Case Notes

The court first held that the heightened pleading standards of Rule 9(b) applied to both the intentional and negligent misrepresentation claims because both were based on allegations of fraudulent conduct. Notwithstanding the lack of specificity in the complaint, however, the court found that the allegations of all the alleged misrepresentations, taken together, were sufficient to meet the rule's standard with respect to the particular statements and speakers at issue. Moreover, it was not necessary to identify the particular statement(s) on which the decedent or her doctor relied, as “due to the ongoing misrepresentations alleged, a requirement that [plaintiff] directly specify which misrepresentations were relied upon would be impractical and not required under the Mass. R. Civ. P. 9(b) standard.” Accordingly, the court denied the defendants' motion. ' David R. Geiger, Foley Hoag LLP

Dialysis Product Plaintiffs Object to Doctor Interviews

Plaintiffs who allege they were hurt or killed because of defective dialysis products are protesting the request by a large chain of dialysis clinics to conduct ex parte interviews with medical directors who work as independent contractors at the defendant's outpatient clinics. [Editor's Note: For more on ex parte interviews, see the Practice Tip article, infra.]Defendant Fresenius Medical Care Holdings Inc. has two lines of business: It makes dialysis machines, artificial kidneys and dialysis solutions; and it provides dialysis at outpatient facilities and in at-home programs.

“Fresenius asks, as though it were innocuous, for an order allowing it to speak to these independent contractor medical directors about any and all topics ' including individual patients and their medical treatment,” the plaintiffs wrote. “In so doing, Fresenius thwarts established and efficient discovery procedures and jeopardizes both the doctor-patient relationship and the confidentiality of health information by requiring some plaintiffs in this litigation ' those unlucky enough to have a treating doctor also serve a Fresenius medical director ' to waive their rights.”

The parties are negotiating a discovery order to allow the exchange of patient medical records under HIPPA, but Fresenius has sought an order allowing the company to have ex parte contact with some of the plaintiffs' treating physicians who also are Fresenius medical directors. Other courts have interpreted HIPAA to prohibit ex parte interviews of plaintiffs' treating physicians by defense counsel “in the absence of strict compliance with HIPAA,” the plaintiffs said.

Massachusetts law also would bar ex parte interviews by the defense because of its recognition of the physician-patient privilege, the plaintiffs said. The federal multidistrict litigation is pending in Massachusetts federal court.

“Given the close, proprietary and pecuniary relationship between the medical directors and Fresenius, the risks associated with permitted ex parte contacts between the defendant and a plaintiff's physician are increased rather than decreased,” the plaintiffs said. “These risks include over-sharing (even inadvertently) of confidential medical information.”

The ex parte contacts also would increase the risk of collusion and influence between the defendant and its medical contractors, the plaintiffs added.

The plaintiffs allege they were severely hurt or killed because of defective dialysis products, GranuFlo or NaturaLyte, made by Fresenius. GranuFlo and NaturaLyte are a component of dialysate, which maintains the proper balance of acid and base in patients' blood when they are undergoing hemodialysis, a treatment for patients with advanced renal disease. But the powders cause unsafe changes in the blood pH, according to the plaintiffs. ' Amaris Elliott-Engel, Law.com.

A 'Scandalous' Assemblage

A class action settlement before the U.S. Court of Appeals for the Seventh Circuit appeals panel was a “scandalous” assemblage of conflicts of interest, cozy relationships, dubious calculations, ethical wrongdoing and judicial inattention, that, in the end, amounted to a decidedly raw deal for the consumers suing Pella Corp. over alleged window defects.

That was what Seventh Circuit Judge Richard Posner concluded about the proposed settlement in Eubank v. Pella Corp., an eight-year-old dispute, that Posner and two fellow judges threw out in June.

“The district court approved a class action settlement that is inequitable ' even scandalous,” Posner wrote on behalf of the three-judge panel, referring to U.S. District Court for the Northern District of Illinois. “Class counsel sold out the class.”

The tangle of problems began, according to the opinion, with the selection of dentist Leonard Saltzman as the sole named plaintiff in the suit, which claimed Pella's ProLine casement windows had a design defect that allowed water to penetrate and damage the windows' frames.

The case, Posner wrote, dripped impropriety and conflict of interest. The lead class counsel was Saltzman's son-in-law, Paul M. Weiss of Chicago's Complex Litigation Group, the opinion says. Saltzman's daughter, Jamie Weiss, also a lawyer, is a partner in her husband's firm. The couple are defendants in a lawsuit charging them with misappropriation of assets from their former firm, Freed & Weiss, which had served as class co-counsel in the Pella case. Illinois' attorney discipline commission has recommended Paul Weiss' suspension for 30 months for alleged sexual harassment and indecent behavior involving seven women.

Posner found a financial motive in the haste to reach a settlement. “Weiss may have been desperate to obtain a large attorney's fee in this case before his financial roof fell in on him,” Posner wrote.

Four other named plaintiffs were added to the case, joining Saltzman. But when the proposed settlement was presented to the district court, those four opposed it, while Saltzman embraced it. Paul Weiss replaced the objectors with four new plaintiffs, who supported the deal.

That deal was stacked in favor of the plaintiffs' attorneys and Pella, with the class members an afterthought, Posner wrote. The settlement called for the attorneys to receive $11 million up front, while the class members were to file complicated, 12-page claim forms and wait. Pella also agreed to pay immediately a $2 million advance to the lead class counsel ' money that Paul Weiss, embroiled in legal trouble, could well use, Posner wrote.

An estimate by the class counsel put the total available to the class members at $90 million, which U.S. District Judge James Zagel signed off on. Posner did his own calculations and came up with a sum, at the very most, of $22.5 million, but more likely $8.5 million. If correct, that would mean the attorneys would pocket at least half of the class' total settlement award, or far more, he wrote.

Posner faulted Zagel for, among other things, signing off on the settlement before the deadline for submitting claims had expired; for not kicking Saltzman and Paul Weiss off the case; for not disapproving whole sections of the proposed settlement; and for not demanding a fair and accurate accounting of the total award and its distribution.

“[A]lmost every danger sign in a class action settlement that our court and other courts have warned district judges to be on the lookout for was present in this case,” Posner wrote. “Most were not even mentioned by the district judge and those that were received a brushoff.”

The panel, which included circuit judges Ann Williams and John Tinder, reversed and remanded the case, and called for Weiss, Saltzman and Complex Litigation Group to be replaced, and the four original named plaintiffs reinstated. ' Lisa Hoffman, law.com.

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MA Superior Court Upholds Claims for Negligent and Fraudulent Misrepresentations

In Gentile v. Biogen Idec, Inc., 2014 Mass. Super. LEXIS 11 (Feb. 14, 2014), a patient who suffered from multiple sclerosis was prescribed an immunosuppressant drug manufactured by the defendants. While still on the medication, the patient died of progressive multifocal leukoencephalopathy (PML), a brain disease thought to be caused by immunosuppressant drugs such as the one she was taking. The administrator of the decedent's estate sued in Massachusetts Superior Court, alleging, among other things, that the drug was defectively designed, and that the defendants fraudulently concealed material facts about the drug's risks and negligently misrepresented the extent of those risks in the drug's labeling, consent forms and advertising. Before either defendant had been served, the out-of-state defendant removed the case to the United States District Court for the District of Massachusetts, but it remanded after concluding that 28 U.S.C. ' 1441(b) does not permit removal of a suit that properly joins a defendant citizen of the forum state until at least one defendant has been served.

The defendants then moved to dismiss the claims for negligent and fraudulent misrepresentation, arguing they had not been pled with particularity as required by Mass. R. Civ. P. 9(b). Specifically, the defendants argued that the plaintiff had not specified: 1) the exact statement(s) the defendants knew or should have known were false; 2) which defendants made the statement(s); and 3) the manner in which the decedent or her doctor relied on them. Rather, the plaintiff alleged only that the defendants, individually and collectively, concealed or misrepresented material facts so that some information or warnings about the drug's risks were never available to the decedent or her doctor, and that the decedent had relied on the defendants' express and implied warranties of safety as well as the drug's labeling, advertising and consent forms in deciding to undergo treatment.

The court first held that the heightened pleading standards of Rule 9(b) applied to both the intentional and negligent misrepresentation claims because both were based on allegations of fraudulent conduct. Notwithstanding the lack of specificity in the complaint, however, the court found that the allegations of all the alleged misrepresentations, taken together, were sufficient to meet the rule's standard with respect to the particular statements and speakers at issue. Moreover, it was not necessary to identify the particular statement(s) on which the decedent or her doctor relied, as “due to the ongoing misrepresentations alleged, a requirement that [plaintiff] directly specify which misrepresentations were relied upon would be impractical and not required under the Mass. R. Civ. P. 9(b) standard.” Accordingly, the court denied the defendants' motion. ' David R. Geiger, Foley Hoag LLP

Dialysis Product Plaintiffs Object to Doctor Interviews

Plaintiffs who allege they were hurt or killed because of defective dialysis products are protesting the request by a large chain of dialysis clinics to conduct ex parte interviews with medical directors who work as independent contractors at the defendant's outpatient clinics. [Editor's Note: For more on ex parte interviews, see the Practice Tip article, infra.]Defendant Fresenius Medical Care Holdings Inc. has two lines of business: It makes dialysis machines, artificial kidneys and dialysis solutions; and it provides dialysis at outpatient facilities and in at-home programs.

“Fresenius asks, as though it were innocuous, for an order allowing it to speak to these independent contractor medical directors about any and all topics ' including individual patients and their medical treatment,” the plaintiffs wrote. “In so doing, Fresenius thwarts established and efficient discovery procedures and jeopardizes both the doctor-patient relationship and the confidentiality of health information by requiring some plaintiffs in this litigation ' those unlucky enough to have a treating doctor also serve a Fresenius medical director ' to waive their rights.”

The parties are negotiating a discovery order to allow the exchange of patient medical records under HIPPA, but Fresenius has sought an order allowing the company to have ex parte contact with some of the plaintiffs' treating physicians who also are Fresenius medical directors. Other courts have interpreted HIPAA to prohibit ex parte interviews of plaintiffs' treating physicians by defense counsel “in the absence of strict compliance with HIPAA,” the plaintiffs said.

Massachusetts law also would bar ex parte interviews by the defense because of its recognition of the physician-patient privilege, the plaintiffs said. The federal multidistrict litigation is pending in Massachusetts federal court.

“Given the close, proprietary and pecuniary relationship between the medical directors and Fresenius, the risks associated with permitted ex parte contacts between the defendant and a plaintiff's physician are increased rather than decreased,” the plaintiffs said. “These risks include over-sharing (even inadvertently) of confidential medical information.”

The ex parte contacts also would increase the risk of collusion and influence between the defendant and its medical contractors, the plaintiffs added.

The plaintiffs allege they were severely hurt or killed because of defective dialysis products, GranuFlo or NaturaLyte, made by Fresenius. GranuFlo and NaturaLyte are a component of dialysate, which maintains the proper balance of acid and base in patients' blood when they are undergoing hemodialysis, a treatment for patients with advanced renal disease. But the powders cause unsafe changes in the blood pH, according to the plaintiffs. ' Amaris Elliott-Engel, Law.com.

A 'Scandalous' Assemblage

A class action settlement before the U.S. Court of Appeals for the Seventh Circuit appeals panel was a “scandalous” assemblage of conflicts of interest, cozy relationships, dubious calculations, ethical wrongdoing and judicial inattention, that, in the end, amounted to a decidedly raw deal for the consumers suing Pella Corp. over alleged window defects.

That was what Seventh Circuit Judge Richard Posner concluded about the proposed settlement in Eubank v. Pella Corp., an eight-year-old dispute, that Posner and two fellow judges threw out in June.

“The district court approved a class action settlement that is inequitable ' even scandalous,” Posner wrote on behalf of the three-judge panel, referring to U.S. District Court for the Northern District of Illinois. “Class counsel sold out the class.”

The tangle of problems began, according to the opinion, with the selection of dentist Leonard Saltzman as the sole named plaintiff in the suit, which claimed Pella's ProLine casement windows had a design defect that allowed water to penetrate and damage the windows' frames.

The case, Posner wrote, dripped impropriety and conflict of interest. The lead class counsel was Saltzman's son-in-law, Paul M. Weiss of Chicago's Complex Litigation Group, the opinion says. Saltzman's daughter, Jamie Weiss, also a lawyer, is a partner in her husband's firm. The couple are defendants in a lawsuit charging them with misappropriation of assets from their former firm, Freed & Weiss, which had served as class co-counsel in the Pella case. Illinois' attorney discipline commission has recommended Paul Weiss' suspension for 30 months for alleged sexual harassment and indecent behavior involving seven women.

Posner found a financial motive in the haste to reach a settlement. “Weiss may have been desperate to obtain a large attorney's fee in this case before his financial roof fell in on him,” Posner wrote.

Four other named plaintiffs were added to the case, joining Saltzman. But when the proposed settlement was presented to the district court, those four opposed it, while Saltzman embraced it. Paul Weiss replaced the objectors with four new plaintiffs, who supported the deal.

That deal was stacked in favor of the plaintiffs' attorneys and Pella, with the class members an afterthought, Posner wrote. The settlement called for the attorneys to receive $11 million up front, while the class members were to file complicated, 12-page claim forms and wait. Pella also agreed to pay immediately a $2 million advance to the lead class counsel ' money that Paul Weiss, embroiled in legal trouble, could well use, Posner wrote.

An estimate by the class counsel put the total available to the class members at $90 million, which U.S. District Judge James Zagel signed off on. Posner did his own calculations and came up with a sum, at the very most, of $22.5 million, but more likely $8.5 million. If correct, that would mean the attorneys would pocket at least half of the class' total settlement award, or far more, he wrote.

Posner faulted Zagel for, among other things, signing off on the settlement before the deadline for submitting claims had expired; for not kicking Saltzman and Paul Weiss off the case; for not disapproving whole sections of the proposed settlement; and for not demanding a fair and accurate accounting of the total award and its distribution.

“[A]lmost every danger sign in a class action settlement that our court and other courts have warned district judges to be on the lookout for was present in this case,” Posner wrote. “Most were not even mentioned by the district judge and those that were received a brushoff.”

The panel, which included circuit judges Ann Williams and John Tinder, reversed and remanded the case, and called for Weiss, Saltzman and Complex Litigation Group to be replaced, and the four original named plaintiffs reinstated. ' Lisa Hoffman, law.com.

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