State ex rel. Rosenblum v. Johnson & Johnson

362 P.3d 1197, 275 Or. App. 23, 2015 Ore. App. LEXIS 1410
CourtCourt of Appeals of Oregon
DecidedNovember 25, 2015
Docket110100494; A153226
StatusPublished
Cited by6 cases

This text of 362 P.3d 1197 (State ex rel. Rosenblum v. Johnson & Johnson) is published on Counsel Stack Legal Research, covering Court of Appeals of Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State ex rel. Rosenblum v. Johnson & Johnson, 362 P.3d 1197, 275 Or. App. 23, 2015 Ore. App. LEXIS 1410 (Or. Ct. App. 2015).

Opinion

HASELTON, C. J.

The state appeals a judgment dismissing this action pursuant to the Oregon Unlawful Trade Practices Act (UTPA), ORS 646.607 and ORS 646.608, against defendants, who manufacture and distribute the over-the-counter painkiller Motrin. The state argues that the trial court, in dismissing the action under ORCP 21 A(8), erroneously concluded that the failure to disclose a known material risk that goods sold in Oregon may be defective is not actionable under the UTPA. We agree that the trial court so erred. See, e.g., Caldwell v. Pop’s Homes, Inc., 54 Or App 104, 634 P2d 471 (1981). Accordingly, we reverse and remand.

Whether a pleading fails to state ultimate facts sufficient to constitute a claim, as required under ORCP 21 A(8), is a question of law. Hansen v. Anderson, 113 Or App 216, 218, 831 P2d 717 (1992). When reviewing an order granting dismissal on that ground, we accept as true the facts alleged in the complaint and all reasonable inferences that may be logically deduced from the pleaded facts. Bernards v. Summit Real Estate Management, Inc., 229 Or App 357, 367-68, 213 P3d 1 (2009). We state the material facts in accordance with that standard by reference to the state’s operative amended complaint.

The defendants in this action are Johnson & Johnson, McNeil-PPC, Inc., and McNeil Healthcare, LLC. McNeil-PPC and McNeil Healthcare are Johnson & Johnson subsidiaries, and the three entities are in the business of manufacturing, advertising, distributing, and selling over-the-counter drugs throughout the United States, including in Oregon. In November 2008, defendants discovered that a batch of Motrin pills that had been manufactured at a Puerto Rico plant was defective — the 200-milligram pills failed to dissolve at the rate required by specifications for good manufacturing practices. The defective batch had been packaged and sold in 8-count vials. Six days after that discovery, defendants reported the dissolution failure to the FDA, but did not conduct a recall or notify wholesalers, retailers, or consumers that its 8-count vials contained potentially defective medicine.

[26]*26Defendants eventually admitted that consumers who used the defective Motrin “might be receiving less than the expected dose of ibuprofen” and that its use “may lead to a worsening of pain, fever, or inflammation, all of which are very likely to be recognized by the consumer or diagnosed by a healthcare professional.”

A month later, in December 2008, defendants discovered the same dissolution defect in another batch of Motrin from the same Puerto Rico plant. That second batch of defective Motrin had been sold in 8-count vials and in 24-count bottles. In notifying the FDA of its second known batch of defective Motrin, defendants disclosed that it had been sold in 8-count vials, but did not disclose that the defective pills were also sold in 24-count bottles. Defendants, again, did not recall the defective product or notify wholesalers, retailers, or consumers.

Defendants eventually determined that 88,104 units of the defective Motrin 8-counts had been distributed nationally, and identified 29 Oregon retailers who received shipments of 8-counts during the distribution window for the defective pills. Defendants did not notify those 29 Oregon retailers (or anyone else outside the state) who were selling potentially defective Motrin; nor did they disclose the defect to consumers in Oregon or elsewhere, despite their knowledge that there was a material risk that defective Motrin was on the market in Oregon.

Defendants decided not to publicly recall the product. Instead, they hired a company, Inmar CLS, to send its employees — “secret shoppers” — out to purchase the remaining Motrin 8-counts from retailers. According to McNeil Healthcare’s “Director of Quality Assurance,” this covert buy-back approach was “a newly created prescribed path *** which is a bit different than our typical procedures.” Similarly, according to McNeil Healthcare’s “Site Quality Leader” in Puerto Rico, the buy-back approach was “very different,” made possible by his “good relationship” with the local FDA director, with whom he had been having “very confidential” “off the record” discussions about how to avoid a recall. However, defendants were concerned that their highly unusual buy-back project would come to the attention [27]*27of other FDA personnel, who would require a public recall. Defendants were particularly concerned about “the press that will be seen” in the event of a recall.

The first phase of the buy-back project took place in March and April 2009, months after the discovery of the defective Motrin. Inmar’s “secret shoppers” were explicitly ordered not to alert store personnel to the defect:

“DO NOT communicate to store personnel any information about this product. Just purchase all available product. If you are questioned by store personnel, simply advise that you have been asked to perform an audit [.]”

(Capitalization in original.)

The project’s first phase was limited in scale, designed to survey the amount of defective product on store shelves. Defendants sent secret shoppers to two stores in Oregon, and 250 stores nationwide. The goal was to obtain data that would allow defendants to prove to the FDA that all of the defective product had already been sold, so as to avoid the need for a nationwide recall. Defendants understood that, “if the data is not favorable,” the FDA — once notified — would expect a nationwide recall.

Defendants commenced the second phase of the buy-back project in June 2009, this time contracting with another company, WIS International. The second phase was much larger in scale, designed as a mass “silent recall” of the potentially defective Motrin from about 5,000 stores nationwide. Again, the drafted instructions to field employees emphasized that the “recall” was to be conducted in absolute secrecy:

“You should simply ‘act’ like a regular customer while making these purchases. THERE MUST BE NO MENTION OF THIS BEING A RECALL OF THE PRODUCT! If asked, simply state that your employer is checking the distribution chain of this product and needs to have some of it purchased for the project.”

(Capitalization and boldface in original.)

During the second phase of the buy-back, WIS sent secret shoppers to 27 Oregon stores that defendants [28]*28identified as having potentially received defective product through their supply chain. Specifically, defendants knew that 828 8-count vials that could contain pills from the defective batches had been distributed and sold in Oregon. However, the secret shoppers were able to find and purchase only 41 units, leaving the other 787 8-count units unaccounted for. In other words, by the time defendants actually executed their secret buy-back project, 95 percent of the units distributed in Oregon that could have contained defective Motrin had already been sold to consumers. Yet defendants did not, at any point before or during this course of events, notify Oregon consumers or retailers that the Motrin they had purchased or sold was potentially defective.1

Free access — add to your briefcase to read the full text and ask questions with AI

Related

State ex rel Rosenblum v. Living Essentials, LLC
497 P.3d 730 (Court of Appeals of Oregon, 2021)
Swango v. Nationstar Sub1, LLC
292 F. Supp. 3d 1134 (D. Oregon, 2018)
BP West Coast Products, LLP v. Oregon Department of Justice
396 P.3d 244 (Court of Appeals of Oregon, 2017)
In re Packaged Seafood Products Antitrust Litigation
242 F. Supp. 3d 1033 (S.D. California, 2017)
Gordon v. Rosenblum
370 P.3d 850 (Court of Appeals of Oregon, 2016)

Cite This Page — Counsel Stack

Bluebook (online)
362 P.3d 1197, 275 Or. App. 23, 2015 Ore. App. LEXIS 1410, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-ex-rel-rosenblum-v-johnson-johnson-orctapp-2015.