Federal judge in Phila. dismisses N.J. CEPA claim against Otsuka America Pharmaceuticals

By Jon Campisi | Mar 29, 2013

During the same week when a Philadelphia jury awarded a plaintiff nearly $1.7 million in

a whistleblower case alleging violations of New Jersey’s Conscientious Employee Protection Act, a federal judge in Philadelphia dismissed a similar complaint against a drug company that had been initiated by a former worker.

In a March 25  memorandum and order, U.S. District Judge Mary A. McLaughlin, of the Eastern District of Pennsylvania, granted a motion by defendant Otsuka America Pharmaceutical’s to dismiss a lawsuit filed against it by James Kerrigan, a former senior director in the company’s global marketing division.

Kerrigan was hired by the company in January 2006 and was put in charge of the marketing for the drug Samsca in the United States.

The drug is used to treat hyponatremia, which is defined as an electrolyte disturbance in the body.

As part of the defendant’s promotional effort, OAPI contracted with Premier Healthcare Resource Inc. to develop and send newsletters to certain healthcare providers who encounter hyponatremia, court papers state.

Premier went on to issue one or more newsletters that did not present a “fair and balanced” approach, the record states, and the material was soon withdrawn from websites.

Then, in 2011, the website Today’s Hospitalist published an article about Samsca that had used information from an OAPI sponsored panel, and which left out proper disclosures and fair balance, according to the record.

Kerrigan soon reported the website’s publication to his superior in the company, and the infraction was reported to the FDA.

Following this incident, Kerrigan, concerned that the Premier newsletters from 2010 had not been similarly reported to the FDA, again re-reported the violation to his supervisor at the company, after which the issue was reported to the FDA, which requested that OAPI write a letter noting the error and lack of compliance to the affected healthcare providers.

Two of Kerrigan’s team members involved with the two compliance risks soon resigned from OAPI at the direction of company president and CEO Mark Altemeyer, with Altemeyer soon reprimanding Kerrigan over the incidents.

One example was Altemeyer telling Kerrigan that, “You continually put the company at risk and you don’t take compliance seriously,” according to the judge’s memorandum, which cited Kerrigan’s complaint.

Kerrigan was eventually terminated for cause on May 29 of last year.

Kerrigan filed a six-count complaint against OAPI and Altemeyer on July 11, 2012, in the Bucks County Common Pleas Court, but the defendants subsequently removed the case to the U.S. District Court citing diversity jurisdiction.

The defendants then moved to dismiss the complaint in its entirety.

On Oct. 31, 2012, the court dismissed with prejudice the plaintiff’s New Jersey Law Against Discrimination claim, intentional infliction of emotional distress claim, negligent infliction of emotional distress claim, and misrepresentation claim.

The court, however, dismissed Kerrigan’s Conscientious Employee Protection Act claim and defamation claim without prejudice, allowing the plaintiff to file an amended complaint restating those two claims and revising the allegations, the record shows.

In dismissing the CEPA count in the original complaint, the court stated that Kerrigan had failed to establish any CEPA-protected whistleblowing activities because his actions fell within his job duties.

Kerrigan argued that the law is not settled that actions within a plaintiff’s job duties are not CEPA-protected whistleblowing activities.

In dismissing the CEPA claim in the amended complaint, McLaughlin wrote that she again finds that the reporting of the two compliance issues fell within the plaintiff’s job duties.

“The plaintiff was the brand lead for the drug Samsca, and both the Today’s Hospitalist and Premier issues dealt with the dissemination of information about Samsca as well as FDA compliance,” McLaughlin wrote. “It remains the case that a plaintiff cannot establish that he engaged in a CEPA-protected act when the plaintiff’s actions fall within the plaintiff’s job duties.”

As for the defamation count, it was dismissed in the original complaint, the judge wrote, because the suit failed to identify any specific defamatory statements made by the defendants.

McLaughlin wrote that the amended complaint fails to cure a deficiency in the first complaint that the statements were opinions, and thus not capable of defamatory meaning.

McLaughlin wrote that Altmeyer’s statements made to Kerrigan were opinions that “do not imply any undisclosed false facts.”

The judge wrote that such statements cannot be the basis for defamation under with Pennsylvania or New Jersey law.

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