John Smith, President of Pharma Inc., a corporation incorporated in Delaware, with a principal place of business in Indiana, heavily promoted the sale of NoSick, an anti-hangover drug, in the state of California. Pharma Inc. used active website advertising, door-to-door salesmen, discount and vendor agreements, all in the state of California, in an effort to promote the drug NoSick.
After approximately two years of successful NoSick sales, John Smith learned, from private data, that NoSick actually caused severe injury or death in one of every 1,000,000 uses. NoSick was a highly effective drug at curing or preventing the adverse effects of over consumption of alcohol, and it significantly improved the lives of many of its users. John Smith ordered the employees of Pharma Inc. to hide the data that NoSick caused severe harm on a ‘once in a million' basis.
Susan Simpson, a citizen of California, took a dose of NoSick and shortly thereafter, suffered permanent nerve loss in her legs and hands. Susan Simpson filed suit against Pharma Inc. in California state court for $5,000,000.00.
California's long-arm statute allows California courts to exercise jurisdiction "to the greatest extent allowed by the United States Constitution."
Pharma Inc. loses at the California trial court, and it appeals to the California appellate court. Pharma Inc. also loses in the California appellate court. Pharma Inc. appeals the decision to the California Supreme Court, which also affirms the lower courts' decisions in favor of Susan Simpson. Pharma Inc. appeals the California Supreme Court decision to the United State Supreme Court.
Topic Issues:
• Does Susan Simpson have standing to sue? Why or Why not?
• Assuming Susan Simpson has standing to sue, does the California court have jurisdiction over the case? Why or why not? Would a federal district court in California have jurisdiction over the case? Why or why not?
• Presuming that California's court system has three levels (trial court, appellate court, and supreme court), was Pharma Inc.'s procedural history (i.e. the way Pharma Inc. made its several appeals) correct? Why or why not?
• How would Pharma Inc.'s case make it to the United States Supreme Court? In other words, what does it take for the United States Supreme Court to hear Pharma Inc.'s appeal?
• Discuss the ethical dilemma faced by John Smith? What are his competing interests? Were his actions ethically appropriate?