Rivera v. Wyeth-Ayerst Laboratories

• Decision Date: 15 February 2002
• Docket Number: No. 01-40122.,01-40122.
• Citation: 283 F.3d 315
• Parties: Elizabeth RIVERA; Arkansas Carpenters Health and Welfare Fund, on Behalf of Themselves and Others Similarly Situated, Plaintiffs-Appellees, v. WYETH-AYERST LABORATORIES, a Division of American Home Products Corporation; American Home Products Corporation, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

283 F.3d 315

Elizabeth RIVERA; Arkansas Carpenters Health and Welfare Fund, on Behalf of Themselves and Others Similarly Situated, Plaintiffs-Appellees, v. WYETH-AYERST LABORATORIES, a Division of American Home Products Corporation; American Home Products Corporation, Defendants-Appellants.

No. 01-40122.

United States Court of Appeals, Fifth Circuit.

February 15, 2002.

Arthur Sadin, Provost, Umphrey, Youngdahl & Sadin, Friendswood, TX, for Plaintiffs-Appellees.

Michael A. Lee (argued), Neal Stuart Manne, Susman Godfrey, Houston, TX, for Arkansas Carpenters Health and Welfare Fund.

Harvey Lee Kaplan (argued), Michael Lee Koon, Shana J. Long, Shook, Hardy & Bacon, Kansas City, MO, Michael R. Klatt, Susan Elizabeth Burnett, Clark, Thomas & Winters, Austin, TX, for Defendants-Appellants.

Appeal from the United States District Court for the Southern District of Texas.

Before SMITH and EMILIO M. GARZA, Circuit Judges, and CUMMINGS,^* District Judge.

JERRY E. SMITH, Circuit Judge:

Pursuant to FED.R.CIV.P. 23(f), defendants Wyeth-Ayerst Laboratories ("Wyeth") and American Home Products Corporation appeal the certification of a nationwide class of drug purchasers and their insurance companies. Because we conclude that this suit does not present a justiciable case or controversy under Article III of the Constitution, we reverse and render a judgment of dismissal.

I.

In July 1997, Wyeth began distributing Duract, a non-steroidal anti-inflammatory drug ("NSAID") prescribed for short-term management of acute pain. Although all NSAID's carry certain risks of liver and gastrointestinal damage, clinical trials revealed that Duract had additional negative effects. Wyeth included a package insert in each box of Duract detailing these dangers, reporting the results of the clinical trials, recommending Duract be used for only short periods ("generally less than ten days"), and warning that Duract may not be appropriate for those with preexisting liver conditions. The Food and Drug Administration ("FDA") approved Duract, its labeling, and its package insert.

In December 1997, Wyeth received three reports of liver failure by patients who had taken Duract for long-term relief without undergoing liver testing. In February 1998, after receiving FDA approval, Wyeth issued a new, revised package insert reporting these cases of liver failure and reemphasizing that Duract was intended "only for the short term (10 days or less)." After receiving new reports of liver failure among long term users, Wyeth voluntarily withdrew Duract from the market in June 1998.

Wyeth explained that of the twelve patients injured by Duract, eleven had taken the drug for over ten days, and one had preexisting liver disease. Wyeth stated that because no change in Duract's package insert could guarantee physicians would stop prescribing the drug for long-term use, it was withdrawing Duract from the market. Wyeth established a program to refund Duract users for any unused portion of their prescription.

II.

Elizabeth Rivera and the Arkansas Carpenters Health and Welfare Fund (the "Fund") filed this nationwide class action suit. Rivera seeks to represent all patients who were prescribed, had purchased, and had ingested Duract but suffered no physical or emotional¹ injury. In fact, the class explicitly excludes any patients who have been injured by Duract. Nor do plaintiffs claim Duract was ineffective as a pain killer or has any future health consequences.

Although the class includes citizens of all fifty states and the District of Columbia, plaintiffs state their complaint under Texas law. They allege that Wyeth failed to warn of Duract's dangers and that Duract was defective in violation of (1) the Texas Deceptive Trade Practices Act ("DTPA"), TEX. BUS. & COM.CODE §§ 17.50, 17.46 (Vernon Supp.1998), (2) the implied warranty of merchantability, TEX. BUS. & COM.CODE § 2.314(a) (Vernon 1994), and (3) common law unjust enrichment, and thus Wyeth owes them economic damages. The Fund asserts a derivative claim: It seeks to represent all third-party payers who have reimbursed these patients for Duract.

Wyeth asked the district court to deny the motion to certify the class on the pleadings or, in the alternative, to allow class discovery and an evidentiary hearing. The plaintiffs agreed that discovery would be appropriate; accordingly, on November 28, 2000, the parties submitted a proposed discovery plan to the district court. That same day, despite the plaintiffs' concession in favor of discovery, the court denied Wyeth's request for discovery and an evidentiary hearing and certified the class under FED.R.CIV.P. 23(b).²

Even though FED.R.CIV.P. 26(d) prohibits discovery and evidentiary hearings in advance of the pretrial conference, and the pretrial conference had been held only thirteen days earlier, the district court rebuked Wyeth for not having pursued discovery over the past four months and decided it could certify the class without any discovery. Accordingly, although the record contained no evidence on Rivera's purchase or use of Duract or on the Fund's reimbursement of Duract patients, the court held that the claims of Rivera and the Fund "appear to be typical" of the class members.

Similarly, the district court dismissed Wyeth's argument that variations in the fifty states' laws would swamp any common issues. There was no need to analyze different states' laws or even to decide which laws applied, the district court held, because plaintiffs had promised eventually to provide a workable subclass plan that would solve any problems.

Wyeth timely filed, and this court granted, an application for interlocutory appeal pursuant to rule 23(f). Apparently estimating that their odds on appeal were bleak, plaintiffs moved the district court to issue an order "expressing the court's intent to vacate the class certification order and to reconsider the class certification issue upon remand." The plaintiffs noted that the district court had erred in failing to conduct a choice-of-law analysis and failing to demand plaintiffs submit a subclass plan before certification; plaintiffs requested the court to assure that it would do so on remand; nonetheless, the court denied the motion on the stated ground of lack of jurisdiction.

III.

Rarely on appeal does the appellee concede that the district court's order is so fatally flawed that it cannot stand. Yet, at oral argument, the attorney for Rivera and the Fund did just that, admitting that only a "feeling of obligation to support the district court order" moved him to argue when it was "crystal clear" we would have to vacate and remand.³ Counsel was only half right, however: Because this suit does not even present a justiciable case or controversy under Article III, we vacate and render a judgment of dismissal.

IV.

Article III limits the judicial power of the federal courts to "Cases" and "Controversies" but does not define those terms. Instead, "the Constitution's central mechanism of separation of powers depends largely upon common understanding of what activities are appropriate to legislatures, to executives, and to courts." Lujan v. Defenders of Wildlife, 504 U.S. 555, 559-60, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). An "essential and unchanging part" of this common understanding is the doctrine of standing. Id. at 560, 112 S.Ct. 2130.

The "irreducible constitutional minimum of standing contains three elements": "[T]he plaintiff must have suffered an injury in fact," "there must be a causal connection between the injury and the conduct complained of," and "it must be likely ... that the injury will be redressed by a favorable decision." Id. at 560-61, 112 S.Ct. 2130 (internal quotations omitted).⁴ The plaintiffs, as the party invoking federal jurisdiction, bear the burden of establishing these elements. Steel Co. v. Citizens for a Better Env't, 523 U.S 83, 103, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998). Failure to establish any one deprives the federal courts of jurisdiction to hear the suit. Id.

The district court erred by not demanding such a showing before it certified the class.⁵ Had it done so, it would have found that plaintiffs had demonstrated neither injury nor causation.

A.

Even though the certification inquiry is more straightforward, we must decide standing first, because it determines the court's fundamental power even to hear the suit. Id. at 94, 118 S.Ct. 1003. The procedural posture of this case does not alter our conclusion.

Though rule 23(f) allows a party to appeal only the issue of class certification, "[s]tanding is an inherent prerequisite to the class certification inquiry." Bertulli v. Indep. Ass'n of Cont'l Pilots, 242 F.3d 290, 294 (5th Cir.2001). Accordingly, standing may — indeed must — be addressed even under the limits of a rule 23(f) appeal. Id.⁶

Standing is a question of law that we review de novo. Pederson v. La. State Univ., 213 F.3d 858, 869 (5th Cir.2000). We review for clear error all facts expressly or impliedly found by the district court. Id.

B.

To establish an injury in fact, plaintiffs must demonstrate "an invasion of a legally protected interest which is ... concrete and particularized." Defenders of Wildlife, 504 U.S. at 560, 112 S.Ct. 2130. Rivera's claim to injury runs something like this: Wyeth sold Duract; Rivera purchased and used Duract; Wyeth did not list enough warnings on Duract, and/or Duract was defective; other patients were injured by Duract; Rivera would like her money back. The plaintiffs do not claim Duract caused them physical or emotional injury, was ineffective as a pain killer, or has any future health consequences to users. Instead, they assert that their loss of cash is an "economic injury."

The plaintiffs never define this "economic injury," but, instead, spend most of their brief listing helpful suggestions on how a court could calculate damages. These arguments are relevant (if at all) to redressability, not injury. Merely asking...