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From Products Liability Law Daily, August 28, 2013

Drug maker asks U.S. High Court to clarify foreign corporation jurisdiction issues

By Susan Lasser, J.D.

The manufacturer of a hormone therapy drug has asked the U.S. Supreme Court to review an Oregon state court’s assertion of jurisdiction in an action by a patient who alleged that she developed breast cancer as a result of her taking the maker’s prescription drug over a four-year period (Novo Nordisk A/S v. Lukas-Werner, Dkt. No. 13-214, August 14, 2013).

Background. The patient, Suzanne Lukas-Werner, and her husband, Scott Werner, (together, “patient”) asserted products liability claims against Novo Nordisk Inc. (NNI) and Novo Nordisk A/S (NN A/S) (as well as claims for medical malpractice against co-defendant Dr. Kristina Harp). The patient developed breast cancer following four years of treatment with Activella®, a prescription hormone therapy medicine manufactured in Denmark by NN A/S and which was distributed in the United States by its indirect subsidiary, NNI. The patient and her husband asserted identical claims against both NN A/S and NNI.

The patient filed her action in the Circuit Court of the State of Oregon for the County of Multnomah on September 9, 2010, and obtained service on NN A/S in Denmark via the Hague Convention under the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters. Subsequently, on March 30, 2011, NN A/S filed its motion to dismiss for lack of specific personal jurisdiction.

NN A/S is a Danish public limited liability company, with its headquarters in BagsvÆrd, Denmark, according to the petition. The company manufactures Activella® in Denmark. Moreover, NN A/S asserts that it does not manufacture or sell any products, own property, or employ workers in Oregon. The manufacturer said that it is not licensed or registered to conduct business in Oregon, does not advertise or solicit business in Oregon, and does not have contracts with or sell any of its products directly to any Oregon-based vendors, retailers, distributors, or individual consumers.

The petition states that NN A/S provides Activella® to NNI, which is a Delaware corporation with its principal place of business in Princeton, New Jersey; and that NN A/S did not sell Activella® in Oregon to any Oregon-based distributor. NN A/S said that it does not control the distribution system by which the “legally separate indirect subsidiary, NNI, sells Activella® within the United States.” Moreover, NN A/S states that it ships the drug to NNI’s third-party logistics provider in Indianapolis, Indiana. According to NN A/S, that concludes its involvement, and that at the point of sale in the United States, “Activella® belongs to NNI, and any subsequent sales transaction is between NNI and the purchaser.” The petition also points out that NNI does not market directly to pharmacies in the state of Oregon, but rather it sells to wholesale distributors, which sell to pharmacy chains and individual pharmacies in the United States, including Oregon. The manufacturer states that NNI obtained FDA regulatory approval to market and sell Activella® in the United States, but that it is NNI, and not NN A/S, that is the entity that is subject to FDA regulations and state and federal law as the listed sponsor of the drug.

Reasons for granting the petition. The drug manufacturer asks that the U.S. High Court clarify the circumstances under which due process would permit a court to exercise specific personal jurisdiction over a foreign corporation, if ever, based solely on a subsidiary or distributor’s in-state conduct. According to NN A/S, this is a question that has produced conflicting approaches among the circuits and between the highest courts of different states, and, therefore, merits Supreme Court review. The drug maker argues that when, as it argues is the current case, a foreign manufacturer is not involved in distribution to or within the forum (and it has not engaged in any other purposeful act in the forum state), mere sales of the product within the forum state alone is not sufficient to establish personal jurisdiction under the relevant due process standard.

Questions presented. NN A/S contends that in spite of its not manufacturing or selling any products, or owning property or employing workers in Oregon, the Circuit Court of Multnomah County, Oregon held that NN A/S was subject to personal jurisdiction in Oregon under a “stream of commerce” theory. The Danish manufacturer complains that it is its subsidiary, NNI, that markets and sells Activella® in the United States, including Oregon.

NN A/S argues that the case poses important questions regarding the stream of commerce theory of specific in personam jurisdiction, particularly in light of the regulatory scheme applicable to pharmaceutical products and their sponsors.

The questions presented by NN A/S are: (1) whether it violates due process for a court to exercise specific personal jurisdiction over a foreign manufacturer based solely upon the volume of sales of its product in the forum state, where (a) such sales were made by an indirect corporate subsidiary and not by the foreign corporation, and (b) the foreign manufacturer did nothing to avail itself of the forum state; and (2) whether it is constitutionally reasonable and consistent with due process for a court to exercise specific personal jurisdiction over a foreign manufacturer of an FDA-approved prescription medication in light of the regulatory scheme that renders the U.S. sponsor of such medication wholly liable for its design, testing, approval, manufacturing, labeling, marketing, and sales, where the sponsor is a party to the action and has sufficient assets to satisfy any judgment.

The case number is 13-214.

Attorneys: Patrick Lysaught (Baker Sterchi Cowden & Rice, LLC) for Petitioner Novo Nordisk A/S.

Companies: Novo Nordisk A/S and Novo Nordisk Inc.

MainStory: TopStory JurisdictionNews DrugsNews

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