The Lance Armstrong saga continues (we've written on Lance HERE, HERE, HERE)... this week saw a class action lawsuit filed against Lance Armstrong and various publishers on behalf of California consumers who claim they were misled by Defendants' statements and purchased Defendant Armstrong's books based upon the false belief that they were true and honest works of nonfiction.

When I first heard about the class action, I immediately thought "Are you kidding me?  Sure, we'd all like to sue Oliver Stone for subjecting us to JFK in 10th grade history class but this? ... come on."

SO, is this class action against Lance Armstrong legit? Actually, it might be.

Stutzman, et al v Lance Armstrong, et al, filed January 22, 2013 in the US District Court for the Eastern District of California, alleges Lance Armstrong et al, made multiple misrepresentations contained in Lance Armstrong's books, IT'S NOT ABOUT THE BIKE: My JOURNEY BACK TO LIFE and EVERY SECOND COUNTS, and advertisements and marketing for the books (including the front and back cover and flyleafs media press kits, during television and newspaper interviews, on Internet websites and at personal appearances made by Armstrong) as true and honest works of nonfiction when, in fact, Defendants knew or should have known that these books were works of fiction. Further, the lawsuit claims Lance Armstrong et al advertised marketed and sold these books as a works of nonfiction.

The Plaintiffs allege they were misled by Lance Armstrong's and the other Defendants' statements and purchased Lance Armstrong's books based upon the false belief that they were true and honest works of nonfiction. In their 59-page Complaint, Plaintiffs cite to the exhaustive and growing body of evidence and recent admissions by Lance Armstrong himself to support the allegations of misrepresentation and fraud regarding Lance Armstrong’s use of banned substances (EPO, blood doping, testosterone) during his professional cycling career.

Knowing that the mere claim that his success was due to superior physical training, proper diet and an extraordinary spirit and drive to succeed was not enough to quell suspicions and rumors that he doped, Defendant Armstrong wrote lengthy passages in IT'S NOT ABOUT THE BIKE: My JOURNEY BACK TO LIFE that were intended to convince readers and consumers - including Plaintiffs and the members of the Class - that the rumors of Armstrong's doping were unfair and untrue because of the extensive drug-testing regime employed by the DCI and the organizers of the Tour de France... Complaint ¶ 20

In order to survive a motion to dismiss, the Plaintiffs will have to overcome the pleading requirements of Federal Rule of Civil Procedure 9(b) which requires state-law claims grounded in fraud to be plead with particularity and requires a plaintiff to plead with particularity the circumstances constituting the fraud while malice, intent, knowledge, and other conditions of a person's mind may be alleged generally. “Averments of fraud must be accompanied by the ‘who, what, when, where, and how’ of the misconduct charged.” Yess v. Ciba–Geigy Corp. USA; Villegas v. Wells Fargo Bank, N.A. (N.D. Cal. Sept. 17, 2012).

The Complaint almost certainly meets Rule 9(b)’s requirements as to Lance Armstrong. As to the other named Defendants however, the Plaintiffs may not get so far. This lawsuit was brought in a Federal Court in the Eastern District of California – a court within the jurisdiction of the 9^th Circuit. The United States Court of Appeals for the 9^th Circuit has held that a book publisher owed no duty to a car dealership owner for allegedly publishing errors concerning emission systems in automobiles. Sinai v. Mitchell Books (9th Cir.1993). In 2000, a New York court followed the 9^th Circuit’s lead and supported the proposition that publishers have no duty to investigate the accuracy of its books.

The Sinai court stated that absent an express warranty, publishers have no duty to investigate the accuracy of the contents of the books it publishes and concluded that such a duty could not be created because a publisher's right to publish free of fear of liability is guaranteed by the First Amendment and the overriding societal interest in the untrammeled dissemination of knowledge. While the Sinai case is 20 years old and may be revisited or distinguished at this point, it may be that the “deep pockets” of the publishers in the case might not be reachable by the Plaintiffs. Which would leave Lance Armstrong alone to pay any judgment.

This case will be interesting to watch in light of Lance Armstrong's recent admissions, alleged recent lies, and anticipated flood of lawsuits resulting therefrom.  If the case is permitted to move forward it will no doubt be because of Lance Armstrong's years of agressive lies and denials about his drug use during his cycling career.  The crux of the case is the contention that the Plaintiffs would not have purchased the books had the truth not been withheld by Lance Armstrong. 

The Boulder Business Lawyers at Laszlo & Associates, LLC provide legal counsel for businesses on a variety of business needs, including products liability, risk management, corporate protection, and legal compliance.

Democrats in the House and Senate introduced bills that would permit generic drug manufacturers the ability to revise the warning labels for generic drugs--in effect making the regulations applicable to brand name drugs applicable to generics. However, it appears that both the bills in the House and Senate bills died in committee.

The bills were introduced in response to the Supreme Court's decision in Pliva v. Mensing about which we have previously written (here and here). In Mensing, the Supreme Court held that federal law preventing generic drug manufacturers from independently changing their generic drugs' warning label pre-empted state law failure-to-warn claims. In essense, according to the Court, it was "impossible" for generic drug manufacturers to comply with both state and federal law. As we previously stated:

Thus, according to the Court, generic drug manufacturers are caught between a proverbial “rock and a hard place”: because state law failure-to-warn claims impose a duty on generic drug manufacturers to provide a “safer label” than required by federal regulations, if the manufacturers had independently changed their labels to satisfy their state-law duty, they would have violated federal law which requires generic drug labels be the same at all times as the corresponding brand name drug labels. “Thus, it was impossible for the Manufacturers to comply with both their state-law duty to change the label and their federal law duty to keep the label the same.”

The bills would have changed this dynamic by allowing generic drug manufacturers the ability to propose changes to the warnings for their generic drugs in response to safety concerns.

Interestingly, 41 state attorney generals signed a letter in support of the bills, stating:

Consumers whose prescriptions happen to be filled with the brand-name version of a drug are protected by state law from inadequate warnings, but consumers whose pharmacists fill their prescriptions with the generic versions are now denied this protection. Congress can readily cure this problem by amending federal law.

Despite the support of the attorney generals, the bills appear to be going nowhere. Consequently, for now, generic drug manufacturers remain largely immune from product liability lawsuits, particularly those based on state law failure-to-warn claims.

The Boulder Business Defense Lawyers at Laszlo & Associates, LLC provide legal counsel for businesses on a variety of business needs, including products liability, risk management, corporate protection, and legal compliance.

Despite the Supreme Court's decision in Pliva v. Mensing whereby the Court held that federal regulations preventing generic drug manufacturers from independently changing their drug's labeling pre-empted state law failure-to-warn claims for injuries caused by the generic drugs, the First Circuit in Bartlett held that the generic drug manufacturer could still be liable under state law design defect claims because they could have refused to manufacture the drug in the first place:

But although Mutual cannot legally make sulindac in another composition (nor is it apparent how it could alter a one-molecule drug anyway), it certainly can choose not to make the drug at all; and the FDCA might permit states to tell Mutual it ought not be doing so if risk-benefit analysis weights against the drug, despite what the Supreme Court made of similar arguments in the labeling context….

 And, not only has the Supreme Court not yet said it would extend [Mensing's] exception to design defect claims, but—while the generic maker has no choice as to label—the decision to make the drug and market it in New Hampshire is wholly its own. Thus, Bartlett having lost her warning claim by the mere chance of her drug store's selection of a generic, the Supreme Court might be less ready to deprive Bartlett of her remaining avenue of relief.

True, such arguments can be turned on their head. To refuse preemption here is…in tension not with the holding but with part of [Mensing’s] rationale; [however,] a generic maker can avoid defective warning lawsuits as well as design defect lawsuits by not making the drug...

As the First Circuit partially admitted in its opinion--its decision was at least opposed to the rationale of Mensing--but not the holding. Our previous posts covered the seemingly logical inconsistencies in the First Circuit's reasoning.  Moreover, other courts have since disagreed with that very same reasoning employed by the First Circuit. However, despite the First Circuit's characterization, there wasn't much of a split in the circuits on this issue anyway. For this reason, Mutual appealed, specifically presenting the following question to the Supreme Court on appeal:

Whether the First Circuit erred when it created a circuit split and held—in clear conflict with this Court’s decisions in PLIVA, Inc. v. Mensing, 131 S. Ct. 2567 (2011); Riegel v. Medtronic, Inc., 552 U.S. 312 (2008); and Cipollone v. Liggett Group, Inc., 505 U.S. 504 (1992)—that federal law does not preempt state law design-defect claims targeting generic pharmaceutical products because the conceded conflict between such claims and the federal laws governing generic pharmaceutical design allegedly can be avoided if the makers of generic pharmaceuticals simply stop making their products.

The apposite statement in the petition question is that the First Circuit created the circuit split with its very own decision--despite the First Circuit's views to the contrary. However, as the First Circuit stated: “[g]iven the widespread use of generic drugs and the developing split in the lower courts, …this issue needs a decisive answer from the only court that can supply it.” The First Circuit's wish has been now been granted.

The Boulder Business Lawyers at Laszlo & Associates, LLC provide legal counsel for businesses on a variety of business needs, including products liability, risk management, corporate protection, and legal compliance.

The Philadelphia office of the Equal Employment Opportunity Commission recently found that a Rite Aid Pharmacy in Perryman, Maryland violated the Americans with Disabilities Act (ADA) when it terminated former employee Christopher Fultz for having epilepsy, and ordered the pharmacy to pay a $250,000.00 monetary award.

What is most striking about this case is not the high monetary award, but rather Rite Aid’s flagrant disregard for the laws and protections provided by the ADA.

Mr. Fultz had filed a previous complaint with the EEOC alleging discrimination based on his disability of having epilepsy. In response to this claim, Rite Aid retaliated against Mr. Fultz by forcing him to undergo a fitness-for-duty exam with an occupational health doctor. Mr. Fultz claimed that the doctor had no experience in treating individuals with epilepsy. Based on the lone opinion of this unqualified doctor, Rite Aid terminated Mr. Fultz’s employment.

I have to say, it is shocking to see a company of this size and name recognition handle a discriminatory claim filed by one of its employees in this way. The law is clear that upon receiving the complaint of discrimination, Rite Aid should have investigated whether or not the pharmacy could reasonably accommodate Mr. Fultz’s disability thereby eliminating any safety concerns his disability presented, or investigated to see if Mr. Fultz’s disability posed an actual safety threat to the workplace.

Rather than properly investigating the claims, Rite Aid egregiously retaliated against Mr. Fultz and that is the most shocking aspect of this case.

It is important for any business to understand the laws of the ADA and its corresponding responsibilities under the Act, and to train all of its employees accordingly. Without proper knowledge and training, a business subjects itself to a toxic work environment and costly litigation. Spending money on the front end in terms of discrimination trainings will save businesses a fortune in litigation and employee turnover.

The Boulder employment law attorneys of Laszlo & Associates Boulder provide legal counsel to for-profit and non-profit businesses on a variety of business needs including startup and corporate formation, employment law, risk management, corporate protection and legal compliance.

This brings up a great question: "How does one get a veto in a startup?" Well, like anything else you agree on with your partners, you negotiate.  But then what do you do? ... Write it down!  Yesterday, we wrote about some things all startups should not avoid doing early on.  Number one on the list was choice of business entity.  It is during this process that you will best be able to make and memorialize agreements as to how the business will be run.  In a Limited Liability Company (LLC), for example, it will come in the form of an Operating Agreement.  An operating agreement is the governing document of the company, which, while similar in many respects to a stock corporation’s by-laws, contains the agreement of the members as to how the LLC will conduct its day-to-day business.  It is in the operating agreement you could include a provision providing for a "veto" much like Mr. Brodsky had in his startup. 

Q: How does one get a veto in a startup?

A: Negotiate.

It is best to memorialize any (and all) such agreements early on in the startup to avoid (or at least minimize) disputes at critical points.  An agreement for a veto may not be necessary in your situation, but there may be something else you want - or are asked to give.  In Mr. Brodsky's situation, the location of the business was a critical decision to him - so much so that he used his veto a couple of times.  I would venture a guess that when Mr. Brosky exercised his veto power, his business partners were at least a little annoyed.  But having a solid agreement will help in such situations as reasonable minds can simply point to the agreement and move on. 

Certainly, agreements are always up for interpretations, so be as clear and forthright when drafting them.  Drafting an operating agreement should be done by a lawyer or even lawyers depending on its scope and the parties involved.   If you are asked to give something up, it is always a good idea to consult your own lawyer - i.e., one who represents you and your interests, not the business itself.

Laszlo & Associates' Boulder StartUp Lawyers provide legal counsel to businesses on a variety of business needs including startup and corporate formation, employment law, risk management, corporate protection and legal compliance.

We take for granted regular dental visits —we understand that the check-up dollars spent now can save us countless cavities, root canals … and … many more dollars (and pain) down the road. We take our automobiles in for regular oil changes, check-ups and tire rotations —why?  Because we understand that these routine maintenance tasks can and will save us time and money in the long run.

So, why is it that as we are considering a new business venture or off and running with our dream business idea, we do not involve legal counsel to guide us through the legal nuances of forming, starting and operating our business? Most likely because we are conditioned to believe that lawyers are expensive.  Certainly some lawyers are very expensive - but you would be surprised at how affordable quality legal advice actually is.

In his concise and timely post, Forbes' Mark Britton identifies Seven Legal Hiccups That Can Crush Your Startup - and explains why failing to get “your legal house in order” is a chronic failure of start-ups.

Mark Britton's 7 Legal Hiccups That Can Crush a Startup:

     1.) Choosing the Wrong Corporate Entity

     2.) Putting Off a Founders’ Agreement

     3.) Using Someone Else’s Trade Name

     4.) Failing to Protect Intellectual Property

     5.) Not Understanding Key Contracts

     6.) Failing to Comply with Federal or State Securities Laws

     7.) Not Hiring a Startup Lawyer

However, more often than not these failures persist in long-established businesses as well.  I’ve counseled multinational corporations that simply failed to do the simplest of maintenance over a period of years which led to millions of dollars in catch up, fines and lawsuit settlements.  It all could have been avoided.  I recently counseled a five person start up that chose the wrong business entity for their capitalization plan and didn’t look back until it was too late.  What would have been a nominal cost turned into tens of thousands of dollars in cleanup work to avoid litigation.

Again, it seems that we are conditioned to avoid legal counsel rather than seek it out until we are faced with the legal equivalent of a root canal or major engine overhaul. So, foregoing a few legal hours “check-up” turns into a huge problem—that may or may not be easily resolved – but will cost you time and money.

For example, if you have failed to take the necessary steps to protect your intellectual property or failed to adequately investigate whether you are infringing on someone else’s intellectual property, months or years of hard work building and marketing your brand may be lost. If you have selected a form of doing business aimed at insulating your personal assets from liability but then fail to observe the necessary entity formalities, you may, in the end, face unlimited personal liability.

"Your legal strategy will never catapult your company to $1 billion in sales, but it will help you avoid tripping over some costly, easily preventable mistakes."

- Mark Britton

Successful businesses not only start with a great idea but also adopt a strategy and philosophy for success—don’t leave legal counsel out of your start-up checklist or your businesses strategic plan.

Laszlo & Associates' Boulder StartUp Lawyers provide legal counsel to for-profit and non-profit businesses on a variety of business needs including startup and corporate formation, employment law, risk management, corporate protection and legal compliance.

First, what is a "Sur-Reply?"  A sur-reply is a reply filed in response to the reply to a motion… motions go like this: Motion >Response> Reply.  Party A ("movant") files a Motion that asks the court to do something and argues its position – Party B ("non-movant") files a response which argues against the Motion – Party A then files a Reply which supports the Motion – but Party A is limited to those arguments and law raised in its original Motion.  After the reply is filed, the issue is “fully briefed.” 

However, when the reply brief raises new material that was not included in the original motion, courts may permit the non-movant to respond to the new material in a “sur-reply.”  No authorization exists in the Federal Rules of Civil Procedure (or the local rules of Western District of Texas) that permit a sur-reply and therefore, the party wishing to file a sur-reply must motion the court for leave to file a sur-reply.  USDC WD Texas Local Rule 7(e)-(f) deals with responses and replies. 7(f) states: “A party may file a reply in support of a motion. Absent leave of court, no further submissions on the motion are allowed.”  Further, a motion for leave is it own motion, separate and distinct from the underlying motion, and therefore, under most local rules (and USDC WD Texas Local Rule CV-7 (i)) requires a “meet and confer" prior to filing.

So, what did Lance Armstrong file?  He filed a sur-reply brief – he did not comply with Local Rule 7 and file a motion asking the court for leave to file the sur-reply itself (strike one) and he did not comply with Local Rule 7(i) and meet and confer with USADA (strike two).  Further, Armstrong did not argue that a sur-reply brief was necessary under the circumstances of the case. He did not show that USADA had presented new material in its reply brief that it had not included in the original Motion to Dismiss. (strike three).  Thus, the Court should find that Armstrong’s surreply brief is improper and should be stricken.

Why did Armstrong’s legal team yet again disregard the local rules?  It’s anyone’s guess … but headed into today’s hearing, it’s my guess that Armstrong’s legal team is clearly trying (desperately so) to get as much information in front of the Court as possible.  Most likely, Judge Sparks read the sur-reply headed into today’s hearing – even if he says otherwise and doesn’t allow the filing to stand.  The goal by Armstrong being just to get it all out and argue like mad today.   

The Boulder business lawyers at Laszlo & Associates, LLC provide legal counsel to businesses on a variety of business needs including products liability, risk management, corporate protection and legal compliance.  For more information on our Boulder criminal defense practice, visit our website at www.laszlolaw.com/civil.  Contact one of our Boulder attorneys if you are need of assistance.

UPDATE: Judge Sam Sparks gave Lance Armstrong until midnight tonight, August 3, to file his response. The Court DENIED Armstrong's request for an extension until August 6. Read Lance v. USADA, et al. Order Granting Extension Until Aug 3, 2012 HERE.  The Court was mindful that USADA's Motion to Dismiss is a dispositive motion, and stated that due to the finality of such a ruling on the Motion, Armstrong should be afforded the opportunity to fully brief the issue.

###

[Our sister blog The Boulder Criminal Law Advisor] has been following and writing (HERE and HERE) about the Lance Armstrong v. USADA, et al. case since it was filed.  Yesterday, in Lance Armstrong v. USADA, et al., Mr. Armstrong's legal team filed a Consent Motion Extension for Extension of Time and Request for Further Extension of Time wherein he requested until August 6, 2012 to respond to USADA's Motion to Dismiss.  Armstrong's lawyers believed they had until August 6, 2012 to respond - USADA contends they had until August 2, 2012 and today filed its Response to Motion for Extension asking the Court to deny the Motion for Extension.  USADA supported its Response with exhibits of last minute emails between Sean Breen, one of Lance Armstrong's lawyers, and USADA attorney Bill Bock that show Breen was mistaken on the calculation of time.

So, when was the response due?  Did Armstrong's legal team screw up?  Let's go through the analysis.

USADA filed its Motion to Dismiss on July 19, 2012.  A motion to dismiss is a dispositive motion.  Under USDC WD Texas Local Rule CV-7(e)(2) which states: “A response to a dispositive motion shall be filed not later than 14 days after the filing of the motion,” Armstrong had 14 days to respond to USADA’s Motion.  USDC WD Texas Local Rule CV-6 states “In computing any time period in any civil case, the provisions of Federal Rule of Civil Procedure 6, as amended, shall be applied.” Thus, Per Fed. Civ. Rule 6(a)(1)(A) you must “exclude the day of the event that triggers the period;” – in this case, the 19^th of July.  Therefore, the 14 day time period started to run on the 20^th of July.  Per Fed. Civ. Rule 6(a)(1)(B), you “count every day, including intermediate Saturdays, Sundays,  and legal holidays…” so, counting 14 days puts us at a due date of August 2, 2012.

NOW here is where things get interesting… we’re not done adding time.  Fed. Civ. Rule 6(d) is called “Additional Time After Certain Kinds of Service.”  And, the Rule states: “When a party may or must act within a specified time after service and service is made under Rule 5(b)(2)(C), (D), (E), or (F), 3 days are added after the period would otherwise expire under Rule 6(a).”  What does this mean?  Let’s go to Fed. Civ. Rule 5.  Generally, Rule 5(a) required USADA to serve the Motion to Dismiss on Lance Armstrong – which it did, under 5(b)(E) by “sending it by electronic means if the person consented in writing—in which event service is complete upon transmission…” when it filed it's Motion with the Court on July 19^th. Confused yet? Don’t be.  Revisiting Rule 6(d) reminds us that because USADA made service under 5(b)(E), Lance Armstrong gets the addition time of three (3) days in which to respond.  Making his response due on Sunday, August 5, 2012 -- BUT, per Fed. Civ. Rule 6(a)(1)(C), which states: "... but if the last day is a Saturday, Sunday, or legal holiday, the period continues to run until the end of the next day that is not a Saturday, Sunday, or legal holiday," the response is due on Monday, August 6, 2012 -- essentially, papers aren't due on weekends or holidays.

So, Armstrong is good right?  WRONG.  Look again at USDC WD Texas Local Rule CV-7(e)(2) which states: “A response to a dispositive motion shall be filed not later than 14 days after the filing of the motion,” Armstrong had 14 days to respond to USADA’s Motion from the filing- not from the service. So Local CV-6 is inapplicable and therefore the above analysis is irrelevant.  Hate lawyers yet?  So, the entire analysis Armstrong's lawyers went through, while correct, did not apply in this case.

Not only is this terribly embarrassing for Armstrong's legal team, there is no question this a huge set back for Armstrong - the Court could very easily refuse to permit him to file a Response at all.  UPDATE: Court granted extension until Midnight August 3, 2012.

Moreover, this is a great lesson on the sheer importance of familiarizing yourself with the peculiarities of the Local Rules in each court in which you practice.  Such a miscalculation could expose Armstrong's lawyers to a claim of legal malpractice.  Missing a deadline is serious business - and its avoidable.  However, even the sharpest lawyers may accidentally miss deadlines - in this case, laziness was not to blame.  I am quite confident there was great attention paid to the above analysis.  But, they missed it.  It would be good practice to always forget about the extra three days under Fed. Civ. Rule 6 when calculating your due dates - if you have 7 days, file in 7 ... 14? file in 14 ... better safe than sorry.

The Boulder business lawyers at Laszlo & Associates, LLC provide legal counsel to businesses on a variety of business needs including products liability, risk management, corporate protection and legal compliance.  For more information on our Boulder criminal defense practice, visit our website at www.laszlolaw.com/civil.  Contact one of our Boulder attorneys if you are need of assistance.

The case involved a plaintiff who purchased two infra-red portable heaters from Home Depot, manufactured by Enerco and Mr. Heater.  According to the plaintiff, because the warnings were inadequate, as they were only in English, she used the two propane heaters indoors which led to her home catching fire, causing $300,000 in damages. However, despite the plaintiff's claims as to the adequacy of the warnings, the district court held as a matter of law that the warnings were in fact adequate.

Additionally, despite alleging in her complaint and summary judgment arguments that defendant manufacturers had a duty under Florida law to provide Spanish language warnings, the plaintiff “did not challenge the district court’s conclusion that Florida law does not automatically impose a duty to provide bilingual warnings on consumer products.”  

Instead, plaintiff presented two issues for appeal: 1.) “the district court erred in concluding that the English-language written warnings and graphic depictions, which were provided, can be deemed ‘adequate’ as a matter of law because she asserts they are inherently contradictory, inaccurate and ambiguous”, 2.) the lack of bilingual warnings was inadequate because the defendants' marketing was directed towards the Hispanic community.

Regarding the first issue, the Eleventh Circuit held “[h]aving considered the totality of the written warnings and graphic depictions, we find that the Defendants adequately notified consumers of the ‘apparent potential harmful consequences’ of the indoor use of the [defendant’s] propane gas heater, including the risk of fire.”  The court was not persuaded that the picture illustrations and written warnings were ambiguous “as to whether the heater could be used inside a person's home and whether the heater posed a fire hazard if used inside a person's home.”  The warnings contained several references that the heater should not be used indoors and also warned of the risk of fire.

As to the second issue, the court was also unpersuaded by plaintiff’s arguments.  There was no evidence that the defendants “regularly and actively” marketed the heaters on Hispanic television or radio stations or Hispanic newspapers.  Prior Florida case law found a duty on the part of the manufacturer to provide bilingual warnings if such a circumstance in marketing and advertising was present.

First of all, it is a little unclear how the English warnings were “inherently contradictory, inaccurate and ambiguous” if they could not be understood in English—which would be the entire point of arguing that the warnings should be bilingual to begin with.  Second, the court upholds the district court’s decision that the warnings were adequate as a matter of law here, but this decision could easily be interpreted to be limited to the facts of this case.  While the court did NOT say there was a duty for a manufacturer to automatically include bilingual warnings, there may be circumstances where it would find such bilingual warnings necessary—particularly, where there is evidence that the product manufacturer directed its advertising and marketing at a particular ethnic community.

The Boulder Business Lawyers at Laszlo & Associates, LLC provide legal counsel for businesses on a variety of business needs, including products liability, risk management, corporate protection, and legal compliance.  

While a clear win for the generic drug manufacturers, Mensing caused some initial concerns for brand name drug manufacturers that worried the decision might be used to make them liable for injuries caused by generic drugs.  The logic here being that because the brand name drug manufacturer controls the warning label based federal law, the brand name manufacturer can effectuate a change to the labeling of a drug--which the generic drug manufacturer must then mirror according to federal regulations.  So a failure to warn of say a possible undisclosed side effect by the generic manufacturer’s drug can equate to brand name manufacturer liability for the brand name drug manufacturer’s failure to change the warning label.  This has been coined by some “innovator liability.”

This issue was recently visited by the Judge Higbee in the Superior Court of New Jersey in Coundouris v. Wyeth, et al., No. ATL-L-1940-10 (June 26, 2012) through a motion to dismiss filed by the brand name manufacturers.  The drug at issue there was metoclopramide (the brand name, Reglan, made by Wyeth then Schwarz then Alaven) which is used to treat gastroesophageal reflux disease and diabetic gastroparesis.  Some of the plaintiffs in Coundouris never took Reglan but the generic metoclopramide. The plaintiffs brought claims of conscious misrepresentation, negligent representation, negligence, claims under New Jersey’s Product Liability Act (“PLA”) for design defect and manufacturing defect, and warranty claims.

In their motion to dismiss, the brand name defendants argued that the plaintiffs' claims were governed by the PLA, “and that pursuant to the PLA and New Jersey case law, manufacturers of a brand-name drug may not be held liable for injuries caused by a plaintiff's use of a generic drug manufactured by another company.” In opposition:

Plaintiffs argue that their claims against Brand Defendants are not products liability claims governed by the PLA, but are instead negligence claims governed by New Jersey common law. Plaintiffs contend that the Brand Defendants owed a duty to those ingesting generic metocloprarnide to exercise reasonable care in either disseminating accurate, nonmisleading information about metocloprarnide or adequately warning doctors and patients as to the risk of the drug.

The New Jersey court makes short work of the plaintiffs argument.  First the court holds the plaintiffs’ claims are product liability claims.  Since the plaintiffs’ claims fall under the PLA, Plaintiffs' action must fail because they did not ingest a product made or sold by the brand name defendants. In New Jersey, "it is well-settled that in products-liability litigation, [a plaintiff] must demonstrate that his or her injuries were caused by ... defendant's ... product."

Where Plaintiffs never ingested metoclopramide manufactured or sold by the Brand Defendants, they are unable to establish an essential element of their prima facie case under New Jersey law, and their claims against the Brand Defendants must be dismissed.

In its decision, the New Jersey court quotes a prior New Jersey decision, Rossi v. Hoffman-LaRoche, No. ATL-L-690-05 (January 3, 2007), which dealt with a similar issue of brand name drug manufacturer liability for injuries caused by a generic drug: there is “no evidence” that “the New Jersey legislature intended for prescription drug liability to extend to the name-brand manufacturer when the alleged victim ingested a generic equivalent manufactured and sold by another company."  Thus, in Rossi, as in Coundouris, the court declined to create a duty on the part of the brand name manufacturer to the consumers of a generic drug.

The Boulder Business Lawyers at Laszlo & Associates, LLC provide legal counsel for businesses on a variety of business needs, including products liability, risk management, corporate protection, and legal compliance.