Usually, when res judicata comes up in our cases, we are trying to fend it off. Luckily, non-mutual offensive res judicata is rarely recognized, so plaintiffs usually fail when trying to preclude the drug or device manufacturer from putting up a full defense based on a prior ruling or verdict in a different case. Occasionally, in serial product liability litigation, we find a plaintiff trying to sue over the same injury twice, but that rarely requires motions, let alone motions based on res judicata. Today, however, we are discussing a Georgia state court case where a drug company’s settlement with Georgia and other governmental entities in a longstanding federal case precluded eight Georgians from suing the same company on behalf of Georgia. Were we to channel a fellow blogger, we might draw some parallel to “The Walking Dead,” which is filmed in Georgia and had been based in Georgia until season 5 (when the gang headed up to Virginia). We might say something about how related cases that pop up after an adjudication on the merits are like “walkers” and have to be disposed of accordingly. We might inject some spoilers by mentioning which main character got shot in the most recent episode and which main character is rumored to die in the next episode. We might even connect these events to an earlier failure to resolve an earlier dispute more definitively. Instead, we will just stick to the case.
Jordan v. State, No. A15A1733, 2016 Ga. App. LEXIS 176 (Ga. App. Mar. 23, 2016), does not have the drug manufacturer as a party to the appeal because it was the State of Georgia that filed and won the motion to dismiss below (although treated as a motion for summary judgment on appeal). This procedural quirk flows from the nature of qui tam litigation. In 2004, a relator named Starr filed a suit in the Eastern District of Pennsylvania against her former employer claiming that its marketing of a prescription anti-psychotic for off-label uses created liability under various statutes, including the federal False Claims Act for reimbursement by various governmental entities. (Some of this background is presented in Jordan, but some details are added from public information.) Over time, other relators filed similar cases, the United States intervened, and Starr’s complaint was amended to include claims under the later-enacted Georgia False Medicaid Claims Act (GFMCA) and various similar state statutes. In late 2013, there was a massive settlement of criminal and civil cases between the manufacturer, the United States, and a number of states—including Georgia—resulting in, among other things, payment of millions of dollars to Georgia and a dismissal with prejudice of the Starr case.
Meanwhile, in March 2013, the Jordan case was brought two of the manufacturer’s employees and six others on behalf of the State of Georgia alleging GFMCA claims based on allegation that off-label marketing defrauded Georgia’s Medicaid into reimbursing for millions of dollars of prescriptions. Under the GFMCA, the Georgia AG can intervene in cases brought by private citizens and, if it does, may choose to move to dismiss the complaint. The GFMCA also precludes private citizens from bringing an action on behalf of the State if the State already is or has been a party to a case based on the same “allegations or transactions.” This provision, and other procedural aspects of the GFMCA, ended up not mattering, because “the record shows that the plaintiffs’ claims are barred by the doctrine of res judicata.” Id. at *11.
The familiar requirements for res judicata under common law and Georgia’s codification of it are: (1) identity of the parties or their privies; (2) identity of the cause of action; and (3) previous adjudication on the merits by a court of competent jurisdiction.” Id. at *12 (citation omitted). At first blush, the Jordan plaintiffs might have had something to say about the first requirement because they were not personally involved in Starr, even though the defendant was the same. However, the State of Georgia was—its AG signed the settlement agreement—and their case was on behalf of the State of Georgia. Cases brought on behalf of the State of Georgia are really on behalf of all of its citizens, so “the State and the plaintiffs acting on behalf of the State were in privity.” Id. at *13. For the second requirement, the plaintiffs argued that the causes of action between the two cases were not the same because their complaint was “more specific to Georgia than the information contained in the Starr complaint.” Id. However, both cases sought damages for “funds spent by the State for health care costs attributable to the pharmaceutical companies’ improper promotion and marketing” of the drug, which was enough to meet the second requirement. Id. at **13-14. The third requirement was pretty straightforward because there was Georgia authority holding that a “voluntary dismissal with prejudice constitutes a judgment on the merits for purposes of res judicata with regard to the same parties and the same cause of action.” Id. at **14-15 (citation omitted).
Setting aside zombies and whether the underlying claims in Starr and Jordan are still viable post-Amarin if based on truthful statements about unapproved uses of the drug, the case matters as sort of a silver lining to facing bad litigation. When a case is pending on behalf of a bunch of governmental entities and the asserted claims seem to cover every possible theory, the defendant faces enormous pressure to settle. There is something of a cottage industry of relators and relators counsel who troll around looking cases to bring on behalf of others. They stand to reap huge windfalls in the event of a plaintiff verdict or, more likely, settlement. As these cases proceed, claims and parties can pile on, particularly where state AGs work in concert. When there is a settlement, at least the defendant should be able to take some solace in the ability to rely on res judicata to preclude further claims that were fairly encompassed within the settlement. Jordan was just before the intermediate appellate court in Georgia, so this may not be the final word here. We hope that the dismissal and Daryl stick around.