NCPA - National Center for Policy Analysis

Court Decision Leaves Trial Lawyers Wobbly

July 20, 1999

A small drug-maker called Forest Labs has taken on plaintiffs' lawyers and has won a stunning decision that have left lawyers vulnerable to future legal challenges.

Forest Labs had been caught up in a class-action suit aimed primarily at such large companies as Pfizer, Abbott Labs and Merck. The anti-trust suit alleged a price-discrimination conspiracy in the brand name prescription drug industry. Faced with a parade of sympathetic and "expert" witnesses, most of the companies decided to settle out of court for $723 million.

  • But Forest opted to try its luck before a judge along with three other drug companies -- Novartis, Johnson & Johnson and J.D. Searle.
  • But suddenly the witness list promised before the trial fell apart -- with more than 30 suddenly becoming "unavailable to testify," leaving only four live witnesses.
  • In announcing he was throwing out the case, U.S. District Judge Charles Korcoras of the Seventh Circuit noted the incompetence of the witnesses, whose testimony had nothing to do with an alleged conspiracy.
  • But then tiny Forest Labs, flush with victory, turned around and sued the plaintiffs' lawyers for $2 million in legal costs -- and it won again.

Another recent verdict in Chicago hit William Lerach -- known as the king of shareholder lawsuits -- and his legal firm with damages of $45 million for "abusive litigation."


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