This page includes one fact pattern and questions over TCOs A, B, C, D, and I.
Note that questions over TCO D and I are short answer only (and have small boxes for your answer) worth 15 points each. Answer those question succinctly.
Questions over TCO A, B, and C are essay questions and have large boxes for your answer. Be sure to fully explain, analyze, and evaluate the full essay questions. These are worth 30 points each.
1. TCO D Short Answer Question and Facts for Page 1 Questions:
A well known pharmaceutical company, Robins & Robins, is working through a public scandal. Three popular medications that they sell over the counter have been determined to be tainted with small particles of plastic explosive. The plastic explosives came from a Robins & Robins supplier named Casings, Inc., that supplies the capsule casings for the medication pills. Casings, Inc., also sells shell casings for ammunition. Over $8 million in inventory is impacted. The inventory is located throughout the Western United States, and it is possible that it has also made its way into parts of Canada.
Last fall, the FDA had promulgated an administrative proposed rule that would have required all pharmaceutical companies that sold over-the-counter medications to incorporate a special tracking bar code (i.e., UPC bars) on their packaging to ensure that recalls could be done with very little trouble. The bar codes cost about 35 cents per package.
Robins & Robins lobbied hard against this rule and managed to get it stopped in the public comments period. They utilized multiple arguments, including the cost (which would be passed on to consumers). They also raised “privacy” concerns, which they discussed simply to get public interest groups upset. (One of the drugs impacted is used for assisting with alcoholism treatment – specifically for withdrawal symptoms – and many alcoholics were afraid their use of the drug could be tracked back to them.) Robins & Robins argued that people would be concerned about purchasing the medication with a tracking mechanism included with the packaging and managed to get enough public interest groups against the rule. The FDA decided not to impose the rule.
Robins & Robins’ contract with Casings, Inc., states, in section 14 B.2.a., “The remedy for defects in supplies shall be limited to the cost of the parts supplied plus any and all damages caused by the defects, including loss of good will to Robins & Robins, as valued by the accounting firm selected by Robins & Robins.” The accounting firm determines the loss of “good will” value to Robins & Robins as a result of this disaster is $140 million. This clause was buried on page 285 of the contract in small, 9-point type. List any defenses Casings, Inc., may have in trying to avoid the results of this clause of their contract. (short answer question)
(Points : 15)
2. TCO B. The FDA discovers that, during the public comment process, Robins & Robins bribed one of the members of the administrative panel that decided to pull the rule from consideration. The member of the panel was removed and is being charged criminally. As a result, the FDA immediately implements an emergency order that puts into effect the “tracking bar” requirement and makes the rule retroactive, but only to Robins & Robins. Provide two arguments Robins & Robins can make to have the rule determined to be invalid under the Administrative Procedures Act. Explain your answer. (Points : 30)
3. TCO C. Robins & Robins immediately issued a massive recall for the tainted medication upon learning of the situation. Despite the recall, 1,400 children and 350 adults have been hospitalized after becoming very ill upon taking the tainted medication. Each of them had failed to note the recall after having already purchased the medication. It is quickly determined that they will need liver transplants and many of them are on a waiting list. During the wait, to date, 12 children have died. Their families are considering suing for both 402A and negligence. The attorneys stated that but for the lobbying efforts, the recall process would have been automated and the people would not have gotten sick or died.
You are the public relations advisor for Robins & Robins, and your boss tells you to write him a memo that he will use to draft a public announcement. He needs you to explain to him why Robins & Robins should not be found negligent for these deaths and illnesses. Draft the memo utilizing the elements of 402A and negligence. Include (and fully explain) any defenses you feel that Robins & Robins may have. Recall that your boss needs all pertinent information for him to write an announcement to the public after reading your memo.
(Points : 30)
TCO A. It is discovered that Robins & Robins knew about the tainted medication 2 months earlier than they announced the recall. They hid it and, in fact, sent out contract buyers to try to buy up all of the medication off the shelves. Their “fake” recall failed. Using the Laura Nash method of analyzing ethical dilemmas, analyze the ethical dilemma faced by the CEO of Robins & Robins for the fact that they saved 35 cents/package and are now in the middle of a major, life-threatening recall. Analyze their “fake” recall as well. Show all of the steps of the model and give a recommendation to the CEO of what to do now that the deaths are escalating. What is the “right” thing for the CEO to do in this case? Did the model help you come to this conclusion, or did you use some other method? Explain.
(Points : 30)
5. TCO I. A Canadian citizen whose son (resident of Ontario) died from the medication sues Robins & Robins in a California court. The court there is well known for being victim friendly and providing huge payouts to victim families. In Canada, the cap on nonpecuniary damages is around $300,000. Punitive damages in Canada are rarely allowed. Robins & Robins moves to dismiss the case under the theory of sovereign immunity. Will Robins & Robins win this motion using this theory? Why or why not? (short answer question) (Points : 15)