614 S.W.3d 681
Tenn.2020Background
- Tennessee enacted the Drug Dealer Liability Act (DDLA) to create market-based civil liability for those who knowingly participate in the illegal drug market and to allow recovery by persons and entities harmed by illegal drug use.
- Plaintiffs: seven District Attorneys General sued in their official capacities on behalf of local political subdivisions, and two infants (Baby Doe #1 and #2) alleged neonatal abstinence syndrome from in utero opioid exposure.
- Defendants: pharmaceutical companies Endo and Teva (among others) were accused of intentionally flooding East Tennessee with prescription opioids, knowingly facilitating diversion to the black market, and profiting from resulting addiction and harms.
- Procedural history: trial court dismissed the complaint, holding the DDLA did not apply to the Drug Companies; the Court of Appeals reversed; the Tennessee Supreme Court granted review.
- Holding summary: the Supreme Court ruled the District Attorneys lack statutory standing under the DDLA, but the Baby Doe plaintiffs (whose standing was undisputed) pleaded sufficient facts — taken as true at the Rule 12.02(6) stage — that the Drug Companies may have knowingly participated in the illegal drug market and thus stated claims under the Act.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether District Attorneys have standing under the DDLA | DAs may sue as "governmental entities" under §106(a) or represent political subdivisions under §116(a) | DDLA's §106(a) enumerates who may sue and does not name DAs; §116(a) permits prosecuting attorneys to represent governmental parties, not to sue in their own names | DAs lack standing; statute does not authorize local prosecutors to bring suit as plaintiffs in their own names |
| Whether DDLA applies to pharmaceutical manufacturers who legally sell prescription opioids | Baby Does: manufacturers knowingly facilitated over‑supply, targeted marketing, and diversion into the illegal market — conduct fits DDLA’s definition of participation | Drug Cos: lawful sale/distribution to licensed channels cannot be transformed into illegal-dealer liability merely because some product is later diverted by third parties | Taking allegations as true, the complaint pleads acts (marketing, oversupplying, supplying suspicious orders) that could amount to knowing participation in the illegal drug market; claim survives dismissal |
| Scope of "market liability" and legal vs. illegal distribution | Plaintiffs: market liability covers intentional participation in an illegal market even if actors also operate in legal channels | Defendants: market liability was meant for classic ‘‘drug dealers’’; manufacturers selling via regulated supply chain should not be liable for third-party diversion | Court: DDLA’s plain language covers participation that facilitates marketing or distribution of illegal drugs; lawful sale can be actionable if defendants knowingly participated in the illegal market as alleged |
| Pleading standard / burden to proceed past Rule 12.02(6) | Plaintiffs point to detailed factual allegations tying manufacturers to diversion and local harms | Defendants contend allegations are insufficient and inconsistent with regulated distribution | On a 12.02(6) review, court accepts plaintiffs’ factual allegations and reasonable inferences; Baby Does stated a viable claim but must ultimately prove participation by clear and convincing evidence at trial |
Key Cases Cited
- Rich v. Tennessee Bd. of Medical Examiners, 350 S.W.3d 919 (Tenn. 2011) (uses expressio unius canon to infer exclusion when Legislature enumerates persons)
- Tucker v. Dabbs, 59 Tenn. (12 Heisk.) 18 (Tenn. 1873) (statutory enumeration limits implied powers of other actors)
- Direct Sales Co. v. United States, 319 U.S. 703 (U.S. 1943) (sale of large quantities to a practitioner can constitute illegal distribution when quantities exceed lawful practice)
- Schafer v. Shopko Stores, Inc., 741 N.W.2d 758 (S.D. 2007) (pharmacy dispensing under valid prescription did not constitute knowing participation under that state's DDLA)
- Whittemore v. Owens Healthcare–Retail Pharmacy, Inc., 111 Cal. Rptr. 3d 227 (Cal. Ct. App. 2010) (plaintiff failed to allege defendant knowingly participated in marketing drugs to the illegal market)