Justia U.S. 10th Circuit Court of Appeals Opinion SummariesArticles Posted in Drugs & Biotech
Kenney v. Helix TCS
Plaintiff Robert Kenney was a former employee of Defendant Helix TCS, Inc. (“Helix”), which provided security services for businesses in Colorado’s state-sanctioned marijuana industry. Kenney filed this lawsuit against Helix under the Fair Labor Standards Act (“FLSA”), alleging that Helix misclassified him and similarly situated workers as exempt from the FLSA’s overtime obligations. Helix moved to dismiss Kenney’s claim based on the Controlled Substance Act (“CSA”), arguing that Kenney’s employment activities were in violation of the CSA and are thus not entitled to FLSA protections. The Tenth Circuit concluded Helix wanted it to interpret the CSA in a manner implicitly repealing the FLSA’s overtime mandate for employers in the marijuana industry. The Tenth Circuit determined the “case law is clear that employers are not excused from complying with federal laws” because of their other federal violations. “Moreover, the purposes of the FLSA do not conflict with the CSA quite as directly as Helix implies. Helix cherry-picks among the enumerated purposes of the FLSA, citing only those most favorable to its arguments.” The Tenth Circuit did not draw conclusions about the merits of Kenney’s FLSA claims. Rather, the Court held only that Kenney and similarly situated individuals were not categorically excluded from FLSA protections. It therefore affirmed the denial of Helix’s motion to dismiss. View "Kenney v. Helix TCS" on Justia Law
Alpenglow Botanicals v. United States
Alpenglow Botanicals, LLC (“Alpenglow”) sued the Internal Revenue Service (“IRS”) for a tax refund, alleging the IRS exceeded its statutory and constitutional authority by denying Alpenglow’s business tax deductions under 26 U.S.C. 280E. The federal government classified marijuana as a “controlled substance” under schedule I of the Controlled Substances Act (“CSA”), but it is legal for medical or recreational use in Colorado. This appeal was the product of the clash between these state and federal policies: Alpenglow is a medical marijuana business owned and operated by Charles Williams and Justin Williams, doing business legally in Colorado. After an audit of Alpenglow’s 2010, 2011, and 2012 tax returns, however, the IRS issued a Notice of Deficiency concluding that Alpenglow had “committed the crime of trafficking in a controlled substance in violation of the CSA” and denying a variety of Alpenglow’s claimed business deductions under section 280E. Alpenglow’s income and resultant tax liability were increased based on the denial of these deductions. Because Alpenglow was a “pass through” entity, the increased tax liability was passed on to Charles Williams and Justin Williams. The two men paid the increased tax liability under protest and filed for a refund, which the IRS denied. The district court dismissed Alpenglow’s suit under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief could be granted, and denied Alpenglow’s subsequent motion under Federal Rule of Civil Procedure 59(e) to reconsider the judgment. Finding no reversible error in the district court's judgment, the Tenth Circuit affirmed. View "Alpenglow Botanicals v. United States" on Justia Law
Fourth Corner Credit Union v. Federal Reserve Bank of Kansas
The Fourth Corner Credit Union applied for a master account from the Federal Reserve Bank of Kansas City. The Reserve Bank denied the application, effectively crippling the Credit Union’s business operations. The Credit Union sought an injunction requiring the Reserve Bank to issue it a master account. The district court dismissed the action, ruling that the Credit Union’s stated purpose, providing banking services to marijuana-related businesses, violated the Controlled Substances Act. The Tenth Circuit vacated the district court’s order and remanded with instructions to dismiss the amended complaint without prejudice. By remanding with instructions to dismiss the amended complaint without prejudice, the Court’s disposition effectuated the judgment of two of three panel members who would allow the Fourth Corner Credit Union to proceed with its claims. The Court denied the Federal Reserve Bank of Kansas City’s motion to strike the Fourth Corner Credit Union’s reply-brief addenda. View "Fourth Corner Credit Union v. Federal Reserve Bank of Kansas" on Justia Law
Cerveny v. Aventis, Inc.
The Cervenys sued the manufacturer of Clomid (Aventis, Inc.), asserting various tort claims under Utah law: failure to warn under theories of strict liability and negligence, breach of implied warranty, negligent misrepresentation, and fraud. They presented two theories, pointing to two types of warning labels that Aventis had allegedly failed to provide: (1) a label that warned of risks to the fetus when a woman takes Clomid before becoming pregnant; and (2) a label that unmistakably warned about harm to the fetus when Clomid is taken during pregnancy. The district court rejected the Cervenys’ claims based on preemption. The Tenth Circuit held that the district court ruling was correct on the Cervenys’ first theory, because the undisputed evidence showed that the FDA would not have approved a warning about taking Clomid before pregnancy. But on the second theory, the Tenth Circuit found the district court did not explain why a state claim based on the FDA’s own proposed language would be preempted by federal law. The district court also erred in failing to distinguish the remaining claims (breach of implied warranty, negligent misrepresentation, and fraud) from the failure-to-warn claims. These claims are based at least partly on affirmative misrepresentations rather than on a failure to provide a warning. The district court failed to explain why claims involving affirmative misrepresentations would have been preempted. View "Cerveny v. Aventis, Inc." on Justia Law
Cody Laboratories, Inc. v. Sebelius
Cody Laboratories, Inc. and Lannett Co., Inc. (collectively, "Cody") appealed a district court's dismissal of their action for declaratory judgment against the Food and Drug Administration (FDA). Cody has been manufacturing and distributing morphine sulfate since 2005. At the time Cody filed its complaint, the company had not received FDA approval for its morphine sulfate product. Cody contends that the product falls under the "grandfather clause" of the Food, Drug, and Cosmetic Act (FDCA). The FDA claims that the grandfather clause is exceedingly narrow and applies only to drugs that have been marketed in essentially identical form since 1938. The FDA sent Cody a warning letter in March 2009 stating that Cody's manufacture and distribution of morphine sulfate was in violation of the FDCA. Meanwhile, in August 2009, Roxane Laboratories, Inc., Cody's main competitor, submitted a New Drug Application ("NDA") for its own morphine sulfate product. Following its policy of granting expedited review of an NDA if no approved alternative drug exists, the FDA quickly reviewed and approved Roxane's NDA in January 2010. Cody submitted an NDA for its product the following month. The company's requests for expedited review were denied. Cody brought suit claiming the FDA acted arbitrarily, capriciously and contrary to law in violation of the Administrative Procedure Act by: (1) improperly determining that Cody's product was a "new drug" and thus not entitled to grandfathered status under the FDCA; and (2) treating Cody disparately from Roxane in processing the companies' respective NDAs. The court subsequently dismissed Cody's complaint for lack of jurisdiction, holding that the FDA had yet to complete "final agency action" under section 704 of the APA. Upon review of the record, the Tenth Circuit concluded that one of Cody's claims was mooted by post-judgment events and that Cody failed to exhaust available administrative remedies with respect to its remaining claim. The Court affirmed the district court's dismissal for lack of jurisdiction on the grandfathering claim, and dismissed Cody's disparate treatment claim as moot.
Rimbert v. Eli Lilly & Co.
Shortly after Plaintiff Mark Rimbert's father began taking Prozac, he killed his wife and himself. Plaintiff brought a wrongful death action against Defendant Eli Lilly, the manufacturer of Prozac. Defendant moved for summary judgment on various grounds and to exclude the testimony of Plaintiff's sole expert witness on the question of causation. The motions were denied by the district judge initially assigned the case. Once the case was reassigned, Defendant moved for reconsideration. The second district judge granted Defendant's motion to exclude Plaintiff's expert witness. The court then entered summary judgment for Defendant, concluding that without the expert's testimony, Plaintiff had no case. Plaintiff brought this appeal to the Tenth Circuit, arguing that the district court erred by excluding the testimony of his expert. Upon review, the Tenth Circuit affirmed the district court's order excluding the testimony, but reversed the order granting summary judgment. The Court remanded the case for further proceedings.