Prior to 1994, Alabama was widely perceived as a “tort hell,” a place where judges and juries actively looked to shift liability to perceived “deep pocket” defendants. The hellish days were marked by outlandish punitive-damage awards, dodgy procedures, and plaintiff-friendly legal doctrines. Most notoriously, in BMW v. Gore, the Alabama supreme court affirmed a $2 million punitive-damages award on the grounds that BMW had touched up a car’s paint job without disclosing it, reducing the vehicle’s value by $4,000, meaning that the damages were awarded in a ratio of 500:1. Class-action lawyers got their plaintiff classes approved simply by dropping by a judge’s office, a procedure that came to be known as “drive-by” certification. Plaintiffs in consumer-fraud cases just had to show that they justifiably relied on what they were told, not that they acted reasonably.
Things began to change in 1994, and Alabama’s top court seemed to find its footing as a rule-of-law court. With elections and appointments inc 1994 and 2004, common-sense conservatives came to hold a majority on the state’s supreme court. That new conservative majority replaced the pre-1994 judicial activism with respect for the rule of law. Punitive damage awards got more rigorous review, “drive-by” class certifications ceased, and the reasonable-reliance standard was again applied to limit runaway consumer-fraud actions.
Since then, Alabama has happily dropped off the list of torturous jurisdictions. Not surprisingly, businesses have taken notice. In recent years, job-creating manufacturers such as Mercedes-Benz, Honda, Hyundai, Thyssen-Krupp, and Airbus have decided to build large plants in the state.
That’s why the Alabama supreme court’s January decision in Wyeth, Inc. v. Weeks is so shocking. The decision isn’t one that we should expect to see from a court that believes — or says it believes — that its job is to say what the law is, not what it ought to be.
In Weeks, the court, in an 8–1 ruling, adopted a bizarre tort theory called “innovator liability.” It held that Wyeth, which created the brand-name anti-reflux drug Reglan, could be held responsible for injuries suffered by a consumer who used only a generic version of the drug. Wyeth did not make the product or sell it to the consumer; it had no relationship to the plaintiff whatsoever. Even so, the court shifted liability for the allegedly inadequate warning on the generic product to Wyeth. It reasoned that, because federal drug regulations require the maker of the generic drug to use the warning approved for the brand-name version, the injuries resulting from the use of the generic drug were somehow foreseeable to Wyeth.
Weeks puts the Alabama supreme court way out on a limb. Only two lower courts in California and Vermont — hardly the kind of company the Alabama court usually keeps — have adopted innovator liability. In contrast, more than 75 decisions applying the laws of 25 states have rejected it. That split also puts the court at odds with every federal court of appeals and every other southeastern state to consider the issue. Those numbers alone should encourage the court re-think its decision.
The Alabama supreme court seemed to believe that a June 2011 decision by the U.S. Supreme Court changed everything. In PLIVA, Inc. v. Mensing, the Court held that federal law preempts state-court lawsuits filed by consumers claiming that they were injured by generic drugs.
The U.S. Supreme Court recognized that federal preemption dealt the consumers of generic drugs an “unfortunate hand,” but held that the solution lies with Congress and federal regulators, not with the judicial branch.
That’s even more true for the state courts: It’s certainly not their job to fix problems that federal actors have created. And no other court has read Mensing the way the Alabama court did in Weeks. To the contrary, every other court that has addressed the issue has held that Mensing had no effect on the liability of brand-name manufacturers under state law.
In struggling to create a remedy to fill the hole it thought that Mensing created, the Alabama supreme court mangled state tort law. In particular, by basing its decision entirely on the assertion that Wyeth could have foreseen the possibility that injury might result from the use of the generic drug, the court overlooked the fundamental rule that a defendant must have some sort of a relationship with the plaintiff before a duty can arise. Here, Wyeth owed no duty to Weeks, who used only Wyeth’s competitors’ products.
Only Justice Glenn Murdock seemed to see what was going on. Dissenting from the majority’s back-to-the-bad-old-days ruling, he cited the amicus brief filed by the U.S. Chamber of Commerce and explained that the brand-name-drug makers such as Wyeth invest a great deal of time and money developing the drugs and measure the value of their investment against the expected return. That return is based, in part, on an understanding that the brand-name manufacturer will be responsible for injuries that result from its conduct. Holding brand-name companies like Wyeth liable for injuries that result from the use of generic products which they neither made nor sold “retroactively frustrate[s] legitimate investment-backed expectations” and “destroy[s] the predictability” all manufacturers need when they decide to bring products to market.
At the very least, Weeks opens the door to lawsuits against other name-brand drug makers by the users of generic medicines. It may also open the door to similar claims by non-buyers and non-users in other industries. Worst of all, Weeks threatens to undo some of the hard-won gains of the past 15 years or more by turning Alabama back into a magnet for more “novel” tort lawsuits.
The Alabama supreme court needs to put this genie back in the bottle. It should grant the pending re-hearing applications and join the overwhelming majority of courts in rejecting innovator liability.
— Jack Park is an attorney with the Atlanta law firm of Strickland Brockington Lewis LLP. He served as a deputy attorney general and an assistant attorney general for the State of Alabama from 1995 to 2007.