Last week, the Supreme Court of Alabama confirmed its January 2013 holding that manufacturers of brand drugs can be liable for injuries caused by generic drugs. Weeks v. Wyeth, Inc., No. 1101397, slip op. (Ala. Aug. 15, 2014). Though the recent ruling puts Alabama in a very small minority of jurisdictions recognizing “innovator liability,” it still represents a state supreme court holding that exposes brand drug manufacturers to liability they  had not previously known. The ruling will likely result in significant new filings by the plaintiffs’ bar in Alabama, and renewed arguments by them for other jurisdictions to follow Alabama’s reasoning.

REARGUMENT AFTER JANUARY 2013 OPINION

The Weeks case was originally decided in January 2013.In that opinion, the Alabama court became the first  state supreme court to hold that brand drug manufacturers could be liable for injuries caused by generic drugs because the warnings and labels relied on were those of the brand drug. That ruling was contrary to the overwhelming majority of other courts, both trial courts and appellate courts alike who ruled against liability unless the drug ingested was from the brand drug company. The Supreme Court of Alabama was excoriated by many for deciding such an important question without oral argument. When the court decided to rehear the case, this time with oral argument, many in the pharmaceutical industry viewed this as an omen that reversal was likely. As time passed, it was thought the court might be carefully crafting a new opinion.

That hope was misplaced. The new Weeks opinion is surprising and disappointing to the pharmaceutical industry; it essentially re-states the original opinion despite the fact that it had been nearly one year since oral argument  and many courts had weighed in on this issue in the intervening year and a half since the first opinion.

THE HOLDING: FORESEEABILITY DERIVES FROM MENSING PREEMPTION

Our previous client alert examined the rationale behind the original holding. Essentially, the Supreme Court of Alabama held that it was foreseeable that a generic drug user’s doctor would rely on representations by a brand drug manufacturer. In reaching this conclusion, the court relied on PLIVA, Inc. v. Mensing, 131 S. Ct. 2567 (2011), which interpreted federal statutes and regulations as requiring generic drug manufacturers to copy brand drug manufacturers’ labels. Unlike most other courts that have examined this issue, the Weeks court found that the foreseeability deriving from the federal regulatory scheme was sufficient to establish that the brand drug manufacturer owed the generic drug user a duty of care.

In reaching this decision once again (Weeks II), the court highlighted Alabama law regarding misrepresentation and “the fact that two parties have had no contractual relationship or other dealings does not preclude the finding  of a legal duty not to make a material misrepresentation or to suppress a material fact.” The majority concluded its opinion by reiterating that the fraud or misrepresentation claim at issue here premises liability not on “a defect in the product itself but as a result of statements made by the brand-name manufacturer that Congress, through the FDA, has mandated be the same on the generic version of the brand-name drug.”

CONCURRENCE: DEFENDING THE COURT’S DIGNITY

Justice Shaw specially concurred to clarify and defend the majority’s opinion. He noted several points. First, the court’s holding in no way meant that a company could generally be held liable for products it did not manufacture. Second, the court did not create new law. Instead, it applied existing Alabama law dealing with fraudulent  conduct. He found that Alabama case law “generally holds that a duty to disclose may be owed to a person with whom the defendant has had no prior dealings, specifically, where there is a ‘duty’ not to make a false representation.”

Third, the majority opinion is extremely narrow and would not apply outside the pharmaceutical context. This appears to be in direct response to critics who have “either shamefully misrepresented our holding or bordered on the hysterical” in response to the original Weeks opinion. Fourth, “no decision of any other jurisdiction addresses the precise question of Alabama law discussed in our answer.”

Finally, Justice Shaw rejected the notion that the decision might stifle business. Instead, the court’s decision “epitomizes the kind of judicial restraint that should be expected of an appellate court.”

THREE DISSENTS

Three justices dissented. Chief Justice Moore felt the court should not have accepted the certified question because the answer was not dispositive of the case in the trial court. Justice Parker felt the court overstepped its authority, especially because he interpreted Mensing and Mutual Pharmaceutical Co. v. Bartlett, 131 S. Ct. 2567 (2013), as making “clear that [a generic drug] consumer is left without a remedy absent a legislative change by Congress.”

Justice Murdock passionately dissented, penning an opinion equal in length to that of the majority’s. He opened by quoting Alexander Hamilton and invoking the great American “spirit of enterprise” to highlight the injustice that would no doubt result from the court’s holding. The dissent’s reasoning was twofold. First, every other court (with the exception of Conte v. Wyeth, Inc., 168 Cal. App. 4th 89 (2008) and Kellogg v. Wyeth, Inc., 762 F. Supp. 2d 694 (D. Vt. 2010)) that had evaluated this issue disagreed with this court. Second (not content with the herd mentality argument), Justice Murdock fell back on the tried-and-true premise that this would “stretch the concept of foreseeability too far.” Foster v. Am. Home Prods., 29 F.3d 165, 171 (4th Cir. 1994). Justice Murdock’s variation on this theme was that foreseeability alone is insufficient to create a duty; in addition to foreseeability there must be a relationship between the two parties.

After conducting an extensive survey of decisions on the issue, Justice Murdock came full circle, predicting the negative impact that the court’s holding would have on free enterprise. He worried that brand drug manufacturers would be unable to predict their liability, and this would create an insurability issue. Meanwhile, the court’s reasoning could spill over into areas beyond pharmaceuticals and compound the problem.

IMPACT

Justice Murdock’s concerns about the court’s decision reaching beyond drugs are unnecessarily alarmist, given the unique federal regulatory scheme governing drugs and the stringent requirements that generic drug manufacturers maintain labels identical to those of the brand drug manufacturer’s. However, innovator liability is now the law of Alabama and brand drug manufacturers should be concerned that filings there will increase. While choice of law rules may prevent out-of-state plaintiffs from taking advantage of Alabama law, the end result remains to be seen. It also remains to be seen whether the pharmaceutical industry will encourage the Alabama legislature to establish new product liability law to overcome the ruling, rather than face unlimited liability for another company’s drugs.