Alaska Law Blog

The State of Alaska just cratered on its claims against Eli Lilly & Company over Zyprexa. “Cratered” is a such a harsh word, though. Maybe “had their backbones dissolve into a puddle on the courtroom floor just before closing argument” would be a more accurate description of what happened. In wrapping up the case and dismissing the jurors, Judge Rindner might well have said: “Thank you very much, and please watch your step on the way out!”

I admit that I’m not really qualified to pass judgment on the State’s decision. The only information I actually have about the case is from watching the TV news, unless you count eavesdropping on other non-involved lawyers at the next table while I was eating lunch at the Sandwich Deck. (And it didn’t help that I was choking on a dry-as-death chicken sandwich at the time.) But I’m an American and an Alaska lawyer. So I’m free to go on at length over stuff I actually know nothing about.

The State gave up its claims worth a supposedly solid $200 million for $15 million. (Actually, the Wall Street Journal reported the State’s total claims were originally pegged at a nifty $1 billion.) The math itself shows you who got the better end of this deal. But really all you needed to see were the interviews on Channel 2 News last night. Assistant State Attorney General Ed "The Glide" Sniffen was talking at length about the settlement. He had to explain to everyone -- himself included -- why the State decided to take the deal. The Lilly lawyer said almost nothing at all on camera but was smiling as wide as the Hoosier farmlands.

I can understand the State’s discomfort about the case. The 8,000 pound elephant in the courtroom was the U.S. Supreme Court. The High and Mighty Court earlier this year ruled that defective product claims against medical device makers had to be given the big “No Way Jose!” under the Medical Device Amendment to the Food, Drug and Cosmetic Act. The creeping fear amongst the plaintiff-type lawyers is that the High and Mighties may well extend this same reasoning to another pending case that, like the Zyprexa lawsuit, involves drug labeling under the Act. (The High and Mighties should not be confused with the Tighty Whities, which can ride up, creating a whole different kind of “creeping fear.”)

Still, I would have thought that the State at least would have let the panel of 12 hometown Alaskans render a thumping fine verdict against Lilly. There was always time to compromise later on, while the case was up on appeal. With a bright and shiny jury verdict in hand the State just might have gotten a bit more consideration in the deal.

And what, my friends, does all this portend for the pitfall-laced lawsuit the State has in the works against the actuaries who advised on the State’s pension plans?

[FULL DISCLOSURE: I'm originally from Indianapolis (Lilly's HQ) and I own a small position in Lilly. My equity interest is so small that the bump up in Lilly stock the settlement provided today was only just enough to buy me a couple of lunches of food-like substances at the Sandwich Deck.]