For the most part, though, it treads familiar legal ground – breach of warranty, products liability, strict liability, unfair trade practices, etc. The accusations concerning the Racketeer Influenced and Corrupt Organizations Act (RICO) are new, however.
Now we’re talking about organized crime.
The basic story
In a nutshell, the lawsuit alleges that, in one way or another, the drug manufacturers, distributors, retailers and re-packagers knew about the dangers of Zantac and other drugs containing ranitidine and had a duty to investigate more fully. They failed to use good manufacturing, shipping and storage practices. Further, they made misrepresentations in their marketing materials that concealed the risk that the drugs might contain the carcinogen Nitrosodimethylamine (“NDMA”). They did this to protect their profits.
In 2019 several independent pharmaceutical laboratories discovered the link between ranitidine and NDMA, and that ranitidine can break down into NDMA, particularly in the stomach. In 2020, shortly after the information was disclosed to the public, the FDA called for the withdrawal of all ranitidine-containing products in the United States.
Sadly, however, Zantac and similar heartburn drugs had already been on the market for nearly thirty years. During that time, the failures, misrepresentations and omissions piled up, and countless consumers were harmed.
The RICO counts in the Complaint add another dimension to the basic story. They get to the profit motive behind the years of deception and tell the tale of a deliberate criminal enterprise. To quote from the Complaint , the defendants’ purpose “was to conceal or downplay the safety risks of Zantac. The motivation was simple: to increase Defendants’ revenues and profits and minimize their losses from the manufacture and sale of Zantac. As a direct and proximate result of their fraudulent scheme and common course of conduct, RICO Defendants were able to extract billions of dollars from Plaintiffs.”
The federal RICO law, passed in 1970, became a key tool in mob prosecutions. Prior to passage of the law, prosecutors could only try mob-related crimes individually, which hampered their efforts to shut down entire criminal organizations. Images of “Sammy the bull” or “tall Paul” may come to mind.
The law has both civil and criminal components, however, and it is the civil aspect that looms large in In re: Zantac, especially because plaintiffs may receive treble damages.
To succeed in a civil RICO lawsuit, an injured person must show:
- that the defendant committed one of the crimes listed in the statute, which include the crimes of mail and wire fraud (In re: Zantac alleges both);
- a pattern of racketeering activity, which means at least two crimes that are related in some way. The relationship between the crimes may be established by showing the same methods, same participants or that they happened over at least a year; and
- that the crimes occurred within a four-year statute of limitations beginning when the victim discovered the crime (which is why the Complaint spends so many paragraphs arguing that beginning date of the statute of limitations should be delayed, or tolled).
How the criminal enterprise allegedly worked
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- concealing or downplaying safety risks from the public and regulators;
- misleading the public and regulators as to the nature and safe use of Zantac;
- formulating, manufacturing, distributing, promoting, and/or selling Zantac;
- misrepresenting or omitting safety risks (or causing such misrepresentations and omissions to be made) in promotional materials or advertisements;
- concealing or downplaying safety risks in scientific studies;
- misrepresenting or omitting (or causing such misrepresentations and omissions to be made) safety risks on FDA applications and other communications with regulators;
- introducing Zantac into the stream of U.S. commerce with concealed safety risks;
- entering into joint ventures or agreements concerning the rights to Zantac;
- persisting in the manufacturing, distribution, and sale of Zantac even after questions were raised about safety risks;
- collecting revenues and profits in connection with the sale of Zantac; and/or
- ensuring that the other RICO Defendants and unnamed co-conspirators complied with the scheme or common course of conduct.
Will the RICO angle work? It’s intriguing and, whatever the outcome, it’s important to recognize some clever and aggressive lawyering by plaintiffs’ counsel. If it does work, RICO could become a powerful tool for consumers to pursue defective drug and other product liability lawsuits.