The opinion from the Fourth Appellate District stems from a 2016 lawsuit filed against several pharmaceutical companies by Orange County District Attorney Tony Rackauckas claiming the companies schemed to keep generic drugs off the market in violation of California’s unfair competition law.
Rackauckas sued on behalf of the People of the State of California, seeking to rectify what he saw as a “pay-for-delay” conspiracy that was unfair, anticompetitive and only benefited those companies. He sought an injunction along with civil penalties and restitution.
The pharmaceutical companies, including petitioner Abbott Laboratories, unsuccessfully lobbied the trial court to toss the suit as it involved “conduct outside the territorial jurisdiction of Orange County.”
On appeal, the pharmaceutical companies asked the three-judge panel to resolve a single issue: whether state law allows county DAs to sue on behalf of all Golden State residents over things that happened outside their county.
In an opinion written by Justice Terry O’Rourke, the panel said no.
“The district attorney is a county officer whose territorial jurisdiction and power is limited accordingly,” O’Rourke wrote for the panel.
Instead, it’s up to the state attorney general to file unfair competition lawsuits for injuries to the state’s residents.
While California law does allow district attorneys to sue on behalf of the People, those lawsuits involve criminal behavior done within the boundaries of their county.
The law “cannot constitutionally or reasonably be interpreted to grant the district attorney power to seek and recover restitution and civil penalty relief for violations occurring outside the jurisdiction of the county in which he was elected,” wrote O’Rourke.
In his lawsuit against the pharmaceutical companies, Rackauckas sought to recover overcharges paid by California users of the cholesterol drug Niaspan, including those residing in Orange County.
A spokeswoman for Rackauckas said the county is reviewing the ruling and will decide “the best course of action upon completion of that review.”
Acting Presiding Justice Richard Huffman joined O’Rourke. But Justice William Dato dissented, saying his colleagues had overstepped their authority by wading into “broad legal policy pronouncements” best left to the Supreme Court and the Legislature.
“The majority then compound these judgmental errors by deciding the ill-considered legal issue incorrectly in a manner that will materially impair the interests of California consumers by fundamentally altering the structure of consumer protection laws in this state,” Dato added.