Cottrell v. Laboratories

874 F.3d 154

Leonard COTTRELL; Sandra Henon; William Reeves; George Herman ; Simon Nazzal; Carol Freburger; Jack Liggett; Patricia Bough; Mack Brown; Dolores Gillespie; Deborah Harrington; Robert Ingino; Edward Rogers, Jr.; Deborah Rusignulolo; Dorothy Stokes ; Josephine Troccoli; Hurie Whitfield; Thomas Layloff; Carolyn Tanner ; Patsy Tate; John Sutton; Jesus Renteria ; Glendelia Franco; Nadine Lampkin, on behalf of themselves and all others similarly situated, Appellants

v.ALCON LABORATORIES; Alcon Research Ltd.; Falcon Pharmaceuticals Ltd.; Sandoz Inc.; Allergan Inc., RP; Allergan USA Inc.; Allergan Sales LLC; Pfizer Inc.; Valeant Pharmaceuticals International; Bausch & Lomb Inc.; Aton Pharma Inc.; Merck & Co Inc.; Merck Sharp & Dohme Corp.; Prasco LLC; Akorn Inc.

No. 16-2015.

United States Court of Appeals, Third Circuit.

Argued: January 24, 2017

Filed: October 18, 2017

LEAH M. NICHOLLS, ESQ. [ARGUED], Public Justice, P.C., 1620 L. St. N.W., Suite 630, Washington, DC 20036, RICHARD S. CORNFELD, ESQ., Law Office of Richard S. Cornfeld, 1010 Market St., Suite 1720, St. Louis, MO 63101, JOHN G. SIMON, ESQ., KEVIN M. CARNIE, JR., ESQ., The Simon Law Firm, P.C., 800 Market St., Suite 1700, St. Louis, MO 63101, JEFFREY W. HERRMANN, ESQ., Cohn Lifland Pearlman Herrmann & Knopf LLP, Park 80 West-Plaza One, 250 Pehle Ave., Suite 401, Saddle Brook, NJ 07663, BRIAN S. WOLFMAN, ESQ., 600 New Jersey Ave. N.W., Suite 312, Washington, DC 20001, Counsel for Appellants.

ROBYN E. BLADOW, ESQ. [ARGUED], AUSTIN C. NORRIS, ESQ., Kirkland & Ellis LLP, 333 South Hope Street, 29th Floor, Los Angeles, CA 90071, Counsel for Appellee Pfizer, Inc.

LIZA M. WALSH, ESQ., ELEONORE OFOSU-ANTWI, ESQ., Walsh Pizzi O'Reilly & Falanga LLP, One Riverfront Plaza, 1037 Raymond Boulevard, Suite 600, Newark, NJ 07102, Counsel for Appellees

Pfizer, Inc., Valeant Pharmaceuticals International, Inc., Bausch & Lomb Incorporated, and Aton Pharma, Inc.

ROGER B. KAPLAN, ESQ., Greenberg Traurig, LLP, 200 Park Avenue, Florham Park, NJ 07932, GREGORY E. OSTFELD, ESQ., Greenberg Traurig, LLP, 77 W. Wacker Drive, Suite 3100, Chicago, IL 60601, LORI G. COHEN, ESQ., Greenberg Traurig, LLP, 3333 Piemont Road NE, Suite 2500, Atlanta, GA 30305, Counsel for Appellees Alcon Laboratories, Inc., Alcon Research Ltd., Sandoz Inc. and Falcon Pharmaceuticals, Ltd.

CHARLES B. CASPER, ESQ., Montgomery McCracken Walker & Rhoads, LLP, LibertyView, Suite 600, 457 Haddonfield Road, Cherry Hill, NJ 08002, STEPHEN G. STRAUSS, ESQ., TIMOTHY J. HASKEN, ESQ., Bryan Cave LLP, 211 N. Broadway, Suite 3600, St. Louis, MO 63102, Counsel for Appellees Merck & Co., Inc., Merck Sharp & Dohme Corp., and Prasco, LLC.

ROBERT J. MCGUIRL, ESQ., Law Offices Of Robert J. McGuirl, LLC, 295 Spring Valley Road, Park Ridge, NJ 07656, Counsel for Appellees Allergan, Inc., Allergan USA, Inc., and Allergan Sales, LLC

JAMES P. MUEHLBERGER, ESQ., LORI A. MCGRODER, ESQ., Shook Hardy & Bacon LLP, 2555 Grand Blvd., Kansas City, MO 64108, Counsel for Appellees Allergan, Inc., Allergan USA, Inc., Allergan Sales, LLC, Valeant Pharmaceuticals International, Inc., Bausch & Lomb Incorporated, and Aton Pharma, Inc.

WALTER H. SWAYZE, III, ESQ., MEGAN E. GROSSMAN, ESQ., KYLE G. EVERLY, ESQ., Segal McCambridge Singer & Mahoney, Ltd., 15 Exchange Place, Suite 1020, Jersey City, NJ 07302, JOHN M. KILROY, JR., ESQ., Polsinelli PC, 900 W. 48th Place, Suite 900, Kansas City, MO 64112, J. STANTON HILL, ESQ., Polsinelli PC, 1355 Peachtree Street, N.E., Suite 500, Atlanta, GA 30309, Counsel for Appellee Akorn, Inc.

JULIE NEPVEU, ESQ., AARP Foundation Litigation, Room B4-245, 601 E Street, N.W., Washington, DC 20049, Counsel for Amicus AARP & AARP Foundation, in support of Appellants

RICHARD A. DEAN, ESQ., Tucker Ellis, 950 Main Avenue, Suite 1100, Cleveland, OH 44113, Daniel J. Kelly, ESQ., Tucker Ellis LLP, One Market Plaza, Steuart Tower Suite 700, San Francisco, CA 94105, Benjamin C. Sasse, ESQ., Tucker Ellis LLP, 950 Main Ave., Suite 1100, Cleveland, OH 44113, Counsel for Amicus Generic Pharmaceutical Association, in support of Appellees

JEFFREY S. BUCHOLTZ, ESQ., PAUL A. MEZZINA, ESQ., King & Spalding, 1700 Pennsylvania Avenue, N.W., Suite 200, Washington, DC 20006, Counsel for Amicus Chamber of Commerce of the United States of America, American Tort Reform Association, Pharmaceutical Research and Manufacturers of America, and National Association of Manufacturers in support of Appellees

ANITA HOTCHKISS, ESQ., Goldberg Segalla, 902 Carnegie Center, Suite 100, Princeton, NJ 08540, Counsel for Amicus Product Liability Advisory Council, in support of Appellees

Michael J. Quirk, ESQ., Williams Cuker Berezofsky, LLC, 1515 Market Street, Suite 1300, Philadelphia PA 19102-1929, National Association of Consumer Advocates

Before: CHAGARES, RESTREPO, and^* ROTH, Circuit Judges

OPINION OF THE COURT

RESTREPO, Circuit Judge

In this putative class action, consumers of prescription eye medication allege that manufacturers and distributors of the medication packaged it in such a way that forced them to waste it, violating the consumer protection statutes of their home states. The District Court dismissed the entire action for lack of jurisdiction, finding the consumers' allegations of injury in fact insufficient to confer standing. For the reasons that follow, we will reverse the dismissal, and remand the case for further consideration.

I¹

Defendants are manufacturers and distributors of generic and brand-name prescription eye drop medications that are approved by the Food and Drug Administration ("FDA") to treat serious medical conditions such as glaucoma, a leading cause of blindness.² Defendants sell these prescription medications in fluid form and package the fluid in plastic bottles. Bottles are pre-packaged with a fixed volume of medication (e.g., 5.0 mL) sold at set prices. Labeling on the bottles does not indicate how many doses or days of treatment a patient will be able to extract from the bottle.

Medication is dispensed from the plastic bottles into patients' eyes in drop form. The dimensions of the bottle's dropper tip dictate the size of the drop dispensed from that bottle. In effect, the larger the bottle dropper tip, the larger the drop dispensed. There is no reasonable way for a patient to instill less than one full drop into his or her eye.

A plethora of scientific research conducted over the last four decades has examined the drop size of Defendants' medications; some of the studies conducted were, in fact, sponsored and published by Defendants. According to these studies, a normal adult's inferior fornix—the area between the eye and the lower eyelid—has a capacity of approximately 7 to 10 microliters ("µLs") of fluid.³ If a drop of medication exceeding that capacity is placed into an adult patient's eye, excess medication is expelled. Expelled medication may run down a patient's cheek, providing no pharmaceutical benefit to the patient whatsoever. This medication is "entirely wasted" by the patient. App. 182. Expelled medication also may flow into a patient's tear ducts and move into his or her bloodstream. Medication entering a patient's bloodstream may increase a patient's risk of experiencing certain harmful systemic side effects.

These studies conclude that eye drops should be 5 to 15 µLs in order to maximize the amount of the medication entering the inner eye—the site of action for the medication. Drop sizes within this range minimize overflow "waste" and also minimize the risk of side effects.

Despite the scientific consensus on drop size, all of Defendants' products at issue emit drops that are considerably larger than 15 µLs. In fact, a 2008 study showed that each Defendant's drop size was more than two to three times the 15 µL maximum recommended size. Several Defendants sold products with drop sizes of 50 µL. To put these data in perspective, at least half of every drop of medication dispensed from any one of Defendants' product bottles goes to waste on a patient, and may put the patient at risk of side effects.

Plaintiffs in this litigation are individuals who paid for Defendants' eye drop medication. They allege that Defendants have control over the design and dimensions of the bottle dropper tip, and thus could reduce the size of drops emitted from their product bottles, but have chosen not to do so. Plaintiffs do not purport to have personal knowledge as to why no defendant has reduced their products' drop sizes. However, Plaintiffs include in the Amended Complaint allegations that senior executives at Defendant Alcon explained to a consultant working with them that they were unwilling to reduce drop sizes because if they did, the company "would sell less product and make less money." App. 244.

Plaintiffs aver that Defendants' practices of selling medication in bottles that emit such large drops caused them "substantial" economic injury. App. 214. Specifically, Plaintiffs allege, "If the sizes of Defendants' prescription eye drops were limited to the maximum effective size of 15 µL ... the medication in the bottles would last longer and [Plaintiffs] would spend substantially less on their therapy than they do with larger, substantially wasted, eye drops." App. 214. Plaintiffs illustrated this point in their Amended Complaint with an example provided in a 2008 scientific study:

[T]he average drop size for Allergan's glaucoma drug Alphagan P... in a 5 mL bottle was 43 µL.... At the recommended dose of one drop in each affected eye three times daily, a 5 mL bottle would last a patient with bilateral glaucoma 20 days. That patient would go through 18.25 bottles in a year. In July 2013, a 5 mL bottle of Alphagan P... cost $104.99. A year's course of treatment would therefore cost approximately $1,915. However, approximately 65% of the medication, the amount over 15 µL, would be wasted. If the drops had been only 15 µL, the patient would have needed only 6.46 bottles a year, or 7.0 bottles if the drops had been 16 µL.... The unneeded

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