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Legal Liability and Regulatory Challenges: Robins & Robins Case Analysis

Case study on legal liability and regulatory issues in business.

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    Legal Liability and Regulatory Challenges: Robins & Robins Case Analysis 1. List any bases Robins & Robins could sue Casings, Inc., under contract theory ONLY for the damages caused by the explosives in their drugs, over and above the cost of the capsule shells. (short answer question) Ans: It is very likely that the contract provision in section 14B.2a would be upheld In this case provided that the contract was not the product of unconscionabiity, misrepresentation, or fraud. Robins & Robins could bring contract actions for breach of warranty depending on the other terms of the contract. Also, Robins might also recover based on a theory of equity based on the extraordinary nature of the damages caused. A contract is a legally enforceable agreement between two or more parties with mutual obligations. The remedy at law for breach of contract is "damages" or monetary compensation. In equity, the remedy can be specific performance of the contract or an injunction. Both remedies award the damaged party the "benefit of the bargain" or expectation damages, which are greater than mere reliance damages, as in promissory estoppels. We have the fact that when Robins & Robins' contracted with Casings, Inc., they made sure to state in the section 14B.2a that "The remedy for defects in supplies shall be limited to the cost of the parts supplied". Vitiating factors constituting defenses to purported contract formation include: Unconscionability and duress. Casings Inc. has supplied the capsule casings for the medication pills tainted with small particles of plastic explosive because of which the final product sold by Robins and Robins were found to be in a defective condition unreasonably dangerous to the user or consumer. The fact that Casting products are damaged makes the contract's lopsidedness unconscionable. Robins and Robins has a right to mitigate his damages. Also we can consider undue influence; unconscionability; misrepresentation/fraud in this case and Robins & Robins could sue Casings, Inc on the basis of undue influence; unconscionability; misrepresentation/fraud. 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) Ans:

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    Robins & Robins could argue that FDA's action violates the consumers right to privacy under the Fifth and Fourteenth Amendment. However, they can't file a lawsuit for these claims because they lack standing based on the discovery 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. . However, they could file a lawsuit on the grounds that it burdens interstate commerce. They could argue they would lose sales all over the country and Canada because the consumers would not want tracking on their medications. The validity of any rule may be determined upon petition for a declaratory judgment addressed to the Court when it is alleged that the rule, or its threatened application, interferes with or impairs or immediately threatens to interfere with or impair, the legal rights or privileges of the petitioner. The FDA shall be made a party to the proceeding; provided, that the court shall not have jurisdiction to hear any such petition for declaratory judgment, and no declaratory judgment may be rendered, unless the petitioner has first requested in writing that the sponsoring department pass upon the validity of the rule in question. Upon its receipt of any such petition the sponsoring department may elect to take no action other than to immediately refer the matter to the appropriate administrative appellate body with jurisdiction over the matter in question and request that such administrative appellate body respond to the petition on the department's behalf. In such a case, the administrative appellate body shall first determine whether it has jurisdiction over the referred matter and if so finding the administrative appellate body shall then pass upon the validity of the rule in question. (Ref:http://www.codepublishing.com/WA/puyalluptribe/html/PuyallupTribe02/PuyallupTribe0208.h tml) Robins can also argue that based on the additional research, it can be concluded that there were flaws in the original research and results. 1) The first ground on which to challenge an agency rule is that it is arbitrary, capricious, and abuse of discretion, or in violation of some other laws. This standard is generally applied to informal rulemaking and simply requires the agency to show evidence to support the proposed rule. Without such evidence, the rule can be held arbitrary and capricious. 2) A second theory for challenging an agency`s regulation is that the regulation is unsupported by substantial evidence. This substantial evidence test is applied in the review of formal and hybrid rulemaking. Where the arbitrary and capricious standard simply requires some proof or basis for the regulation, substantial evidence requires that more convincing evidence exist in support of the regulation than against it. 3) A third ground on which to challenge an agency`s regulation involves the rule that a regulation can be set aside if the agency did not apply with the APA requirements of notice, publication, and public comment or input. The procedures for rule making must be followed in order for the regulatory process and resulting rules to be valid. An agency that seeks public comment for the purpose of drafting legislation cannot then turn the legislation into rules after the comment period.

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    4) Another basis for challenging a regulation is that the regulation is unconstitutional. Many challenges based on constitutional grounds deal with regulations that give an agency to search records or that impose discriminatory requirements for licensed professionals. 5) Another theory for the challenging a regulation in court is ultra vires. An ultra vires regulation is one that goes beyond the authority given to the agency in its enabling act. Although most agencies stay clearly within their authority, if an agency tries to change the substance and purpose of the enabling through regulation, the regulations would be ultra vires. 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 attorney for one of the dead children’s family. List the causes of action (if any) you would file against Robins & Robins, the FDA, and the bribed FDA member. List the elements of the causes of action, and set forth the facts that you have that would support a lawsuit against each of the three named defendants. State any defenses any of the three would have. Analyze the success of the defenses. Ans: Negligence may be defined roughly as an act or omission which unreasonably does or may affect the rights of others, or which unreasonably fails to protect one’s self from the dangers resulting from such acts. The tort of negligence is one that applies in a variety of circumstances, but it is always used when the conduct of one party did not live up to a certain minimal standard of care. The FDA, Robins and Robins and bribed FDA member all had the duty to protect and act in the best interest of the citizens. Here, FDA failed to get the recall done at an appropriate time. If FDA had provided substantial evidence citing the interest of the public uppermost using proper standards then regulation would have stood hard on the ground in spite of all the lobbying efforts of various public interest groups. Once the standard of care and the duty are established under element one, there must be a determination that the defendant fell short of that standard or breached that duty for the plaintiff to recover on the basis of negligence. Here, clearly FDA, Robins and Robins and bribed FDA member all failed to live up to the standard of the duty which caused so many children to die and many other adults and children would need to undergo liver transplant. After establishing a duty and breach of duty, the plaintiff in a negligence suit must also establish that the breach of the duty was the cause of the damages. Here, there is no doubt that the medications tainted with small particles of plastic explosive were the main cause of the children dying as well as falling utterly sick. so, there is a clear causation here between the breach of the duty for each of these parties and the resulting effect on the public. Under Restatement 402 A - Special liability of seller of product for physical harm to user or consumer, one who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property is subject to liability for physical harm thereby caused to the ultimate user or consumer. The rule applie s although the seller has exercised all possible care in the

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