Tuesday, December 15, 2009

Second District Upholds Denial of Certification in In Re Vioxx Class Cases

On December 15, 2009, the Second District (Division 3) upheld the trial court's denial of class certification in In Re Vioxx Class Cases, __ Cal.App. 4th __ (2009).  In that case, the plaintiffs sought recovery, on behalf of all persons and entities in California who paid for Vioxx, of the difference in price between what they paid for Vioxx and what they would have paid for a safer, equally effective, pain reliever. The plaintiff’s theory alleged that Merck knew about the dangers of Vioxx but engaged in a campaign to hide or explain away those risks, and pursued causes of action under the UCL, the FAL the CLRA, and unjust enrichment.

Plaintiffs appeal asserted that the Supreme Court’s decision in In re Tobacco II Cases, 46 Cal.4th 298 (2009), undermined the trial court’s rationale. The Second District disagreed, concluding that “the trial court’s ultimate decision is consistent with Tobacco II, and is supported by substantial evidence.”

As to Plaintiffs’ claims under the UCL and FAL, one issue on appeal concerned the trial court’s conclusion that the plaintiff’s restitutionary theory was not amenable to class-wide adjudication:
The [trial] court concluded that the monetary value plaintiffs wish to assign to their claim – the difference in price between Vioxx and a generic, non-specific NSAID, implicates a patient-specific inquiry and therefore fails the community of interest test. In short, the trial court rejected the entire premise of plaintiffs’ class action. While the trial court allowed the possibility that plaintiffs could recover for having been exposed to misrepresentations, the trial court concluded that the theory that the entire class was harmed because Vioxx was no more effective, and less safe, than naproxen implicated individual issues of proof.
See Slip Opinion, at 24-25.

Plaintiffs mounted a two-pronged challenge to the trial court’s conclusions – neither were successful.

First, plaintiffs argued that the trial court abused its discretion by rejecting their factual evidence establishing that naproxen was a valid comparator to Vioxx. See id., at 25. The Court disagreed, concluding that the trial court’s findings were sufficiently grounded by evidence in the record:
The trial court did not err in rejecting naproxen as a valid class-wide comparator. Defendants introduced substantial evidence that, after Vioxx was withdrawn from the market, most Vioxx patients switched to another COX-2 inhibitor, not a generic NSAID such as naproxen. As this evidence indicates that Vioxx was worth more than naproxen to a majority of class members, it is more than sufficient to support the trial court’s conclusion that naproxen is not a valid comparator on a class-wide basis.
See Slip Opinion, at 25-26.

Second, plaintiffs asserted that the validity of naproxen as a comparator goes to the merits of the action, and as such, the trial court erred by resolving this issue within the confines of the certification motion. See id., at 26. The plaintiffs reasoned that “since the UCL and FAL allow an award of restitution without individualized proof of deception, reliance and injury, the trial court should not have been considering the validity of naproxen as a comparator.” See id. The Court rejected this argument, reasoning that the trial court acted within its discretion by evaluating whether the plaintiff’s restitutionary theory was capable of commonly impacting the class as a whole:
We do not disagree that a trial court has discretion to order restitution even in the absence of individualized proof of injury. (Fletcher v. Security Pacific National Bank, supra, 23 Cal.3d at p. 452.) However, in order to obtain class wide restitution under the UCL, plaintiffs need establish not only a misrepresentation that was likely to deceive (Corbett v. Superior Court, supra, 101 Cal.App.4th 649, 670) but the existence of a “measurable amount” of restitution, supported by the evidence. (Colgan v. Leatherman Tool Group, Inc., supra, 135 Cal.App.4th at p. 698.) The failure of naproxen as a viable class-wide comparator thus defeats the claim for class-wide restitution. The trial court concluded that whether any particular plaintiff’s loss can be measured by the difference in price between Vioxx and generic naproxen depends on issues specific to that individual plaintiff. The evidence supports the trial court’s conclusion in this regard. Even if plaintiffs establish, class-wide, that Merck misrepresented the cardiovascular risks of Vioxx in a manner that was likely to deceive plaintiffs and their prescribing physicians, no plaintiff would be able to recover without first identifying a proper comparator drug, the cost of which would provide the actual value to the patient of the Vioxx received. As the trial court concluded, on the evidence, that the issue of a proper comparator was a patient-specific issue, incorporating the patient’s medical history, treatment needs, and drug interactions, the trial court properly concluded that restitution could not be calculated on a class-wide basis.
See Slip Opinion, at 27-28.

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