Tennessee Supreme Court Holds that Drug Companies May Be Sued Under the Tennessee Drug Dealer Liability Act but not by District Attorneys General

December 17, 2020

The Tennessee Supreme Court has unanimously held that Endo Health Solutions Inc., Endo Pharmaceuticals Inc., and Teva Pharmaceuticals USA, Inc.—drug companies that manufacture prescription opioids—may be sued by babies harmed by their mothers’ use of opioids. Under the Tennessee Drug Dealer Liability Act, these babies may sue for damages caused by the use of illegal opioids if there is clear and convincing evidence that the drug companies knowingly facilitated the distribution of opioids in the illegal drug market. The Court also held that seven District Attorneys General who had individually sued the drug companies on behalf of their districts did not have standing to sue under the Act.

The lawsuit, filed in the Campbell County Circuit Court, was brought under the Tennessee Drug Dealer Liability Act. In passing this law, the Legislature declared that the sale and use of illegal drugs affects every community in the country and takes a substantial toll on society. This Act allows a person or company that knowingly participates in the illegal drug market to be sued for injuries caused by illegal drug use. The Legislature found that civil lawsuits were a viable way to compensate those who have suffered harm from the illegal drug market at the expense of those who have engaged in it. Thus, the Act allows family members of illegal drug users, including babies exposed to illegal drugs in utero, those who have expended resources on behalf of an illegal drug user, and those who have been injured by the actions of an illegal drug user, to sue a party that knowingly participates in the illegal drug market in Tennessee.

 In response to the opioid crisis in East Tennessee, seven District Attorneys General and two unnamed children identified as “Baby Doe plaintiffs” sued the drug companies under the Act. The District Attorneys claimed that the epidemic of illegal opioid use had damaged the communities in their districts, and the Baby Doe plaintiffs claimed that they were harmed by exposure to opioids in utero. They alleged that the drug companies knowingly participated in the illegal drug market by intentionally flooding East Tennessee communities with prescription opioids, leading to widespread addiction and diversion of the opioids into the black market. The lawsuit contained detailed allegations of intentional conduct by the drug companies to fuel the demand for opioids in the illegal drug market and to over-supply the market to meet that demand. The plaintiffs alleged that the drug companies deceptively and aggressively marketed opioids, encouraged doctors to prescribe and even over-prescribe opioids, and over-supplied opioids to communities in East Tennessee. The plaintiffs claimed that the drug companies saw signs of illegal diversion and knew opioids were being distributed without a prescription, which made them illegal drugs. The plaintiffs also claimed the drug companies knew unscrupulous doctors and “pill mills” would illegally distribute the drugs.

The drug companies moved to dismiss the suit, contending that the Act did not apply to them and that the District Attorneys did not have standing to sue under the Act. The Campbell County Circuit Court dismissed the suit. The Court of Appeals reversed, holding that if the allegations against the drug companies were true, the drug companies could be held liable under the Act and that the District Attorneys could sue under the Act.

In a unanimous opinion, authored by Justice Sharon G. Lee, the Tennessee Supreme Court held that the District Attorneys had no statutory right to bring suit under the Act. The Act specifically identifies those who can file a lawsuit, which does not include District Attorneys General suing as individual plaintiffs on behalf of their districts.The Court noted that at this early stage in the litigation, when ruling on a motion to dismiss, the Baby Doe plaintiffs’ factual allegations against the drug companies must be taken as true. Under that standard, the Court held that the drug companies could be held liable under the Act if the Baby Doe plaintiffs could prove to a jury by clear and convincing evidence that the drug companies intentionally participated in the illegal drug market as defined in the Act. Although the drug companies argued that they were not the type of “drug dealers” the Legislature meant to target with the Act, Justice Lee, on behalf of the Court, wrote that the drug companies could not “invoke their status as otherwise lawful companies to avoid civil liability” for intentionally flooding “communities in East Tennessee with highly addictive opioids they knew would be sold in the illegal drug market.”      

To read the opinion of the Court in Effler, et al. v. Purdue Pharma L.P., et al., please visit the Opinions section of tncourts.gov.