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State law on illegal drug market liability applies to opioid pharma defendants, Tenn. high court rules
January 14, 2021Infant plaintiffs who were exposed to addictive opioids in utero can bring claims against pharmaceutical defendants for their role in contributing to and profiting from the opioid epidemic’s illegal drug market, the Tennessee Supreme Court has ruled. In an issue of first impression, the court held that a civil liability law for drug dealers applies to the defendants because the plaintiffs alleged sufficient evidence that a fact-finder could reasonably conclude that the defendants knowingly participated in the opioid black market. (Effler v. Purdue Pharma LP, 2020 WL 7394301 (Tenn. Dec. 17, 2020).)
Several district attorneys and two infant plaintiffs who suffer from neonatal abstinence syndrome from in utero exposure to opioids sued the defendants under Tennessee’s Drug Dealer Liability Act, alleging that the pharmaceutical companies “knowingly participated in the illegal drug market by flooding East Tennessee communities with prescription opioid medications, leading to widespread addiction and diversion of the opioids into the black market.” The act is based on the Model Drug Dealer Liability Act, which has been adopted in some form by 18 states and provides a civil cause of action to hold defendants—including those who distribute or are involved in the chain of distribution—accountable for their knowing participation in the illegal drug market. Plaintiffs’ claims must be proven by clear and convincing evidence.
Tennessee’s law allows plaintiffs who have been injured by a defendant’s actions in the illegal drug market to recover damages—the purpose of the act being to shift the costs of those injuries to the parties that profit from the illegal drug market. Section 106(a) enumerates who can bring a claim and includes individuals exposed to illegal drugs in utero and governmental entities that fund drug treatment programs or otherwise spend funds on behalf of someone using illegal drugs. The act also provides that a “prosecuting attorney” can act as counsel for a state entity that brings a claim under its provisions.
The trial court dismissed the claims, finding that the district attorneys do not have standing under the act and that the act does not apply to the defendants. A state appellate court reversed, and the defendants appealed to the Tennessee Supreme Court. The high court held that the district attorneys do not have standing to sue in their names, but that the infant plaintiffs’ claims could proceed and that the pharmaceutical companies are proper defendants under the act.
Whether the district attorneys have standing rests on statutory interpretation. Because the act enumerates the parties that can bring a claim, the court reasoned, the lack of “district attorneys” in that list means that the state legislature did not intend for them to have standing on their own. Although the district attorneys could represent governmental parties enumerated in the act, they cannot “stand in the shoes” of those parties akin to representing a class of plaintiffs. Because the district attorneys brought the action in their names, they do not have standing under the act, the court held.
However, the two “Baby Doe” plaintiffs have standing under §106(a) as enumerated parties, so the court next considered whether the act applies to the pharmaceutical defendants with respect to their claims. The act defines “persons” to include corporate entities, the court noted, and it also defines an “illegal drug market” as “the support system of illegal drug related operations, from production to retail sales, through which an illegal drug reaches the user”—including distribution of opioids to someone who does not have a prescription.
Culpability relies on a “market liability” theory: that the illegal drug activity occurred within the illegal drug market community that the defendant targeted and its participation is connected with the same type of illegal drug that injured the plaintiff during the time when the plaintiff was injured. The defendants countered that because they were involved in the legal market for opioids, they could not be accountable for what happens with their products once they enter the illegal drug market. But the Tennessee Supreme Court disagreed, stating that the defendants “cannot ‘knowingly seek out suspect doctors and pharmacies, oversupply them with opioids for the purpose of diversion, benefit from the process, and then cynically invoke their status as otherwise lawful companies to avoid civil liability.’”
The court detailed the specific allegations in the Baby Doe plaintiffs’ complaint, which laid out how the pharmaceutical companies intentionally availed themselves of Tennessee’s illegal drug market. The plaintiffs point to, for example, allegations of the defendants flooding the state with more prescription opioid pills than reasonably could be needed, their knowledge that opioids are frequently over-prescribed by doctors and then diverted into the black market drug trade, their participation in aggressively marketing and selling a highly addictive substance for years, and high rates of neonatal abstinence syndrome in the region.
The court further explained that characterizing the defendants as “drug dealers” due to the title of the act did not negate application of the act’s market liability cause of action to the defendants simply because they are otherwise legal distributors of opioids. It also noted that liability for oversupplying addictive medication is not new in the law—the U.S. Supreme Court posited this theory more than 75 years ago in a case involving a doctor who oversold morphine in such amounts that he must have known his prescriptions were not legitimate. (Direct Sales Co. v. United States, 319 U.S. 703 (1943).)
“By its decision, the court has helped ensure that the opioid producers who flooded our communities with pills will face a jury of citizens where they will have to explain their reprehensible conduct,” said Nashville, Tenn., attorney Gerard Stranch, who represents the Baby Doe plaintiffs.