In this week’s Alabama Law Weekly Update, we review one opinion from the Supreme Court of Alabama and another from the United States Court of Appeals for the Eleventh Circuit.  Resolving a split in the lower Alabama courts, the Alabama Supreme Court opinion holds that a brand-name pharmaceutical manufacturer can be held liable for fraud or misrepresentation due to a lack of warning to a plaintiff who took the generic brand of medication.  The United States Court of Appeals opinion determined that certain litigation expenses such as mediation, legal research, postage, and travel may be recoverable under the fee-shifting provisions applicable to COBRA claims.

Wyeth, Inc., et al. v. Weeks, No. 1101397 (Ala. Aug. 15, 2014) (holding that a brand-name prescription drug manufacturer can be held liable for fraud or misrepresentation to a plaintiff claiming physical injury from a generic drug).

In this case, the plaintiffs, Danny and Vicki Weeks, filed an action against five current and former drug manufacturers for injuries that Mr. Weeks incurred as a result of his long-term use of the generic form of the brand-name drug Reglan.  The question presented to the Alabama Supreme Court in the form of certification was whether a drug company may be held liable for fraud or misrepresentation based on statements it made in the distribution of the brand-name drug by a plaintiff claiming physical injury from a generic drug manufactured and distributed by a different company.  Within the state of Alabama there was a split among the lower courts over whether or not the brand name manufacturers could be held liable for injuries sustain while using the generic brand which split the Alabama Supreme Court chose to remedy.

The plaintiffs claimed that three brand-name manufacturers, Wyeth, Pfizer, Inc., and Schwarz Parma, Inc., falsely and deceptively misrepresented or knowingly suppressed facts about Reglan or metoclopramide, such that Mr. Week’s physician was materially misinformed and misled about the likelihood that the drug would cause the movement disorder tardive dyskinesia and related movement disorders.  The plaintiffs contended that the drug companies had a duty to warn Mr. Weeks’ physician about the risks associated with the long-term use of the drug.  The manufacturers argued that this action was essentially a “products-liability” claim.  However, the Alabama Supreme Court found that this was not a claim that the drug taken by Mr. Weeks was defective, but rather that the drug companies fraudulently misrepresented or suppressed information about the manner in which the drug was to be taken.

Prescription drugs are unique due to the extensive regulation by the Food and Drug Administration and must go through a lengthy period of testing and research prior to being allowed on the market.  Once the drug is on the market, the brand-name manufacturer enjoys the benefits of a patent until its expiration.  At this point, a generic manufacturer may seek to replicate the drug through an abbreviated approval process.  In addition, a generic drug’s label is required to be the same as the brand name’s label, and in addition the generic manufacturer cannot strengthen a warning label or send a “Dear Doctor” letter.  If a generic manufacturer believes that stronger warnings are needed, it must propose the changes to the FDA, and if the FDA agrees it will work with the brand-name manufacturer to create a new label for both the brand-name and generic drug.  The label of the generic drug in this case, which is the same as the brand-name drug, is the issue of this suit.

The Alabama Supreme Court determined that a duty was owed to the plaintiffs under the learned intermediary doctrine which entitled the plaintiffs to rely on the representations made to Mr. Week’s physician.  A prescription-drug manufacturer fulfills its duty to warn the ultimate users by providing adequate warnings to the learned intermediaries who actually prescribe the drug.  If the warning to the intermediary is inadequate and leads to physical injury to the patient, then the manufacturer can be liable for the patient’s injuries.

The Court determined that due to the level of regulation imposed on prescription drugs and the unique relationship between the brand-name manufacturer and the generic manufacturer, a brand-name drug company may be held liable for fraud or misrepresentation based on statements made in connection with the brand-name drug, by a plaintiff whose injury was caused by the generic drug manufacturered by a different company.  The Alabama Supreme Court specified that nothing in the opinion suggests that this should apply to anything other than prescription drug manufacturers.  The unique relationship between the brand-name and generic drugs which have resulted from federal law and FDA regulations combined with the learned intermediary doctrine create the unique context where a brand-name manufacturer can be held liable for a misrepresentation made regarding a generic drug that it didn’t manufacture.

Evans v. Books-a-Million, ____ F.3d ____, 2014 WL 3882506 (11th Cir. Aug. 8, 2014) (holding that expenses related to mediation, legal research, postage and travel may be awarded under 29 U.S.C. §1132(g)(1)).

Tondalya Evans (“Evans”) was a former employee of Books-A-Million who was involved in the implementation of a new payroll system (“ADP system”) when she found out she was pregnant.  Upon asking to go on maternity leave, she felt she had “no choice” but to continue to work from home after the birth of her child.  After her child was born, she immediately began working from home and worked nearly full-time and was paid her full salary.  However, during this time, the ADP implementation was running behind which caused her boss to become unhappy with her performance.  Upon returning to work, Evans said that her boss’s attitude was cold and hostile, and shortly thereafter she was reassigned from her position as Payroll and Insurance Manager to a newly created position as Risk Manager.  Evans chose not to accept the Risk Manager position and was subsequently terminated.  Upon termination, Evans was informed that she was not eligible for the year-end bonus for the previous year because an employee must be employed on the date the company’s audit committee voted to approve the annual financial statements which was two days after she was terminated.  Additionally, she did not receive a COBRA notice regarding the continuation of her dental insurance.  Evans filed suit against Books-A-Million alleging violations of the Family and Medical Leave Act (“FMLA”), the Equal Pay Act, Title VII of the Civil Rights Act of 1964 (“Title VII”), and the Consolidated Omnibus Budget Reconciliation Act (“COBRA”).

The District Court granted summary judgment in favor of Books-A-Million on all claims with the exception of the claim under COBRA which proceeded to a bench trial where the Court found that Books-A-Million intentionally violated COBRA.  The Court then assessed a statutory penalty of $75 per day and awarded Evans attorneys’ fees and costs but disallowed other costs which totaled $2,460.67.  Evans then appealed the grant of summary judgment and disallowance of the other costs, and Books-A-Million cross-appealed the finding of an intentional COBRA violation and assessment of the penalty.  On appeal, the Eleventh Circuit Court of Appeals found that the District Court correctly awarded summary judgment to Books-A-Million with respect to the Title VII claim and the Equal Pay Act claim and did not abuse its discretion in assessing the penalty for the COBRA violation.  However, the Court of Appeals found that the District Court erred by refusing to consider Evans’ FMLA claim and the additional litigation-related expenses of $2,460.67.  The Court of Appeals overturned the District Court’s ruling relating to the FMLA claim and the dismissal of additional costs and remanded it for further consideration.  It appears that the District Court dismissed the FMLA claim because Evans was paid her full salary throughout the period and due to this she was not injured.  The Court of Appeals determined, however, that if the employer coerces an employee to work during her intended FMLA leave period and, subsequently, reassigns her based on allegedly poor performance during that period the employee may have been harmed by the FMLA violation.  The Court of Appeals found that there were unresolved issues which required a trial and should not have been dealt with on summary judgment.

The second issue, which appears to be an issue of first impression, was whether the additional expenses, which the District Court disallowed, may be awarded as attorney’s fees under 29 U.S.C. §1132(g)(1).  The fees at issue included fees for mediation, legal research, postage and travel.  The parties both agreed that the expenses were not recoverable as costs under 28 U.S.C. §1920, but Evans claimed that they should have been awarded as attorneys’ fees under 29 U.S.C. §1132(g)(1).  The Court of Appeals has previously held that §1132(g) should be interpreted consistently with similar fee-shifting statutes such as 42 U.S.C. §1988 which states that a party “may recover all reasonable expenses incurred in case preparation, during the course of litigation or as an aspect of settlement of the case.”  Additionally, reasonable expenses have been found to include “reasonable out-of-pocket expenses…normally charged to a fee-paying client, in the course of providing legal services.”  As a result, the Court of Appeals found that Evans should have been awarded the $2,460.67 for expenses incurred in mediation, legal research, postage and travel if the District Court determines these are fees which the prevailing legal community bills separately to fee-paying clients.  The Court of Appeals remanded the issue of whether this was the prevailing practice in the local community and whether or not the amounts were reasonable.