As our society progresses in complexity, theories of tort law have evolved in order to provide redress for the harms caused in a changing world. Tort law evolution has resulted in the creation of new remedies and, in many instances, the erosion of certain preconditions for recovery in tort. Nevertheless, with limited exceptions, there has not been significant erosion of the requirement that a plaintiff must first be able to identify the person or entity that caused her injury before she can recover in tort. In the past decade, however, a small number of courts have abrogated this principle, which is referred to as “causation in fact.” In the place of causation of fact, these courts have adopted the concept of “market share liability.”
Market Share Liability in DES Cases: The Unwarranted Erosion of Causation in Fact, DePaul Law Review, Volume 40, Article 5, Issue 3, Spring 1991.
The market share liability theory has developed mainly through lawsuits filed by women who claim to suffer injuries resulting from their mothers’ ingestion of the drug Diethylstilbestrol (“DES”) while pregnant. These plaintiffs are commonly referred to as the “DES daughters“. The time that passes between the maternal ingestion of DES and the diagnosis of the injuries is generally twenty or more years because the injuries do not manifest themselves until sometime after the daughter has reached puberty. A DES daughter is often unable to identify the specific manufacturer of the drug her mother took for two key reasons: the long passage of time and the fungible nature of DES. Faced with the possibility of leaving these plaintiffs without a remedy as a result of their inability to identify the manufacturer, some courts have instead abolished the traditional requirement of establishing causation in fact. In place of causation in fact, these courts have adopted a theory that imposes liability upon any defendant who participated in the manufacturing or marketing of DES in the relevant market. Under this “market share liability” theory, each defendant is liable for the proportion of the judgment that its share of the market represented during the relevant time period.
Market share liability has been controversial since its inception. The concept has been adopted with varying modifications by a handful of courts e and promoted by a larger number of legal commentators. At the same time, other courts have denounced the theory of market share liability when faced with the opportunity to adopt the proposition in either DES cases or cases involving other products. Currently, only nine state supreme courts have addressed the market share liability issue in a DES case. Most likely, however, other jurisdictions will eventually be forced to face this issue, especially in light of the fact that DES was used nationwide, some plaintiffs have achieved success with the theory, and there is the potential for large recoveries.
Most legal commentary on the issue of market share liability has supported the adoption of the theory. Commentators and courts that support the market share liability theory correctly argue that there is a need to adapt our existing tort law in the face of progress. They also argue that there is strong emotional appeal to insure a remedy for all plaintiffs, especially plaintiffs who are innocent of any wrongdoing. However, this Article contends that courts should not develop a market share liability concept.
This Article begins with a brief history of the development of the drug DES. In the next section, this Article reviews the tort requirement of causation in fact. The third section outlines the DES cases in which state supreme courts have adopted market share liability, and the fourth section addresses cases where courts have rejected the theory in the DES context and in other actions.
The Article concludes that market share liability is an unsound concept, that it represents too wide a leap in our tort principles, and that the abrogation of such a fundamental tort requirement is unwarranted. Two ideas are presented to support this conclusion. First, there is insufficient data to accurately develop the required market shares for each of the hundreds of pharmaceutical companies that produced DES. This lack of data precludes the fair allocation of liability for DES related injuries among all DES manufacturers. Second, upon close scrutiny, the underlying policies offered to justify adoption of the market share liability theory are either not achieved by the theory, and even if they can be achieved, they do not provide sufficient reasons to adopt it. This Article proposes that the judicial development of market share liability involves making public policy determinations that more appropriately should be left for state legislatures. A legislative response, similar to the federal legislation established to compensate persons injured by childhood vaccines such as the diphtheria, pertussis, and tetanus (“DPT”) vaccine is a proper method of compensation, and one that will not require a radical change in a state’s tort law.
I. HISTORY OF DES
DES is a synthetic substance that duplicates the activity of estrogen, a female hormone crucial to sexual development and fertility. In 1940, a number of pharmaceutical companies sought Food and Drug Administration (“FDA”) approval to market DES in up to five milligram doses to treat vaginitis, engorgement of the breasts, excessive menstrual bleeding, and symptoms of menopause. The FDA approved the use of DES for these purposes in 1941, and, in 1947, the FDA approved the use of DES as a miscarriage preventative. In 1952, the FDA declared that DES was no longer a “new drug” within the meaning of the Federal Food, Drug, and Cosmetic Act,16 and was therefore considered safe for general use. This status allowed DES manufacturers to market the drug without submitting data to the FDA concerning its safety and effectiveness for any desired use.
In 1971, two medical studies suggested that there was a statistically significant association between the outbreak of clear cell adenocarcinoma, a form of cancer, in young women and the maternal ingestion of DES during pregnancy. The mothers of the women stricken with clear cell adenocarcinoma generally had used DES as a miscarriage preventative. Later that year, the FDA contraindicated the sale of DES for use by pregnant women. According to estimates, by the time of the FDA ban, as many as 300 companies had produced DES for sale. Each company’s product was essentially fungible, in that each product contained the same chemical composition. However, DES was marketed in a number of different colors, dosages, sizes, and shapes.
DES is no longer used as a miscarriage preventative. The drug is, however, still prescribed as an estrogen replacement for women with hormone deficiencies, for treatment of unusual menopausal symptoms, and for treatment of certain kinds of cancer of the breast and prostate. DES is also a major ingredient in the “morning-after pill,” a post coital contraceptive.
Since the 1970s, hundreds of daughters of women who took DES while pregnant have filed lawsuits against DES manufacturers. Generally, the complaints allege that the drug companies failed to test DES properly and to warn women adequately of its dangers. The injuries these women suffered are unquestionably serious. Some women have died, and others have required partial or total hysterectomies due to cancer that may be linked to their mother’s ingestion of the drug. DES manufacturers, however, contend that statistics regarding DES daughters have not shown a high incidence of cancer, and that it is not generally accepted that the injuries suffered are the consequence of the maternal ingestion of DES.
Some DES plaintiffs who could identify the manufacturer of the DES their mothers ingested have been able to proceed to trial. Other DES plaintiffs allege, after extensive discovery, that they are unable to satisfy the identification element. A number of circumstances contribute to the barrier of establishing causation in fact in these cases. The effect of prenatal exposure to DES usually does not manifest itself until at least after the child reaches puberty, and more years may pass before the cancer is linked to DES. During this long interval, whatever records the doctor, pharmacy, or manufacturer maintained often become lost or destroyed, and the memories of the persons involved have faded. Contributing to the lack of records is the fact that the manufacturers were not required by law to maintain records for long periods of time. Moreover, during the twenty-five years that DES was used to treat pregnancy-related problems, as many as 300 companies manufactured the fungible product. Additionally, many manufacturers no longer exist, having either merged with other concerns, or having gone bankrupt.
II. THE IDENTIFICATION REQUIREMENT
Typically, the tort causes of action DES daughters advance are based on negligence or strict liability theories. A fundamental principle of these theories, and of tort law in general, holds that the plaintiff has the burden of proving, by a preponderance of the evidence, that the named defendant caused the harm or injury complained of; mere conjecture or speculation as to the identity of the responsible party is insufficient proof of causation. This principle is known as the identification requirement. The requirement is one aspect of the element of causation in fact, which in turn is a common element to virtually all tort law litigation. The issue of identification, although important and present in every negligence and strict liability action, is infrequently litigated. Normally, plaintiffs know the identity of the manufacturer or seller of a product, or the identity is not difficult to discover. This is not true, however, in market share cases. Therefore, an essential issue each court must address when faced with a request to adopt market share liability is whether it is advisable to abolish the identification requirement.
The identification element of causation in fact serves important functions in the law of torts. One goal of our tort law is to compensate victims for their injuries. However, our justice system has so far determined that a no-fault society, one in which all injuries are compensable, is not desirable. Instead, tort law only redresses those injuries that result from a defendant’s culpability and then only if the defendant can be identified.
In promoting the goal of compensating victims, however, it is necessary to avoid establishing laws that act as an excessive deterrent to useful activity, such as the production of socially desirable products. Therefore, tort law’s goal of compensation must be balanced against a second tort law interest, that of protecting people from excessive liability. Requiring the plaintiff first to identify the responsible defendant as a condition of liability insures that a defendant will only be held liable for those injuries he more than likely caused.39 Because causation in fact limits a defendant’s potential liability to injuries that the defendant actually caused, the goal of preventing excessive deterrence is promoted. Otherwise, if potential liability is excessive, a person’s useful conduct along with his undesirable conduct will be inhibited. Moreover, although causation in fact restricts liability, it also helps to assign blameworthiness to the culpable party.
Notwithstanding the benefits that causation in fact provides, a narrow line of cases have created exceptions to the requirement of proof of causation in fact. The particular exceptions that DES plaintiffs most often raise are enterprise liability and alternative liability. These two exceptions allow a plaintiff to shift the burden of proof on the causation issue to a defendant or a group of defendants. Liability may attach to the group of defendants as a whole if a particular defendant is not identified as the party responsible for the injury. Besides market share liability, DES daughters have pursued two other causes of action with more lenient identification burdens: concert of action and civil conspiracy. These two causes of action are not exactly exceptions to the identification requirement. Although DES plaintiffs typically allege elements of each of these causes of action, the courts almost always reject all but the market share liability theory.
There has been a split among courts on the question of whether to adopt market share liability in negligence and strict liability actions brought against drug manufacturers for injuries suffered by women whose mothers ingested DES while pregnant. Currently, the highest courts of California, Washington, Wisconsin, New York, and, most recently, Florida have adopted some form of the market share liability theory in DES daughter cases. The supreme courts of Illinois, Missouri, and Iowa have specifically rejected the market share liability theory in DES cases.
III. JUDICIALLY PROMULGATED MARKET SHARE THEORIES
None of the five states that have adopted the market share liability concept have implemented the same procedure. All five states, however, have a number of similarities in the procedures adopted. This section generally discusses the concept of market share liability as a unified principle, noting the important variations each state has included in the particular form adopted.
A. Reasons for Adopting a Market Share Liability Theory
The DES cases are examples of the reality that in our complex industrialized society, advances in science and technology have created fungible goods that may harm consumers and that are difficult to trace to a specific producer. Courts faced with cases involving fungible products must determine whether they will fashion a procedure to allow the plaintiff to overcome the obstacles of identification that these technological advances cause. Courts in the DES cases answering this question affirmatively generally rely on three basic policy reasons as justification for adopting market share liability.
The first policy is that as between an innocent plaintiff and a manufacturer of a defective product, the manufacturer should bear the cost of the injury. The courts conclude that the plaintiff in these cases is not at fault in failing to provide evidence of causation, reasoning that the conduct of the defendants played a significant role in creating the unavailability of proof. The Washington and Wisconsin courts expanded on this justification, explaining that because each defendant contributed to the risk of injury to the public and consequently to the risk of injury to the plaintiff, each defendant shared, in some degree, culpability for producing or marketing DES.
Courts also articulate two other policy reasons to support the adoption of market share liability. The second policy justification is that as between the injured plaintiff and the possibly responsible drug company, the drug company is in a better position to absorb the cost of the injury. The large pharmaceutical companies, the courts conclude, not only can insure against the costs of injury, they also can pass on these costs to the public. The final reason given to support market share liability adoption is that because the manufacturer is in the best position to recognize defects in its products and to guard against them, holding the producer liable for these defects provides an incentive to produce safe products.
B. Market Share Liability Theory
These three policy reasons have prompted courts to reevaluate their state’s tort laws in an attempt to hold DES manufacturers responsible for injuries their drugs caused. The first court to adopt market share liability was the California Supreme Court in Sindell v. Abbott Laboratories. The Sindell court based the market share liability theory it adopted, and some of its rationale in adopting the theory, on a student law review article. The article argued that, in DES cases, some form of enterprise liability should be fashioned. The court, however, did not literally follow the article’s proposal. Similarly, each court adopting market share liability since Sindell has likewise placed its own twist on the market share liability theory.
The preliminary component of any case using market share liability concerns the number of defendants who must be joined. In Sindell, the court held that the plaintiff had to join as defendants the manufacturers of a substantial percentage of the DES sold in the relevant market. This requirement must be met before defendants may cross-claim against other possibly responsible manufacturers. The substantial share component was important in the concept of the market share liability theory conceived in the law review comment the court relied upon. The substantial share requirement diminishes the likelihood that a manufacturer will be liable for injuries a product it did not produce caused. Therefore, the substantial share requirement helps preserve the causation in fact element to a limited extent because a manufacturer who contributed to a substantial share of a market for DES will more likely be liable for injuries its products actually caused.
On the other hand, the other four states, which have adopted market share lability have not adopted the substantial share component of the California theory. In Washington, Wisconsin, and New York, the plaintiff need only sue one drug company that produced DES and that company’s DES sales need not constitute a substantial share of the market. Inevitably, though, a single named defendant will implead other companies that sold DES in the relevant market.
The next element necessary to succeed in a market share liability action is that the plaintiff must prove a prima facie case on every element of a negligence or strict liability action except identification of the direct tortfeasor. Therefore, the plaintiff must prove, by the preponderance of the evidence, that her mother took DES, that the DES caused subsequent injuries, that the defendant produced or marketed the type of DES the plaintiff’s mother ingested, and that the production and marketing of DES breached a legally recognized duty to the plaintiff.
Once the plaintiff has presented a prima facie case of negligence, the burden shifts to the defendant to exculpate itself. In order to do so, a defendant must prove by a preponderance of evidence that it did not produce or market the type of DES the mother took, that it did not produce or market DES for the prevention of miscarriage in that geographical area, or that it did not produce or market DES at that time.
In Hymowitz v. Eli Lilly & Company, New York’s highest court, the Court of Appeals, made it difficult for a defendant to exculpate itself. New York uses a national market. Therefore, a defendant can only exculpate itself through proof that it did not participate in the marketing of DES for pregnancy use.80 Even conclusive proof that the defendant-manufacturer could not have caused a particular plaintiff’s injury is insufficient for exculpation purposes in New York.
If the defendant fails to exculpate itself, the court next defines the relevant geographic market area for the purpose of measuring and apportioning liability. Remaining defendants which provided DES in the relevant geographic market become members of the plaintiff’s DES market. The relevant geographic market area ideally is defined on a local level, however, where local market share evidence is unavailable, county, state, or even national market share figures are admissible to determine the defendant’s market share. Damages are then apportioned according to the likelihood that any of the defendants supplied the product. This apportionment is achieved by holding each defendant liable for the proportion of the judgment its share of the market represents. The intended result of market share liability is that a manufacturer’s liability for an injury will be approximately equivalent to the amount of damage caused by the DES the manufacturer supplied in the relevant market area.
New York is the only state which refuses to narrow the relevant market. Rather, New York uses a national market. New York rejected the idea that a market share liability theory could be finely tailored so that liability for many injuries would equal the injuries actually caused by the product of a particular manufacturer. Nevertheless, the New York court realized that a national market could not provide a reasonable link between liability and the risk a defendant created toward a particular plaintiff. Instead, a national market apportions 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.
A last common characteristic of market share liability is that the liability is not joint and several; rather, it is only several. In adopting market share liability, the New York Court of Appeals concluded that joint and several liability would represent a retreat from the attempt to achieve as close an approximation as possible between a defendant’s liability for damages and its individual responsibility for the injuries that the products it manufactured caused. In cases in which all manufacturers in the market are not joined, a plaintiff will receive less that 100% recovery because liability will be limited to the market share represented.
Beyond this basic framework of market share liability, each state has developed certain important distinctions. The unique twists to the theory adopted by California and New York courts have already been discussed. However, Washington and Wisconsin also have developed profound variations in their versions of market share liability. These variations generally relate to the apportionment of damages.
The market share liability theory that the Washington court has adopted is known as “alternative market share liability” because of its similarities to alternative liability. Under the Washington theory, after defining the geographic market, all defendants are presumed to have equal market shares and are liable on a pro rata basis. Manufacturers may rebut this presumption by proving their actual market share. A defendant proving actual market share in the relevant market is only liable for a percentage of damages equivalent to the market share. The presumptive share of the remaining defendants that are unable to establish their actual market share is then adjusted upward, so that 100% of the market is accounted for. If all defendants are able to establish their actual market share and the percentage of the market represented is less than 100%, plaintiff’s recovery is limited to the percentage of the market that is actually represented.
Wisconsin’s theory, on the other hand is known as the “risk contribution theory,” and relies on that state’s comparative negligence statute for apportioning damages. Under Wisconsin’s theory, if only one company is sued and no others are impleaded, that company is liable for all the damages if it cannot exculpate itself. If more than one defendant is joined or impleaded, then damages are determined according to the jury’s assignment of liability under Wisconsin’s comparative negligence statute. A number of factors may be considered in apportioning damages. These factors include the market share of the defendant, whether the company conducted safety tests on DES, the role the company played in seeking FDA approval of the drug, and whether the company issued warnings about the dangers of DES.
IV. COURTS THAT HAVE REJECTED MARKET SHARE LIABILITY
The concept of market share liability has not received strong support. The supreme courts of Illinois, Missouri, and Iowa have refused outright to adopt the market share liability theory in the context of DES daughter cases. The extent of each court’s analysis varies, although there are certain common justifications that each court has given for its holding. Each court has recognized the strong appeal of imposing liability on manufacturers that profited from the sale of a product that has injured an innocent victim.108 However, these courts have realized that the market share liability theory was too great a deviation from existing tort law and, therefore, as the theory presently existed, was not a viable concept. The market share liability theory, as these courts perceived it, did not present sufficient policy reasons to alter causation in fact. Rather, if any change was to be made to the existing tort laws, the courts reasoned that the legislature, and not the courts, would be better equipped to construct a solution to the DES liability problem.
In addition, the Illinois and Missouri courts stressed that the inadequacies of the data available on manufacturers’ market share made the concept unworkable. As a result, these two courts reasoned that it would be unfair to award damages based on inaccurate evidence. Both courts also declined to embrace the underlying policy reasons on which the courts that accepted market share liability relied. In Zafft v. Eli Lilly & Co., the Missouri Supreme Court discounted the argument that “as between an innocent plaintiff and negligent defendants, the latter should bear the cost of the injury” because “defendants can better absorb the cost of injury. The Zafft court stated that this argument ‘ignored the strong countervailing interests that support the causation in fact requirement. The Illinois and Missouri courts also both recognized that adoption of market share liability would have little effect on production of safer products. In fact, these courts believed adoption of market share liability would have a detrimental effect on desired pharmaceutical research and development. In addition, the Illinois Supreme Court disputed whether the theory would have any significant effect on enhancing record keeping.
The Illinois Supreme Court, in Smith v. Eli Lilly & Co., further explained that the market share liability theory had the potential for treating plaintiffs who were unable to identify the culpable manufacturer better than the average plaintiff who was able to do so. Where the manufacturer can be identified, a plaintiff runs the risk that the culpable party may not be amenable to suit or may be insolvent. The Smith court also refuted the plaintiff’s contention that the defendants’ breach of a duty to her formed a basis for adopting the theory. Moreover, the Smith court concluded that imposing liability under the market share liability theory would make the remaining manufacturers of DES the insurers of the industry. The Illinois court reasoned that imposing liability would be especially unfair because the relevant industry existed between twenty and forty years ago and there were some 300 manufacturers involved; however, only the few manufacturers still in existence would have to shoulder the liability costs. Lastly, the Smith court rejected the plaintiff’s analogies to res ipsa loquitur and alternative liability as too tenuous.
Most federal courts that have addressed the issue of whether to apply market share liability in a DES case have declined to adopt the theory.127 The federal courts generally characterize the theory as a radical departure from the common law of the state in which they sit. Therefore, without a clear direction from a state’s supreme court, a federal court sitting in diversity would be usurping the proper authority of a state court.
For example, in Mizell v. Eli Lilly & Co., the South Carolina federal district court refused to apply California’s market share lability law. Even though the Sindell rule was the appropriate law according to conflict of law principles, the Mizell court refused to apply market share liability because it violated the public policy of the forum state, South Carolina. The Mizell court concluded that “market share represents a radical departure from the body of products liability law that has been developed in South Carolina” and has the potential for placing liability on defendants who bear no responsibility for the defective product.
Likewise, in Tidler v. Eli Lilly & Co., a case decided under Maryland law, the Court of Appeals for the District of Columbia declined to adopt the market share liability theory. The Tidler court reasoned “that the theory that plaintiffs would have us ‘construct’ requires that we build on a new foundation, not on the structural underpinnings of the traditional common law of torts. Neither the highest court of Maryland nor the District of Columbia had addressed the issue. The Tidler court, therefore, held that such a marked deviation from the common law was beyond the authority of a federal court bound by the Erie doctrine.
B. Attempts to Expand Market Share Liability
Beyond DES Cases Plaintiffs have attempted to extend market share liability to contexts other than DES cases but with considerably less success. In Shackil v. Lederle Laboratories, the New Jersey Supreme Court refused to apply market share liability in an action filed against manufacturers of the diphtheria, pertussis, and tetanus (“DPT”) vaccine. The plaintiff in Shackil allegedly became severely retarded as a result of receiving a DPT vaccine. The plaintiff was unable to identify the specific manufacturer of the DPT vaccine she received. As a result, the plaintiff sued a number of manufacturers that potentially could have produced the vaccine she received and argued for adoption of a market share liability theory. The court determined that to adopt market share liability in a DPT case “would frustrate overreaching 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 fact that Congress had already established a fund and a mechanism to compensate plaintiffs the vaccine allegedly injured also influenced the court’s decision.
The largest area of cases in which plaintiffs have been largely unsuccessful in attempting to impose market share liability has been in asbestos litigation. The main factor prohibiting application of the theory to asbestos cases is that asbestos is not a fungible product. Asbestos is a generic term for a family of minerals. Asbestos products have wide variances in toxicity depending on the amount of asbestos contained in the product; the greater the toxicity, the greater the risk of harm.” Therefore, establishing market shares based on the amount of product a manufacturer supplied into the market would not accurately reflect the amount of harm its product caused.
In Goldman v. Johns-Manville Sales Corp., the Ohio Supreme Court clearly articulated the reasons for which market share liability theory is rejected in asbestos cases.’ 60 The Goldman court reasoned that market share liability is inappropriate “in an asbestos litigation case, especially where it cannot be shown that all the products to which the injured party was exposed are completely fungible. The risk that the manufacturer created, the Goldman court noted, is not accurately reflected in its market share because many products contain different degrees of asbestos. The court further reasoned that there would be difficulties with the theory as applied to asbestos cases because the largest asbestos supplier, Johns-Manville, was not amenable to suit. Instead of adopting a market share theory, the court concluded that the problem required legislative solution.
Plaintiffs in a less cohesive mixture of cases have likewise been unsuccessful in their attempts to expand the doctrine of market share liability. In one line of cases, courts have held that plaintiffs, injured by the explosion of multipiece truck wheels, could not use market share liability against the manufacturers. These courts generally reason that the plaintiff failed to prove that the product was defective. Additionally, courts have found no proof that each company’s product shared the same defect. Manufacturers of clothing alleged to be unreasonably flammable, were held not liable under the market share liability theory because the products were not sufficiently fungible. The market share liability theory also was rejected in actions against the manufacturers of a type of blood product from which plaintiff contracted AIDS, the manufacturers of benzidine congener dyes, the manufacturers of Salk polio vaccine,162 and the manufacturers of a breast prostheses.
As illustrated, a slim majority of state supreme courts have embraced the market share liability theory in DES cases. The market share liability theory, however, has been rejected in almost all other contexts. Furthermore, the five courts that adopted some form of market share liability have criticized and ultimately rejected, in whole or in part, the theory as developed in the other jurisdictions. Each adopting court has recognized that its version of the theory may be flawed, but adopted the market theory anyway, believing that subsequent opinions would refine the concept. Nevertheless, after a decade of refining, the courts recognize that they apparently have been unable to resolve many of the problems with the concept. Courts should not be swayed to adopt market share liability, or one of the slightly altered variations of it, based on the strong emotional appeal to provide injured plaintiffs with a remedy. The theory is not only infirm, it is also a marked deviation from useful tort principles.
A. Criticisms of the Procedures Adopted for Implementing Market Share Liability
Market share liability represents one of the most important, if not one of the most radical, developments in tort law in the past decade. It has understandably been the subject of criticism. Market share liability defendants and some commentators have argued that the whole concept is flawed. The flaws associated with the overall concept of market share liability will be addressed later in the Article. This section discusses the flaws associated with the procedural elements of market share liability.
The first procedural component in a market share liability case is the identification of defendants. The California market share liability theory requires the plaintiff to name defendants having a “substantial share” of the market, while the market share liability theories of the three other states require the plaintiff to name only one defendant. One criticism specific to the California “substantial share” requirement is that the Sindell court failed to define what constitutes a “substantial share” of the market, such that the burden of proof shifts to the defendant. The law review article that the court relied upon suggested that the plaintiff join seventy-five to eighty percent of the manufacturers. The court, though, rejected this percentage as too high and held that only a substantial percentage share is required.
The three other state supreme courts only require the plaintiff to sue one defendant. However, without the requirement that a “substantial share” of the market be present, perhaps at least fifty percent of the market, there is the realistic potential of creating liability disproportionate to the amount of damage a manufacturer caused, especially if only a small manufacturer or a few small manufacturers are joined. If a substantial share is joined, there is at least a likelihood that one of the defendants before the court caused the injuries. Without the substantial share requirement, one manufacturer or a handful of manufacturers could continually be named defendants and be forced to pay damages. Consider what could happen if the sole defendant is a small contributor to the DES market. This manufacturer could possibly shoulder complete liability, without proof of it being the cause in fact of the injury; in fact, the great likelihood will be that the manufacturer did not cause the plaintiff’s injuries. For example, under the Washington procedure, a small company that no longer has records of its actual market share is given a presumptive share which equals the portion of the damages unattributed. Thus, that company could be responsible for seventy-five percent or more of the damages, when common sense dictates that a small company surely could not have distributed such a high percentage of the DES used in the market.
Defendants assigned presumptive shares are also held liable for the share of the market attributable to companies no longer in business or not otherwise amenable to suit. Defendants who are amenable to suit become insurers of the products that other manufacturers, not amenable to suit, made and marketed. Therefore, a market share liability theory that does not require the identification of a substantial number of defendants can be substantially unfair to any company that is unable to prove its market share, especially if that company is small.
Another criticism of the procedures developed is that each theory, other than New York’s, fails to identify the relevant market-the local area, the county, the state, or the nation-for purposes of determining a particular defendant’s market share. The relevant market area is important because a manufacturer’s liability will vary widely depending on which market is used. The courts adopting the theory claimed that market share liability approximates each defendant’s responsibility for the injuries its own product caused. However, these assertions are undermined by the fact that, depending on the chosen market, there is this potential for extreme variance in liability. Furthermore, each state’s theory fails to specify how the market for DES can be allocated fairly when DES was prescribed for uses other than as a miscarriage preventative. Failure to account for the diverse uses of DES exacerbates the improbability that the market share theory apportions liability in any way that approximates the injuries each defendant caused.
The Wisconsin provision that holds a single named defendant who can not prove market share 100% liable for a plaintiff’s injury, in particular, is subject to criticism. The Wisconsin Supreme Court emphasized that it was adopting the concept due, in part, to the fact that the defendant created a risk of harm. The other courts adopting market share liability did not go so far as to impose potentially total liability on a single defendant merely for creating a risk of harm. The Collins decision contravenes the principle that a mere possibility that a defendant is the responsible party is insufficient to satisfy causation. It is possible, therefore, under the Wisconsin theory that the defendant’s liability will far exceed the probability that it caused the injuries.
The Wisconsin court, in Collins, also rejected “unalloyed market share,”‘ 86 concluding that it “does not constitute the most desirable course to follow in DES cases because the theory, while conceptually attractive, is limited in practical applicability. The Collins court found that defining the market and apportioning the market share are almost impossible to accomplish fairly and accurately because of the insufficiency of the data on market shares, and because a second mini-trial to determine market share would waste judicial resources. While this observation may be true, it has been pointed out that the Collins single defendant method does not resolve the perceived errors in allocating market share. Moreover, under the court’s procedure, the errors are compounded by inundating a jury with a mass of information and by adding a trial on the separate issue of apportioning liability.
The New York Court of Appeals recently declined to accept Wisconsin’s risk contribution theory, believing that it would only be feasible on a limited scale. The New York court was wary “of setting loose, for application in the hundreds of cases pending in this State, a theory which requires the fact finder’s individualized and open-ended assessment of the relative liabilities of scores of defendants in every case. The court concluded that the injustice resulting from delays in recoveries and inconsistent results militated against adoption of the theory.
B. Inability to Reconstruct the Defendant’s Market Shares
There are numerous problems with the overall concept of market share liability aside from those concerning the procedures each court developed to impliment its theory. A major flaw with DES cases is that there is only a small amount of, or in some cases no reliable information available to establish the defendants’ percentages of the market. No party can be blamed for the lack of information. The lack of information is, in part, the result of the inadequacy of the laws in effect regarding maintenance of records. Other factors relate to the long lapse in time from the sale of the drug to the filing of the lawsuit. Besides the lack of records for existing manufacturers, many of those defendants named in the lawsuits are no longer in business. For these companies especially, it is unlikely that records are available to establish their share of any market. The lack of available records is evidenced by the fact that after extensive discovery, many plaintiffs are unable to identify the responsible manufacturer or even to narrow it to a likely group of defendants. Unfortunately, the courts that have adopted market share liability have done so while ruling on pretrial motions. These courts have not had the benefit of hearing evidence regarding the unavailability of market share data before ruling on whether or not to adopt the market share liability theory.
The experiences of trial courts in California, directed by the Sindell court to apply the market share liability theory, exemplify the problems courts will encounter in determining market shares. The Smith court noted that California trial judges, in In re Complex DES Litigation, attempted to define the relevant market as narrowly as possible. After extensive discovery proceedings, the parties were unable to present data on a narrow market. Therefore, the judge determined that the only practical relevant market was a national market. Likewise, the Smith court noted that another California court, in Stapp v. Abbott Laboratories, expressed exasperation with the task of attempting to formulate market shares after spending over four weeks examining the DES market. The Stapp court concluded that there simply was no such market share data. The Stapp court criticized the courts that developed the market share concept for adopting the theory despite their obvious lack of trial experience and lack of knowledge as to what would go into proving a case based on the theory.
Those who support the market share liability theory, and those courts that developed it, did so believing that attributing damages in proportion to the percentage of DES a manufacturer supplied in a narrow market would, over the run of cases, result in holding each defendant responsible for the amount of harm its own product caused. Thus, the causation in fact element was preserved as much as possible. It is highly unlikely, however, that market share liability can meet the goal of apportioning damages in the context of DES cases.
A truly reliable market share calculation must be limited to an accurate reflection of the amount of DES a manufacturer supplied into the market. Such an accurate determination of market share apparently cannot be achieved. Moreover, any market share determination must be limited to the amount of DES the manufacturer sold for use in preventing miscarriages. This narrow market is appropriate because the drug was, and is, safe for the other purposes for which it was sold. The task of determining market share is especially awesome in the case of DES sales because of its widespread use and because of the long period of time over which it was prescribed. To reconstruct the market and apportion liability accurately, evidence must be presented detailing each defendant’s percentage of the relevant market for a specific year, overlapping years, or span of years. For instance, if a plaintiff’s mother, for some reason, took DES intermittently over a period of three years before the plaintiff’s birth, the trial court will have to reconstruct the market shares of each defendant for each year. In addition, DES cases have generally been consolidated before a single trial judge for docket management purposes. The judge has the difficult task of developing the various market shares for the numerous defendants and years involved in the multitude of DES cases before the court. This can mean reconstructing the sales data for thirty or more manufacturers for any number of years between 1947 and 1971.
Unfortunately, reconstructing these narrow markets can be nearly impossible due to the scant amount of market data that remains available. If courts and juries are allowed to apportion damages when reliable information is not available, the clear result will be arbitrary determinations and wide variances between judgments, without sufficient explanation for these differences. This unpredictability makes it difficult for manufacturers to insure against liability and to reach reasoned settlements in pending suits. Additionally, states that adopt market share liability place a burden on their trial courts and the parties involved to determine market shares. This burden bogs down trial courts and creates for them an almost futile endeavor. The burden of establishing market shares based on unreliable or insufficient data also comes at a tremendous cost to the court system and to litigants, both monetarily and in terms of manpower.
Contributing to the misperception regarding the ability to reconstruct markets is the implicit contention that defendants amenable to suit can establish their true market shares. Throughout the history of the use of DES as a miscarriage preventative, hundreds of manufacturers produced the product. It is impossible to bring them all before a single court. The defendants who do appear in court face the difficult burden of proving their market share. Those who cannot meet this task, but who still desire to reduce their potential liability, will have the even more difficult burden of establishing market shares of codefendants or unnamed manufacturers. The likely result of the failure of market share proof will be that those companies that are amenable to suit, but unable to establish their market share, will be liable for a wholly speculative and disproportionate amount of the damages. Instead of having every DES manufacturer pay damages that, in the long run, approximate the harm the manufacturer caused, the market share theory places liability on only the small percentage of the many DES manufacturers that are still viable and amenable to suit.
One contention that may support adoption of market share and may overcome some of the problems discussed is, that after a number of jurisdictions have grappled with developing market shares, there will become a pool of generally accepted market share data for the various DES manufacturers. Such a proposition, however, is not accurate. Any generally accepted data that courts develop will likely be established for those few large companies that are still viable and amenable to suit. Also, any generally accepted data will most likely be only for large manufacturers’ national market shares. Under each adopted market share liability theory, except for New York’s, the trial court first attempts to determine the local market share-that is the market shares of the defendants who participated in a specific neighborhood, county, region of the state, or whole state. Thus, regardless of a manufacturer’s national market, if suits are brought throughout the country, the incentive and the burden will remain for a manufacturer to attempt to establish a more localized market share.
Even if the trial courts agree to accept only data on national market shares, inevitably disagreement will arise about these markets. For example, after extensive discovery and hearings, a San Francisco California court developed national market shares for the years involved in the cases before it. However, the litigants in a New York DES case declined to accept these figures. The New York court is now attempting to construct its own market share figures. Subsequently, the San Francisco court decided to relitigate the market share issue because of perceived errors in its calculation.
Last, the national market data will inevitably be flawed due to the lack of reliable information. Market share figures likely will not include all the companies brought before each court or will not include the many companies no longer amenable to suit.
C. Tort Principles Used to Justify Adoption of Market Share Liability
Irrespective of the lack of reliable market share data, the underlying policy goals of market share liability do not justify adoption of the theory. Proponents of the theory argue that certain policy considerations of negligence and strict liability law compel courts to adopt market share liability. Although tort law must remain viable to impose liability on the responsible manufacturer or manufacturers, market share liability either does not effectuate the principles and policy reasons offered as justification, or, to the extent market share theory achieves tort law goals, the proposed reasons are insufficient to warrant adoption of the concept.
The Sindell court relied upon two policy reasons for adopting market share liability: (1) as between an innocent plaintiff and a manufacturer of a defective product, the manufacturer should bear the cost of injury; and (2) as between the injured plaintiff and the possibly responsible manufacturer, the manufacturer is better able to absorb the cost of the injury. These two policy reasons are also cited to justify imposition of strict products liability. The courts that followed Sindell in adopting the market share liability also justified adoption of the theory based in part on these policy reasons.
However, eight years after Sindell, in Brown v. Superior Court, the California Supreme Court held that prescription drugs should be exempt from strict liability; in so holding, the Brown court adopted comment k of the Restatement (Second) of Torts section 402A for determining the liability of a pharmaceutical manufacturer. Brown held that, in general, “so long as the drug involved was properly prepared and accompanied by warnings of its dangerous propensities that were either known or reasonably scientifically knowable at the time of distribution,” a manufacturer is not strictly liable. As shown earlier, market share liability is a theory that has essentially been limited to actions against manufacturers of DES, a prescription drug. Interestingly, when California, the first state to adopt market share liability, explained its reasons for accepting market share, the court relied on policy reasons underlying strict liability. Nevertheless, in Brown, a later California case, the California Supreme Court held that in an action under market share liability, the plaintiff could not rely on an action sounding in strict liability. In California, a plaintiff can now recover under the market share liability theory only by proceeding under a negligence cause of action.
The California court’s legal reasoning is patently unsound. First, the court legitimized the adoption of market share liability based on the policy reasons supporting strict liability, and then the court later declared that the market share theory should not be used in a strict liability action. In the meantime, the subsequent courts that adopted market share liability unwisely accepted the underlying policy reasons for adopting market share without analyzing whether the policies support adoption of the concept. After scrutinizing the policy reasons, it appears doubtful that they do sufficiently support adoption of the market share liability theory.
As noted, one policy consideration relied upon in adopting the theory is that drug companies are better able to absorb the costs of the injury by insuring against liability and passing the costs on. Linked with this principle is the contention that the pharmaceutical drug companies are in solid financial condition and, therefore, are able to afford insurance to cover the costs. Manufacturers have strongly contested the figures and conclusions regarding their financial status, or any implication that one company’s solid position reflects the security of other participants in the drug manufacturing industry. The producers further contend that expansions in tort law, such as the adoption of market share liability, have the perverted result of eliminating production of certain useful and necessary drugs. Additionally, manufacturers contend that adoption of market share liability dramatically increases insurance costs to such an extent that some companies either can no longer obtain insurance or cannot pass the costs on to consumers, while other companies can no longer survive.
There are a number of examples of drugs that are no longer produced because of increased product costs related to potential liability. For example, Oculinum and Benedectin were considered safe and useful but are no longer available to the public because manufacturers cannot afford to insure their sale of the drugs. The federal government has interceded in some cases to protect companies from liability, in order to insure availability of a drug. For instance, the government intervened to insure availability of the swine flu and polio vaccines. The New Jersey Supreme Court voiced this same concern when it declined, on policy grounds, to impose market share liability on manufacturers of DPT because of the crippling effect potential liability would have on the availability of the vaccine.
Surely, broadening manufacturers liability exposure through market share liability will have the concomitant effect of negatively impacting drug availability. Manufacturers will need to insure against losses arising from the sale of their own products as well as the products of others in the industry, most of whom are no longer in existence. Even if a manufacturer decides not to insure against losses, it will still be obliged to cover the costs of any damage awards. This added potential for liability will likely contribute to a reduction of the number of participants in the market and the availability of drugs, as well as a decline in the amount of new drug research. It may be tempting to impose liability based on the fact that these manufacturers profited from the sale of a drug that may be responsible for the plaintiff’s injuries, regardless of their actual ability to cover these costs. However, this temptation alone is not a sufficiently compelling reason to adopt a theory that significantly alters a state’s tort law, while only providing a clearly flawed alternative. Likewise, the policy considerations regarding the ability of manufacturers to absorb costs is insufficient to justify adoption of market share liability given the unclear effect on future drug availability.
Another policy consideration supporting the development of products liability is that the production of safer goods will be promoted. Proponents of market share liability argue that adoption of the theory is also necessary to provide incentive to produce safer generic drugs. However, this argument is unconvincing. First, the industry arguably needs no additional encouragement above and beyond the incentives that strict liability and negligence laws provide to produce safer drugs. For years, the pharmaceutical industry has been the frequent target of litigation, facing large damage awards. This exposure has provided the industry with incentive to produce safe products. Before any drug is introduced to the public, extensive research and development costs are incurred to ensure that the product is safe. Furthermore, this country has established and yearly funds the Food and Drug Administration which is responsible for regulating the safety of pharmaceuticals. The FDA must first approve the use of any new drug before it is allowed on the market. After a drug is approved for sale, the FDA retains authority to remove the drug from the market if a problem later is discovered.
The likelihood of an incentive towards safety resulting from the imposition of market share liability in DES cases also is questionable for another reason: liability is not imposed until forty years after the undesirable behavior occurred and almost twenty years after the potential harm was discovered and the product removed from the market. Most of the defendants in current DES litigation had very little to do with the marketing of the drug when it was taken as a miscarriage preventative. Imposition of liability at this late date will have little deterrent effect. Today, drug manufacturers are guided in their safety incentive by medical and scientific research and FDA regulations not by this new concept for ensuring recovery. A third reason why market share liability does not provide a safety incentive stems from the fact that the theory imparts potential liability on all manufacturers in the particular industry. There cannot be an incentive to produce safer products if liability is still imposed as a result of the negligence of others in the industry. The incentive towards safety is also diminished if a manufacturer knows that others in the industry will absorb the damages resulting from its negligence.
The safety incentive rationale is questionable for a final reason: the theory has been adopted in only a limited number of jurisdictions, and thus far, market share liability is’only being applied to manufacturers of DES. Therefore, if a court adopts market share liability, the goal of warning manufacturers to produce safer products will not reach a wide array of drug manufacturers or other industries. The limited reach of the rule will produce little incentive for most manufacturers to produce safer goods since only one segment of the pharmaceutical industry is affected.
Similarly unavailing is the policy argument that adoption of market share liability encourages manufacturers to maintain more detailed records that will enable plaintiffs to identify the culpable party. Normally, when DES leaves a manufacturer’s plant, it is identifiable. Somewhere along the chain of distribution, however, the drug becomes commingled and less traceable. Due to the fungible nature of DES, drug manufacturers have very little ability to keep track of the ultimate market and user of the drug. Moreover, the drug industry did not violate any laws regarding the maintenance of sales records. With the adoption of market share liability, however, manufacturers nevertheless are punished for their failure to maintain better records.
Certainly, there are infirmities in the rationale offered to justify adoption of market share liability. Moreover, to the extent that these reasons and policy goals are met, they do not provide sufficient basis for judicial adoption of the theory.
D. Pharmaceutical Drug Manufacturers Should Not Become Insurers of Their Industry
Another justification offered for adoption of market share liability is that the DES manufacturers breached a duty to make a safe product and, therefore, liability should be imposed. First, one must note that in the cases adopting the theory no breach of duty had yet been established because the issue was decided on the basis of pretrial motions. Additionally, there is conflicting evidence as to whether DES is in fact an unreasonably dangerous product or whether it is especially harmful. Regardless, the concept that liability may be imposed based merely on a breach of duty or creation of risk, without causation established, has long been rejected in American tort law.
Courts should not easily discard historic tort law principles merely because the defendants are members of the drug industry or because a plaintiff has suffered an injury. Market share liability, however, does disregard tort law principals. As a result, manufacturers are insurers of not only their own products but also the products of other manufacturers in the industry. Additionally, market share liability in DES cases causes solvent defendants to become insurers of an industry that existed approximately twenty to forty years ago.
As Justice Richardson stated in his Sindell dissent:
The majority’s decision effectively makes the entire drug industry (or at least its California members) an insurer of all injuries attributable to defective drugs of an uncertain or unprovable origin, including those injuries manifesting themselves a generation later, and regardless of whether particular defendants had any part whatever in causing the claimed injury.
Such a result is unwarranted. The majority of plausible DES defendants have not been, or cannot be, brought before a court. Those defendants who are brought before courts bear the difficult burden of establishing their share of a relevant market. The companies that cannot prove their share will have to pay the unattributed portion of the damages, thus paying the damages that rightfully belong to companies that are insolvent, not amenable to suit in the jurisdiction, or for some other reason, are not before the court. The Sindell court justified its ruling in part on the belief that over the run of the cases, a company’s liability would approximate the harm it caused. However, this assumption is purely illusory, as recognized in Hymowitz. This type of judicial legislation is an unreasonable overreaction in an attempt to achieve what is perceived as a socially desirable result. A decision to adopt market share liability not only distorts a state’s common law but also is best decided by the legislature and not the courts.
VI. LEGISLATURES, NOT COURTS, SHOULD DETERMINE THE PUBLIC POLICY IN DES CASES
There is a strong appeal in compensating DES daughters for their injuries. However, in fashioning market share liability theories, the state supreme courts are, in essence, legislating. In fact, the courts that have adopted market share liability have expressly done so after determining what they perceive as public policy demands in the DES cases. The courts declining to adopt market share liability recognized that the issue demands a judgment on public policy; these courts then concluded that the legislatures could better address the issue. The Sindell court, however, rejected the dissent’s argument that the issue should be left to the legislature because the majority found no “justification for shifting the financial burden for such damages from drug manufacturers to the taxpayers of California.
The market share liability issue involves determinations of public policy. The various state legislatures are the appropriate forums for determining public policy in this instance. A legislature has the ability to hold hearings, listen to debate, receive data on the extent of the problem, and ultimately to determine what, if any, remedy the state should provide. In performing this function, legislatures face divergent interests when considering the adoption of market share liability. On the one hand, a state may strongly desire to ensure that its citizens are compensated for injuries and have access to courts to pursue their claims. On the other hand, a state legislature may recognize the strong public interest that the pharmaceutical industry continue its research and development of new and safe drugs. A legislature is equipped to determine what economic effect the imposition of market share liability will have on the industry. State lawmakers may determine that the laws should not sanction a tort theory which likely will apply to only a small group of defendants-pharmaceutical manufacturers-and which may have a disproportionately large economic impact. Or lawmakers may determine that the theory unreasonably expands the state’s laws to benefit a narrow class of plaintiffs. The legislature also may decide to fashion its own form of market share liability, or it may decide to remunerate the victims without assigning fault to any group of defendants.
Courts are not the proper forums for making these policy evaluations in DES cases because they do so without any concept of the extent of harm or even risk of injury involved by the maternal ingestion of the drug. Reliable evidence indicates that although hundreds of thousands of women took DES, the incidence of injury to their children is minimal. The courts are thus emasculating existing tort law for the benefit of a narrow group of people while the necessity of the action remains open to question. Such a determination could be addressed more intelligently and thoroughly in the legislative forum, where both sides of the issue would be analyzed appropriately.
Certainly one may argue against deferring to the legislature in this instance because the pharmaceutical industry and the insurance industry are influential and will be able to politically sway the issue their way. On the other side of this issue, however, are the powerful trial lawyers associations and other bar groups, both of which are coordinated on the state and national levels and which have also exhibited legislative persuasion. Moreover, in similar instances, legislatures have in fact determined that persons suffering’ injuries resulting from drugs or other products should be compensated, thus thwarting the desires of the insurance industry and drug manufacturers. The compensation such legislation provides is not awarded by courts. Instead, compensation comes from a specific fund established for the purpose.
Legislation which compensates victims for injuries resulting from defective products generally establishes a fund and a procedure people must follow in order to receive money. The recovery fund is established from revenue received by members of the industry producing the product or through tax revenue. A structured and predictable system for recovery is thereby created that operates at a lower monetary cost and in a more efficient and expeditious manner. Injured parties benefit by avoiding protracted and uncertain civil litigation. The legislation recovery system insures that there is a source from which to recover. Also, the manufacturers’ costs of defending suits and the necessity of insuring against unknowable damage awards are eliminated. A legislated recovery system is predictable in the sense that manufacturers know in advance what their costs of compensation will be. However, the public ultimately bears the costs for this either in its tax bill, if it is funded through tax revenue, or in the higher prices paid for the goods, if the manufacturers have to bear the cost and decide to pass it on in the form of higher prices.
Courts in the past have not been hesitant to develop new tort concepts. Courts should, however, decline to adopt market share liability because of the theory’s infirmities. Market share liability is a flawed concept that likely will apply only to a narrow class of plaintiffs and defendants. Moreover, rejection of the market share liability concept will not leave DES daughters or other plaintiffs without a remedy. Some DES plaintiffs have been able to establish the identity of the specific manufacturer, while others will be able to establish enough evidence to proceed to trial on the issues of causation in fact or negligence. Adoption of the market share liability theory, though, contravenes existing tort principles. The theory deviates too greatly from a principle which serves a vital function in the law: causation in fact. In the final analysis, the legislature, and not the court, is the appropriate forum for determining whether to adopt or reject market share liability.
David M. Schultz, 1991.
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