Bexis knows that cases like Daughtry v. Silver Fern Chemical, Inc., 2025 U.S. App. LEXIS 11431, 2025 WL 1364806 (5th Cir. May 12, 2025), hit our sweet spot.  It is a civil case, but it also emits a whiff of criminal law. It purports to be, among other things, a product liability case, but it turns out that it isn’t. And even the nature of the product is hazy. Is it a drug or is it a chemical?  Either way, the case was dismissed.  

Daughtry is a half drug/half chemical decision involving allegations of unusual personal injury.  The chemical was an industrial solvent with various innocuous uses. But the chemical could also be used as a date-rape drug.  Maybe it is both a drug and a chemical.  Call it Schrodinger’s product. 

The Drug Enforcement Administration (DEA) investigated the defendant company, which had been selling the drug/chemical to the plaintiffs’ employer.  In response to a government subpoena, the defendant company turned over records, including invoices, purchase agreements, safety data sheets, and emails between the defendant and the plaintiffs. The DEA relied upon those documents to prosecute the plaintiffs for controlled substances offenses. The government seized assets of the plaintiffs. Some of the plaintiffs pleaded guilty. End of story. 

Except that was not the end of the story.  The plaintiffs claimed that they later found out that the defendant company and some of its employees had altered the documents produced to the government. (There were different versions of the story as to how the plaintiffs discovered that documents had been doctored, and the appellate court seemed a bit skeptical.) The plaintiffs claimed that the defendants altered the emails to help the government’s criminal and civil cases against the plaintiffs, that the defendants were in fact covering up their own tracks, and that it was the defendants, not the plaintiffs, who failed to operate according to the appropriate standards. According to the plaintiffs, the government relied upon the phony documents, especially the safety data sheet, to show that the plaintiffs were not employing voluntary industry practices.  

You would think that the altered documents would form the basis of some sort of effort to obtain post-conviction relief, perhaps undoing the convictions.  That is usually a long shot. But what the Daughtry case concerns is the plaintiffs’ civil claim against the defendants for defrauding them, for product liability failure to warn, negligent misrepresentation, constructive fraud, and civil conspiracy.  The injury alleged was the litigation against the government and the guilty pleas. On its face, that theory sounds screwy. Then again, a criminal conviction probably is worse than most of the specious injuries we see alleged in the mass tort cases that clog our files. 

The trial court dismissed the case on both substantive grounds and for lack of personal jurisdiction against one of the individual defendants.  The appeal went up to the Fifth Circuit, which has become far and away the most fascinating of all the circuit courts.  If the next SCOTUS nominee is not from the Fifth Circuit, we’ll eat a big, fat Texas bug. 

The Fifth Circuit disagreed with the district court’s holding that specific personal jurisdiction was lacking against one of the defendants. Seeking to induce a criminal prosecution against Texans connected the defendants to Texas, so there was personal jurisdiction.  If that is a holding you end up using some day, your practice is far more interesting than ours.  (This case will be a published, precedential decision.)

The most pertinent part of the Daughtry case for purposes of our little blog is the dismissal of the plaintiffs’ cause of action for product liability. The product liability claim was based on the defendant’s alleged failure to attach a government-mandated date-rape warning label to the product it sold to plaintiffs.  That was also the subject of the email doctoring.  But the injuries the plaintiffs claimed related to the government’s prosecution for their own unlawful distribution of the product as a drug, not to the risk mentioned in the missing label.  Those injuries did not stem from any defect in the product’s warnings. 

The court rejected the plaintiffs’ fraud claim because the plaintiffs were not the defrauded parties.  They weren’t the ones who relied upon the allegedly doctored documents. It was the government that relied on the documents (though such reliance was to the plaintiffs’ detriment). 

Nor could the plaintiffs assert a negligent undertaking claim under Rest. (Second) of Torts sections 323 or 324Aconcerning the missing label.  Recovery for negligent undertaking is limited to physical harm.  None of the plaintiff’s alleged harms was physical, but rather related to the government’s raids, seizures, and their monetary consequences. 

It is possible that the plaintiffs had a legitimate beef against the defendants. But their causes of actions were the wrong ones.