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Alabama legislature passes bill avoiding ‘looming disaster’ for state’s business climate

YH Prescription Drugs

MONTGOMERY, Ala. – The Alabama Legislature on Tuesday gave final passage to legislation that overturns the Alabama Supreme Court’s adoption of a novel legal theory that many considered to be a looming disaster for Alabama businesses and the state’s overall business climate.

In 2013, the Alabama Supreme Court in the Weeks v. Wyeth case — and then again on rehearing the same case in 2014 — held that a brand-name manufacturer can be held liable for physical injuries caused by a generic product made and sold by a different company.

The Business Council of Alabama filed a brief in the case along with the U.S. Chamber of Commerce urging the Supreme Court to reverse itself and warning that adoption of the “innovator-liability” theory would once again make Alabama a magnet for frivolous lawsuits.

After the Supreme Court refused to reconsider its initial ruling in the 2014 rehearing, Sen. Cam Ward, R-Alabaster, sponsored SB 80, which garnered wide bipartisan legislative support and is headed to the governor for consideration.

The House on Tuesday voting 86-14 passed SB 80. The Senate previously passed SB80 by a bi-partisan 32-0 vote.

Rep. Jack Williams (R-Vestavia Hills), introduced the House companion bill, HB110, and handled Ward’s SB80 during Tuesday’s House floor debate. The House previously passed HB 110 by a vote of 88-7.

“People are being sued for products they did not make,” Williams said. “That was a departure from case-product law in Alabama. Basically what we are doing is restating what the law is prior to that and clarifying to the courts what the intention is.

“We’re not offering immunity, we’re just saying you can’t be sued if you didn’t make it,” Williams said. “There is a fear out there this could be expanded.”

Rep. David Faulkner, R-Birmingham, praised the bill. “We passed it overwhelmingly before, it’s a tremendous bill,” Faulkner said. “A lot of lawyers looked at this bill, business interest and plaintiff’s lawyers, the defense side. The language is needed.”

BCA President and CEO William J. Canary thanked the Alabama Legislature for righting a wrong.

“By passing this important legislation, the Alabama Legislature has stood with Alabama’s businesses by reversing the Alabama Supreme Court’s adoption of a novel tort theory, which could have had chilling effects on Alabama’s business climate,” Canary told Yellowhammer. “Had this not been corrected swiftly by the Legislature, Alabama would have been at a great disadvantage in attracting new business investment, which is key to bringing economic growth and jobs to our state.”

Preventing potential damage from the innovator-liability rulings was a priority in the BCA’s 2015 State Legislative Agenda.

Despite the Alabama Supreme Court’s attempt to limit the “innovator liability” theory to the pharmaceutical industry, the Wall Street Journal and legal scholars have observed that “[p]harmaceuticals aren’t the only industry that would feel the pain if [Weeks] stands,” because the innovator liability theory could apply “in any market served by brand-name companies that actively promote their wares but face competition from largely identical but lower-priced store brands.”

“Alabama manufacturers are fortunate that this legislation will now be law,” said Tommy Lee, President and CEO of Vulcan, Inc., a manufacturer in Foley. “To think that a company could be held liable for injuries allegedly caused by a product it neither manufactured nor distributed is alarming.”

Before the Alabama Supreme Court’s decision, courts nationwide, now 100 in all, applying the law of 30 different states, and including all seven U.S. Courts of Appeals to consider the question, had soundly rejected the “innovator liability” theory.

Only three other courts nationwide have adopted innovator liability under other states’ laws, an intermediate appellate court in California, and federal trial courts in Illinois and Vermont.