Joshua Z. Rokach
Joshua Z. Rokach

A novel verdict against Teva in New York

teva pharmaceuticals stock photo (dreamstimes.com)

Just as New Yorkers prepared to ring out the old year, a jury in a civil suit found the US division of Teva Pharmaceuticals liable for largely causing the opioid (pain killer) epidemic in the state. The next phase of the trial will determine how much money the company must contribute to programs for rehabilitation of addicts and future prevention. The State of New York and two Long Island counties successfully argued that the company created a “public nuisance” in its marketing of pills to doctors. The doctors prescribed, and retail drug stores dispensed, the medications.

The verdict raises difficult legal issues. In New York, courts, not the Legislature, created the law of public nuisance. Based on precedent from the New York Court of Appeals, the state’s highest tribunal, advertising and selling legal drugs may well not constitute a nuisance.

Public nuisance as a societal wrong (tort) deserving compensation derives from the Torah. Mishpatim (Exodus 22:5), prescribes restitution for the loss of crops of victims of a fire that a property owner allows to burn out of control. The Shulchan Aruch in Hoshen Mishpat Ch. 418 delineates the circumstances which constitute or do not constitute negligence leading to liability for property owners.

English common law judges expanded the type of behavior that became a nuisance.   Colonial New York adopted the British model. Two court systems existed side-by-side: the law courts and the equity courts. Law courts administered the written legal code and assessed damages. Equity courts stepped in where no law existed. Judges created rules and granted non-monetary remedies, such as injunctions. Nuisance cases belonged in equity courts. Litigation concerned use of private property in a way that harmed neighbors. Remedies involved ordering actions to cure and end – abate – the nuisance.

New York State abolished its equity courts when the state merged them with its law courts in 1848.  Since then, judges have trod carefully before declaring new types of nuisances. All the more so when the issue involved activity outside the traditional categories. The courts must respect the prerogative of the Legislature, the elected representatives of the people, to establish legal norms. The courts have refused to declare a nuisance and institute abatement in situations in which the Legislature had codified the violation and decreed penalties.

Two New York Court of Appeals cases stand out. The first concerned an attempt by two law firms to sue the Transport Workers Union for conducting an illegal strike, which shut down subways and buses in New York City. The law firms claimed the strike a public nuisance and sought relief for the disruption the strike brought about. The court refused because the Legislature had passed a law, the Taylor Law, governing labor relations in the public sector.

The court held that “it is for the courts to determine, in light of those provisions, particularly those relating to sanctions and enforcement, and their legislative history, and of existing common-law and statutory remedies, with which legislative familiarity is presumed, what the Legislature intended.”  Burns Jackson v. Lindner, 59 NY 2d 314 (NY Court of Appeals 1983). Analyzing the Taylor Law, the court found that the legislation created mechanisms for resolving disputes and established penalties for strikes. Nowhere did the act authorize private individuals to sue under nuisance.

In the second case, City of NY v. SMOKES-SPIRITS, 911 NE 2d 834 (NY: Court of Appeals 2009) the city invoked the Public Health Law regulating tobacco to try to recover lost tax revenue from illegal imports of cigarettes. The court rebuffed the effort.  The judges pointed out, that the activity of shipping cigarettes into New York “’is not illegal or even traditionally deemed offensive.’” Therefore, declaring it a nuisance required creating a new category. The court held that the law regulating tobacco did not contemplate recovery of lost taxes from black-market products.

The case against Teva involved allegations of aggressive  marketing of a product useful to society – pills that helped patients manage pain: in short, garden variety commercial activity. As in the cigarette tax case, that type of conduct does not fit traditional nuisance jurisprudence. The courts must then defer to the written law, the provisions against deceptive advertising. In particular, the enforcement provisions of the General Business Law,, Ch. 20, Article 22-A, Section 350-d give the State Attorney General the authority to sue for deceptive advertising and collect up to $5,000 for each violation.

Teva claims the state did not accuse the company of deception. Even if the state did prove otherwise, the sole remedy against Teva remains $5,000 per violation. As the state did not invoke the consumer protection law, the Attorney General had bigger ideas in mind.

The appellate courts will decide.

About the Author
Joshua Z. Rokach is a retired appellate lawyer and a graduate of Yale Law School.
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