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California attracts 'litigation tourists,' study finds

Legal Newsline, February 3, 2017

By: Tabitha Fleming

SAN FRANCISCO (Legal Newsline) – Most of the plaintiffs in product-liability cases filed against pharmaceutical manufacturers in California’s leading courts were brought by people who live in other states, finds a recent study by the Civil Justice Association of California.

The study examined cases in both the Los Angeles and the San Francisco superior courts from January 2010 to May 2016. The results showed that the majority of these cases against pharmaceutical companies were brought by so-called, “litigation tourists,” or plaintiffs who don’t actually reside in California.

In fact, 90 percent of the 25,503 litigants who were included in the study lived in other states and in more than 66 percent of the cases, there weren’t any California residents among the plaintiffs. In a legal opinion letter published by the Washington Legal Foundation, attorney Mark Behrens examined these findings and why California is an attractive state for those that bring litigation against pharmaceutical companies.

“California’s plaintiff-friendly reputation no doubt attracts many out-of-state plaintiffs,” Behrens wrote, citing the American Tort Reform Foundation’s annual labeling of the state as a “Judicial Hellhole.”According to Behrens, California’s legal system rewards plaintiffs with some of the nation’s largest verdicts in tort cases, especially pharmaceutical cases.

The CJAC study noted the fact that a relatively small number of law firms was responsible for bringing the majority of the lawsuits studied, with more than 90 percent of plaintiffs being represented by only 25 law firms.

“It appears that the law firms bringing most of the pharmaceutical product-liability cases in California are actively searching for plaintiffs in other states and funneling those filings to California,” wrote Behrens.

In fact, the firms that filed most of the pharmaceutical related liability cases plaintiffs were overwhelmingly from places other than California. Only one-third of the plaintiffs represented by the top 25 law firms were residents of the Golden State.

Behrens also points out that California is one of the six states where theFrye standard still remains the threshold for determining the validity of expert testimony.

“California is among a shrinking minority of states that has not adopted the federal Daubert standard for the admissibility of expert evidence,” writes Behrens.

The Daubert standard is used by a trial judge to assess whether a purported expert’s testimony is based on scientific reasoning or methodology. The standard stems from Daubert v. Merrell Dow Pharmaceuticals Inc. from 1993, and replaced the Frye standard.

California law also provides for “so-called innovator liability theory,” according to Behrens, which allows manufacturers of brand-name drugs to be held liable for injuries sustained by patients treated by generic versions of those medications manufactured by third parties. In addition, Behrens notes that California courts have no cap on punitive damages, unlike many other states in the nation.

Behrens points to the recent Bristol-Myers Squibb Co. v. Superior Courtcase that the California Supreme Court decided last August was appropriately heard in the state even though the case involved claims from mostly nonresidents and the company was based on the east coast.

The Delaware corporation with headquarters in New York argued that the California court lacked the required personal jurisdiction due to the fact that the product was neither manufactured, developed, labeled, packaged or approved in California.

Furthermore, the company argued, sales in the state of California amounted to only 1.1 percent of national sales. However, the California Supreme Court ruled that the marketing and distributing of the product within the state did, in fact, establish specific personal jurisdiction - a move that “effectively cemented California’s position as a plaintiff-friendly destination for pharmaceutical and other mass-tort litigation,” wrote Behrens in the legal opinion.

In conclusion, Behrens writes that the study by the CJAC, “exposes the pervasiveness of nonresident pharmaceutical filings in the Golden State.” It also, according to Behrens, provides a much-needed starting point for discussion of the impact that nonresident filings have on the state’s judiciary budget crisis, and how these cases may be delaying justice for California’s actual residents.