Settling a case may be the culmination of years of litigation or a strategic move at the outset to avoid litigation costs. Many times, settlement occurs at some point in between. Regardless of when the settlement occurs, it’s important to focus on certain considerations that should be part of any settlement process and the eventual agreement. Consideration of the points identified below will help ensure the creation of the most favorable agreement possible.
Term Sheets and Mediator’s Proposals
We’ve all been there. It’s the end of a long day at mediation and finally you reach a settlement. After having spent many hours together, everyone is eager to leave. Resist this temptation. Why? Buyer’s remorse. Don’t give the other side the opportunity to back out of the deal. First, reduce the key terms to writing in a term sheet. Second, make sure that any term sheet or mediator’s proposal includes any “magic language” necessary in your jurisdiction to make the term sheet or mediator’s proposal enforceable. For example, in California, Evidence Code section 1123 provides that a written settlement agreement prepared in the course of mediation may be considered admissible if signed by the settling parties and if the agreement provides that it is enforceable or binding or words to that effect. See Stewart v. Preston Pipeline Inc., 134 Cal. App. 4th 1565, 1578 (2005) (finding that beyond the necessary signatures, the parties stated within their confidential settlement agreement that it was a full and final settlement intended to be enforceable, thereby satisfying the requirements of § 1123).
Additionally, if you are going to be presented with a mediator’s proposal, be proactive and tell the mediator that any mediator’s proposal must contain language making it enforceable, admissible, and binding if accepted and signed by the settling parties. Read more ›
The New Jersey Supreme Court ruled on August 22 that consumers’ state-law claims that manufacturers of a generic Reglan, a heartburn medication, did not adequately warn about its risks are not preempted by federal law.
Under the Federal Food, Drug, and Cosmetic Act, manufacturers of brand-name drugs must seek approval from the FDA to market the drug and must prove that it is safe and effective and that its proposed label is accurate and adequate. Generic drug manufacturers, however, face a more streamlined process: they can gain FDA approval of a generic drug simply by showing it is identical in active ingredients, safety, and efficacy to a brand-name drug that has already been approved. Similarly, the brand-name manufacturer is responsible for the accuracy and adequacy of a drug’s labeling for new drug applications and updated labeling, while generic manufacturers are responsible for ensuring that the labeling is the same as the labeling approved for the brand-name drug.
When it comes to matching an updated label, generic manufacturers are required to update their labeling at the “very earliest time possible.” Generic manufacturers must therefore routinely monitor the FDA’s website for information on changes in labeling and/or obtain the information in other ways, such as from the FOIA staff at the FDA. Read more ›
The Food and Drug Administration released draft guidance last week revealing its intent to better track medical devices, from pacemakers to condoms, through an amendment to its 2013 “UDI (unique device identifier) Rule”. The draft guidance is intended to assist both labelers and FDA-accredited issuing agencies to better ensure the UDIs are in compliance with the Rule. The UDI Rule established a tracking system to adequately identify devices through distribution and use throughout the United States. Under 21 CFR 801.20, a UDI is required on the label and package of every medical device in commercial distribution in the United States (unless an exception or alternative applies). Read more ›
Virtually every day there are media reports regarding the introduction of driverless cars to mainstream consumers. As driverless cars rapidly accelerate from concept to commercialization, it is becoming increasingly apparent that technological refinements remain necessary and are ongoing in response to recent accidents.
For instance, earlier this year in Europe a driver of a Tesla operating in autopilot mode ran into the rear of a van stopped on the highway. Then again, in July of this year, a Tesla operating in autopilot mode crashed on a windy two lane road in Montana. While neither of those drivers were seriously injured, on May 7, 2016, a driver of a Tesla in autopilot mode was killed in Florida when his vehicle failed to stop in the path of a tractor trailer. A spokesperson for Tesla indicated that the car was unable to differentiate between the white side of the tractor trailer against the backdrop of a bright sky. This is the first reported fatality for any vehicle operating in a self-driving mode. Although the family of the driver has not sued Tesla, they have reportedly retained counsel who is investigating the crash. Read more ›
On July 8, 2016, the U.S. Food and Drug Administration released draft guidance amending the process for manufacturers to update labeling of generic drugs in situations where the reference drug labeling has been withdrawn for reasons other than safety or effectiveness.
The FDA generally requires a generic drug to have the same labeling as the reference drug at the time of approval. Moreover, all marketing application holders have an ongoing obligation to ensure that their product labeling is accurate, and not false or misleading. In particular, when new information becomes available that causes the labeling to be inaccurate or misleading, the application holder must update its labeling.
Where the reference drug is still on the market, the reference drug manufacturer frequently proposes changes to the labeling, and generic drug manufacturers are expected to update their labeling accordingly to reflect any approved relevant changes. While this process is fairly clear cut, the FDA admits there is confusion about what generic drug application holders must do to update labeling when the reference drug is off the market (for reasons other than safety or effectiveness). This draft guidance seeks to clarify that process. Read more ›
On May 11, 2016, President Barack Obama signed the Defend Trade Secrets Act of 2016 (the “DTSA”), which provides a federal civil cause of action to manufacturers for the misappropriation of trade secrets under the Economic Espionage Act. While the DTSA substantially mirrors the protections afforded under the Uniform Trade Secrets Act, currently adopted by 48 states, the DTSA gives manufacturers a choice of whether to file in state or federal court. Importantly, the DTSA provides manufacturers with a new avenue to address a wide range of trade secret issues.
For manufacturing companies with trade secrets “related to a product or service used in, or intended for use in, interstate or foreign commerce,” the DTSA provides, for example:
- Federal Civil Action. The DTSA creates a federal civil cause of action, giving original jurisdiction to United States District Courts. This will allow companies to file in or move most trade secret litigation to federal court. The original federal jurisdiction conferred by the DTSA will, in turn, invariably include federal supplemental jurisdiction for claims for breach of contract, related common law claims, and state statutory claims. Importantly, similar to federal employment laws, the DTSA does not supersede state trade secret laws.
- Seizure of Property. Unlike any of the pre-existing state laws, the DTSA includes a provision that permits the Court to issue an order, upon ex parte application in “extraordinary circumstances,” seizing property to protect against improper dissemination of trade secrets. Interestingly, the DTSA permits such an order only if the moving party has not publicized the requested seizure and includes imbedded confidentiality protections that protect seized information from public disclosure. If granted, the Court is required to schedule a seizure hearing and the moving party will be required to provide security in an amount to be determined by the Court for the payment of any possible damages suffered as the result of a wrongful or excessive seizure. This provision of one of the more robust features of the new law, permitting, for example, the seizure of computer hardware and software that has been used for misappropriation without giving notice to the party against whom the order is issued, and thereby decreasing the risk of spoliation of evidence. This can be an important weapon in dealing with ever-increasing cyber-threats. Read more ›
This week, on June 14, 2016, the FDA issued a final ruling revising its medical device and certain biological product labeling regulations to allow, for the first time, manufacturers to use graphical representations of information on its labeling without adjacent explanatory text (known as “stand-alone symbols”). The new ruling goes into effect on September 13, 2016.
The ruling brings the labeling regulations in line with the current use of symbols on labels in European and other foreign markets. Thus, in the view of the FDA, this ruling seeks to “harmonize” the U.S. device labeling requirements for symbols with international regulatory requirements.
In addition to increasing consistency between U.S. device labeling requirements and international requirements, the FDA touts that, by allowing the use of stand-alone symbols, medical device manufacturers will experience a positive net benefit over time in the form of a reduction in costs for the design and redesign of labeling for medical devices currently marketed.
Specifically, the FDA estimated the total benefits annualized over 20 years to be between $7.7 and $25.5 million. Of course, the switch to stand-alone symbols will require some up front and recurring costs to redesign the labeling and to create an accompanying glossary (more on this below), which the FDA estimates at total annualized amount of $1.1 to $3.2 million over 20 years. Thus, the total annualized net benefit to medical device manufacturers stands to be in the range of $6.6 to $22.3 million. Read more ›
Motor vehicle design continues to make significant technological leaps incorporating a number of automated features, with many manufacturers pioneering the concept of driverless cars. What was once the stuff of science fiction is making significant headway towards full-scale production and commercialization. A recent study reveals that existing U.S. laws pose few barriers to adoption of autonomous vehicle technology – that is so long as manufacturers stick with traditional designs permitting human driver control override.
As is often the case with new technology, the pace of advancement has outpaced the U.S. government’s ability to fully regulate driverless technology. In order to sell a motor vehicle in the U.S. market, a vehicle manufacturer must certify that the vehicle meets the performance requirements specified in the Federal Motor Safety Standards, or FMVSS (see 49 U.S.C. 30115). Unfortunately, the FMVSS was initially drafted in 1966 and was developed with the assumption that vehicles subject to this regulation would be driven by a human driver. Understanding the need to revise the FMVSS to address the imminent commercialization of driverless cars, the U.S. Department of Transportation commissioned a study by the John A. Volpe National Transportation Systems Center (Volpe Center).
The focus of this study was to highlight standards in the current FMVSS that may create certification challenges for automated vehicle concepts. The Volpe team conducted two separate reviews of the FMVSS: one identified instances in the FMVSS where a “driver” was referenced, and the second review looked to identify current language in the FMVSS that could pose direct challenges to a range of automated vehicle concepts. Read more ›
Earlier this year Olympus Corp. (“Olympus”) announced that it would recall and redesign its TJF-Q180V duodenoscope following its link to deadly patient infections in the United States and abroad. This situation presents an important cautionary tale and one that is not strictly limited to medical device manufacturers.
A duodenoscope is a reusable medical device and is used in more than 500,000 procedures a year in the United States. It is a flexible, lighted tube that can be threaded through the mouth, throat and stomach to the top of the small intestine. Duodenoscopes are used in a specific procedure called an endoscopic retrograde cholangiopancretography or ERCP. The use of duodenoscopes provides an alternative to traditional surgery and can be used to drain fluids from pancreatic and biliary ducts which may be blocked by tumors, gallstones or other conditions.
The duodenoscope, unlike other gastric scopes, contains a hollow chamber which allows for the injection of contrast dye or the insertion of other instruments to obtain tissue samples. It also contains a moveable elevator part at the tip. This elevator changes the angle of the accessory existing in the accessory channel and allows it to access ducts to address problems with fluid drainage.
Keeping in mind that hindsight is 20/20, Olympus’ issues began in 2010 when Olympus modified the scope by redesigning them to seal a narrow internal channel in the hopes of keeping out blood and infectious materials. The challenge in cleaning and disinfecting the duodenoscope stems from the fact that some parts are very hard to clean. For example, the elevator portion of the device contains microscopic crevices that cannot be reached with a brush thereby permitting residual body fluids and debris to remain after cleaning and disinfection. And, as it would be later alleged, this closed channel design actually allowed bacteria to remain inside the device.
Read more ›
On April 19, 2016, the Third Circuit Court of Appeals issued its opinion on the issue of federal preemption in Sikkelee v. Precision Airmotive Corp. The sixty-one page opinion effectively narrowed the scope of federal preemption and held that aviation product liability claims are to be controlled by state tort law standards of care as opposed to federal standards of care. This opinion could expose aviation product manufacturers to potential liability, as well as the unpredictability of non-uniform standards across the states.
Sikkelee involved an airplane crash in July 2005, where the pilot David Sikkelee crashed his Cessna 172N aircraft shortly after taking off from the Transylvania County Airport in Brevard, North Carolina. Tragically, Mr. Sikkelee died as a result of serious injuries and burns suffered in the crash. Plaintiff Jill Sikkelee, the wife of David Sikkelee, alleged that the aircraft lost power and crashed as a result of a malfunction in the engine’s carburetor, which is designed to regulate the proper mixture of fuel and air that enters the engine’s cylinders.
As a result, Ms. Sikkelee filed suit in the Middle District of Pennsylvania in 2007 against seventeen defendants, asserting state law claims of strict liability, breach of warranty, negligence, misrepresentation, and concert of action. In 2010 the District Court granted the defendants’ motion for summary judgment holding that plaintiff’s state law claims, based on state law standards of care were preempted by federal standards of care. Plaintiff subsequently filed an amended complaint, continuing to assert state law claims, but also alleging numerous violations of FAA regulations. Read more ›