A Minnesota federal judge has dismissed with prejudice a suit alleging Abbott Laboratories and St. Jude Medical LLC hid a dangerous battery defect in implantable defibrillators, ruling that an Alaskan health benefits trust's claims were preempted by federal law.
U.S. District Judge David S. Doty on Thursday wrote that while ASEA/AFSCME Local 52 Health Benefits Trust was able to show that Abbott and St. Jude's actions in not disclosing the defect sooner harmed it financially, the federal Food, Drug and Cosmetic Act preempts claims that seek to impose disclosure requirements beyond what the federal Food and Drug Administration requires.
While the trust argued that its claims fit through a "narrow gap" in the preemption, saying St. Jude and Abbott knew the devices did not conform to federal requirements, Judge Doty cited similar cases where courts have found that claims such as those raised here are expressly preempted by the federal law.
The trust first sued in Illinois federal court in September 2017, alleging that St. Jude was aware of a defect in its implanted defibrillators that could cause batteries to fail without warning well before a due diligence review in 2016 gave rise to a recall, but failed to report it to the FDA or patients.
The Illinois court dismissed the case in June, ruling that it lacked jurisdiction over St. Jude and that the venue was improper, and the trust refiled the case in Minnesota in July.
In the complaint, the trust claimed St. Jude cost it hundreds of millions as it paid for the devices and to replace them, costs it said it wouldn't have incurred if St. Jude had disclosed the defect.
St. Jude, which was acquired by Abbott Labs in January 2017, moved to dismiss the Minnesota suit, arguing the trust lacked standing, the claims were preempted, the court lacked jurisdiction, and the trust failed to state a claim.
Judge Doty rejected St. Jude's arguments that the trust had no standing, saying even though there was a multistep sequence between the manufacture of the defibrillators and the trust's financial injury, the connection was in fact straightforward.
"St. Jude put a defective product on the market that plaintiff paid for and must pay to replace," the judge wrote. "Even acknowledging that certain interim steps occurred before plaintiff paid for the defective devices, the fact is that plaintiff did pay for them and will pay for costs associated with replacing them."
The judge likewise rejected arguments that St. Jude did not deal directly with the trust for the same reasons. Judge Doty also ruled that the claims were ripe for resolution because while St. Jude argued there wasn't a determination that their conduct harmed any patients, the trust adequately pleaded that it was financially harmed.
Judge Doty agreed with St. Jude on its preemption arguments, however, finding that the court is constrained by previous decisions on other cases, where courts found that claims similar or identical to the trust's were preempted by the FDCA.
As the claims are thus preempted, Judge Doty did not consider St. Jude's jurisdictional arguments or whether the claims were sufficiently pled.
"The judge made a thoughtful decision," Karl L. Cambronne of Chestnut Cambronne PA, representing the trust, said in an email Friday. "It's hard for third-party payers like the plaintiff to find a remedy for their losses. We are unsure as to whether review will be sought."
Attorneys for St. Jude and Abbott Laboratories declined to comment.
The trust is represented by Karl L. Cambronne, Bryan L. Bleichner and Jeffrey D. Bores of Chestnut Cambronne PA, Adam J. Levitt, Amy E. Keller and Adam Prom of DiCello Levitt & Casey LLC, Kim D. Stephens, Jason T. Dennett and Cecily C. Shiel of Tousley Brain Stephens PLLC and Robert K. Shelquist and Rebecca A. Peterson of Lockridge Grindal Nauen PLLP.
St. Jude and Abbott Laboratories are represented by Daniel L. Scott, Thomas F. Nelson, Adine S. Momoh and Lariss J. Maldonado of Stinson Leonard Street LLP and Andrew A. Kassof, Barry E. Fields, James R.P. Hileman and Whitney L. Becker of Kirkland & Ellis LLP.
The case is ASEA/AFSCME Local 52 Health Benefits Trust v. St. Jude Medical LLC et al., case number 0:18-cv-02124, in the U.S. District Court for the District of Minnesota.