Class Certification Denied in Vioxx Consumer Fraud Litigation
In one of a number of closely-watched decisions, a New Jersey trial court on Tuesday denied class certification in a pending case against Merck & Co.'s now-withdrawn Vioxx prescription drug.
The plaintiffs in Kleinman v. Merck & Co., Inc., Docket No. ATL-3954-04 (N.J. Super. Ct. Law Div. — March 17, 2009) alleged that Merck was aware of cardiovascular risks associated with Vioxx but failed to disclose this risk during the period that Vioxx was on the market, from 1999 to 2004. Plaintiffs claimed the evidence indicated Merck was aware of risks as early as 1996, that Merck engaged in a uniform deceptive marketing campaign to hide evidence of risks and that Merck's clinical studies were designed to minimize the evidence of risks in order to demonstrate the drug's safety. Plaintiffs sued under New Jersey's Consumer Fraud Act and for unjust enrichment, seeking both a nationwide class and a New Jersey-only class. (The court quickly dismissed the claim for unjust enrichment.)
Superior Court Judge Carol Higbee — who has been specially assigned to manage all Vioxx litigation in New Jersey — denied class certification, finding the plaintiffs could not establish predominance, typicality and superiority on their proposed Consumer Fraud Act claim.
Significantly, the Kleinman court found that even a New Jersey-only Consumer Fraud Act class could not be certified. Because the narrower New Jersey class could not be certified, the court did not reach the choice-of-law issues implicated in a broader nationwide class action.
New Jersey's Consumer Fraud Act requires proof of: (1) unlawful conduct; (2) an ascertainable loss; and (3) a causal relationship between the allegedly unlawful conduct and the purportedly ascertainable loss. Consumer fraud violations are divided broadly into three categories: affirmative misrepresentations, knowing omissions and regulatory violations. Prevailing plaintiffs under the Consumer Fraud Act are automatically entitled to treble damages and attorneys' fees.
Like its federal counterpart, New Jersey's class certification rule requires plaintiffs first demonstrate numerosity, commonality, typicality and adequacy. Additionally, plaintiffs seeking mainly compensatory damages must also demonstrate that common questions of law or fact predominate (predominance) and that a class action is superior to other modes of adjudication (superiority). Judge Higbee found that predominance, typicality and superiority were lacking.
Predominance. The court assumed plaintiffs could show that Merck knew of the risks of Vioxx and intentionally omitted and/or misrepresented them. The court also assumed plaintiffs could demonstrate an ascertainable loss on classwide proofs, though it might be a difficult issue. The problem, however, lay in establishing the CFA's required causal nexus. The court flatly rejected the plaintiff's prima facie causation argument, that Merck's withholding of information and the plaintiffs' purchase of Vioxx ipso facto established a causal nexus. The court found that the individual class representatives purchased Vioxx for varying reasons and would have each reacted differently even if the risk information about Vioxx had been known; indeed, one class representative said he would have continued to take Vioxx, while the other said she would not. Simply because a defendant acted uniformly does not mean that a court can assume all plaintiffs reacted uniformly. Numerous individual issues associated with why any particular plaintiff purchased Vioxx predominated, making it impossible to establish a causal nexus (i.e., causation) across the class. The individualized proofs required to show causation rendered class certification inappropriate.
Typicality. The court also found multiple differences in why each plaintiff took Vioxx and what benefit was received from the drug. As the court wrote, "Although each plaintiff took Vioxx and paid some price for the drug, the similarities between the two plaintiff[s] end there."
Superiority. Finally, based upon the problems associated with predominance and typicality, the court found that class adjudication was not superior. The court noted that denial of class certification may be the "death knell" for small loss CFA actions such as this one but nonetheless adhered to the class certification rule and case law. The court also took note of the fact that there have been differing outcomes in other individual Vioxx Consumer Fraud Act cases, including jury decisions in favor of both Merck and consumers. Consequently, certifying a class here would be unfair to defendant Merck (i.e., denial of due process), as it would have denied Merck the opportunity to present defenses tailored to each individual plaintiff's circumstances.
Kleinman represents an important decision for manufacturers and marketers of consumer products or services based or doing business in New Jersey, particularly those faced with the prospect of a Consumer Fraud Act class action lawsuit. The decision may help to stem the tide of class-action lawsuits against consumer product makers and service providers.
Buchanan Ingersoll & Rooney's attorneys have significant class action litigation experience. We have represented pharmaceutical wholesalers, chemical manufacturers, car makers and distributors, computer manufacturers, media outlets and resort operators in consumer fraud class actions in New Jersey state and federal courts, successfully defending class certification motions and consumer fraud claims.
The plaintiffs in Kleinman v. Merck & Co., Inc., Docket No. ATL-3954-04 (N.J. Super. Ct. Law Div. — March 17, 2009) alleged that Merck was aware of cardiovascular risks associated with Vioxx but failed to disclose this risk during the period that Vioxx was on the market, from 1999 to 2004. Plaintiffs claimed the evidence indicated Merck was aware of risks as early as 1996, that Merck engaged in a uniform deceptive marketing campaign to hide evidence of risks and that Merck's clinical studies were designed to minimize the evidence of risks in order to demonstrate the drug's safety. Plaintiffs sued under New Jersey's Consumer Fraud Act and for unjust enrichment, seeking both a nationwide class and a New Jersey-only class. (The court quickly dismissed the claim for unjust enrichment.)
Superior Court Judge Carol Higbee — who has been specially assigned to manage all Vioxx litigation in New Jersey — denied class certification, finding the plaintiffs could not establish predominance, typicality and superiority on their proposed Consumer Fraud Act claim.
Significantly, the Kleinman court found that even a New Jersey-only Consumer Fraud Act class could not be certified. Because the narrower New Jersey class could not be certified, the court did not reach the choice-of-law issues implicated in a broader nationwide class action.
New Jersey's Consumer Fraud Act requires proof of: (1) unlawful conduct; (2) an ascertainable loss; and (3) a causal relationship between the allegedly unlawful conduct and the purportedly ascertainable loss. Consumer fraud violations are divided broadly into three categories: affirmative misrepresentations, knowing omissions and regulatory violations. Prevailing plaintiffs under the Consumer Fraud Act are automatically entitled to treble damages and attorneys' fees.
Like its federal counterpart, New Jersey's class certification rule requires plaintiffs first demonstrate numerosity, commonality, typicality and adequacy. Additionally, plaintiffs seeking mainly compensatory damages must also demonstrate that common questions of law or fact predominate (predominance) and that a class action is superior to other modes of adjudication (superiority). Judge Higbee found that predominance, typicality and superiority were lacking.
Predominance. The court assumed plaintiffs could show that Merck knew of the risks of Vioxx and intentionally omitted and/or misrepresented them. The court also assumed plaintiffs could demonstrate an ascertainable loss on classwide proofs, though it might be a difficult issue. The problem, however, lay in establishing the CFA's required causal nexus. The court flatly rejected the plaintiff's prima facie causation argument, that Merck's withholding of information and the plaintiffs' purchase of Vioxx ipso facto established a causal nexus. The court found that the individual class representatives purchased Vioxx for varying reasons and would have each reacted differently even if the risk information about Vioxx had been known; indeed, one class representative said he would have continued to take Vioxx, while the other said she would not. Simply because a defendant acted uniformly does not mean that a court can assume all plaintiffs reacted uniformly. Numerous individual issues associated with why any particular plaintiff purchased Vioxx predominated, making it impossible to establish a causal nexus (i.e., causation) across the class. The individualized proofs required to show causation rendered class certification inappropriate.
Typicality. The court also found multiple differences in why each plaintiff took Vioxx and what benefit was received from the drug. As the court wrote, "Although each plaintiff took Vioxx and paid some price for the drug, the similarities between the two plaintiff[s] end there."
Superiority. Finally, based upon the problems associated with predominance and typicality, the court found that class adjudication was not superior. The court noted that denial of class certification may be the "death knell" for small loss CFA actions such as this one but nonetheless adhered to the class certification rule and case law. The court also took note of the fact that there have been differing outcomes in other individual Vioxx Consumer Fraud Act cases, including jury decisions in favor of both Merck and consumers. Consequently, certifying a class here would be unfair to defendant Merck (i.e., denial of due process), as it would have denied Merck the opportunity to present defenses tailored to each individual plaintiff's circumstances.
Kleinman represents an important decision for manufacturers and marketers of consumer products or services based or doing business in New Jersey, particularly those faced with the prospect of a Consumer Fraud Act class action lawsuit. The decision may help to stem the tide of class-action lawsuits against consumer product makers and service providers.
Buchanan Ingersoll & Rooney's attorneys have significant class action litigation experience. We have represented pharmaceutical wholesalers, chemical manufacturers, car makers and distributors, computer manufacturers, media outlets and resort operators in consumer fraud class actions in New Jersey state and federal courts, successfully defending class certification motions and consumer fraud claims.
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