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1 IN THE SUPREME COURT OF THE UNITED STATES

2 - - - - - - - - - - - - - - - -X

3 BUCKMAN COMPANY, :

4 Petitioner :

5 v. : No. 98-1768

6 PLAINTIFFS' LEGAL COMMITTEE :

7 - - - - - - - - - - - - - - - -X

8 Washington, D.C.

9 Monday, December 4, 2000

10 The above-entitled matter came on for oral

11 argument before the Supreme Court of the United States at

12 10:03 a.m.

13 APPEARANCES:

14 KENNETH S. GELLER, ESQ., Washington, D.C.; on behalf of

15 the Petitioner.

16 IRVING L. GORNSTEIN, ESQ., Assistant to the Solicitor

17 General, Department of Justice, Washington, D.C.; on

18 behalf of the United States, as amicus curiae,

19 supporting the Petitioner.

20 MICHAEL D. FISHBEIN, ESQ., Philadelphia, Pennsylvania; on

21 behalf of the Respondent.

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1 C O N T E N T S

2 ORAL ARGUMENT OF PAGE

3 KENNETH S. GELLER, ESQ.

4 On behalf of the Petitioner 3

5 ORAL ARGUMENT OF

6 IRVING L. GORNSTEIN, ESQ.

7 On behalf of the United States, as amicus curiae,

8 supporting the Petitioner 19

9 ORAL ARGUMENT OF

10 MICHAEL D. FISHBEIN, ESQ.

11 On behalf of the Respondent 26

12 REBUTTAL ARGUMENT OF

13 KENNETH S. GELLER, ESQ.

14 On behalf of the Petitioner 51

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2

1 P R O C E E D I N G S

2 (10;03 a.m.)

3 CHIEF JUSTICE REHNQUIST: We'll hear argument

4 now in Number 98-1768, the Buckman Company v. the

5 Plaintiffs' Legal Committee.

6 Mr. Geller.

7 ORAL ARGUMENT OF KENNETH S. GELLER

8 ON BEHALF OF THE PETITIONER

9 MR. GELLER: Thank you, Mr. Chief Justice, and

10 may it please the Court:

11 The plaintiffs in this case are people who

12 underwent back surgery in which particular medical devices

13 were used. They brought this suit under State law to

14 recover for injuries allegedly caused by their -- by these

15 devices, but this is a very unusual form of State law

16 product liability action. The plaintiffs don't claim that

17 these devices were in any way defective. There's no claim

18 here of manufacturing defect. There's no claim here of

19 design defect. The plaintiffs also don't claim that the

20 surgeons who used these devices did anything wrong.

21 There's no claim here of medical malpractice.

22 Instead, the plaintiffs' sole claim in this case

23 is the following. They assert that the Federal Food &

24 Drug Administration was deceived into giving regulatory

25 clearance to these devices, that, absent this deception,

3

1 these devices would never have been on the market, and

2 that, if the devices had never have been on the market,

3 they wouldn't have been used in their surgeries and they

4 wouldn't have suffered any injuries.

5 So this lawsuit is, in other words, a direct

6 attack under State law on the decision of the Federal Food

7 & Drug Administration applying Federal law to allow these

8 devices to be marketed in interstate commerce and, if this

9 suit is allowed to proceed, it means that a jury applying

10 State law would have to decide such issues as, what sorts

11 of disclosures have to be made to the Food & Drug

12 Administration in the context of seeking 510(k) approval

13 for a device? What did the FDA know about these specific

14 devices and their intended use? Was the FDA deceived in

15 any way in granting regulatory clearance?

16 QUESTION: Do they really have to get into all

17 of those issues, because I thought at least one theory of

18 the plaintiffs' case was simply representation as

19 determined on an objective basis and the only thing the

20 jury would have to decide was whether, on an objective

21 basis, the representation that the devices were intended

22 for, what was it, long bone surgery, something other than

23 spinal surgery, was true or false? Why would they have to

24 go beyond that?

25 MR. GELLER: Justice Souter, they would have to

4

1 do that because there's a fraud claim and if you look at

2 the complaint --

3 QUESTION: Well, that would be a question of

4 intent on the part of the company, but it --

5 MR. GELLER: It would --

6 QUESTION: I'm sorry, go ahead.

7 MR. GELLER: It would be more than that, Justice

8 Souter. If you look at the complaint, for example, at

9 page 21 of the joint appendix, paragraphs 131 and 132

10 allege not only that a false statement was made but

11 reliance and causation and all the things that you have to

12 prove in order to prove a State law cause, State law fraud

13 action.

14 So it's not enough simply to prove that a

15 misrepresentation was made in order to recover on it. You

16 would also have to prove whether the misrepresentation was

17 material, whether the FDA knew what was allegedly not told

18 to it, whether the FDA thought that it was relying on the

19 absence of the information, relied on the

20 misrepresentation and then finally, what would the FDA

21 have done if it had been told the truth, the causation

22 theory.

23 QUESTION: Mr. Geller, why wouldn't it be

24 adequate to show that, that there had been two prior

25 applications that were rejected for use of this device for

5

1 spinal surgery?

2 MR. GELLER: Your Honor, the -- what the

3 manufacturer has to show in seeking 510(k) is, in addition

4 to showing that the device has the physical technological

5 characteristics of the predicate device the manufacturer

6 also has to put down what the intended use of the device

7 is. It's -- the manufacturer under the law is entitled to

8 put down any intended use it wants, as described in the

9 labeling.

10 What the plaintiffs seem to claim here is that

11 the FDA, is that the manufacturer had to allege not simply

12 that the intended use was for the long bones, which was

13 the manufacturer was entitled to allege, but also,

14 according to the complaint, that once the device got on

15 the market the manufacturer intended that it be used for

16 spinal applications, and that our -- and therefore a State

17 jury would have to determine what would the FDA have done,

18 if it had been told, as the plaintiffs allege the

19 manufacturer should have told the FDA, that once this

20 device gets on the market the intent was to see it used

21 significantly for spinal applications.

22 QUESTION: But my point was simply that we do

23 have two applications that said the intended use is for

24 spinal surgery and both of those applications were turned

25 down. Isn't that enough to infer that if they had for a

6

1 third time said the same thing they'd be turned down

2 again?

3 MR. GELLER: Well, I think the opposite, Justice

4 Ginsburg. I think it shows that the FDA was well aware of

5 the possibility of using these devices for spinal

6 applications and when the manufacturer came in, as it was

7 entitled to do, and that now we want to seek 510(k)

8 approval to label these devices for the long bones of the

9 arm and leg, the FDA was well aware that the devices had

10 some possibility of being used for spinal applications.

11 After all, I think the mistake here --

12 QUESTION: So you're saying in effect that there

13 would be an issue of whether the FDA was complicit in the

14 deception itself?

15 MR. GELLER: Absolutely, what did the FDA

16 actually know about the use of these devices, and that's

17 in our view not an inquiry that should be made under State

18 law. In fact, one of the --

19 QUESTION: We know -- I mean, as Justice

20 Ginsburg's question suggests it would be fairly easy to

21 prove what the FDA knew about possible applications, but I

22 think, if I understand your answer to her, your answer is,

23 well, that still doesn't simplify the case, because the

24 issue then would become, even on that assumption, did the

25 FDA understand perfectly well that this fraud was nothing

7

1 but a fraud, and they winked at it and said, sure, this is

2 an easy way of letting them do what they want to do even

3 though we've said before that we won't let them do it. In

4 other word -- is that in effect what you're --

5 MR. GELLER: In effect, although whether it was

6 even a fraud at all -- you see, I think one of the

7 problems here is in viewing the intended use statement

8 under 510(k) as a factual representation at all. It's not

9 a factual representation at all. It's simply a request

10 for marketing clearance.

11 The manufacturer decides by its labeling what

12 sort of marketing clearance it seeks for its devices. The

13 FDA's role is simply to look at the labeling and determine

14 whether there was a device on the market prior to 1976

15 with those physical characteristics and that labeling.

16 QUESTION: It's really a misnomer, then, if

17 you're going to use it the way you say they have been and

18 ought to use it, they shouldn't call it intended use.

19 They should have -- it should be called permitted use, or

20 approved use, or something like that.

21 MR. GELLER: Absolutely, Justice Scalia. I

22 think intended use is a misnomer. It's a term of art in

23 the food and drug law, and I think the statute and the

24 regulations are as clear as can be, it is simply a request

25 for marketing clearance by describing how you intend to

8

1 label your device. It is not at all a factual

2 representation as to how that device will actually be used

3 off-label once the device is on the market, which is, I

4 think, one of the many problems with the plaintiffs' claim

5 here.

6 But the point that I was simply making is the

7 sorts of inquiries that a State judge or jury would have

8 to make if this State law claim were allowed to proceed

9 are inquiries that would delve heavily into the

10 intricacies of the Federal regulatory process and, in

11 addition, in addition to prevail on their claims the

12 plaintiffs would have to convince a State jury that these

13 devices should never have been on the market and were not

14 lawfully on the market, even though the FDA has decided as

15 a matter of Federal law that the devices are lawfully on

16 the market, so to rule for plaintiffs, a jury under State

17 law would have to essentially disregard and nullify a

18 binding decision of the FDA.

19 Now, our position is that a claim such as this,

20 which essentially amounts to an attack under State law on

21 a binding determination by a Federal agency is both

22 expressly and impliedly preempted by the Federal food and

23 drug laws.

24 QUESTION: Mr. Geller, I'm sorry, may I ask you

25 just to go back one step, and that is to the issue of

9

1 whether the plaintiffs' cause of action really is an

2 attack, at least on its face, on an FDA decision, because

3 the FDA decision, as I understand it, is a decision to

4 allow the devices to be marketed for the long-bone use,

5 and their cause of action, as I understand it, is that in

6 fact, as a result of this lie, this fraud on the FDA, it

7 was, in fact, allowed to be used, or it was possible to

8 use it, I guess is the neutral word, on the spine.

9 MR. GELLER: Yes.

10 QUESTION: But that is not attacking a decision

11 of the FDA because, in the sense that the FDA, as I

12 understand it, says yeah, we'll permit it for the purposes

13 of long-bone use.

14 MR. GELLER: No, I think --

15 QUESTION: And that's as far as the FDA decision

16 went, wasn't it?

17 MR. GELLER: That's a mis -- I think that's a

18 misunderstanding --

19 QUESTION: Okay.

20 MR. GELLER: -- Justice Souter, of the process.

21 What the FDA does is permit it to get on the market, and

22 it can only be marketed for long-bone use. It can only be

23 marketed for the intended use described in the labeling,

24 but once it's on the market, it's quite clear that

25 surgeons are entitled, in the exercise of their medical

10

1 judgment, to use those devices for --

2 QUESTION: Oh, it's true, and the surgeons are

3 not liable to the FDA --

4 MR. GELLER: That's --

5 QUESTION: -- but is it fair to characterize the

6 FDA decision as being a decision to permit it's use for

7 the spine --

8 MR. GELLER: The FDA --

9 QUESTION: -- as opposed to permit its use for

10 the intended purpose?

11 MR. GELLER: The FDA decided that these devices

12 were entitled to be on the market, labeled for long-bone

13 use. There's no question that they were lawfully at all

14 times on the market, labeled for long-bone use.

15 QUESTION: And labeled for long-bone use means,

16 doesn't it, that the -- or implies, doesn't it, that the

17 FDA's approval was for long-bone use --

18 MR. GELLER: Yes.

19 QUESTION: -- and only for long-bone use?

20 MR. GELLER: No. It means it could only be --

21 QUESTION: It may not have had a right to go

22 after the doctor who used it for some other purpose, but

23 the extent of the FDA approval didn't go beyond long

24 bones, did it?

25 MR. GELLER: No, Your Honor. It means it can

11

1 only be marketed for long-bone use. It can be used for

2 any purpose whatsoever once it was on the market,

3 consistent with independent medical judgment. The claim

4 here --

5 QUESTION: Well, to the extent that it's used

6 for more than long bones, hasn't the FDA in effect washed

7 its hands of it?

8 MR. GELLER: But it is not inconsistent in any

9 way with the FDA's decision. The FDA decided here that

10 the -- that this 510(k) satisfied the statute in the sense

11 that the device was similar, substantially equivalent both

12 in its characteristics and its intended use to a predicate

13 device. It therefore was entitled to be on the market.

14 In fact, it had a right to be on the market. At all times

15 it was lawfully on the market. The plaintiffs --

16 QUESTION: Mr. Geller, is it -- explain to us,

17 if you would, the practice of the FDA with regard to

18 authorized drugs and devices. If it is authorized, is an

19 off-label use always allowed --

20 MR. GELLER: Yes.

21 QUESTION: -- by the FDA?

22 MR. GELLER: Yes. The FDA --

23 QUESTION: In fact, it's rather common?

24 MR. GELLER: Absolutely. In fact, many drugs

25 and devices --

12

1 QUESTION: For instance, the use of, what is it,

2 the cholesterol-reducing drugs for memory enhancement and

3 that sort of thing is perfectly okay, even though it's

4 authorized only for the cholesterol?

5 MR. GELLER: Absolutely. The statute is quite

6 clear. Congress made it quite clear that the FDA has no

7 control over the practice of medicine. All it does is

8 approve drugs and devices to be marketed for particular

9 purposes. Once they're on the market, physicians and

10 surgeons are entitled to use the devices for any purpose

11 consistent with their own medical judgment, and off-

12 label --

13 QUESTION: Now, I assume these plaintiffs would

14 have a cause of action against the physicians who made the

15 judgment that it's okay to use them for the spine?

16 MR. GELLER: If that failed --

17 QUESTION: If, indeed, they're not safe for the

18 spine?

19 MR. GELLER: If that fails to satisfy some State

20 law duty of care.

21 In fact, Justice Souter, you can imagine a

22 situation where a manufacturer here sought approval for

23 these devices for a purpose of labeling them for long

24 bones, and had absolutely no intent that they be used for

25 anything else, a manufacturer with a perfectly clear heart

13

1 here, contrary to what they allege about these defendants.

2 The device would have been on the market in exactly the

3 same way these devices would have been on the market. The

4 physicians and surgeons would have used them in exactly

5 the same way these devices were used. The plaintiffs

6 would have suffered exactly the same injuries.

7 So the flaw here is that these devices were

8 entitled to be on the market. Once the intended use that

9 was described in the 510(k) application was consistent

10 with an intended use for devices such as these prior to

11 1976 --

12 QUESTION: No, I think -- I mean, I think I --

13 MR. GELLER: Okay.

14 QUESTION: -- get your point. The only issue

15 that I was trying to raise was how we ought to

16 characterize it. Should we characterize it as -- should

17 we characterize their intent as inconsistent with the FDA

18 approval, as distinct from consistent with a use that the

19 FDA would not affirmatively take steps to stop, and

20 that --

21 MR. GELLER: It is consistent --

22 QUESTION: That characterization might have an

23 effect on the way we view --

24 MR. GELLER: My view, Your Honor, it -- what

25 happened here was perfectly consistent with the FDA --

14

1 with the scheme and the FDA's decision here.

2 The FDA's decision here was that these devices

3 had a right to be on the market because they satisfied

4 510(k). What happened thereafter, it may have been a

5 marketing violation if they were marketed for other

6 purposes, but it was in no way a fraud on the FDA, which

7 is the allegation here, to seek approval. It is perfectly

8 lawful -- let me say it this way.

9 It is perfectly lawful, perfectly consistent

10 with the statute, perfectly protective of the public

11 health, to seek approval under section 510(k) for a device

12 by saying it has intended use A, even though you hope,

13 expect, intend that once the device gets on the market it

14 would be used primarily, or even exclusively, for use B.

15 That's perfectly consistent with the Federal statutory

16 scheme.

17 Now, what you can't do is market it for use B,

18 but it's perfectly appropriate, under the statute, to

19 represent to the FDA and put in your labeling that it has

20 intended use A.

21 QUESTION: And the marketing, you can't market

22 it for use B.

23 MR. GELLER: You cannot market it.

24 QUESTION: That's part of which statute?

25 MR. GELLER: That's part of the food and drug

15

1 laws. That may well be misbranded or adulterated if you

2 market it for use B when it only has intended use A, but

3 when you do that you violated the marketing regulation.

4 It's in no way a fraud on the FDA, which is what the

5 allegation is here.

6 QUESTION: If it helps bring you to the argument

7 on implied preemption, which I'm anxious to hear --

8 MR. GELLER: Yes.

9 QUESTION: -- let me just ask you this question.

10 Suppose a consultant like your client here, in assisting

11 the labeling of a drug or device, does not disclose a side

12 effect, and the side effect is not on the label, and

13 somebody's injured because they have the side effect, and

14 the allegation is that they knew about the side effect and

15 deliberately withheld it. Is there a cause of action

16 under some States, under this State?

17 MR. GELLER: No. I --

18 QUESTION: Or there is implied preemption --

19 MR. GELLER: Our position --

20 QUESTION: -- and if so, why should that be?

21 MR. GELLER: I think it should be, Justice

22 Kennedy, because Congress ultimately made a decision that

23 there is not to be a private right of action for violation

24 of the Federal Food, Drug, and Cosmetic Act, that all

25 violations of the act or suspected violations are to be

16

1 enforced by the Food & Drug Administration in its ultimate

2 discretion.

3 This is section 336 and 337 of the act. The FDA

4 is to decide whether there is a violation and, if there is

5 a violation, the FDA is to decide whether it's a

6 significant enough violation to cause some sort of

7 penalties to be imposed, and this was a very, very

8 important part of Congress' scheme.

9 Unlike many other regulatory statutes, the

10 securities laws, the antitrust laws, Congress here decided

11 there should not be a private right of action and the

12 reason is because you're dealing here with the public

13 health. There may well be misrepresentations to the FDA

14 in an application and yet it's important to have the

15 device remain on the market for the public health.

16 QUESTION: Mr. Geller, suppose the case was one

17 in which the FDA decided that the misrepresentation,

18 assuming there was one, was sufficient to justify taking

19 it off the market. Would a person who was injured during

20 the period it was on the market have any remedy at all,

21 either State or Federal?

22 MR. GELLER: Well, obviously it's not this case,

23 but --

24 QUESTION: No, I understand that.

25 MR. GELLER: -- I would say no because of the

17

1 Congress' decision not to provide -- you cannot bring a

2 cause of action that enforces the Federal Food & Drug

3 laws. Now, there may well be a State -- as in

4 Medtronic --

5 QUESTION: Even though the Federal agency might

6 have found there was, in fact, exactly the violation?

7 MR. GELLER: Absolutely, because there's too

8 great a danger I think, Justice Stevens, that a State

9 court might impose a remedy that is completely

10 inconsistent with the remedy that the FDA itself would

11 have decided was appropriate in that situation.

12 And here, you know, this is a -- this is the

13 contrasting situation, if I could, and I'd like to save

14 some time for rebuttal, but this is a situation in which

15 all of the allegations of so-called fraud in the

16 plaintiffs' complaint here were presented to the Food &

17 Drug Administration not on one occasion but on at least

18 two occasions.

19 Thousands and thousands of pages of documents

20 that allegedly documented this fraud were presented to the

21 FDA in a citizens' position, and when the FDA was

22 reclassifying bone screws. The FDA decided not to do

23 anything. It obviously didn't feel itself defrauded. It

24 decided not to take these devices in any way off the

25 market, and yet the plaintiffs' fraud claim here would

18

1 have the potential to completely undermine this entire

2 statutory scheme by allowing State courts and juries to

3 second-guess the decision of the FDA to allow these

4 devices to remain on the market to protect the public

5 health.

6 If there are no further questions, I'd like to

7 reserve the balance of my time.

8 QUESTION: Very well, Mr. Geller.

9 Mr. Gornstein, we'll hear from you.

10 ORAL ARGUMENT OF IRVING L. GORNSTEIN

11 ON BEHALF OF THE UNITED STATES, AS AMICUS CURIAE,

12 SUPPORTING THE PETITIONER

13 MR. GORNSTEIN: Mr. Chief Justice, and may it

14 please the Court:

15 The respondents' fraud on the FDA claim is

16 impliedly preempted for two reasons. First, it conflicts

17 with the Federal Government's exclusive authority to

18 enforce the act's prohibitions against fraud on the FDA

19 and second, it conflicts with the FDA's decision clearing

20 the devices at issue here for marketing.

21 Now, as to the first point, the act expressly

22 gives to the Federal Government exclusive authority to

23 enforce the act's prohibitions against fraud on the FDA,

24 and the claim here conflicts with that allocation of

25 authority because it asks the States to impose on an

19

1 individual an obligation not to defraud the FDA.

2 Now, in this area of preeminent Federal concern,

3 there is no room for that State rule. It is up to the

4 Federal Government to decide whether the FDA has been

5 defrauded and, if so, what to do about it, and that is

6 particularly true when the question is whether the FDA's

7 own internal decision-making process has been corrupted

8 through an act of fraud.

9 Now, as to the second point, the --

10 QUESTION: And would you give the same answer

11 Mr. Geller did? Assume the FDA concluded that its

12 processes had been corrupted by the acts of fraud, and so

13 forth and so on. Is there any way the FDA could give a

14 remedy to people who were injured by that fraud?

15 MR. GORNSTEIN: The people who were -- there

16 would not be an injury for the fraud, but there would be

17 whatever other claims --

18 QUESTION: You mean, there would not be a remedy

19 for the fraud?

20 MR. GORNSTEIN: For the -- there would not be

21 private damage actions for the fraud on the FDA.

22 QUESTION: So the category of people who might

23 exist -- I'm not suggesting that's this case, but who

24 might have been injured by that fraud would have

25 absolutely no remedy?

20

1 MR. GORNSTEIN: The only remedies they would

2 have are the other remedies that State laws affords if the

3 product was --

4 QUESTION: But I -- they're preempted.

5 MR. GORNSTEIN: Well, let me just continue. The

6 fraud claim is preempted, but if there is negligent

7 design, negligent manufacturing, failure to warn, common

8 law malpractice, all of those claims are available, but

9 insofar as they would be asserting an essential element of

10 the claim would be that the FDA was defrauded, that is an

11 area of exclusive Federal concern, and the State common

12 law cause of action would be preempted.

13 QUESTION: What happens if the --

14 QUESTION: What's the Federal provision on fraud

15 on the FDA? What is that?

16 MR. GORNSTEIN: 331(q)(2) is the prohibition

17 against fraud, 21 U.S.C. 331(q)(2), which I don't think is

18 included in any of the materials here.

19 QUESTION: That's --

20 MR. GORNSTEIN: And the exclusive enforcement is

21 21 U.S.C. 337(a), which with certain limited exceptions

22 gives the Federal Government exclusive authority to

23 enforce the act's prohibitions.

24 QUESTION: What would happen if an expert gave

25 fraudulent or negligent, two different hypotheticals,

21

1 information to an attorney, and the attorney then made a

2 submission to the court, and the court makes a ruling, and

3 the ruling is against the adversary party, can the

4 adversary party then sue the expert just under State law,

5 and does this happen all the time, or would the courts

6 have in -- throughout the States the same argument that

7 you're making here, oh, we don't want a lot of satellite

8 litigation, we don't want to be deluged? Are there cases

9 on the books that tell us about this, or --

10 MR. GORNSTEIN: I'm not aware of cases, but we

11 think the same general principle, if a court is defrauded

12 and its judgment permits certain conduct, then the method

13 to go about getting relief from that is to go back to the

14 court and say that that judgment has been secured by

15 fraud, and the same thing is true here.

16 QUESTION: This theory hasn't been tried?

17 MR. GORNSTEIN: I have not seen that theory

18 tried, Justice Kennedy.

19 Now, the second reason that there's preemption

20 here, and this is a second and independent reason, is that

21 the State law common law claim conflicts with the Federal

22 clearance decision, and the reason --

23 QUESTION: The what?

24 MR. GORNSTEIN: The FDA's decision clearing the

25 devices at issue for marketing, and the reason that it

22

1 does is that an essential element of this claim is that

2 the devices never should have come to market under Federal

3 law, whereas the FDA has determined that they should, and

4 the fact that there is an allegation here that that

5 decision was secured through fraud does not avert the

6 conflict, because the FDA can reconsider its decisions and

7 withdraw them if it determines they've been secured by

8 fraud, but unless and until it does that, those decisions

9 remain binding and authoritative, and they preempt any

10 conflicting State law claims.

11 QUESTION: But you're going further. You're

12 saying even if they did find it was procured by fraud,

13 there would still be preemption.

14 MR. GORNSTEIN: Yes, Justice Stevens, but that's

15 under my first argument and not under my second argument.

16 QUESTION: Well, you'd say there would be

17 preemption up to the point when the FDA reviews the matter

18 and concludes that it has been defrauded. Then would you

19 say -- I'm just trying to follow Justice Kennedy's

20 judicial analogy. If you went back to a court and the

21 court concluded it had, indeed, been duped, you'd probably

22 then have a private lawsuit.

23 MR. GORNSTEIN: You probably do, Justice Scalia,

24 and there may not be a perfect analogy here, because --

25 QUESTION: Because you don't think there would

23

1 be a private lawsuit, even after the FDA came to the

2 conclusion that indeed --

3 MR. GORNSTEIN: That's correct, because the

4 second theory of preemption would be gone, but our first

5 theory of preemption, which is that this is a matter of

6 exclusive Federal control over the decision as to whether

7 there's fraud and what the remedies for that should be,

8 would still be in effect.

9 QUESTION: In other words -- I'm sorry. In

10 other words, the FDA can do its own fraud prosecution and

11 the FDA can withdraw the drug from the market.

12 MR. GORNSTEIN: It can.

13 QUESTION: I mean, those are the reasons.

14 MR. GORNSTEIN: That's correct.

15 Now, finally, the final point I wanted to make

16 is that the --

17 QUESTION: Excuse me. And if that happened, you

18 would not object to a fraud suit at that point.

19 MR. GORNSTEIN: No. We --

20 QUESTION: Under --

21 MR. GORNSTEIN: There would still be a --

22 QUESTION: Under the implied preemption theory.

23 MR. GORNSTEIN: On the second implied preemption

24 that I've given, which is that an outstanding Federal

25 clearance decision, there would not be preemption, but --

24

1 because that would have been withdrawn, but on the first

2 theory preemption I'm giving, which is that the decision

3 about whether there is fraud and what the remedies for

4 that should be, there would still be preemption of that

5 claim. Now, either one of those theories is independently

6 sufficient to resolve this case.

7 Now, the final point I wanted to make is that

8 the respondents say that this case is just like Medtronic,

9 and the claims here shouldn't be preempted for the same

10 reasons the claims in Medtronic were not preempted, but

11 there are three basic differences between the claims in

12 Medtronic and the claim here.

13 The claims there, the State was performing its

14 traditional role in enforcing ordinary duties of care

15 running from the manufacturer to the consumer, whereas

16 here it's seeking to impose an obligation on somebody not

17 to defraud a Federal Government agency. The claims there

18 had an existence that was completely independent of the

19 Federal scheme. This claim is entirely derivative.

20 Without this Federal regulatory scheme you could not have

21 a fraud on the FDA claim.

22 And finally, the claims there were not preempted

23 by the Federal clearance decision. They all assumed that

24 the devices had been permissibly cleared under Federal

25 law, whereas here, the claim conflicts with the Federal

25

1 clearance decision.

2 If there are no further questions --

3 QUESTION: Very well, Mr. Gornstein.

4 Mr. Fishbein, we'll hear from you.

5 ORAL ARGUMENT OF MICHAEL D. FISHBEIN

6 ON BEHALF OF THE RESPONDENT

7 MR. FISHBEIN: Thank you, Mr. Chief Justice, and

8 may it please the Court:

9 We're here to determine whether or not the Food,

10 Drug and Cosmetic Act, or the medical device amendments to

11 that act, prevent the States from recognizing and awarding

12 damages for -- which flow from allowing a device to enter

13 the market through fraud on the FDA. I would suggest to

14 the Court the answer to that question comes from the

15 unanimous -- the unanimous portions of this Court's

16 decision in Medtronic.

17 In Medtronic the Court was confronted with the

18 question about whether or not the Food, Drug and Cosmetic

19 Act and the medical amendments to the Food, Drug and

20 Cosmetic Act preempt State common law claims which are

21 founded on a violation of Federal requirements, and what

22 the Court said, and said so unanimously, was that there is

23 nothing in Federal law which prevented the States from

24 affording a private damage remedy, one not given by

25 Federal law at all, for violations of the Food, Drug, and

26

1 Cosmetic Act, or the medical device amendments to that

2 act, and that was not limited to negligence cause of

3 actions. It was focused on violations of the act.

4 In the present case, our claim does not derive

5 from some newfangled principle of tort law. Out claim

6 derives from a longstanding principle of tort law which

7 has been in force in this country, in the States, in

8 various forms since they became States, and that is the

9 principle reflected in section 536 and 557(a) of the

10 Restatement of Torts Second --

11 QUESTION: May I just --

12 QUESTION: But that's an extraordinary -- this

13 is an extraordinary application of that principle.

14 MR. FISHBEIN: I don't believe so, Mr. Chief

15 Justice, and I say that for this reason. The tort law

16 does not only go to negligence per se, but tort law says

17 that where one is required to file, furnish, or publish

18 information by statute or regulation for the protection of

19 the public, and makes a misrepresentation in doing so and

20 harm follows from that, that you're entitled to recover

21 damages.

22 QUESTION: From whom?

23 MR. FISHBEIN: That is true --

24 QUESTION: From whom?

25 MR. FISHBEIN: You're entitled to recover

27

1 damages from the maker of the misrepresentation, because

2 that is where the culpable conduct lies.

3 Now, of course, it's true that that principle is

4 not frequently invoked, because in many cases it's easier

5 to go more directly through other tort principles, but

6 that doesn't change the fact that that is a principle of

7 tort law which is independent of the Federal scheme.

8 QUESTION: It is, but in ordinary tort law the

9 third party who has been defrauded does not have the power

10 to say authoritatively in any sense, I have not been

11 defrauded. It will be up to the court to say whether he's

12 been defrauded or not.

13 But here the alleged defraudee is a Federal

14 agency that is empowered to decide authoritatively whether

15 it's been defrauded or not.

16 MR. FISHBEIN: I agree with that statement,

17 Justice Scalia, and I think that one of the important

18 distinctions here is that this agency never said one way

19 or the other whether they had been defrauded. There has

20 never been a factual finding, either in connection with

21 the 510(k) clearance premarket notification or

22 subsequently, in which the FDA say we either were or were

23 not defrauded, but if there was --

24 QUESTION: If the FDA --

25 MR. FISHBEIN: -- I would agree with you.

28

1 QUESTION: If -- supposing the FDA had opened

2 the matter up, said we find we weren't defrauded, would

3 you then have no claim?

4 MR. FISHBEIN: I think that that presents a more

5 difficult question to --

6 QUESTION: Well, I'm asking you to fish or cut

7 bait, so to speak.

8 (Laughter.)

9 MR. FISHBEIN: I would argue, Your Honor, even

10 under those circumstances, unless we were party to the

11 adjudication, or that was made through a formal notice and

12 comment proceeding, that we were not bound by that.

13 However, I believe that at least in that circumstance

14 there's the argument that allowing a jury to find a

15 contrary fact cuts against what the FDA decided.

16 QUESTION: Suppose you get a judicial

17 determination that in fact the FDA has been defrauded,

18 does that have any effect on the FDA's approval for the

19 marketing of this device?

20 MR. FISHBEIN: You mean in private litigation,

21 Justice Scalia, or --

22 QUESTION: You win this suit, and the basis for

23 your winning it is a determination by the Court that the

24 FDA has been defrauded. Does the FDA have to withdraw the

25 medical device from the market?

29

1 MR. FISHBEIN: No, Your Honor, and that's one of

2 the points that we make here, is that --

3 QUESTION: This produces a very crazy system,

4 doesn't it, where you have a bunch of State courts going

5 around saying that the FDA has been defrauded and has been

6 duped into approving this and the FDA continuing to allow

7 it to go out there? Why would we want a system that

8 allows these contrary authoritative determinations to

9 bounce around?

10 MR. FISHBEIN: Your Honor, I think we have such

11 a system. Indeed, it's common in our system. Just to use

12 a basic analogy, if I could, the State establishes a law

13 saying you can't -- we're going to put a stop light up at

14 the corner, and you can't run the stop light. The State

15 has the power to enforce that through criminal sanctions

16 and administrative sanctions.

17 You run through the stop light, the State can

18 either choose or not choose to prosecute you, they can

19 choose or not choose what remedy to afford, but there's no

20 doubt, we all know this from our basic tort law, that the

21 injured individual, notwithstanding the potential exercise

22 of State power, has the right to go into court and recover

23 damages for that violation.

24 QUESTION: Yes, but this is not that.

25 QUESTION: That example is quite different. Can

30

1 I just suggest why, and I would really like you to focus

2 on it. Here, your claim is not only that they were

3 defrauded, but that the fraud was sufficiently serious,

4 that's responsible for the item being on the market, and

5 so if they keep the item on -- say the FDA had an

6 investigation, you had a jury, everybody agreed there was

7 fraud, but everybody also agreed the fraud was not

8 sufficiently serious to take the item off the market, it

9 was kind of immaterial, that's quite a different case from

10 the red light case.

11 MR. FISHBEIN: Your Honor, I do not believe that

12 a determination was ever made that the device should not

13 be kept on the market, and I think that goes to what's

14 involved in a so-called 510(k) clearance.

15 QUESTION: Well, no. It's involved in your

16 lawsuit, as I understand it. One of the steps in the sort

17 of, the change of causation is that in your argument --

18 your complaint, if I understand, is, but for the fraud,

19 this item would not be on the market. Is that correct?

20 MR. FISHBEIN: That's correct, Your Honor.

21 QUESTION: Okay.

22 MR. FISHBEIN: And the point I want to make here

23 is simply this. When the FDA receives a 510(k)

24 notification it has to determine -- it only has the power,

25 not to clear the device for the market or not clear the

31

1 device for the market. Under 21 C.F.R. section -- I think

2 it's 807.100, the FDA has three choices when it gets a

3 510(k) market, premarket notification. It can either say

4 that the device is substantially equivalent to a predicate

5 device for the use intended by the applicant, it's not

6 substantially equivalent, or it can ask for more

7 information.

8 Now, what the FDA did here was exactly what they

9 typically do. They looked at the proposed labeling they

10 were given, which was not accurate labeling because it was

11 not truthful reflection of the intended marketing for this

12 device, which is required under the regulations, but the

13 applicant --

14 QUESTION: Excuse me. No, you can't say that,

15 that it wasn't a truthful reflection of the intended

16 marketing. I think it's been conceded by Mr. Geller that

17 if they marketed this for the use that you claimed harmed

18 your clients they would have been in violation, wouldn't

19 they?

20 MR. FISHBEIN: Yes, sir.

21 QUESTION: So it isn't a matter of what's the

22 intended marketing. The issue is what is the intended

23 use.

24 MR. FISHBEIN: I agree with that, Justice

25 Scalia.

32

1 QUESTION: And the intended use, according to

2 Mr. Geller, is a term of art, which means the use for

3 which you want FDA approval.

4 MR. FISHBEIN: I disagree with that, Justice

5 Scalia, and I think that it's clear, and the Government

6 agrees with this position, that intended use not only in

7 this section of the statute but every other place is

8 defined objectively by the manner in which the proponent

9 of the device intends to characterize the device in the

10 market.

11 And I think it's significant that in the

12 regulations governing 510(k) disclosure -- I believe it's

13 807.87(e) of title 21, or of 21 C.F.R. -- what the FDA

14 says is, don't just give us the label that's going to

15 accompany this product. You are obliged to give us

16 labeling sufficient to describe the intended use of the

17 device, and labeling through a series of case law and

18 decisions says that it is not only -- and in your decision

19 in Cordell, in fact, it is not only what is on the

20 product, it is the promotional materials which accompany

21 the product which demonstrate how the product will be

22 characterized in the marketplace which determine intended

23 use, and that is consistent with the legislative scheme.

24 Congress --

25 QUESTION: Are those promotional materials

33

1 attached to the application to the FDA?

2 MR. FISHBEIN: Frequently they are, Justice

3 Ginsburg. In this case they were not, and my point is

4 simply that it is not sufficient to come to the FDA and

5 say, here is a screw, I'm going to use this as a screw to

6 build crutches, when you know darned well that you're

7 never going to characterize it that way in the market.

8 It's not a crutch screw, it's a bone screw, and --

9 QUESTION: But the thing that makes this case so

10 peculiar is, a Government agency, a private Attorney

11 General coming in to say that the agency has been

12 defrauded. I don't know of any precedent for a private

13 citizen coming in and saying, Government agency, I'm going

14 to be your champion, you have been defrauded.

15 It's not like in the SEC. The SEC says, yeah,

16 we need people to help us enforce because we can't go

17 after all those bad actors, quite different from here,

18 saying, agency, you've been defrauded, and we private

19 citizens are going to decide. Is there any precedent,

20 anything like this?

21 MR. FISHBEIN: I believe that there is, Justice

22 Ginsburg. I think, in fact, your opinion in Medtronic, at

23 least the unanimous portion, says that private plaintiffs

24 can rely upon violations of food, drug, and cosmetic law

25 if they can otherwise do so under State law to recover

34

1 damages.

2 QUESTION: I don't mean the FDA, because as far

3 as I know this is a novel claim. Is there any case where

4 citizen X has successfully maintained a claim for fraud on

5 any three- or four-letter agency that you want to pick?

6 MR. FISHBEIN: I believe in the securities area

7 there is, Your Honor. I can't cite the case, but your --

8 this Court's recognized --

9 QUESTION: Where there's a claim for fraud on

10 the SEC?

11 MR. FISHBEIN: Sure. Where you have a false

12 filing with the SEC and people purchase in reliance on the

13 false information contained in that filing, I think it is

14 actually a statutory cause of action.

15 QUESTION: That's a -- but that's --

16 QUESTION: That's fraud on them. I mean, once

17 you have a false -- you made a false statement in a filing

18 that you know is going to be presented to -- in a

19 prospectus that you know is going to be presented to

20 buyers, that's fraud on them, but this is not fraud on

21 your clients. I mean, this is quite a different

22 situation.

23 MR. FISHBEIN: It is not fraud on our clients,

24 Justice Scalia, but the common law does not require as a

25 tort matter fraud on the clients.

35

1 QUESTION: Do you have another example besides

2 the SEC filings, which are, of course, meant to be

3 presented to the investors and therefore constitute fraud

4 on the investors themselves?

5 MR. FISHBEIN: There was a case, an important

6 case decided by the Third Circuit, not by you, by Justice

7 Becker, called Stanton By Brooks v. Astro Pharmaceutical,

8 which held in the early 1980's that the failure to

9 discharge duties of disclosure in connection with a drug

10 or device rendered the product defective per se under

11 section 402 of the Restatement, and allowed a court to

12 award damages based on the theory that the FDA, had they

13 received appropriate disclosures, would have acted

14 differently and would have protected the plaintiff from

15 injury and therefore which allowed recovery.

16 There are also other appellate cases within the

17 appellate system which are cited in our brief, Learjet v.

18 Spindlauer, which I think is a Fifth Circuit case, and

19 there are a few others which recognize -- and that case

20 was an aviation case, where a fraudulent -- a license was

21 obtained fraudulently from the FAA, also a case called

22 Hawkins, cited in our briefs, where the -- again a Federal

23 court case, an appellate case, where the court recognized

24 that that kind of misrepresentation changes the whole

25 regulatory calculus, deprives the public of an informed

36

1 decision with respect to the product, and that could

2 render the product dangerous and people can recover based

3 on that.

4 So there is a recognition both in the common law

5 of that, and what I would suggest is that in Medtronic,

6 both explicitly and as a matter of implied preemption

7 which is not dealt with directly in Medtronic, that States

8 are not foreclosed from doing that, because there is no

9 impact here on any function with which the FDA is

10 entrusted.

11 QUESTION: Well, I found it rather hard to find

12 that in my opinion in Medtronic, which was a separate

13 opinion.

14 MR. FISHBEIN: Your opinion, Justice Breyer, was

15 the one opinion which didn't go off on the distinction

16 between remedies and requirements and the State --

17 QUESTION: I mean, I would find it surprising,

18 wouldn't you, that if you have a private right of action,

19 to say in any of the thousands and thousands of State

20 agencies or Federal agencies that what the State did, you

21 see, what these people did is, they got their brief in

22 late. They got their brief in late, violating the

23 Federal -- violating the agency rule, and if they -- doing

24 that, they wouldn't have gotten the approval.

25 MR. FISHBEIN: Well --

37

1 QUESTION: There would be no cause of action

2 there.

3 MR. FISHBEIN: No, there wouldn't be.

4 QUESTION: No, all right, so -- and because it

5 would be up to the agency to enforce its own rule, isn't

6 it?

7 MR. FISHBEIN: No. I would have a different

8 reason for that, Your Honor, and the reason I would

9 advance for that --

10 QUESTION: Is?

11 MR. FISHBEIN: -- is that in that particular

12 circumstance the failure to follow Federal law was not

13 something that had to do with the safety of --

14 QUESTION: No, no, no. Whether it's Federal or

15 State, I don't care. I mean, take any agency you want.

16 Take a municipal council, I don't care. It would just be

17 amazing to me that you'd find somebody getting a private

18 right of action based upon, under ordinary tort law

19 principles, based upon the agency not following its own

20 procedural rules, that the person violated some procedural

21 rule, because you'd say that's for the agency, and of

22 course my question is, how is this any different, and of

23 course my opinion in Medtronic says that we look to see

24 what the agency wants and if the agency thinks it's

25 preempted, good-bye, and that seems to me in essence what

38

1 you have here.

2 Now, I'm putting it that to you to get an

3 answer, not because I'm wedded to it.

4 MR. FISHBEIN: There's a couple of embedded

5 questions in there, Your Honor. One, I do believe it's a

6 traditional principle of tort law, not as a matter of

7 implying cause of action but as a matter of negligence per

8 se, or liability per se, that where somebody violates a

9 statute or regulation, regardless of who's in charge of

10 administering that statute or regulation intended for the

11 protection of the public, any harm caused by that is

12 actionable under State law, not because you're implying a,

13 in the case of Federal law a Federal cause of action, but

14 just as a matter of negligence per se.

15 So the question then is, is this a substantive

16 safety regulation that we're talking about here, or is it

17 a procedural regulation, and I say it's a substantive

18 safety regulation, because the heart of the Federal

19 scheme, and there's hundreds of cases on this regulating

20 food, drug, and cosmetics, is, you are only regulating

21 by -- with respect to what the device or drug is, and that

22 is a function of two things, both what it physically is

23 and what it's conceived to be for marketing purposes, and

24 if you misrepresent to the public what it is, or you

25 misrepresent to the agency what it is, you're undermining

39

1 the central safety aspects here.

2 For -- it's easy to see that in this case,

3 because when the agency was told this was a spinal

4 fixation device and that that's what it was, they said,

5 you can't put that on the market.

6 QUESTION: There are a number of things. We're

7 on precisely the same track, because in my mind I was

8 thinking substantive/procedural, something like that, and

9 what's fraud, and then if I push it towards -- I can be

10 elliptical because I think we're thinking alike.

11 The -- if you push it towards the substantive

12 side, then I get into the problem of the agency having a

13 bunch of powers. They could enforce it through injunctive

14 relief, monetary penalties, seizure, criminal

15 prosecutions, withdrawal of market clearance.

16 And then I think, well, shouldn't that be up to

17 them? I mean, after all, their job is to protect the

18 public from monopoly, and if they think that really this

19 particular misrepresentation is not that serious in light

20 of their basic job, shouldn't it be up to them to decide

21 how to enforce it rather than up to a jury?

22 MR. FISHBEIN: We don't know here whether they

23 think it's serious or not, so that's the first point, but

24 more fundamentally, insofar as the remedies that you've

25 enumerated are concerned, I do believe that the FDA has

40

1 exclusive prosecutorial discretion. I do think that

2 section 337 of title 21 does preempt the ability of States

3 to give, for example, injunctive relief, civil penalties,

4 and to suspend somebody's license to sell these products.

5 I agree with all that.

6 But what the Federal law doesn't give, and what

7 Congress reserved to the States when it passed the Federal

8 law, it doesn't give anybody the ability to compensate the

9 victims that I represent for the damages that he's

10 sustained as a result of the fraud.

11 QUESTION: That's because the FDA doesn't want

12 them compensated for this kind of thing because it's

13 decided that the harm to them, which they're not

14 understating, would be outweighed by the need to get this

15 drug on the market to fight the monopolistic advantage

16 that people would have without it being there.

17 MR. FISHBEIN: Your Honor, they made no such

18 determination in this case.

19 QUESTION: No, no, that's true, but they say,

20 the way we make these determination is by deciding which

21 remedy to pick, and we pick the lesser ones when we think

22 we want this thing on the market. We pick the greater

23 ones when it should be gotten rid of, and if you leave it

24 up to the jury, of course, that's the same as getting rid

25 of the product.

41

1 MR. FISHBEIN: I disagree that it's the same as

2 getting rid of the product. What happened is, the product

3 as bone screws entered the market, I say unlawfully. Now,

4 if the FDA has not revoked the 510(k) clearance it's

5 because the product is still legitimately on the market as

6 a bone-screw product. The problem is here, we have an

7 illegitimate pretextual application which the Government

8 concedes was pretextual and would be improper if the facts

9 we allege are true.

10 QUESTION: Mr. Fishbein, may I stop you there --

11 MR. FISHBEIN: Certainly, Your Honor.

12 QUESTION: -- because I didn't realize that was

13 the Government's concession, and Mr. Geller told us that

14 there was indeed an effort to go to the FDA to complain

15 about this and it was unsuccessful.

16 MR. FISHBEIN: The F -- we have gone to the FDA

17 and they have not ruled yea or nay, and I believe that

18 their brief concedes that they have not made a

19 determination as to the lawfulness of this conduct in any

20 context, both when the application was received by them,

21 or subsequently, and they take the position that when

22 someone applies for 510(k) clearance they cannot simply

23 list a use, an intended use, in quotes, which is

24 pretextual.

25 The Government's position, and I think it's

42

1 right, is that the use must be bona fide. You must

2 intend, the product must have an intended use, meaning you

3 intend to characterize it in the market for that use.

4 Now, true --

5 QUESTION: Shouldn't there be some, even a

6 notion of -- assuming that there could be such a complaint

7 at all, of primary jurisdiction, or exhaustion or

8 something, to let the agency speak for itself? If it

9 doesn't think that it's been defrauded, that should be the

10 end of it.

11 MR. FISHBEIN: The doctrine of exhaustion I

12 think does not apply here, because that presupposes that

13 the agency has the power to give a remedy that the

14 plaintiffs want and in this case that would be damages,

15 and the agency clearly does not have that power.

16 The doctrine of primary jurisdiction is a

17 doctrine which enables a court to make a referral to an

18 agency to make a determination of some issue of fact

19 that's germane to the case. Of course, nobody asked for

20 such a referral here and, looking at your recent case,

21 Southwest Marine, Inc. v. Gissone and Rider v. Cooper, it

22 seemed to me that if there was no primary jurisdiction

23 asserted in those cases, one, for example, whether someone

24 had Longshoreman and Harbor Workers Compensation Act

25 status or seaman status, that was not to be referred to

43

1 the agency there, that this seemed to me to be an

2 inappropriate case for the exercise of primary

3 jurisdiction.

4 QUESTION: Mr. Fishbein, even if you say in this

5 case the agency hasn't ruled yea or nay on the particular

6 facts here, do you have at least some other case where the

7 FDA, which has this authority to find that it has been

8 defrauded, has withdrawn something from the market or has

9 imposed some other penalty because the application did not

10 contain uses that were anticipated, although they were not

11 set forth in the application?

12 MR. FISHBEIN: I know of no such case, Justice

13 Scalia, but that's not our position.

14 QUESTION: Don't you think that's significant?

15 Doesn't it tend to support Mr. Geller's contention that

16 all the FDA cares about is what use do you want authority

17 to market for, and so long as you set forth that use,

18 you'll have authority to market for it, and anything else,

19 you may anticipate it's going to be used for other things,

20 but that's all we're approving, is this marketed use?

21 MR. FISHBEIN: But Justice Scalia, that's not

22 the agency's position and that's not what its regulations

23 say. They say that you must furnish the agency with a

24 bona fide intended use, not a pretextual one, meaning that

25 at least as to the use that you're listing to the agency,

44

1 you intend to characterize that device in the marketplace

2 in that manner.

3 QUESTION: You intend to market it for that use,

4 and there is no allegation here that it was marketed for

5 anything except the approved uses.

6 MR. FISHBEIN: That's not correct, Justice

7 Scalia.

8 QUESTION: It isn't?

9 MR. FISHBEIN: The allegation to the complaint

10 here and the factual support here indicate that this

11 device was never, never marketed for long-bone use. It

12 was only marketed for spinal application, and it was

13 marketed -- in fact, the president of AcroMed within a few

14 days of this clearance told somebody that this was --

15 their application to the FDA was a labeling sleight of

16 hand which in no way changes the intended use of the

17 product.

18 There virtually is fraud conceded here by virtue

19 of the circumstances. It's an unusual circumstance, I

20 grant. There's not too many people that would be this

21 brazen, but that's what happened here.

22 QUESTION: There is a contest on that point, as

23 to whether it was marketed improperly. Mr. Geller says it

24 wasn't. Your cite says it was.

25 MR. FISHBEIN: It was not marketed properly. It

45

1 was -- in fact, it was -- we contend that this fraud did

2 not occur by itself but occurred as part of a deal, or a

3 concocted scheme between Buckman and AcroMed as a two-

4 step process. First, they couldn't get it on the market

5 as a pedical screw fixation device, which is all it ever

6 was. So they lied to the FDA, then they got clearance,

7 meaning, it was found substantially equivalent for long-

8 bone use, but they knew they were going to market it the

9 second it got approved for -- not for long-bone use.

10 There's not a person in the United States that ever

11 received this, as far as we can tell, for long-bone

12 application, and --

13 QUESTION: Mr. Fishbein, are there other State

14 causes of action that your client could pursue that don't

15 raise this problem of having to establish that the FDA

16 called it wrong, a failure to warn, or some other kind of

17 negligence cause of action?

18 MR. FISHBEIN: The answer to your question,

19 Justice O'Connor, is, as to Buckman, no. As to other

20 defendants, yes, but as to other defendants, why would we

21 bring Buckman in this if we had other solvent defendants?

22 The principal defendant here was AcroMed Corporation.

23 AcroMed Corporation was basically insolvent with respect

24 to this liability and we ended up settling our claims

25 against AcroMed on a limited --

46

1 QUESTION: So Buckman is the one that has the

2 assets and therefore you need a different cause of action.

3 MR. FISHBEIN: They have additional assets,

4 that's correct, and we are attempting to try to recover

5 for our clients all the damages to which they're legally

6 entitled. I suspect even Buckman does not have sufficient

7 assets, because this fraud and its consequences were so

8 widespread and caused so much injury that there's simply

9 not enough money with the potential culpable defendants.

10 QUESTION: But the cause of action does require

11 the jury to decide, in effect to second-guess the FDA?

12 MR. FISHBEIN: I disagree with that, Justice

13 O'Connor, and here's why. The FDA did nothing wrong, or

14 nothing that needs to be second-guessed. They were

15 told -- if we look at page 58 of the joint appendix, the

16 FDA asked Buckman, what is the intended use of this

17 device? Page 58 is a letter from Buckman back to the FDA,

18 because the FDA had reviewed this and seen it was a spinal

19 device before.

20 Now it's being presented as a long-bone device,

21 and Mr. Shlerf of Buckman said, for purposes of this

22 510(k), this is a long-bone fixation device, and as a

23 long-bone fixation device, the FDA was correct in

24 determining that there were predicate devices on the

25 market which had the same technical characteristics as

47

1 this device, and it was okay.

2 There's nothing about our claim that would

3 require a jury to say the FDA was wrong. In fact --

4 QUESTION: Well, except section 132 of the

5 complaint says, were it not for these fraudulent acts and

6 statements the FDA would not have issued the 510(k)

7 clearances for the screw for any purpose, the devices

8 wouldn't have been introduced into interstate commerce,

9 and plaintiff wouldn't have been exposed.

10 MR. FISHBEIN: Yes, Your Honor.

11 QUESTION: I mean, that looks pretty much like

12 second-guessing to me.

13 MR. FISHBEIN: Actually, it's enforcing what the

14 FDA had previously determined on two occasions, one of

15 which was about 3 or 4 months before that. The FDA made a

16 specific determination that these devices were not

17 substantially equivalent for pedical screw use or spinal

18 use twice, and the consequence of that was that they

19 didn't belong in the market.

20 So what we're doing here is simply vindicating

21 an explicit regulatory determination made to protect

22 persons in the position of the plaintiff from the kind of

23 harm that occurred here.

24 QUESTION: But you're also something of an

25 interloper. I mean, under the Government's view the FDA

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1 has various authorities to follow this thing up and may

2 choose not to follow it up.

3 MR. FISHBEIN: That's correct, Your Honor, but

4 the Government's authority is in its capacity to protect

5 the public through the remedies given to it, and my

6 contention is, and I think --

7 QUESTION: Well, the Government's authority is

8 also to limit those remedies if it so chooses.

9 MR. FISHBEIN: I would suggest, Your Honor, that

10 the Government has no power to limit the availability of

11 damage relief and that Congress did not want it to limit

12 the availability of damage relief.

13 QUESTION: Well, if you say Congress didn't

14 intend to limit damages you're probably right, but the

15 Government -- assuming if Congress felt otherwise it would

16 be true, too.

17 MR. FISHBEIN: Oh, if Congress said no damages?

18 There's no question that Congress has the power to do

19 that.

20 QUESTION: No, but specifically, assuming what

21 you say is right, after the event the FDA finds out about

22 this, it says, we want to leave this stuff out there,

23 because it's more helpful than it is harmful, and

24 therefore we give you a wrist slap, you see, and why are

25 they doing that? Because they want the drug out there to

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1 lower price.

2 Now, you come along and say, I'm going to a

3 jury, and that will make sure it can't be out there.

4 Now, why doesn't this range of remedies give the

5 FDA just the authority that I mentioned, an authority that

6 you'll take away from them if you go to the jury, however

7 meritorious your case might be here?

8 MR. FISHBEIN: I think, Your Honor, that

9 Silkwood basically answers that question both in terms of

10 the majority and the dissent in Silkwood, which said that

11 there is an independence here of regulatory restraint and

12 damage recovery which can and should and must peacefully

13 coexist with one another, so that the FDA, or in that case

14 the nuclear regulatory authorities, regulate -- from a

15 public regulatory standpoint they do what they do and the

16 State courts administer a remedy system which may, in

17 fact, have penal aspects to it, because in Silkwood,

18 remember, there was an award of punitive damages. We're

19 not asking for that here.

20 So I think that the two can peacefully coexist,

21 and it's up to the State system applying State rules --

22 there are some States that would not allow us to recover

23 here, but there are many others that would, and there's --

24 I think what Congress made clear in enacting both the

25 Food, Drug, and Cosmetic Act and the medical device

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1 amendments to that act, was that empowering the FDA to

2 have certain nondamage remedies should not usurp the

3 State's power to provide remedies for people who are hurt.

4 QUESTION: Thank you, Mr. Fishbein.

5 MR. FISHBEIN: Thank you, Your Honor.

6 QUESTION: Mr. Geller, you have 2 minutes

7 remaining.

8 REBUTTAL ARGUMENT OF KENNETH S. GELLER

9 ON BEHALF OF THE PETITIONER

10 MR. GELLER: Thank you, Mr. Chief Justice. Just

11 a few things.

12 First, in response to Justice Scalia's question,

13 there is no precedent for this cause of action. Every

14 court of appeals, with the exception of the court below,

15 has held that the so-called fraud-on-the-agency claims are

16 preempted.

17 Secondly, I want to address Medtronic, which is

18 the centerpiece of the plaintiff's argument here. This

19 case is completely unlike Medtronic, in part for some of

20 the reasons Mr. Gornstein was getting into. Medtronic was

21 a garden-variety product liability claim under State law,

22 design defect, failure to warn. There was no requirement

23 in Medtronic that the Food, Drug, and Cosmetic Act be

24 construed, there was no suggestion that you had to inquire

25 into any agency determinations, there was no fraud-on-

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1 the-agency claim in Medtronic, and there was no claim of

2 implied preemption in Medtronic.

3 In fact, the existence of Medtronic suggests,

4 the decision in Medtronic suggests that the plaintiffs

5 have many common law claims available to them if these

6 products were defective, so it's not a case that the Court

7 was confronted with in Medtronic, where the argument of

8 preemption would have wiped out many preexisting State law

9 claims. Here, no claim -- the States would not be ousted

10 of any claim that would have existed prior to the

11 enactment of the medical device amendments in this case.

12 Third, I just want to focus for the Court's

13 attention at, if you look at page 136 of the joint

14 appendix there's a strong suggestion here that what the

15 plaintiff's label as fraud on the FDA the irony here is,

16 actually was an idea that originated with the FDA to break

17 up this one device into its two constituent parts and to

18 seek 510(k) approval for each, so the notion that a State

19 court years later could conclude this was a fraud on the

20 FDA and enter a judgment that would -- might have the

21 effect of removing the device from the market is

22 completely inconsistent, we think, with Congress' scheme

23 here, which is to centralize enforcement authority with

24 the FDA.

25 QUESTION: Mr. Geller, I don't understand one

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1 thing about your case.

2 MR. GELLER: Yes.

3 QUESTION: I don't want to eat up your time,

4 but do you contend that your client must -- that a bona

5 fide intended use is at least an intended use that you

6 intend to market? Do you --

7 MR. GELLER: No.

8 QUESTION: What is bona fide --

9 MR. GELLER: No, there's absolutely no

10 requirement.

11 QUESTION: You don't even have to intend to

12 market it?

13 MR. GELLER: You do not have to --

14 QUESTION: What does bona fide mean, then?

15 MR. GELLER: It's not our -- it's not our word,

16 it's the plaintiff's word. What you have -- you're

17 seeking approval to market for a particular -- for a

18 particular use. You can't market for some other use, but

19 there's no requirement under the law that you market for

20 that use.

21 Many devices and drugs are on the market --

22 QUESTION: Then why do we have a fraud cause of

23 action, as opposed to a cause -- on the part of the

24 agency, as opposed to a cause of action for failing to

25 abide by the terms of your regulatory applications?

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1 MR. GELLER: Well, Justice -- if I may answer

2 the question, Mr. Chief Justice.

3 Justice Souter in making a 510(k) application,

4 you not only have to provide the intended use, you also

5 have to provide many details about the physical or

6 technological characteristics of the device. There may be

7 test results that are presented. There are many occasions

8 where you might actually present fraudulent information

9 but it doesn't relate to the intended use.

10 CHIEF JUSTICE REHNQUIST: Thank you. Thank you,

11 Mr. Geller. The case is submitted.

12 (Whereupon, at 11:00 a.m., the case in the

13 above-entitled matter was submitted.)

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