Another Class Cert Denial Illustrates Difficulties Associated with Consumer Protection & False Advertising Class Actions

Contributing Author: Sylvia E. Simson

On February 5, 2013, Judge Nathaniel Gorton of the U.S. District Court for the District of Massachusetts denied two motions for class certification in the multidistrict litigation (“MDL”) concerning Forest Pharmaceuticals, Inc. and Forest Laboratories, Inc. (collectively, “Forest”)’s marketing and sales of two antidepressant drugs, Celexa and Lexapro, In re: Celexa and Lexapro Marketing and Sales Practices Litigation, MDL 2067.    Judge Gorton’s decision is yet another addition to a growing list of class certification denials in the consumer protection and false advertising class action context, and exemplifies the difficulties faced by plaintiffs in these types of suits in establishing Rule 23(b)(3)’s requirements.

The heart of the off-label use allegations in the plaintiffs’ complaints is as follows.  In 1999, Forest submitted protocols to the U.S. Food and Drug Administration (“FDA”) for two double-blind, placebo-controlled studies on the pediatric use of Celexa.  One study, referred to as the Lundbeck study, indicated that Celexa was no more effective than a placebo in treating pediatric depression and caused more suicidal ideation than taking a placebo, whereas another study conducted by Karen Wagner at the University of Texas indicated than Celexa was more effective than a placebo.  In September 2002, FDA denied Forest’s application for a pediatric indication for Celexa, citing the findings of the Lundbeck study; thus, FDA only approved Celexa, as well as Lexapro, for use in adults.  From 2001-2004, Forest did not disclose the Lundbeck study findings to sales representatives, consultants, or its pediatric researchers, including Dr. Wagner.  On June 21, 2004, the New York Times published an article revealing the results of the Lundbeck study, observing that Dr. Wagner’s recent American Journal of Psychiatry article failed to mention the contradictory results articulated by the Lundbeck study.  Forest quickly issued a press release acknowledging the Lundbeck study and another double-blind study for Lexapro that did not show efficacy in comparison to a placebo.  As for the plaintiffs’ complaints, they alleged that Forest (1) misled physicians by promoting the Wagner results (and thus the safety and efficacy of Celexa for pediatric use) while failing to disclose the Lundbeck results, and (2) illegally paid kickbacks to physicians to induce them to prescribe the drugs.

The first motion for class certification involved a Missouri case, Jaeckel, and a New York case, Palumbo, which were consolidated for pretrial proceedings. The plaintiffs in these cases, who brought consumer protection law violation claims and fraud-based claims, among others, sought to certify a nationwide class of Celexa and Lexapro purchasers for pediatric/adolescent use pursuant to Fed. R. Civ. P. 23(b)(3).  Upon conducting a choice-of-law analysis, despite plaintiffs’ assertions that Missouri law should apply to both cases, Judge Gorton found that the law of the plaintiffs’ home states must apply.  As a result, he found that “[b]ecause the claims in [both] cases must ‘be adjudicated under the law of so many jurisdictions, [presumably all 50 states,] a single nationwide class is not manageable” and “a class action is not the superior method [of] adjudicat[ion].”  In holding that the class did not meet Rule 23(b)(3)’s superiority requirement, Judge Gorton cited to the Seventh Circuit’s In re Bridgestone/Firestone, Inc. decision, which stated that “[c]ourts have been particularly unwilling to certify classes under the laws of multiple states in the . . . state consumer-protection law[ context] . . . [because] those laws vary widely state to state and ‘courts must respect these differences rather than apply one state’s law to sales in other states with different rules.’”

The second motion for class certification was brought by Scott Wilcox, who claimed that Forest violated the California Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code §§ 17200-17209, and False Advertising Law (“FAL”), Cal. Bus. & Prof. Code §§ 17500-17509, by making “fraudulent, false, unlawful and misleading representations that [Celexa] was safe and effective for minor children.”  Wilcox sought certification for a California class of purchasers of Celexa for pediatric/adolescent use pursuant to Rule 23(b)(3).  Forest argued that while Wilcox, as the representative plaintiff, need not establish that unnamed class members were “actually deceived,” class certification is inappropriate because individual proof would be necessary to determine whether each class member was exposed to the allegedly false or misleading advertising at issue, i.e., that each of the physicians who prescribed Celexa to class members was actually exposed to the allegedly false statements made by Forest employees.  Judge Gorton agreed, noting that “[a]t best[,] plaintiff can show records indicating that 6,000 sales calls were made by Forest sales representatives to doctors in California regarding Celexa,” and that the plaintiff has not shown “how many of those calls actually related to promoting off-label pediatric use.”  Judge Gorton also noted that “individual questions will remain as to whether each doctor relied on those misrepresentations when deciding to prescribe Celexa.”  Thus, “[b]ecause the UCL and FAL claims require individual, plaintiff-specific determinations, those claims are not subject to common proof” and thus the class cannot meet Rule 23(b)(3)’s predominance requirement.

In short, Judge Gorton’s decision is one more decision illustrating the difficulties associated with litigating consumer protection and false advertising class actions.  The denial of Jaeckel/Palumbo class certification illustrates how even though there may be some advantages to litigating a consumer protection claim on a class-wide basis—for example, each individual claim is relatively small, and so without the class device, many claims would go without vindication—the case management difficulties associated with applying a variety of states’ laws outweigh the benefits.  The denial of Wilcox class certification, on the other hand, highlights how difficult it is to sustain a consumer protection class without resorting to individualized inquiries with respect to each class member’s claim.  In the wake of the recent flurry of consumer fraud and false advertising complaints being filed against corporations in the skincare and food industries, among others, companies should take notice of this decision, and others, bringing such suits to a standstill at the class certification stage.