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Introduction - Chapter 1 - Trade and Opioid Diversion: Litigation Strategies and Case Studies

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This chapter is from Trade and Opioid Diversion: Litigation Strategies and Case Studies

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A.  General Overview of Diversion

What is “trade diversion”? Simply stated: Trade diversion occurs when in a commercial transaction product intended for one channel of trade instead ends up in another channel of trade.  In those instances, where the parties to a transaction mutually intend for this to occur, the diversion is legal. For example, where the parties intend, by contractual agreement or other conduct, to export U.S. product abroad rather than sell it into the U. S. domestic marketplace, this “diversion” is legal. However, if the diversion of the product takes place in violation of contract terms and/or by virtue of fraudulent conduct, then the diversion is illegal.
     In certain cases, where governmental authorities deem the diversion conduct to be egregious, the governmental authority, e.g., a U. S. Attorney’s Office, may bring a criminal prosecution. Given the extent of governmental regulation over controlled substances, this occurs most commonly, but not exclusively, in the pharmaceutical industry.  The FDA statutes and regulations with respect to the DEA specifically focus on diversion and governmental procedures to enjoin such conduct.  Additionally, the DSCSA seeks to implement, through its systemic reporting requirements, greater control over the market movement of pharmaceutical products.  The implementation of the DSCSA requirements were due to take place by November 27, 2024.  
     Generally, in cases of alleged illegal trade diversion, private companies are left to civil litigation to vindicate their rights. In cases of alleged opioid diversion, plaintiffs are commonly governmental entities, e.g., cities and counties.
 

Rodney A. Brown is a graduate of Williams College, holds a master’s degree in philosophy from the University of Heidelberg, and received his J.D. degree from the Cornell Law School.  He began his career as an Assistant District Attorney in the New York County District Attorney’s Office. After serving as a litigation associate and partner in several corporate practice law firms, he  started his own firm in 1990. The firm was last known as Brown & Whalen, P.C. 

From 1995 through 2015,  he litigated numerous trade diversion cases. Representative clients in trade diversion litigation included: The Clorox International Company; Conopco, Inc. (Unilever); Hershey Foods Corp.; The Quaker Oats Company (now a division of Pepsi Co.); Dial Corp., Eagle Family Foods Group LLC, The Merisant Company and The NutraSweet Company (previously divisions of Monsanto), and American Pharmaceutical Partners n/k/a Frensenius Kabi USA, LLC.

Rodney A. Brown is admitted to the bar of New York and numerous federal courts. He was selected to Super Lawyers 2010-2018 and has received an AV Preeminent Peer Review Rating in Martindale Hubbell for many years.


 


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