"Be careful what you wish for …"
The Iqbal and Twombly rulings made it significantly harder for plaintiff to plead claims, even when it was obvious that there was fire behind the smoke. Thus, the two decisions created incentives forplaintiff’s lawywers to stay in state court, and to work with state attorney generals able to issue subpoenas to get the internal corporate papers needed to satisfy the new, heightened pleading standards. When obtained, the papers can be compelling, and produce trial verdicts. Thus, outcomes such as the recent spectacular billion dollar jury verdict against Johnson & Johnson, described below in a new AmLaw post from Julie Triedman:
"Last week’s $1.1 billion Arkansas state court award against Johnson & Johnson’s Janssen Pharmaceuticals unit was the biggest yet in a cascade of state court judgments over marketing of the antipsychotic Risperdal. But it’s not over yet: More attorneys general are now jumping into the fray, compounding J&J’s problems and keeping defense lawyers busy fighting state claims over alleged off-label marketing.
What’s behind the trend? State consumer protection laws make it easier to win at trial, according to Daniel Miller, a former prosecutor who helped hammer out several big drug settlements between 2008 and 2010. Unlike state and federal False Claims Acts–the primary enforcement tool for the past quarter century–state consumer protection laws generally don’t require a finding that a company’s marketing sales calls or letters actually changed doctors’ prescription-writing behavior. Under state consumer laws, "it’s just a question of whether the marketing was misleading or deceptive," said Miller, who joined Philadelphia plaintiffs firm Berger & Montague in 2010 to represent whistleblowers.
Between 2005-2010, Miller headed up a state and federal government lawyers’ group that coordinates efforts to prosecute alleged Medicaid fraud. For more than a decade, that group, the National Association of Medicaid Fraud Control Units, has spearheaded government claims, like the one that resulted in the then-record $1.4 billion federal and state Medicaid fraud settlement with Eli Lilly & Co. over off-label marketing of Zyprexa.
By contrast, just prior to that settlement, Lilly had settled state consumer protection claims brought by 33 states for just $62 million, less than a tenth of the federal settlement. Last March, meanwhile, AstraZeneca reached a deal with 37 states to settle state consumer protection claims over Seroquel for a relatively paltry $68.5 million. According to Securities and Exchange Commission filings, at least seven states have sued AstraZeneca over Seroquel marketing; the company reached a settlement in principle with Montana last month."
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