(CN) - The Oregon Court of Appeals revived claims the state lobbed against Johnson & Johnson over its recall-avoidance tactics when it learned stores were selling defective Motrin.
Johnson & Johnson and its subsidiaries discovered in 2008 that one of its plants in Puerto Rico had sent out Motrin painkillers that did not dissolve properly.
The company reported the situation to the Food & Drug Administration but failed to notify retailers, wholesalers or consumers.
Another defective batch sent Johnson & Johnson to the FDA again one month later, but the company disclosed only that the defective painkillers had been sold in 8-count vials. In fact defective pills had also been sold in 24-count vials.
Again, Johnson & Johnson did not alert retailers, wholesalers or consumers and decided not to recall the product publicly.
Instead, the company hired WIS International to send "secret shoppers" to buy the defective pills at 27 stores in Oregon and 5,000 stores around the United States.
Directions that the company gave to field employees in June 2009, in boldface, capital letters, said: "There must be no mention of this being a recall of the product."
In Oregon, the shoppers found only 41 of the 848 packages that could have contained defective Motrin pills.
One of the secret shoppers alerted the Oregon Board of Pharmacy that July, which informed the FDA. Johnson & Johnson finally went public about the defective pills on Feb. 17, 2010.
After a series of inspections, Johnson & Johnson conducted the largest recall of children's medicine in the history of the FDA.
Oregon Attorney General Ellen Rosenblum filed suit under the state's Unlawful Trade Practices Act, stating that Johnson & Johnson concealed product defects despite a "material risk" that defective Motrin was on the market.
The Multnomah County Circuit Court dismissed the case, however, agreeing with Johnson & Johnson that the state failed to allege that defective Motrin reached Oregon.
A three-judge panel with the Oregon Court of Appeals reversed on Nov. 25.
"A material risk that a product has a latent defect is exactly the kind of inherent feature of a product implicated under (the law)," Chief Judge Rick Haselton wrote for the court.
"If a product is advertised and sold as effective for its intended use, notwithstanding a known risk that the product may not be fully effective, that risk itself is a 'fact' for purposes of the UTPA, and its non-disclosure is actionable under the UTPA," Haselton added.
There have been several consumer lawsuits over the stealth recall across the country.
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