West Virginia Business Litigation : West Virginia Business Litigation Lawyer & Attorney : Law Office of Jeffrey V. Mehalic : Charleston, Huntington, Parkersburg

First of all, I hope that all of you have a happy and safe Thanksgiving with your families and loved ones, and take some time to think about who and what in your lives are important to you. (And in care you're wondering, Google's only connection to this post is that I liked its Thanksgiving logo.)

By the way, yesterday was the last day of the Supreme Court of Appeals of West Virginia's September Term, and the court has issued most, but not all, of its opinions. One opinion that is eagerly anticipated is DuPont's appeal of the $400 million verdict in the medical monitoring class-action brought by residents of a town where DuPont had operated a zinc smelter. In the past, the court has released opinions for several days after the end of the term, so we may have the opinion next week.

But today I want to discuss a lawsuit filed last month in the Circuit Court of Monongalia County, West Virginia by Mylan, Inc. and its subsidiary, Mylan Pharmaceuticals, Inc., against the Pittsburgh Post-Gazette, two of its reporters, Patricia Sabatini and Len Boselovic, and several John Does, which is the second action Mylan has filed against the paper and its reporters. Mylan, Inc. v. PG Publishing Co., Civil Action No. 09-C-807 (October 30, 2009).

In its first lawsuit filed on August 19, 2009, Mylan asserted claims for misappropriation of trade secrets, conversion, detinue, and trespass to chattels, as a result of a story written by Sabatini and Boselovic and published by PG on July 26, 2009 about alleged violations of drug-quality controls by Mylan employees at its Morgantown, West Virginia manufacturing facility.

Here is the complaint, in which Mylan asserts the purpose of PG's July 26 article:

From its alarmist headline to its foreboding conclusions, the July 26th article and subsequent Post-Gazette articles were designed to fulfill two objectives. The first was to instill apprehension in the minds of patients, shareholders, and the general public by communicating the frightening fiction that Mylan's pharmaceuticals are "unsafe," knowing that this could cause patients, caregivers, and customers to question the continued use of Mylan products. The second was to incite animosity against Mylan, its management and employees, by falsely accusing them of acting in callous disregard for patient health and well-being.

 Then, Mylan describes the effect of the article:

The defamatory import of these articles is unmistakable: The Post-Gazette intentionally communicated to readers the false impression that Mylan deliberately glossed over serious and potentially dangerous production problems. Further, the Post-Gazette conveyed the false message that Mylan, its management and employees were sacrificing drug quality, safety and effectiveness for profit. Mylan believes that, in doing so, the Post-Gazette and its employees acted maliciously and with reckless disregard for the truth, knowing that the information it maliciously printed was false and knowing that the information it had did not warrant the implications and conclusions of the articles.

Although the complaint refers repeatedly to "numerous articles" published for several weeks after the July 26 article, it does not identify any article by date except the one on July 26.

Mylan asserts three claims for libel per se against the defendants based on the overall message of the July 26 article, its use of certain words and phrases, such as "tainted medications" and "catastrophically serious," and its allegedly false accusation that Mylan conducted an inadequate investigation into alleged deviations from its own internal procedures. 

Here are PG's article on Mylan's libel lawsuit, as well as a post from Ed Silverman's Pharmalot blog and Russell Adams' article in The Wall Street Journal online.

For some additional background, here is my post in which I wrote about PG's decision to remove Mylan's first lawsuit on the grounds that Mylan's subsidiary, Mylan Pharmaceuticals, which is a West Virginia corporation, is not a proper party, which creates diversity between the parties and the basis for federal jurisdiction. According to PACER, PG's motion to dismiss and Mylan's motion to remand have been briefed and are pending before United States District Judge Irene M. Keeley.

I don't know whether this libel action was planned by Mylan or is a reflection that perhaps the first lawsuit is not having the intended effect. But even if the answer is the former -- which we are not likely to find out anyway --truth is a defense to libel and slander actions, which would seem to entitle PG and its reporters to broad discovery in their efforts to show that what they wrote about Mylan was accurate.

• Email This
• Print
• Comments
• Trackbacks

Last month, I wrote about Mylan's lawsuit against the Pittsburgh Post-Gazette and two of its reporters for misappropriation of trade secrets, conversion, and other claims, based on articles that have not been favorable to Mylan. Based on PG's response to the lawsuit, Mylan may get more of a fight than it expected.

First, PG removed the case to the Northern District of West Virginia, even though diversity of citizenship does not exist. But PG argues that Mylan, which is a Pennsylvania corporation and is the parent of Mylan Pharmaceuticals, Inc., "has no standing to sue for or recover damages" because the plaintiffs' claims are "based on damage to property that is owned by MPI." Because Mylan's ownership of Mylan Pharmaceutical's stock is not the same as ownership of its property, Mylan is not a proper party and without it in the litigation, diversity exists and federal jurisdiction is proper.

In all likelihood, Mylan will move to remand, but  PG's argument about whether Mylan is simply a plaintiff in order to defeat diversity and keep the case in Monongalia County, where it has a large manufacturing presence, is interesting. There is also the possibility that if the court would grant the motion to remand and the state court would grant PG's motion to dismiss Mylan, PG could again remove the case on the grounds that diversity exists. But that's nothing but speculation at this point.

PG has also moved to dismiss the complaint under Federal Rule 12(b)(6) on the grounds that Mylan has no standing to assert its claims. This is how PG sees Mylan's claims:

In sum, the Post-Gazette did nothing wrong whatsoever -- not in obtaining information for publication, and not in publishing. All of its conduct is fully protected under well-settled legal principles under the First Amendment to the United States Constitution, Article III, Section 7 of the Constitution of the State of West Virginia, and common law.

Mylan's effort to circumvent these principles and to impose liability on the Post-Gazette for constitutionally protected conduct is doomed to fail. This fact makes all the more evident that Mylan's suit is aimed, not at the meritless effort of holding the Post-Gazette liable, but at attempting to uncover the Post-Gazette's sources of information. Upon learning that the Post-Gazette had obtained information about Mylan's internal investigation, Mylan undertook a feverish hunt to uncover the sources, but the effort was unavailing. Only then did Mylan launch this suit, with the express purpose of obtaining an order "compelling the identity of all persons delivering the Documents to the Post-Gazette or Reporter-Defendants." (Emphasis added.)

In a footnote, PG describes Mylan's decision to file in state court as a "cynical appeal to local interests [] manifested , for instance, in the wholly gratuitous allegation that Mylan provides "jobs for thousands of West Virginia citizens."

PG's motion to dismiss is based on the argument in its notice of removal that Mylan is separate from Mylan Pharmaceuticals and has no standing independently to seek any damages from the defendants and therefore is not a proper party.

PG filed its answer to the complaint, but responds only to the allegations made by Mylan Pharmaceuticals, consistent with its position that Mylan is not a proper party. This post by Robert MacMillan in Reuters' MediaFile blog says that PG countersued Mylan, but I can't find any counterclaim in the answer or any separate pleading listed in the docket. I have contacted Fritz Byers', PG's counsel, and asked about a counterclaim, but haven't heard from him yet.

Patricia Sabatini and Len Boselovic, PG reporters whom Mylan also sued, have separate counsel and have filed motions to dismiss and answers that are patterned on PG's pleadings.

• Email This
• Print
• Comments
• Trackbacks

It's fair to say that the Pittsburgh Post-Gazette and two of its reporters, Patricia Sabatini and Len Boselovic, have been an aggravation, to put it mildly, to generic drug manufacturer Mylan Inc. for some time. But it looks like the Post-Gazette's July 26 story written by Sabatini and Boselovic was Mylan's tipping point.

In that story, entitled "Mylan workers overrode drug quality controls," the Post-Gazette reported that, according to a confidential internal memo obtained by the paper, "the company discovered that workers were routinely overriding computer-generated warnings about potential problems with the medications they were producing."

But the Post-Gazette's story, which also had a sidebar entitled "Mylan's 'red screen' timeline," apparently put enough pressure on Mylan to issue a press release on July 26 -- the same date as the Post-Gazette's article -- in which Mylan criticized the article and stated that its quality control processes were working. 

Then, on July 28, Mylan issued another press release, in which it reported that representatives of the FDA visited its plant on July 27 and  have "determined that the baseless accusations in the article were unfounded." (The press release did not explain how a regulatory agency can determine, based on a site visit that lasted no more than one day, that allegations made in an article based on weeks of reporting, were "baseless" and "unfounded.")  But that wasn't the end of Mylan's reaction.

Last Wednesday, Mylan filed a lawsuit against the Post-Gazette, Sabatini, Boselovic, and several John Does in the Circuit Court of Monongalia County, West Virginia. Mylan Pharmaceuticals, Inc v. PG Publishing Co., Civil Action No. 09-C-592 (August 19, 2009). Here is the complaint, in which Mylan alleged that:

The Post-Gazette's Article [on July 26], and a series of articles that followed, are sensational and misleading articles based on improperly obtained and misconstrued confidential, proprietary and/or privileged internal documents. The articles mischaracterized facts relating to an internal Mylan procedure, creating the false appearance of significant quality and regulatory issues at Mylan's Morgantown, W. Va., plant when no such issues existed.

But another paragraph suggests the real reason for the lawsuit:

The sensationalized misuse of the Documents caused harm to Mylan and its shareholders, evidenced by substantial market volatility, a decrease in its stock price, and the resulting decrease in market capitalization, all of which occurred on the second largest trading day in Mylan's history.

Mylan has asserted claims for detinue (wrongful detention of Mylan's property such as the documents), misappropriation of trade secrets, conversion ("Defendants intentionally dispossessed or intermeddled with Mylan's property interest in the Documents and trade secrets by obtaining them and using the confidential, proprietary and/or privileged information therein."), and trespass to chattels ("This use of the Documents and trade secrets by Defendants caused harm to Mylan through the dispossession and dissemination of the information contained therein and the loss of Mylan's property interest in the confidential, proprietary and/or privileged Documents and trade secrets."), and seeks compensatory and punitive damages.

Here are the Post-Gazette's story and Mylan's press release on the lawsuit.

Jim Edwards at BNET Pharma Blog wrote this post last week, which suggests that the the real motivation behind the lawsuit may have been the drop in Mylan's stock price (mentioned in the complaint) and and its relationship to Mylan CEO Coury's compensation (not mentioned in the complaint). Also as noted by Edwards, there may have been an element of payback in Mylan's lawsuit, as the Post-Gazette's reporting about Mylan COO Heather Bresch's fictitious MBA caused quite a stir in Morgantown last year. But before you start worrying too much about the effect of the MBA scandal on Bresch's career, take a look at Mylan's July 29 press release, in which it announced that she has been promoted to president of the company.

Here's another post by Edwards from August 17 in which he questioned whether Coury had libeled Sabatini and Boselovic by describing their reporting as "baseless" and "biased," even though the FDA's report of its investigation was consistent with what they reported.

My own impression, based, admittedly, on limited facts and reporting, is that the lawsuit is Mylan's attempt to get the Post-Gazette generally and Sabatini and Boselovic specifically to curtail their coverage of Mylan, which Myland may have achieved, at least temporarily. I don't know what the Post-Gazette's policy is, but I'd be surprised if Sabatini and Boselovic are allowed to write about Mylan -- regardless of the issue -- during the pendency of the lawsuit.

Plus, the lawsuit enables Mylan to focus on the Post-Gazette and its reporters while the issues that prompted the story in the first place become secondary.

• Email This
• Print
• Comments (2)
• Trackbacks