Document O3NNEv8zmoJqp8y5E9aDYRLXw

^waBausaaBSHowi FD-5S5 "Market Share Liability" The Sindell decision and its disturbing implications for defendants. of other parties, on behalf of herself and other women similarly situated. The trial court dismissed the action, brought under several theories of liabil ity, on the grounds that the plaintiff could not identify which defendant had manufactured the DES her mother had ingested. Between 1941 and 1971 various drug companies promoted and marketed DES (diethvlstilbesterol) Bases of Liability -- a synthetic compound of estrogen. The drug was On appeal,the California Supreme Court, at 607 administered to pregnant women to prevent mis P2d 624 (Cal 1980), CCH Prod Liab Rptr 8648. carriages. It is estimated that up to three million reversed the previous judgment of dismissal. Until women took DES during pregnancy. In 1971 the Sindell, generally, plaintiffs were required to prove FDA ordered the drug companies to cease marketing that their injuries were caused by an act of the- ~. DES to prevent miscarriages and to warn that the defendant. The court evaluated each of the following drug should not be used by pregnant women. It has exceptions that the plaintiff proposed as a basis for been alleged that DES may cause pre-cancerous holding the defendant liable. vaginal and cervical growths in female children The first exception, known as alternative liabil exposed to DES before birth. These may manifest ity, is embodied in 433B, subsection 3 of the themselves after a minimum latent period of ten to Restatement (Second) of Torts, which states: twelve years. Where the conduct of two or more actors is In Sindell v. Abbott Laboratories, the plaintiff tortious, and it is proved that harm has been alleged that, as a result of her mother's ingestion of caused to the plaintiff by only one of them, but DES during pregnancy, she developed a malignant there is uncertainty as to which one has caused it, bladder tumor. Unable to identify which company the burden is upon each actor to prove that he has manufactured the drug claimed to be responsible not caused the harm. for her injuries, the plaintiff nevertheless brought an This theory is best illustrated by the case of Sum action against eleven drugxomparueiandLajoutnber, mers v. Tice,199 P2d 1 (Cal 1948). Two hunters, IB OCTOBER I960 A FOR THE DEFENSE 0008 0617 SCF-FA-7496 PRODUCED BY FORD For Manufacturers shown to be negligent'in firing guns, were held jointly liable because it could not be determined which hunter had fired the shot which hit the plaintiff. The court concluded that the rule in Summers was not applicable here. In Summers, all the parties who could have been responsible for the harm to the plaintiff were joined as defendants. Here, only five out of 200 DES manufacturers were defendants in the suit. The second exception is the "concert of action" theory, as embodied in 876 ofRestatement (Second) of Torts: For harm resulting to a third person from the tortious conduct of another, one is subject to liability if he (a) does a tortious act in concert with the other or pursuant to a common design with him. or (b) knows that the other's conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other so to conduct himself, or (c) gives substantial assistance to the other in accomplishing a tortious result and his own con duct, separately considered, constitutes a breach of duty to the third person. The plaintiff's complaint alleged that, by relying upon each other's testing and promotion methods, the defendants acted in pursuance of a common plan or design to commit a tortious act. The court concluded that such reliance is common practice in the industry. ` The problem with this theory is that applying the "concert of action" to this situation would render almost any manufacturer liable for the defec tive product ofan entire industry. Furthermore--as the court recognized in rejecting this theory there was no allegation that each defendant knew the other defendant's conduct was tortious and that they encouraged one another to test and warn inadequately with regard to use of DES. The third exception is the theory which the plaintiffs called enterprise liability. The court, how ever, more accurately referred to it throughout as "industry-wide liability." The former is really a policy argument to impose liability; the latter states the theory or cause of action itself. The theory was suggested in Hall v. E. I. du Pont de Nemours A Co., Inc., 345 FSupp 353 (ED NY 1972), in which sub stantially the entire blasting cap industry plus its trade association were joined in an action involving twelve separate blasting cap incidents which occur red in ten different states. In Hall, the court followed this line of reasoning: since there was evidence that the defendants had adhered to an industry-wide standard concerning the safety features, manufac ture and design of the caps, if the plaintiffs could FOR THE.DEFENSE__.4. _OCTOBER 1980. 19 8002 0618 PRODUCED BY FORD establish that the caps were manufactured by one of the defendants, the burden of proof as to causation generations later. They are permitted to receive substantial damages from multiple defendants would shift to all of the defendants. The industry without any proof that any defendant caused or wide standard itself, therefore, became the cause of even probably caused plaintiffs injuries. 607 P2d the plaintiffs injury. Since each industry member had adhered to the standard, according XoHall, each at 938. No sound academic analysisjustified this major member had contributed to the plaintiff's injury. innovation in strict tort liability. In a scant column and one-half, the court set forth its "forceful argu This critique ofSindell was edited by DRI Acting Research Director Donald J. Hirsch, with editorial comments by Assistant Research Director Susan M. Danielski. It is based upon research memoranda by Kay Ann Hunt arid Mary L. Schuette, DRI Student Research Assistants. ments in favor of holding that the plaintiff has a cause of action," which may be summarized a.s follows: In light of an increasingly complex indus trialized society, it is virtually impossible to trace fungible goods harmful to consumers to a specific producer. Rather than adhering rigidly to prior doctrine the majority felt compelled to fashion a remedy to meet these changing needs by "some The Sindell court rejected the application of adaptation of the rulfs of causation and liability." industry-wide liability by distinguishing this case The only two justifications for so major a from Hall. The court in Hall had cautioned that this change involved the "deep pockets" of corporate theory of liability applied to industries composed of defendants. The court's "most persuasive reason," a small number of producers, such as the blasting based on Summers, was that "as between an inno cap industry within the United States, which was cent plaintiff and negligent defendants, the latter composed of six manufacturers. In contrast, there should bear the cost of the injury." The second were at least 200 manufacturers of DES. Further justification was the broader policy argument that more, there were no allegations, as in Hall, that DES defendants are better able to bear the cost of injury. producers had delegated some functions relating to Justice Richardson argued that a defendant's safety to a trade association and, therefore, had wealth is surely not a reliable indicator of fault and jointly controlled the risk. Finally, since the drug should play no conscious part in the legal analysis of industry is so closely regulated by the FDA, the court the problem. In applying this new theory of market concluded it would be unfair to impose on a man share liability, the court concluded that it would be ufacturer liability for injuries resulting from the use reasonable of a drug which it did not supply, simply because it to measure the likelihood that any of the defend followed standards suggested or compelled by the ants supplied the product which allegedly injured government. the plaintiff by the percentage which the DES sold by each of them for the purpose of preventing Market Share Liability ' miscarriages bears to the entire production of the drug sold by all for that purpose. 607 P2d at 937 Having ruled out all three exceptions upon Market share liability imposes only several liability which the plaintiff based her cause of action, the upon the defendants. Each-defendant will be held majority admitted that, under traditional tort law, liable for a percentage of the judgment, as deter the plaintiff (being unable to identify the specific mined by that defendant's market share, unless a manufacturer of the DES used by her mother) would particular defendant can demonstrate that it could be "precluded from any recovery." not have made the DES which injured the plaintiff. The court did not stop there, but went on to deal The plaintiff has the burden ofjoining in one action with this situation -- one involving fungible goods the manufacturers of a substantial market share of which can harm consumers but cannot be traced to DES. Once the plaintiff has met her burden, the the specific producer -- by fashioning an entirely defendants may cross-complain against other man new theory of liability, "market share liability." In ufacturers not joined in the action. Unfortunately, the words of dissenting Justice Richardson, the this is of little consolation. As one commentator has majority adppted stated: "Since no other state has recognized such a a wholly new theory which contains these ingre theory, if a defendant in California cannot secure dients: The plaintiffs were not alive at the time of jurisdiction over another manufacturer of DES in the commission of the tortious acts. They sue that state, there will be no basis for contribution or 20 OCTOBER 1980 & FOR THE DEFENSE 8002 0619 PRODUCED BY FORD indemnity against those other producers of DES." defendant may be either insolvent or not amenable Kroll. Intraindustry Joint Liability, Ins L J185,194 to process. Under the majority's theory, plaintiffs (Apr 1980). who wholly fail to prove any causation are rewarded by being offered a wider selection of defendants and Basic Unfairness Of Theory a greater opportunity for recovery. Not only are the plaintiffs relieved of matching the conduct of a Justice Richardson's dissenting opinion further particular defendant to their injury, but the major highlighted some of the problems inherent in the ity "sprinkles the rain of liability upon all the joined Sindell majority opinion. He viewed the market defendants." 607 P2d at 939 Additionally, market share theory as basically unfair to some defendants share liability will fall disproportionately on those who may have had nothing whatsoever to do with defendants amenable to suit in California. causing an alleged injury. Not only did the major Finally, the dissent recognized the injury ity's theory shift the burden of proof to the defen threatened to the public's interest in continued dant, but it effectively guaranteed that the plaintiffs basic medical research. The opinion noted that would prevail on the causation issue because the Comment k to 402A "implicitly recognizes the defendants are no more capable of disproving cau social policy behind the development of new phar sation than plaintiffs are ofproving it. Furthermore, maceutical preparations." 607 P2d at 941 Justice the plaintiff can recover from a small number of Richardson asked: defendants -- each of whom individually may ac Must a drug manufacturer to escape this blanket count for only a small share of the market--so long liability wait for a generation of testing before it as the aggregate business of those defendants is may disseminate drugs? If a drug has beneficial substantial. According to the dissent's analysis of purposes for the majority of users but harmful this point: side-effects are later revealed for a small fraction In other words, a particular defendant may be held proportionately liable even though mathematically it is much more likely than not that it played no role whatever in causing plain tiff's injuries. 607 P2d at 939 The majority give no guidance as to what consti tutes a "substantial" share of the relevant market, although it indicates that the percentage need not be as great as 75 per cent. The court has revised the requirements of a products liability action, leavingpractical questions unanswered. The dissent criticized the violence done to traditional tort principles by the drastic expansion of consumers will the manufacturer be absolutely of liability: . liable? If adverse medical consequences wholly The majority now expressly abandons unknown to the most careful and meticulous of the ... traditional requirement of some causal present scientists, surface in two or three genera connection between defendants' act and plain tions, will similar liability be imposed? 607 P2d at tiffs' injury in the creation'of its new modified 942 industry-wide tort. Conceptually, the doctrine of Justice Richardson concluded that the majority's absolute liability which heretofore in negligence decision effectively makes the drug industry an law has substituted only for the requirement of a insurer of all injuries attributable to drugs of breach of defendant's duty of care, under the unprovable origin. majority's hand now subsumes the additional necessity of a causal relationship. 607 P2d at 939 Under the majority's new theory, a defendant may Economic and Practical Effects be held liable if he happens to be involved in a Serious economic effects can also be antici similar business and if causation is possible, even pated. When a manufacturer prices a product, it though remote. may now have to consider the liability it may incur Furthermore, under market share liability, an for a defective product manufactured by another. unwarranted preference is created for a particular Insurers of product manufacturers will be faced class of plaintiffs. In the ordinary tort case the with answering for the tortious conduct of com- FOR THE DEFENSE__ A___ OCTOBER 1980 21 8092 0620 PRODUCED 6YFOfcD V 1. panies that they "neither insure nor receive a gives the following illustration: premium from." Kroll, supra, at 196. At the same Assume a plaintiff joins Dl, who enjoyed 80% of page of his article, Mr. Kroll further addresses the the relevant market, and D2, who enjoyed 10%. problems which pharmaceutical manufacturers Having met her burden ofjoining defendants with having large self-insured retentions will face. a "substantial market share," plaintiffs action DES cases may represent only the "tip of the would proceed despite the lack of proof of causa 1 iceberg" with regard to cases in which a large tion. Assume further that as the action proceeds, number of plaintiffs -- unable to recover in a Dl is able to demonstrate it did not produce the traditional products liability case because they injury-causing product, and is accordingly dis could not identify the specific manufacturer -- missed from the action. would be able to recover under market share liabil- May plaintiff, having initially satisfied her bur den, continue the action against D2? Does plain tiffs burden of joining defendants with a "sub When a manufacturer prices a stantial" aggregate share of the market continue product, it may now have to throughout the litigation, thereby permitting D2 to move to dismiss the action? consider, the liability it may Given the vast potential for litigation in which plaintiffs may advocate adoption of market share 4 incur for another liability and the adverse effects the decision may manufacturer's "defective'' have on other industries, the words of Justice Richardson are especially appropriate: product. Respectfully, I think this is (an] unreasonable overreaction for the purpose of achieving what is perceived to be a socially satisfying result. 607 ity. Persons alleging injuries caused by food addi P2d at 943 tives, for example, would have a greater chance of A legislative effort has been made in California recovery under the new theory. The majority opin to reverse the "unreasonable overreaction" of the ion fails to define what constitutes a "fungible Sindell majority opinion. Assembly Bill 3344 would product" -- thus leaving the area's scope open to (among other things): preclude liability in a pro speculation. ducts liability case, unless the plaintiff proves by a In espousing its new theory of "market share preponderance of the evidence that the product liability," the Sindell court essentially has revised seller's own product was a proximate cause of the the requirements of a products liability action, injury, death or damage; this limitation would while leaving unanswered all of the practical prob apply to all pending claims and actions. Although lems concerning market share determination. Mar unlikely to pass this session, the bill is likely to be i ket share liability is to be determined by the re-introduced in the next session of the legislature. * percentage of DES sold by each manufacturer for As a sidelight to an analysis ofSindell, the reader the purpose of preventing miscarriages. What the may wish to consult the article beginning on page 27 majority ignores is that DES was provided for a of this issue. The author, examining another recent ' number, of uses, and it would be most difficult to decision, analyzes another court's changing of the ascertain what proportion was used as a miscar rules of products liability after a manufacturer has riage preventive. The court fails to discuss whether had its only turn at bat, "boxing a product seller into "relevant market" is restricted geographically to a 'no-win' position." The root problem is that: California -- the state in which DES was adminis a product which was not "defective" in the legal tered to the plaintiffs mother -- or if there are any sense when it was designed and manufactured can time restrictions, such as relevant market prior to become "defective" in the same sense many years the plaintiffs birth. later without any actual change in the product. In an article entitled, Market Share Liability This occurs because a court has modified rules of Under California's Sindell DES Decision, National products liability law between the time the pro Law J at 26 (May 19, 1980), Sheila L. Bimbaum duct left the control of the manufacturer and the commented on the court's failure to address any of time the product is subjected to judicial scrutiny. the ramifications of the procedural issues that may Kircher, Products Liability - Judicial "Catch 22", arise as a result of applying this new tort theory. She infra at page 28. .. A i __ 22 OCTOBER 1980 A FOR THE DEFENSE 8002 0621 PRODUCED BY FORD