We have an update today on a case from Idaho on which we blogged late last year. The issue then was innovator liability, and we gave our enthusiastic stamp of approval to the court’s rejection of “product liability” where the innovator manufacturer neither made nor sold the product that allegedly harmed the plaintiff. As the Idaho court held, a manufacturer is generally not liable for another manufacturer’s product, and the court was unwilling to make innovators “de facto insurers” for their generic competitors.
There are two important updates: First, since we penned that blogpost, we have been to Idaho, for the first time. We spent only a few hours there as we passed through en route to Yellowstone, but the scenery definitely did not disappoint. The wide-open expanses were stunning, and as we were crossing the Snake River, its rugged beauty immediately struck us, and we could not help but recall 1970s daredevil Evil Knievel, whose attempt to jump the Snake in a steam-powered rocket made headlines worldwide. Good times.
Second, the Idaho court has now decided that it lacks personal jurisdiction over the innovator on a residual fraud claim, which the plaintiffs pleaded in an amended complaint and which appears to have been the subject of jurisdictional discovery. Stirling v. Novartis Pharm. Corp., 2020 WL 4259035, Slip Op. at 2-3 (Idaho Dist. Ct. July 13, 2020). This order does not surprise us. As we recently observed here, personal jurisdiction should be a defense to claims against innovators because both issues rely on the defendant’s contacts with plaintiffs and their claims. If an innovator did not make and did not sell the product that the plaintiff used, that should be the end of the inquiry. Similarly, if that same innovator is not “at home” in the forum jurisdiction, what contacts with the plaintiff’s claims and forum could possibly support specific personal jurisdiction? As we know from the U.S. Supreme Court’s opinion in Bristol-Myers Squibb Co. v. Superior Court, a defendant’s contacts or transactions with other individuals are not sufficient, nor are the defendant’s contacts with an intermediary distributor.
The facts in Stirling lay this out very neatly. The product at issue was a generic version of a drug that the innovator stopped selling several years before the plaintiff used it. Thus, no one in Idaho—let alone the plaintiff herself—used the innovator’s product for years before the plaintiff sued. Where are the claim-specific contacts upon which specific jurisdiction could be based? They simply are not there.
The innovator’s arguments on these facts were strong: “[W]hat is needed—and what is missing here—is a connection between the forum and the specific claims at issue.” Slip op. at 4. The innovator’s marketing years before the plaintiff’s prescription do not show forum contacts that actually gave rise to the plaintiffs’ claims. Id. The innovator’s purported “agency” relationship with a distributor that specifically targeted Idaho was not sufficient either. Even if specific jurisdiction is possible though “agency”—and we have serious doubts whether any form of “agency jurisdiction” survives BMS—the distributor never contacted the plaintiff or her prescribing physician. Id. Moreover, the distributors’ calls were in connection with a different use of the product, and it made those calls seven years before the plaintiff received her prescription from her OBGYN. Id. at 4-5.
The court put it this way:
[A]fter significant opportunity for discovery on this issue, the Plaintiffs’ evidence of contacts fails to establish that [the product] was marketed to Idaho as a tocolytic [i.e., the plaintiff’s use] [¶] Important to the Court’s decision is the lapse in time between the alleged contacts with Idaho . . . and Plaintiff Michelle’s use of the generic form . . . . This lapse in time, combined with the facts that [the innovator] sold the . . . NDA in 2001 and then ceased marketing the product, support the Court finding this litigation does not arise out of the alleged marketing activities. . . .
Overall, the Court finds the two . . . marketing phone calls by . . . agents to non-OBGYN doctors in Idaho that occurred approximately seven years before Plaintiff Michelle used . . . a generic form . . . are insufficient to establish the minimum contacts necessary to confer personal jurisdiction . . . .
Id. at 5.
We expect we will continue to see this interplay between innovator liability and specific personal jurisdiction in other cases. The only question is the sequence in which courts will take up these issues. In Stirling, the Idaho court decided innovator liability first, thus dismissing product liability claims and leaving only a weak fraud claim. In another case on which we recently blogged, the court addressed personal jurisdiction first, Henry v. Angelini Pharma, Inc., 2020 WL 1532174 (E.D. Cal. Mar. 31, 2020).
It makes more sense to decide personal jurisdiction first. Courts generally prefer to address jurisdictional issues at the threshold, and if the court lacks jurisdiction, that disposes of the entire case and avoids piecemeal proceedings. The Idaho court went another way, driven in part by the plaintiffs’ amended pleadings and the perceived need for discovery. In fact, the allowance of “jurisdictional discovery” is the only factor keeping this case from being one’s own private Idaho. Given that it was undisputed that the innovator had not marketed the drug to anyone anywhere for several years—and especially not to the plaintiff or her OBGYN—we are not sure what facts discovery could have revealed that could have changed this result.
But now we’re just griping. In the end, the court came to the correct result for the correct reasons. Because eventually, all things merge into one, and a river runs through it. Wait, that’s Montana.