Keith:

With respect to U.S. v. Park, it is interesting to note that when Lilly
realized something might be amiss with the medicine reaching patients it did
a careful review of the manufacturing history
of the relevant batches and determined that it had done nothing wrong within
the confines of its factories.  It then did nothing more!  Lilly is relying
almost entirely on the common law principle of no duty to rescue absent a
special relationship with the victim.  The idea appears to be that a
pharmaceutical company has no such relationship with the ultimate consumer
when there are intermediate sellers who process the goods.  In this case
pharmacists have the responsibility of preparing the properly diluted
formulation from Lilly's powder.  In Indiana, under this theory, Lilly would
have a good shot at prevailing on summary judgment motions and subsequent
appeals.  A problem for Lilly is that these cases are probably going to be
tried in Missouri State Court.  Because Lilly has been joined as a defendant
to civil actions against the Missouri pharmacist, we have an absence of the
complete diversity necessary for removal to federal court.  I have a feeling
that Missouri courts will be more sympathetic than Indiana courts to the
various exceptions to the no-duty-to-rescue rule that the plaintiffs'
counsel are likely to find in abundance.

One last interesting fact.  A Missouri physician had been apprised by a
Lilly salesman that, based on his sales records, something wasn't kosher
with the amount of Gemzar the pharmacist seemed to be providing her.  She
had the stuff tested and found gross over-dilution.  She says she then sent
Lilly a FAX, which Lilly says it has no record of.  So the issue of who knew
what and when did they know it may become central if the courts hold that
Lilly had a duty to come forward.  I think the doctor's phone records should
help here and the fact that the tests were ordered creates a likelihood that
some follow was undertaken by the physician.

Oh, by the way, the various bleeding hearts in the ALSB may actually find
some ethical issues in these facts in addition to the legal ones.  (For the
literal minded, that was supposed to be irony.) Your students  should have
fun with this case.  Stay tuned.
-----Original Message-----
From: Keith Maxwell [mailto:[log in to unmask]]
Sent: Wednesday, October 24, 2001 7:41 PM
To: [log in to unmask]
Subject: Re: Comments of Eli Lilly's CEO (was Our comments to AACSB)


Jordan,

This is a great case to discuss in class--thank you very much for your
response to my request! In addition to issues of reckless disregard and
punitive damages, I think this raises an issue under the Food, Drug, and
Cosmetic Act, similar to U.S. v. Park where the company president was found
guilty for the failure to be aware that subordinates had not cleaned up the
rodent infested food warehouse. It could be very instructive to have
students identify the similarities and differences in the two cases. What a
great exercise precedent-based legal reasoning!

Thanks again!

Keith

At 01:28 PM 10/24/2001, you wrote:
>Keith:
>
>The underlying tort cases referred to below (there are now 54 of them)
>involve the purported criminal dilution of a Lilly cancer drug (Gemzar) by
a
>Missouri pharmacist.  The public comments by the Lilly CEO that I felt were
>gratuitous and unwise can be found in Jeff Swiatek, "Indianapolis-Based Eli
>Lilly CEO blames Lawyers for Woes in Diluted-Drug Case," Indianapolis Star,
>Aug. 7, 2001.  This article and the remaining reportage on this mess can be
>found with a NEXIS search using "Eli Lilly" and "Taurel" as search terms.
>
>The CEO's (Sidney Taurel) statement that, I think will prove devastating in
>a jury trial, should it come to that (Lilly moved yesterday for dismissal
of
>7 of the 54 cases), was: "Taurel said he first heard about the scandal at
>that time, and he's not upset that he wasn't told earlier by the Kansas
City
>salesman or his regional manager.  'there was no way to foresee the turn of
>events.  I don't think it's realistic for me to be informed earlier.'"
>
>The plaintiff's attorney crticized Taurel for saying he didn't feel a need
>to be told by company employees of the suspected dilution.  "For the CEO to
>say, 'that's not something I should be bothered about,' I think that's
>reprehensible.  Where does the buck stop at Lilly?  Does it stop at his
desk
>or not?"
>
>First semester business law agency principles would have helped Mr. Taurel
>here.  There's more.
>

Keith A. Maxwell                        | Phone: (253) 879-3703
Professor of Legal Studies and Ethics   | Fax:     (253) 879-3156
University of Puget Sound               | e-mail:  [log in to unmask]
Tacoma, WA 98416                        | www.ups.edu/faculty/maxwell