Idaho Court Dismisses Innovator Liability Claims Against Novartis for Lack of Specific Personal Jurisdiction

July 13, 2020

The District Court of the Fourth Judicial District of the State of Idaho dismissed an innovator liability claim against Firm client Novartis Pharmaceuticals Corporation (“NPC”) for lack of specific personal jurisdiction.  The court found that NPC’s limited, third-party contacts with Idaho were not sufficient to convey specific personal jurisdiction because the allegations did not arise out of or relate to those contacts.  The ruling comes after numerous rounds of briefing, many hearings, and multiple attempts by plaintiffs to cure the many defects in their complaint.

Plaintiffs brought suit against NPC under the widely rejected theory of innovator liability.  Although plaintiffs were never prescribed an NPC product and never ingested an NPC product, plaintiffs claimed that NPC should be liable for injuries allegedly caused by ingestion of a generic brand of the drug NPC had divested seven years prior.

NPC moved to dismiss the initial complaint due to a lack of specific personal jurisdiction in Idaho state court and for failure to state a claim upon which relief could be granted, Idaho Rules of Civil Procedure 12(b)(2) and 12(b)(6) respectively.  After oral argument by Firm partner Matthew J. Malinowski, the court initially issued a preliminary ruling on NPC’s 12(b)(6) claim, holding that Idaho law did not allow for liability when the defendant did not manufacture the drug that caused the alleged injuries.  However, the court also issued narrow discovery on the issue of whether NPC was subject to personal jurisdiction in Idaho state court.

After limited discovery, the court found that it did have personal jurisdiction over NPC due to a marketing agreement between NPC and a telemarketing company that made less than a dozen calls to Idaho general practitioners in 2000 — seven years before plaintiffs’ alleged injuries occurred.  However, because the court had entered the preliminary order, held in abeyance pending jurisdictional discovery, the court dismissed NPC while allowing plaintiffs the opportunity to file an amended complaint only as to its claim of fraud.

Plaintiffs filed the amended complaint with only the allowed fraud claim asserted against NPC.  NPC then again moved to dismiss the complaint under Rule 12(b)(2) and 12(b)(6).  Citing heavily to the Supreme Court’s recent Bristol-Myers Squibb Co. v. Superior Court of Ca. et al. decision that reframed the standard for specific personal jurisdiction, NPC argued in its briefing and at oral argument that, for the purposes of specific jurisdiction, whether Horizon was NPC’s agent was irrelevant. The key inquiry—completely ignored by plaintiffs—was whether the suit arises out of or relates to the defendant’s contacts with the forum.  NPC further argued that plaintiffs alleged no such contact between NPC and Idaho.  That a company promoted an NPC product in Idaho years before plaintiffs’ mother took a generic version cannot establish that connection.  Plaintiffs’ attempts to rely on old and overruled law to illustrate how NPC “purposefully directed its marketing activity” was of no moment.  There was simply no connection between the few marketing calls made in 2000 and plaintiffs’ alleged exposure to a non-NPC product.

The court acknowledged that the “the main issue raised by the parties related to personal jurisdiction was whether Novartis had an agency relationship with [third-parties].”  The court had determined previously that NPC did have an agency relationship with the third-party based on their actions and terms of the marketing agreement, despite express language in the agreement denouncing any such relationship.  In this round of briefing, the court found language from Bristol-Myers Squibb persuasive: “what is needed—and what is missing here—is a connection between the forum and the specific claims at issue.”  The court agreed with NPC’s argument, specifically because the limited jurisdictional discovery did not reveal any evidence to support plaintiffs’ erroneous claims that NPC ever marketed its drug to Idaho physicians for off-label purposes.  In fact, it revealed no evidence whatsoever that NPC marketed or otherwise contacted the prescribing physician for any reason, let alone off-label use of the drug at issue. The court believed the lapse in time of seven years between the alleged contacts with Idaho and plaintiffs’ use of the generic drug to be the key issue.  Specifically, the court held that it “is unreasonable that Novartis was on notice that it may be called into Idaho courts to answer for use of a generic form of [a drug] that was ingested six years after Novartis sold [the drug] and seven years after its agent’s direct marketing activity into Idaho.”  Overall, the court found that two marketing calls by a third-party to doctors in Idaho unrelated to the plaintiffs and unrelated to their claims were insufficient to establish personal jurisdiction over NPC in Idaho.

Stirling v. Novartis Pharm. Corp., No. CV01-18-4880 (Idaho 4th Jud. Dist., Ada Cty. July 13, 2020)