Applying Concerted Action to the DES Cases

Introduction

In Bichler v. Eli Lilly & Co., a unanimous New York Court of Appeals affirmed a lower-court ruling which held that a plaintiff may bring an action for damages against a drug manufacturer without being able to identify such manufacturer as the actual maker of the drug which caused her injury. The Court of Appeals decision, which accepted an expanded concerted action theory as the basis of liability, removes a major obstacle faced by many of the DES daughters, the victims of the synthetic estrogen ingested by their mothers when pregnant. Due to the generic nature of the drug and the length of time between ingestion by the mother and manifestation of injury in the daughter, most victims have been unable to identify the maker of the drug which injured them. Without such identification, they fail to prove a crucial element of the traditional tort requirement of showing cause in fact, and therefore have been precluded from seeking a remedy for an otherwise justiciable claim. Although the narrowness of its ruling throws some doubt on the precedential value of the case, the Court of Appeals’ decision, allowing plaintiffs to circumvent the identification requirement, marks a significant development in products liability law.

Bichler v. Lilly: Applying Concerted Action to the DES Cases, School of Law, Pace Law Review, Volume 3, Issue 1, Article 5, Fall 1982.

The plaintiff in Bichler brought an action against Eli Lilly, a DES manufacturer, for damages sustained by her as a result of her mother’s ingestion of DES when pregnant with plaintiff. Diagnosed as having vaginal and cervical cancer at age seventeen, plaintiff underwent a radical hysterectomy, which rendered her sterile and impaired her sexual functioning. Although she could not prove the identity of the maker of the particular drug taken by her mother, she claimed that the defendant should nevertheless be found liable. She based her claim on an expanded theory of concert of action, alleging that the defendant was jointly and severally liable as one of the group of DES manufacturers who had wrongfully tested and marketed the drug for use in pregnancy. She asserted that the wrongful conduct of each company evidenced either the tacit agreement with or substantial encouragement of the others’ conduct necessary to supply the requisite showing of concerted action. The jury found that even though plaintiff had failed to establish that the defendant was the manufacturer of the DES taken by her mother, the defendant had engaged in concerted action with other manufactuers and could therefore be held liable for her damages. The appellate court upheld the verdict, finding ample evidence from which a jury could determine that defendant had engaged in concerted action. The Court of Appeals affirmed, holding that the trial court’s instructions on concerted action liability were not erroneous and that the evidence before the jury was legally sufficient to support a verdict based on concerted action.

In allowing plaintiff to bring her claim against the specifically unidentified manufacturer, New York became one of the few jurisdictions to sustain such actions when the cause in fact requirement has not been met. Each of these jurisdictions, however, has relied on a different basis on which to predicate liability. This note examines the theory adopted in Bichler and compares it with those used in other jurisdictions. It concludes that the use of the concert of action theory as expanded in Bichler operates to impose a species of enterprise or industrywide liability on the DES manufacturers.

Background

The Development of DES

DES, or diethylstilbestrol, is a synthetic estrogen first developed in England in 1938. Because its makers did not patent the drug, it could be made and sold by any number of manufacturers under its generic name. In 1939, several American manufacturers sought Food and Drug Administration (FDA) approval to market DES, proposing its use for a variety of estrogen disorders in women. The first applications were rejected by the FDA because they were based solely on foreign studies. At the FDA’s suggestion, the companies joined together to pool their clinical data on the drug in order to expedite the approval process by a joint filing. They also agreed to follow a uniform chemical formula and to use uniform labeling and product literature. Initial FDA approval in 1941 did not include the use of DES to prevent miscarriage. Supplemental applications for that use, first filed in 1947, were based primarily on two studies which were soon shown to be suspect for inadequate controls and unsubstantiated claims. Nevertheless, FDA approval was granted. Serious questions regarding the efficacy and potential carcinogenic effect of DES existed before FDA approval and multiplied afterward, but at no time did the companies perform tests on laboratory animals to determine the possible effects of the drug on the human fetus. After medical studies later revealed a link between maternal use of DES and subsequent development of vaginal cancer in daughters, the FDA in 1971 contraindicated the use of DES in pregnancy.

Between 1947, when the FDA first approved the use of DES for preventing miscarriage, and 1971, when such use was discontinued, several hundred companies were involved in the manufacture and marketing of the drug. During that period, possibly two million women took DES in the larger doses prescribed for prevention of miscarriage. Years later, their daughters, exposed in utero, were discovered to have developed precancerous and cancerous vaginal tract abnormalities related to the use of the drug. Discovery of the link led to an estimated one thousand suits being filed by DES victims, with most suits still pending at the pre-trial stages.

The Identification Problem in DES

Litigation DES plaintiffs face considerable problems of proof, but the most significant problem thus far has been how to overcome the threshold requirement of identifying the defendant as the manufacturer of the product which is the cause in fact of their injury. Proof of cause in fact is a fundamental requirement of an action in tort, and implicit in the requirement is the necessity of identifying the defendant as the actual tortfeasor. Most DES plaintiffs are unable to determine the identity of the maker of the product used by their mothers, because of two factors beyond their control. First, the generic nature of the drug makes its manufacturer extremely difficult to trace, and second, in most cases considerable time has passed since ingestion, so that crucial medical and pharmaceutical records have long since been lost or destroyed. The lack of proof of identification leaves the plaintiff open to motions to dismiss for failure to state a claim or motions for summary judgment. Until very recently, this identification requirement acted as an effective bar to recovery in most DES cases.

To defeat this identification problem, plaintiffs have sought to impose joint and several liability on every DES manufacturer. In the few cases where plaintiffs have been successful, two theories have emerged as means by which the identification barrier may be circumvented: concerted action, and alternative liability.

The ancient doctrine of concerted action is employed when two or more parties are alleged to have acted in pursuance of a common plan to commit a tortious act. Each participant can be held liable for the damage done by his co-participants, even though his own acts have not caused the injury. Express agreement to pursue the plan is not necessary; a tacit understanding is enough. The classic illustration of this doctrine is the case where two or more cars participate in a spontaneous drag race, and one car injures a bystander. Each driver will be considered jointly and severally liable for that injury, although only one car actually struck the plaintiff. The element of tacit agreement necessary to prove such liability may be inferred from the parallel conduct of the participants.

The theory of alternative liability applies in situations where each defendant, acting independently, has behaved tortiously, but only one unidentifiable defendant actually caused the injury. The theory originated in the case of Summers v. Tice. There, plaintiff’s two hunting companions fired their guns carelessly in his direction. Although only one bullet injured plaintiff, it was impossible to determine from whose gun it was fired . The court considered the application of the concert of action theory, but refused to strain the concept since an inference of tacit agreement to pursue a common plan would be an obvious fiction in this case. Instead, the court allowed the burden of proof of causation to be shifted to the defendants on the grounds of fairness to the injured party. Since both defendants were wrongdoers, and since it was their conduct that had placed plaintiff in the unfair position of having to prove the cause of his injury, the court determined that shifting the burden was justified. Rather than leave plaintiff remediless, policy reasons compelled the court to hold each defendant jointly and severally liable if he could not exculpate himself. This theory has traditionally been available only when plaintiff has joined all possible tortfeasors.

Both theories were successfully asserted in a Michigan DES case, Abel v. Eli Lilly & Co., where plaintiff joined as defendants all manufacturers who had distributed DES in the area during the time the drug had been prescribed to her mother. The Michigan Court of Appeals, in refusing to grant defendants’ motion for summary judgment, held that plaintiff’s allegations that defendants had acted in concert to produce and market ineffective and dangerous products, without adequate testing or warning, were sufficient to state a cause of action. The court also permitted a reliance on the alternative liability theory, noting that in special circumstances “policy and fairness” dictate a shifting of the burden to the wrongdoer.

The unmodified use of the alternative liability theory was rejected by the California Supreme Court, in Sindell v. Abbott Laboratories, where plaintiff had not joined every possible manufacturer. The Court stated that unless all were joined, there would be no basis for inferring that the product of any one defendant was the cause in fact. The Sindell court also rejected the concerted action theory because the requisite element of implied agreement was not, in that court’s opinion, supplied by a showing of conscious parallel conduct by the manufacturers. The court reasoned that stretching the doctrine to encompass a common industry practice would not only go far beyond the intended scope of the doctrine, but would hold virtually any manufacturer liable for the defective products of an entire industry, even if the defendant could prove that his product was not the cause in fact of the injury. Although it rejected the traditional doctrines, the Sindell court felt compelled by reasons of policy and fairness to find a basis for allowing the claim. Recalling Justice Traynor’s famous concurrence in Escola v. Coca Cola Bottling Co., the court reaffirmed its rejection of a rigid adherence to traditional tort law in the fact of the complex problems created by modern technology. When fungible goods which harm consumers cannot be traced to any specific producer, the Sindell court noted, “some adaptation of the rules of causation and liability may be appropriate . . . .,, The court chose to modify the Summers theory of alternative liability by permitting an action when a substantial number of the manufacturers were joined as defendants. Each manufacturer, however, would be liable only for its proportionate “market share” of the judgment. Further, each defendant would also have the opportunity to fully exculpate itself by proving that it did not manufacture the product which actually caused the injury.

Bichler v. Lilly: The Lower Court Decision

The issue presented in the Bichler case was whether an injured plaintiff who cannot identify the actual manufacturer of the drug which caused her injury, and thus cannot satisfy the traditional tort requirement of showing cause in fact, may impose joint and several liability on a single DES manufacturers.

A unanimous New York appellate division court, adopting an expanded concert of action theory, held that, in the “special circumstances” of the DES cases, joint and several liability could be imposed without proof of identity as an element of cause in fact. The court cited several factors in support of its holding. First, the court found sufficient evidence to justify the jury finding that the defendant and the other manufacturers of DES had wrongfully tested and marketed the drug. Reservations about the efficacy of DES for treatment of complications of pregnancy, doubts about the adequacy of the two studies relied on, and concerns about the potential carcinogenic effect of the drug on mother and fetus were shown to have all been raised prior to 1953, when plaintiff’s mother used DES. Yet none of the companies producing or marketing DES responded to these issues by performing any tests on either humans or animals. The court also found that the evidence of “conscious parallel activity” by the drug companies amply supported an inference of a tacit understanding among the companies to wrongfully market the drug for use in preventing miscarriage without first performing laboratory tests upon pregnant mice. The original cooperation and pooling of data by the first twelve applicants set the pattern for later manufacturers, who used the same basic chemical formula and literature. When FDA approval was later sought for the use of DES in pregnancy, the companies relied on the same research studies and prescribed the same dosages. On these facts, the court found “ample evidence” of concerted action.

The court admitted that it was doing what the Sindel court had found unacceptable: it was stretching concert of action to encompass the common practice of an entire industry by allowing “conscious parallelism” to evidence the required element of tacit agreement. The Bichler court, however, characterized this as only a “limited -expansion” of the doctrine, justified by both legal precedent and equitable considerations.

As legal precedent, the court pointed to a previous tailoring of the doctrine in Hall v. E.I. Du Pont De Nemours & Co. In Hall, plaintiffs were children injured in separate blasting cap explosions. Unable to identify the manufacturers of the product which caused their injuries, they joined six manufacturers, who comprised virtually the entire domestic industry. The court, in Bichler, noted that Hall had fashioned a theory which combined elements of concerted action and alternative liability. Concerted action was shown both by express agreement among the defendant blasting-cap manufacturers not to warn of their product’s danger, and by the companies’ reliance on industry-wide safety standards. The alternative liability doctrine was invoked to allow a shifting of the burden of proof of causation to the defendants, permitting them to exculpate themselves if they could show that their product did not cause the injury. As further support for its theory the court pointed to the fact that “conscious parallel behavior” without express agreement had long been accepted by the Supreme Court as a basis for finding conspiracy in antitrust cases.

In addition to the legal justifications cited, the court also emphasized the policy considerations which mandated expansion of traditional doctrines “to adapt to the exigencies of trying a case in the rapidly developing area of the law of strict products liability.” The complexity of modern products, the court noted, often means that the manufacturer is the only party who can know if the product is safe. The court refused to allow such a manufacturer to escape liability by hiding behind the “shroud of anonymity” created by the generic nature of his product and the parallel practices of his industry. Citing Abel and Sindell as examples of the responses by other courts to the “special circumstances” facing the DES plaintiffs, the New York Appellate Division joined the Michigan and California courts in refusing to bar an otherwise valid claim when the traditional requirement of causation was impossible to prove.

The court found no unfairness in imposing liability on the sole defendant. Plaintiff had the option of going against any joint tortfeasor; as a participant in concerted tortious action, defendant was jointly and severally liable. Furthermore, defendant could proceed against the other manufacturers for contribution under the theory of Dole v. Dow Chemical Co., which allows allocation of the judgment according to equitable share.

The Court of Appeals Decision

The Decision

The New York Court of Appeals unanimously affirmed the lower-court ruling. The opinion was so narrowly drawn, however, as to leave undefined the scope of the expanded concerted action theory. Limiting itself only to those issues preserved for its review, the court held that the trial court’s instructions on the concerted action theory were “not erroneous as a matter of law,” and that the jury’s verdict in light of those instructions was not without sufficient evidentiary support.

The court refused to address Lilly’s claim on appeal that it was “jurisprudentially unsound” to permit recovery against it on a concerted action theory. Noting that Lilly had not raised this claim at any prior stage of the proceedings, the court held that the theory of concerted action therefore became the “controlling law” of the case. Having made this determination, it only remained for the court to decide whether, to the extent the issue was preserved, the trial court’s instructions on concerted action were erroneous, and if not, whether the evidence was sufficient to support the verdict.

The court first considered the trial court’s instructions to the jury on concerted action. The instructions specified two theories of concerted action upon which defendant’s liability could be premised: first, concerted action by agreement, in which an express or implied understanding is manifested by “consciously parallel conduct” on the part of the drug companies in failing to test DES on pregnant mice; and, second, concerted action by substantial assistance, in which the companies acted independently of each other in failing to test but with the result that such independent actions had the effect of substantially encouraging the failure to test by the others. Although the court enumerated Lilly’s challenges to these instructions, it refused to explore the merits of Lilly’s claims, holding that such exploration was precluded by the fact that none of the challenges had been preserved for review by appropriate request of exception. The sole exception to the concerted action charge which Lilly had made concerned the issue of intent, an issue which the court stated did not “even arguably relate” to any of the claimed errors urged on appeal. Without proper objection having been taken, the trial court’s charge on concerted action therefore became the law of the case.

The court then addressed the issue of whether the evidence was legally sufficient to support the jury’s finding of concerted action, either by agreement or by substantial assistance. With regard to concerted action by agreement, the court held that the jury could infer, solely from evidence of “consciously parallel behavior,” an implied agreement by the drug companies not to test DES on pregnant mice. Similarly, the court found that the charge on concerted action by substantial agreement allowed the jury to infer from Lilly’s failure to test that other manufacturers were substantially encouraged to do the same. Confining its review of the evidence to events beginning in 1947, the court held that the conduct of Lilly and the other companies in filing new drug applications for use of DES for treatment of problems of pregnancy “was sufficient to support jury findings of both conscious parallelism and substantial assistance or encouragement under the jury instructions to which no exception was taken.

Analysis of the Court of Appeals Decision

The Court of Appeals decision, characterized by a deliberate emphasis on the procedural aspects of the appeal and a corresponding narrowness in the scope of its review, provides little guidance as to the acceptability of the concerted action theory. After stating positively that products liability law cannot be expected to stand still where innocent victims face inordinately difficult problems of proof, the court avoided every opportunity to set forth a clear rule on concerted action. Further, the court refused to consider, even in passing, the other theories of liability proposed for application in the DES cases; instead, the court stated that it was expressly leaving for another day consideration of whether other theories of liability may in the DES context establish a cause of action. Announcing that it would address only the basis of liability pleaded, concerted action, the court further narrowed its review of that basis only to the extent that the issue was preserved for our review.

Throughout the decision, the court repeatedly emphasized the limited nature of its scrutiny. First, although it allowed concerted action to form the basis of a full recovery against Lilly, it did so almost grudgingly, giving as its only reason the fact that Lilly had allowed the case to proceed on that basis. Furthermore, it considered the trial court’s instructions with regard to concerted action only in light of whether proper exception had been taken; by this test, it found them to be “not erroneous as a matter of law,” hardly an enthusiastic endorsement. Finally, in its review of the sufficiency of the evidence, the court found the evidence to be sufficient, but emphasized that it had only measured the sufficiency under the “jury instructions to which no exception was taken.

The penurious nature of the court’s endorsement of the concerted action theory may have a purely procedural explanation. Section 5501 of New York’s Civil Practice Law and Rules provides that an appeal brings up for review “any charge to the jury, or failure or refusal to charge as requested by the appellant, to which he objected. Section 4017 further provides that “failure to. . . make known objections. . . may restrict review upon appeal.” The court of appeals, struggling with a huge caseload, cannot be expected to knowingly expand its scope of review to embrace issues not properly raised on appeal.

Although the precedential value of the court of appeals decision in Bichler remains open to question, there are oblique indications in the opinion which suggest that New York will remain a sympathetic forum for a DES plaintiff who relies on the concerted action theory. First, the court’s express declaration that products liability law cannot be expected to stand still where innocent victims face inordinately difficult problems of proof indicates the court’s willingness to entertain new theories or, as in Bichler, new applications of old theories. Furthermore, the court found that there was sufficient evidence of conscious parallelism among the first group of companies who sought approval of the use of DES for problems of pregnancy in 1947 and 1948, basing its finding on the facts that the companies filed their applications within a short span of time, relied on the same studies, and requested approval for the same dosages. Moreover, the court found that Lilly’s participation in this first wave of filings could fairly be found by the jury to substantially encourage the other companies who subsequently manufactured and marketed DES for the same purpose in 1953, the year the drug was ingested by plaintiff’s mother.

Analysis of Ramifications of Bichler

The precedential value of the use of the concerted action theory in DES cases must remain unclear. Until the court of appeals deals with a case in which the issues have been fully preserved for its examination, its endorsement of the theory is questionable. Nevertheless, its decision represents a significant development in products liability law.

The most obvious result of this decision is that a New York plaintiff, unlike her counterparts in California and Michigan, need not join all or even most DES manufacturers; one defendant is enough. This frees the New York plaintiff from the necessity of serving out-of-state defendants or trying to assert jurisdiction over them, and from the expensive, time-consuming business of determining which of the hundreds of DES manufacturers might have supplied the relevant geographical area at the time of ingestion. The defendant may be held liable for the entire judgment even if it can prove that it did not manufacture the particular product ingested. Further, a manufacturer who made only one pill will be held fully liable.

At first glance, the Sindell court’s shifting of the burden and limiting the extent of liability to market share seem to lead to a fairer result. The inequities which seem to result in Bichler are not really meaningful, however, in light of the nature of concerted action liability. Unlike alternative liability, which holds only one actor as truly culpable, under concerted action all the participants in a wrongful activity are considered as culpable as the actual producer of the product which inflicted the injury. In a sense, the wrongful activity becomes the cause in fact, so that any participant in the activity is also a participant in the causation of the injury. On the practical level, the Sindell shifting of the burden will likely prove a hollow victory for defendants, since they face as insurmountable a problem in disproving cause in fact as plaintiffs face in proving it.

Aside from the arguably unfair placement of liability on one manufacturer, the Bichler doctrine’s most vulnerable element is the nature of the showing required to prove tacit agreement. The conscious parallel activity of the drug companies is largely a function of standard industry practice, and probably the inevitable result of producing generically identical products. By holding the entire industry liable on the basis of this parallel conduct, the Bichler court is really endorsing a species of enterprise, or industry-wide, liability. The court clearly feels that such extended liability is appropriate in certain circumstances, for much the same reasons that justify imposing strict liability. Since the manufacturer is often the only one who can know if a product is safe for its intended use, it is fair to hold it strictly liable, without proof of fault or privity. By the same reasoning, if all the manufacturers in an industry negligently produce identical, and identically defective, products, it is fair to extend liability across the whole industry. In adapting concerted action to the DES situation, the Bichler court furthers the original twofold goals of the doctrine: to assure a deserving plaintiff of a remedy, and to deter dangerous group behavior. By accepting plaintiff’s bold adoption of a little-used theory,  the Bichler court lifts the “shroud of anonymity” which had protected the manufacturers of DES.

Conclusion

In Bichler, the New York courts responded to the identification problem faced by the DES plaintiffs by allowing the concert of action theory to establish joint and several liability on an industry-wide basis. The Bichler courts accepted a showing of parallel conduct in the drug manufacturers’ testing and marketing procedures as sufficient evidence of the tacit agreement element of concerted action. A drug manufacturer who produces a generic product may thus be found liable even if his own product did not cause the injury. To the extent that the lower court’s opinion was affirmed by the court of appeals, the decision represents a significant development in products liability law.

Andrea Riger Potash, September 1982 .

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