California Court Finds No Liability for Pharmacy under Drug Dealer Liability Act

California Court Finds No Liability for Pharmacy under Drug Dealer Liability Act

You might be surprised, like I was, to discover that several states have passed a Drug Dealer Liability Act which allows some individuals who are injured by the marketing and sale of illegal drugs to recover damages from drug dealers. Who knew?

Most of these state drug dealer laws were developed using the Model Drug Dealer Liability Act (DDLA), which was intended to protect, among others, those injured by a driver under the influence of drugs and families whose children overdose on drugs. California is one of the states that have adopted the model law.

In 1995, the first lawsuit under a state DDLA was brought in Michigan for damages resulting from the birth of a baby born addicted to drugs and for expenses paid by the city of Detroit for treating drug addicts in Detroit jails. In the baby case, two Detroit dealers were ordered to compensate the siblings because the baby was born addicted to cocaine; the baby was later bludgeoned to death by its mother who was high on drugs.

In Utah, the wife of a long-term drug addict filed suit against his drug dealer of six years; the dealer settled out of court prior to trial. In South Dakota a man was killed in an auto accident with another man who was high on drugs. The dead man’s wife sued the drug dealer of the other driver and was awarded over $250 million in damages.

In some DDLA cases, the plaintiff need not prove that the defendant was the particular dealer who supplied the actual drugs that were directly involved in the injury. Instead, liability attaches in a “stream of commerce” type fashion with the plaintiff only needing to prove that the dealer was distributing illegal drugs in the user’s community, that the dealer was distributing the type of drug used by the addict, and that the dealer was actively dealing during the time the addict bought drugs.

Common plaintiffs in DDLA cases include guardians of drug-addicted babies, victims of drugged drivers, parents of teen drug users, and employers, insurers, and governments that must pay for treatment once the users become addicted.

Although the defendants in DDLA cases are typically those who operate in the black market illegal drug trade and plaintiffs are typically third-party victims who did not engage in any wrongful activity, one woman in California recently sought to expand the pool of those who can be held liable for the sale of illegal drugs by suing the pharmacy employers of the man who sold her the prescription drugs that he stole on the job.

A June 22, 2010 opinion from the California Court of Appeals has been certified for partial publication. The case involves the Drug Dealer Liability Act (California Health & Safety Code, §§ 11700 et seq.), which authorizes a user of an illegal controlled substance to recover damages resulting from its use from those who knowingly market the substance. It covers substances that require a prescription. In this case, the court was asked to decide whether a pharmacy is liable under the Drug Dealer Liability Act for conduct of an employee who furnished stolen prescription drugs to a plaintiff.

Plaintiff Melody Whittemore developed a severe infection in the fall of 2005 and was treated by a physician. When she was no longer able to obtain prescriptions for pain medication from her doctor, she sought the medication from other sources. She began buying black market prescription drugs, such as OxyContin, for about one dollar a pill from Steven Correa, an employee of Owens Pharmacy. Whittemore also purchased Norco and hydrocodone from Correa. It is estimated that she paid almost $350,000 for the pills over an eighteen month period.

The drugs were pain medications and were classified as Schedule II controlled substances; as such, they required a prescription before they could be legally dispensed. Whittemore took the drugs for over a year and, not surprisingly became addicted – both physically and emotionally. She eventually had to be hospitalized for her addiction and, thereafter, helped law enforcement build a case and arrest Correa – he had stolen the drugs from the pharmacies for which he worked.

Whittemore discovered that Correa’s employers had a duty to monitor their supply of prescription drugs and to file a report with the Drug Enforcement Agency (DEA) if any of the drugs ever went missing. Whittemore and her husband sued both Correa and the pharmacies from which Correa obtained his drugs. Whittemore contends that the pharmacies owed her a legal duty to properly monitor and account for their drug supplies, identify drug theft and report it to the appropriate authorities so that it could be investigated. Whittemore contends that this failure to properly safeguard the drugs was, in essence, a reckless disregard for her welfare that resulted in her being able to purchase the stolen drugs and develop a dangerous prescription drug addiction.
She attempted to hold the pharmacies liable as suppliers in Correa’s black market operation.

Whittemore’s husband contended that he was also harmed by the prescription drug dealing in that he suffered severe emotional distress by seeing his wife on drugs. The couple also sued for unfair business practices, loss of consortium, intentional infliction of emotional distress, and battery, arguing that Melody’s addiction made her unable to consent to ingesting the medications. The lawsuit sought compensation for the amount of money spent on the drugs, medical expenses for addiction treatment and punitive damages.

The pharmacies filed a demurrer, arguing that Whittemore could not sue them as she had “unclean hands” — Whittemore’s buying and taking medications without a prescription and with the knowledge that they were stolen is illegal. The lower court sustained the demurrer and dismissed the case. Whittemore appealed the decision, arguing that the Drug Dealer Liability Act created a statutory exception to “unclean hands” as it specifically allowed users of illegal drugs to recover damages.

The Appeals Court largely avoided the “unclean hands” issue and held that the Act applies only to those who knowingly participate in the marketing of illegal drugs. In finding for the pharmacy, the Court determined that it did not “knowingly” participate.

In addition to the “unclean hands” argument, the defendants also argued that they were not responsible for their employee’s conduct based on respondeat superior – Correa was not acting within the scope and course of his employment when he stole the prescription drugs and sold them on the black market. Plaintiffs responded that it was defendants’ failure to supervise their employee and keep track of their drug supplies that caused the injury. Even if this were true, however, the DDLA covers only those who knowingly engage in the illegal drug trade.

Failing to control inventory and supervise employees was likely not what the California legislature intended when targeting those activities that directly contribute to the illegal drug trade. Such behavior typically rises only to the level of negligence or gross negligence, a far cry from the strict liability imposed by the DDLA. However, due to the doctrine of “unclean hands”, a suit brought by Whittemore based on negligence would likely also fail due to her own contributory negligence in ingesting the substances.

Millie Anne Cavanaugh, Esq. is licensed to practice law in California and Massachusetts. The information contained herein is provided for informational purposes only, and should not be construed as a solicitation for your business or as legal advice on any subject matter. You should not act or refrain from acting on the basis of this information without seeking independent legal advice.

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