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Alabama court ruling could boost Mississippi’s business recruitment

law_webA recent ruling by the Supreme Court of Alabama could threaten to roll back some of the principles of that state’s tort reform efforts.

It could also give Mississippi an advantage when the two states are pursuing the same economic development projects.

Innovator liability is the theory the Alabama court’s decision codified. It essentially allows brand name pharmaceutical companies to be held liable in perpetuity for injuries alleged to have been caused by generic versions of their products. The decision arose out of a case in which an Alabama man sued Pfizer subsidiary Wyeth for injuries caused by a generic version of antacid medication the company stopped making the early part of this decade. Wyeth did not make the medication at the center of the litigation; it was a copy made by a generic manufacturer.

“Lots of courts have faced this issue and decided this question,” said Kevin Newsom, an Alabama attorney who represents Pfizer.

Newsom said only courts in California, Vermont and Alabama have decided that brand-name manufacturers are liable for generic versions of their products. “All the southern states went the other way,” including Mississippi, he said.

Newsom said that while the ruling involves a case dealing solely with the pharmaceutical companies, the principles the court established could spread the effects to other industries.

In its ruling, the court said that there was no requirement for a pre-existing relationship for a plaintiff to bring a cause of action against a defendant. In other words, a plaintiff can sue a product manufacturer even if the product was not made by the defendant. Instead of bringing a direct product liability claim against a defendant, plaintiffs can now bring a fraud claim based on a product’s design.

“And that could very well affect any manufacturer of any product” in Alabama, Newsom said.

The lone dissenting justice on the Alabama court wrote that the majority decision runs counter to “bedrock principles” of tort law “that parties are responsible for their own products, not those of others.”

Wyeth recently asked the Alabama court to reconsider the issue. The appeal is supplemented by briefs from several business groups in Alabama and those that operate nationally. Most of the briefs warn of the consequences innovator liability would have on the state’s ability to recruit business and industry.

The U.S. Chamber of Commerce said in its brief that innovator liability “threatens to unleash the plaintiffs’ bar on all manufacturers doing business in Alabama.”

The ruling could have a clear effect on Mississippi’s economic development efforts, especially when pursuing projects also being sought by Alabama.

The two states have competed recently for several large projects. The biggest is the $600 million Airbus facility in Mobile, which will employ 1,000 people. Production is set to begin in 2015.

Mississippi and Alabama were among a handful of southeastern states that pursued the project. Louisiana, Mississippi, Alabama and Florida even formed an alliance aimed at landing it and spreading suppliers among the membership.

The cooperation has since ended. Alabama lawmakers have advanced a bill limiting lawsuits against aircraft manufacturers and their suppliers to a 12-year window. Alabama Gov. Robert Bentley said in late February that the bill is specifically intended to keep Airbus supplier jobs in the state. In Mississippi, the statute of repose allowing aircraft litigation is 20 years. The bill was still circulating through the Alabama capitol last week. Bentley has said he intends to sign it when it gets to him.

Supplier jobs connected to the Airbus facility are expected to top 3,000.

Both states also sought the Volkswagen plant that eventually went to Chattanooga, and the Mercedes facility that Alabama landed over a decade ago. That facility employs 3,000 people.

Newsom admitted he was surprised by the court’s decision, adding it was one he would have expected in the 1990s, before Alabama had passed its version of tort reform.

“The Alabama court has a definite history, but this is something that I did not at all see coming,” Newsom said. “Now the question becomes: Is this a blip? Or is this going to be long-term?”


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About Clay Chandler