1978 DES Case: Mink v. University of Chicago

Abstract

Plaintiffs have brought this action on behalf of themselves and some 1,000 women who were given diethylstilbestrol (“DES”) as part of a medical experiment conducted by the defendants, University of Chicago and Eli Lilly & Company, between September 29, 1950, and November 20, 1952. The drug was administered to the plaintiffs during their prenatal care at the University’s Lying-In Hospital as part of a double blind study to determine the value of DES in preventing miscarriages. The women were not told they were part of an experiment, nor were they told that the pills administered to them were DES. Plaintiffs claim that as a result of their taking DES, their daughters have developed abnormal cervical cellular formations and are exposed to an increased risk of vaginal or cervical cancer. Plaintiffs also allege that they and their sons have suffered reproductive tract and other abnormalities and have incurred an increased risk of cancer.

United States District Court, N.D. Illinois, Eastern Division, Columbia US Law, No. 77 C 1431, March 17, 1978,

Mink v. University of Chicago, U.S. District Court for the Northern District of Illinois, Justicia US Law FSupp/460/713/2093161, 460 F. Supp. 713 (N.D. Ill. 1978)
October 13, 1978.

The complaint further alleges that the relationship between DES and cancer was known to the medical community as early as 1971, but that the defendants made no effort to notify the plaintiffs of their participation in the DES experiment until late 1975 or 1976 when the University sent letters to the women in the experiment informing them of the possible relationship between the use of DES in pregnant women and abnormal conditions in the genital tracts of their offspring. The letter asked for information to enable the University to contact the sons and daughters of the plaintiffs for medical examination.

The complaint seeks recovery on three causes of action.

  1. The first alleges that the defendants committed a series of batteries on the plaintiffs by conducting a medical experiment on them without their knowledge or consent. The administration of DES to the plaintiffs without their consent is alleged to be an “offensive invasion of their persons” which has caused them “severe mental anxiety and emotional distress due to the increased risk to their children of contracting cancer and other abnormalities.”
  2. The second count is grounded in products liability and seeks to recover damages from defendant Lilly premised on its manufacture of DES as a defective and unreasonably dangerous drug.
  3. Finally, the plaintiffs allege that the defendants breached their duty to notify plaintiffs that they had been given DES while pregnant and that children born from that pregnancy should consult a medical specialist. Throughout the complaint plaintiffs claim the defendants intentionally concealed the fact of the experiment and information concerning the relationship between DES and cancer from the plaintiffs.

Both defendants have moved to dismiss the complaint for failure to state a claim. We will deny the motions as to the first cause of action, and grant the motions as to the second and third causes of action. ” …

… continue reading Mink v. University of Chicago, 460 F. Supp. 713 on Justicia US Law or on leagle.

More DES DiEthylStilbestrol Resources

Market Share Liability New York Style: Negligence in the Air

In its famous Palsgraf decision, the Court of Appeals of New York faced the issue whether, given that a defendant acts negligently towards someone, this negligence gives rise to liability to an unforeseeable plaintiff. Judge Benjamin Cardozo concluded that proof of negligence in the air, so to speak, will not do. Because the defendant’s conduct did not pose an unreasonable risk of harm to the particular plaintiff, and the damage to her was unforeseeable, the fact that the conduct was unjustifiably risky to another was irrelevant.

Market Share Liability New York Style: Negligence in the Air, Missouri Law Review, Volume 55, Issue 4, Article 7, Fall 1990.

In a recent decision, the highest court of New York adopted a theory of market share liability that strays from Cardozo’s foreseeability theory. The New York court added a new twist to “traditional” market share liability and held that a defendant could be liable even if the defendant can show that it did not make the particular drug that injured the plaintiff. This Note evaluates the New York approach, with particular emphasis on the consequences of holding a defendant liable for “negligence in the air.”

I. FACTS AND HOLDING

Hymowitz v. Eli Lilly and Co. consolidates four cases in which plaintiffs alleged injury resulting from their mothers’ ingestion of the drug diethylstilbestrol (DES) during pregnancy.  Various manufacturers of the drug were joined as defendants in the underlying actions.

DES is a synthetic form of the female hormone estrogen. Production of DES is much cheaper than isolating natural estrogen. From 1947 to 1971 the drug was marketed for human miscarriage prevention.  In 1971, however, the Food and Drug Administration (FDA) prohibited the use of DES for this purpose. Studies linked the use of DES with vaginal adenocarcinoma, a form of cancer, and with adenosis, a precancerous vaginal growth, in the female offspring of DES users. Because an estimated one-half to three million women used DES during pregnancy, the potential monetary damages to users’ daughters is estimated in the billions of dollars.

Potential DES plaintiffs face a virtually impregnable bar to recovery under traditional tort principles. This bar stems from the difficulty in’ identifying a particular DES manufacturer and from the latent nature of DES injuries. It is estimated that, during the 24 years in which DES was approved for use during pregnancy, as many as 300 companies may have produced the drug. Further, DES is a generic drug, meaning that each manufacturer uses an identical formula in production. Thus, druggists usually fill prescriptions from whatever source is on hand.

The long gestation period also clouds the identification issue. The Hymowitz court stated:

Memories fade, records are lost or destroyed, and witnesses die. Thus the pregnant women who took DES generally never knew who produced the drug they took, and there was no reason to attempt to discover this fact until many years after ingestion, at which time the information is not available.

Because of the latent nature of DES injury, many DES cases are barred by the statute of limitations before discovery of the injury. The traditional New York rule was that “the limitations period accrued upon exposure in actions alleging personal injury caused by toxic substances.”  This “exposure rule” made it practically impossible for DES plaintiffs to recover. In 1986, however, the New York Legislature enacted a “discovery rule” for “the latent effects of exposure to any substance.” Thus, the statute of limitations clock does not begin to tick until discovery of the injury.

While helping DES plaintiffs, this legislative action does not resolve the identification issue. In the Hymowitz cases, the defendants moved for summary judgment on the grounds that the plaintiffs could not identify the particular manufacturer of the particular drug that purportedly injured them. In three of the four underlying actions the defendants also moved on statute of limitations grounds. The defendants alleged that a New York statute reviving causes of action for DES exposure for one year was unconstitutional. The trial court denied all motions. Particularly, on the statute of limitations defense the trial court granted plaintiffs’ cross motions, which eliminated defendants’ affirmative defense that the actions were timebarred.

On appeal, the New York Supreme Court, Appellate Division, affirmed in all respects. It certified the following question to the court of appeals: “whether a DES plaintiff may recover against a DES manufacturer when identification of the producer of the specific drug that caused the injury is impossible. The New York Court of Appeals answered yes. It held that a market share theory, using a national market for determining liability, was the appropriate method for determining liability and apportioning damages in DES cases in which identification of a particular manufacturer was impossible.

II. LEGAL BACKGROUND

The seminal case on market share liability is Sindell v. Abbott Laboratories. The fact pattern presented to the California Supreme Court in Sindell was very similar to that presented in Hymowitz. The Sindell court stated that generally there can be no liability without a specific showing that defendant caused plaintiff’s injuries. The court noted, however, this general causation rule was not without exceptions. The Sindell court proposed and adopted a new basis of liability for this situation; it based its proposal on a modification of an existing exception to the causation rule.

The first and most important exception examined by the California court was the so-called “alternative liability” theory as set forth in Summers v. Tice. In Summers, the plaintiff was negligently shot by one of two hunters using identical guns and ammunition. Although the plaintiff could not prove which of the two defendants actually caused his injury, the court held the defendants jointly and severally liable. The defendants could, however, escape liability by showing they could not have caused plaintiff’s injury. The Sindell case did not find the alternative liability theory applicable because of the large number of DES producers and because of the long latency period involved in DES claims.

The court also discussed a second exception to the traditional causation requirement, the theory of “concert of action. The Sindell court quoted the RESTATEMENT (SECOND) OF TORTS, providing that

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 conduct, separately considered, constitutes a breach of duty to the third person.

Because there was no evidence of an express or tacit agreement between manufacturers to engage in tortious conduct, there was no viable cause of action under the concerted action theory.

Finally, the Sindell court discussed the theory of “enterprise liability” posited in Hall v. E.L Du Pont de Nemovis & Co., Inc. In Hall, several children were injured by blasting caps. Unfortunately, the plaintiffs could not identify the specific manufacturer of the injury-causing product. The court imposed liability on the entire domestic blasting cap industry, which consisted of six manufacturers. The court specifically found that those six entities jointly controlled the risk. The court also focused on the parallel behavior present in the establishment of industry wide safety standards. Thus, “under this industry-wide liability theory, the existence of industry wide standards or practices may support a finding of joint control of risk and shift the burden of proving identification to the defendants.” This theory however, has never been adopted by any other court.

The Sindell court rejected the theory of enterprise liability, and noted that in the Hall case there were six possible manufacturers, while in the DES situation there were at least 200. Further, the court relied on the absence of concert of action for the proposition that defendants did not jointly control the risk. Also, the drug industry is monitored by the Food and Drug Administration; therefore, the industry standard is suggested by the government rather than by industry consensus.

Modifying the Summers v. Tice alternative liability theory, the California Supreme Court adopted a new theory of market share liability. The Sindell court first changed the Summers requirement that all potential defendants be before the court to a requirement that a “substantial percentage” be joined. Next, the Sindell majority held “each defendant will be held liable for the proportion of the judgment represented by its share of that market unless it demonstrates that it could not have made the product which caused plaintiff’s injuries. Thus, a defendant can exculpate itself by showing it could not have made the injury-causing product. The court rationalized that under this approach, each manufacturer’s liability would approximate its responsibility for the injuries caused by its own products.

The Sindell decision left open the question whether the liability imposed would be joint and several or several only. In Brown v. Superior Court, the California Supreme Court resolved this ambiguity, by providing that each defendant’s liability under market share is several only. An individual manufacturer’s liability cannot be inflated to allow for the full recovery of plaintiffs’ injuries. Thus, in California liability cannot exceed a given company’s market share.

The Wisconsin Supreme Court adopted its own version of market share liability in Collins v. Eli Lilly Co. It declined to follow the Sindell approach, and held instead that “unalloyed market share theory does not constitute the most desirable course to follow in DES cases because the theory, while conceptually attractive, is limited in practical applicability. By practical inapplicability, the court was referring to “the practical difficulty of defining and proving market share.”

The Wisconsin approach begins with the general proposition that each defendant contributed to the risk of injury to the public … thus each defendant shares, in some measure, a degree of culpability in producing or marketing … a drug with possibly harmful side effects. Under this approach, the plaintiff’s prima facie case consists of establishing by a preponderance of the evidence that a defendant produced or marketed the type (e.g., color, shape, markings, size, or other identifiable characteristics) of DES taken by the plaintiff’s mother.

Once the plaintiff has alleged a viable cause of action, the burden of proof shifts to the defendant to prove by a preponderance of the evidence that it did not produce or market the subject DES either during the time period the plaintiff was exposed to DES or in the relevant geographical market area in which the plaintiff’s mother acquired the DES. The Collins court held that determination of liability was a jury question to be answered in the context of Wisconsin’s comparative negligence doctrine. According to the court, market share remains an important factor for the jury’s consideration.  The goal of the Wisconsin approach appears to be to allow the jury to hold a defendant liable in proportion to the amount of risk it created that the plaintiff would be injured by DES. This risk-based approach resembles market share liability only when a jury is allowed to consider market share in making its assessment of the proportion of risk of injury for which a defendant is liable.

Shortly after Collins, the Washington Supreme Court adopted another version of DES market share liability in Martin v. Abbott Laboratories. The Washington version, styled “market share alternative liability,” claims justification in that “each defendant contributed to the risk of injury to the public and, consequently, the risk of injury to individual plaintiffs.” The Washington court did leave defendants an out: Individual defendants are entitled to exculpate themselves from liability by establishing, by a preponderance of the evidence, that they did not produce or market the… DES taken by plaintiff’s mother . . .

An interesting aspect of the Washington methodology is that defendants who fail to exculpate themselves are “presumed to have equal shares of the market and are liable for only the percentage of plaintiff’s judgment that represents their presumptive share of the market.” A defendant may rebut this presumption by introducing evidence to establish respective market share. If proven, a particular defendant is liable only for the percentage of the total judgment corresponding to the company’s market share. The liability of unexculpated defendants, however, is inflated to allow for a 100% recovery.

The Washington Supreme Court further developed its theory in George v. Parke-Davis, a subsequent DES decision. First, the determination of market share is a question of fact in each case. Second, depending on the circumstances of a particular case, the relevant market may be as small as the local pharmacy or as large as the country. The court stated “the relevant market for determining liability should be as narrow as possible”.

III. THE INSTANT DECISION

A. Rejection of Accepted Tort Doctrine

Judge Wachtler, author of the majority opinion, began by rejecting the established tort doctrines of alternative liability and concerted action: He stated “we agree with the near unanimous views of the high [s]tate courts that have considered the matter that these doctrines in their unaltered common-law forms do not permit recovery in DES cases.

Relying on Summers v. Tice, the Hymowitz court stated the rule of alternative liability as “where two defendants breach a duty to the plaintiff, but there is uncertainty regarding which one caused the injury, the burden is upon each such actor to prove that he has not caused the harm. The court stated that “the central rationale for shifting the burden of proof in such a situation is that without this device both defendants will be silent, and plaintiff will not recover; with alternative liability, however, defendants will be forced to speak, and reveal the culpable party, or else be held jointly and severally liable themselves.

The court postulated that in order to invoke the doctrine of alternative liability, the defendant must have better access to information than the plaintiff, and all possible tortfeasors should be joined in the action. Further, the court stated “alternative liability rests on the notion that where there is a small number of possible wrongdoers, all of whom breached a duty to the plaintiff, the likelihood that any one of them injured the plaintiff is relatively high, so that forcing them to exonerate themselves, or be held liable, is not unfair.

The Hymowitz court ultimately held the large number of potential tortfeasors and the long time period between ingestion and injury created problems for this traditional tort theory. Defendants did not have the requisite better access to information, and it was virtually impossible to have all possible producers before the court. The court seized also on the issue of fairness, holding “while it may be fair to employ alternative liability in cases involving only a small number of potential wrongdoers, that fairness disappears with the decreasing probability that any one of the defendants actually caused the injury.” In DES litigation the chance a particular defendant actually caused the injury in question is often very remote. Therefore, alternative liability provides no relief.

Next, the court dealt with the theory of concerted action. Analogizing to drag racing cases, it stated the theory provides for joint and several liability on the part of all defendants having an understanding, express or tacit, to participate in ‘a common plan or design to commit a tortious act.

The court conceded the drug companies had engaged in parallel conduct in producing DES from an identical formula. There was, however, no evidence of any agreement to market DES in an unsafe manner.9 ” The court concluded “parallel activity, without more, is insufficient to establish the agreement element necessary to maintain a concerted action claim.”

Although the traditional common law doctrine provided plaintiffs with no relief in Hymowitz, the court rationalized that “judicial action is … required to overcome the inordinately difficult problems of proof caused by contemporary products and marketing techniques.”‘ Thus, the court opened the door for the imposition of market share liability.

B. Market Share Liability

In looking to non-traditional forms of relief, the Hymowitz court stressed that in the DES situation, “it is more appropriate that the loss be borne by those that produced the drug for use during pregnancy, rather than by those who were injured by the use, even where the precise manufacturer of the drug cannot be identified in a particular action.” Policies of fairness and justice mandated judicial relief.

First, the court had to deal with its previous DES decision in Bichler v. Eli Lilly & Co. Some commentators interpreted Bichler to create a modified form of the concerted action doctrine. In Bichler, the court submitted jury instructions substituting “conscious parallel activity by manufacturers” for the traditional common law requirement that a plaintiff prove “actual or tacit agreement to participate in a common plan to commit tortious behavior.” Because of the defendant’s failure to object, “the modified concerted action theory became the law applicable to that particular case.”

The Hymowitz court, however, refused to adopt this modified concerted action theory as the general law of the state. It held

inferring agreement from the fact of parallel activity alone improperly expands the concept of concerted action beyond a rational or fair limit; among other things, it potentially renders small manufacturers, in the case of DES and in countless other industries, jointly liable for all damages stemming from the defective products of an entire industry.

Parallel behavior is too common in modern industry to warrant the imposition of liability.

Finally, the Hymowitz court turned to the concept of market share liability. After examining the various forms of market share liability adopted in other jurisdictions, the court posed its own solution. Relying primarily upon California’s experience, the court concluded “a market share theory, based upon a national market,” provided the practical solution. The court explicitly rejected the Wisconsin “assessment of risk” approach, finding this methodology would prove too burdensome and inconsistent over the long run.

The court realized the adoption of a market share liability theory using a national market would probably result in a disparity between an individual manufacturer’s liability and the actual injuries caused by that manufacturer in New York. Thus, the Hymowitz policy differs from the Sindell policy. Liability is not expected to correspond with causation over the long run of cases. Further, the court recognized that the use of a national market would not necessarily result in liability in proportion to the risk created by a defendant towards a particular plaintiff. The Hymowitz court chose “to apportion liability so as to correspond to the overall culpability of each defendant, measured by the amount of risk of injury each defendant created to the public-at-large.”

C. The “New Twist”

In contrast to previous versions of market share liability, the Hynowitz court refused to excuse a defendant from liability upon a showing that it could not possibly have manufactured the particular drug which injured the plaintiff.  The court stated that because liability here is based on the over-all risk produced, and not causation in a single case, there should be no exculpation of the defendant who, although a member of the market producing DES for pregnancy use, appears not to have caused a particular plaintiff’s injury. The majority rationalized that it is merely a windfall for a producer to escape liability solely because it manufactured a more identifiable pill, or sold only to certain drug stores. These fortuities in no way diminish the culpability of a defendant for marketing the product, which is the basis of liability here. The majority did concede that a defendant could not be held liable if it did not make DES for use during pregnancy.

Finally, the Hymowitz court found DES producers severally liable, not jointly and severally liable as had other jurisdictions. Liability should not be inflated when all participants in the market are not before the court in a particular case. The court realized its rule would result in some plaintiffs failing to recover their total damages. The court explained that because it refused to allow a defendant exculpation from liability, it would not be fair to increase a defendant’s liability beyond its fair share of responsibility.

D. Judge Mollen’s Opinion

Judge Mollen concurred in two of the underlying cases and dissented in part in the remaining two. Mollen agreed with the majority that market share liability based on a national market was the proper theory for the plaintiffs to pursue. He would, however, allow exculpation of a defendant who could prove, by a preponderance of the evidence, that it did not manufacture the particular pill taken by the plaintiff’s mother. Further, he would allow joint and several liability in order to ensure that a particular plaintiff obtains full relief.

Judge Mollen noted that in the California, Wisconsin, and Washington approaches, a defendant could exculpate itself by proving it could not have made the specific drug taken by the plaintiff. He realized “to preclude exculpation would directly and unnecessarily contravene the established common-law tort principles of causation.” Mollen contended the majority “provides DES plaintiffs with an unprecedented strict liability cause of action.” He maintained the majority’s rationale is “unfair and inequitable” to those defendants who could prove they did not manufacture the drug in question.  In Mollen’s opinion, the majority was merely adopting the Bichler “modified concerted action” theory which they explicitly purported to reject in their opinion.

Judge Mollen appears to embrace the Sindell approach. He advocates

the shifting of the burden of proof on the issue of causation to the defendants and he would impose liability upon all of the defendants who produced and marketed DES for pregnancy purposes, except those who were able* to prove that their product could not have caused the injury.

Judge Mollen further advocates imposing joint and several liability on those defendants who are unable to exculpate themselves. Mollen’s version of market share liability differs from Sindell in this respect. Joint and several liability ensures plaintiffs a full recovery for their injuries.

This procedure also provides defendants with an incentive to implead DES manufacturers not joined by the plaintiff. This opportunity reduces unfairness to innocent defendants. Mollen claims this approach furthers the “valid public policy of imposing the burden of bearing the cost of severe injuries upon those who are responsible for placing into the stream of commerce the causative instrumentality of such injuries. Finally, Judge Mollen concludes the majority engages in judicial legislation by eliminatinh fundamental causation requirements.

IV. COMMENT

This Note uses the policy behind tort law and products liability as a framework for analysis. This policy framework warrants a terse review. Further, the Note examines attempts to expand market share liability outside the DES arena, and evaluates a potential legislative solution.

A. Policy Framework

Compensation and deterrence are the two most widely announced purposes underlying tort law. Other frequently mentioned purposes are the assessment of moral blame in the eyes of society, and the punishment of wrongdoers. A major purpose of the cause in fact requirement in tort law is to limit the scope of potential liability. Professor David Fischer writes that the “cause-in-fact requirement is one way in which the law limits the scope of liability and attempts to avoid discouraging socially desireable activity.”

There are six generally recognized goals of a strict products liability regime. These goals include

  1. compensation (or loss spreading);
  2. deterrence;
  3. encouraging useful conduct;
  4. overcoming proof problems;
  5. protection of consumer expectations;
  6. and cost internalization.

The compensation goal is based on the premise that in our modern society injuries to individual consumers caused by the use of complex products are inevitable. Because of the gravity of potential injury, it is fair to impose liability on the manufacturers of these products who can, in turn, shift the loss back to consumers via price increases or insurance.

The deterrence goal rests on the proposition that the threat of liability motivates manufacturers to make safer products. Strict liability is believed to be a stronger deterrent than negligence. Under a negligence standard a manufacturer is held to a reasonable person benchmark, while the strict liability standard may require a manufacturer to go beyond this reasonable person criterion if the cost of added safety is less than the cost of potential liability.

The third goal, and perhaps the most important for purposes of analyzing the New York version of market share liability, is encouraging useful conduct. The deterrence and compensation goals nearly always indicate liability. Yet, until the New York version of market share liability:

no court has imposed the liability of an insurer on manufacturers by requiring them to pay for all harm caused by their products. This is because of the fear that such absolute liability would place unreasonable burdens on manufacturers and discourage them from producing useful products. The policy of avoiding over-deterrence by balancing the needs of defendants against needs of plaintiff is clearly at work, although it is seldom articulated.

The fourth goal of products liability law is to help plaintiffs overcome difficult proof problems. Often the defendant is in a much better position than an individual plaintiff to prove fault or lack of fault. Some commentators conclude that the market share liability theory reflects courts policy judgment that as between an innocent plaintiff and defendants who are allegedly guilty of some wrongful conduct, the plaintiff should prevail-even if the alleged (not necessarily established) conduct in question did not cause .the plaintiff’s injury. In products liability actions courts often simplify the plaintiff’s prima facie case or shift the burden of proof on an issue to the defendant.

The final two commonly articulated goals of product liability law include the protection of consumer expectations and the policy of cost internalization. The consumer expectation policy is grounded in the notion that manufacturers induce consumers to rely on safe products, thus the consumer should be protected from hidden perils. The cost internalization goal depends on manufacturers passing liability costs back to consumers, who can then make intelligent purchases based upon the true costs of products.

B. Policy Implications of New York’s Version of Market Share Liability

The traditional tort requirement of causation in fact fails to further tort goals of deterrence and compensation. Professor Fischer provides the following illustration:

Suppose a falling tree that had been struck by lightning injured plaintiff. If plaintiff were able to establish that a railroad company was negligent in failing to equip its locomotive with a whistle, a court could further the tort policies of compensation and deterrence by imposing liability for plaintiff’s injury upon the railroad company, even though no causal connection existed between the company’s negligence and plaintiff’s injury. As long as the railroad company understood that liability was being imposed upon it because of its negligence, it would have an incentive to equip its locomotives properly in the future. At the same time, requiring the railroad company to compensate the injured party would further society’s interest in compensating accident victims.

Thus, market share liability fails to profoundly effect these goals.

The goal of assessing moral blame flounders in the context of “traditional” market share liability. The plaintiff may not have even joined the culpable defendant. This problem is magnified under the New York theory, where there certainly will be cases where a defendant could exculpate itself if given an opportunity. The policy of assessing moral blame is further watered down as courts decrease the threshold of “substantial market share” below the ninety percent level. This problem is intensified if market share is expanded to industries which, unlike the DES market, are not concentrated in a relatively few firms.

Perhaps the most profound policy effect of market share liability transpires in the area of encouraging useful conduct, or avoiding overdeterrence. The consequences of over-deterrence include disincentives for safety to unsafe manufacturers, and a reluctance by “leading edge” companies to introduce new products for fear of potential liability. “By apportioning damages throughout an industry solely on the basis of market shares and irrespective of safety efforts, it enables unsafe manufacturers to spread the burden of their accident costs and thereby creates disincentives for safety.” Further,

it has also been pointed out that imposing the market-share theory in a strict liability tort case gives rise to a form of absolute liability by relieving the plaintiff of proving defendant’s breach of duty and by guaranteeing plaintiff’s proof of causation, which ‘forces an industry into the position of an insurer of a product.

In reflecting on the over-deterrence issue, liability expert Peter Huber asks and answers the question who fled most quickly from the baying tort pack? Those quickest on their feet, of course-the person of action, the company of initiative, the mover, the shaker, and the doer. In characterizing the damper placed on innovation by excessive tort liability, he states in the very markets where the legal pursuit was the most intense … the mood among suppliers became most sullen, hostile, defensive, and then coldly stagnant.

As an example, Huber states “research expenditures by U.S. companies working on contraceptives peaked in 1973 and plummeted 90% percent in the next decade.” Huber quotes the president of a major pharmaceutical company, reflecting on the amount of litigation and asking “who in his right mind would work on a product today that would be used by pregnant women? Society suffers because “it is the innovative and unfamiliar that is most likely to be condemned.”

Empirical evidence on the over-deterrence effect is difficult to find. According to one author, “the inquiry is enormous because virtually every corner of society has been reached by the liability revolution, and frustrating because each story is unique, with much of the evidence anecdotal in nature and hard to document or quantify.” In the pharmaceutical industry, much of the evidence that is available centers around the highly visible areas of contraception and vaccines. It is safe to say, however, that the number of product liability lawsuits filed in the U.S. is increasing at a staggering rate. Between 1974 and 1988 the number of product liability lawsuits filed in federal district courts increased by 983 percent.

Because of the limited availability of concrete evidence, it becomes necessary to infer over-deterrence from certain market characteristics. For instance,

in 1980, experts writing in International Family Planning Perspectives predicted that long-acting hormonal rings, vaginal rings, new injectable preparations, postaglandins to induce early abortions, IUDs causing less bleeding and pain, and cervical caps are in advanced field trials with thousands of women, and should be widely available in the contraceptive industry within the next three to five years.

Though some of these products are now available in Europe, nine years later not one is available in the U.S. A plausible explanation for the availability of the drugs in Europe and not in the United States is the liability crisis.

C. Attempts to Expand Market Share Liability Outside the DES Arena

Courts limit the doctrine of market share liability to DES cases. Innovative plaintiffs attorneys, however, diligently attempt to apply market share liability outside the DES context. Examples of actual attempts at expansion range from vaccines to asbestos and even to a ruptured breast prosthesis. The Sindell court implied that “the market share theory… conceivably could apply to all potentially harmful fungible products made from an identical formula.” Thus, market share liability could conceivably embrace “the manufacturing and marketing of cigarettes, food additives, generic drugs,  asbestos, pesticides, aluminum wire, industrial waste, and products that cause environmental pollution.” Fortunately, at this juncture attempts at expansion fail.

A recent New Jersey case illustrates careful reasoning by a court in refusing to expand market share liability. In Shackil v. Lederle Laboratories, the plaintiffs filed a medical malpractice and products liability action arising out of the 1972 inoculation of an infant plaintiff with what is commonly known as the DPT vaccine. The plaintiffs could not identify the specific manufacturer, so attempted to invoke market share liability.  In refusing to accept the theory, the court rationalized that the imposition of market share liability would frustrate public policy and public health considerations by “threatening the continued availability of needed drugs and impairing the prospects of the development of safer vaccines. The court also paid heed to the fact that recent market trends threatened the supply of DPT and that due to extreme liability exposure there were only two current producers of the drug. While the Shackil court found no liability, it addresses the potential problems inherent in imposing too much liability on an industry as vital to our health and welfare as the drug industry.

D. Legislative Question

Some commentators suggest a legislative or administrative compensation plan when injured persons cannot identify the specific manufacturer responsible. Suggested alternatives include:

  1. a limited no-fault product liability fund for plaintiffs unable to identify the manufacturer of a generic product that produced a latent injury;
  2. suits against the federal agency responsible for regulating the particular industry using the Federal Tort Claims Act and the Administrative Procedure Act;
  3. ad hoc congressional responses to mass injuries caused by products of unidentifiable manufacturers;
  4. legislation designed to hold certain industries liable through trade associations for all injuries caused by those industries’ products whenever the manufacturer of an injury-causing product is not identifiable;
  5. a no-fault compensation system for persons injured by DES which would be funded by a tax imposed upon all manufacturers who produced DES for use as a miscarriage preventative;
  6. and a toxic tort compensation system not limited to a single industry or a single type of product-injury but designed to deal with the toxic tort problem as a whole.

Schwartz and Mahshigian suggest a particularly appealing legislative solution which grasps the following general principles:

  1. the tort system should guide recovery when a particular defendant can be identified;
  2. in non-identification cases, the claimant should be required to show fault, causation, damages, and a good-faith, genuine attempt to identify the manufacturer
  3. legislation should penalize plaintiffs and counsel who falsely identify a defendant … including defendant’s legal costs and a possible civil fine;
  4. the legislation should strongly emphasize causation-that the product actually caused plaintiff’s injury;
  5. and damages should be limited to the claimant’s true excess economic losses, which means no damages for pain and suffering.

Specific provisions of the Schwartz and Mahshigian plan remedy many problems cited in this Note. First, this scheme places the burden of proof on the defendant only when information is in the defendant’s control.211 Second, the plan provides that all manufacturers of DES should contribute to compensation paid to plaintiffs, calling this provision “fairer than the random targeting of defendants that occurs under current judicial theories.” Third, payment by the individual manufacturers “furthers the cause of effective deterrence of (and where appropriate, penalty for) tortious behavior.” Fourth, a properly applied legislative solution would lower the administration costs of the present tort system. Finally, limiting recovery to economic damages lessens the burden on manufacturers. This relief conceivably inures to the benefit of society in the form of lowered prices and increased innovation.

Another attractive legislative solution is the adoption of a federal products liability statute that pays more credence to FDA approval. An Institute of Medicine study recently advocated that, as a general matter, there be no liability for design defect or inadequate warning if the FDA has reviewed and approved the contraceptive product or the warning and has addressed the characteristics of the product that caused the plaintiff’s injury. The defense should not be available if the manufacturer withheld relevant information from the FDA in the approval process or if information developed after approval was not reviewed by the FDA for the purpose of determining whether the product or its labeling should be changed.

The added certainty which a uniform statute provides would allow manufacturers to divert more funds into the research and development area, and would allow the introduction of innovative new products without fear of excessive liability.

V. CONCLUSION

Looked at from a societal perspective, market share liability fails horribly. It merely perpetuates the overall liability crisis in America. Society suffers from increased prices, decreased safety, and a reluctance to market beneficial new products. This crisis begs for a return to traditional tort theory.

The New York version of market share liability assumes a perfect world. It requires uniformity to meet its initial goal of averaging. Thus, it only “works” if all fifty states apply the same rationale. Absent uniformity it becomes grossly unfair to defendants. Given that at least six states explicitly reject market share liability, and that only a half dozen others adopt the theory, the prospect of uniformity is slim. Therefore, if one buys into the market share concept, the only way to assure perfect compliance is through comprehensive federal legislation.

The Hymowitz decision allows “offensive” use of market share liability even when the defendant DES manufacturer can prove that it absolutely did not manufacture the particular drug taken by the plaintiff. Extending this logic to its natural conclusion, perhaps a defendant should be able to use market share “defensively” when the plaintiff can identify the culpable manufacturer. Thus, a defendant marketing five percent of the DES produced for use during pregnancy would only be liable for five percent of plaintiff’s damages even when identified as the culpable party. The overall ‘liability of a particular defendant would then coincide perfectly with culpability. To hold otherwise “transforms the market share liability theory into a lottery based on the fortuity of the availability of evidence in a particular case. The outcome, of course, is absurd.

Mike D. Murphy, 1990.

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More DES DiEthylStilbestrol Resources

Risk Exposure as Injury: Alleviating the Injustice of Tort Causation Rules

Increasingly, courts are faced with cases involving injuries stemming from exposure to risk. Our scientific knowledge of sources of disease, and our ability to correlate exposure and injury, are increasing. However, standard causation rules are inadequate in situations involving the indeterminate defendant, the indeterminate plaintiff, and loss of a chance patterns.

The author argues that a “risk as injury” approach will resolve problems associated with causal indeterminacy. The “all or nothing” requirement of current tort principles frequently causes injustice. However, a riskbased theory is compatible with general objectives of tort liability. Moreover, probabilistic evidence may be as adequate as particularistic evidence.

Risk Exposure as Injury: Alleviating the Injustice of Tort Causation Rules, McGILL LAW JOURNAL, Vol. 35, 1990.

The “risk as injury” theory has been applied by American courts in cases involving DES. The author argues that the approach taken in decisions such as Sindell may be extended to other fact patterns involving indeterminacy. The case of Janiak shows that Canadian courts may be ready to accept risk-based liability as a method which resolves causal indeteminacy yet maintains the integrity of the causation requirement.

Introduction

Scientific developments in this half century have had an impact on tort causation in two unique but interrelated ways. First, populations are being exposed to hazardous substances more often and in greater intensity than ever before. Second, knowledge is constantly increasing as to the sources of disease and other mysterious injuries. This new knowledge, however, is frequently insufficient to link a particular defendant’s conduct with a particular plaintiff’s injury in the eyes of the law. The difficulty is that there is a substantial difference between medical causation and legal causation. While scientists make predictive statements based on observations of repetitions of events, our courts treat a submission which is probably true as if it were a certain fact. In the result, the standard causation inquiry is inadequate to deal with the increasingly complex circumstances which are confronting it. This article postulates a “risk as injury” thesis as an answer to this inadequacy.

The problem arises primarily in three contexts. They are known as the “indeterminate defendant”, “indeterminate plaintiff”, and “loss of a chance” patterns. In each case the plaintiff generally will be denied recovery because of his or her inability to show a connection (in the eyes of the law) between the defendant’s tortious conduct and the injury he or she has suffered.

There has been some litigation and considerable commentary in each of these contexts. The American courts and academics have been the most active, and in fact have dominated the dialogue. One of the goals of this article is to bring a Canadian perspective to the discussion, although many of the principles and precedents involved are common to the American and Commonwealth systems. The major difference is found more in judicial attitude; the U.S. courts have taken the lead in resolving the injustice of causal indeterminacy.

More important than relating the issue to Canadian law is the task of providing a unified approach to the indeterminate defendant, indeterminate plaintiff, and loss of a chance cases. That unified approach may be described as a “risk as injury” thesis. This involves application of a “probabilistic increasedrisk concept”, under which exposure to risk is classified as an actual injury worthy of redress. Liability for risk exposure will permit the plaintiff to recover in some circumstances when he or she previously would have been barred; however, the award will be discounted to the extent that it is likely that the plaintiff’s injury was caused by risk factors other than the defendant’s negligence. Thus, it is also referred to as “proportional recovery”. A simple example of proportional recovery might run as follows. It is established that there is a thirty percent chance that the defendant caused the plaintiff’s injury (but a seventy percent chance that the defendant had nothing to do with the injury). As will be explained, traditional causation law would deny any recovery to the plaintiff. Proportional recovery would award thirty percent of the plaintiff’s damages against the defendant. Such an award most precisely reflects the risk created by the defendant and the damage suffered by the plaintiff through that risk.

The need for a unified approach arises from two distinct sources of confusion. First, commentators have generally not attempted to resolve all three patterns at once; most have chosen instead to tackle only one or at most two. The result has been a patchwork of theories and proposals. In one instance, for example, the consequence has been that the writer, while calling for some form of proportional recovery, simply failed to realize the potential breadth of application of his theory; at other times commentators have been unable to get beyond the technical aspects of the particular approaches they were criticizing in order to apprehend the existence of any underlying principle. Second, advocates of proportional recovery have travelled differing theoretical routes in arriving at their conclusions. At times this leads to differences in practical application.

This article argues that risk-based liability is necessary to resolve the dilemma created by causal indeterminacy.

  1. Part I establishes that injustice inevitably flows from the “all or nothing” requirement of current tort principles.
  2. In Part II, the all or nothing and risk-based liability approaches are examined in the context of the underpinnings of tort liability.
  3. Part III discusses statistical methods of proof.
  4. Part IV demonstrates that a single integrated thesis underlies all three sub-patterns such that the sub-patterns are merely extensions of each other.
  5. Parts V through VII discuss the sub-patterns, and their application to risk-based liability. In trying to solve the indeterminate defendant problem, the important case of Sindell v. Abbott Laboratories provided the first explicit recognition of a form of risk-based liability. Part V examines the principles embodied in that case and how they evolved in subsequent decisions.
  6. Part VI illustrates how such analysis is properly applied to the indeterminate plaintiff sub-pattern.
  7. Part VII begins with a discussion of loss of a chance paradigms, and suggests that the future foundation for risk-based liability rests on two decisions, Herskovits v. Group Health Co-op” and Janiak v. Ippolito. Herskovits provides firm support for the loss of a chance approach in the United States, while the unanimous decision of the Supreme Court of Canada in Janiak is capable of significant and exciting expansion in Canada.
  8. Part VIII very briefly examines whether the court system is .the proper forum for the undertaking of such potentially momentous reforms. Finally, this article concludes that risk-based liability is the only method which can fairly resolve causal indeterminacy and yet maintain the integrity of the causation requirement.

Before embarking on this discussion, three points must be made.

  1. First, the consequence of the risk-based liability approach is to make the causation requirement relatively easy to satisfy. The integrity of the causation inquiry is maintained because risk is injury, and there is a resulting shift in the focus of the analysis to damages assessment. Cases such as McGhee v. National Coal Board illustrate that the causation inquiry is unsuited to the task of unravelling the riddle of causal indeterminacy. Our law has long required a “yes or no” answer to the issue of factual causation, and seems incapable of moving from that. Where there is causal indeterminacy, the result is ineffective, muddled, and unfair law, which has finally led to a severe backlash. The distinction made in focusing on damages instead of causation involves more than semantics; put simply, the courts need to use tools appropriate to the task at hand. The damages inquiry does not suffer from some of the logical restraints which bind causation, and has the theoretical flexibility to master the complexity of risk-based liability cases. The shift to a focus on damages assessment is thus an integral feature of risk-based liability.
  2. Second, the “indeterminate defendant”, “indeterminate plaintiff”, and “loss of a chance” sub-patterns are truly only labels for general fact patterns which parallel one another on a theoretical level. They are “three sides of the same coin”, and each should generally be treated in an identical fashion.
  3. Finally, a brief comment should be made on the proper scope of the risk as injury thesis. Richard Wright argues that risk exposure has its place on the “frontiers of tort liability”,  but his view of the theory’s potential breadth may be somewhat narrow. For example, it may have application in some sporadic accident circumstances. But while it might be possible for risk exposure theory to move to the mainstream of tort litigation, such a development is highly improbable for the foreseeable future. More likely, the theory will find use where ambiguous causal relationships exist. In other words, it will be used where it is useful, and those circumstances are limited at present.

I. The Source of Injustice – The All or Nothing Approach

The specific obstacle to recovery which critics of the traditional causation requirements are attempting to surmount is the “all or nothing” standard for recovery. Under this standard, if the plaintiff meets the burden of proof (generally the balance of probabilities) regarding all the elements of the tort (including, specifically, causation), then the court will treat the defendant’s causal responsibility as a certainty. Conversely, if the plaintiff fails to meet the burden, it will be considered a certainty that the defendant’s actions imposed no harm upon the plaintiff.

The flaws of the all or nothing approach are exposed in the increased risk cases. In practical terms, the approach’s most glaring weakness is its denial of recovery to almost all increased risk plaintiffs. For example, in the industrial waste context, it is virtually impossible for an individual to show that her injuries have been caused by the defendant. In many cases she can prove that the defendant negligently disposed of the dangerous substance, that she was within the area of risk, and that she suffered some injury. But under traditional Canadian tort law she must also be able to show, on the balance of probabilities, that the defendant’s negligent conduct was the legal cause of her injuries. Considerable controversy exists as to what is the threshold for the standard of proof, but assume for argument’s sake that the plaintiff must show that it is more likely than not (ie., greater than fifty percent chance) that the defendant caused her injury. While the plaintiff may be able to show some connection between the dangerous substance and the cancer through epidemiological evidence, she will rarely be able to recover under traditional tort principles. Unless she can show that there is a greater than fifty percent chance that the defendant’s negligence led to her injuries, she will fail. This fact pattern is known as the “indeterminate plaintiff” problem: although it is certain the defendant must have caused some injuries, the plaintiff is unable to show under traditional causation principles that she was one of the defendant’s victims. While a representative action might be of assistance, access to such procedures is severely limited in Canada.

The industrial waste plaintiff’s problems are mirrored in other contexts. Consider the injured person who goes to a doctor for treatment on her leg. Assume that if the doctor correctly diagnoses and treats the injury, there is a thirty percent chance the leg can be saved. However, the doctor is negligent, and the patient loses her leg. Under the analysis applied in the industrial waste context, she can not recover from the doctor because it was more likely than not (seventy percent) that the leg would have been lost anyway. This is a case of “loss of a chance.” It might also be referred to as a problem of “indeterminate harm,” because it is unknown whether the plaintiff has been injured at all by the defendant’s negligence.

The third context in which the plaintiff might encounter similar difficulties with the causation requirement also involves mass torts. United States courts have already considered the “indeterminate defendant” question in a number of jurisdictions. The diethylstilbestrol (DES) drug litigation poses the problem of identifying which defendant company manufactured the particular drug taken by the plaintiff’s mother. The drug was distributed under a generic label. Again, the plaintiff may be unable to prove on a balance of probabilities that any single defendant caused her injury.

The all or nothing approach works reasonably well in the context of the ordinary sporadic accident case “in which causal indeterminacy arises randomly and always signifies a substantial chance that the defendant in fact harmed no one.”‘ In adjudication of sporadic accidents, all or nothing is possessed of a number of virtues, not the least of which is efficiency. The all or nothing rule interacts well with the traditional presumptions of tort law – for example, that the plaintiff carries the burden of proof. The combination of the placing of the burden and the all or nothing rule are the law’s solution to fact indeterminacy. Unless the plaintiff can overcome this obstacle, the court will refuse to intervene; but because of the nature of causal indeterminacy, the plaintiff will virtually never succeed – neither the plaintiff nor the defendant possesses sufficient information to satisfy the burden of proof. At issue is a policy question concerning the kinds of interests the law should be protecting; and despite that it appears that maintenance of the all or nothing rule may be a display of “healthy judicial conservatism”, a choice in favor of doing nothing to change the rule is in fact a choice. The issues need to be confronted openly.

,Efficiency and consistency are the primary virtues of the all or nothing rule. Neither, however, provides sufficient justification for its application across the board. They are desirable and necessary for dispensing justice, but expedience cannot be substituted for fairness on a scale such as the one involved in this problem. The increased risk cases, in all forms, represent substantial numbers of claims for substantial awards; and the cost of errors against plaintiffs, many of whom have suffered catastrophic injuries, is high.

II. Tort Objectives and Causal Indeterminacy

It is thus necessary to consider the all or nothing rule and the probabilistic increased risk approach in the context of the objectives of tort law. The most important of these are compensation and deterrence. Each of these, and some objectives of lesser importance, favors the classification of risk as an injury.

A. Compensation

Compensation is fundamental to tort law’s operation. In the indeterminate defendant cases there is no doubt that the plaintiffs’ injuries resulted from negligence, so an approach based upon probability can comfortably award full compensation; the all or nothing rule would usually leave the plaintiff without a remedy (at least in the DES and asbestos cases). If applied in the form of a modification of the causation rule, proportional recovery in an indeterminate plaintiff case (i.e., toxic tort) operates in a rough and ready fashion. Critics charge that proportional liability, in subverting the causation requirement, gives a windfall to the plaintiff. This fear is strongest in the context of loss of a chance and indeterminate plaintiff cases, and is particularly acute when recovery based on future risk of contracting disease is contemplated. The argument is that some members of the plaintiff class (those who were in fact injured by the defendant) will be undercompensated, while the rest (those who suffered no injury at the defendant’s hands) will be overcompensated.

This criticism is accurate, however, only if recovery is granted with resort to a blurring of the causation requirements (in order, for example, to compensate a future injury). The risk exposure thesis preserves the causation requirement rather than relaxing or subverting it. The crucial point to understand is that the risk as injury approach reformulates or expands the concept of damage to embrace tortious exposure to risk as a legal injury. A new legal interest worthy of protection is recognised. The plaintiff must always show on the balance of probabilities that the defendant caused her exposure to the risk. There is never a windfall, because in each case where compensation is awarded the plaintiff will have suffered a legal injury. The fairness of a particular award will not depend upon the ultimate development of disease, which, in the risk exposure cases, is not the injury being litigated. This approach is perfectly consistent with the desire to conduct an overt (rather than covert) analysis of policy and principle to resolve the causation dilemma. There is no sleight of hand here.

The real danger of windfalls exists under the traditional causation approach. Suppose, in a toxic tort case, that each of ten plaintiffs can show a seventy percent likelihood that the defendant caused their injuries. The defendant will be liable for the full damages suffered by each plaintiff; three of the plaintiffs have probably recovered a windfall. In an opposite case, none of the plaintiffs will be able to prove their cases, and the defendant will receive a windfall.

B. Deterrence

Concomitant with the fear of windfalls is a belief that proportional recovery will over-deter defendants and discourage socially desirable activity. Optimal deterrence is achieved when the precise amount of accident costs created by the defendant is passed on to him or her. As David Rosenberg states:

The threat of tort liability should induce rational actors to take ‘optimal care’ – that is, to reduce the chance of accidents to the point at which the cost of any further accident prevention measures would exceed the injury losses they would prevent. Optimal care thus minimizes the sum of accident costs.

Liability for risk creation provides a perfect fit from the defendant’s perspective, because it is the injury to the class of plaintiffs which is important. That injury reflects the whole of the risk created by the defendant, so liability for risk creation indeed achieves optimal deterrence. The key is that liability is attached to the defendant’s conduct (the creation of the risk) rather than to its impact (the resultant injury).

In the context of causal indeterminacy, the all or nothing approach fails to deter the creation of unreasonable risks. Glen Robinson writes that:

Normally, of course, deterring the risk will deter the harm; nevertheless legal rules that are forced on only the latter may not deter the former effectively. The DES cases illustrate this point. To insist that a particular injury be linked to a particular manufacturer’s product is to invite undeterrence of the risk in every case where there is no proof of specific causation.

Of course, not all risk creation will render the defendant liable. The law is only concerned with deterring unreasonable risks. Defendants must be negligent for the causation inquiry to have any relevance; and while this seems an obvious prerequisite for all tort liability, the point seems to have escaped some commentators and courts. That only tortious conduct will attract liablity is particularly significant in light of the complaint that acceptance of liability for risk exposure will have the effect of discouraging socially desirable activity.

Is tort liability an effective deterrent? Detractors of liability for tortious risk creation are clearly convinced that it operates as a deterrent – otherwise there would be no reason for them to oppose it in fear of overdeterrence. Rosenberg also believes that the threat of liability has deterrence value: both the theory of profit maximization and recent (though tentative) empirical data indicate that firms are becoming increasingly sensitive to the prospect of tort liability.  Moreover, liability for risk creation will provide for defendants the motivation and the ability to determine and minimize “the degree of excess risk attributable to their activities.”

C. Other Objectives: Knowledge and Justice

Risk-based liability should have the effect of generating knowledge. Under the all or nothing approach no incentive exists for defendants to conduct research into injury causation; liability for risk exposure will encourage defendants to examine their own activities afresh in order to discover exculpatory evidence. Such research may uncover more efficient methods of reducing risk, and should reduce injuries over time.

Which approach will provide more accurate results? If one considers manifested injuries to be the interest to be protected, proportional recovery will minimize errors in the long run.  It is argued, however, that our justice system requires that the interests of individuals not be undermined in favor of fewer errors over the long term. In individual cases, the all or nothing rule will produce fewer numerical errors and pay out a smaller amount of money damages in error. But the types of errors created must also be considered – in particular, the number of large errors promulgated under each approach. Arguably, large errors are more dangerous because they are more likely to inflict a crushing result upon a party. Proportional liability will create significantly fewer large errors.

The criticisms directed at proportional recovery in the context of minimizing errors have been predicated on the assumption that the interest protected is the actual physical injury suffered by the plaintiff.’ The approach proposed by this article dispenses with such analysis, and advocates the protection of the plaintiff against risk creation. The injury is exposure to the risk. As such there are no errors created, because in all cases the plaintiff is compensated for precisely that injury. Thus, in the sense of minimizing errors, liability for risk exposure is far superior to the all or nothing rule.

Risk-based liability should carry the benefit of encouraging fairer settlements for plaintiffs. Under the all or nothing rule, defendants have no incentive to settle for more than a nominal sum. Negative publicity is the only risk to which they are exposed in proceeding to trial: there is virtually no chance of an adverse judgment in most cases. The new theory will grant some recovery to many more plaintiffs, so it enhances their bargaining positions for settlement negotiations. Where plaintiffs and defendants make similar estimates of the probability of causation, settlements will be encouraged; where estimates vary widely, the question will likely end up in the courts. ” In either instance, the plaintiff is no longer being forced to accept a settlement imposed on the defendant’s terms.

It is also argued that proportional recovery is unfair to defendants, because it is no more than an application of a “‘deep pocket’ theory of liability, fastening liability on defendants, presumably because they are rich”. No doubt, plaintiffs will be the primary beneficiaries of risk-based liability. It is fallacious, however, to presume that the relative wealth of the parties bears on the theory’s validity. Arguably, risk-based liability is capable of application in sporadic accident cases, where defendants may be average individuals no better equipped to bear the loss than a corporate defendant. Moreover, “rich” defendants may invoke the theory to reduce their liability. In Hardy v. Johns-Manville Sales Corp., the defendant asbestos manufacturer successfully applied to court for leave to file cross-actions against other manufacturers for contribution under market share theory.

In summary, it is clear that the tort objectives of compensation and deterrence are satisfied through the imposition of liability for risk exposure. In addition, the generation and accuracy of knowledge should be enhanced. The present all or nothing causation requirements fail to achieve these objectives. Defendants are permitted to avoid liability in circumstances where their conduct has caused statistically demonstrable losses.’ Justice demands the acceptance of liability for risk exposure, which permits plaintiff recovery without unduly prejudicing defendants or deterring valuable activity.

III. The Problem of Statistics: Probabilistic v. Particularistic Evidence

The remaining objection to the acceptance of proportional recovery is based on hesitancy regarding statistical evidence. It should be readily apparent that “causation ‘ arguments in risk-based liability cases depend heavily on probabilistic and statistical evidence, particularly epidemioligical studies. The majority of these plaintiffs’ cases will fail, even with risk as a protected interest, if probabilistic evidence is excluded. Whether to admit such evidence for the purpose of demonstrating causation has been the source of a heated academic debate.

Unfortunately, the participants in the debate are so polarized that it is nearly impossible for an unbiased newcomer to choose a position without resort to simple intuition. This is perhaps appropriate, because at the core of the controversy lies a question which begs an intuitive response: what is the probative value of statistics?

The question arises because of uncertainty as to what constitutes the “balance of probabilities” or “more likely than not” threshold. Some argue that the plaintiff must establish that there is a greater than fifty percent probability that her submissions are true. Others have argued for an “actual belief’ standard; this has been criticized as demanding too much from the plaintiff. In its place has been suggested a non-probabilistic requirement that jurors be “inclined” to believe the truth of the plaintiff’s allegations.

Critics of statistical evidence have attempted to demonstrate its unreliability through the use of various hypotheticals. One of the most famous of these is the “Blue Bus” case.’ Suppose Helen is struck by a bus driven negligently She sues the Blue Bus Company, whose buses are blue in color, for the injuries she suffers. At trial she offers no evidence as to the color of bus that struck her (nor any other evidence regarding the particular bus or driver). She bases her claim on the fact that eighty percent of the buses which use that street are blue buses belonging to the Blue Bus Company, believing she has proven causation on the balance of probabilities. The defendant complains that there is no evidence to link its buses to the accident.

Many commentators would require the presentation of “particularistic” evidence that a blue bus injured Helen, ie., an eyewitness account. Statistical evidence provides no information about the buses in particular, but merely the proportion of blue buses to grey buses on the road. On the other hand, if a witness were to testify to having seen a blue bus cause the accident, this particularistic evidence would identify blue buses specifically. While probabilities assist in predicting the statistical likelihood of an event occurring over the long run, only particularistic evidence provides a “rational basis for forming beliefs about individual events.”

While it cannot be denied that probabilistic evidence fails to focus on the particular defendant, the necessity of such a requirement can be questioned. According to Rosenberg:

The entire notion that “particularistic” evidence differs in some significant qualitative way from statistical evidence must be questioned. “Particularistic” evidence…is in fact no less probabilistic than is the statistical evidence that courts purport to shun. All knowledge of past as well as future events is probabilistic. Inevitably it rests on intuitive or more rigorously acquired impressions of the frequency with which similar events have occurred in like circumstances.

For example, if a person is witnessed slipping while walking on a patch of ice, one naturally concludes that the ice caused the fall. That conclusion, however is arrived at from past experience which tells us that the frequency of falls increases under icy conditions. It is a probabilistic inference based on observations of the frequency of falls under different conditions.” So, it is argued, if all evidence is ultimately probabilistic, why should explicitly probabilistic evidence be excluded.

If the commentators are divided on the general use of statistical data, they are agreed that it is appropriate for use in a toxic tort or Sindell-type situation. There, every defendant has engaged in tortious conduct, and each will have to pay out the equivalent of the total damages it caused. In contrast, there is a distinct possibility that the Blue Bus Company has done nothing wrong.

Additionally, the preceding discussion is largely moot in the context of risk-based liability. Mary Dant suggests that, in arriving at a decision, the trier of fact is searching for the best explanation, and as such needs only to believe the plaintiff’s explanation over that of the defendant in order to find for the plaintiff (or vice versa). In risk as injury cases, that explanation relates not to whether the defendant actually caused the plaintiff’s injury, but to whether the defendant imposed a tortious risk which could have led to the injury. Once tortious risk creation is shown, the statistics are used to measure the plaintiff’s compensable loss.86 Regarding the causation issue, the statistics merely assist in making an inference to causation. In a toxic tort case, for example, there will be additional evidence as to the defendant’s negligence, and the type and magnitude of risk the release of toxic substances is likely to create. Thus, in risk as injury cases, the statistics will not be used to prove that the defendant was negligent.

IV. Risk Factors: Binding the Patterns Together

As stated earlier, “indeterminate defendant”, “indeterminate plaintiff”, and “loss of a chance” are no more than convenient labels used to designate classes of circumstances which fall within one larger pattern. Each of the classes, or sub-patterns, possesses distinct features the details of which require individual treatment; nevertheless, the overall approach to each must be identical.

Thus, it is necessary to examine how they interact. In the past, where there has been any attempt to link the subpatterns, the relationships between them have been largely misunderstood. A typical approach is to treat the indeterminate defendant sub-pattern as the direct inverse of the indeterminate plaintiff sub-pattern. In the former pattern, a single plaintiff knows she has suffered injury at the hands of one of a number of potential defendants, but does not know which caused her actual injury. For the indeterminate plaintiff, the scene is reversed. Now, the plaintiff is one of a number of “victims”, some of whom have been injured by a defendant’s negligence, but “who are unable to determine which among them has suffered injury at the defendant’s hands.

Yet, such an approach is misleading. Richard Delgado states that the uncertainty in the indeterminate defendant problem occurs at the “origin or the starting point of causation”. Conversely, the uncertainty for the indeterminate plaintiff occurs at the “terminus” of causation. While this characterization appears correct on the surface, the statement is an incorrect description of the patterns’ interrelationship.

To illustrate that the sub-patterns operate within the same parameters, consider the following hypothetical. If a worker in a factory containing asbestos products develops cancer, but cannot prove which manufacturer produced the asbestos, he has an indeterminate defendant problem. If he also cannot prove conclusively that the cause of the cancer was asbestos exposure (ie., if he does not develop a “signature disease”) he is an indeterminate plaintiff. If his disease prevents him from pursuing an employment opportunity (which he might have secured) then he is also a loss of a chance plaintiff. Thus, the sub-patterns are simply extensions, rather than inversions, of one another.

Consider how one’s analysis of an indeterminate defendant problem would be altered if it were shown that background risks existed (ie., that there was a chance that the injury occurred irrespective of any negligence). All nontortious risks must be accounted for. Each “victim’s” injury is the consequence of exposure to risk factors. Those risks may be entirely natural, they may be the result of non-tortious human conduct, or they may arise from negligence. In the DES cases (indeterminate defendant) it is clear (because of the unique nature of the injuries suffered) that the injuries were caused by negligence. Thus it is unnecessary to consider other risk factors. The plaintiff simply does not know which defendant created the risk which caused the actual injury. In the indeterminate plaintiff sub-pattern, the plaintiff does not know which risk factor, negligent or natural, caused the actual injury. In the loss of a chance sub-pattern, the plaintiff’s “condition” might not have been bettered even if the defendant’s negligence had not occurred. There were risk factors operating to prevent the plaintiff from achieving success, some tortious and some not. No one knows which of these was the operating factor.

The solution to all of these sub-patterns is to compensate for tortious exposure to risk. The risk as injury inquiry consists of identifying and quantifying as well as possible the sources of risk (risk factors), and compensating the plaintiff for exposure to those arising from negligent conduct; no compensation will be forthcoming for non-tortious risk factors.

V. The Indeterminate Defendant

A. The DES Dilemma

The extension of liability for risk exposure has been largely misunderstood in the indeterminate defendant context. Plaintiffs first made inroads toward recovery in Sindell, where the “market share” theory was created. But while that case represented a significant advance toward the recognition of exposure to risk as a protected interest, it failed to account sufficiently for the existence of a broader underlying principle. As a result, Sindell itself was fundamentally flawed, and it spawned much criticism. Subsequent cases attempted to remedy Sindell’s flaws, but again usually fell short of achieving a satisfactory solution.

The classic case of the indeterminate defendant problem arose in the DES cases (of which Sindell was one). DES is a man-made estrogen synthesized by British scientists in the 1930s. Originally, the drug was intended for use in treating certain female disorders believed to stem from low estrogen levels. In 1947 the U.S. Food and Drug Administration (FDA) approved the use of DES to prevent miscarriages. From that time until 1971, DES was manufactured by scores of drug companies, and prescribed to up to three million women. In 1971 the drug was banned for use by pregnant women in response to studies linking it to the development of a rare form of cancer (vaginal adenocarcinoma) in the users’ daughters.

DES daughters were confronted by a number of obstacles to recovery, primarily that they were unable to prove which manufacturer produced the drug that caused the cancer in any single case. The drug was marketed generically, meaning that the mother likely did not know whose DES she was consuming. Moreover, the cancer does not manifest itself for at least ten to twelve years, and DES was likely not recognised as the cause of the condition until somewhat later. The combination of these delays resulted in the destruction of records necessary to prove the plaintiff’s case under traditional principles.

The problems of proof presented by the latency periods were compounded by the number of DES manufacturers. In the Collins case it was alleged that between 1957 and 1958 at least one hundred and twenty companies marketed DES in a particular dosage. Hundreds of suits were filed against drug manufacturers as a consequence of DES use, but only a few have been successful. The successes all resulted from relaxation of the causation requirement. The most famous of these cases is Sindell, which imposed liability on defendants according to their respective market shares.

Although the methods used to impose liability in the successful DES cases are different in a number of ways from the theory proposed in this article, it is instructive to examine those decisions. They reveal the weight of judicial concern and the policy considerations underlying that concern, and they show the evolution of market share theory toward liability for risk creation.

B. Sindell: Risk as Injury in its Infancy

The decision in Sindell was prompted by the persuasive Fordham Comment. Market share theory modified the approach used in Summers v. Tice, a case virtually identical in facts and reasoning to Cook v. Lewis. Summers and Cook shifted the burden of proof regarding causation to the defendants to show that they were not responsible for the harm suffered by the plaintiff. The shift was justified because both defendants were negligent toward the plaintiff, their very negligence was the cause of the plaintiff’s inability to identify who caused the injury, and if the court did not take action, it was likely that both defendants would escape liability.

The fact patterns in Sindell and Summers bear striking similarities. Nevertheless, the Sindell court was unwilling to follow Summers because only five of approximately two hundred companies manufacturing DES were joined in the action; it was highly possible that none of the defendants joined made the DES which caused the injury. The court also declined to follow a number of other approaches, such as enterprise liability, proposed by the plaintiff.

Instead, the court created the market share theory, which required the plaintiff to join a “substantial share of the appropriate market”. Once the plaintiff showed a complete cause of action in all other respects, and met the requirements of the exception, the direct causation requirement would be waived. Liability would be apportioned to market share. The court anticipated that, with a substantial share of the market represented, each defendant’s liability would equal approximately the damages caused by the DES it had manufactured.

The court justified its departure from traditional causation requirements in a number of ways, but most compelling was the need for flexibility:

In our contemporary complex industrialized society, advances in science and technology create fungible goods which may harm consumers and which cannot be traced to any specific producer. The response of the courts can be either to adhere rigidly to prior doctrine, denying recovery to those injured by such products, or to fashion remedies to meet these changing needs.

The case provided an ingeniously fair and simple solution; nevertheless, it was not without its detractors, for the Sindell court failed to address many of the subtle and complex difficulties raised by market share liability. Some courts flatly rejected Sindell; others saw the theory as unrefined but important, and capable of (or receptive to) improvement.

C. The Evolution of the Theory

The courts following Sindell showed an increased understanding of the principles underlying market share theory. In Martin, another DES case, the Supreme Court of Washington found for the plaintiff for the same policy reasons as the court in Sindell, but declined to follow market share theory as formulated in that case. The court had two primary concerns. First, the Sindell court failed to define the term “substantial” share of the relevant market. Compounding this omission, the court did not specify what would occur if the plaintiff joined less than one hundred percent of the market. The implication is that the defendants would have to pay one hundred percent of the damages regardless. To do so would “distort” liability by forcing each of the joined defendants to pay more than would be attributable to the risk it created.

The Martin court rejected the “substantial share” requirement altogether, because it did not alter the probability that any particular defendant caused the injury. Instead, upon proving the necessary elements, the burden would shift to each defendant to establish its market share. Each defendant would have the opportunity to exculpate itself by establishing that it could not have been their DES which the mother ingested. Any defendants unable to exculpate themselves would be presumed initially to have equal shares of the market. Each would be entitled to rebut this presumption by establishing its actual share of the relevant market. Defendants would be able to implead third party defendants to reduce their presumptive shares, and if all defendants were able to establish a share, any shortfall would be borne by the plaintiff. The plaintiff is thus induced to account for as much of the market as possible, or risk being unable to recover a potentially substantial portion of her damages.

The Martin court’s reasoning was wholeheartedly supported by the Massachusetts District Court in McCormack, which was particularly significant because a Massachusetts court had previously rejected the pure Sindell approach. Garrity J. conceded it was inevitable that defendants would be held liable to plaintiffs whose injuries they did not cause, but argued that:

Under market-share theory, a plaintiff must first prove that a defendant acted tortiously before any liability may be imposed. Consequently, a defendant who erroneously is held liable to a particular plaintiff can not be considered wholly innocent of wrongdoing. Such defendant, by engaging in the conduct found to be negligent, contributed to the risk of injury to the public in general and consequently shares some degree of culpability in producing or marketing DES.

The modifications made in Martin and McCormack brought market share theory closer to liability for risk exposure. No longer would fewer than one hundred percent of potential defendants be held liable for the whole of a plaintiff’s damages, and a plaintiff would not be required to name more than one defendant in the action.

Collins represented an attempt to understand the link between market share liability and risk creation. In that case, since the market was fluid and many companies did not have adequate records, the court redefined the role of market share in apportionment (it was to be considered a “relevant factor” ). There was brief discussion of Robinson’s argument that “the critical point is the creation of a risk that society deems to be unreasonable, not whether anyone was injured by it.” Nevertheless, the court was somewhat unsettled by that approach and was not prepared to see risk creation as a protected interest. The court in Collins wrote:

Although we find Robinson’s ‘risk contribution’ theory sound to the extent that it recognizes that all DES drug companies contributed in some measure to the risk of injury, we do not agree that this is a sufficient basis in itself for liability. We still require it be shown that the defendant drug company reasonably could have contributed in some way to the actual injury.

Despite its discomfort, the court proposed a mode of apportionment closely approximating that which would result if risk creation were considered the key to recovery. Liability would be apportioned according to comparative negligence principles – the liability of each defendant would mirror the percentage of causal negligence attributable to it.

D. Extending Sindell

Simple market share liability is limited. It is an adequate method of apportionment in the DES cases, but has virtually no practical application otherwise. It can only work in product liability cases where there is in fact a “market” and the defendants have created the same type of risk. It works in the DES context because the resultant apportionment of liability generally reflects contribution to risk.

Sindell-type liability cannot be extended without a broader theoretical foundation. To date, courts have been unwilling to expand market share liability beyond DES cases. When liability is tied to risk creation, and exposure to risk treated as an actual injury, far more flexibility is permitted and the criticisms directed at Sindell are easily answered. It becomes obvious that only one plaintiff need proceed at one time, and that a substantial proportion of potential defendants need not be joined. Most importantly, a theory based on risk as injury should assist plaintiff recovery in many more cases.

As noted, market share liability only functions when the defendants have created the same type of risk. Liability for risk creation allows for much greater flexibility as long as each defendant’s liability is in proportion to the magnitude of risk created by his or her activity. Logically, the risk liability rule must be considered to extend to “cases involving multiple and different risk-creating activities.” Robinson examines this problem in detail and creates a hypothetical in which Horace Tumor develops cancer, having been exposed to asbestos, toxic waste, and negligently manufactured medication.  The source of each is known, but it is not known which caused his cancer. However, it is possible to estimate their respective contributions to the risk of cancer as forty percent, thirty-five percent, and twenty-five percent respectively. Horace will likely fail on any theory in arguing that any one of these defendants caused his injury. Moreover, each risk is qualitatively distinct. But if the risk imposed by each defendant is viewed as an actual legal injury, and it is possible to estimate the contribution by each to the total risk, there is no reason to deprive Horace of recovery, irrespective of the fact that the risks are of different types.

Robinson has also argued that risk-based liability is not useful in the context of sporadic accidents, such as automobile collisions. In the average case involving a collision he may be correct, but sporadic accidents may generate situations in which liability for risk creation is required to solve causal indeterminacy. Imagine a situation where:

An individual drove carelessly down a street where a pedestrian stood on the curb waiting to cross. Just as the driver reached the point where the pedestrian stood, a careless tree-trimmer working directly over the pedestrian’s position dropped a tree limb. Simultaneously, a large, unleashed dog ran past the pedestrian. At that moment, something – the pedestrian could not afterward say what – caused the pedestrian to fall, and he suffered a serious head injury.

It will be difficult to estimate each causal agent’s respective contribution to risk, but no more so than if a court were faced with one defendant (ie. the driver) and forced to make an all or nothing determination. In any case, a court would be forced to make such estimates if it were found that the plaintiff were contributorily negligent. Thus, while the task of estimating each defendant’s contribution to risk may seem imposing, no court should refrain from use of risk-based liability by reason of that obstacle alone.

E. The Significance of Breach in Risk-based Liability

Tort principles require that no liability be imposed unless it is established that the defendant has acted tortiously. Consequently, risk-based liability cannot be used to resolve causal indeterminacy in cases of intermittent torts. Such circumstances might arise where a defective unit of an otherwise safe generically marketed product is distributed and injures a person. Liability could be imposed on each manufacturer of the product “in proportion to the manufacturer’s risk contribution as measured by its long-run accident (or defect) rate.” To do so, however, would be to extend risk-based liability beyond its proper bounds: risk would be measured as an average over a series of transactions, rather than in terms of a single transaction. Defendants who were creating no risk at the time the plaintiff was injured could be held liable; one necessary justification for recognising risk exposure as a category of injury is that innocent defendants will never be exposed to liability.

The nature or existence of the defendant’s breach of duty is important in yet another context. The Collins court listed factors which might be considered in determining risk contribution in the DES cases. Among those factors were the defendant’s role in gaining FDA approval for the drug, whether the defendant was an industry leader in producing or marketing the drug, and whether it took affirmative steps to reduce the risk to the public. The last of these factors can have an impact in two ways. If the steps taken succeed in reducing the level of risk created by the defendant, its liability should be reduced accordingly; if those steps are sufficient to meet the standard of care imposed on the defendant, it will be exculpated of any liability. This involves no more than application of standard tort principle.

The first and second factors point to a different problem. Suppose a DES manufacturer is exculpated because it was able to show that it did not manufacture the DES taken by the plaintiff’s mother (for example, that she used a different dosage than that produced by the manufacturer). One commentator argues that under the Collins formula this would not mean the manufacturer did not contribute to the risk of injury, particularly if it had been an industry leader. If so, it would be wrong to exculpate a defendant simply on the basis that he or she did not directly contribute to the plaintiff’s risk.

It seems a formidable obstacle, yet the solution is quite simple. Causation must be relevant to the alleged tortious conduct. In the DES cases the plaintiffs are claiming that the manufacturers negligently failed to adequately test the drug and then negligently marketed it.  They can only be held responsible for consequences attributable to these acts. Whether the defendant was an industry leader is irrelevant in measuring the risk created, because the plaintiff’s claim does not involve negligence as an industry leader. Thus these factors do not belong in the causation inquiry.

F. The Operation of Risk-based Liability

How will liability for risk exposure operate in the context of the indeterminate defendant? To begin with, the plaintiff must establish that the defendant’s conduct was tortious. The plaintiff should not be required to join a substantial share of potential defendants,’ but he or she will be induced to join as many as possible because each defendant’s liability will be limited to its share of the entire risk.  In addition only factors relevant to the alleged breach of duty may be considered in measuring each defendant’s risk contribution. A more difficult issue arises in deciding how to determine a defendant’s contribution. It is important to understand how risk-based liability operates. Contrary to what has been suggested, there is no relaxation of the causation requirement, nor is the burden of proof shifted to the defendant.  The integrity of the causal link requirement is maintained. Consequently, the Martin method, which presumes that all defendants created an equal share of the risk and permits them to rebut the presumption by establishing a lesser share, is unfair. Undoubtedly the plaintiff would benefit, and the process of measuring risk might be simplified. But risk is treated as an injury to relieve plaintiffs of the injustice of factual indeterminacy. As such it is no more than another protected interest, and no further departure from traditional tort principles is warranted. So where the plaintiff is faced with risk indeterminacy, the burden of proof should not be shifted to defendants.  Instead, both plaintiffs and defendants should present evidence relating to risk contribution,’ and the courts will determine defendants’ respective contributions in a manner similar to that used in cases of contributory negligence.

VI. The Indeterminate Plaintiff

A. Redress for the Mass Exposure Victim

On the surface, the indeterminate plaintiff and loss of a chance sub-patterns might be thought to be more closely connected to each other than to that of the indeterminate defendant. While that is not the case, they do occasionally share issues not prevalent in indeterminate defendant problems. These relate primarily to the types of evidence admissible to show causation. Still, they deal primarily with different fact patterns, the causation difficulties arise in different ways, and each raises unique technical obstacles. Thus, they warrant separate treatment.

Toxic tort cases form the typical indeterminate plaintiff pattern. Agent Orange, PCBs, radon,  and potentially hundreds of other substances, often working in concert, pollute the air1 and our waters, putting millions at risk of disease at any one time. It is certain that many more hazards, present and future, have yet to be discovered.

The nature of the hazards makes it impossible for most victims to establish that the toxic or radioactive waste was the cause of their injuries. Most of the resulting diseases (ie., cancer) leave no physical “trail” to the inducing agent, so observation of symptoms is often of little help in identifying the cause; The injuries may remain latent for years. They can “occur at background levels without any apparent cause.”  Moreover, the victim usually is unaware when the toxic exposure is occurring: the exposure event is inconspicuous, and there will be no identifiable irritation or traumatic injury to signify exposure.

Given the widespread and crushing nature of the injuries toxic tort victims can suffer, the practical need for deterrence in this particular context is intensified. Mass exposure torts are frequently products of the deliberate policies of businesses that tailor safety investments to profit margins. No threat of liability means no economic incentive to invest in safety. As a result, some producers of industrial waste feel no compunction about dumping wastes where those wastes will inevitably and permanently scar the environment and its ability to support healthy life.

There does not seem to have been any reported toxic tort litigation to date in Canada. Bruce Pardy’s article is one of few examples in Canadian literature to indicate that anyone has even considered the possibility. Doubtless, plaintiffs have been deterred by obstacles such as establishing causation, running a class action, and obtaining sufficient damages to make a suit economical.’ Obstacles to recovery also have the effect of placing defendants in superior bargaining positions in settlement discussions, and victims have likely been forced to accept reduced compensation because of the negligible chance of success at trial.

B. McGhee Overturned

In McGhee v. National Coal Board, the House of Lords adopted an approach which might have assisted plaintiff recovery in these circumstances. In general terms, Lord Reid and Lord Wilberforce  were prepared to shift the burden of disproving causation to the defendant in certain cases of factual indeterminacy. Lord Wilberforce, whose reasoning has garnered the most Canadian support, argued that the defendant’s negligence caused the factual indeterminacy and that the defendant should not escape liability because of the plaintiff’s inability to show cause. That interpretation has since been discredited by the present House of Lords. Lord Bridge states in Wilsher v. Essex AHA that McGhee “affirmed the principle that the onus of proving causation lies on the pursuer or plaintiff. His Lordship argues that Lord Wilberforce was the only member of the House of Lords in McGhee to advocate a burden shift and that the majority opinion was actually expressed by Lord Reid, who made a “legitimate inference of fact that the defenders’ negligence had materially contributed to the pursuer’s injury.” McGhee, therefore, laid down no new principle of law.

One can easily understand Lord Bridge’s aversion to the common interpretations of McGhee. Lord Wilberforce’s approach represents precisely the sort of falsification of causation requirements which risk-based probability is intended to replace. To shift the burden to the defendant is simply to decide for the plaintiff, for the defendant has no greater knowledge.  On the other hand, Lord Reid chose to relax the burden upon the plaintiff, arguing that there is “no substantial difference between saying that what the defendants did materially increased the risk of injury to the appellant and saying that what they did made a material contribution to his injury.” With respect, such a difference clearly does exist. Lord Reid’s approach severs the connection between conduct and liability such that accurate compensation and deterrence can not be achieved.

While McGhee is flawed, Lord Bridge’s argument that it broke no new ground is difficult to accept. For over fifteen years Canadian courts’ 90 and academics’91 have seen McGhee as precisely laying down a new principle of law. Moreover, it can be questioned whether the facts of McGhee are susceptible to the kind of analysis which Lord Reid is supposed (by Lord Bridge) to have conducted.

In any event, Wilsher ought not to have a significant impact upon the risk exposure thesis. In terms of substantive law, Lord Bridge’s analysis is confined to McGhee and its interpretations. Any broader influence is likely to result from the court’s attitude as illustrated in the case, and that attitude is better articulated in Hotson, where their Lordships were not prepared to compensate for loss of a chance.

C. Epidemiological Evidence

Once again, the solution is to classify risk as a type of injury. The plaintiff would be required to show that he or she was exposed to the toxic substance, that exposure to the substance caused an increased risk of disease, and the extent of the increased risk. The plaintiff will rely primarily on epidemiological evidence to provide the link between exposure and disease. Elpidemiology involves the study of human disease processes within population groups. It seeks to establish associations between alleged causes and effects by one of two methods: either comparing the incidence of disease across exposed and unexposed populations, or comparing the incidence of exposure across sick and healthy populations.

In the context of all or nothing causation, the probative value of epidemiological studies is limited: they cannot be used to prove causation conclusively in any individual case. Under risk-based liability, however, epidemiology provides precisely the sort of evidence the plaintiff needs. Epidemiologists can estimate the magnitude of the association between the risk factor and the disease. They can describe in percentages both the proportion of disease incidence attributable to background risks, and the increase in incidence resulting from the defendant’s negligence.

D. Calculating Awards

Treating risk as an injury necessarily involves discounting the plaintiff’s recovery according to the chance that his or her injury was not caused by the defendant’s negligence. One commentator has suggested that while the all or nothing standard should be abandoned, awards should be discounted intuitively without attempting to arrive at an exact probability estimate.”a To prefer a purely scientific calculation, ie. to seek a “mystically precise probability that would determine the proportional recovery”, is to “embrace the myth of the magic number.” The argument has some merit, but the dispute may ultimately be one of semantics. Generally the defendant can be expected to present its own evidence as to the magnitude of the risk created, and it will be the task of the court to determine how the award should be discounted. The final award may be the result of compromise where there is little to choose between the opposing experts’ opinions. In all cases, that final award must be calculated with reference to the plaintiff’s total injuries, and as such will constitute a percentage of those injuries. Thus, the award will always reflect the court’s legal determination of the proportion of total risk which was created by the defendant. Stating that the final award is arrived at through intuitive, rather than scientific, reasoning cannot be said to enhance the validity of that award, even if the scientific estimate cannot be one hundred percent accurate.

E. The Unavailability of Class Actions

The risk as injury approach may be of particular importance to the indeterminate plaintiff in Canada, for whom the option of a class action appears to be unavailable. While United States courts have attempted to resolve the difficulties of ensuring just compensation for each class member, the Canadian response in Naken v. General Motors of Canada Ltd. was to define restrictively the meaning of “same interest” in Rule 75 of the Ontario Rules of Practice, which reads:

75. Where there are numerous persons having the same interest, one or more may sue or be sued or may be authorized by the court to defend on behalf of, or for the benefit of, all.

In Naken, the plaintiffs attempted to file a class action suit for breaches of warranty involving up to four thousand and sixty-two Firenza automobiles. The Supreme Court dismissed the class action on the basis that the evidentiary difficulties outweighed the expedience of allowing such an action. Estey J was unsettled by problems in identifying members of the class 8 and the conduct of discovery procedures and ordering of costs (because members of the class were not parties to the action). The Ontario Law Reform Commission’s proposed Class Actions Act illustrates that these difficulties are not insurmountable. The effect of Naken, however, is to preclude use of class actions where damage claims of class members must be assessed individually.

In a toxic tort action, indeterminate plaintiffs will always require such separate assessment. Under any theory of proportional recovery other than “risk as injury”, plaintiffs, forced to proceed one at a time, are vulnerable to the argument that epidemiological studies cannot be used to prove causation in individual cases. In fact, it appears that an indeterminate plaintiff relying upon epidemioligical evidence to show causation must argue a theory of risk-based probability in order to succeed.

F. No Manifested Injury: Is Accurate Compensation Possible?

Up to this point this section has dealt with the case in which the indeterminate plaintiff has manifested a physical injury. Recovery appears to depend on classifying risk exposure as a legal injury. But if exposure to risk constitutes an injury, is it necessary to require the plaintiff to have developed the threatened disease in order to justify compensation? Suppose, for example, that it is more probable than not that the plaintiff will never contract the disease. If the plaintiff is awarded compensation, he or she might then be said to enjoy a windfall. Additionally, if the disease does manifest itself, the plaintiff may then have been undercompensated – the recovery will have been insufficient to redress the actual loss suffered. One commentator, moreover, argues that such an extension of liability would undermine recovery for indeterminate plaintiffs who have suffered physical injuries by invalidating the standards of recovery.

It cannot, however, be argued that the plaintiff who has yet to manifest injuries has suffered no loss. Exposure to the excess risk attributable to the defendant’s conduct “devalues” the victim. Additionally, there are real costs associated with exposure to a risk of disease. Victims of risk exposure may wish to undergo medical treatment to prevent or monitor possible development of disease; such treatment would constitute a real and justifiable expense.

A victim may also choose to purchase insurance against the development of disease. Why not ensure that any injury he or she suffers is fully compensated by awarding the cost of premiums? Any discomfort created by awarding damages to plaintiffs who have yet to manifest physical injuries should be counterbalanced by the consideration that the plaintiff’s purchase of insurance is no more than an attempt to mitigate the risk exposure inflicted; it is a legitimate expenditure for which the defendant should be liable to reimburse the plaintiff.

Moreover, awarding the cost of premiums may soothe fears that defendants will be swamped with speculative and spurious claims.

Such an award maintains the integrity of the risk as injury classification. “If insurance is available at an actuarially fair rate, the premiums charged will equal the potential injury loss discounted by its probability …. The plaintiffs are allowed to insure themselves fully against the eventuality of contracting disease, so there is no windfall or shortfall; and the cost of that insurance should exactly match the total sum which would be properly awarded to all those who do eventually suffer injury, so there should be perfect deterrence.

The preceding approach is formulated to alleviate discomfort associated with awards to plaintiffs who may never suffer physical injury. Risk-based liability in its pure form is untroubled by such considerations, because risk exposure is a protected interest. If the theory advanced in this article is accepted, liability for risk of future losses is an inevitable consequence. In fact, there is support for the proposition that Canadian courts have already moved in this direction.

VII. Loss of a Chance

In the loss of a chance or indeterminate harm cases, the plaintiff is suing for the destruction of an opportunity to better, or to avoid a worsening of, her overall condition. Medical negligence is the most common such circumstance. For example, by negligently failing to diagnose or properly treat a progressive disease the doctor deprives the patient of a chance to halt the advance of that disease.

To recover under an all or nothing standard, the plaintiff must show that the disease probably would have been halted or slowed with proper care. The Herskovits court recognized that adoption of this approach would constitute “a blanket release from liability for doctors and hospitals any time there was less than a fifty percent chance of survival, regardless of how flagrant the negligence.”

Joseph King further illustrates the necessity of moving to risk-based liability with the following hypothetical:’ Suppose there is a jar which, it is established, probably contains some pennies. It is estimated that the jar contains forty coins, so the jar’s value would be forty cents. If the jar were negligently lost, its owner would recover forty cents under the more likely than not standard.

Now suppose a plaintiff is deprived of a chance to pick one coin from a jar holding one hundred coins, forty of which are worth one dollar, and sixty of which are worth nothing. Anyone picking one coin at random will have a forty percent chance of finding a dollar. Thus the estimated value of such a chance to take a coin is forty cents, identical to the value of the first jar. The traditional causation standard would deny recovery to the second plaintiff because it is probable that a valueless coin would be drawn from the jar; such an analysis, however, ignores that forty people in a group of one hundred would have found a dollar. Where a chance is lost, one cannot know whether an actual injury was suffered, so each plaintiff should be compensated for the risk of loss created by the defendant.

Recovery for loss of a chance has been accepted by a number of courts. The classic example is Chaplin v. Hicks, where damages were awarded for the loss of a chance to compete for a prize in a beauty contest. More recently, in Herskovits, the Supreme Court of Washington was faced with circumstances where the defendant doctor negligently failed to diagnose lung cancer in the decedent, reducing the latter’s chance for survival from thirty-nine percent to twenty-five percent. The Herskovits court rejected the suggestion that the plaintiff must fail without a showing that Herskovits had a fifty-one percent chance of survival with proper treatment, concluding that “the loss of a…chance should be recognized as an actionable injury.”

In Hotson v. East Berkshire Area Health Authority,’ the Court of Appeal permitted a plaintiff whose hip was injured and negligently treated, resulting in permanent deformity, to recover for the loss of a twenty-five percent chance that the permanent injury could have been averted with proper treatment. The House of Lords reversed that decision, but on the specific point that there was no chance of avoiding the permanent injury.Their Lordships declined to decide whether an action could lie for loss of a chance, but Lord Mackay considered Herskovits at length and treated it with some sympathy.

A. Janiak: The Foundation for Risk-based Liability

The Supreme Court of Canada was confronted in a unique context with an argument that it should recognize the value of a chance. In Janiak v. Ippolito,”9 the plaintiff was negligently injured by the defendant in a car accident. It was estimated that surgery to correct his back injuries carried a seventy to seventy five percent chance of success, but the plaintiff refused to undergo the operation. In doing so, he was unreasonably failing to mitigate his losses.  The court was asked to decide whether the plaintiff could still claim recovery for the possibility that the remedial measures would have failed.

Madame Justice Wilson was not prepared to treat the seventy to seventyfive percent chance of success as a legal certainty, and compensated the plaintiff for the remaining risk of continuing loss. In doing so, she was influenced by a statement of Lord Diplock in Mallet v. McMonagle:

In determining what did happen in the past a court decides on a balance of probabilities. Anything that is more probable than not it treats as certain. But in assessing damages which depend upon its view as to what will happen in the future or would have happened in the future had something not happened in the past, the court must make an estimate as to what are the chances that a particular thing will or would have happened and reflect those chances, whether they are more or less than even, in the amount of damages it awards.

Put simply, Lord Diplock is explaining that courts must discount awards for future loss by the chance that the loss will not occur. This principle cannot be limited to mitigation of damages, but speaks to future contingencies of any nature. Madame Justice Wilson’s decision, and her endorsement of Lord Diplock’s statement, must be seen as indicating support on the part of the Supreme Court for a probabilistic approach to future loss. Pardy makes the point even more strongly, arguing that as a result of Janiak, “proportional recovery for a risk of future loss… is now the law in Canada. ”

Such a development carries with it consequences which affect the whole risk exposure thesis. Janiak speaks to future loss, but what if the event (or injury) in question has already occurred? It would be anomalous for courts to compensate for risk of future loss, as in Janiak, but not for negligently imposed risk which possibly created a present loss. This may be more easily understood by examining the toxic tort (indeterminate plaintiff) cases, where recovery for as yet unmanifested injuries (the paradigm of risk of future loss) is much more controversial than recovery where the injuries have actually been suffered by the plaintiff.

It is logical, then, that the McMonaglelJaniak principle be extended to permit a proportional approach to damages assessment for not only future but also existing injuries and losses. One could argue that Wilson J. explicitly precludes such a conclusion with the following statement in Janiak.

The balance of probabilities test is confined to determining what did in fact happen in the past. In assessing damages the Court determines not only what will happen but what would have happened by estimating the chance of the relevant event occurring….

But while it appears that she is upholding the all or nothing standard for past events, she does recognize that the potential for over or under compensation is…a pervasive difficulty with the present ‘once and for all method of awarding tort damages. Moreover, the court was not asked to review that standard in a general sense. Most importantly, one must be remember the all or nothing standard is to be used under the risk exposure thesis and specifically, to what it is to be applied. Whether the plaintiff was actually exposed to a tortious risk (and thus made the victim of a legal injury) must still be established on the balance of probabilities. Quantification of the risk is reserved for damages assessment, where probabilistic analysis logically extends to future and existing losses. Thus, it is submitted that Janiak represents the foundation for the future development of risk-based liability in Canada.

B. Valuing the Loss of a Chance

In the indeterminate plaintiff context, Steve Gold argues that risk exposure should be estimated subjectively by the trier of fact.” The simplicity of this method, however, is outweighed by the desire to measure as accurately as possible the extent of the risk created by the defendant, particularly where medical evidence of survival rates is available.” A better approach is to “measure a compensable chance as the percentage probability by which the defendant’s tortious conduct diminished the likelihood of achieving some more favorable outcome.” This “simple probability” method of valuation awards damages proportionally to the chance lost by the plaintiff. If a defendant negligently denies a plaintiff a thirty percent chance of healing his injured arm, the court would assess the value of a healthy arm, and discount that value by seventy percent.

The simple probability method is ideal for determining awards where all chance of achieving a beneficial result has already been lost, such as in a Chaplin or Hotson situation. Where the case is one of prospective future loss, King has developed a still more accurate method of valuation, the “weighted mean” method. He distinguishes its operation from that of simple probability in the following example. The defendant’s negligence creates a thirty percent chance that a healthy plaintiff will become blind in the future. Most likely, if blindness does result, it will be at age fifty. The value of the plaintiff’s eyesight at age fifty is $100,000. Under simple probability the court would award $30,000, which is thirty percent of $100,000.

The weighted mean method takes into account the possibility that blindness might develop earlier or later than at age fifty. Suppose it is established that the plaintiff’s chances of becoming blind are twenty-five percent at age fifty, four percent at forty, and one percent at thirty. There is still a thirty percent chance that the plaintiff will be blind by fifty. The value of the plaintiff’s vision at age fifty is $100,000; at forty, $200,000; and at thirty, $300,000. Under the weighted mean method, the total loss would be arrived at by “aggregating each of the possible outcomes discounted to reflect their degree of likelihood.”

The intricacy of the preceding method is justifiable. At this point in the analysis the paramount goal is to reduce the number and size of errors in valuation. More complex testimony will be required than for the subjective approach; but more important than the potential complexity is the danger that the court will be forced to arrive at an award without meaningful guidance.

VIII. Judicial or Legislative Reform?

Some argue that solutions such as the risk as injury thesis involve radical departures from traditional notions of individual justice, and that where “such a break from the whole tradition of our culture” is at stake, it is the place of legislatures only, and not the courts, to intervene by introducing reform. The answer to this is now almost a legal cliche, for (as must have been argued by practically every freshman tort law student at one time or another) if this argument had been given weight by Lord Atkin in deciding Donoghue v. Stevenson, the face of tort law would look rather different today.

This is not to say that legislative reform would not be welcome. Rosenberg, a strong advocate of proportional liability, has undertaken a thorough examination of how public law mechanisms (such as class actions and insurance fund judgments) could be utilised in the causal indeterminacy context. But while he has concerns that judicial (as opposed to legislative) reform might impair the productivity and efficiency of the justice system, Rosenberg also recognises that:

In effect, legislatures have declined the invitation to formulate a comprehensive administrative solution – in part because, at least for the foreseeable future, such a solution seems politically infeasible. Thus the problem of the tortious use of toxic agents is unavoidably on the tort system’s doorstep; the personal and social dimensions of the problem are simply too momentous to allow the courts to abdicate authority altogether.

In addition to political infeasibility, legislatures may be faced with another obstacle. While the three sub-patterns operate under the same broad theoretical umbrella, the actual circumstances which they deal with tend to be extremely varied – from toxins in the environment to negligent diagnosis of an injury depriving the victim of a chance of recovery.” It must be questioned whether a legislative scheme can be designed which can at once both give effect to the risk exposure principle, and adequately and efficiently answer all the specific practical demands of the sub-patterns.

Courts are much more experienced than legislatures in the creation and application of broad principles. Thus it appears that they have a vital responsibility to attempt to resolve the injustices imposed upon victims of causal indeterminacy.

Conclusion

This article has had three primary objectives.

  1. First, it has established the unity of the three sub-patterns. This having been accomplished, it follows (along the lines of basic principles) that any developments in the jurisprudence regarding any one or more of the sub-patterns ought to be capable of immediate extension to the others.
  2. Second, this article has demonstrated that the risk exposure thesis is the only tort solution to causal indeterminacy which can operate within traditional causation requirements and still provide accurate compensation and deterrence (while never imposing liability upon a non-negligent defendant).
  3. And third, it has provided a Canadian perspective to the causal indeterminacy problem and shown, through Janiak, that there is a foundation in Canadian jurisprudence for recovery based upon risk exposure.

By now it should be clear that it is necessary to classify risk as an injury to maintain the integrity of of the causation inquiry. Courts have explored alternative methods of compensating plaintiffs, but too often the solution involves relaxing proof requirements. The unsatisfactory nature of this approach is best illustrated by McGhee,” where Lord Wilberforce shifts the onus to the defendant to disprove causation notwithstanding that the defendant was in no better position to carry the onus than the plaintiff.

Risk-based liability recognizes modem reality and dispenses with the fiction of searching for certainty where none exists. The balance of probabilities test is still applied, but to an issue which is quite capable of an either/or determination. Rather than asking the plaintiff to point out a particular defendant as the cause of his or her injury, the law should in appropriate cases require only that each defendant be identified as creating a risk to which the plaintiff was exposed. Risk as injury is the only theory flexible enough to permit broad application.

There has been very little litigation in Canada of the patterns discussed in this paper, but this does not mean that risk-based liability will operate in a vacuum. Traditional causation principles have prevented disputes from even reaching the courts, so the problem is less apparent than it might be. If courts move to resolve the dilemma facing risk exposure plaintiffs, many more claims will come to light. In order for this to occur, it is time for the law to fall in line with other disciplines in recognizing the reality of how causal relationships are established.

David Gerecke, 1990.

Click to download the full paper.

More DES DiEthylStilbestrol Resources

Medical/legal implications of DES long-term sequelae, including 3rd generation

Abstract

The spectrum of teratogenic and carcinogenic effects which can be exerted when the unborn child is exposed to diethylstilbestrol (DES) has been shown to be broad.

Animal work indicates the need for vigilance as regards genetic susceptibility to DES sequelae. The emergence of third generation sequelae has been demonstrated in mice, and has been postulated to occur in humans.

Diethylstilbestrol, teratogenesis, and carcinogenesis: medical/legal implications of its long-term sequelae, including third generation effects, International Journal of Risk and Safety in Medicine, vol. 1, no. 3, pp. 171-193, 1990.

Given the emergent data establishing problems of infertility in men and women and of relatively late onset cancer, and the possibility that in utero exposure to DES may prime a variety of tissues to noxious environmental influences there is an urgent need for measures to provide just coverage for those harmed by the drug.

The DES disaster also raises important ethical and research questions which demand attention.

More DES DiEthylStilbestrol Resources

The Paradox of Statutes of Limitations in Toxic Substances Litigation

This Article evaluates the use of statutes of limitations in toxic substances litigation. Professor Green begins by analyzing the function of statutes of limitations in traditional tort cases. He concludes that in these traditional settings statutes of limitations may improve the accuracy of fact-finding and provide some measure of repose for defendants. He demonstrates, however, that toxic substances cases differ markedly from traditional tort claims: The causes of the injury are more difficult to trace; the period from exposure to cognizable harm is much longer and varies significantly; the harms are more susceptible to misdiagnosis; and the number of victims is likely to be much greater. Because of these differences, he contends, statutes of limitations have precisely the opposite of their intended effect in toxic substances litigation. Rather than improving the accuracy of fact-finding, they require that claims be resolved before adequate scientific evidence of causation has been developed. These statutes also require plaintiffs to bring suit prematurely-before they have suffered any significant loss and at a time when assessing the future course of their condition is impossible. Finally, he argues, that providing a significant measure of repose through statutes of limitations to defendants is neither possible, because of the lengthy latency periods, nor particularly desired by those defendants.

The Paradox of Statutes of Limitations in Toxic Substances Litigation, California Law Review, Volume 76 | Issue 5 Article 1, October 1988.

Professor Green recommends that statutes of limitations be abolished entirely in toxic tort litigation, thereby leaving the decision when to file a suit to the discretion of the plaintiff. He concludes that abolishing statutes of limitations offers a means for improving the accuracy of outcomes in toxic substances litigation and for relieving the burden of unmeritorious toxic tort claims in the courts.

INTRODUCTION

Toxic substances litigation has moved front and center on the contemporary civil litigation stage. Its scope is massive, its influence on doctrine substantial, its challenges for the administration of the civil justice system unique. Toxic substances litigation and the compensation questions it spawns present political, social, technological, and economic challenges with which we have just begun to grapple and which we will continue to face for decades to come.

The most compelling problems posed by toxic substances litigation are its voracious appetite for the civil justice system’s resources and the difficulty of resolving factual issues of causation given the limited state of scientific understanding. Since the first reported asbestos decision in 1973, tens of thousands of suits have been filed, and in some jurisdictions they continue to be filed at twice the rate at which they are being resolved. The phenomenon has not gone unnoticed; judges, lawyers, and academics have decried court dockets bloated with toxic substances cases. Judge Edward Becker of the Third Circuit Court of Appeals, for instance, characterized asbestos litigation, with some hyperbole, as “the most serious crisis the federal court system has faced in its history.” Much of the data relied on by contemporary advocates of tort reform to demonstrate overlitigiousness is skewed heavily by the recent emergence of toxic substances litigation.

Reform proposals, both at the macro- and micro-level have been proferred. Some believe it is time to move toward no-fault compensation. These compensation fund proposals would displace the current regime and create a distinct system that would both compensate toxic tort victims and satisfy the deterrence-regulatory needs of society. Others have engaged in more pragmatic tinkering with the existing system, attempting to make it more efficient and responsive to the current generation of demands without altering the basic framework. Defenders of the current regime also exist, although many of them concede the need for modification of the substantive or procedural rules currently employed.

This Article falls into the tinkerer category. Practical considerations suggest that massive changes in the contemporary tort apparatus are not likely to occur during this lifetime. Despite that pessimistic prediction, improvements can be made to help the current system adapt to the demands of mass toxic substances litigation. Moreover, the challenges posed by toxic substances litigation have a silver lining: The vast quantity of cases, particularly asbestos cases, casts new light on the flaws of the entire tort system. Identifying those flaws and their solutions may serve a broader class of litigation than the mass toxic substances sphere.

Quite simply, this Article proposes the abolition of all statutes of limitations in toxic substances litigation in which the plaintiff suffers from insidious disease. This proposal would vest the plaintiff with unconstrained discretion in deciding when to bring a lawsuit. Although it would operate within the existing civil justice system boundaries, the proposition is, I recognize, quite revolutionary. For example, Professor Richard Epstein expresses the conventional wisdom in his recent observation:

The length of the interval between cause and effect-or more generally the length of the interval between the constellation of facts that generate tort liability and the liability itself-is critical to the operation of the system. With the passage of time, the evidence available regarding a given legal issue necessarily becomes stale. The reliability of any determination thus decreases, and with it the effectiveness of the system no matter its objectives ….

Similar arguments can be made about the expenses of litigation. If rules were costless, it would always pay to use the ideal rule. But rules have costs, and there is little reason to adopt a rule that costs $100 to resolve a $50 dispute-at least where the moneys are invested in deciding whether the facts of a particular case conform to the rule….

The passage of time is positively correlated with both of the costs just identified: the expense of litigation and the error rate. The longer the period between operative fact and legal judgment, the more likely it is that error will creep in: memories will fade, evidence will disappear or become unreliable. Uncertain outcomes are costly in that they necessarily make risk-averse persons-that is, most of us-worse off. Uncertain outcomes also increase the stakes in litigation, so that more will have to be expended before judgment or settlement is reached.

This Article acknowledges the value of the objectives cited by Professor Epstein, but asserts that a better means of achieving those goals would be to eliminate statutes of limitation. Specifically, the Article makes three claims in support of eliminating statutes of limitations in toxic substances litigation:

  1. accuracy of the outcomes will be improved;
  2. efficiency in the resolution of toxic substances cases will be enhanced;
  3. and the legitimacy of the outcomes, from society’s perspective, will be promoted.

Thus, paradoxically, the policies underlying statutes of limitations would be better served by abolishing them for this class of cases.

It is easy to underestimate the impact of statutes of limitations on the outcome and life cycle of toxic substances cases. The statute of limitations is not a curious anachronism that plays an insignificant role in determining which toxic victims receive compensation and which do not. A study of asbestos insulation workers by the premier research scientist on asbestotic disease, Dr. Irving Selikoff, found that statutes of limitations were the most successful defense. The reporters confirm that plaintiffs frequently run afoul of the statute of limitations, and even when they do not, the parties and the courts expend substantial energy litigating the question.

  1. Part I of this Article begins by reviewing the evolution of statutes of limitations for personal injury lawsuits.
  2. Part II outlines the parameters of contemporary toxic substances litigation, and reveals how very different the modem toxic substances case is from the traditional conception of a tort case.
  3. Part III reviews the contemporary response to the demands of the time dimension of toxic substances litigation-adoption of “discovery rules” that toll the running of the statute of limitations clock.
  4. Part IV demonstrates that the policies underlying statutes of limitations will be enhanced by their abolition under the model of toxic substance litigation sketched out in Part II.

Removing time limitations on the filing of toxic substances cases will prune from the civil dockets a substantial body of cases that are either premature or needless. Moreover, abolishing statutes of limitations will reduce the current perverse incentives for plaintiffs to delay in trying or settling their cases.

The case for abolishing statutes of limitations does not rest on efficiency grounds alone. First, outcomes will be more accurate. Leaving the timing to plaintiffs would improve the overall quality of evidence, most significantly by delaying litigation until scientific understanding of causation can be more fully developed. Second, defendants’ legitimate need for notice will not be impaired. In the mass exposure context, notice to defendants of these potential claims will occur no later than when the first victims bring suit. Because plaintiffs have strong incentives to assert their claims promptly once they become ripe, notice of individual claims should be provided in time to satisfy any of defendants’ legitimate needs as well. By contrast, providing repose for corporate entities for whom managing ongoing litigation is part of the ordinary course of business is neither a compelling nor attainable goal. Part IV concludes with a discussion of several unfortunate consequences of utilizing statutes of limitations in insidious disease litigation.

I THE DEVELOPMENT OF STATUTES OF LIMITATIONS IN PERSONAL INJURY ACTIONS

The common law survived for centuries without a statute providing a limitations period for personal actions. Statutes of limitations were not unknown; limitations periods had long existed for criminal prosecutions and real property claims when the Limitations Act of 1623 first provided a limitations period of four years for trespass, assault, and battery and six years for actions on the case. The structure of the Limitations Act was largely followed in subsequent English limitations statutes and later in the United States. History is murky with regard to the precise evil that the Limitations Act of 1623 and its progeny were intended to redress, but personal injury suits apparently were not a pressing concern. In any case, statutes of limitations played an inconsequential role in the limited number of personal injury actions of the time.

The limitations treatises of the nineteenth century are virtually devoid of reports of personal injury cases; the bulk of the reports concern real property or commercial disputes. Those tort cases that did implicate the statute of limitations involved property damage, commercial loss, conversion of property, and occasionally slander or false imprisonment. Not until the early twentieth century did the personal injury claims of the industrial revolution appear in the statute of limitations treatises, and those cases tended to be of the snapshot  variety, involving shootings, and streetcar and occupational accidents, in which the plaintiff’s injury occurred within a short time period. The primary form of proof in those cases-witness recollection of previous perceptions unaided by documentary evidence-was consistent with the major functions of the statute of limitations: ensuring early notice to defendants and resolving factual disputes before witnesses disappeared and memories faded irreparably.

The ease of determining the time of plaintiff’s traumatic injury in these snapshot cases made the application of limitations statutes straightforward. The facts relevant to a statute of limitations defense were rarely controversial or in dispute, and the occasional tort victim who brought suit too late could be identified on a motion for summary judgment, without expending a great deal of resources. Indeed, the prospect of certain defeat likely deterred most out-of-time claimants from even pursuing a lawsuit.

II A DESCRIPTIVE MODEL OF INSIDIOUS DISEASE LITIGATION

Insidious disease cases are fundamentally different from the snapshot torts described above. In sketching out a model, based largely on asbestos litigation, one must keep in mind that toxic agents are not homogeneous; any realistic proposal for change must recognize this full range of variations. Nevertheless, providing an insidious disease taxonomy at the opposite end of the spectrum from snapshot torts is helpful in illustrating the operation of statutes of limitations.

The first, and most significant, parameter that defines (and distinguishes) toxic substances torts is lengthy latency periods from exposure to clinical manifestation of disease. The latency periods for asbestotic diseases vary from fifteen to fifty years; the latency periods for other toxic substances victims range from a number of years to a generation or more.

The second characteristic is widespread uncertainty about the causal relationship between the toxic agent and plaintiff’s disease, although that uncertainty is neither universal nor static. As the toxicological and epidemiological evidence accumulates, our understanding of the causal relationships between a toxic agent, other causal factors, and a disease improves, albeit accretively and irregularly.

The contemporary experience with benzene is illustrative. In 1960, a suit on behalf of a leukemia victim against the employer based on occupational exposure to benzene was dismissed by the New York Court of Appeals because “the causes of leukemia or its aggravation are unknown. By the late 1970s, however, benzene was widely recognized as leukemogenic, although lack of understanding of the dose-response curve at low levels of exposure bedeviled regulatory efforts to reduce benzene exposure in the workplace. A decade later, scientists have begun to unravel the low-level exposure risks of benzene. But even as better scientific understanding of the relationship between benzene and leukemia is attained, questions are being raised about the role of benzene in causing multiple myeloma and cancer of the bone marrow.

Benzene, as an example of contemporary toxic tort litigation, points out the third distinguishing feature of such litigation: Multiple diseases develop from exposure to the same agent. Because of differing latency periods, the diseases manifest themselves in the toxic victim serially, often separated by many years. Those diseases and concomitant adverse health effects vary in prognosis and progression.

For purposes of examining the impact of statutes of limitations, multiple diseases that result from a single toxic source can be roughly divided into three categories. The first class includes benign diseases that rarely result in significant dysfunction or other health problems. Examples include the pleural plaques of those exposed to asbestos and the adenosis of DES daughters. The second category includes more serious diseases like asbestosis. Although asbestosis initially causes little disability or dysfunction, it proceeds at a gradual, albeit unpredictable, pace. Neurotoxic effects, although less well understood, exhibit similar characteristics in some cases. The mortality rate for these intermediate diseases tends to be low or moderate. Finally, toxic agents may be carcinogens or teratogens: lung cancer, mesothelioma and gastrointestinal cancer for asbestos; adenocarcinoma for DES; lung cancer for tobacco; leukemia and other cancers from atomic radiation. Many of these diseases have a very high degree of mortality. At the very least, substantial medical treatment and temporary disability will result.

The fourth characteristic that distinguishes toxic cases from snapshot torts is that diagnosis of toxic related disease is almost always an uncertain enterprise, particularly in the ‘early stages of the disease. Lack of understanding of biological and physiological mechanisms, absence of serious dysfunction, and the slowly progressive nature of some diseases contribute to the difficulties of diagnosis. Moreover, unfamiliarity by many health-care practitioners with uncommon toxic diseases results in misdiagnoses.

The combination of lengthy latency periods and diagnostic difficulties is a unique feature of toxic substances cases for purposes of statutes of limitations analysis: No temporally discrete event exists that encompasses the defendant’s breach and the plaintiff’s injury. Instead, insidious disease litigation involves an extended chronology of causation unlike traditional snapshot torts.

Fifth and finally, many toxic agents are sufficiently pervasive that large numbers of individuals are exposed, posing the potential for massive litigation. Asbestos is the largest and most prominent type of current mass toxic litigation, but DES and Agent Orange also involve many potential plaintiffs. Indeed, if smoking victims can overcome the federal preemption barrier, litigation against tobacco manufacturers could make asbestos litigation look trifling in magnitude.

III DELAYING ACCRUAL: THE DISCOVERY RULE

To date, the predominant legal response to the statute of limitations problem in insidious disease litigation has been to fashion some form of “discovery rule,” which delays the accrual of a plaintiff’s claim until she discovers or should have discovered her injury. Since the statute of limitations begins to run upon accrual of plaintiff’s claim, use of a discovery rule expands the time for plaintiff to bring her claim.

The Supreme Court’s acceptance in Urie v. Thompson of a discovery rule for Federal Employers’ Liability Act cases was the genesis for its widespread acceptance in state-based tort claims. The reform has not been wildly controversial; beginning the statute of limitations clock at some other point, such as defendant’s breach, plaintiff’s initial exposure to the toxic agent, or the occurrence of some metaphysical “injury” that is neither detectable nor determinable, offends deep-seated notions of elemental fairness and justice. Unless one is willing (or desires) to deprive plaintiffs of their common law remedy in order to protect defendants, there is little to be said against adoption of a discovery rule. Virtually all commentators and the vast majority of courts are in agreement; the few ossified judges who have demurred on the adoption of a discovery rule have argued institutional function grounds preferring to leave the matter to the legislature-rather than the merits.

The most prominent holdout, New York, came into the fold in 1986. The New York legislature enacted a discovery provision, and Governor Mario Cuomo’s comments as he signed the bill reflect the ineluctability of the discovery rule: “Today we correct a serious injustice in our law that barred many people from seeking restitution for injuries caused by exposure to toxic substances because the statute of limitations had run out before they discovered their illness.”

Despite agreement on the need for a discovery rule, wide variation remains in the discovery rules that have been adopted. At least three different formulations exist, including versions requiring discovery of simply the injury; the injury and its cause; and the injury, its cause, and the availability of a legal remedy. Even within these categories there is discrepancy in interpretation and enforcement.

My purpose is not to argue the merits of the discovery rule. That debate has already taken place, and the overwhelming adoption of some form of a discovery rule and the acceptance of the concept by law reformers is persuasive evidence of its value. Rather, the existing discovery rules form the backdrop for developing the thesis of this Article.

The second potential procedural barrier for toxic substance plaintiffs is a statute of repose. By contrast with limitations statutes, repose periods are measured from the time a product is manufactured or first sold, thus ignoring the latency period in setting limits on the time of suit. Approximately twenty states have enacted some version of a statute of repose.

For several reasons, repose statutes have not had a major impact on toxic substances lawsuits. Courts have refused to give effect to a variety of repose formulations, most notably those that completely barred a claim before it had accrued, as violating state constitutional guarantees of open access to the, courts or equal protection. Other statutes of repose do not absolutely bar actions brought outside the time provided, but make it harder for plaintiffs to recover by limiting the legal theories available or imposing presumptions favorable to defendants. Finally, exceptions for insidious disease victims that permit them sufficient time to bring their claims have been enacted by some legislatures or found by courts in interpreting a particular statute of repose.

IV THE EFFECT OF STATUTES OF LIMITATIONS IN Toxic SUBSTANCES LITIGATION

A. Why Statutes of Limitations?

The policies that support statutes of limitations are inveterate and familiar to most. One such policy relates to efficiency and accuracy. Providing the defendant prompt notice of a claim permits the defendant to preserve evidence that may otherwise deteriorate or disappear over time. Moreover, since memories and the quality of other evidence inevitably deteriorate over time, requiring litigation to begin promptly enables the fact finder to rely on evidence that is fresher and more specific in resolving the disputed facts. Often asserted, albeit tentatively, is that promptly filed claims are more likely to be meritorious than those filed later. Thus, evidence deterioration aside, statutes of limitations are touted as enhancing accurate outcomes by screening out less meritorious claims . Additionally, the ease with which statutes of limitations defenses can be resolved ensures early and uncomplicated determinations. Finally, statutes of limitations also serve a substantive function; after a specified period has passed without a lawsuit being filed, an individual is entitled to the psychological repose and comfort of knowing that she no longer has the threat of a legal action looming over her. Corporate targets are afforded the opportunity to engage in planning with some assurance about what legal claims they may face in the future and without the threat of long dormant claims arising.

Occasionally one sees the statement that statutes of limitations are intended to encourage diligent or deserving plaintiffs; or, stated in slightly different terms, statutes of limitations protect defendants from nondiligent plaintiffs. This explanation for statutes of limitations can only be justified as an instrument for furthering one or more of the purposes set forth above. Unless the indolence of the plaintiff has somehow threatened the quality of the evidence available at trial or intruded on a potential defendant’s repose, no purpose, other than generally punishing the slothful, is served by barring the claim. It would be curious indeed for a defendant to defend a contract action by conceding that he had breached the contract, but asserting that the plaintiff should not recover because she was a lazy slob.

Thus, the purposes of statutes of limitations are congruent with the desirable characteristics of any procedural system: reducing the public and private resources required to resolve disputes-that is, “efficiency”- and enhancing accurate outcomes.79 In addition to the procedural aspects, statutes of limitations also serve the substantive function of repose described above.

B. Exogenous Efficiency Considerations

Within the policy framework just set forth, statutes of limitations may contribute to efficiency in two distinct ways. First, in providing an incentive to claimants to bring suit promptly, statutes of limitations enhance the quality of evidence available at the time of trial for resolving disputed facts. The next section of this Article demonstrates that, counterintuitively, statutes of limitations as currently formulated inhibit presentation of the best evidence with regard to a wide range of substantive issues in toxic substances cases. Second, by precluding plaintiffs from pursuing out-of-time claims that are less likely meritorious than timely claims, the civil justice system is spared the effort required to resolve those cases. Section C also attempts to deflate any subconscious sense that later filed toxic claims are less meritorious than timely ones. Before discussing the merits of these intrinsic efficiency claims, however, I will address several concerns that are exogenous to the efficiencyenhancing policies behind statutes of limitations. Several unfortunate consequences result from the application of statutes of limitations to the modern generation of toxic substances litigation. These include draining party and judicial resources, encouraging a substantial number of premature or needless cases, and distorting incentives to settle disputes. In sum, these are costs imposed by the existence of statutes of limitations for which, as the following section demonstrates, there are no countervailing benefits.

1. Creating a New Disputed Issue: The Impact of Discovery Rules

With snapshot torts, application of the statute of limitations is a routine, easily performed task. Ascertaining the time of plaintiff’s injury can be accomplished with little effort, a high degree of confidence in the accuracy of the determination, and concomitantly, little legitimate dispute. Early resolution through summary judgment or even dismissal of the complaint ensures prompt and efficient resolution of the statute of limitations issue. Given the clarity of the rule and its application, most out-of-time claimants probably never even bother submitting their claims to a court.

Employing a discovery rule statute of limitations, by contrast, expands the scope of legitimate disagreement. Thus, proportionally more statute of limitations issues exist that require judicial resolution and demand a broader and more lengthy inquiry. The discovery rule yields substantial uncertainty and wide latitude in its resolution for three reasons. First, the diagnosis of insidious disease and the determination of its etiology are fraught with difficulty, uncertainty, and error. Second, although the discovery rule standards are couched in terms of knowledge of the requisite elements, certainty is not required. Thus, a plaintiff need possess only some degree of belief or suspicion, and this determination requires selecting a point on a continuum, rather than making a clear, dichotomous choice. Third, discovery rules contain an alternative objective standard: Even if the plaintiff did not “know” of the element, should she have known? That evaluative inquiry, similar to a finding of negligence, creates another layer of indeterminacy. Thus, the trier of fact must determine not only whether the plaintiff’s subjective knowledge of her injury constitutes discovery, but at what point she should have discovered the injury had she been acting reasonably. Resolution of issues concerning the plaintiff’s knowledge unavoidably depends on largely circumstantial evidence. Extensive discovery proceedings, contested factual hearings, and ultimate submission of this issue to the jury become necessary conditions for resolution. No longer can the statute of limitations issue be decided at an early stage, thus obviating the need for the parties to prepare for and litigate the merits as well. Not only does the statute of limitations fail to reduce the resources poured into litigating the merits, but the judicial and party resources expended to resolve the protracted disputes over its application, like all procedural wrangling, in no way contribute to the resolution of the merits of the case.

2. The Prematurity Phenomenon

As litigation over a toxic substance grows out of infancy and the potential for vast numbers of claims and claimants increases, a specialized plaintiffs’ bar tends to develop that acquires a great deal of sophistication about the toxic agent, the industry in which it is produced, the available legal theories, and relevant scientific and medical literature. These lawyers are willing to make large investments in acquiring information in a given case because of its payoff in later cases. Contacts are made and pursued with specialists in relevant medical and scientific fields as well as with those influential with potential clients, such as union officials in the case of occupational diseases. This specialization has been most prominent in the asbestos litigation arena,  but exists to some extent in many other mass toxic tort litigation areas.

One consequence of a sophisticated bar that represents substantial numbers of victims in discovery rule jurisdictions is that lawyers – run rather than walk – directly to the courthouse with any client who manifests the slightest indication of insidious disease. Regardless of whether the client has suffered any disability or pecuniary loss, the attorney knows that the safest course of action is filing a suit as promptly as possible.

Adams v. Johns-Manville Sales Corp. illustrates well the prematurity effect of statutes of limitations in toxic substances litigation. The plaintiff, a commercial insulator for sixteen years, sued the asbestos producers who had supplied the insulation to which he had been exposed. Plaintiff’s expert testified that, while plaintiff exhibited none of the symptoms associated with asbestosis, he did have “abnormal breathing sounds …some pleural calcification, and a minimal obstructive ventilatory defect”. Plaintiff apparently suffered no disability as a result of his condition and testified that he had lost no wages and incurred no medical expenses to treat his asbestos-induced condition. The trial judge refused to give an instruction permitting the jury to award damages for the increased risk of future cancer. Although the jury found that some of defendants’ products were defective, it awarded the plaintiff no damages. Plaintiff pursued post-trial motions and an appeal, all to no avail.

Unfortunately, Adams is not an isolated phenomenon. In several jurisdictions with a large burden of asbestos cases, between one-third and two-fifths of the pending cases involve plaintiffs with mild or no impairment. Removing the perverse incentives of the statute of limitations is likely to decrease the number of these cases that are actually filed. Logic, self-interest, and risk-aversion suggest that most plaintiffs and their attorneys would prefer to wait and see whether the client will develop serious symptoms, disability, and consequent damages before filing suit and submitting the case for final resolution.

The husband-plaintiff in Doe v. Johns-Manville Corp. is a prominent example of a toxic victim who would have preferred to wait until his minimal asbestotic disease had run its course before filing suit. The husband had been exposed to asbestos over a long period of time and had been diagnosed as having pleural thickening. Like the plaintiff in Adams, however, he had no pain, disability, or difficulty in breathing. He and his wife sued, seeking a declaratory judgment that their claims would not accrue until he became disabled as a result of his asbestotic disease. The court refused to provide declaratory relief, although ironically the plaintiffs had been forced to file a protective action before the court’s decision because of the impending running of the statute of limitations.

The bulk of nonimpairment cases in the courts may also obscure the scope of the mass toxic substance problem and impede attempts to develop more efficient mechanisms for resolving the most pressing cases. Because of the differences in evidence and motivations for plaintiffs in nonimpairment cases, these cases may provide a skewed view of a particular class of toxic substances litigation.

3. Perverting the Paradigm of the Persevering Plaintiff

In the typical lawsuit, the plaintiff, who desires a change in the status quo, pushes for a resolution of the case, while the defendant is the foot-dragger. Moreover, prompt resolution may be essential to the seriously injured plaintiff, for whom income replacement, rehabilitation, and related financial needs are pressing.

Insidious disease litigation stands this model on its head. The lack of physical impairment and concomitant pecuniary loss, in combination with the prospect of substantial future damages, warp the traditional incentives for plaintiffs and encourage them to delay once their case has been filed. Meanwhile, no reciprocal force encourages defendants to push for disposition of these premature cases. Instead, both sides are content with languishing litigation. To be sure, delay may be preferable for both parties given existing statute of limitations constraints. Removing those constraints, however, and thus severing the connection between these cases and the civil justice system, would surely be preferable.

4. The Impact on Settlement

The prematurity phenomenon creates incentives that may also delay settlements and require the expenditure of greater resources before settlements can be reached. Although many factors affect whether a settlement will be reached in any given case, commentators agree that the most significant are the parties’ assessment of the outcome of the case at trial and the divergence of the competing parties’ assessments. Legal or factual indeterminacy provides the opportunity for greater disagreement in the parties’ assessments.

In the context of toxic substances litigation, uncertainty about the progress and future severity of plaintiff’s disease’ and the development of a second disease, combined with the previously discussed advantages to plaintiffs in delaying resolution of their case, should result in later settlement of toxic substances cases as a class. Some evidence suggests that this predicted effect is actually occurring in jurisdictions with a heavy burden of toxic cases. Given the current strain on civil justice resources, eliminating cases that do not need to be in the system, do not need resolution, and ultimately demand more resources to induce settlement, can only be a benefit to the administration of toxic substances litigation.

C. The Quality of Evidence: Implications for Accuracy and Efficiency

All of the inefficiencies engendered by statutes of limitations may be tolerable if they further some justifiable goal. The law is, after all, a trade-off among competing values. Thus, presumably efforts required to resolve discovery rule disputes in toxic cases are “worth it” when balanced against the unfairness that results from a statute of limitations that begins running at the time of exposure. The latter choice, despite its obvious efficiencies, has the unfortunate characteristic of eradicating any remedy the substantive law would otherwise provide for many toxic victims.

One competing value is accuracy. Additional resources might be expended to improve the accuracy of the outcomes. Thus, the current discovery rule might be justified if it enhanced the quality of evidence. As this section will show, however, accuracy is not enhanced. On the contrary, removing all limitations on when a plaintiff must file suit would improve the overall accuracy of toxic substances litigation outcomes. Moreover, in addition to enhancing accuracy, the availability of more specific and reliable evidence should reduce the range of disagreement, thereby promoting efficiency.

Statutes of limitations may affect the accuracy of adjudication in two distinct ways. First, by providing a powerful incentive for early lling, the statute may influence the quality of the evidence available to the parties to resolve the dispute. Any assessment of this influence’s effect on accuracy requires examination of the function that time from accrual plays in the ability of the legal system to reach correct outcomes. Second, by barring those claims for which time has run, the statute of limitations may screen out unmeritorious cases that might have been wrongly decided if submitted for adjudication on the merits. Again, appraisal of this accuracy function requires consideration of the role that time from accrual plays in the proportion of meritorious cases that are brought to court. The traditional conception of these functions is illustrated in Figure 1.

Paradox of Statutes of Limitations – Figure 1.

If the model is correct with regard to the effect that passage of time has upon the accuracy of litigation, then logic requires that at some point where gains in accuracy due to the efforts of litigation diminish sufficiently (without defining precisely the point), the statute of limitations should be invoked. Further, if the meritoriousness function is correct, utilizing the statute of limitations (as opposed to permitting litigation) may be a better choice for minimizing the aggregate number of errors by summarily awarding judgment to defendants, as depicted in Figure 2.

Figure-2
Paradox of Statutes of Limitations – Figure 2.

Inaccuracy is measured on a scale from -1 to 1. A mechanism that resolved every case incorrectly would receive a -1. Similarly, a mechanism that got as many cases right as it got wrong would be graded at 0. The curve I(1) represents the inaccuracy due to litigation and assumes that the error rate due to litigation is relatively low and increases as time passes. Note that even at the far reaches of the time axis, if litigation accuracy is better than random, the curve will remain positive. Indeed, to the extent that lack of evidence causes inaccuracy, litigation error moves in the direction of the meritoriousness curve, because plaintiffs will be unable to meet their burden of proof. The curve I(s) represents inaccuracy due to the sanctioning effect of the statute of limitations.

Because Figure 2 does not depict the costs of litigation, we would rationally pick a point to invoke the statute of limitations well before the point at which the two curves intersect. To assure that resources devoted to litigation provide at least an equal increment of accuracy, that point would be set where the difference between I(s) and I(1) equals the cost of litigation.

Regardless of the norm, however, there is strong reason to believe that in insidious disease litigation both of the curves drawn in Figure 1 are reversed: That is, as time passes after accrual of the claim, litigation accuracy actually improves for a substantial period of time. The relationship between inaccuracy induced by statutes of limitations and litigation in insidious disease litigation is depicted in Figure 3.

Figure-3
Paradox of Statutes of Limitations – Figure 3.

As a result of this improved accuracy, the incentive effects of statutes of limitations in insidious disease litigation actually increase error. In addition, there is little reason to believe (and some contrary indications) that insidious disease plaintiffs who file their cases later have less meritorious claims than those who file earlier. Thus, the sanctioning effect of statutes of limitations-barring late claims-also contributes to inaccuracy.

1. Incentive Effects: The Impact of Time on the Quality of Evidence

In order to evaluate the effect of time upon the availability and quality of evidence in a toxic substances case, we must first assess the contested elements of a claim and the evidence that is likely to be relevant to those elements. In a toxic substances case, the elements relevant to a substantive resolution of the case, broadly speaking, include the basis for defendant’s liability, causation, and plaintiff’s damages.

a. Liability of Defendant

The primary theories of liability available to any toxic substance plaintiff include strict products liability, negligence, and breach of implied warranty. Although strict liability is the plaintiff’s preferred theory, it may not be available in a number of instances. Regardless, for all three theories the significant factual issues for which proof may be affected by the time dimension include the dangerous aspects of the toxic substance and the defendant’s ability to foresee the harm caused by the substance.

For reasons developed below, society’s knowledge of the dangerous aspects of a toxic substance only improves over time. Moreover, the knowledge accumulated from toxicological and epidemiological research does not deteriorate over time; results can easily be retrieved even decades later from the library shelves.

To the extent that a plaintiff must prove that the defendant appreciated the dangers inherent in the toxic agent, the evidence similarly improves over time, although for radically different reasons. Obviously, the optimum time to assess the defendant’s knowledge is during the relevant period-when the defendant either sells the agent or otherwise exposes the plaintiff to it. Even at that optimum time, extracting information from a defendant about her knowledge of the risks is problematic; indeed, it is a significant reason for the very existence of strict liability. To the extent this evidence is still required, however, the latency period of the disease will unavoidably delay inquiry into the state of the defendant’s knowledge.

Given that the inquiry into the defendant’s knowledge will be delayed at least a decade past the optimum point, the relevant question becomes what impact additional delay beyond the latency period has on evidence of defendant’s knowledge. The answer to that question depends substantially on the stakes involved in litigation over the particular agent. In the case of mass toxic substances, the vast number of victims and concomitant stakes involved make investments in acquiring information about the defendant’s knowledge worthwhile. The history of asbestos litigation demonstrates that as time passes, more and better evidence is uncovered about the industry’s and particular defendant’s knowledge concerning the dangers of asbestos products to the variety of circumstances in which people were exposed.

No doubt there lurk toxic agents about which little has been or will be uncovered regarding defendants’ knowledge because of the lack of incentives to develop such information. However, to the extent deterioration in the evidence due to the passage of time affects our ability to gauge the defendant’s knowledge, the error more likely will occur in the same direction that the statute of limitations would direct: The plaintiff, who has the burden of proof on this aspect of the case, will be the party adversely affected if insufficient evidence of the defendant’s knowledge can be obtained.

The passage of time also affects a defendant’s attempts to avoid liability by raising affirmative defenses based on plaintiff’s conduct. Some of those defenses may simply be variations on the individual causation question, such as an asbestos defendant’s claims that plaintiff’s smoking constituted contributory negligence. The only historical factual issue involved in that inquiry is causation, which is addressed below.

The other significant affirmative defense likely to be affected by the passage of time is assumption of risk. The difficulties of ascertaining which risks the plaintiff adequately knew about are similar to the problems addressed in the previous discussion regarding defendant’s knowledge of the risk. Significantly, given the passage of time due to prolonged latency periods, the marginal impact on the quality of the evidence resulting from removing statute of limitations constraints is likely to be quite small.

b. Causation

Because of our lack of understanding of the biological and physiological mechanisms by which toxic agents work, causation is frequently the critical issue in toxic substances cases. Causation may involve as many as three distinct subissues:

  1. whether the toxic agent can cause the disease from which plaintiff suffers;
  2. whether the toxic agent actually caused the plaintiff’s disease;
  3. and whether the defendant is responsible for the agent to which plaintiff was exposed.

Each of these matters may be contested and may require resolution in order to decide a toxic substance case.

The best evidence to demonstrate an agent’s capacity to cause a particular disease is epidemiological. However, proving (or disproving a hypothesis about) a toxic agent’s ability to cause insidious disease is a lengthy, complex, and often tortuous process that frequently takes several decades. Impediments include ethical concerns that prevent investigators from introducing toxic agents in controlled prospective studies. As a result, researchers must rely upon retrospective studies with all their attendant shortcomings: these include difficulties in determining exposure and measuring dosage in a retrospective study, errors in determining causes of deaths on death certificates, and competing disease that, because of premature death, may obscure the existence of disease with a longer latency period. Finally, because of the lengthy latency periods of many insidious diseases, these studies may result in premature conclusions of no causation. Unlike scientists, the courts do not have the option of holding in abeyance any given causation question when in doubt; the courts must decide the issue, or at least determine that a party has failed to meet its burden of production. The passage of time increases the knowledge that exists with respect to the capacity issue. Providing plaintiffs with additional time by removing the constraints of the statute of limitations therefore could only improve the accuracy of fact-finding.

One consequence of the need to resolve the causation capacity issue before adequate epidemiological evidence is available is that some courts have permitted proof of causation through clinical assessments. Although this evidence may be better than none at all, it is less reliable and less specific than epidemiological evidence in addressing and resolving the causation question.

Another consequence of premature litigation of causation has been the admission of less specific and less directed forms of proof. Plaintiffs attempt to use toxicological (animal studies) proof, and to use analogies to biologically or chemically similar substances to satisfy their burden of proof. As a result, disputes about the legitimacy of drawing inferences from these types of evidence are presented to the jury. Defendants rely on preliminary studies that find no causation, and the dispute expands to an assessment of the methodology and generalizability of a study with too few subjects or other potential flaws.

An alternative but less than satisfying option in dealing with inadequate evidence of causation is to employ the burden of proof to resolve cases. Chief Judge Weinstein’s opinion in In re Agent Orange Product Liability Litigation, one of the individual opt-out actions in the Agent Orange class action litigation, fairly cries out for postponing resolution of the case until better evidence of causation is available. In granting summary judgment to defendants based on insufficient evidence of causation, Judge Weinstein wrote:

A long latency period may ultimately reveal some causal relationship between exposure to Agent Orange and adverse health effects in those exposed and in their children. If and when such a connection is shown the issue of compensation should be addressed by the government. This court must decide the case on the evidence presently available.

To be sure, time may not develop the evidence to demonstrate a causal connection between exposure to Agent Orange and the lymphosarcoma that killed the plaintiff’s decedent in In re Agent Orange.  Indeed, there may be no such connection, in which case the absence of evidence over time will tend to support that conclusion. On the other hand, the well-established causal connections between benzene, asbestos, and tobacco smoking and various forms of cancer, all of which required decades or longer to develop, stand out in contrast.

Equally problematic is determining whether exposure to defendant’s toxic agent caused the disease from which the plaintiff suffers. With few exceptions, the vast bulk of toxic diseases are “nonsignature diseases”, those in which a background incidence of the disease is present in the general population due to factors other than the toxic agent.

The background rate results from a myriad of factors, some understood-most not-including naturally occurring environmental factors, as well as individual characteristics such as diet and genetic makeup. Because epidemiological evidence only provides group data that identifies a statistically increased risk for nonsignature diseases, there is rarely a definitive way to establish which factor caused plaintiff’s disease. Professor Richard Delgado coined the phrase the “indeterminate plaintiff” to describe this uncertainty.  The predominant response by the courts has been to rely on the preponderance of the evidence standard to determine recovery: If plaintiff can persuade the fact finder that there is a better than fifty percent chance that defendant’s agent caused plaintiff’s disease, she can recover; otherwise, the defendant prevails.

Proof in this regard requires two forms of information. First, it requires information relevant to determining the causes of the plaintiff’s disease-both the toxic agent involved in the case and other causes, such as environmental factors, for which the defendant would not be liable. Second, the inquiry requires information about the individual plaintiff relevant to causation (established by the first category of information), such as length and intensity of exposure. The combination of these types of information permits a refined assessment of the likelihood that the toxic agent caused plaintiff’s disease. Thus, for an asbestos plaintiff suffering from lung cancer, research findings demonstrating that certain kinds of asbestos fibers are more likely to cause lung cancer than others would be significant in assessing the probability that plaintiff’s lung cancer was the result of exposure to asbestos, rather than some other etiology. Of course, that epidemiological finding is only useful if we also have information specific to the plaintiff that enables us to determine its implications: Specifically, to what kind and what dosage of asbestos fiber was the plaintiff exposed?

In general, it seems fair to conclude that information of the first type will improve as time passes and that information of the second type will deteriorate with the passage of time. The one qualification to the latter conclusion is with regard to the diagnosis of the plaintiff’s disease. At least in the early stages of progressive diseases, and even in the case of cancer, for which more refined diagnostic tools are developed over time, the passage of time improves the accuracy of the diagnosis. To be sure, the victim’s death is probably the outer limit of this diagnostic improvement-at that point the disease has progressed as far as it can. But even death and a subsequent autopsy frequently provide evidence crucial to sorting out the plaintiff’s particular disease and its cause.  Thus time seems to have both a positive and a negative effect on the quality of the evidence regarding the plaintiff’s individual characteristics, including diagnosis. Overall, however, the effect is positive: For toxic cases, causation evidence improves over time.

Connecting the defendant with the toxic agent is the third element necessary to demonstrate causation. Some agents, because of brand identification-for example, Rely Tampons and the Dalkon Shield-generally will not present any serious proof problems with regard to exposure. Generic agents, by contrast, may present significant proof problems, particularly where they are incorporated into finished products that do not have strong brand identification. Thus, in some asbestos cases, identifying the defendant whose asbestos products came into contact with the plaintiff may present proof problems.

Once again, however, abolishing the statute of limitations is not likely to have any significant impact on the quality of evidence. First, any deterioration of identification evidence due to the absence of statutes of limitations incentives must be measured against the delay inherent in latency periods which last for decades. Second, because plaintiffs bear the burden of proving exposure to the defendant’s agent they have an incentive to avoid delay: The deterioration of evidence results in an outcome identical to that which the statute of limitations would have otherwise commanded. Finally, developments in technology may provide improved evidence of exposure despite the passage of time.

Some courts have fashioned special rules when plaintiffs are unable to prove which defendant provided the generic agent that caused their disease. The market share theory of liability constructed by the California Supreme Court in Sindell v. Abbott Laboratories, for example, permits DES daughters who cannot prove which manufacturer provided the DES taken by her mother to recover proportionally from each manufacturer based on its share of the relevant DES market. The absence of statute of limitations incentives in this class of cases may create incentives for strategic delay. For example, plaintiffs might intentionally wait for evidence of actual causation to dissipate, if they currently possess unfavorable evidence of exposure, such as knowledge that the manufacturer that provided the agent is now defunct. Of course, any plaintiff willing to engage in strategic delay could just as easily conceal the unfavorable evidence.  A possible solution to this problem, were it to turn out to be significant, would be to use equitable notions similar to laches to permit the defendant to demonstrate that the plaintiff’s delay has harmed the defendant’s ability to demonstrate a lack of causation. If the defendant were successful, then the plaintiff would be denied the use of any special rules excusing actual proof of exposure.

c. Damages

Predicting the future course of a plaintiff’s medical condition is an age-old challenge for the civil justice system. Statutes of limitations, in conjunction with the single judgment rule, nevertheless require such predictions to be made in a wide range of personal injury cases. The difficulties encountered in toxic substances litigation, while not different in kind, are magnified by the nature of such litigation.

Statutes of limitations result in a disproportionately large number of toxic tort plaintiffs filing suit prematurely, forcing the fact finder to predict the future course of plaintiff’s disease. That prediction, moreover, must be made in a context in which wide individual variations exist in the disease’s progression and in which there is little or no ability to make individualized distinctions in the prognosis. Thus, even if the overall payment required of defendants is reasonably accurate based upon actuarializing the payments over a large number of cases, many plaintiffs will be either over- or under-compensated.

Multiple diseases exacerbate this problem. With varying and differential latency periods, a toxic victim is at risk of developing other diseases, which to a large extent cannot be isolated. The single judgment rule is the primary villain here. Relaxing the rule to permit a second suit if the victim develops a second disease could largely ameliorate this concern; indeed, a number of courts have opted for this approach. However, in other courts, plaintiffs must attempt to recover for the risk of contracting those diseases with little more than generalized probabilities and accommodating experts. When the courts award full damages to plaintiffs who meet the more-likely-than-not burden with probabilistic proof, but deny damages to others whose proof falls short, over- and under-compensation are once again guaranteed.

Professor Leubsdorf has described the speculation and unrealities frequently required by the law of remedies. As he presciently observed, courts may circumvent fact-finding uncertainty in a limited class of cases by awaiting the passage of time. As the previous section has demonstrated, with the exception of evidence regarding plaintiff’s exposure, evidence relevant to the major issues in toxic substances litigation improves significantly for a period well beyond that mandated by a discovery rule statute of limitations. Even with the deterioration of exposure evidence, the overall balance appears firmly on the side of expanding the time to bring suit. Moreover, since plaintiffs have the burden of proof on the issue of exposure, evidence lost because of expanded time should not significantly disadvantage toxic defendants.

2. The Sanctioning Effect: Generating False Negatives

As noted, contrary to conventional wisdom, the passage of time is likely to improve the quality of evidence and the accuracy of outcomes for toxic torts. Aside from its effect of reducing the quality of available evidence, statutes of limitations generate inaccuracy by creating false negatives (barring otherwise valid claims). These false negatives explain the unpopularity of statutes of limitations; they not only offend utilitarian principles but also strike squarely in the unfairness gut. Nevertheless, in circumstances in which the incentive effect truly and substantially contributes to accuracy, the unfortunate product of barring a number of otherwise meritorious claims may be judged acceptable. A claim sometimes tentatively asserted in support of statutes of limitations is that they may improve accuracy by screening dilatorily filed cases. If those later filed cases are less meritorious than promptly filed cases, statutes of limitations might contribute to accuracy by reducing the risk of litigation error. However, it is difficult to justify the assumption that insidious disease plaintiffs who file their cases outside discovery rule time limits have less meritorious claims. The predominant explanation for insidious disease plaintiffs running afoul of statutes of limitations is ignorance or naivete about their disease, its source, or their legal remedies. The current crop of insidious disease cases in which statutes of limitations are involved, along with the existing data on the incidence of victims seeking legal relief, reveal that the overwhelming reason why plaintiffs failed to file timely actions is that they simply did not appreciate the significance of a relatively minor malady, its source, or the availability of legal relief.16 Furthermore, unless the meritoriousness of this class of cases diminishes over time, limitations statutes decrease accuracy by generating false negatives. Indeed, the tentativeness with which this justification is asserted suggests that it not be taken too seriously.

Another reason to believe that the meritoriousness curve rises over time, at least beyond the point .dictated by the discovery rule, is the improvement in evidence relating to plaintiff’s disease and its etiology. As information about claimants’ disease improves-particularly with regard to the class of premature claims described above-previously uncertain cases will be screened out by claimants or their attorneys who recognize from the additional information that the claim is unlikely to be successful.

3. The Danger of Strategic Delay

Conceding the inadequacies of the current statute of limitations regime, a skeptic might nevertheless inquire whether abolishing the statute would create incentives with adverse consequences. Might not claimants shop chronologically, biding their time until a more favorable rule of law develops or until unfavorable facts are no longer available to the defendant? This concern deserves serious consideration.

Before addressing the dangers of generating chronological litigation shopping, it is important to note that there are powerful incentives for plaintiffs to avoid unnecessary delay. It must be conceded that delay for the sake of delay is not an advantage and that there is a point (well beyond the one identified by current limitations rules) at which accuracy may be detrimentally affected by further delay. However, plaintiffs cannot recover anything until they assert their claims. This point may be particularly compelling once the plaintiff’s disease has caused impairment. At this point, the need for compensation will be a significant incentive to assert the claim promptly. Tactically, there are substantial advantages to having the seriously injured plaintiff available for the jury to observe and hear. Even after death, grieving family members or those who have suffered tangibly from the death make far more sympathetic plaintiffs than the victim’s grandchildren. Concerns about insolvency or the bankruptcy of potential defendants, given the recent experience in the asbestos industry and with A.H. Robins, also encourage prompt, perhaps even premature, filing. Thus, substantial incentives already exist for plaintiffs with mature, meritorious claims to file them promptly.

Nonetheless, some inevitable percentage of plaintiffs will delay. For those claimants with marginal or unmeritorious claims, delay may occur simply because of ennui-the prospects for recovery are insufficient to justify the efforts required for suit. More perniciously, some claimants may conclude that deliberate footdragging is advantageous because of the hope of a favorable development in the law applicable to their claim.  A favorable turn might result in plaintiffs filing newly viable cases far beyond those cases’ optimal point.

The more significant concern implicated in this scenario is the application of contemporary law to cases in which defendants’ conduct occurred when different substantive law existed. This is already a familiar situation in the products liability context, because of the lengthy life of industrial machinery and other durable goods, and the latency periods for insidious disease. A solution to this concern, if one is necessary, would be to judge defendants’ conduct or their products’ safety by the law applicable at the time of design or manufacture. Statutes of limitations are but a partial and poor fix for this concern.

It is more difficult to assess the extent to which strategic delays will be employed to allow the dissipation of unfavorable evidence or to obstruct its discovery. For example, a plaintiff aware that her own behavior would subject her to a successful affirmative defense might delay in bringing suit, hoping that time will diminish the defendant’s ability to discover and gather evidence of her behavior. However, with the burden of proof on the plaintiff, evidence about the most vexing aspect of the claim-causation-safely preserved in print, and defendants in control of their records, it is difficult to imagine how plaintiffs could systematically utilize delay to their advantage. Nevertheless, given the financial incentives involved, the possibility always exists that clever attorneys will devise means to exploit the rules to their clients’ advantage.

Two possible solutions to strategic delay exist, although they are not without their own difficulties. First, defendants could be permitted an equitable laches-like defense if they could demonstrate either that plaintiff’s delay prejudiced the defense of that action or that plaintiff’s delay was so unreasonably long as to justify an inference that it was for strategic reasons. The obvious difficulty with this proposal is that although it is intended to be a limited, infrequently asserted defense, it may become routinely invoked, thereby wiping out the efficiency gained by abolishing statutes of limitations. Thus, unless strategic delay turns out to be a substantial problem, laches is probably undesirable.

In any case, a cutoff of 20 years after the death of the injured victim would provide an outside limit that could ameliorate some of the residual concerns. Unlike the discovery rule, it could be easily applied; the date of death is an event about which there is unlikely to be much uncertainty or disagreement. Although such a limit might bar claims before adequate evidence of causation is developed, the concern for compensating heirs who have survived for a generation without it is diminished. Nor should a 20 year cutoff significantly affect tort law’s deterrent effect. Given lengthy latency periods, the large numbers of exposed individuals, and the agency-cost problems of the modem publicly held corporation,  deterrence in the mass toxic substances context is already problematic. Attempting to optimize deterrence by using a precise statute of limitations to fine-tune defendants’ liability is a bit like trying to regulate the flow of water at Niagara Falls with a water pistol. Even using current limitations periods, but accruing claims at death, would be preferable to the current discovery rule regime, although it has the additional disadvantage of barring claims that were not brought because the parties did not know the cause of their decedents’ diseases or its implications.

D. The Emptiness of Repose

Certainty generally is illusion, and repose is not the destiny of man.

Regardless of the overall truth of Justice Holmes’ dictum, lengthy latency periods for insidious disease, both directly and indirectly, thwart the provision of any significant degree of repose for defendants. Defendants are directly affected because any judicial activity must await development of the victim’s disease, which necessarily entails a delay equivalent to the latency period. Defendants are indirectly affected because the latency period makes discovery of the causal connection between agent and disease a lengthy process. This results in a longer period during which victims are exposed to the agent and afflicted by disease, thereby expanding the time-span of lawsuits.

Moreover, the traditional concerns for providing repose to defendants are attenuated in the toxic substances arena. An uninsured individual at risk of being sued because of an identifiable event surely deserves some protection from the psychological trauma induced by the combination of substantial risk, uncertainty, and lack of control over one’s destiny. But insidious disease cases hardly fall within this paradigm. Defendants in toxic substances litigation invariably are corporations, not individuals. Moreover, most are corporations for whom the management of litigation has become an aspect of doing business. Although this function may not be among the most desirable in corporate management, it has become regularized, routine, and a necessary aspect of business operations.

Statutes of limitations have been defended on the grounds that insurers need some certainty about the length of time they will be at risk on their policies. However, with the expanded period of exposure and delay in manifestation due to latency periods, even the discovery rule cannot provide fixed limits on the period of liability. The liability insurance industry’s recent move toward claims-made policies, despite the formidable changeover and continuing coverage problems, should provide some greater certainty in underwriting these risks.

Perhaps the most telling evidence of the unimportance of repose within the current framework is the defendants’ response to premature claims in asbestos litigation. The Asbestos Claims Facility, a consortium of the major asbestos defendants, has a standing offer to provide a “green card” to plaintiffs who have a history of asbestos exposure but no current physical impairment. The green card tolls the statute of limitations indefinitely, permitting plaintiffs to wait until disability or impairment occurs before filing claims. Asbestos defendants have demonstrated that they are willing to sacrifice the incentive effect of statutes of limitations and the repose they afford in order to avoid prematurity. The time value of money and cash flow concerns also motivate defendants to spurn the incentive effect of statutes of limitations: Slowing down the stream of claims reduces the real cost of settlements and judgments. Thus if, as defendants’ actions demonstrate, there is no benefit to prompt submission and resolution of claims, barring potentially meritorious claims because of the passage of time cannot be justified on repose grounds.

E. Creating Chinks in the Integrity of the System: Beyond the Utilitarianism of Statutes of Limitations

This Article has focused primarily on a utilitarian analysis of the impact of statutes of limitations in insidious disease litigation. That analysis has addressed the variables of efficiency and accuracy in dispute resolution. In many respects, fairness and legitimacy concerns, however loosely defined, are consistent with this utility calculus: The false negatives generated by the sanctioning effect of statutes of limitations not only result in inaccuracy, but also they violate basic principles of equalitytreating like cases alike-and equity-resolving cases on the merits rather than as a result of a procedural default. The remainder of this section addresses several legitimate concerns that do not fit neatly within the utilitarian framework.

1. The Lack of Verifiability: Encouraging Plaintiff Mendacity

The discovery rule’s reliance on the plaintiff’s subjective knowledge to begin the running of the statute of limitations provides unfortunate incentives for mendacity by claimants. In the absence of documentation, there will rarely be even circumstantial evidence that bears on the claimant’s awareness of his condition and its source. As Professor Henderson observed, process constraints suggest that the law be structured in a fashion that allows verification of relevant matters. The discovery rule violates this prescription.

Moreover, the inclination to preserve one’s claim by conveniently forgetting about one’s prior knowledge is enhanced by the perceived unfairness and arbitrariness of statutes of limitations, which provide a convenient rationalization for those who need one. This phenomenon can only breed cynicism and lack of respect for the judicial process. While the extent to which this distortion occurs is unclear, the comment of two attorneys who represent a leading asbestos defendant suggests it is far from rare: “Only an ill-prepared or benevolent plaintiff would consciously bar his own cause of action by readily admitting that he knew that he had been injured by a toxic substance at some time prior to the applicable limitations period.”

2. Fostering Conditions for Expert Witness Abuse

Plaintiffs are not the only ones who may fabricate testimony or mislead the court. Expert witnesses who have little or no basis for their opinion and who simply lend their credentials as oath-takers for the party paying them create a similar problem for the legal system. Other experts use large leaps of faith to draw inferences and render firm opinions on matters that most in their field would label as nothing more than hypotheses. In the toxic tort context, the combination of insufficient information about causation,  the time constraints imposed by the statute of limitations, and the allocation of the burden of proof has allowed this abuse to proliferate. As several commentators have noted, this problem transcends toxic substances litigation. Nevertheless, the problem is particularly acute in toxic substances cases because time constraints imposed by statutes of limitations virtually require plaintiffs to build their case on hastily assembled expert witness opinions. Allowing claimants to wait and bring their case when better evidence of causation is available cannot provide a comprehensive solution, but may-make a contribution in the right direction. 3. Forum Shopping and Lack of Consistency Two identically situated asbestos victims with the same domicile will have diametrically different outcomes depending upon which side of the Delaware River they file their suit. Because Pennsylvania’s statute of limitations for all consequences accrues upon discovery of the first disease, while New Jersey’s does not, the outcome of a case may depend on whether suit is filed in Pennsylvania or New Jersey. 93 Similarly, a Virginia resident who had the sagacity to forum shop in Texas, Mississippi, or Ohio will have the opportunity to pursue a claim that her neighbor who remained at home sacrificed. 194 The stream of out-of-time claimants to jurisdictions with more favorable statutes of limitations is discomfiting and results in wildly inconvenient forums or skirmishes over forum non conveniens. Of course, this result is directly attributable to interjurisdictional variations in statutes of limitations, but aside from uniformity, liberalization of time requirements could reduce this flow substantially.

CONCLUSION

This Article has attempted to demonstrate that molding statutes of limitations to fit the constraints of insidious disease litigation results in a paradox: Rather than enhancing accurate outcomes and efficiency, statutes of limitations produce exactly the opposite effect. Beyond such utilitarian concerns, statutes of limitations in insidious disease litigation have several other troubling effects. The errors they generate are not randomly distributed, but fall exclusively on the class of victim-claimants. By requiring premature determination of causation questions, they provide a breeding ground for the abuse of the expert witness system that has become epidemic in modem litigation. The lack of uniformity in statutes of limitations among the states has encouraged forum shopping of the most blatant kind and resulted in inconsistent outcomes between similarly situated claimants.

I hope the reader will not misunderstand me. I do not contend that later is always better than sooner. Society has a legitimate interest in putting ancient history to rest. At some point, the evidence in a toxic substances case will mature, and further delay will not promote-indeed will detract from-an accurate outcome. Given agency cost concerns in the publicly held corporation and the time value of money, the tort system’s deterrent effect dissipates as time passes. Yet, lengthy latency periods make substantial delay inevitable, and statutes of limitations as currently formulated are a terrible, expensive, and unfair mechanism for ascertaining the appropriate time for a toxic substances lawsuit.

A resolution of the current quagmire is neither theoretically nor practically obvious. Although this Article began with a proposal to abolish all statutes of limitations in insidious disease litigation, potential strategic responses by claimants constitute a significant, albeit difficult to assess, concern. Political constraints also loom large. While there is abundant evidence that asbestos defendants do not desire the benefit of the incentive effects or the repose of statutes of limitations, they are unlikely to agree to give up the benefits of its sanctioning effect, which provides one of the most effective arrows in their defense quiver. Unfortunately, that sanctioning effect is the undesirable byproduct of providing just those incentives spurned by defendants.

A scaled-down solution might abolish all statutes of limitations during the lifetime of the victim and provide a set amount of years thereafter for the family to bring suit. An outside limit of twenty years would not impinge seriously on tort policies, even though advantages exist to providing a longer period because of agents for which evidence of toxicity is undeveloped and because some individuals may remain unaware of the cause of death of a relative or its legal implications.

Ideally, any reform should be universalized-an unlikely event in the diversity and vagaries of state legislatures. However, preempting state statutes of limitations and providing a uniform federal provision is not as radical as it might initially appear. A virtually unnoticed provision of the Superfund Amendments and Reauthorization Act of 1986196 imposes a discovery rule for accrual of all state tort claims for personal injury or property damage resulting from exposure to hazardous substances.1 97 Although this provision does not appear to apply to products liability actions, and in any case does not address the concerns raised in this Article, it does set a precedent for a uniform federal statute of limitation, even for state-based tort claims.

The political unreality cloud still remains, but with a potential silver lining. Many players in the products liability game and the current Administration have renewed their efforts to enact a federal products liability statute. These parties claim that such a statute would provide uniformity and certainty in an area with significant interstate implications. Much negotiation has taken place in the process of trying to fashion a bill that will be politically feasible. If those advocating a federal statute are committed to providing uniformity and certainty-not to mention the additional benefits in efficiently and fairly adjudicating these claims-a provision eliminating or substantially extending the statute of limitations in insidious disease cases may yet see the light of day.

Professor Ken Abraham has convincingly pointed out the difficulties of a universal mass tort compensation scheme. Nevertheless, individualized compensation schemes for specific mass toxic agents about which substantial scientific evidence of causation exists are an attractive, but politically unlikely, solution to the challenge. In the absence of such wholesale reform, I hope this Article will contribute to the recognition that toxic substances torts are different in important ways from the traditional snapshot tort and that those differences may require rethinking fundamental assumptions about the existing tort system and its relationship to the statute of limitations.

Michael D. Green, 1988.

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Generic Product Risks: The Case Against Comment k and for Strict Tort Liability

Professor Page considers whether strict liability should be imposed for injuries caused by products that pose generic risks – risks that do not derive from flaws in the manufacturing process but from product design or from the very nature of the product. He reviews the ALL debate that preceded adoption of section 402A of the Restatement (Second) of Torts and finds the ambiguous meaning of comment k. which deals with “unavoidably unsafe” products, of little use in determining whether section 402A applies to generic product risks. After examining the policy justification for imposing strict liability in cases involving design defects and construction defects, Professor Page concludes that, at least in cases involving generic product risks that were unknown at the time of sale. strict liability should be imposed as a modest incentive to manufacturers, to improve product safety and as a means of satisfying justifiable consumer expectation.

INTRODUCTION

Recent litigation involving asbestos and DES has attracted widespread interest, not only because of the staggering numbers of claimants alleging serious harm from these products and the filing of a bankruptcy petition by the nation’s largest asbestos manufacturer, but also because of the complexity of the issues that the cases involve For example, many DES claimants, daughters of women who took the drug during pregnancy, are unable to identify the maker of the particular pills consumed by their mothers. The courts have had to decide whether to depart from traditional causation rules that would require directed verdicts for defendants, and if so, what new rules to adopt. In the asbestos cases, courts have had to determine the obligations of successive insurers to indemnify asbestos manufacturers against claims made by persons who allegedly contracted respiratory diseases from continuous exposure to asbestos over many years.  In addition to these problems, an array of legal theories asserted against an array of defendants who do not manufacture asbestos or DES has emerged in these cases.

Generic Product Risks: The Case Against Comment k and for Strict Tort Liability, Georgetown University Law Center, 1983.

The few courts reaching the merits of claims made by asbestos and DES victims have, for the most part, refused to venture beyond the familiar confines of negligence law. Giving dispositive weight to section 402A of the Restatement (Second) of Torts, which imposes strict liability for “any product in a defective condition unreasonably dangerous to the user, and to comment k of section 402A, which recognizes an exception to strict liability for products deemed “unavoidably unsafe, these courts in effect have required plaintiffs to establish that defendants engaged in unreasonable conduct. Under this analysis, if the benefits of a product outweigh its known risks, and if the manufacturer has provided suitable warnings and directions for use, the defendant’s product will be deemed reasonably safe, and the plaintiff will not recover.  Similarly, if the manufacturer has placed  the product into the stream of commerce without knowledge of the dangers associated with its use or consumption, courts typically have refused to impose liability unless the exercise of reasonable care would have uncovered the hazards. 11 One notable exception to this trend is a recent decision by the New Jersey Supreme Court, holding that an asbestos producer might be strictly liable in tort for injuries caused by risks that were unknown despite reasonable investigation at the time of sale.

The reluctance of courts to impose strict liability in toxic-product cases corresponds to a trend, reflected in scholarly musings and adopted in recent congressional reform efforts, to limit strict liability to product defects attributable to the construction or manufacturing process. With respect to claims alleging inadequate product design, warnings, or instructions for use, the proponents of this limitation would apply a negligence test, either expressly or in a disguised form.

Although the desirability of imposing strict liability upon the pharmaceutical industry for adverse drug reactions has been debated,  the larger issue of whether all manufacturers should be held liable without fault for other types of toxic adverse effects of their products largely has escaped scrutiny. Since courts in a number of jurisdictions may soon be addressing the merits of asbestos and DES cases, a fresh look at the subject seems in order.

The central focus of this Article is whether all “generic product risks” should be treated alike. The Article first will discuss the various types of generic risks-avoidable and unavoidable, known and unknown-including those risks associated with toxic products like asbestos and DES. It will then argue that section 402A of the Restatement and its comments provide little guidance in deciding cases that involve generic risks, and should not be accorded dispositive weight in product liability suits. The Article will then examine and evaluate the policy justifications for adopting a rule of strict tort liability in cases involving generic risks. Ultimately, the Article will conclude that a persuasive case can be made for imposing strict liability on manufacturers whose products contain unknown generic risks.

I THE NATURE OF PRODUCT RISKS

Risks attributable to flaws or impurities caused by the manufacturing process usually are present only in a small percentage of the units of a particular product and do not endanger every consumer of the product. Such product risks are nongeneric in nature. The presence of a foreign substance in a jar of mayonnaise and a malfunction in a television set due to poor workmanship exemplify this category of hazards. In contrast, asbestos and DES share a common characteristic: the capacity to create risks that endanger, but do not necessarily harm, every user or consumer of the product. Such product risks are generic in nature.

This Article will focus on generic product risks, of which there are two main types. One includes design risks, or risks that can be eliminated or at least reduced by changing the design of the product. For instance, the interior of an automobile can be made more crashworthy so that the occupant is more likely to survive a collision. Some design risks, however, may be impossible to eliminate or to reduce without frustrating the purpose for which the product is marketed. The sharpness of a knife, the heat of a stove, and the physical force generated by an automobile are examples of this type of risk. These hazards enable the products to do what they were meant to do; they are essential to the function of the product and cannot be designed away.

The hazards associated with toxic products like asbestos and DES represent the second main type of generic risk. The manufacturers of asbestos products and DES have no desire to create the hazards associated with their products because these hazards serve no useful purpose. Unlike the capacity of a knife to cut, which is essential to its intended use, the capacity of DES to cause cancer in the daughters of mothers who used the drug is irrelevant to the effectiveness of the drug; while the cutler consciously designs the cutting edge of a knife, the pharmaceutical company does not intentionally create the risk of cervical cancer. Toxic product risks are inherent in the nature of the product, regardless of its design, and cannot be eliminated, at least given the current state of scientific knowledge, by any means short of withdrawing the product from the market.

Other examples of generic, non design risks abound: adverse reactions to drugs and exposure to harmful chemicals; the risk of cancer from smoking cigarettes;  the risk of “toxic shock” from using tampons; and the possibly deleterious effects of consuming food and beverages containing saccharin and caffeine,  if these substances were someday linked conclusively to diseases in humans.

As the saccharin and caffeine examples suggest, different types of generic risks, whether designed into a product or inherent in its nature, may also be distinguished by the degree of existing knowledge about them. Some generic risks, such as the risk of cancer from smoking cigarettes, are well known to manufacturers and consumers alike. Other generic risks, such as the carcinogenic effects of DES, were unknown when the consumer was exposed to them. Still others, such as the possible side effects of caffeine, remain unknown today.

This Article discusses whether or not these various generic product risks-designed-in and inherent, known and unknown-should be treated alike for purposes of applying strict liability. Should the rights of a plaintiff whose hand is burned by a hot stove or whose eye is injured because a machine tool lacks a safety device be determined by the same theory of liability that determines the rights of a plaintiff disabled by exposure to toxic asbestos fibres or DES? Should the claim of a patient harmed by an adverse side effect known to be associated with a drug be governed by the same theory of liability as is the claim of a patient injured by an adverse side effect that was unknown at the time the drug was administered? The light shed on these questions by the Restatement (Second) of Torts, which has greatly influenced the development of product liability doctrine, is an appropriate starting point.

II GENERIC PRODUCT RISKS AND THE RESTATEMENT

Section 402A of the Restatement (Second) of Torts gave impetus to a profound and far-reaching change in the law of product liability. It subjected sellers, including manufacturers, of all products to strict liability and grounded the cause of action in tort rather than warranty. This change was important because a warranty cause of action was contractual in nature and was being preempted by the Uniform Commercial Code. More importantly, this change relieved plaintiffs of the need to establish a privity-of-contract relationship with defendants. This so-called “citadel of privity,” preventing plaintiffs from asserting breach of warranty against defendants with whom they were not in privity, already had almost totally collapsed in warranty cases involving products for internal human consumption, and was crumbling under the onslaught of plaintiffs injured by manufactured goods. The widespread judicial adoption of section 402A completed the demolition  and seemed at the time to be the most dramatic aspect of the new rule.

This doctrinal revolution was remarkably swift. What began in 1958 as a modest proposal for strict tort liability for the sale of food “in a condition dangerous to the consumer,” was extended three years later to cover “other products for intimate bodily use” in a “defective condition unreasonably dangerous to the consumer.”  By 1964, the final form of section 402A applied to “any product.”  This expansion of the strict liability rule, however, was not accompanied by a thorough analysis of the implications of bringing new classes of products within the sweep of section 402A. As a result, the Restatement does not adequately address the issues raised by generic risks.

A. The Restatement Generally

When the drafters of the Restatement broadened the scope of section 402A to cover all manufactured goods, they apparently assumed that the doctrine and explanatory comments, which had been developed for food and other products “for intimate bodily use,” would apply equally well to all manufactured goods. The final version of the section and its comments, therefore, remained virtually intact.

In retrospect, the most significant impact of this rush to strict liability was the confusion and uncertainty that subsequently plagued product-design litigation. Although the concept of design defectiveness was not unknown in 1964, the proponents of section 402A saw no need to adjust the rules to determine explicitly when the new doctrine would impose strict liability for design defects. They retained the terms “defective” and “unreasonably dangerous” and added the requirement that the product “must be dangerous to an extent beyond that which would be contemplated by the ordinary consumer.” In subsequent years, courts and commentators alike have found this formulation inadequate and have struggled in vain to fashion an acceptable test for strict liability in product-design cases.

Although the issue of design defectiveness was not recognized as a problem during the evolutionary stages of section 402A, certain other generic risks did occupy the attention of Dean William E. Prosser (the Reporter of the Restatement (Second) of Torts), his advisers (the American Law Institute Council), and the American Law Institute (“ALI”) membership. In working out the new rule of strict liability, they were cognizant of the controversy over the causal relationship between cigarette smoking and cancer, as well as of the incidence of serious harm attributed to certain drugs and vaccines,  and considered whether the tobacco and pharmaceutical industries should be subject to strict liability. In their floor debates, Dean Prosser and members of the ALI also considered how whiskey would fit into their scheme of liability.

With respect to cigarette-cancer litigation, the Restatement came out unequivocally on the side of the tobacco companies. During a 1961 floor debate on section 402A, a motion was made to delete the word “defective” on the ground that the “unreasonably dangerous” requirement was an adequate test for determining when strict liability should apply and that therefore the term “defective condition” constituted excess baggage.  In response to this motion, Dean Prosser pointed out that the ALI Council wanted to retain the element of defectiveness in order to insulate from liability the sellers of dangerous products, such as whiskey, cigarettes, and certain drugs, which are inherently dangerous even though there is nothing “wrong” with them.  The specter of alcoholics bringing a barrage of suits against distillers apparently haunted the drafters of section 402A. After a very brief discussion, the motion was defeated by a voice vote, and the “defective condition” standard remained a part of section 402A.

The notion that section 402A would apply only to defective products-products that have something wrong with them other than their inherent danger-would seem to exclude most generic risks. It is not clear, however, that this interpretation is what the majority of the ALI had in mind. During the 1961 debate, Dean Prosser agreed with other members that the “unreasonably dangerous” standard was sufficient to protect sellers of products such as cigarettes and whiskey.  In drafting comment i to section 402A, he pointed out that many products, including food and drugs, involve “some risk of harm, if only from over-consumption,” but this risk did not render such products “unreasonably dangerous.” Dean Prosser concluded that the proper test was whether the product was “dangerous to an extent beyond that which would be contemplated by the ordinary consumer who purchases it, with the ordinary knowledge common to the community as to its characteristics.” Thus defined, the requirement of unreasonable danger would not be met in cases involving whiskey, the hazards of which are known universally, but might be met in cigarette cases, depending upon the court’s determination of what the ordinary consumer knew about the risks of smoking at the time of marketing. Toxic risks are not necessarily excluded, therefore, from section 402A.

Another way to approach the scope of section 402A is to ask whether a product with any kind of generic risk, which was found to be unreasonably dangerous, would meet the separate requirement of defectiveness. The comments to section 402A do not answer this question. Comment i presents examples that shed little light upon the problem. The examples contrast generic risks that are not considered unreasonable (“good” whiskey that makes some people drunk, “good” tobacco that causes harm, “good” butter that deposits cholesterol in the blood and leads eventually to heart attacks) with those that do present unreasonable dangers attributable to defects in the same products (whiskey contaminated with a dangerous amount of fuse oil, tobacco with marijuana, butter with poisonous fish oil). The former pose dangers widely known to the ordinary consumer;  the latter present clear instances of something “wrong” with the product. Neither group of examples presents a product, not otherwise defective, with such unreasonable risks that strict liability ought to apply.

Comment g, elaborating upon the concept of “defective condition,” is similarly unhelpful. It limits strict liability to situations where ••the product is, at the time it leaves the seller’s hands, in a condition not contemplated by the ultimate consumer, which will be unreasonably dangerous to him.” The word ··condition,” like the contaminated product examples, seems to suggest that there must be something “wrong” with the product beyond any inherent capacity to cause harm.

Yet Dean Prosser and the ALI did not intend to exclude from section 402A all products creating generic risks. Comment j states that warnings may be required for “poisonous drugs or those unduly dangerous for other reasons” (categories broad enough to embrace medicines triggering deleterious reactions), a proposition compelling the conclusion that the failure to include such warnings might subject the manufacturer to strict liability. While the comment specifies that the absence of directions or warnings may render the product unreasonably dangerous, it does not explain whether unreasonably dangerous also means that the drug is in a “defective condition.” Does comment k shed any light on the meaning of “defective”?

B. The Meaning of Comment k

Comment k, dealing with so-called “unavoidably unsafe products,” is more expansive than these other comments. It declares that a drug with proper directions and warnings would be neither defective nor unreasonably dangerous, thus suggesting that the same characteristic (mislabeling) that made the drug unreasonably dangerous might also make it defective. This wording blurs the distinction between the two elements, and the requirement of a defect thus becomes superfluous.

The genesis of comment k may help explain this blurring and comment k’s other mysteries. Dean Prosser drafted the comment in response to a proposal at the 1961 ALI meeting that prescription drugs be specifically excluded from section 402A. The arguments and the discussion that followed were notably unfocused. The motion under consideration failed to distinguish between harm from adverse reactions and other kinds of drug-induced harm, such as that caused by improper formulation or toxic ingredients. Since no one could argue seriously that the latter risks should escape strict liability, the failure to separate the two categories muddled the debate. Moreover, neither Dean Prosser nor the ALI member who made the proposal indicated how he thought section 402A would apply to prescription drugs in the absence of an explicit exemption. A solution was being offered for a problem that never had been clearly defined. Nor were adverse reactions about which warnings had been issued at the time of marketing distinguished from other harmful effects not discovered until later.

There was also disagreement over the scope of the proposed exemption. The motion proposed to insulate all prescription drugs from strict tort liability. Dean Prosser suggested that a better case could be made for excluding “relatively new, experimental, and uncertain drugs, of which there are a great many on the market, and justifiably so.” He defined the term “experimental drug” to include virtually all prescription drugs and even some over-the-counter medicines. Dean Prosser’s use of the adjective “experimental” went far beyond clinical testing, an initial stage of the Food and Drug Administration (“FDA”) approval process, and covered drugs that had completed the entire approval process and had been marketed to consumers. Thus, he was suggesting an exemption even broader than that proposed by the motion.  The motion to include an exemption for prescription drugs in section 402A ultimately was defeated, as was a subsequent motion to insert such an exception in the comments. On its face, this defeat did not seem to reflect a desire by the membership to exclude more than prescription drugs from section 402A, but Dean Prosser apparently saw things differently.

Reflecting the murkiness of its origins, the version of comment k that emerged from the Reporter’s hand failed to delineate in any meaningful way either the breadth of its coverage or its purpose. The comment first addresses “unavoidably unsafe products, .. which it defines as “products which, in the present state of human knowledge, are quite incapable of being made safe for their intended and ordinary use.” The comment then appears to focus on “the field of drugs,” where such products are “especially common,,. and presents three overlapping categories of unavoidably unsafe products: high-benefit, high-risk drugs, such as the vaccine used for the treatment of rabies; “many other drugs, vaccines, and the like, many of which [because of high risks involved] cannot legally be sold except to physicians, or under the prescription of a physician;” and “many new or experimental drugs.”

The comment furnishes no criteria for determining how risky and how beneficial a drug must be in order to qualify under the first category as “unavoidably unsafe.” In any event, such a determination would appear to be unnecessary for drugs. The second category may reasonably be read to include all prescription drugs, since federal law mandates that any medicine with toxic effects that render it unsafe as self-medication be sold under prescription -and a high-risk, high benefit drug surely would be limited to sale by prescription. The sweeping requirement of prescription status also makes the third category superfluous, a fortunate occurrence since the term “new or experimental drugs” is highly ambiguous.

Thus, if its examples are taken seriously, comment k reasonably could be read as excluding from section 402A only unavoidably unsafe prescription drugs. The comment, however, fails to explain what might render an unavoidably unsafe product “defective” and thus subject to section 402A in the first instance. Instead, it states that if the known benefits of one of these products outweigh its known risks, it would not be considered “unreasonably dangerous, .. provided that it was prepared properly and bore adequate warnings and directions for use.  The negative implication of this statement radically expands the scope of the exemption. Since injury caused by any product whose risks outweigh its benefits presumably would be actionable under traditional negligence principles, comment k may be read to remove from the reach of section 402A any product that is unavoidably unsafe as long as the manufacturer will not be subject to liability under a negligence rule for injury caused by the product. Such an exemption includes but is not limited to prescription drugs, an ironic turn in light of the ALI vote rejecting the proposed exemption for prescription drugs alone.

To appreciate the effect of this interpretation of comment k, it is necessary to consider how sellers of unavoidably unsafe products might be held strictly liable in the absence of comment k. The consumer-contemplation test of comment F seems to preclude liability in cases where the risks generally were known and therefore within the contemplation of the ordinary consumer. Under this test, if a patient suffers harm from a high-risk, high-benefit drug and the harm falls within the scope of the contemplated risk, the drug would not be unreasonably dangerous. Similarly, a warning about an adverse reaction listed on the label of a prescription drug would be considered part of the contemplated risk, as would be true of known risks posed by experimental drugs. Given the broad sweep of comment i, one can salvage independent meaning for comment k only by surmising that, without comment k, harm from unknown risks, or harm from known risks which turns out to be much graver than expected, generally would be actionable under theories of strict tort liability. With comment k, therefore, one must surmise that a manufacturer of a product posing such risks would escape liability under section 402A if the product were “unavoidably unsafe.”

This analysis suggests that the function served by comment k is to exempt unknown risks created by unavoidably unsafe products, since comment i already excludes known risks. Yet this interpretation presents difficulties. The text of comment k is not at all specific on the point, and a matter as important as the treatment of unknown hazards merits direct mention. Moreover, the comment focuses on known risks. Two of the three categories listed in the comment involve products unavoidably unsafe because of known risks, such as a rabies vaccine. According to the comment, the manufacturers of these drugs should not be strictly liable for harm from the known risk, a proposition seemingly rendered superfluous by comment i. The third category, “new or experimental drugs,” however, does cover products that are unavoidably unsafe because of unknown risks. Indeed, one important purpose of the clinical testing of experimental drugs is to learn more about adverse reactions they might cause. On the other hand, since a patient participating in clinical trials must give an informed consent, which includes an understanding that the harmful effects of the drug are not yet fully known,  any adverse reaction the patient suffers may be said to fall within the range of consumer contemplation.

Comment j, unlike comment k, speaks specifically to product risks unknown at the time of marketing; but comment j raises more questions than it answers and sheds little light on the meaning of comment k. In discussing the duty to give warnings and directions for use, Dean Prosser indicated that the sellers of food need not provide warnings about common allergic reactions to their products, since they might reasonably assume that consumers who suffer from the allergy are aware of it.  This conclusion is consistent with the consumer-contemplation of unreasonable danger test in comment i: to the ordinary consumer with a common allergy, an allergic reaction would be an expected hazard, and hence not unreasonable. The Reporter went on to state, however, that

where . . . the product contains an ingredient to which a substantial number of the population are allergic, and the ingredient is one whose danger is not generally known, or if known is one which the consumer would reasonably not expect to find in the product, the seller is required to give a warning against it, if he has knowledge, or by the application of reasonable, developed human skill and foresight should have knowledge, of the presence of the ingredient and the danger. Likewise in the case of poisonous drugs, or those unduly dangerous for other reasons, warnings as to use may be required.

This language is unclear on a number of points. Why should the duty to warn unwary allergy victims be limited to cases in which a “substantial” segment of the populace is affected? Under ordinary negligence principles, one might find the risk of serious harm or death to a miniscule percentage of individuals, or even a single individual, to be sufficient justification for requiring a warning. Also, if the risk is undiscoverable in the exercise of due care and hence need not be mentioned in the warnings or instructions for use, does it follow that the manufacturer will not be strictly liable for harm resulting from the risk? This seems to be a fair reading of the text. If so, strict liability will not attach even though the product was dangerous beyond the contemplation of the ordinary consumer.

But what are the reasons for this departure from the comment i test? Does the last sentence of the paragraph indicate merely that drugs fall within the scope of the general duty to give warnings or directions in every case? Or does it mean that allergic reactions to drugs should be governed by the same principles applicable to reactions to food, i.e., that users need not be warned about common risks that are known by both the manufacturer and the consumer? Should it be read even more expansively to preclude liability for harm from all unknowable adverse drug reactions, and, by extension, from all unknowable generic risks? If this gloss on the language of comment j is correct, comment k again would serve no purpose.

Another noteworthy aspect of comment k is its suggestion that strict liability not be imposed on the manufacturers of “new or experimental” drugs containing harmful or impure ingredients that could not be eliminated “because of lack of time and opportunity for sufficient medical experience.” The scope of the “unavoidable product danger” exception would be extended beyond generic risks and would apply to garden variety defects, where something is actually “wrong” with some units of the product. Such a view reads into comment k an “‘impure ingredient” exception.

If the risk of an impure or otherwise deleterious ingredient is known when a drug is marketed, but the manufacturer could not discover Which doses contained the substance (as is the case of blood contaminated with serum hepatitis), an adequate warning on the label of the drug would place the defect within the scope of consumer expectations. The product thus would not be unreasonably dangerous under the comment i test. Impure ingredients whose presence is not known when the drug is sold (such as the offending agents in the polio vaccine case) pose a more difficult problem because of their similarity to impurities in food and manufacturing defects in mass-produced goods. The seller may be unaware of these defects and may be unable to discover them by economically feasible methods. But these instances are plainly covered by the strict liability rule of section 402A.

The comment k “impure ingredient” exemption should not apply to either of these cases. The exception should be narrowly limited to emergencies in which the usual precautions for assuring the purity of ingredients have not been taken, yet there is medical justification for using the drug.  The appropriate scope of the exception is thus so narrow that the exception would make more sense as an interpretation of the consumer contemplation test of comment i than as an exception to the strict liability rule of section 402A: in this particular context, assuming an adequate warning has been given, the risk of harmful ingredients is within the ambit of consumer contemplation.

In conclusion, the Restatement’s treatment of generic risks falls short on several counts. The requirement of a “defect” as a distinct element of strict liability was inserted to serve a function already adequately addressed by the “unreasonably dangerous” test. The Restatement fails to make a clear distinction between known and unknown hazards, and never takes a forthright position on which of these two types of hazards strict liability should cover: either, neither, or both. This omission is surprising given the evident concern, reflected both in the ALI floor debates and the comments, over the effect of section 402A upon the manufacturers of drugs, vaccines, and cigarettes. Comment k also is vague in that it fails to make clear what kind of special rule it puts in place, what purposes it meets, and to what classes of products it applies. Finally, the ALI’s position on generic product risks, uncertain though it may be, reflects policy judgments. While the ALI is a distinguished body, it is a private, nongovernmental entity. The courts have ultimate responsibility for translating policy into common-law rules, and the matter of liability for generic risks, and for toxic products in particular, requires more comprehensive scrutiny than has been afforded by the Restatement.

III GENERIC PRODUCT RISKS RECONSIDERED

When the Restatement’s commentary on adverse reactions to drugs, food, and tobacco was drafted, the proposed rule of strict liability did not cover all products placed in the stream of commerce. Thus, there was no need to consider how the full range of generic risks should be integrated into the framework of a strict liability system. Even had the drafters reflected on this issue, their efforts may not have produced an internally consistent doctrine to cover harm from the ill effects of products for human consumption and intimate bodily use, and harm from the designed-in dangers of massproduced goods, for the problem is not an easy one.

There are two basic approaches to the issue of liability for the deleterious effects of generic risks. One approach is to focus on strict liability as it has evolved in design-defect and warning cases, and to ask whether the manufacturer’s duty to eliminate or warn of product dangers extends to the particular generic hazard in question. The other approach is to ask whether the policy justifications for imposing strict tort liability in cases involving nongeneric risks, i.e., construction defects, where there is general agreement that it should be imposed, support the extension of strict liability to cases involving generic risks. Each of these approaches will be considered in the remainder of this section.

A. Justifying Strict Liability for Generic Risks: Is the Duty in Design-Deject and Warning Cases Adequate?

Under well settled principles of negligence law, a manufacturer has a duty to use reasonable care in the design of a product. This obligation requires the manufacturer to use precautionary measures which are economically and technologically feasible, and which will eliminate unreasonable risks of harm. The duty extends to risks of which the manufacturer is aware and, in the exercise of due care, should be aware.  If a hazard may be reduced by providing information to the user of a product, the duty of reasonable care may be discharged by providing instructions and warnings.

To have meaning in design cases, the concept of strict liability must make the manufacturer answerable for product-related harm for which negligence theories would provide no remedy. Strict liability potentially might extend to all generic risks, to risks that are designed into a product as well as to those naturally and unavoidably present. The failure to design out or to warn against these risks would render the manufacturer liable, even though the design change or warning might be economically or technologically infeasible, and even though the risk may have been unknown or unknowable at the time of production.

A theory of “ultra-strict” liability for harm from all generic hazards has found neither judicial nor scholarly acceptance. As Professor Gary Schwartz has argued in a similar context, if loss spreading is our goal, we ought not to adopt a rule that discriminates against the victims of nonproduct-related accidents.  Courts adopting “ultrastrict” product liability would find themselves on the fabled slippery slope and would be unable to offer any logical reason for not extending the doctrine to other contexts in which the public is routinely exposed to the risk of injury, such as the operation of premises held open for business or public purposes or leased to tenants. Such radical changes in the common law surely and properly would encounter judicial hesitation, grounded upon the conviction that it would be more appropriate to leave the difficult policy judgments involved in adopting such an expansive rule to the legislature.

The rejection of “ultra-strict” liability leaves open, however, the theoretical possibility of imposing strict liability for some harm caused by generic risks. For example, suppose an automobile manufacturer is deemed not liable for all harm to occupants who collide with the interior of a vehicle. Is there any way to assign responsibility for some but not all injuries attributable to the generic risks of the so-called “second collision” -to assign responsibility in fewer than all cases. as would be done under a rule of ultra-strict liability, yet in more cases than would be done under a rule of negligence? In other words, are there second collisions that the manufacturer could not have avoided by exercising reasonable care but for which the manufacturer should be held liable? This question has provoked considerable academic debate, much of it sharply critical of courts that have answered “yes” and imposed liability for injuries that were not reasonably avoidable without articulating a clear, workable standard for deciding when an alleged design flaw is defective or unreasonably dangerous.  The emerging consensus seems to be that design defects are best dealt with under a balancing test, which is indistinguishable from the negligence standard. Thus, the failure to develop judicially administrable criteria for strict liability has led to the conclusion that product manufacturers, absent negligence, should not be liable for failing to design out functional dangers. Commentators have concluded, in short, that there is no middle ground between negligence and “ultra-strict” liability, at least in cases involving design defects.

The one exception to this proposition, originally articulated by Deans Page Keeton and John Wade, and since adopted in several jurisdictions,  is that knowledge of risks should be imputed to the manufacturer as of the time of production or sale. Thus, in determining whether to impose liability for failure to design out or warn of a danger, a jury might take into account hazards that were unknown, or even unknowable, to the manufacturer when the product was marketed. That the manufacturer could not have discovered these risks in the exercise of reasonable care would be irrelevant; if a hypothetical reasonable manufacturer, aware of these risks, would not have marketed the product or would have warned of the dangers, an injured plaintiff may recover.

This exception uses hindsight to achieve a genuine strict liability in certain cases of generic risks, such as adverse reactions to drugs, dusts, and chemicals. This hindsight approach, however, has not received much policy-oriented justification either by courts or commentators. The mere fact that it created a well-delineated area of strict liability in design and warning cases seemed to suffice. It was inevitable that a need for a firmer rationale would arise.

The recent decision of the New Jersey Supreme Court in Beshada v. ]ohm-Manville Products Corp. attempted to provide such a rationale. The court held that asbestos manufacturers might be liable for lung diseases caused by exposure to asbestos dust at a time when the risks were unknown and undiscoverable, offering three reasons to support this extension of strict tort liability: the allocation of the costs of injuries to the parties best able to bear them; the reduction of risks by increasing incentives for safety research; and the elimination of the need for plaintiffs to prove scientific knowability, a factual determination that is too complex and speculative for jury resolution. The potential problems with each of these reasons will be considered in turn.

The first rationale offered, the notion that manufacturers of defective or unreasonably dangerous products are in a superior position to allocate the costs of product-related injuries, does not really help to answer the question of what makes a product defective or unreasonably dangerous. Nor does it answer the question of which costs should be shifted. Compared with plaintiffs who are injured by products, manufacturers are almost always better able to bear risks by spreading losses through price adjustments and insurance. This rationale would therefore justify imposing liability for harm from risks known as well as unknown, reasonable as well as unreasonable, and ultimately would lead to “ultra-strict” liability. Because it proves too much, this rationale provides only weak justification for a narrower rule of strict liability.

Professor James Henderson has also criticized the risk-spreading rationale on the ground that a hindsight approach would misallocate the costs of liability from products creating risks that were unknown and unknowable at the time of sale. Manufacturers would add this cost to the prices of different, reasonably safe products or to the same products put to different, safe uses. Since the offending products would already have been priced and sold, their liability costs could not be assigned to them. Moreover, once manufacturers discover the danger, the product is removed from the market or redesigned, or appropriate warnings are given, and thus there is no longer any need to assign costs of liability.

Such a result-product prices reflecting costs other than those caused by the product itself-would lead to market distortions and destroy the optimality properties that flow from cost-based pricing in a perfectly competitive market.  In a perfectly competitive market, cost minimization and profit maximization for a particular product, and not costs from earlier versions of a particular product, or different products altogether, will determine the price of the product. A manufacturer who tries to pass on these costs will be driven from the market by manufacturers who do not. Professor Henderson’s argument thus squarely poses a paradox: the market distorting effects of misallocation can occur only in a noncompetitive market, where the effects of misallocation are ambiguous. Because of competitive market pressures, unanticipated liability costs are more likely to be paid out of profits, loans, or sources other than price increases.

It is important to distinguish between the allocation that would result from the retroactive application of a hindsight rule and that from the prospective application. The court in Beshada pointed out that application of the rule of strict liability for unknowable risks “will force the price of any particular product to reflect the cost of insuring against the possibility that the product will turn out to be defective.” Thus, the threat of prospective liability would force a proper allocation of product prices. When a court initially adopts a hindsight rule and imposes it retroactively, however, the prices of products marketed years, or, in the case of asbestos, decades, earlier will not bear their own liability costs. In the case of asbestos, this “first shot” problem is enormous. The New Jersey Supreme Court did not ask whether considerations of fairness deriving from justifiable reliance by asbestos manufacturers, or the enormous potential liability to which the industry might be e:…:posed, supported the recognition of a hindsight rule that would operate prospectively only.

For all of these reasons-because it proves too much, because it may or may not apply depending on market conditions, and because its effectiveness depends on whether the application is prospective or retroactive-the risk-spreading rationale raises more questions than it answers and provides only weak support for a rule of strict liability.

The second policy justification offered in Beshada was that a rule of strict liability would spur safety research that might reveal hidden dangers. Put another way, a contrary rule would benefit producers who were unaware of risks and thus would tend to perpetuate ignorance, especially if plaintiffs could not easily establish that a hazard might have been detected in the exercise of due care. Admittedly, if the existence of a hazard were completely unknown at the time of marketing, a manufacturer would be unable to determine how much to spend in order to make the discovery, and there may be no increase in safety research. On the other hand, if a hazard were suspected or were known to exist but its full extent were not known, the incentive for additional investigation could produce some incremental level of safety. In either instance, though, this incentive for safety research would justify a rule of strict liability because the manufacturer can always uncover the known risks better and more cheaply than the potential victim.

It is worth noting that Beshada involved asbestos rather than a drug. Federal regulation prescribes the nature and amount of safety testing that must be done before the marketing of a new medication. In using stimulation of safety research as a rationale for a rule of strict liability for unknown risks, a court would be explicitly or implicitly recognizing a general need for more extensive premarket investigation than presently required by the FDA. This recognition, however, goes far beyond judicial determinations in individual cases that FDA approval of a particular new drug does not preclude a finding of negligence or strict liability. While the safety-incentive rationale is not indefensible,  some courts might give it less weight than they would otherwise because of its far-reaching implications.

Another problem with the accident-avoidance rationale is that it leaves open the following question: why should courts impose strict liability upon manufacturers for harm from hazards of unknown scope as an incentive to discover the true scope of the risks, but not apply strict liability as a spur to technological development where at the time of production it was technologically infeasible to eliminate or to reduce risks? There is widespread agreement that in the latter cases, involving the so-called “state of the art” issue,  manufacturers will not be liable, absent negligence, for having failed to use today’s safety technology yesterday . It is difficult to distinguish between technology that can detect the gravity of risk and technology that can eliminate or reduce risk, or to conclude that strict liability would act as a spur to the advancement of the former but not of the latter.

The third justification for strict liability offered by the Beshada court is that the litigation process cannot adequately determine scientific knowability.  But although the same might be said of the need to decide whether a manufacturer failed to exercise reasonable care in designing a product,  courts have not stopped resolving these is sues. The scientific speculation inherent in deciding whether a particular hazard was knowable may produce more uncertainty than a dispute about whether designing out a known danger was feasible; this greater degree of uncertainty might tip the balance in favor of giving at least some weight to this particular rationale for strict liability. The elimination of the need to establish knowability would certainly reduce trial costs, but so would dispensing with the burden of proving lack of due care in design cases.

Since design and warning cases generally are decided by balancing factors that are virtually identical to those used to determine negligence, it is difficult to justify treating unknown or unknowable generic risks as falling within the duty to design or warn but outside the balancing approach. Ultimately, however, a de facto negligence test for all generic risks is unsatisfactory because this standard does not take into account the compelling policy reasons for adopting a strict liability theory. I now turn to those policy reasons, which have been recognized in the context of non generic risks.

B. Justifying Strict Liability for Generic Risks: Are the Policies Underlying Strict Liability in Construction Deject Cases Adequate?

The conceptual treatment of liability for harm from unknowable generic risks as deriving from the manufacturer’s duty to design or to warn creates a discomforting impression: that liability is being imposed for a failure to do the impossible. An alternative approach is to view generic risk through the same lens that, when focused upon the risk of harm from construction defects, has produced a rule of strict liability even when it might have been economically infeasible or technologically impossible to eliminate the hazard. Here the theory does not rest so much on any real or presumed inadequacy in the manufacturing process as on a policy decision to impose liability without fault. Thus, it may be appropriate to inquire whether the bases of strict liability for construction defects support a similar rule for generic risks.

Manufacturers are strictly liable for harm from construction defects even if they could not have eliminated, or discovered, such defects by exercising reasonable care.  Held to the standard of their own plans and specifications, manufacturers must answer for imperfections that arise from their production processes.  Of the various reasons that have been advanced to justify this rule of strict liability in construction defect cases,  three seem worthy of discussion in the context of generic risks: accident avoidance, loss spreading, and the satisfaction of justifiable consumer expectations.

Whether strict liability will actually foster accident avoidance has been seriously questioned. It has been argued that producers will avoid only those accidents worth avoiding-if it is cheaper to let an accident happen and to pay the resulting liability costs, the profit maximizing manufacturer will follow that course. Thus, if testing and quality-control procedures would cost more than projected liability costs, a rule of strict liability would not encourage manufacturers to adopt procedures to prevent accidents.

This argument, however, is not entirely persuasive. A manufacturer bound by negligence principles might foresee escaping some liability costs that should attach when it does not exercise due care. The difficulties of proving fault might be too great for injured plaintiffs in certain kinds of cases,  or economic constraints might force plaintiffs to accept unfavorable settlements. Anticipating these lower liability costs, manufacturers might spend less on accident prevention. By reducing plaintiffs’ burdens, a strict liability rule might well encourage manufacturers to increase safety expenditures to the level they might reach under a negligence system that functioned optimally.

The adoption of a rule of strict liability in cases where a manufacturer knew a risk existed but did not know its full extent also might increase safety by providing an incentive to perform additional investigations. Indeed, assuming that manufacturers foresee that, under negligence principles, not every injured plaintiff will recover full damages for harm from a particular design feature or warning, the application of strict liability to all generic hazards, known and unknown, will increase the prospect of full recovery, encouraging safety expenditures and accident avoidance. This increase in safety enhancement standing alone, however, is probably insufficient to justify liability without fault in these cases.

The “loss-spreading” rationale rests on the manufacturers’ ability to use insurance to spread the costs  of harm caused by construction defects more efficiently and more easily than product victims can. Construction defects are easily insurable for two reasons: the number of claims likely to arise from such defects is fairly predictable, and this number is likely to be relatively small in comparison with the total number of products placed into the market. Insurance against these risks, therefore, is readily available because the costs are predictable and the harm to be insured against normally will remain within modest bounds. The number of known generic risks likely to occur-ranging from adverse drug reactions for which warnings have been given to automobile accidents -can also be predicted with some certainty. Rough estimates can even be made about risks whose presence is known but whose extent cannot be calculated. The only type of hazard that would not permit even a guess would be the unknown and undiscoverable danger.

In the case of generic risks, however, the other aspect of insurability-a comparatively small number of risks-is absent. Unlike construction defects that affect only a small percentage of users, every generic risk will endanger every user of the product. Thus, the amount of damage attributable to generic product risks could be enormous, even if recoveries are reduced to take into account the comparative responsibilities of plaintiffs, third persons, and other enterprises that might appropriately share the losses. One might argue, then, that loss spreading makes sense only in the context of construction defects, where the relatively modest costs can be more easily absorbed by the manufacturer.

An intermediate position might hold manufacturers strictly liable for unavoidable hazards, such as adverse reactions to toxic products. but not for designed-in, functional dangers, such as the speed of an automobile. This compromise position, however, has several problems. As a practical matter, it is difficult to base a rule of strict liability on degrees of potential damage: the notion that the more harm a defendant may cause the less likely it is that liability will attach strikes a somewhat perverse chord. Moreover, the focus on the quantity of loss may well be misguided. If the purpose of loss spreading is to deflect the economic impact of product-related harm away from those who may not be able to absorb it, perhaps the focus should be on the victims’ capacity to pay for their own injuries, and not on the aggregate cost of all such injuries.

Consumers’ ability to foresee product risks is relevant to a determination of their ability to insure themselves against those risks, and thus to a determination of their capacity to absorb the cost of their own injuries. The policy of satisfying justifiable consumer expectations  may shed light on this issue of cost absorption in particular and on the appropriateness of strict liability for generic product risks in general.

The notion that manufacturers should be strictly liable for harm from product frustration is rooted in the doctrine of implied warranty of merchantability, which holds goods to the standard of reasonable fitness for their intended use. Products placed into the stream of commerce carry with them a representation of safety, the scope of which is determined by what the ordinary consumer would expect of those products.  This representation of safety underlies the consumer contemplation test set out in comment i of the Restatement.

It is important to distinguish between two uses of consumer expectations: the goal of meeting justifiable consumer expectations as a policy behind strict tort liability, and the use of consumer expectations as a criterion for deciding whether strict liability should apply in a particular instance. The former derives from the conviction that, as a matter of fairness, consumers should be entitled to rely on the representation of safety made by the seller of a product and by any information accompanying the product. Consumers depend on the manufacturer to provide goods that will meet these implied representations so that they can make rational judgments affecting their own well-being. The imposition of strict liability will encourage producers to satisfy these consumer expectations, will permit consumers to act on the assumption that expectations will be met, and will enable consumers to survive the economic hardship of unexpected losses.

When using consumer expectations as a criterion for applying strict liability, the critical task is to determine which consumer expectations are justifiable. The rule in construction defect cases suggests that courts have found such defects to lie outside the ambit of consumer contemplation; consumers, therefore, may justifiably expect products to be free of construction flaws, and manufacturers will be held strictly liable for all such flaws: known, unknown, and unknowable. In design defect cases, however, courts apply what amounts to a negligence test and say in effect that consumers justifiably may expect only that due care, measured as of the time of manufacture, will be exercised with regard to design and warning decisions.

Is this distinction tenable? Given what the average person undoubtedly knows about product quality (especially in light of the publicity given to recalls of automobiles and other household products), all types of risk-creating flaws, both in construction and design, are arguably within the contemplation of ordinary consumers.  In some cases, awareness of a vague possibility that some defect might lurk somewhere within a product ought not to establish the risk as within the consumers’ contemplation. The wide range of potential flaws, especially in complex items such as automobiles and workplace machinery, and the varying degrees of potential risk associated with such flaws, renders a general awareness practically useless to the consumer. Moreover, the marketing image of a product may dim an already faint awareness of the risk. A rule of strict liability for construction defects, then, reflects a justifiable judicial determination that consumers merit protection under a standard requiring goods to be completely free of such defects.

A practical reason for limiting justifiable consumer expectations to the exercise of reasonable care in the design of products is that there is no other workable standard by which courts may determine whether a product is unreasonably dangerous. Consumers usually are unable to form an expectation about the extent to which design defects will be eliminated: it is not a matter of expecting one unit of a particular product to be as good as the next. Therefore, the best that consumers can justifiably expect in the design defect context is that manufacturers will use technologically and economically feasible methods to reduce or eliminate foreseeable risks.

The policy of satisfying justifiable consumer expectations also dictates the refusal to impose strict liability for harm from known generic risks. The ordinary consumer appreciates the dangers posed by a speeding automobile or a sharp knife, and would therefore have no cause to believe that a manufacturer would do more than use due care to reduce these hazards. Contemporary smokers know of the risk of cancer from cigarettes. The presence of warnings on the label of prescription drugs makes physicians, acting on their patients’ behalves, aware of the relevant risks. In each of these cases, consumers can make a rational judgment about the scope of the hazard and act accordingly.

But if the danger or its full dimensions do not become evident until after the plaintiff has been exposed to the product, the consumer-contemplation policy supports the imposition of strict liability. The product has inflicted an unpleasant surprise. Although the manufacturer could not have discovered the danger or its extent, the marketing of the product misled the consumer with an implied representation of safety that was not met and thus deprived the consumer of the opportunity to evaluate the risk and to decide whether to accept it. Under this new view of consumer e1:pectations, a product posing an unknown or unknowable generic hazard would stand on the same footing as a product with a construction flaw: each product would be considered unreasonably dangerous for purposes of strict liability because it frustrated justifiable consumer e1:pectations recognized by the law.

The need to integrate liability for product-related harm to nonconsumers into a scheme structured around consumer expectations raises a conceptual problem. Professor Gary Schwartz has noted that a third-party beneficiary theory can preserve the viability of the consumer-expectations test in instances where the consumer could reasonably be deemed to have contemplated the conferral of accident-avoidance benefits upon others.  The extension of the implied warranty of merchantability, which under the Uniform Commercial Code protects anyone “who may reasonably be expected to use, consume or be affected by the goods,”  lends support to this argument by analogy. But it would be stretching things beyond the breaking point to assume that a consumer intends to protect bystanders, especially those who are total strangers. As a practical matter, this problem will be limited to construction defect cases: the de facto negligence test used to determine liability in design defect cases applies equally well to consumers and bystanders;  and unknown generic risks will rarely endanger anyone other than a product user. These limitations, however, do not eliminate the theoretical hurdle.

One answer is simply to recognize that the policy of satisfying justifiable expectations supports the imposition of strict liability only on behalf of consumers and their intended beneficiaries. To hold manufacturers liable without fault for harm to bystanders would then require a separate, independent rationale. A second, and perhaps preferable, solution lies in a reassessment of the consumer-contemplation policy. Its roots, as has been noted, go back to the doctrine of implied warranty of merchantability, the primary concern of which was the adjustment of the rights of parties to commercial transactions. Although courts fashioning tort doctrine may legitimately borrow from sales law, they need not feel fettered by sales law constraints. Where the same policy goals would be applicable to nonconsumers, it might be logical to extend strict liability protection beyond the purchaser. Thus, the user of a product personally relies upon the implied representations of safety inherent in the product. Certain bystanders may also entertain similar expectations that a product will not injure them. This approach would require courts to differentiate between two classes of bystanders: the first is exemplified by a pedestrian injured when an automobile goes out of control because of a construction defect; the second by the person harmed while asleep at home by an airplane that crashed because of a flaw in its assembly. In the latter case, the victim had no expectation generated or frustrated by the product. The falling airplane was like a falling meteorite-completely unexpected-an event for which there is no tort remedy. Hence the consumer-contemplation rationale, expanded to take into account the actual expectations of users and bystanders, would not support recovery by such victims under strict liability.

CONCLUSION

This Article has proposed a conceptual framework for determining when to apply strict liability to generic product risks. On the twentieth anniversary of the first decision to hold product manufacturers strictly liable in tort,  the parameters of the doctrine remain in flux. Federal legislation threatens to restrict the doctrine to harm from non generic risks.  Conflicts and uncertainties in the common law of product liability as it has evolved in the states have been cited as a major justification for federal action.

The case for salvaging some remnant of strict liability within the area of generic product risks is not an easy one. The use of a policy based analysis, however, makes it possible to link the accepted view that the rule should apply to construction defects to the admittedly controversial proposition that harm from unknown or unknowable generic risks should be compensated in the same fashion. The advantage of this approach is that it provides a coherent, principled basis for excluding other kinds of generic product risks from a rule of strict tort liability. Both the satisfaction of justifiable expectations on the part of product victims and the achievement of modest advances in safety justify the application of strict liability to harm from unknowable generic hazards.

Neither section 402A and comment k, interpreted as denying strict liability for unknowable generic risks, nor Beshada, forthrightly permitting recovery in such cases, presents a satisfactory resolution to the problem. The proposed federal Product Liability Act uncritically accepts comment k, while Beshada has provoked an outpouring of criticism. The tide at the moment apparently is running against strict liability in generic-risk cases. But the last words have not yet been spoken.

Joseph A. Page, 1983.

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1989 DES Case: Besser v. Squibb & Sons

Abstract

This appeal from the dismissal of a complaint on the ground that the action, commenced pursuant to the “revival statute”, was barred by the “borrowing statute” involves the interplay between the latter (CPLR 202) and the 1986 statute which revived causes of action arising out of exposure to diethylstilbestrol (DES) and other toxic substances, even if such causes had been previously dismissed as time barred. Since her action is time barred if the borrowing statute controls, plaintiff argues that, inasmuch as the revival statute begins with the words “notwithstanding any other provision of law” (L 1986, ch 682, § 4) the borrowing statute is to be disregarded in revival statute actions. The motion court rejected this argument and granted defendants’ motion for summary judgment.

BESSER v. SQUIBB & SONS, Leagle, 1989253146AD2d107_1238, March 30, 1989.

Image by Jeffrey Zeldman.

Plaintiff’s construction of the revival statute does not comport with the Legislature’s intent to provide to New York residents only — not the entire world — a one-year window period in which to sue for claims otherwise barred by law. Plaintiff was a resident of Pennsylvania at the time her cause of action accrued, a resident of New Jersey at the time her injury manifested itself, and a resident of Virginia at the time she first commenced a lawsuit for in utero exposure to DES. Despite the absence of any nexus to New York, she contends that this action, and many others which similarly have no connection to the State, can be maintained in this jurisdiction. We believe that such a result is contrary to logic and foreclosed by the legislative history and policy underlying the revival statute. Accordingly, we affirm.

Plaintiff, who was born in Philadelphia, was allegedly exposed, in utero, to DES during her gestation. Thus, any such exposure occurred wholly in Pennsylvania. In September 1975, while she was a resident of New Jersey and attending college in Massachusetts, plaintiff became ill and was diagnosed as having clear cell adenocarcinoma of the cervix, a condition allegedly caused by the exposure to DES. She thereafter underwent treatment in New Jersey and Pennsylvania. After graduating from college in 1977, plaintiff returned to her home in New Jersey. Since that time, she has resided in Illinois, Virginia and Massachusetts, but now apparently resides in New York.

On December 29, 1980, plaintiff commenced an earlier action in New York solely against E. R. Squibb & Sons, Inc. to recover for her alleged exposure to DES. At the time, she was a resident of Virginia, and had never lived in New York. That action was dismissed on July 27, 1982 because the court found that under the then applicable three-year Statute of Limitations, plaintiff’s cause of action accrued at the time of her “last exposure” to DES, and that, even allowing for a toll of the limitation period until she reached majority, she had commenced her action more than three years after she attained her majority on September 1, 1974.

In 1986, as part of a tort reform package, the Legislature enacted the Toxic Tort Revival Statute (L 1986, ch 682, § 4), which provides: “Notwithstanding any other provision of law, including sections fifty-e and fifty-i of the general municipal law, section thirty-eight hundred thirteen of the education law and the provisions of any general, special or local law or charter requiring as a condition precedent to commencement of an action or special proceeding that a notice of claim be filed or presented, every action for personal injury, injury to property or death caused by the latent effects of exposure to diethylstilbestrol, tungsten-carbide, asbestos, chlordane or polyvinyl-chloride upon or within the body or upon or within property which is barred as of the effective date of this act or which was dismissed prior to the effective date of this act solely because the applicable period of limitations has or had expired is hereby revived and an action thereon may be commenced provided such action is commenced within one year from the effective date of this act”.

Although the 1986 legislation made significant changes in the rules governing the conduct of personal injury suits, its focus was on the elimination of New York’s “last exposure” rule and the adoption of a “discovery” Statute of Limitations. (L 1986, ch 682, § 2, adding CPLR 214-c.) The new Statute of Limitations provides that a personal injury claim arising out of the “latent effects of exposure to any substance or combination of substances” accrues on the earlier of “the date of discovery of the injury by the plaintiff or from the date when through the exercise of reasonable diligence the injury should have been discovered”. (CPLR 214-c [2].) Henceforth, an injured party is permitted to assert a cause of action within three years from the date of discovery of the injury, regardless of the time of exposure. In addition, in an effort to eliminate the unfairness of the State’s last exposure rule, the revival statute provided a one-year window period to sue for persons who were or would have been barred by operation of the preexisting last exposure rule.

Commenced on August 6, 1986, this action was also brought initially only against Squibb. In addition to a general denial, Squibb’s answer asserted as affirmative defenses the bar of the applicable Statute of Limitations and the unconstitutionality of the revival statute. When plaintiff moved to dismiss these affirmative defenses, Squibb cross-moved for summary judgment on the ground, inter alia, that the action was barred by the Statute of Limitations. While the motion was pending, plaintiff commenced similar actions against The Upjohn Company and Eli Lilly & Company.

Squibb argued, and plaintiff did not contest, that where a cause of action accrues outside New York in favor of a nonresident, the borrowing statute requires that the foreign Statute of Limitations apply if it is shorter than the applicable New York limitation period ; that plaintiff’s injuries accrued in 1955 in Pennsylvania; and that, as a result, she must satisfy the Pennsylvania limitation rule, which, as long as the revival statute is upheld as constitutional, is shorter than the New York period. In response, plaintiff’s sole contention was, as it is on appeal, that since the revival statute commences with the words “notwithstanding any other provision of law”, the borrowing statute was intended to be excluded from any application to revived claims.

Finding that exposure to the drug occurred in Pennsylvania, while discovery of the illness took place in New Jersey, the court held that either the Pennsylvania or New Jersey law would apply by virtue of the borrowing statute. Applying that statute, the court ruled that the claim was untimely under the Statute of Limitations of either State, and dismissed the complaint. The court rejected the argument that the initial words to the revival statute excluded the application of the borrowing statute, citing In re “Agent Orange” Prod. Liab. Litig. At the court’s direction, the parties stipulated that the separate actions be consolidated and that Squibb’s cross motion be deemed to have been made by Upjohn and Lilly as well. This appeal followed.” …

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California Expands Tort Liability under the Novel Market Share Theory

The California Supreme Court, in the novel and unprecedented case of Sindell v. Abbott Laboratories, eliminated the plaintiffs burden of identification of a negligent party, and thus the causation requirement, in a multiple party tort action. In the course of this decision, the court adopted the “market share” theory of liability which dictated in Sindell that nonidenti iable defendant-manufacturers of the generic drug DES would be liable for the damages in proportion to their share of business in the market. The author thoroughly examines various theories of recovery, such as “alternative liability,” “concert of action” and “enterprise liability,” which the court employed in their formulation of the ‘market share” theory. While in agreement with this decision, the author analyzes the majority and dissenting opinions and notes the benefits and shortcomings of this most controversial development in California tort law.

I. INTRODUCTION

Until recently, the vast majority of women who had developed cancer due to their mother’s ingestion of the drug diethystilbestrol (DES) during pregnancy were unable to recover damages because of their inability to identify the responsible manufacturer. However, the California Supreme Court, in Sindell v. Abbott Laboratories, has pioneered a new theory of recovery which permits a DES daughter to recover damages without naming a specific manufacturer-defendant. This four to three decision will likely have far-reaching consequences in the field of products liability by in effect removing causation in certain situations as a required element of proof.

California Expands Tort Liability under the Novel Market Share Theory: Sindell v. Abbott Laboratories, Pepperdine Law Review, Volume 8 | Issue 4 Article 4, 5-15-1981.

Before discussing the significance of Sindell with regard to the expansion of manufacturer’s liability, the special nature of DES cases will be noted. Next, both the history and the court’s treatment of each theory of applicable established tort law will also be discussed, in addition to a review of the market share theory, adopted by the Sindell court. Finally, both the advantages and drawbacks of the market share theory, and its potential impact on future cases in the field of products liability will be analyzed.

II. THE FACTS

A. DES

DES, a synthetic compound of the female hormone estrogen, was approved on an experimental basis in 1947 as a miscarriage preventative. DES was manufactured, promoted, and marketed from 1947 to 1971 by hundreds of drug companies,  including the respondents in Sindell. In 1971, as a result of statistical data showing a significant correlation between the use of DES and the subsequent development of cancer in the daughters of mothers who took the drug during pregnancy, the FDA “banned” the use of the drug for the purpose of preventing miscarriages, because of its danger and ineffectiveness.

Presently, several hundred young women whose mothers ingested DES during pregnancy are suffering from a DES-induced cancer known as clear cell adenocarcinoma. Heretofore a relatively rare form of cancer it is believed to strike after a minimum latent period of 10 to 12 years and generally appears in the vagina, cervix and uterus. The vast majority of DES daughters who have not developed cancer are suffering from other abnormalities, the most prevalent being adenoses.

B. The Facts in Sindell

The appellant, Judith Sindell, filed suit against several drug companies for personal injuries sustained as a result of prenatal exposure to DES. Sindell sued on her own behalf and as representative of a class of other women in California similarly situated. The Sindell case is just one of many actions that has been brought in recent years by DES daughters, most of whom have already developed clear cell adenocarcinoma. Sindell, as a result of DES exposure, developed a malignant bladder tumor which was surgically removed.  She also continues to suffer from adenoses, which requires that she be frequently monitered by biopsy or colposcopy to insure early warning of further malignancy.

Among Sindell’s allegations were that each defendant knew, or should have known, that DES was carcinogenic at the time of its manufacture and sale, and that the defendants acted in concert in the manufacture and promotion of DES for the prevention of miscarriage without adequate testing or warning, and without monitoring or reporting its effects.  Sindell further alleged that each defendant undertook a program to market DES on a “wide-open basis” for the prevention of miscarriage, notwithstanding the fact that it was only conditionally approved by the FDA and that each defendant continued to market DES after learning of its carcinogenic properties. However, in her complaint, and subsequdntly throughout her trial and appeals, Sindell was unable to name a specific manufacturer responsible for her injuries.

The trial court sustained the defendant’s demurrer to the complaint and dismissed the action, primarily because of Sindell’s inability to name the responsible manufacturer. On appeal, the court of appeal reversed the trial court, finding a cause of action under both the alternative liability and concert of action theories. The defendant’s subsequent appeal resulted in the California Supreme Court decision which is the subject of this case note.

C. The Issue Presented

Although many legal issues are involved in DES cases in general, the Sindell court restricted its discussion to the following issue: “May a plaintiff, injured as the result of a drug administered to her mother during pregnancy, who knows the type of drug involved but cannot identify the manufacturer of the precise product, hold liable for her injuries a maker of a drug produced from an identical formula? The California Supreme Court believed public policy required an extension of traditional products liability doctrine to provide for an adequate remedy in such situations. In order to accomplish this extension, the court adopted a novel theory of liability in tort law.

Before discussing the Sindell court’s analysis of this complex legal issue, a brief explanation of the various theories of liability which have permitted plaintiffs to recover despite the inability to name a specific defendant is necessary.

III. CAUSATION

Although DES cases involve several legal problems, such as class action certification, statute of limitations, possible absence of a cause of action for fetal injury prior to viability, and possible absence of a cause of action because the danger of the drug was unknown at the time of manufacture, the Sindell court saw the identification of the manufacturer, or causation issue, as the major problem facing potential plaintiffs.

Because of the significant time lapse between the intake of the DES, the manifestation of the injury, and the time period which elapses before DES is discovered to be the causative agent, most plaintiffs are unable to positively identify the specific manufacturer of the drug ingested by their mothers.

The general rule in tort liability is that the plaintiff has the burden of proof on the issue of causation with the responsibility of showing that his or her injuries were caused by the act of the defendant or by an instrumentality under the defendant’s control. This rule applies whether the injury occurred as the result of an accidental event or from the use of a defective product.

There are several exceptions to this general rule, two of which may be applicable to the Sindell situation. These two exceptions are “concert of action” and “alternative liability. A third basis of liability, “industry-wide” or “enterprise liability, has also been considered in the resolution of DES cases. All of these theories, under certain circumstances, may support a plaintiff’s action even if the responsible defendant is not specifically named or identified, and all were considered as possible solutions by the Sindell court. Thus, each of these theories will be discussed in detail before the adopted “market share” approach is analyzed.

A. Alternative Liability
1. History

The unanimous decision of Summers v. Tice best exemplifies the theory that has been termed double fault and alternative liability. This theory states that, where all defendants behave tortiously, but the plaintiff is unable to identify the specific defendant that causes his or her injury, the burden of proof is shifted to each defendant to show that he is not the responsible party. Where the defendants are unable to meet this burden, joint and several liability results.

In Summers, the plaintiff was injured when two hunters simultaneously and negligently fired their guns in the plaintiff’s direction. The plaintiff could not ascertain which of the defendants actually caused the injury, but the court nevertheless held that both defendants were jointly and severally liable. The Summers court refused to apply the concert of action theory,  by stating that to do so would be straining that concept. The court developed instead the concept of alternative liability, based on the following policy consideration: if the plaintiff is forced to identify the responsible defendant, there is the possibility that the wrong defendant will be identified, conceivably leaving the injured plaintiff without a remedy. Because of this inequitable result, the burden of proof should shift to the defendants, “each to absolve himself if he can.

This rule of alternative liability developed by the Summers court has been adopted by the Second Restatement of Torts. The Restatement notes that the policy underlying the rule is the injustice of permitting proved wrongdoers, who among them have inflicted an injury upon the entirely innocent plaintiff, to escape liability merely because the nature of their conduct and the resulting harm has made it difficult or impossible to prove which of them has caused the harm.

In formulating the alternative liability theory, the Summers court relied upon the celebrated case of Ybarra v. Spangard. In Ybarra, the plaintiff sustained an injury while unconscious during the course of surgery. The court decided that it would be an unfair burden to require the plaintiff to identify the person or persons who caused his injury, because his inability to identify the specific causative factor was a direct result of actions of the defendants. Therefore, the court, by applying the doctrine of res ipsa loquitur found that an inference of negligence had arisen that required the defendants to explain their conduct.

2. Appellant’s Reliance on Alternative Liability

In Sindell, the appellant placed primary reliance on the Summers and Ybarra decisions to show joint or alternative liability on the part of the defendants. For example, the appellant maintained that the Ybarra decision went one step further than that required of the court in a DES case.

In Ybarra the court may have actually shifted the burden of proof to an entirely innocent non-negligent party. Here we are merely asking the court to follow the doctrine elaborated in Summers and shift the burden of proof to a group of defendants, each and every one of which is a negligent cause of the plaintiff’s inability to identify the specific wrongdoer causing inJury.

The appellant also attempted to compare the Summers fact situation to that of the DES-type of injury. For example, the appellant pointed to the fact that the fungible nature of the shotgun pellets in Summers was what made the identification of the responsible defendant virtually impossible. This was analogized to the situation in Sindell, where the fungible nature of the generic drug DES made it difficult to prove without records which respondent caused the harm to the appellant.

In Summers, the conduct which created the impossibility of identification was the simultaneous discharge of the two defendants’ shotguns. However, in Sindell, the appellant argued that the drug companies, by manufacturing the same drug under a variety of trade names, created a situation in which it was unlikely that any identification could be made. The appellant also contended that the tortious character of the respondent’s conduct in failing to warn of, or discover, the dangers of DES was the major reason why all parties failed to keep better records. Thus, the appellant maintained that the DES injury was an even more compelling situation in which to find liability than that found in Summers.

In developing this theory, the plaintiff relied on Haft v’ Lone Palm Hotel. In Haft, multiple defendants were held liable for the drowning of a young boy and his father in the hotel swimming pool despite the absence of proof of causation. The defendants were held to have been liable for negligence in failing to provide a lifeguard as required by law. Even though there were no witnesses to the accident, the Haft court held that the absence of evidence of causation was a direct and foreseeable result of the defendant’s negligence, and on this basis, shifted the burden of proof to the defendants. Similarly, the appellant in Sindell argued that her inability to identify the responsible manufacturer was a direct and foreseeable result of the defendant’s negligence in their failure to warn consumers of the dangers of DES.

3. Sindell Analysis of Alternative Liability

The Sindell court, in response to the respondent’s allegation that the appellant was in a superior position to identify the responsible manufacturer, stated that neither Sindell nor the drug manufacturers were in a better position to bear the burden of proof of identifying the responsible manufacturer.

The respondents argued that the Summers-Ybarra burden of proof rule was predicated on the defendant’s greater access to information, and since this was not the case in Sindell, alternative liability should not be applied. The court rejected this claim, noting that while “Summers states that defendants are ‘ordinarily … in a far better position to offer evidence to determine which one caused the injury’ than a plaintiff,” this is not necessarily a prerequisite to the shifting of the burden of proof. The court believed that the particular circumstances in Sindell, as in most DES cases, made it virtually impossible for either party to identify the specific wrongdoer.

The court then distinguished the appellant’s reliance on Haft. The court stated that the difficulty or impossibility of the identification of the specific responsible DES manufacturer was not, as argued by the appellant, the result of the respondent’s alleged negligent act of failing to provide adequate warning. Rather, in the view of the court, it was a result of the long passage of time between the act, the ingesting and prenatal exposure to DES, and the resulting subsequent development of cancer.

The Summers theory of alternative liability was rejected by the Sindell court for one major reason: the number of joined and unjoined defendants. In Summers, all parties who were or could have been responsible for the harm to the plaintiff were joined as defendants. However, in Sindell, there were approximately 200 drug companies  that might have produced the injury-producing drug that injured the appellant; of these, only five were ultimately joined as defendants.

The court concluded that an application of the Summers rule to Sindell would not be fair to the respondents. The possibility of any of the respondents causing the injury to the appellant was too remote to require each respondent to exonerate itself, especially with the substantial possibility that the actual offending manufacturer might escape liability altogether. Thus, the court refused to apply the Summers theory of alternative liability.

B. Concert of Action
1. History

Concert of action is another theory by which a plaintiff may obtain joint and several liability. A typical illustration is that of an illegal drag race in which a bystander is injured by one of the participants. Suppose A, B, and C enter into such a race, and P is injured by A’s car. Under the concert of action theory, P may sue A, B, C or any combination of the three.

Prosser defined the concert of action rule as follows:

All those who, in pursuance of a common plan or design to commit a tortious act, actively take part in it, or further it by cooperation or request, or who lend aid or encouragement to the wrongdoer, or ratify and adopt his acts done for their benefit, are equally liable with him.

Thus, in the above example, all P need do is show that “each defendant he has joined helped plan and facilitate the race, that the participation of each was tortious, and that his injury resulted from the race. It should be noted that the participants of the race may still be held under the concert of action theory even though they did not expressly agree to participate in it; “all that is required is that there be a tacit understanding. . . . It is also noteworthy that the definition of “joint tortfeasors” with relation to concerted action applies not only to those who act in concert to accomplish some common goal or plan and thereby cause injury, but also to “those who order, direct or permit others to do the act, and who give assistance or encouragement.  This theory of liability is accepted without dispute in California.

Orser v. George, relied on by the appellant in Sindell, explains the rationale for the use of the concert of action theory as a means to establish the element of causation. In Orser, three defendants were engaged in the tortious conduct of firing their guns in the direction of the decedent. Two of the three were alternately firing a pistol which was later determined to be the weapon that killed the decedent. The third defendant was shooting a rifle, which was not the fatal weapon. The trial court granted the third defendant summary judgment on the basis that he met the alternative liability burden of proof in showing that he was not the responsible defendant. The court of appeal reversed on the issue of whether the third defendant’s tortious conduct in firing the rifle in the direction of the decedent had provided the other defendants with the “substantial ‘assistance and encouragement’ necessary for concert of action liability.

Orser effectively demonstrates the distinction and the added element involved in concert of action as opposed to alternative liability. If a defendant can be shown to have joined with others to facilitate an injurious result, it is irrelevant whether or not he can subsequently meet the burden of proof by showing that he was not personally responsible. Under the concert of action theory, the act of joining in or encouraging tortious conduct is in itself tortious.

The close relationship between concert of action and enterprise liability is shown in Hall v. E. I. Du Pont De Nemours & Co., Inc. Hall involved injuries to thirteen children by dynamite blast caps. The evidence of individual manufacturers was destroyed by the explosions. Alleging that the defendants knew that blasting caps were dangerous and agreed among themselves not to put warnings on the labels, the plaintiffs sued the six major manufacturers of blasting caps and the industry’s trade association. Although Hall was not decided on concert of action, the language used by the court forms a basis for the enterprise theory of liability. Accordingly, Hall will be discussed more fully below.

2. The Sindell Analysis of Concert of Action

The court first addressed the appellant’s charge that the respondent’s parallel- or imitative conduct in their testing and promotion, methods was in itself tortious conduct. The court rejected this contention by pointing out that it is common for manufacturers to borrow testing and sales techniques from other manufacturers in the same industry. Thus, the court refused to set any precedent that might “render virtually any manufacturer liable for the defective products of an entire industry. This was the major reason for the court’s rejection of the concert of action theory, since, in the court’s view, its application in this context would have expanded liability much further than had ever been intended.

The court also distinguished the DES cases from prior concert of action cases cited by the appellant. In particular, the court sought to distinguish Orser. The decision in Orser was based on the encouragement and assistance given by one of the alleged tortfeasors to the other. However, there was no allegation made by the appellant in Sindell that each respondent knew of the other’s tortious conduct, or that they assisted and encouraged one another to inadequately test DES and to provide inadequate warnings in the same manner as in Orser. Thus, the theory of concerted action was rejected.

C. Enterprise Liability
1. History

The concept of enterprise liability was first introduced in Hall v. E. I. Du Pont de Nemours & Co., Inc.. Though Hall and its companion cases were decided on other grounds, the court suggested an expansion of the concert of action theory to include corporate entities, and referred to this expansion as “enterprise liability.” In Hall, the defendants had adhered to an industrywide standard with regard to safety design, labelling and manufacture of the blasting caps. Thus, it appeared that the defendants jointly controlled the risk of injury. If shown by the plaintiffs that the caps were manufactured by one of the defendants, the burden of proof would shift to the defendants.

This novel theory of liability was developed and refined by Naomi Sheiner, while a law student at Fordham University for use within the context of DES actions. In DES and a Proposed Theory of Enterprise Liability, Sheiner proposed that enterprise liability “combines the better features of concert of action and alternative liability into one coherent theory. The elements of the theory as outlined in the article are as follows:

  1. Plaintiff is not at fault for his inability to identify the causative agent and such liability is due to the nature of the defendant’s conduct.
  2. A generically similar defective product was manufactured by all the defendants.
  3. Plaintiff’s injury was caused by this product defect.
  4. The defendants owed a duty to the class of which plaintiff was a member.
  5. There is clear and convincing evidence that plaintiff’s injury was caused by the product of some one of the defendants. For example, the joined defendants accounted for a high percentage of such defective products on the market at the time of plaintiff’s injury.
  6. There existed an insufficient, industry-wide standard of safety as to the manufacture of this product.
  7. All defendants were tortfeasors satisfying the requirements of whichever cause of action is proposed: negligence, warranty, or strict liability.

Once the plaintiff proves these seven elements, the burden of proof as to causation shifts to the defendants, each of which can exonerate itself by showing … that its product could not have been the one which injured this particular plaintiff.

Enterprise liability is similar to alternative liability in that it presumes that one of the defendants caused the plaintiff’s injury, and because of the tortious acts of all defendants coupled with the plaintiffs inability to identify the one who caused the injury, the burden is shifted to the defendant to exculpate himself if he is able. Like concert of action, the plaintiff must prove an additional element in enterprise liability, . . . , one that is derived from the concerted activities of the defendants: the presence of an insufficient industry wide safety standard. In addition to the Restatement’s theory of concert of action and the Summers rule of alternative liability, Sheiner, in developing this proposed theory of liability, relied on both Hall and Ybarra for authority.

The primary rationale that Sheiner advances for enterprise liability is the familiar policy generally found in strict liability cases: “That as between the innocent plaintiff and the tortfeasors, the tortfeasors should bear the cost of the injury. Sheiner relies on the policy considerations of the doctrine of respondeat superior and strict liability, which involve a deliberate allocation of risk to those in the best position to take preventative measures and to absorb and distribute foreseeable costs to the public. In particular, reliance is placed on the landmark decision of Escola v. Coca Cola Bottling Co. , which developed the theory of strict liability in response to the scientific and industrial advances of the time. The Sheiner article suggests that it is now time to advance still another, more far-reaching form of liability.

2. Sindell Analysis of Enterprise Liability

The Sindell court rejected the theory of enterprise liability, at least in form. The court distinguished Sindell from Hall by pointing out that in the latter there were only six manufacturers which represented the blasting cap industry in the United States;  there are at least 200 manufacturers of DES, of which only five were named in Sindell. Moreover, in Hall, the defendants jointly controlled the risk of injury through a trade association; however, in Sindell, proof of control of risk would not be shown by such means.

The court also advanced the policy reason that the drug industry, because of its close affiliation with the Food and Drug Administration, should not be held completely responsible for its industry-wide standards, since those standards are dictated by the government. In its analysis, however, the court failed to consider the fact that although the FDA set the standards for the manufacture and distribution of DES, the manufacturers of the drug failed to follow these standards.

Thus, the court rejected, rather summarily, the third theory of liability offered by the appellant. However, as will be seen below, while the court rejected enterprise liability in form, the substance is strikingly similar to the theory of “market share” liability that the court developed sua sponte.

IV. MARKET SHARE LIABILITY

Although the court deemed the three theories of liability advanced by Sindell insufficient to warrant a cause of action, the court nevertheless held that the appellant should not be precluded from recovery. The court stated that the response of the courts can be either to adhere rigidly to prior doctrine, denying recovery to those injured by such products, or to fashion remedies to meet these changing needs. Therefore, based on major policy considerations, the court established a new theory of causation applicable to a limited number of cases.

Primary authority for “market share” liability was Justice Traynor’s landmark concurring opinion in Escola v. Coca Cola Bottling Co. , which over thirty years ago recognized the then traditional standard of negligence as insufficient to govern the obligations owed by the manufacturer to the consumer.  As in Escola, the policy argument that the manufacturer is better able to bear the cost of an injury resulting from a defective product was also stressed by the Sindell court. It was reasoned in Sindell that from a policy standpoint, holding a manufacturer liable for defects in their products and for the failure to warn of harmful effects, even in the absence of proof of causation, would provide an incentive for product safety, since the manufacturer would be in the best position to guard against such defects.

Although the Sindell court rejected the theories of alternative liability, concert of action, and enterprise liability, it nevertheless borrowed heavily from each of these theories in its formulation of “market share” liability. In its rejection of alternative liability and concert of action, the court apparently preferred not to expand either of these established tort doctrines to the extent that would be necessary in the Sindell factual setting. In contrast, enterprise liability, which is more of a proposed theory than an established doctrine, was relied on very heavily by the court in the adopted “market share” theory.

The major difference between the three theories of liability proposed by the appellant and the “market share” theory formulated by the court, is that “market share”, rather than imposing joint and several liability, imposes only several liability on the defendants. Accordingly, no manufacturer may be held liable for 100 percent of the judgment. Instead, “each defendant will be held liable for the proportion of the judgment represented by its share of that market unless it demonstrates that it could not have made the product which caused plaintiffs’ injuries.” Although the court uses the term “market share” to literally mean “the proportion of the judgment represented by [that defendant’s] share of that market, the court did not state exactly how a defendant’s share of the market would be determined.

The court recognized that some discrepancy between the “market share” apportioned to a defendant and the actual liability of that defendant is inevitable, primarily because of the passage of time involved. However, the court likened this problem to the inability of a jury to precisely determine the relation between fault and liability under the doctrines of comparative fault  or partial indemnity. In practice, it would seem that a defendant’s portion of the market would be more easily defined, because of company records of sales and profits, than a particular defendant’s comparative fault in, for example, a multiple-vehicle accident case, which would necessarily be a more subjective determination because of the lack of factual basis.

The other major problem with the “market share” theory, is that all the potential defendants may not be named. The Sindell court concluded, however, that this was not a major obstacle in this case, since the five named respondents represented approximately ninety percent of the entire market. Thus, there was only a ten percent likelihood that the offending producer would escape liability. The court, therefore, gave the appellant the initial burden of joining a “substantial percentage” of the manufacturers in bringing an action based on “market share” liability. However, the court did not determine what constituted a “substantial percentage,” except to state that in the instant case that the appellant met the burden.

Though the court readily acknowledged the above potential procedural and equitable problems with the theory, it viewed these as relatively minor, considering the alternative of leaving the appellant without a remedy. Thus, it appears that the Sindell court, without specifying it as such, facilitated a type of balancing test in its adoption of “market share” recovery; inconsistencies inherent in the determination of a “substantial percentage” or “market share” are outweighed by the necessity of providing innocent plaintiffs’ with an avenue of recovery.

V. THE DISSENT

A strong dissent, written by Justice Richardson, began by stating that the ramifications of the “market share” theory adopted by the court were virtually limitless, with the “elimination of the burden of proof as to the identification [of the manufacturer whose drug injured plaintiff imposing] … a liability that would exceed absolute liability. Justice Richardson cited briefly the prevailing authority on tort law, as well as other DES cases in support of this position.

The dissent painstakingly examined the majority’s decision, showing, one by one, the problems inherent in the “market share” theory. First, although the court stated that the requirement of proof is satisfied by joinder of those defendants who have together manufactured a “substantial share” of the market,  it failed to establish a guideline or method of determining what constitutes a “substantial share.  Although the dissent believed that this should have been specifically determined by the court, the dissent did not appear to consider this a major deficiency in the decision compared to the other problems with “market share” recovery.

More significantly, the dissent was concerned with the consequences of what it terms the “unprecedented extension of liability” advanced by the theory. For example, a particular defendant, having a very small share of the relevant market, could “be held proportionately liable even though mathematically it is much more likely than not that it played no role whatever in causing plaintiff’s injuries. This would allow the plaintiff to “pick and choose their targets, with the defendants, who are held to be liable, named according to whatever method the plaintiff chooses, rather than by the possibility or likelihood of liability. While this may be a legitimate concern, it seems more likely that a potential plaintiff unable to identify a responsible defendant would name those companies most readily identified as DES manufacturers, with a corresponding large share of the market, rather than those minor companies who participated in an extremely small portion of the market.

The dissent also pointed out the practical consideration of the disproportionate impact on those manufacturers who are amenable to suit in California, since it is possible that no other state will adopt the market share theory. In this situation, those manufacturers brought to trial in California would be, in effect, jointly responsible for 100 percent of plaintiffs’ injuries although those manufacturers ‘substantial’ aggregate market share may be considerably less.

Finally, the dissent criticized the theory as contrary to the social policy that encourages the development of new pharmaceutical drugs. Justice Richardson reasoned that the decision of liability based on market share would inevitably inhibit, if not the research or development, at least the dissemination of new pharmaceutical drugs. This, he stated, was totally inconsistent with the policy of traditional tort theory as advanced in the Restatement. While Justice Richardson’s view is shared by several authorities, it has been controverted by others.  This conflict of opinion will be discussed more fully below.

The dissent concluded by suggesting, in view of the sweeping possibilities of the market share theory as applied to other areas of business and commercial activity, that this extreme departure from traditional tort law should only be undertaken, if at all, by the legislature.

VI. IMPACT OF SINDELL

A. Problems with “Market Share” Liability

Authorities in the field of products liability disagree as to the long-term impact of the Sindell ruling; however, it is generally agreed that the decision, although limited, poses potential procedural problems.

The first apparent problem with the “market share” approach is that all potential defendants need not be named. Only a “substantial share” or percentage of the total possible defendants must be named. This not only raises the practical problem of determining what a “substantial share” of the market is, but also leaves the possibility that the actual tortious manufacturer would not be named. In this situation, the “substantial share” of manufacturers, rather than the responsible tortfeasor, would pay for the plaintiffs injuries.

Although the Sindell court did not believe that this would be a major problem, its failure to give a guideline for determining what is a “substantial share” of a market has created potential problems. The lack of foresight by the court in creating a novel theory of liability without following up on the practical application of the theory has, perhaps unnecessarily, exposed the decision to criticism. A related problem is the failure of the court to explain a method of determining the “market share” of a defendant.

One potential procedural problem not discussed by either the majority or the dissent is whether a finding of “market share” liability may collaterally estop an entire industry from denying liability. Collateral estoppel has recently been ruled a proper pleading vehicle in products liability cases. However, these decisions do not address the possibility of collaterally estopping manufacturers of a generic product who have not personally had their day in court. In view of the generic quality of DES, as well as the limited scope of “market share” applicability, it is doubtful that this issue presents a serious problem.

Apart from the aforementioned procedural problems in Sindell, there are equitable drawbacks inherent in the “market share” theory. One of the most serious of these appears to be the problem with the apportionment of damages. For example, in cases where the plaintiff cannot name the responsible defendant, such as was the situation in Sindell, “market share” liability will be evoked. However, in those cases where the plaintiff is able to name the responsible manufacturer that caused her injuries, it is assumed that the plaintiff will retain the burden of proof as to the single defendant, rather than naming several defendants and proceeding under a “market share” theory For example, in case 1, if the plaintiff is able to identify a specific responsible manufacturer, the plaintiff will retain the burden of proof, with the single defendant paying 100 percent of the judgment. However, in case 2, if the plaintiff is unable to name the responsible manufacturer, she will name several and proceed on the basis of “market share” liability. If one manufacturer is named in both case 1 and case 2, that manufacturer-defendant will be forced to pay 100 percent of one judgment and a market share percentage in another. Thus, this combined liability will force that one manufacturer-defendant to bear a much greater burden than its actual market share.

As pointed out by the dissent, the above example would particularly become a problem if jurisdictions other than California fail to adopt the “market share” theory as advanced by the Sindell court. In this situation, those manufacturers more amenable to suit in California would be held to a disproportionate share of damages.

The final major problem with the “market share” theory is the concern that the pharmaceutical industry may be undermined by, in effect, making it the insurer of all defective drugs of uncertain origin.  Critics of the Sindell decision believe, as was stated in the dissent, that the theory will inhibit the dissemination of drugs, which is contrary to the public policy considerations advanced in the Restatement. A close look at the wording of the Restatement cited by the dissent, however, will show that these policy considerations do not apply to the facts of the Sindell case.

The Restatement states that public policy justifies the use of new or experimental drugs, despite medically recognizable risks, and that the manufacturer of such a drug will not be held strictly liable for subsequent injuries caused by the drug. However, this applies to manufacturers who are held strictly liable, and only applies when the drug is properly prepared and marketed, and proper warning given.  In contrast, Sindell sued the various respondents for their negligence in failing to properly market, test, and warn of the inherent dangers in the use of DES.

Therefore, it appears that the Sindell court, rather than holding the drug industry liable for all injuries that occur as a result of a drug previously thought to be safe, has only suggested that those manufacturers who are shown to have been negligent in their marketing or testing of a drug should be held liable for the consequences of their negligent acts. Rather than discouraging the dissemination of modern drugs, this policy should serve to encourage their safe testing, marketing, and utilization.

B. Benefits of “Market Share” Liability

The major advantage of “market share” liability is the equitable policy repeated throughout the Sindell decision. It is “preferable to hold liable a negligent defendant who did not in fact cause the injury than to deny an innocent plaintiff a remedy when it cannot be determined which of the defendants is responsible for the harm but it appears that one of them was.” This same general policy is the basis for virtually all of the major advances in the field of products liability in recent years.

Sindell was innocent of any wrongdoing, yet suffered serious injury. Although she could not name the manufacturer that produced the DES that caused her specific injury, she named several manufacturers, and alleged that all of them negligently produced the carcinogenic drug. If the Sindell court had not allowed the appellant to maintain her action, the result would have been that the victims of DES would have borne the cost of their injuries while the tortious manufacturers would have avoided liability. As has been stated so often by the courts, the cost of these injuries is much better borne by the manufacturers, who have the potential to guard against such dangers, than by the innocent victims of their mistakes.

C. The Potential Application of “Market Share”

It is clear that California’s “market share” apportionment theory is affecting almost immediately other DES cases pending in other courts. For example, in May of 1980, only one month after the Sindell ruling, a Cleveland woman settled out of court with four separate DES manufacturers for a total of two million dollars. This immediate result is not unexpected. After the Sindell decision,  one defense attorney involved in DES litigation stated that “the Sindell case is a major victory for the plaintiffs’ bar. Especially since California traditionally is in the vanguard of tort litigation, Sindell might represent a watershed in terms of a trend for the future. This seems to be the general consensus among both plaintiff and defense attorneys,  especially since the United States Supreme Court has denied the writ of certiorari sought by the Sindell respondents.

If, as is expected, the Sindell decision sparks a rash of suits based on “market share” liability, it may be advantageous for the drug companies to unite, develop a proportional scheme based on the market, and begin to organize efficient and expeditious settlements with DES plaintiffs.  Although this type of organization would be enormously expensive and administratively complicated, it would be beneficial to all parties in the long run. A plaintiff would be compensated sooner, and although she would possibly receive a lesser amount of recovery, the legal entangelments of lengthy litigation would be avoided. The defendants, although forced to pay damages in all cases, would save tremendous litigation expenses. This will especially be true if other jurisdictions follow the lead of Sindell, since without the necessity of the plaintiff identifying a specific defendant, defense verdicts would be rare. Finally, the advantage of mass settlement and avoidance of unnecessary and protracted litigation would be beneficial in promoting judicial efficiency by helping to alleviate the existing court backlogs around the country.

In regard to the further application of Sindell to other areas of tort litigation, the repercussions will be necessarily minimal because of the relatively few types of products liability cases that involve serious problems of defendant identification. The Sindell court limited itself in its application of “market share” liability to only cases where a plaintiff has an identification problem due to the generic quality of the product causing the injury. The court further limited the theory by applying it, as an element of causation, only in those cases where the manufacturer is negligent. Thus, the far-reaching impact feared by the critics of Sindell is unlikely to occur.

However, in those few cases that involve the type of identification problems found in DES cases, the application of the “market share” theory will be almost immediate. The most obvious of these cases are the more than 6,000 asbestos cases that are pending around the country.  The asbestos cases involve the factually analogous problem of a construction worker attempting to prove not only the identity of each of his employers during the twenty to thirty years of asbestos exposure, but also which manufacturer produced the asbestos products that were purchased by or on behalf of those employers over such period of time. This identity problem, similar to the DES cases, would without a “market share” type of approach preclude any remedy.  Like DES cases, asbestos litigation is similarly causing court backlogs throughout the country. Therefore, the judicial system, faced with such a problem, may welcome expeditious approaches to the resolution of these cases as well.

VII. CONCLUSION

It is clear that Sindell is a substantial expansion of products liability law. It is equally clear that this expansion is necessary to meet the changing needs of society. It has been said that the life of the law is a response to human needs. The Sindell court, in developing the “market share” theory of liability, has expanded the law to adapt to the expansion of technology and industry in today’s advancing society.

Far from stifling the drug industry, the “market share” theory should encourage more responsible testing and care in the development of modern drugs. The Sindell decision does not call for the pharmaceutical industry’s guarantee of fool-proof drugs, rather, it calls for a responsible attitude in their development.

This decision also avails the courts of an expeditious approach to relieve court backlogs in cases where the liability is clear but proof of causation as to a specific manufacturer is not. This decision should be a welcome answer to a practical problem felt by many members of the legal profession in eliminating expensive, time-consuming, and unnecessary litigation.

In conclusion, although some problems exist in the “market share” theory of liability the benefits to be gained from its adoption greatly outweigh any disadvantages. The inequities in the decision are limited to those manufacturers responsible of innocent plaintiffs.

N. Denise Taylor, 1981.

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More DES DiEthylStilbestrol Resources

The Relevancy of Drug Efficacy Evidence in Strict Liability Actions

INTRODUCTION

Diethylstilbestrol (DES), a synthetic estrogen widely prescribed in the past for the prevention of miscarriage is currently the subject of much drug litigation. The association between clear-cell adenocarcinoma of the vagina in young females, a rare cancer which was virtually unknown before the use of DES, and prenatal exposure to DES is firmly established. It is estimated that in the female DES-exposed population, four in one thousand women will develop clear-cell adenocarcinoma. Almost fifty deaths have resulted from prenatal exposure to DES.

The Relevancy of Drug Efficacy Evidence in Strict Liability Actions: Needham v. White Laboratories,
Inc, The John Marshall Law Review, Volume 14 | Issue 3 Article 2, Summer 1981.

DES daughters, and DES sons as well, suffer from a variety of maladies which presently are considered benign, but are suspected to be precancerous. For example, it is estimated that adenosis, the abnormal presence of benign glandular tissue in the vagina, occurs in eighty to ninety percent of the female population exposed in utero to DES, yet adenosis is found histologically in over ninety-seven percent of DES daughters who have adenocarcinoma of the vagina.  DES daughters also may develop various abnormalities of the cervix. Recent research reveals that a number of DES sons also suffer from abnormalities which may result in sterility, and a preliminary study suggests the need for research on whether in utero DES exposure may be associated with a risk for testicular cancer.

DES mothers, also, are subject to an increased risk of endometrial cancer. In addition, a recent follow-up study of DES mothers shows that they have an increased risk of breast cancer. Researchers’ views differ as to the significance of this increase, however, animal studies demonstrate that estrogen increases the frequency of carcinomas of the breast, cervix, vagina, kidney, and liver.

DES daughters have instituted a number of legal actions against drug manufacturers. DES mothers who were unknowing participants in a 1953 study to determine the effectiveness of DES are litigating a class action suit against the University of Chicago Lying-in Hospital and Eli Lilly Company. At least one suit has been filed by a DES son who is suffering from testicular cancer.

DES litigation has fostered the articulation of new theory, as well as the creative application of established theory, in the area of tort law. The majority of the decisions favor DES defendants. The recent decision of the Seventh Circuit in Needham v. White Laboratories, Inc., reversing a jury’s determination of drug manufacturer liability, deals a drastic blow to drug injured plaintiffs seeking to hold drug manufacturers strictly liable in tort. The reversal is significant because Needham is the first appellate reversal of a DES plaintiff’s jury verdict and its impact on drug litigation is far reaching. This article will analyze the Needham decision within the context of strict liability principles appropriate to the drug industry.

Needham v. White Laboratories, Inc.

Plaintiff Needham’s mother ingested dienestrol, a synthetic estrogen similar to DES, while she was pregnant with the plain- tiff. At the age of twenty, plaintiff discovered she had the rare clear-cell adenocarcinoma of the vagina, which made surgical removal of all her reproductive organs necessary. Plaintiff sued White Laboratories, the manufacturer of dienestrol, on theories of negligence, strict liability in tort, and fraud and deceit. Plaintiff’s strict liability claim was based on two theories: failure to properly warn of the risk of cancer from exposure to dienestrol; and production of a drug which was defective in that it was useless and unreasonably dangerous in the treatment of threatened or habitual abortion. Plaintiff’s two theories of negligence were based on defendant’s failure to test dienestrol in accordance with 1952 medical research standards and to warn of its dangers.

Before instructions were given to the Needham jury, the Illinois Supreme Court held in Woodill v. Parke Davis Co , that a manufacturer is strictly liable for failure to warn of a risk of injury if the manufacturer knew or should have known of the product’s danger. The Woodill majority asserted that it was not imposing a negligence standard. Although a knowledge requirement injects an element of fault which, in theory, is absent in strict liability, in the court’s view, failure to warn based on strict liability remains separate and distinct from failure to warn based on negligence. The court did not clearly define this difference; however, given its extensive reliance on comment k to section 402A of the Restatement (Second) of Torts,  it seems reasonable to presume that the comment may provide an explanation.

Comment k and Evidence of Efficacy

The comment k exception to strict liability is created for unavoidably unsafe products, and it applies particularly to drugs, which in the present state of human knowledge, are quite incapable of being made safe for their intended and ordinary use. The sale of such products may be justified, provided a warning is given when necessary, because the benefit of using the product appears to outweigh the attendant risk.

Relying on both Woodill and the comment k strict liability exception for unavoidably unsafe products, the district court in Needham allowed plaintiff to present evidence of dienestrol’s ineffectiveness to counter defendant’s reliance on the comment k exception to strict liability. The district court reasoned that if comment k did not apply because the sale of dienestrol was not justifled–i.e., it had no apparent usefulness to outweigh any risk of harm-then the defendant could be liable for marketing the drug even if the plaintiff could not prove the defendant knew it was dangerous and yet failed to give a warning. The relevant issue would be whether defendant knew or should have known that the drug was ineffective or not apparently useful, not whether defendant knew it was dangerous. The district court also noted that evidence of dienestrol’s ineffectiveness was relevant to plaintiff’s alternate theory of strict liability that dienestrol was defective and unreasonably dangerous because it was ineffective and caused cancer.  The essence of this alternate theory is that dienestrol was not fit for its intended use.

The Seventh Circuit’s View

The jury returned a general verdict against the defendant and assessed damages of $800,000.  On appeal, the Seventh Circuit reversed and remanded for a new trial, holding that evidence of dienestrol’s effectiveness or ineffectiveness was irrelevant and prejudicial. The court’s decision was premised on the notion that Illinois recognizes two types of strict liability drug actions involving warnings which are set forth in comments j and k to section 402A: complete failure to give a warning; and failure to give an adequate warning. In the Seventh Circuit’s view, comment k contemplates only the latter instance in which some warning is given but is inadequate. Here, a manufacturer is entitled to comment k protection only if the product’s benefits outweigh its risks. If no warning at all is given, comment j governs the action. The court reasoned that efficacy evidence is relevant only in a comment k case because, in that instance, the drug’s benefits must be balanced against its risks. In a comment j case, where no warning is given, efficacy evidence is irrelevant, according to the court, because the manufacturer’s liability turns on whether it had knowledge of the risk about which it failed to warn. Concluding that the defendant in Needham failed to give a warning of the risk of cancer from ingesting its product, the circuit court held that comment j governed, and evidence of dienestrol’s ineffectiveness was therefore irrelevant and prejudicial to the defendant. The court also asserted that Illinois law did not support plaintiff’s alternate theory of strict liability, and accordingly efficacy evidence was not relevant to this theory.

The court’s decision rests on an erroneous interpretation of Woodill. The court characterized Woodill as a comment j case and announced flatly that Illinois had not yet decided a comment k case. In fact, comments j and k may be read together for the purpose of determining whether any given case should be governed by a strict liability standard. Thus, in actions against the manufacturers of concededly beneficial drugs, liability must be premised on defendant’s knowledge of the risk of injury. These cases, unlike Needham, have not involved a challenge to the claimed benefits of the drug. In the absence of such a challenge, an initial presumption that benefits outweigh risks is made. Once this presumption is made, the manufacturer’s liability for failure to warn, under comment k, turns on whether the drug is properly prepared and accompanied by warnings of known dangers. If the drug is accompanied by a warning of known risks of injury and is properly prepared, the manufacturer is not liable for harm caused by its dangerous product. If, on the other hand, the manufacturer knows or should know of the drug’s risks, and fails either to warn or to properly prepare the drug, the drug is considered to be unreasonably dangerous and the manufacturer is liable for harm caused.

Where the assumption that a drug is beneficial is challenged, as in Needham, the court must initially determine whether or not the drug’s usefulness is outweighed by its risks. Efficacy evidence is crucial to this determination. If the drug’s risks outweigh its usefulness, the manufacturer will be liable for its unreasonably dangerous product irrespective of its ignorance of the risk of injury.

The Seventh Circuit failed to note that Illinois courts had never been confronted with a strict liability, failure to warn action involving a challenge to the drug’s usefulness. Whether comment k protection from strict liability should be extended to such a case had never been called into question. Comment k imposes a knowledge of risk requirement for failure to warn cases which involve beneficial drugs. Thus, comment k expresses a policy of not imposing strict-where knowledge is irrelevant-liability where a manufacturer has undertaken to supply the public with a useful drug. Where, however, the drug manufacturer has not marketed a useful drug, the rationale for protecting the manufacturer from strict liability is absent. Public policy negates the argument that comment k protection may be invoked before it is established that defendant marketed a relatively beneficial drug. But for the principal case, no Illinois precedent would support such an expansive interpretation of comment k.

THE NATURE OF THE DRUG INDUSTRY

High Profits; Few Losses

An understanding of the nature of the drug industry is essential to understanding the legal, factual, and policy issues that the Needham cases raises. The drug industry has been described as one of both high profits and high returns. During congressional hearings in 1972, the drug industry was characterized as practically unique in that 1osses or even low profits, are virtually unheard of among larger companies. Although drug companies attempt to justify high profits by pointing to the extreme risks inherent in the development of new drugs, critics note that if extreme risks justify high profits, one would expect to see “occasional losses” by some firms instead of “consistently high industrywide profits.

The fear that imposing strict liability on the sellers of drugs would result in depriving consumers of essential drugs, has little basis in reality. One commentator has argued that this fear should not shape the development of strict liability law in the absence of substantial empirical supporting data showing that the profit margin in the drug industry is so low that the industry could not bear the cost of compensation for the injuries it produces. This argument is especially persuasive when the industry produces, promotes, and obtains large profits from a drug like DES, whose efficacy and concommitant benefits are questionable, and which is also capable of causing serious injury. Such products are particularly appropriate subjects for strict liability.

“Me Too” Practices

Another unusual feature of the drug industry is the “me too” practice of developing new drugs. “Me too” drugs are typically made by slightly deviating from the molecular make-up of an already marketed drug. Molecular manipulation is of no significant therapeutic value. The practice does, however, enable a manufacturer to market a theoretically “new” drug without violating a patent or obtaining a licensing agreement from the manufacturer who invented the original product. Thus, drug companies expend considerable research money to develop drugs which vary only slightly from the original product.

The result is a proliferation of company trade names for essentially one product. The Health, Education and Welfare (HEW) task force on prescription drugs determined that important new chemical entities represent only a fraction, perhaps 10-20%, of all new products introduced each year, while the remainder consist merely of minor modifications of combination products. The task force concluded that many of the drug industry’s research and development activities would appear to provide only minor contributions to medical progress. A more important concern, especially in the case of DES-related products, is that a single defect in the original drug may be common to all similar products subsequently manufactured.

DES, dienestrol, and related DES products are poignant examples of drug industry “me too” practices. DES was unpatented by its original inventor. In 1941, twelve drug companies submitted a joint clinical file to the Food and Drug Administration (FDA) as part of their New Drug Application (NDA) request for permission to market DES. These companies also agreed on common chemical standards, uniform labeling, and product literature for the drug to be manufactured by each of them. The companies did not request permission to market DES to prevent threatened or habitual abortion until 1947.

In 1946, White Laboratories obtained permission to market dienestrol for the same use as DES.64 DES and dienestrol are virtually identical in action and toxicity; dienestrol, specifically marketed to be competitive with DES, was described by the former medical director of White Laboratories as a “me too” drug.

In 1948, a year after other companies received permission to market DES for use in the treatment of threatened abortion, White Laboratories submitted a supplemental NDA requesting permission to market dienestrol for the same use in pregnancy. Its intent in marketing dienestrol was to compete with DES; dienestrol had no advantages over DES for use in pregnant women. Moreover, when White Laboratories requested permission to market dienestrol, it did no independent testing of dienestrol’s safety in pregnant women or their offspring. The supplemental NDA contained only two summaries of case reports by two different doctors to show that dienestrol would do what White Laboratories claimed it could do-prevent habitual or threatened abortion. These case reports were characterized by two eminent researchers as grossly inadequate demonstrations of these claims.

The FDA Then and Now

White Laboratories argued that FDA approval of dienestrol absolved the company of responsibility for failure to test dienestrol adequately before marketing it. While some authority exists for this proposition, most courts have held that FDA approval does not discharge the obligation of the drug manufacturer to test adequately for and warn of its product’s risks of danger.

The premise underlying the argument that FDA regulations define only minimal standards, may well be an accurate assessment of the FDA’s role in the 1950s and today. Prior to 1962, a drug manufacturer’s NDA was automatically approved if the FDA did not object to the marketing of the drug. While the FDA must now act positively to approve a drug for marketing, it still only reviews a report of data provided by the drug manufacturer. The FDA does not test the drug independently, and the drug manufacturer, consequently, has complete control over what data is submitted. While the FDA may refuse to approve of a drug until a manufacturer performs additional tests, the ultimate responsibility for providing the clinical data upon which the agency will make its final determination rests with the party who has the greatest interest in a favorable response.

Data submitted by drug manufacturers has often been criticized by the FDA as scientifically inadequate; some has even been shown to be fraudulently concealed or rigged. Clinical investigators hired by drug companies to investigate their drugs have also been criticized as tending to skew data in favor of their employers. Many articles extolling a drug’s virtues or minimizing its harmful effects, which are published in respectable medical journals, have been sponsored by the drug company that manufactured the drug. A substantial number of these articles have been written within the confines of the pharmaceutical houses concerned. Moreover, medical journals rely on drug advertising as a major source of financing. Some medical journals which, by virtue of their ownership, are captives of certain drug houses, have printed inaccurate articles on the miraculous effects of new drugs. Once a drug has been authenticated by publication, the drug manufacturer cites the article as authority for its advertising claims.

Promotional Practices

Not only is the FDA dependent upon drug manufacturers for information about their drugs, but the prescribing physician also relies on the drug manufacturer for information about a drug’s safety and instructions for use. Medical practitioners simply cannot keep abreast of numerous medical articles, scattered in hundreds of journals, on each new drug which appears on the market. Consequently, doctors rely on product information supplied by the drug companies through advertising in drug brochures and medical journals, and detail men who personally visit a doctor to promote a specific drug.

Advertising

The proliferation of “me too” drugs, each with its own brand name, makes advertising the important variable in the fight for increased sales. Drug companies spend enormous amounts of money to influence a doctor’s choice of a brand name drug. A brand name often is easier to remember than the more complex generic name. Drug manufacturers inundate doctors daily with a “torrent of new drug advertising” which is “confusing” and “misleading.” Frequently, warnings appearing in a brochure about drug side effects are tucked neatly away behind a “stream of literature which extols the claimed virtues of the drug so glowingly that it takes attention away from the hazards of the drug. The physician simply is “bombarded with seductive advertising which fails to tell the truth;” which often misleads him or her to prescribe a new drug without adequate information about possible side effects and without any “solid clinical evidence that the drug is effective or even as safe as the advertisers claim.”

The advertising practices of DES manufacturers are subject to these criticisms. Claims of DES’s safety and effectiveness in the treatment of threatened and habitual abortion abounded in advertisements within reputable medical journals. Some advertisements recommended DES as a routine prophylaxis in all pregnancies.

Detail Men

Since drug manufacturers daily send physicians more drug information than they can possibly read or remember, physicians rely on detail men for drug information.  Detail men frequently minimize their product’s dangers while emphasizing its effectiveness and wide acceptance.  This practice has resulted in drug manufacturer liability despite a printed warning.

White Laboratories utilized detail men to distribute a brochure to doctors about dienestrol’s indicated use. The brochure was a promotional effort which White Laboratories knew would be relied upon by doctors. The distribution was a form of salesmanship,  and the dienestrol brochure was the product information provided to doctors. This brochure only contained references to studies and a personal communication which reported estrogen to be an effective method of preventing accidents of pregnancy. Although the medical director and management of White Laboratories were aware of studies which indicated that DES had no value in preventing threatened abortion and studies which demonstrated that estrogens caused cancer and fetal abnormalities, these studies were not included in the dienestrol brochure. Although a statement that use of estrogen was considered investigational was included, any reference to risk was omitted.

HISTORY OF THE MEDICAL CONTROVERSY SURROUNDING DES

DES As a Carcinogen

At trial, plaintiff presented “extensive evidence describing studies prior to 1952” which suggested a causal relationship between synthetic estrogen and cancer in animals. Dr. Michael Shimkin, “one of the earliest and still among the most eminent researchers in the field,” testified that by 1940 the scientific community viewed the eventual demonstration of synthetic estrogen’s carcinogenic effects in humans to be a “lead pipe cinch.” In his view, any drug manufacturer should have been aware of this. Dr. Shimkin also described in extensive detail several pre-1952 studies which demonstrated that the introduction of estrogen into the system of a pregnant animal could affect her offspring, and that the introduction of other carcinogens into the system of a pregnant animal could cause cancer in the offspring. Dr. Shimkin concluded that, in 1952, any drug firm planning to market a drug like dienestrol for use in pregnant women should have viewed animal testing for intergenerational effects as essential. The drug company also should have warned of the risk of cancer in 1952.

Dr. Neary, White Laboratories’ medical director at the time dienestrol was marketed, testified that it was “standard practice” when dealing with a new drug to consider publications on both clinical use of the drug and animal experimentation with the drug.110 At the time dienestrol was marketed, Dr. Neary was familiar with a 1940 study which revealed abnormalities in male and female offspring of female rats injected with estrogen. He acknowledged that estrogens had been shown to induce tumor formation in animals. He also knew, at that time, of a warning issued by the editors of the Canadian Medical Journal that since synthetic estrogens were chemically related to some carcinogenic substances, notably coal tar, a warning was justified on purely theoretical grounds.

In 1948, a doctor who was later employed by White Laboratories had written that endometrial hyperplasia in humans could be considered a precancerous lesion. Dr. Neary acknowledged that endometrial hyperplasia was an expected pharmacological effect of estrogen use. He also admitted that he knew the tissue of the developing fetus was more susceptible than adult tissue to carcinogenic transformation. Yet, prior to marketing dienestrol for use in pregnant women, Dr. Neary did not commission any research to determine whether estrogens caused cancer in the mother or the child.

At trial, and on appeal, White Laboratories disputed the importance and applicability of animal studies to the human experience and argued that these studies could not provide notice of the need for human testing. Dr. Shimkin, however, was “unequivocal” in his assertions that the animal studies were known at that time to indicate potential danger to humans. Although Dr. Neary recognized the relevance of animal research to certain aspects of new drug development, he believed that the application of animal studies to human beings was controversial. 121 Consequently, prior to marketing dienestrol for use in pregnant women, the management of White Laboratories consciously decided not to do any testing to determine whether dienestrol was safe for use in human beings.

The district court’s ruling in Needham which upheld the evidentiary use of animal studies to show knowledge of a risk of injury in humans was correct. In other drug cases, courts have considered the results of animal tests which revealed injuries similar to but not the same as the injuries sustained by a plaintiff to be evidence of knowledge or notice of the risk of injury which required a warning about that risk. A manufacturer is deemed to constructively know the results which testing and inspection of its product could have revealed.  Courts accordingly have based liability on inadequate testing, together with failure to warn.  It hardly seems fair to the consuming public to allow a drug manufacturer which has failed to test its product to escape liability for failure to warn about dangers which could have been discovered by adequate testing. “The claim that a hazard was not foreseen is not available” to a drug manufacturer who does not “use foresight appropriate to his enterprise.”

Risks versus Benefits: Dienestrol as an Ineffective Therapeutic Agent
Standards for Testing Drugs

Dr. Shimkin testified that recognized testing methods existed in 1948 to determine drug safety and efficacy.  He identified the principle method of scientific testing as the controlled experiment, which scientists viewed as an important means to eliminate bias. Controlled experiments were considered essential to evaluate the ability of estrogen to prevent threatened abortion because pregnancy is affected by many factors, such as diet and psychological state. Consequently, it would be imperative to design a study which would control for these factors by treating all research subjects in the same manner. Use of a placebo in the nonmedicated group compared to use of the experimental drug in the medicated group is an example of such a control. The paradigm of controlled experiments, and the most favored testing method in 1952, is the double blind study in which neither the researcher nor the research subject knows whether the drug given is a placebo or a real drug-in all respects both groups being compared are treated and evaluated in the same manner.

Claims of Effectiveness from Poorly Controlled Studies

Articles published by Drs. Olive and George Smith in the late 1940s were primarily responsible for the belief that DES would reduce the incidence of threatened abortion. The Smiths theorized that a lack of the hormone progesterone caused early termination of pregnancy, and that DES could stimulate production of progesterone, thereby preventing abortion. Other scientists severely criticized both the theory that reduced progesterone caused abortion, and the method that the Smiths used to measure the efficacy of DES and its alleged progesterone stimulating qualities. As early as 1949, the Smiths were severely criticized for lack of adequate controls, and controlled studies performed in the early 1950s refuted the Smiths’ claims of DES effectiveness in preventing threatened abortion.

White Laboratories’ Decision to Market Dienestrol to Treat Threatened Abortion

The medical director of White Laboratories, Dr. Neary, relied on the Smiths’ articles to establish DES effectiveness in the treatment of threatened abortion.  Before submitting the supplemental NDA to the FDA, Dr. Neary reviewed the published material concerning the use of estrogen in experimental animals and humans. He knew that the usefulness of DES in treating threatened abortion was controversial, and he informed the management of White Laboratories of this controversy.  The supplemental NDA, however, did not list any publication which indicated that the use of DES was controversial.

In a letter to White Laboratories, the American Medical Association questioned the effectiveness of dienestrol and criticized the NDA data as “completely uncontrolled,” resulting in “obscure” criteria for the use of estrogen in treating threatened abortion. Nevertheless, Dr. Neary failed to conduct further tests to determine the effectiveness of dienestrol. He did inform management of two studies indicating that DES was of no value and a “dismal failure” in preventing threatened abortion, and also told management that pregnant animals treated with estrogen had aborted. These facts, however, were not included in the supplemental NDA or the product information brochure, although White Laboratories and Dr. Neary knew that doctors would rely on the brochure to determine dosage and instructions for use.

Dr. Albert Schmitt, an obstetrician who has done extensive work with DES-related problems, described these reports as “inadequate testing,” and also characterized as irresponsible the Smiths’ suggested hundredfold increase in dosage for pregnant women. Both Dr. Schmitt and Dr. Shimkin criticized White Laboratories’ reliance on the Smiths’ articles to determine dienestrol’s safety and efficacy in the treatment of threatened abortion: a review of articles which favored estrogen use in pregnant women and which were of questionable authority because of poor testing methodology was unacceptable premarketing practice. In Dr. Shimkin’s view, more premarket testing of dienestrol was required because estrogens were well known to be carcinogenic.

RELEVANCE OF DRUG EFFICACY EVIDENCE IN STRICT LIABILITY ACTIONS

The District Court’s Ruling in Needham
Comment k

Before determining when the comment k exception to strict liability applies, it is necessary to examine the products to which it applies. By its terms, comment k covers “unavoidably unsafe products;” those products which, “in the present state of human knowledge,” are incapable of being made safe for their ordinary and intended use. Unavoidably unsafe products are especially common in the field of drugs.

Comment k separates drugs into three categories.

  1. An example of the first category is the rabies vaccine. Because it prevents death, marketing and use of the vaccine are “fullyustified” despite the high degree of risk which the vaccine itself presents.
  2. In the second category are drugs which cannot legally be sold except to a physician or under prescription of a physician.
  3. The third category consists of new or experimental drugs in which, because of “insufficient time and opportunity for medical experience,” there can be no assurance of safety.

The seller of these three types of products is not to be held strictly liable in tort simply because the seller has undertaken to supply the public with an apparently useful and desirable product, as long as the product is accompanied by proper directions and warnings and is properly prepared.

Comment k, accordingly, has been referred to as an “exception” to strict liability which applies to the sellers of “established” but unavoidably unsafe, and new or experimental drugs. The obvious intent of comment k is to preclude drugs and other inherently dangerous products from being characterized as defective merely because of their inherently dangerous features. Consequently, when a plaintiff sues a drug manufacturer for strict liability in tort for failure to warn of a risk of injury from a drug, the courts and commentators assume that a drug is an unavoidably unsafe product which must be analyzed according to the provisions of comment k. This assumption accurately perceives that all drugs involve some risk of danger, and hence are unavoidably unsafe.

The district court in Needham, therefore, was correct in assuming that dienestrol was an unavoidably unsafe product which should be analyzed within the comment k framework. White Laboratories’ defense throughout the trial was that dienestrol was a new or investigational drug, the dangers of which were unknown in 1952 when plaintiff was exposed to it. If this were true, and if dienestrol were an apparently useful and desirable drug, White Laboratories could escape liability for failure to warn of the danger since it did warn that dienestrol was an investigational drug. If the defendant did know of the risk of harm, the jury could determine that this warning was inadequate.

The district court also properly construed comment k as interpreted by the Illinois Supreme Court in Woodill v. Parke Davis. In that case the court held that when a plaintiff sues a drug manufacturer based on strict liability in tort for failure to warn of a danger the plaintiff must, in accordance with comments j  and k, plead and prove that the manufacturer knew or should have known of the risk inherent in the drug. Thus, a drug manufacturer in Illinois cannot be held strictly liable for failure to warn of a risk unless liability can also be based on negligent failure to warn, that is, unless the evidence would support a finding that the seller should have foreseen the danger.

The Woodill decision, however, did not involve a challenge to the drug’s usefulness and the manufacturer’s decision to market it was tacitly assumed to be reasonable despite the attendant risk. Consequently, the comment k knowledge standard was properly applied. Comment k does not, however, limit drug manufacturer liability under all conditions. The protection from strict liability afforded by comment k might be lost if a drug that offered no substantial benefit caused an injury, even if the injury were not foreseeable.  Such a drug would be considered unreasonably dangerous as marketed or unreasonably dangerous per se.

To determine whether a drug provides a substantial benefit, and therefore comes within the comment k exception to strict liability, the drug’s benefits or apparent usefulness and desirability must be weighed against its risks. If the “risk/benefit” analysis under comment k renders a product unreasonably dangerous, sale of the drug results in strict liability regardless of the manufacturer’s ignorance of the dangers.  Where a seller has marketed an apparently useless drug, the reason for the comment k exception-to give sellers of drugs an incentive to continue producing useful and beneficial drugs-is not present. The seller of such a product should not be entitled to greater protection than the seller of a product which has a manufacturing defect. Society’s interests are not served if an unavoidably unsafe product has a high degree of risk and an occasional or nonexistent benefit, yet enjoys insulation from strict liability in tort despite its predominantly detrimental effects. This is the reason the comment k exception to strict liability requires a predominant character of usefulness-and beneficiality.

Strict liability in tort is particularly appropriate where this beneficial character is lacking in a drug. The drug industry is highly competitive; new drugs must be produced to ensure a drug company’s continued existence.  The potential profits from a commercially successful new drug are enormous. In an economic sense then, strict liability is justified by the manufacturer’s superior ability to absorb the costs of minimizing risks and ensuring drug efficacy. Although production of safe and useful drugs can only be accomplished through more extensive testing, which would increase the price of drugs, consumers directly benefit from the availability of a drug whose benefits far outweigh its risks, and from escaping exposure to drugs which are ineffective and dangerous. The possibility of strict liability may provide drug manufacturers with an incentive to market drugs which are effective and beneficial as well as profitable. It may also encourage drug companies to divert a portion of their huge advertising and promotion budgets to researching and testing of their products.

It is readily apparent that the risk/benefit analysis required under comment k to determine whether a product’s marketing was justified, necessitates evidence of the product’s efficacy or lack of efficacy. When the efficacy of a drug is manifestly outweighed by its risks, or is nonexistent, proof of fault-knowledge of a risk of injury and failure to warn-is unnecessary to a finding of liability.

In Needham, the district court ruled that evidence of dienestrol’s lack of efficacy was relevant. A pretrial ruling noted that drugs are commonly considered unavoidably unsafe products under comment k. Citing the language of comment k, the district court noted that such products are not unreasonably dangerous, and therefore do not come within the purview of strict liability, if they are properly prepared and accompanied by directions and warnings:

The seller of unavoidably unsafe products, again with the qualification that they are properly prepared and marketed and a proper warning is given, where the situation calls for it, is not to be held to strict liability for the unfortunate consequences attending their use, merely because he has undertaken to supply the public with an apparently useful and desirable product, attended with a known but apparently reasonable risk.

The district court interpreted this language to mean conversely that strict liability may be imposed upon a manufacturer, irrespective of warnings, if the product at the time of marketing was not apparently useful. Accordingly, evidence of efficacy was relevant to determine whether or not dienestrol was apparently useful when marketed. The precise question to be addressed, in the court’s view, was whether there were sufficient technological experience and testing standards in 1952 to justify the marketing and use of dienestrol. The issue to be resolved was not whether dienestrol was actually useful, but whether dienestrol was apparently useful.

In later opinions, the district court affirmed its ruling that evidence of dienestrol’s ineffectiveness was relevant to foreclose reliance on the lack of knowledge defense provided by comment k. If there was no reason to believe in 1952 that dienestrol was useful in preventing threatened or habitual abortion, the court reasoned, the marketing of dienestrol was not justified. Consequently, the comment k curtailment of the normal strict liability standard could not be applied. The absence of any apparent utility would render the drug unreasonably dangerous, and irrespective of its knowledge of dienestrol’s danger, White Laboratories could be held strictly liable in tort. Evidence of efficacy was deemed crucial to the case and its omission, in the court’s view, could require reversal.

Strict Liability Based on a Drug Defect

To recover under section 402A of the Restatement (Second) of Torts, a plaintiff must prove that the proximate cause of his or her injury was a defect in the product which rendered the product unreasonably dangerous. The rationale for imposing strict liability is set forth in comment c:

The seller, by marketing his product for use and consumption, has undertaken and assumed a special responsibility toward any member of the consuming public who may be injured by it; that the public has the right to and does expect, in the case of products which it needs and for which it is forced to rely upon the seller, that reputable sellers will stand behind their goods.

Public policy demands that the burden of accidental injuries caused by products intended for consumption be placed upon those who market them, and be treated as a cost of production against which liability insurance can be obtained.

Certainly, drugs are necessary products for which the consumer must rely upon the seller who markets them for consumption. Thus it would seem that a drug manufacturer has a special responsibility under section 402A to a member of the consuming public who is injured by its drug. The design and manufacturing process must yield a product which reflects the proper balance of efficiency and safety. The Restatement test to determine whether particular risks posed by a product make it defective and unreasonably dangerous is whether the article is more dangerous than would be contemplated by the reasonably informed consumer.  Under this test, drugs which are ineffective and unsafe would be defective and unreasonably dangerous.

Design Defects

The defect asserted by the plaintiff in Needham was that dienestrol was ineffective and unreasonably dangerous as marketed for its intended use. This description comes within the Restatement’s consumer-expectation definition of a defective and unreasonably dangerous product. The difficulty with using the Restatement test in a prescription drug case is that the consumer does not purchase the drug directly from the seller, but through a learned intermediary, the prescribing physician. Substituting the word “physician” for “consumer” would resolve this difficulty. If the risks of a drug manifestly outweigh its benefits, the drug is dangerous beyond the extent contemplated by either the consumer or the prescribing physician.

The drug was in the condition the manufacturer intended, hence the injury resulting from its use can be analogized to an injury caused by a defect in design. In a design defect case, the product conforms to the manufacturer’s plan or design, but certain intended characteristics render the product not reasonably safe. In the case of drugs, something in the formula makes the product dangerous.  In a strict liability sense, the product defect in drugs is, in most instances, due to a laggard approach to research design formulation. Design defect claims protect the consumer’s interest in avoiding exposure to a product posing risks which so far outweigh its benefits that it should not continue to be marketed.

Although the definition of defect in a drug may differ from the definition of defect in a machine, the theory of strict liability is the same in both cases. 190 As Justice Traynor cogently noted:

If we scrutinize deviations from a norm of safety as a basis for imposing liability, should we not scrutinize all the more the product whose norm is danger? Such scrutiny is especially sensible for drugs for which a reasonably safe substitute exists. Thalidomide sleeping pills afford a recent dramatic example of such a dangerous product. Other drugs, which must be used despite the danger, perhaps should be treated differently.

Despite a lack of negligence, public policy demands that responsibility be fixed wherever it will most effectively reduce the hazards to life and health inherent in defective drug products. The responsibility is appropriately fixed on the drug manufacturer because “the manufacturer can anticipate some hazards and guard against the occurrence of others as the public cannot. In addition to being in a superior position to reduce the injury, the manufacturer is in the best position to spread the cost of the injury; the consumer can least afford the devastating impact of disability.

Where a product is inherently unsafe, strict liability requires that the marketer face the test of usefulness and reasonable purpose for the product in the marketplace. ‘To the degree a product is unsafe, a similar degree of justification will have to be found for offering it for use or consumption.” Marketing a drug which lacks therapeutic potential is unreasonable when that drug also presents a risk of harm. ‘The less effective a drug is, the more its risks become unreasonable.” This formulation is reflected in the design defect theory articulated by the California courts. Other courts have held that proof of the manufacturer’s fault is unnecessary where the efficacy of the drug is manifestly outweighed by its risks’ -the drug is defective and unreasonably dangerous in a strict liability sense.

Illinois courts have defined defective products to be those products which are dangerous because they fail to perform in the manner reasonably to be expected in light of their nature and intended function. Proof that, in the absence of abnormal use or reasonable secondary causes, the product failed so to perform establishes a prima facie case that the product was defective. Whether a product has failed to perform in the manner that would reasonably have been expected, and whether this failure caused plaintiff’s injury, are questions for the jury. Although the Illinois cases that produced this definition involved hammers, ladders, and brakes, the strict liability principles articulated in these design defect cases apply as well to defects in the design of drugs. The policy reasons for imposing strict liability are the same in each instance.

The strict liability rationale was set forth in Suvada v. White Motor Co. before Illinois adopted the Restatement view of strict liability. In Suvada the supreme court discussed the rationale in terms of the consumption of food, but the reasoning is especially applicable to drugs. First, the public interest in human life and health demands all the protection the law can give against unwholesome food. This policy applies equally to unwholesome drugs–drugs which are of questionable efficacy and a high risk of harm. Second, the manufacturer solicits and invites the use of its product by packaging, advertising, or otherwise representing to the public that it is safe and suitable for use. With respect to drugs, the inducement is aimed at the prescribing physician, who then orders the drug for the consumer.

Third, the losses caused by unwholesome food should be borne by those who have created the risk and reaped the profit by placing the product in the stream of commerce. In the case of drugs, the manufacturer’s high profits and few losses render this reason particularly forceful, especially since the profits are justified by asserting that a risk exists in developing new drugs. Moreover, where a drug manufacturer has placed a drug on the market which has been inadequately tested for efficacy and safety, the manufacturer has certainly created the risk. Consequently, the manufacturer should bear the losses caused by the drug. To quote Suvada:

It seems obvious that public interest in human life and health, the invitations and solicitations to the doctors to prescribe the product for a consumer] and the justice of imposing the loss on the one creating the risk and reaping the profit are present and as compelling in cases involving motor vehicles, food, and other products, where the defective condition makes them unreasonably dangerous to the user, as they are in drug cases.

The strict liability principles were later affirmed by the Illinois Supreme Court in Liberty Mutual Insurance Co. v. Williams Machine and Tool Co . The court asserted that the major purpose of strict liability is to place the loss caused by defective products on those who create the risk and reap the profit from placing defective products on the market. This rationale should apply to drug actions which assert strict liability based on a defect.

Efficacy Evidence

It is readily apparent that to determine whether a product is defective, evidence of efficacy or lack of efficacy together with evidence of danger is necessary. For example, in one product defect case, evidence of both brake failure and brake effectiveness was introduced to determine whether the product failed to perform in the manner reasonably to be expected in light of its nature and intended function. Similarly, evidence of efficacy must be presented in addition to evidence of dangers in a drug defect case to determine whether a drug performed in a manner reasonably to be expected. Accordingly, the district court correctly ruled that evidence of efficacy was relevant to plaintiff’s claim for strict liability based on a defect. The plaintiff claimed that the drug was defective because it was not safe for its intended use and was ineffective. Consequently, dienestrol failed to perform in the manner reasonably to be expected in light of its nature and intended function.

The district court relied on the Illinois Supreme Court’s refusal in Woodill v. Parke Davis & Co. to impose a requirement that defendant have knowledge of the potential danger in design defect cases. The district court also referred to the Woodill court’s reliance on the comment k balancing of benefits against risks and, citing Cunningham v. MacNeal Memorial Hospital, noted that if the product was not “one of those useful but unavoidably dangerous” products described in comment k, then liability could be imposed “even in the absence of the knowledge of the dangers involved.” The district court concluded that the principles of strict liability based on a defect remained substantively unchanged by the Woodill decision.  Unfortunately, the court expressed no opinion on whether the evidence would have supported a verdict for plaintiff on the defect theory. The district court merely reaffirmed its ruling that efficacy evidence was admissible under this theory.

Authority for the District Court’s Ruling

Cunningham v. MacNeal Memorial Hospital involved a transfusion of blood contaminated by hepatitis virus. The Illinois Supreme Court held the hospital supplier of the blood strictly liable and refused to apply the comment k exception for unavoidably unsafe products. The court held that blood containing hepatitis virus is impure and therefore in an unreasonably dangerous defective condition. Comment k was construed to apply only to products which are not impure and which, even if properly prepared, involve substantial inherent risk of injury to the user.

Later, in Woodill v. Parke Davis & CO., the Illinois Supreme Court referred to the distinction between strict liability based on a defect in a product “such as was involved in [Cunningham]” and an unavoidably unsafe product such as the one involved in Woodill.  Woodill made it clear that the knowledge of risk requirement was not a “weakening” of the Cunningham rule that proof of a defect suffices for strict liability ; comment k applies only to unavoidably unsafe products. The court also refused to extend the knowledge requirement to design defect cases.

The district court interpreted the Woodill court’s reaffirmation of Cunningham as authority for premising strict liability for a drug injury on a defect in the drug. The defect in dienestrol was not an impurity, as in Cunningham, but rather a design defect. The court therefore inferred that Cunningham’s applicability to strict liability actions for other types of defects such as design defects should be broadly construed. There is language in Woodil1 and in another drug case, Lawson v. G.D. Searle, which supports this inference. Interpreting this language together with the strict liability principles articulated in design defect cases involving products other than drugs, it is reasonable to conclude that the Illinois courts would uphold a claim based on a design defect in a drug such as that alleged in Needham. Consequently, the admission of efficacy evidence on this basis was correct.

Reversal by the Court of Appeals
Comment k Risk/Benefit Analysis

On appeal, the Seventh Circuit criticized the district court’s ruling on the admissibility of efficacy evidence as an erroneous interpretation of Illinois law. In the Seventh Circuit’s view, only three possible kinds of defective products could result in strict liability in Illinois, and none of these include the design defect:

  1. a product contaminated by an impurity;228
  2. a product unaccompanied by a warning of the product’s dangerous propensities, also called a comment j case;229
  3. and a product which is accompanied by a warning but in which the risk of danger outweighs the benefit of use, also described as a comment k case.

The court further explained that a comment k case exists only where the manufacturer warns of the danger, and yet the product remains dangerous even if the warning is followed. Evidence of efficacy is relevant, in the Seventh Circuit’s opinion, only to this third kind of defect, a comment k case. Only here is it necessary to weigh the drug’s apparent usefulness against its risk to determine whether the drug is unreasonably dangerous. The court found it necessary to adopt another jurisdiction’s analysis of comment k since the Illinois Supreme Court had not “yet decided a comment k case” but had only “commented” on the applicability of comment k to products which are not impure and involve substantial inherent risk of injury even if properly prepared.

Citing Woodill, the Seventh Circuit determined that comment j, rather than comment k, governed the Needham action because no warning accompanied dienestrol. Efficacy evidence was therfore held to be irrelevant to the “dispositive issue,” in the case: Wihether White should be held liable for its failure to warn of the risk of cancer to offspring of pregnant women who ingested Dienestrol.

The Court of Appeals reasoning is faulty for several reasons. First, it ignores the existence of liability for a design defect in Illinois. Second, the court incorrectly interpreted Illinois case law to distinguish between comment k and comment j cases. Third, the court erroneously asserted that the Illinois Supreme Court had not yet decided a comment k case. Fourth, the court ignored the new-drug provisions of comment k which apply to dienestrol.

Comment k and Comment j

Illinois drug cases based on strict liability for failure to warn do not support the Seventh Circuit’s distinction between comments j and k. The Illinois courts have not dichotomized the comments to apply comment j only in cases where a warning of a risk is lacking, and comment k only in cases where a warning is given. Rather, the Illinois courts have construed comments j and k together to determine that a manufacturer of a beneficial drug must have actual or constructive knowledge of a risk of danger before it can be held strictly liable for failure to warn of that risk.

Furthermore, it is simply incorrect to say that Illinois has not yet decided a comment k case. Several Illinois drug cases based on strict liability for failure to warn have expressly relied on comment k to resolve the issues. In Woodill v. Parke Davis & Co , the Illinois Supreme Court placed great reliance on comment k for resolution of the strict liability failure to warn issue. Despite the absence of a warning accompanying the drug, the court, adopting comment k language, described the product as an unavoidably unsafe product.  Other drug cases reveal a tacit assumption by Illinois courts that prescription drugs, by their nature, are unavoidably unsafe products which must be analyzed according to the provisions of comment k. A discussion of Woodill will exemplify these issues.

In Woodill, the plaintiff sued the drug manufacturer, alleging strict liability for failure to warn physicians and consumers of the danger in using the drug pitocin to induce labor in pregnant women when the fetus is in a certain position. As in Needham, there was no warning given about this danger. The court, nevertheless, characterized pitocin as an unavoidably unsafe product.  In so doing, it did not distinguish between comnients j and k, but did distinguish between the nonapplicability of comment k in strict liability defective product cases. Citing Cunningham, the Woodill court stated:

Later in Cunningham we distinguished between strict liability based on a defect in a product, such as was involved therein, and where, as here, warning may be required because a product is unavoidably unsafe. We referred to the “exception” created by comment k to Section 402A of the Restatement (Second) of Torts: k. Unavoidably Unsafe Products.

There are some products which, in the present state of human knowledge, are quite incapable of being made safe for their intended and ordinary use. These are especially common in the field of drugs. An outstanding example is the vaccine for the Pasteur treatment of rabies, which not uncommonly leads to very serious and damaging consequences when it is injected. Since the disease itself invariably leads to a dreadful death, both the marketing and the use of the vaccine are fully justified …. Such a product, properly prepared, and accompanied by proper directions and warning, is not defective, nor is it unreasonably dangerous …. We believe it clear that the exception set forth in the quoted comment relates only to products which are not impure and which, even if properly prepared, inherently involve substantial risk of injury to the user.

The Woodill court went on to hold:

Therefore, the pleading requirement that a manufacturer know or should know of the dangerous propensity of the product is limited to complaints which allege a breach of the duty to warn adequately. Whether it is necessary to allege knowledge where liability is predicated on the defective design of the product is not before us.

The Woodill discussion of the knowledge requirement is replete with references to the language of comment k. For example, to describe the pleading and proof requirements of a strict liability failure to warn action, the court stated that “the inquiry becomes whether the manufacturer, because of the ‘present state of human knowledge, . . . knew or should have known of the danger presented by the use or consumption of the product. Again using the language of comment k, the court expressed one of the reasons for imposing the knowledge limitation: If a manufacturer is held liable for failure to warn of a danger which it would be impossible to know about “based on the present state of human knowledge,” then the manufacturer would become “an insurer of its product. Finally, in language which parallels the rationale of comment k, the court set forth the policy reasons for imposition of a knowledge requirement in strict liability failure to warn cases:

This court is acutely aware of the social desirability of encouraging the research and development of beneficial drugs. We are equally aware that risks, often grave, may accompany the introduction of these drugs into the market place. We simply think, however, in accordance with comments j and k of Section 402A… that where liability is framed by the manufacturer’s duty to warn adequately of dangers which may arise from the use of a drug that liability should be based on there being some manner in which to know of the danger.

The Illinois appellate court also has relied “particularly” on comment k to conclude that “without doubt, Section 402A… comment k, discloses that a prescription drug may be deemed unreasonably dangerous if it is manufactured and distributed without adequate warnings … .- Implicit in this formulation is the assumption that comment k applies to all prescription drugs because these products are inherently dangerous by nature and therefore unavoidably unsafe products. The presence or absence of warnings determines whether the useful product is unreasonably dangerous, not whether it is unavoidably unsafe. Before a warning is required under Woodill, however, the manufacturer of a beneficial drug must have known or have been able to discover the risk of danger. If knowledge of a risk exists and a warning is provided, the product is not unreasonably dangerous; if such knowledge exists but a warning is not given, the product is unreasonably dangerous.

Woodill’s reliance on comment k belies the notion that it can be characterized as a comment j, as opposed to a comment k case. Woodill also demonstrates that a warning is not a prerequisite to comment k applicability. The Seventh Circuit’s conclusions concerning comment k directly oppose those of the Illinois Supreme Court. Although the Seventh Circuit recognized its responsibility to apply the substantive law of Illinois, it evaded this obligation.

To justify the application of another jurisdiction’s substantive law, the Seventh Circuit simply asserted that the Illinois Supreme Court had not decided a comment k case. Perhaps what the court meant was that the fllinois courts had not been confronted with a case like Needham, that is, a strict liability failure to warn action in which the plaintiff claimed that the drug involved was not beneficial-not an apparently useful product-in addition to asserting that it posed a risk of harm about which there was no warning. Consequently, Illinois courts have not been asked to balance a drug’s risk of harm against its benefits to determine whether the manufacturer’s decision to market the drug was justified. In the Illinois drug cases decided thus far, the drug has been presumed to be beneficial. Thus the comment k rationale for imposing a knowledge requirement applies to those cases, and the courts accordingly have imposed liability in these circumstances in accordance with the comment k exception to strict liability: The manufacturer of a beneficial drug is liable for failure to warn only of known dangers.

It seems likely, however, that if the Illinois Supreme Court were faced with a challenge to a drug’s benefits, it would resolve the issue using efficacy evidence, in the same manner as other courts have resolved it.  If, as in Needham, the drug’s risks manifestly outweigh its benefits, then under the comment k analysis, the knowledge requirement, which protects or excepts the manufacturer from strict liability, would not be applied. In relaxing the strict liability rule in failure to warn cases, the Woodill court clearly indicated that the underlying policy of this rule was to favor the development of beneficial drugs. Conversely, then, if a drug’s benefits were manifestly outweighed by its risk, that is, if the drug were ineffective and caused serious harm, the policy favoring the development of beneficial drugs would not be furthered by allowing comment k protection to the manufaturer. The manufacturer would be held strictly liable for failure to warn, irrespective of its knowledge of dangers.

The Seventh Circuit’s Comment k Analysis

Instead of applying Illinois law, the Seventh Circuit adopted the comment k analysis articulated in Reyes v. Wyeth Laboratories, which it mistakenly interpreted as a case in which a warning of risks is given and yet the product remains dangerous even if the warning is followed. The manufacturer is exempt from liability only if the product’s benefits outweigh its risks. In Reyes, however, no warning was provided, although the risk of danger was known. Nevertheless, the court found that the vaccine was an unavoidably unsafe product and thus that comment k applied. Because no warning as to the vaccine’s dangers was provided, the Reyes court held Wyeth Laboratories strictly liable under a comment k analysis. The Seventh Circuit was therefore mistaken in indicating that a warning must have been given for comment k to be applicable.

In analyzing the issue within the comment k framework, the Reyes court first determined whether the vaccine was unreasonably dangerous per se by determining whether marketing it was justified despite the danger involved in its use. After concluding that marketing the vaccine was justified, the court went on to decide whether the drug was unreasonably dangerous as marketed, which in a drug case translates to “a duty to provide proper warnings.

According to the Reyes comment k analysis, the first, rather than last, step is to determine whether the drug’s apparent usefulness outweighs its known risk. If it does, then the marketing of the drug is justified; if it does not, the drug is unreasonably dangerous per se. At this juncture, the question of warnings, whether given or not, need not be addressed. To determine whether a product is unreasonably dangerous per se, it is apparent that evidence of efficacy or lack of efficacy must be adduced. Without this evidence, it is impossible to determine whether the drug’s apparent usefulness outweighs its known risks. Thus, under Reyes, the evidence of dienestrol’s ineffectiveness clearly was not irrelevant or prejudicial. Rather, this evidence was a crucial aspect of the case. The Reyes analysis supports the district court’s ruling that evidence of dienestrol’s efficacy or lack of efficacy is relevant to the Needham action.

If the Seventh Circuit had correctly applied the Reyes court’s analysis to the facts adduced during the Needham trial, it would be hard pressed to escape the conclusion that dienestrol was unreasonably dangerous per se. As of 1952, the efficacy of dienestrol in preventing threatened abortion was admittedly “controversial” according to White Laboratories’ medical director, and White Laboratories was aware that other scientists had concluded that dienestrol was a dismal failure. Thus, White Laboratories knew or should have known that dienestrol was not apparently useful. The additional knowledge that DES-related estrogens such as dienestrol caused tumor formation and abnormal anatomical changes in the offspring of pregnant animals, as well as cancer, leads to the conclusion that the known risks far outweighed its benefits. Even if the Seventh Circuit viewed animal studies as inconclusive proof of actual danger to humans, the jury was entitled to believe the testimony of plaintiff’s experts that animal studies were viewed as reliable indicators of risks to humans. Although the Needham district court did not make a finding as to the sufficiency of the efficacy evidence, it did find that the evidence supported a jury verdict for plaintiff on the basis of White Laboratories’ knowledge of the risk of cancer to female offspring exposed in utero to dienestrol. The Seventh Circuit did not refute this finding. Under the Reyes analysis, the evidence presented at the Needham trial established that White Laboratories’ decision to market dienestrol was not justified. Given the gravity of the potential harm, the controversial and questionable efficacy of dienestrol could not possibly be found to outweigh its known risk. Dienestrol is unreasonably dangerous per se within the meaning of Reyes.

Another Seventh Circuit View of Comment k: Singer v. Sterling Drug

The requirement that comment k be applied only when the manufacturer has warned of the risk and the product remains dangerous even if the warning is followed is supported by the Seventh Circuit’s earlier decision in Singer v. Sterling Drug, which established two classifications of drugs which fall within the comment k exception to strict liability. First, comment k applies to drugs in which there is a known but apparently reasonable risk of injury and the user has been warned of the risk. An example of this drug is the Pastuer vaccine for rabies. The second class to which comment k applies is the new or experimental drug for which there is no knowledge of risk and the user has been warned that the drug is new or experimental. An example of this type of drug is dienestrol.

The Seventh Circuit’s decision in Needham addresses only the first category of comment k drugs; the second category is notably missing from the court’s discussion of comment k. This omission is significant because White Laboratories relied on the second category as a defense. Throughout the trial, White Laboratories maintained that knowledge of dienestrol’s risks had not and could not be discovered in 1952, and that White Laboratories had warned that the use of dienestrol in the treatment of threatened abortion was investigational. The Seventh Circuit simply ignored this evidence and did not address the second comment k category formulated in Singer. In categorizing comment k drugs in two classes, Singer itself made a notable omission. The text of comment k refers to prescription drugs, which Singer ignored, apparently because the court viewed with disfavor the applicability of the comment k knowledge requirement in all prescription drug cases based on strict liability for failure to warn. The Woodill court imposes this requirement on all failure to warn cases which involve beneficial drugs. Thus, Singer rejects the underlying premise of Woodill, and therefore is questionable authority for Illinois strict liability law.

Strict Liability Based on a Defect

In Needham, the plaintiff’s second theory of strict liability was that dienestrol was defective because it was useless and unreasonably dangerous. The Seventh Circuit held that the district court’s alternative ruling, which allowed evidence of lack of efficacy to prove dienestrol defective, was not supported by Cunningham v. MacNeal Memorial Hospital. The district court relied on Woodill to support its view that the knowledge of risk requirement applied in strict liability failure to warn cases, and that the usual rule in other strict liability cases, that proof of a defect suffices, remained undisturbed. Cunningham was cited as authority for the usual strict liability rule that proof of a defect is sufficient. The district court’s interpretation was correct. The Woodill court clearly stated that it was not imposing a knowledge requirement in either a product defect or design defect case. In reaching this decision, the Woodill court cited the Cunningham distinction between strict liability based on a defect and strict liability based on the manufacturer’s failure to warn, and noted that comment k only applied to the failure to warn action.

Despite the Woodill references to defect cases such as Cunningham, and to design defect cases, the Seventh Circuit essentially held that an impurity such as that in Cunningham was the only kind of product defect on which strict liability could be based. Since the plaintiff in Needham did not claim that dienestrol contained any impurity as did the plaintiff in Cunningham, the Cunningham case did not “govern.” The Seventh Circuit interpreted the district court’s citation to Cunningham as a ruling that an ineffective product is a defective product. Citing section 402A, the Seventh Circuit held that ineffectiveness of a product is not actionable under strict liability theory.

The district court, however, had not ruled that plaintiff’s case was governed by Cunningham. Rather, the district court extrapolated from Cunningham the principle that proof of a defect, without proof of knowledge of the defect, is sufficient to establish strict liability based on that defect. Likewise, the district court did not hold that an ineffective product is necessarily a defective product. The plaintiff’s alternate theory of strict liability was premised on the claim that dienestrol was defective because it was ineffective and unreasonably dangerous. If the drug was both ineffective and the cause of plaintiff’s cancer, as the jury was instructed, then the drug was defective. The theory is supported by Illinois case law. To distinguish between an ineffective drug and an ineffective brake, both of which subsequently cause injury, is not legally justified for purposes of strict liability.

The real difference between these products is in their nature; the brake is only dangerous if it is ineffective, while the drug is always potentially dangerous. A drug is ingested despite its danger because it is an effective therapeutic agent against some other harm. Such a drug is not unreasonably dangerous. If, however, the drug does not prevent some other harm, that is, if it is useless, then the danger it poses is unreasonable. In the first situation there is reason for exposing oneself to potential danger-the drug is taken to avoid some other harm. If the drug does not prevent this other harm, then it follows that it is not reasonable to expose oneself to the drug’s potential dangers. Such a drug is unreasonably dangerous.

These differences in the kinds of product defects are not of sufficient import to deny strict liability for drug defects. The response of the courts can be either to adhere rigidly to prior doctrines, denying recovery to those injured by such products, or to fashion remedies to meet these changes. From a strict liability policy standpoint, the manufacturer of drugs is better able to bear the cost of injuries resulting from defective products. The manufacturer is in the best position to test for and discover, as well as guard against, defects in its products. The threat of strict liability will provide an incentive to produce safer drugs. The drug-consuming public needs protection from defective drug products. The Seventh Circuit’s holding creates a blanket protection from strict liability for drug manufacturers who develop, promote, and profit from an ineffective and dangerous drug. This decision is contrary to Illinois strict liability consumer protection goals.

CONCLUSION

The protection afforded by comment k to drug manufacturers applies only if the drug’s benefits outweigh its risks. Where a plaintiff challenges the manufacturer’s decision to market the drug as unjustified by asserting that the drug is not beneficial, evidence of efficacy or inefficacy is relevant to decide the claim. If the decision to market the drug was not justified because its apparent usefulness was outweighed by its risks the manufacturer loses the protection of comment k and may be held strictly liable. Comment k protection was intended for manufacturers of beneficial drugs only.

On the other hand, if a drug had no apparent usefulness and it caused injury, the manufacturers may be held strictly liable for manufacturing a defective product in an unreasonably dangerous condition. The result under either theory, the loss of comment k protection, is the same, and evidence of efficacy or lack of efficacy is relevant to both theories. These theories are supported by Illinois case law and by decisions in other jurisdictions.

Moreover, the imposition of strict liability on the drug manufacturer who develops, promotes, and profits from an apparently useless and dangerous drug is a just result. It would be manifestly unfair to thrust upon the consumer the burden of paying for the treatment of injuries caused by such drugs. The high profits and few losses in the drug industry reveal that a drug company is in a better position than the injured consumer to absorb and spread the cost of compensating for drug injuries. It is time to make the justification for these high drug profits a reality; manufacturers who develop, for profit, apparently useless and dangerous drugs must also accept the risk in such developments. The district court’s ruling promotes this goal; the Seventh Circuit’s decision defeats it. The Needham reversal signified another victory for the drug companies, and yet another disaster for the consumer.

The Seventh Circuit’s opinion in effect allows drug companies to develop and sell useless drugs with no concern about whether or not these drugs are dangerous, since the manufacturers will not be strictly liable in tort for injuried caused by such drugs. And as long as neither the drug manufacturer nor anyone else tests for the drug’s dangers, the manufacturer will not be liable for failure to warn because it will not know of the danger until some time after the drug has been on the marketin the case of cancer, perhaps twenty years. During this time the manufacturer will have made an enormous profit. Of course, one would assume that after the manufacturer learns of injury caused by its product, it would warn consumers of the danger. But if the birth control pill experience is any indication, this assumption is grossly naive. The risk of cancer from estrogen consumption has only recently surfaced in the warnings accompanying the pill. Time may well prove that the development and promotion of estrogen products has been the greatest fraud ever perpetrated by drug companies. The courts should allow the victims of DES injuries to bring strict liability actions based either on a theory of defect or of failure to warn. Evidence of efficacy or usefulness should be deemed pivotal in such actions. Strict liability for drug injuries should exist in fact, not just in theory.

Mary E. Kelly, 1981.

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1989 DES Case: Hymowitz v. Eli Lilly & Co.

Abstract

Plaintiffs in these appeals allege that they were injured by the drug diethylstilbestrol (DES) ingested by their mothers during pregnancy. They seek relief against defendant DES manufacturers. While not class actions, these cases are representative of nearly 500 similar actions pending in the courts in this State; the rules articulated by the court here, therefore, must do justice and be administratively feasible in the context of this mass litigation. With this in mind, we now resolve the issue twice expressly left open by this court, and adopt a market share theory, using a national market, for determining liability and apportioning damages in DES cases in which identification of the manufacturer of the drug that injured the plaintiff is impossible (see, Kaufman v Lilly & Co.,  Bichler v Lilly & Co.,. We also hold that the Legislature’s revival for one year of actions for injuries caused by DES that were previously barred by the Statute of Limitations is constitutional under the State and Federal Constitutions.

HYMOWITZ v. ELI LILLY & CO., Leagle, 198956073NY2d487_1518, April 4, 1989.

The history of the development of DES and its marketing in this country has been repeatedly chronicled. Briefly, DES is a synthetic substance that mimics the effect of estrogen, the naturally formed female hormone. It was invented in 1937 by British researchers, but never patented.

Hymowitz v. Eli Lilly and Company case brief, lawschoolcasebriefs, January 31, 2013.

In 1941, the Food and Drug Administration (FDA) approved the new drug applications (NDA) of 12 manufacturers to market DES for the treatment of various maladies, not directly involving pregnancy. In 1947, the FDA began approving the NDAs of manufacturers to market DES for the purpose of preventing human miscarriages; by 1951, the FDA had concluded that DES was generally safe for pregnancy use, and stopped requiring the filing of NDAs when new manufacturers sought to produce the drug for this purpose. In 1971, however, the FDA contraindicated the use of DES as a miscarriage preventative, when studies established the harmful latent effects of DES upon the offspring of mothers who took the drug. Specifically, tests indicated that DES caused vaginal adenocarcinoma, a form of cancer, and adenosis, a precancerous vaginal or cervical growth.

Although strong evidence links prenatal DES exposure to later development of serious medical problems, plaintiffs seeking relief in court for their injuries faced two formidable and fundamental barriers to recovery in this State;

  1. not only is identification of the manufacturer of the DES ingested in a particular case generally impossible,
  2. but, due to the latent nature of DES injuries, many claims were barred by the Statute of Limitations before the injury was discovered.

The identification problem has many causes. All DES was of identical chemical composition. Druggists usually filled prescriptions from whatever was on hand. Approximately 300 manufacturers produced the drug, with companies entering and leaving the market continuously during the 24 years that DES was sold for pregnancy use. The long latency period of a DES injury compounds the identification problem; memories fade, records are lost or destroyed, and witnesses die. Thus the pregnant women who took DES generally never knew who produced the drug they took, and there was no reason to attempt to discover this fact until many years after ingestion, at which time the information is not available.

We recognized this predicament in Bichler v Lilly & Co., where the court stated that in DES cases it is a “practical impossibility for most victims to pinpoint * * * the manufacturer directly responsible for their particular injury”. We allowed plaintiff’s recovery in that case, however, notwithstanding the failure of the plaintiff to identify the manufacturer of the injurious DES, on the limited basis that “the evidence was legally sufficient to support the jury verdict for the plaintiff” on the law as charged to the jury, and unobjected to by the defendant (see, Kaufman v Lilly & Co.,). The question, therefore, of whether nonidentification of the manufacturer precludes plaintiffs from recovering for DES caused injuries, remained unresolved after Bichler v Lilly & Co. (supra).

The second barrier to recovery, involving the Statute of Limitations, arose from the long-standing rule in this State that the limitations period accrued upon exposure in actions alleging personal injury caused by toxic substances (Fleishman v Lilly & Co. In Fleishman v Lilly & Co. (supra) it became clear that this exposure rule led to many DES cases being barred by the Statute of Limitations before the discovery of injury; we held, however, that any change in the accrual date from exposure to discovery was more properly the prerogative of the Legislature. Two years after Fleishman v Lilly & Co. the Legislature addressed the Statute of Limitations problem, and instituted a discovery rule for “the latent effects of exposure to any substance” . The Legislature also, for one year, revived causes of action for exposure to DES that had been time barred.

It is estimated that eventually 800 DES cases will be brought under the revival portion of this recent statute. Moreover, as indicated in Bichler v Lilly & Co. (supra), and as apparent from the record now before the court, in the vast majority of these cases identification of the manufacturer of the DES that injured the plaintiff will be impossible. The Legislature, however, while reviving these time-barred actions, did not resolve the identification problem.

The present appeals are before the court in the context of summary judgment motions. In all of the appeals defendants moved for summary judgment dismissing the complaints because plaintiffs could not identify the manufacturer of the drug that allegedly injured them. In three of the appeals defendants also moved on Statute of Limitations grounds, arguing that the revival of the actions was unconstitutional under the State and Federal Constitutions, and that the complaints, therefore, are time barred and should be dismissed. The trial court denied all of these motions. On the Statute of Limitations issue, the trial court also granted plaintiffs’ cross motions, dismissing defendants’ affirmative defenses that the actions were time barred. The Appellate Division affirmed in all respects and certified to this court the questions of whether the orders of the trial court were properly made. We answer these questions in the affirmative.” …

…continue reading the full paper HYMOWITZ v. ELI LILLY & CO., on Leagle.

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