The Corpus Christi Court of Appeals recently held that the learned intermediary doctrine does not apply to a drug manufacturer that advertises its products to consumers.  In doing so, the court affirmed the plaintiff’s multi-million dollar judgment against the drug manufacturer.

The court’s opinion is rather lengthy and traces the origins of the learned intermediary doctrine in Texas.  Basically, the court found:

  • that the drug manufacturer has a duty to warn consumers about known dangers concerning its product;
  • the learned intermediary doctrine provides an alternate means of fulfilling this duty;
  • other court have recognized exceptions to the doctrine; and
  • the Restatement contemplates situations where the doctrine would not apply.

These factors, coupled with the drastic change by which drugs are marketed, led to this holding:

In sum, the premises underlying the doctrine are unpersuasive when considered in light of direct marketing to patients.  The situation presented is more similar to the recognized exceptions to the doctrine, where courts considering the issue have found it unreasonable to for a manufacturer to rely on an intermediary to convey a warning, given that direct advertising and changes in the provision of healthcare impact the doctor’s role and promote more active involvement by the patient.  Under these circumstances, we hold that when a pharmaceutical company directly markets to a patient, it must do so without fraudulently misrepresenting the risks associated with its product.

This opinion raises a number of questions.  One question is why the court considered the doctor’s role and responsibility diminished, as opposed to increased, in light of direct marketing of drugs to consumers.  The court relied in part on the fact that doctors spend less time with patients as a result of managed care to justify its holding.  Second, what is the impact of telling manufacturers that publishing some of the side effects, as opposed all conceivable side effects, constitutes fraud supporting punitive damages?   Are drug manufacturers better off publishing no side effects and leaving that information to doctors?  Is the public better off?  The court noted that the advertisement counseled consumers to consult with their healthcare provider, visit the website for more information, and stated that the advertisement should not be used as a substitute for talking to your doctor.

The court’s opinion in Centocor, Inc. v. Hamilton can be found at this link.

 

 

 

The case I blog about today reminds us of why it’s so critical to pay attention to appellate judgments.  As appellate practitioners, too often the first and only thing we study closely is the opinion, and errors in the appellate judgment go unnoticed.  To understand what happened here, I will start with a bit of history of the case.

In August of 2008, the Texas Supreme Court issued an opinion in Columbia Medical Center of Las Colinas, Inc. v. Hogue, in which the Court "affirm[ed] the award of actual damages and gross negligence damages", but "reverse[ed] the portion of the judgment awarding loss of inheritance damages."  The court’s majority opinion may be found at this link.  Apparently, the judgment issued the same day simply stated that the portion of the court of appeals’ judgment awarding loss of inheritance damages is reversed and the remaining portions of the court of appeals’ judgment were affirmed.   In short, the court rendered judgment and did not remand the case.  The Court’s online docket shows Columbia filed a motion for rehearing, but there’s no indication what complaints were made.

After the court of appeals mandate issued, a dispute arose between the parties regarding the (now affirmed) award of gross negligence damages.  Columbia argued that because the actual damages had been reduced, Texas Civil Practice and Remedies Code Section 41.008(b) required reduction of the punitive damages as well. 

In February of 2009, Columbia filed a motion with the Texas Supreme Court asking that the Court modify the mandate to reflect that punitive damages must be reduced (per statute).  The court denied the motion over a dissent authored by Justice Wainright (joined by Justices Hecht and Brister).  The dissent may be found at this link.

 

Continue Reading Using mandamus to fix errors in judgments

The Houston (14th) Court of Appeals recently held that a fee agreement that included a mandatory arbitration agreement does not violate public policy.  In this case, the attorney had included an arbitration clause requiring arbitration in Harris County under the Federal Arbitration Act (FAA)according to American Arbitration Association rules.  When the client brought suit against the attorneys for malpractice, the attorneys moved to compel arbtiration under the fee agreement.  The client made four arguments in response.  The court first rejected the argument that the Texas Arbitration Act (TAA) should apply, instead of the FAA, because the agreement specified the FAA.  The court also held in dicta that even if the TAA did apply, the arbitration clause was not invalid because the client’s malpractice claim was not a personal injury claim.  Further, the court rejected the argument that the clause was unconscionable based on the special relationship between attorney and client and opined that the matter was best left to the legislature.  In doing so, the court dismissed an opinion by the Texas Ethics Commission on the subject as "advisory."  Finally the court rejected the argument that including the clause in the fee agreement violated Disciplinary Rule 1.08(g) by "limiting the lawyer’s liability to a client for malpractice."  The court stated that "an agreement to arbitrate does not, in fact, limit a party’s liability; it merely denominates a procedure for determing that liability."  Accordingly, the court granted the writ of mandamus directing the trial court to grant the motion to compel arbitration.  The court’s opinion in In re Pham can be found here.

In dissent, Justice Seymore would have affirmed the trial court because the client was unaware of the clause and her counsel failed to fully explain it.  The dissent would hold attorneys to a higher standard by requring counsel to fully explain the consequences of agreeing to arbitration or "offer the prospective client the opportunity to seek advice from another source before signing" the agreement.  The dissent can be found here.

Practitioners will want to take note of this recent opinion from the Dallas Court of Appeals.

In a split decision in Davis v. Rupe, the court affirmed a sanctions order against an attorney based upon the trial court’s inherent power to sanction.  Because the trial court did not issue findings of fact to support its order (an omission that the dissenting judge looked on with disfavor), the court had to consider all grounds on which the trial court might have based its decision.   The majority recited three grounds, each of which provides some interesting dynamics.

Continue Reading The inherent power to sanction…

The Dallas Court of Appeals held that a temporary injunction order that does not on its face set the cause for trial on the merits or fix the amount of security to be given is void and must be dissolved.  In CLST Holdings, Inc. v. Red Oak Partners, LLC, the trial court granted Red Oak Partners’, Pinnacle Fund’s and Red Oak Fund’s application for injunctive relief to compel CLST to conduct its annual shareholder’s meeting.  CLST filed an interlocutory appeal to complain and sought emergency relief. 

The court of appeals observed that when an order grants injunctive relief that is effective immediately so that it operates during the pendency of the suit, it is a temporary injunction.  The Court further held that the rules of civil procedure are mandatory and require that the order "set the cause for trial on the merits and fix the amount of security to be given by the applicant."  Further, because Rule 683 is strictly construed as to its requirements, the court of appeals held that the order must be complete on its face, such that it is unacceptible to set a trial date in a separate document.  Here, the court granted CLST’s motion for emergency relief, declared the injunction void and ordered it dissolved.  The court’s opinion can be found at this link.

The Austin Court of Appeals recently held that a plaintiff’s notice of non-suit precludes a defendant from recovering attorney’s fees as prevailing party under a written agreement.  In this case, the plaintiffs bought a house from defendants under a standard-form sales contract promulgated by the Texas Real Estate Commission.   Plaintiffs brought suit against defendants for failing to disclose alleged defects to the house and sought attorney’s fees.  Defendants also requested attorney’s fees.  Section 17 of the contract provides that the prevailing party is entitled to attorney’s fees.  Plaintiffs nonsuited their claims prior to trial leaving only the defendant’s claim for attorney’s fees unresolved.  The trial court entered a take nothing judgment against the plaintiffs (despite the nonsuit) and awarded the defendants attorney’s fees.

The court of appeals reversed the take-nothing judgment against the plaintiffs because the trial court had no discretion but to dismiss the plaintiffs’ claims without prejudice once the notice of nonsuit was filed.  More importantly, however, the court reversed the attorney’s fees award and held that the defendants were not prevailing parties because they had not prevailed on the merits of any legal proceeding related to the contract.  The court of appeals stated:

Because the court did not adjudicate the [plaintiffs’] claims, and because the [defendants] brought no claim for relief on which they could prevail other than their request for attorney’s fees, the [defendants] did not prevail on any claims that would entitled them to attorney’s fees under the terms of contract.

The court of appeals also rejected defendants’ argument that allowing parties to nonsuit at the last minute to avoid liability for attorney’s fees was poor public policy.  The court distinguished a case in which a party sought statutory attorney’s fees after a partial nonsuit.  The court’s opinion in Fowler v. Epps can be found here.

The Dallas Court of Appeals granted a petition for writ of mandamus in In re Hunter, and ordered the trial court to specify the reasons for ordering a new trial.

The court’s opinion  relies upon the Texas Supreme Court’s opinion in In re Columbia Medical Center, 290 S.W.3d 204 (Tex. 2009), to support its holding.  Interestingly, the relator (Hunter) apparently argued that the trial court was required to vacate or set aside its order granting the new trial.  The court’s opinion does not state what reasoning the relator gave to support her argument.  However, the court of appeals cites the Texas Supreme Court’s opinion in In re United Scaffolding, Inc., for the proposition that vacating or setting aside the order is not required.  Without knowing what reason the relator gave to support her argument, it’s hard to know how United Scaffolding applies.  The opinion in In re United Scaffolding addressed whether the granting of the new trial was improper to the extent it was based upon a lack of sufficient evidence.  The supreme court stated that because it did not know the reason the new trial was granted, it could not grant relief other than requiring the trial court to specify the reasons.  This language almost implies that other relief could be granted in some circumstance.  Here, we don’t know if Hunter made the same argument as United Scaffolding, or if some new and different argument was presented and rejected.

The court’s opinion in In re Hunter may be found at this link.

The United States Supreme Court recently resolved a split of authority as to the citizenship of corporations for purposes of federal diversity jurisdiction.  Corporations are deemed citizens of the state in which they are incorporated and the state in which they have their "principal place of business."  In Hertz Corp. v. Friend, the Court adressed the interpretation of the phrase "prinicipal place of business."  The Court first discussed the various tests developed and applied by the courts of appeals focusing on the "nerve center" test  and "business activities" test.  In this case, the Ninth Circuit employed the business activities test and held that because Hertz did more business in California than any other state, it was a citizen of California.  The Supreme Court disagreed and held that 

“[P]rincipal place of business" is best read as referring to the place where a corporation’s officers direct, control, and coordinate the corporation’s activities. It is the place that Courts of Appeals have called the corporation’s “nerve center.”  And in practice it should normally be the place where the corporation maintains its headquarters . . .

The Court concluded by acknowledging that "seeming anomalies" will arise under this test, but the Court was willing to accept them "in an effort to find a single, more uniform, interpretation of the statutory phrase" and "in view of the necessity of having a clearer rule."  Thus, a corporation’s dual citizenship for diversity purposes consists of the state of incorportation and the state in which the headquarters is located.  Accordingly, the Court reversed the Ninth Circuit and remanded for reconsideration in light of this test.  The Supreme Court’s unaminous opinion can be found here. 

Supersedeas aficionados will want to take a look at the Austin Court of Appeals‘ opinion in Shook v. Walden.  The opinion gives a very thorough treatment of the parties’ arguments and analysis of the law relating to elements of damages that must be superseded.  To summarize, the court of appeals makes the following holdings:

  • Attorney’s fees awarded under Civil Practice and Remedies Code Chapter 38 are not compensatory damages that must be superseded under Civil Practice and Remedies Code Section 52.006.  The court distinguishes the Houston Fourteenth Court of Appeals decision in Clearview Props., L.P. v. Property Tex. SC One Corp., 228 S.W.3d 262 (Tex. App.–Houston [14th Dist.] 2007, pet. denied)
  • Prejudgment interest is a form of compensatory damages that must be superseded under Civil Practice and Remedies Code Section 52.006.
  • The clerk’s record for an appeal is not a cost awarded in the judgment and does not have to be superseded under Civil Practice and Remedies Code Section 52.006.
  • Post-judgment interest, including the post-judgment interest awarded on prejudgment interest, trial and post-judgment attorney’s fees, and costs must be superseded under Civil Practice and Remedies Code Section 52.006.
  • Post-judgment interest for one year’s estimated is adequate since the trial court has continuing jurisdiction to revisit the matter after a year has passed.

The court’s opinion may be found here.  The court’s opinion that post-judgment interest on post-judgment attorney’s fees must be superseded is interesting in light of the Fourteenth Court’s holding that post-judgment interest on post-judgment attorney’s fees should not begin to run until the appeals court judgment is final.  Protechnics Int’l, Inc. v. True-Tag Sys., Inc., 843 S.W.2d 734, 736 (Tex. App.– Houston [14th Dist.] 1992, no writ).

 

 

The Dallas Court of Appeals has held that "due process requires that a party be given the opportunity to present its arguments to a court before the court makes a ruling." (citing TRAP 52.4).

In In re Victor Enterprises, Inc., the trial court (Dallas County Court at Law No. 1) granted a petition for writ of mandamus without requesting a response from Victor Enterprises.  Victor Enterprises sought mandamus relief in the court of appeals.  Interestingly, the court of appeals requested a response from the real party in interest.  The real party in interest filed no response.  The court of appeals concluded that the trial court abused its discretion by granting the petition without requesting a response or allowing Victor Enterprises time to file a response.   The writ of mandamus was conditionally granted.  The court’s opinion may be found here.