Summary
The Alabama Supreme Court granted Novartis Pharmaceuticals Corporation’s petition for a writ of mandamus challenging the trial court’s refusal to sever claims brought by the State of Alabama against 73 pharmaceutical companies. The court held that the companies were improperly joined under Alabama Rule of Civil Procedure 20 because their similar but independent business transactions did not arise from the same transaction or series of transactions. The court ordered the claims severed into separate proceedings and vacated the trial court’s order establishing four trial tracks.
Topics
Practice areas
Questions Presented
- Whether the State's claims against 73 pharmaceutical companies satisfied the same-transaction-or-occurrence requirement for permissive joinder under Rule 20(a), Ala. R. Civ. P.
- Whether the trial court's denial of the defendants' motions to sever was subject to mandamus relief.
- Whether the misjoined claims should be dismissed or severed under Rule 21, Ala. R. Civ. P.
Holdings
- The State improperly joined the pharmaceutical companies because coincidental, but not coordinated, business transactions causing separate economic losses did not arise from the same transaction or series of transactions under Rule 20(a).
- Mandamus was the appropriate means to challenge the trial court's ruling on the motion to sever, and Novartis established entitlement to the writ.
- The misjoined claims were to be severed and proceeded against separately rather than dismissed.
Key quotations
“We hold, therefore, that the State’s joinder of the 73 companies was improper because coincidental, but not coordinated, business transactions giving rise to separate economic losses do not constitute a series of transactions as contemplated by Rule 20.” (304)
““ ‘Transaction’ is a word of flexible meaning. It may comprehend a series of many occurrences, depending not so much upon the immediateness of their connection as upon their logical relationship.” (303)
“We therefore grant Novartis’s petition for a writ of mandamus and direct the trial court to vacate its order denying Novartis’s motion to sever.” (305)
Factual background
Alabama sued 73 pharmaceutical companies alleging that each independently reported false pricing benchmarks and failed to disclose discounts or rebates, causing the Alabama Medicaid Agency to reimburse providers at inflated amounts. The companies allegedly marketed the resulting profit margins to providers, but the State disavowed any conspiracy or concerted action among the companies. The transactions involved different companies, products, and time periods over approximately 15 years.
Procedural history
The State of Alabama sued 73 pharmaceutical companies, including Novartis, asserting fraud, suppression, wantonness, and unjust-enrichment claims based on allegedly false drug-pricing information. The trial court denied motions to sever, finding common questions of law and fact and transactions involving the Alabama Medicaid Agency. Novartis and 43 other companies sought mandamus relief; the court decided Novartis's petition and directed severance of the claims.
Remand instructions
The trial court must vacate its order denying Novartis's motion to sever, vacate its order creating four defendant tracks and requiring four trials, and sever the claims against all companies so that Abbott Laboratories, Inc., the first-named defendant, is the only defendant remaining in the underlying action.