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From Products Liability Law Daily, October 21, 2013

U.S. High Court declines request to clarify foreign corporation jurisdiction issues

By Susan Lasser, J.D.

A request by the manufacturer of a hormone therapy drug that the U.S. Supreme Court 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 was denied by the High Court (Novo Nordisk A/S v. Lukas-Werner, Dkt. No. 13-214, August 14, 2013; cert. denied October 21, 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). 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, has its headquarters in Denmark, and manufactures Activella in Denmark, as well. 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 stated 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 stated 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 pointed 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 also stated that NNI obtained FDA regulatory approval to market and sell Activella in the United States, but that it was NNI, and not NN A/S, that was the entity subject to FDA regulations and state and federal law as the listed sponsor of the drug.

Reasons for granting the petition and questions presented. The drug manufacturer asked 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 was a question that had produced conflicting approaches among the circuits and between the highest courts of different states, and, therefore, merited Supreme Court review. The drug maker argued that when, as in 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 was not sufficient to establish personal jurisdiction under the relevant due process standard.

NN A/S contended 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 complained that it was its subsidiary, NNI, that marketed and sold Activella in the United States, including Oregon. According to NN A/S’s petition, the case posed 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 were: (1) whether it violated 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 was 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 rendered the U.S. sponsor of such medication wholly liable for its design, testing, approval, manufacturing, labeling, marketing, and sales, where the sponsor was a party to the action and had 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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