Baycol Cases I and II 10/20/09 CA2/7

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State: California

Court: 1st District Court of Appeal 1st District Court of Appeal

Docket No: B204943

Case Date: 02/18/2010

Preview:Filed 10/20/09 In re Baycol Cases I and II CA2/7

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION SEVEN

In re BAYCOL CASES I and II.

B204943 (Los Angeles County Super. Ct. No. JCCP4217)

APPEAL from a judgment and an order of the Superior Court of Los Angeles County, Wendell R. Mortimer, Judge. Judgment affirmed in part and reversed in part with directions; appeal dismissed in part. Green Welling, Jenelle Welling, Charles Marshall and Brian S. Umpierre for Plaintiff and Appellant. Sidley Austin, Catherine Valerio Barrad, Steven A. Ellis and Brendan P. Sheehey for Defendant and Respondent.

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INTRODUCTION

Plaintiff Douglas Shaw (Shaw) appeals from a judgment of dismissal entered after the trial court sustained the demurrer of defendant Bayer Corporation (Bayer) without leave to amend. Shaw also appeals from a subsequent order denying his motion for reconsideration. We dismiss the appeal as to the postjudgment order and as to the class action claims. We reverse the judgment as to Shaws individual claims.

FACTUAL AND PROCEDURAL BACKGROUND1 On June 26, 1997, the Food and Drug Administration (FDA) approved Bayers application to market the drug Baycol in doses up to .3 milligrams in the United States. Bayer later obtained approval to market Baycol in dosages of .4 and .8 milligrams. Baycol, generically known as cerivastatin sodium, belongs to a class of cholesterol lowering drugs commonly referred to as statins. Statins work by blocking an enzyme involved in the synthesis of cholesterol. They are generally prescribed to people with high blood pressure and heart disease. Bayer began marketing Baycol on February 18, 1998. At that time, cholesterol lowering drugs were among the fastest growing products in the pharmaceutical industry. Revenue from the sale of statins increased from $2.9 billion in 1996 to $9.5 billion in 2000. Estimated revenue from sales of statins for 2001 was in excess of $14 billion, based on 70 million prescriptions. Bayer marketed Baycol as an effective, "simple and safe" alternative to the other statins on the market. It claimed that Baycol had fewer and less severe side effects than

1

On demurrer, the facts are those pleaded in the complaint and those of which judicial notice may be taken. (Williams v. Housing Authority of Los Angeles (2004) 121 Cal.App.4th 708, 719.) 2

other statins. It aggressively marketed Baycol to doctors as well as advertising Baycol directly to consumers. Bayer obtained approval to market Baycol after clinical trials involving only 3,000 people. This was far fewer than the people involved in clinical trials of other statins. Additionally, early clinical trials indicated that Baycol was not more effective, and presented greater risks than other statins. On August 8, 2001, Baycol lost its FDA approval and Bayer withdrew it from the market. Baycol users were advised to switch to another medication for lowering cholesterol. The reason for the loss of FDA approval and the withdrawal of Baycol from the market was reports linking Baycol with rhabdomyolysis, an acute and sometimes fatal disease causing the destruction of skeletal muscle tissue. The disease causes a breach of the cellular membranes of the muscle tissue, releasing myoglobin and potassium into the bloodstream. This can lead to kidney failure and death, or to heart failure. The FDA received reports of 31 deaths in three years from rhabdomyolysis caused by the use of Baycol. FDA records showed 772 cases of rhabdomyolysis in people taking statins during the time Baycol was on the market; more than half of these cases were linked to Baycol. Baycol also was linked to myositis and myopathy, diseases of the muscle tissue. Additionally, Baycol was less effective at lowering cholesterol than other statins. Bayer knew as early as 1994 that Baycol lowered the ability of the liver to produce coenzyme Q10 (CoQ10). Risks of decreased CoQ10 levels include rhabdomyolysis, myositis, myopathy, congestive heart failure and other diseases. Before Bayer began to market Baycol, SmithKline Beecham Corporation (SmithKline), Bayers marketing partner, expressed concern over the risks associated with Baycol. SmithKline did not believe that Baycol was more effective than other statins, and was concerned over its dangerous side effects. The FDA also advised Bayer that Baycol was only minimally effective at lowering cholesterol as compared to other statins already on the market. 3

In 1998, Bayer placed a warning in the Physicians Desk Reference (PDR) that ",,[r]are cases of rhabdomyolysis with acute renal failure secondary to myoglobinuria have been reported with other [similar drugs]." Bayer later revised its PDR entry to state that rhabdomyolysis and other conditions had been reported since the introduction of Baycol, but "a causal relationship to the use of Baycol cannot be readily determined due to the spontaneous nature of reporting of medical events, and the lack of controls." Bayer conducted additional studies to demonstrate the safety and efficacy of Baycol in conjunction with its attempt to obtain approval of higher doses of Baycol. These studies showed, however, that a higher dosage increased the risks of Baycol. Bayer did not disclose these increased risks. In April 1999, the FDA reported that among the six statins on the market, incidents of rhabdomyolysis were highest for Baycol users. Other reports showed problems with Baycol as well. Bayer continued to characterize rhabdomyolysis as a rare side effect of Baycol, however. Bayer also advertised that Baycol provided "[t]he same proven safety and tolerability youve come to expect. Side effects are usually mild and transient and similar to a placebo." On October 25, 1999, the FDA wrote to Bayer that it had "become aware of promotional material for Baycol . . . that is false, lacking in fair balance, and otherwise misleading." There was no substantial evidence that Baycol was "superior to competing products" or provided "a clinical advantage versus ,,other statins." Additionally, the FDA stated, Bayers "presentation of risk information . . . lack[ed] fair balance." The FDA directed Bayer to "immediately cease" its deceptive advertising. Bayer continued to promote Baycol until August 8, 2001, when Bayer announced that it was withdrawing Baycol from the market for public safety reasons. It acknowledged that "rhabdomyolysis is a serious, potentially fatal effect of all statin drugs, including Baycol." At the same time, the FDA issued a notice linking Baycol to 31 deaths in the United States. Following Bayers withdrawal of Baycol from the market, thousands of plaintiffs filed suit against Bayer. (See In re Baycol Products Litigation (D. Minn. 2003) 218 4

F.R.D. 197, 201.) Shaw filed his action on September 5, 2001 in superior court in San Francisco County. He filed it as a class action alleging causes of action for unlawful, unfair or fraudulent business practices under Business and Professions Code section 17200 et seq. and for unjust enrichment. Shaw identified the class as "California residents who purchased or ingested the drug Baycol." The basis of his action was Bayers false and misleading advertising regarding Baycol. On Bayers motion, the action was removed to United States District Court of the Northern District of California. On October 26, 2001, Shaw moved to remand the action to state court. Over a hundred federal cases against Bayer were coordinated in a multidistrict case in the District of Minnesota (In re Baycol Products Liability Litigation (MDL No. 1431)). Shaws case was one of those transferred, as of March 18, 2002. A Plaintiffs Steering Committee was appointed by the court to represent all of the plaintiffs. (In re Baycol Products Litigation, supra, 218 F.R.D. at p. 201.) The committee filed a master class action complaint. It contained class action allegations on behalf of three separate classes: (1) the medical monitoring class, consisting of persons who took Baycol but had not yet manifested physical injury; (2) the personal injury class, consisting of persons who were physically injured as a result of taking Baycol; and (3) the refund class, consisting of persons who purchased Baycol for personal or family use. (Id. at p. 202.) In the MDL, plaintiffs sought as to the refund class, which included Shaw, "restitution, disgorgement of profits and punitive damages based on claims of unjust enrichment and breach of implied warranty of merchantability . . . ." (In re Baycol Products Litigation, supra, 218 F.R.D. at p. 213.) The court concluded that the plaintiffs "failed to demonstrate that common issues of law predominate[d]" and therefore denied class certification. (Id. at pp. 214, 216.) The decision in the federal action was filed on September 17, 2003. On February 11, 2004, Shaw moved for an order remanding his case to superior court in San Francisco. After initially denying the motion, on November 29, 2004, the federal court 5

granted Shaws motion for remand. The court found it did not have subject matter jurisdiction over the case, in that Bayer had failed to establish that the amount in controversy for each class member exceeded the federal minimum. Several hundred cases involving Baycol, including a number of class actions, which had been filed in California were consolidated in a Judicial Council Coordinated Proceeding (JCCP) in Los Angeles Superior Court. As in the MDL, a master complaint was filed in the JCCP. Shaws case was added on to the JCCP on February 4, 2005. During the next approximately two years, many of the cases in the JCCP were dismissed or resolved in Bayers favor on summary judgment. On January 29, 2007, Shaw filed his first amended complaint, alleging causes of action for violation of the unfair competition law (UCL, Bus. & Prof. Code,

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