because in this case, as in AstraZeneca, the State knew that the prices reported by Sandoz were not what the State claims they should have been, Alabama law does not allow the State to claim that its reliance on that information was reasonable."
Other Considerations In Play
"Further," the majority continued, "the State's reimbursement decisions were not based on the allegedly false information provided by Sandoz; instead, its decisions were based on policy concerns and certain requirements of the federal Medicaid program. Thus, as was the case in AstraZeneca, the State's claims should not have been submitted to the jury, and Sandoz is entitled to a judgment in its favor."
The majority said that the Alabama Medicaid Agency, which decides how much the state will reimburse for drugs prescribed to Medicaid recipients, "had actual knowledge that AWPs were not 'net' prices." In addition, it said the state was aware of or should have been aware that WAC data did not include discounts.
The majority said it is "telling" that even after the Alabama Medicaid Agency discovered the purported fraudulent pricing by Sandoz, it did not change its estimated acquisition cost formulas.
The majority consisted of Chief Justice Charles R. Malone and Justices Thomas A. Woodall, Lyn Stuart, Michael F. Bolin, Glenn Murdock, Greg Shaw and Alisa Kelli Wise.
Justice Tom Parker dissented, saying that the court's ruling in AstraZeneca was "a mistaken view of the case and a mistaken interpretation of the evidence." Citing evidence from the trial, the justice said he did not believe that the state knew that the WAC was not a net price.
In addition, Justice Parker said he did not find that the state's actions - preparing a lawsuit, performing a study to confirm the existence of a problem and not changing the estimated acquisition cost formulas - "somehow negated the State's claim."
NEW YORK - Bankrupt grocer The Great Atlantic & Pacific Tea Co. on July 6 moved in the U.S. Bankruptcy Court for the Southern District of New York to enforce an agreement with one of its unions that had agreed to make cost reductions to help the company emerge from Chapter 11 bankruptcy (In Re: The Great Atlantic & Pacific Tea Company Inc., No. 10-24549, S.D. N.Y. Bkcy).
BOSTON -GlaxoSmithKline LLC (GSK) agreed today to plead guilty and to pay $3 billion to resolve broad-ranging criminal and civil allegations in Massachusetts federal court regarding the promotion of several prescription drugs, failure to report safety data and alleged false-price reporting practices (United States ex rel. Greg Thorpe, et al. v. GlaxoSmithKline PLC, No. 11-10398-RWZ; United States of America v. GlaxoSmithKline LLC, No. 1:12-cr-10206-RWZ, D. Mass.).
GSK agreed to plead guilty to two counts of introducing misbranded drugs, the antidepressants Paxil and Wellbutrin, into interstate commerce and to one count of failing to report safety data about the diabetes drug Avandia to the U.S. Food and Drug Administration. GSK will pay $1 billion, including a criminal fine of $956,814,400 and forfeiture of $43,185,600 on the counts. The company also will pay $2 billion to resolve civil liabilities with the federal government and states under the False Claims Act.
The U.S. Department of Justice said the resolution is the largest health care fraud settlement to date and the largest payment ever by a drug company.
A criminal charge alleges that from April 1998 to August 2003, GSK unlawfully promoted Paxil for treating depression in patients under age 18 although the drug was not approved for pediatric use. The government alleges that GSK participated in publishing and distributing a misleading medical journal article in support of pediatric use.
A second criminal allegation is that from January 1999 to December 2003, GSK promoted Wellbutrin for off-label uses including weight loss, sexual dysfunction, substance addiction and attention deficit hyperactivity disorder.
The third criminal allegation is that between 2001 and 2007, GSK failed to include safety data about the potential increased risk of congestive heart failure and heart attack among diabetics using Avandia. The FDA in 2007 added two black box warnings to the Avandia label about those risks.
The government also alleges that GSK illegally promoted off-label use of Advair, Lamictal and Zofran and paid kickbacks to physicians to prescribe those drugs as well as Imitrex, Lotronex, Flovent and Valtrex. GSK reported false best prices, the government says, resulting in the underpayment of rebates under the Medicaid Drug Rebate Program.
The false best prices allegations are resolved in a separate document called the Nominals Settlement.
The criminal plea agreement also includes nonmonetary compliance commitments and certifications by GSK's U.S. president and board of directors. The guilty plea and sentence require court approval.
The false claims complaint was filed under seal in October and unsealed today.
The United States is represented by District of Massachusetts U.S. Attorney Carmen M. Ortiz and Assistant U.S. Attorneys Sara Miron Bloom, Amanda Strachan and Brian Perez-Daple in Boston; District of Colorado U.S. Attorney John Walsh and Assistant U.S. Attorney Edwin Winstead in Denver; Acting Assistant Attorney General Stuart F. Delery and Dante Anderson, Jamie Ann Yavelberg, Andy Mao, Brian McCabe and Douglas Rosenthal of the department's Commercial Litigation Branch, Civil Division; and Jill Furman, Patrick Jasperse and David Frank of the department's Consumer Protection Branch, Civil Division, both in Washington, D.C.; and Gregory E. Demsky, Chief Counsel of Office of Inspector General, U.S. Department of Health and Human Services, in Washington.
GSK is represented by Senior Vice President for Global Litigation Elpidio Villarreal, and Geoffrey Hobart and Matthew O'Connor of Covington & Burling in Washington.
Relators Greg Thorpe and Blair Hamrick are represented by Brian Kenney and M. Tavy Deming of Kenney McCafferty in Philadelphia. Relators Thomas Gerahty and Matthew Burke are represented by Erika Kelton of Phillips & Cohen in Washington. Relator Lois Graydon is represented by Reuben Guttman of Grant & Eisenhofer in Wilmington, Del.