Thursday, November 13, 2008

More Thoughts On Conte v. Wyeth

Last week, the day the case came down, we threw up a quick post with our very preliminary thoughts about Conte v. Wyeth, which is now available at 2008 WL 4823066 (Cal. App. Nov. 7, 2008). That’s the generic Reglan case where the court held that, even though the generic manufacturer whose product the plaintiff took escaped liability under the learned intermediary rule, the pioneer manufacturer could be liable even though it didn’t sell the allegedly injurious product.

We said that we thought the case was very important – and very wrong – for separating liability for product warnings from the manufacture or sale of the product. Probably because we were first on the web with Conte, our little post drew a lot of attention, from the FDA Law Blog (who saw “potentially vast” implications), the Tort Professors (who called the decision “stunning”), Pharmalot, The Recorder (a major California legal newspaper), Law and More (which called it a “legal game changer”) and Overlawyered. That’s a lot of attention for a little post in a little blog like ours.

But then the Conte case warrants a lot of attention. So we’ve thought about it some more. The more we think about it, the worse it gets. At bottom Conte is based on two fallacies. The first of these we’ll call the "Lipstick On A Pig" fallacy. That fallacy is, if you put lipstick on a pig it will somehow be something other than a pig. The Conte decision fell for this, snout, line, and mascara.

California's where they basically invented modern product liability, well before Restatement (Second) of Torts §402A (1965). The seminal case, Greenman v. Yuba Power Products, Inc., explained the rationale for what it called “strict liability”:


We need not recanvass the reasons for imposing strict liability on the manufacturer. The purpose of such liability is to insure that the costs of injuries resulting from defective products are borne by the manufacturers that put such products on the market rather than by the injured persons who are powerless to protect themselves.
377 P.2d 897, 901 (Cal. 1963).

And that’s been the bedrock rationale for product liability ever since – that manufacturers should bear the costs of injuries when they make defective products. The only really serious breach of that standard was market share liability in Sindell v. Abbott Laboratories, 607 P.2d 924, (Cal. 1980). The Sindell court, after recognizing “the proposition that, as a general rule, the imposition of liability depends upon a showing by the plaintiff that his or her injuries were caused by the act of the defendant or by an instrumentality under the defendant's control,” id. at 928, created a narrow exception where: (1) the manufacturer was unknown, because (2) there were a bunch of interchangeable chemically identical products made by different companies, and (3) the plaintiff was not at fault for not knowing the manufacturer (in Sindell a drug caused injuries that did not manifest themselves for decades, after pharmacy records were typically destroyed). Even then Sindell recognized the gravity of the limited exception it was creating:


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. . . . [W]e acknowledge that some adaptation of the rules of causation and liability may be appropriate in these recurring circumstances.
Id. at 936. The Sindell court thus reiterated the overall policy that a “manufacturer is in the best position to discover and guard against defects in its products and to warn of harmful effects; thus, holding it liable for defects and failure to warn of harmful effects will provide an incentive to product safety.” Id.

So what happened in Conte? Fifty-five years of California product liability policy goes out the window. None of the Sindell factors for easing the manufacturer-liability link are present. The manufacturer of the drug is identified, who made what product is not in doubt, since there are only two defendants, and there’s no long-delayed injury (Reglan allegedly causes tardive dyskinesia, a condition that quickly becomes all-too-apparent).

The Conte court gets to this result by putting lipstick on the product liability pig and calling it “fraud” or “negligent misrepresentation.”


[W]e reject [defendant’s] syllogism premised upon product liability doctrine that. . .this is merely a products liability lawsuit disguised as an action for fraud and misrepresentation. . . . The conclusion would be sound were [plaintiff] in fact pursuing a cause of action against [defendant] for strict products liability. But she is not. The complaint alleges that [defendant] made intentional and/or negligent misrepresentations about the safety of [the drug].
2008 WL 4823066, at *5. Form over substance. Over and over again, the court focuses on the lipstick rather than the pig. Id. at *6 (“this is a case involving legal principles of negligent misrepresentation, and not a products liability action”), at *8 n. 9 (refusing to apply principle that “a manufacturer owes no duty to consumers injured by a competitor’s product” because “we do not find this principle determinative in a suit based on allegedly actionable misrepresentations”), at *11 n.16 (rejecting public policy arguments as product liability-related); at *12 (rejecting all relevant prior precedent as rellying on product liability-related criteria).

Sorry, but we ain’t buying that pig in a poke. The alleged misrepresentations are limited solely to statements made in the labeling that accompanied the product. While at one place Conte asserts that the case is about “a defendant who authors and disseminates information about a product manufactured and sold by another,” 2008 WL 4823066, at *6, that’s simply wrong. The claims at issue “are premised on misrepresentations in [the drug’s] labeling” and “in a monograph [the defendant] provided for the Physician’s Desk Reference (PDR).” Id. at *4. The PDR compiles FDA-approved drug labeling, id. at *4 n.4 - the same sort of routine product warnings that have been the bread and butter of product liability liability litigation for decades. We think that the labeling-related claims in Conte are product liability claims no matter how much legal lipstick anybody puts on that pig. The outcome of a case should not depend on the caption by which the plaintiff chooses to call the cause of action.

In this sense, “intentional/negligent misrepresentation” is simply the latest in a long line of putative theories – trespass, negligent marketing, public nuisance, and market share liability itself – that plaintiffs have advanced in search of their promised land: industry-wide liability for non-defective products.

After wandering in the wilderness for 55 years, have plaintiffs found their promised land in California? We hope not.

The second fallacy the Conte court falls prey to we’ll call “omniforeseeability.” That’s just a made-up word for the truism that “anything is foreseeable in hindsight.” There are a number of terms in the law – “reasonableness,” “duty,” “foreseeability,” and “proximate cause” chief among them – that courts ordinarily invoke as a way of setting limits on liability. Before Conte, courts had (uniformly, we think) taken the position that foreseeability was limited, when liability for product-related attributes was involved, to the actions of the product manufacturer.

Hamilton v. Beretta USA Corp. is a good example of this limitation, rejecting pure foreseeability in the context of a negligent marketing claim alleged against all handgun manufacturers because “a duty and the corresponding liability it imposes do not rise from mere foreseeability of the harm.” 750 N.E.2d 1055, 1062 (N.Y. 2001).

Another, more recent, example of limited foreseeability is Gourdine v. Crews, 955 A.2d 769 (Md. 2008), which we discussed here. Gourdine held that it wasn’t legally foreseeable that a drug company’s supposedly inadequate warning would cause injury to anybody who the patient collided with while under the influence of the drug - thus preventing potential liability to the entire human race. We’re sure there are many other similar examples of legal foreseeability limiting factual foreseeability, because if there weren’t, Conte wouldn’t be such a big deal.

Hamilton and Gourdine are two cases holding that legal foreseeability is not the same, and is more limited than, factual foreseeability.

Conte goes all the way in the opposite direction. It rejects what it calls “heightened foreseeability.” 2008 WL 4823066, at *6 n.9.

Conte falls to the omniforeseeability fallacy, when it holds – using hindsight, of course – that it’s “foreseeable” that a doctor wouldn’t rely upon the labeling of the generic drug he just prescribed, but rather on similar labeling for the pioneer drug that he read years earlier (here, during the doctor’s residency):


[O]ur duty analysis must look primarily to the foreseeability of physical harm. . . . It is. . .highly likely that a prescription for [the pioneer drug] written in reliance on [its manufacturer’s] product information will be filled with generic [drug]. And, because by law the generic and name-brand versions of drugs are biologically equivalent, it is also eminently foreseeable that a physician might prescribe generic [drug] in reliance on [the pioneer manufacturer’s] representations about [its drug].
2008 WL 4823066, at *8 (citations omitted). Thus foreseeability is used to trump both time and space – another manufacturer’s warnings from much longer ago, read anywhere, trumps nonreliance on the warnings that came with the product that the doctor actually prescribed.

Wow. You heard that right. Defendant's "duty of care in disseminating product information extends to those patients who are injured by generic metoclopramide as a result of prescriptions written in reliance on [defendant's] product information for Reglan." 2008 WL 4823066, at *9.

If “negligent/intentional misrepresentation” is what makes the product identification requirement vanish, pharmaceutical product liability isn’t the half of it. Try this hypothetical:

Plaintiff New Dad gives plaintiff New Mom his old SUV, manufactured by Gasguzzlers ‘R Us, so she has something big and safe to drive New Baby around. To replace it, he buys a hybrid made by Minigas, Inc. to drive to work. Wife puts New Baby’s carseat in the front seat, and plows into a telephone pole (or something else, it really doesn't matter). The airbag kills New Baby. Gasguzzlers ‘R Us didn’t get its federal bailout and goes bankrupt. But since both of the family cars had identical government-mandated (allegedly) inadequate warnings about not putting an infant car seat next to an airbag, who gets sued, Minigas – even though it’s car had nothing to do with the accident.

Farfetched? We wish. Isn’t it foreseeable that New Mom and Dad would have relied on the warnings in the brand new owner’s manual they just saw when buying their brand new hybrid, instead of the older manual in the SUV, which they haven’t looked at in years (assuming they still have the old manual at all)? Under Conte’s omniforeseeability analysis, why not?

So the hybrid maker ends up paying for injuries caused by an accident involving a different – and bankrupt – manufacturer’s SUV. We’ve seen plaintiffs come up with lots of creative theories when the usual suspect is broke. Think “asbestos.” We have no doubt they’d try something like this, and try it 100,000 times over.

So let’s try an asbestos hypothetical. We’ll keep it simple:

Landowner hires contractors, who hire subcontractors, who hire subs of their own, to install or remove asbestos products from Blackacre. The owner doesn’t tell anybody any more about asbestos risks than did the manufacturers, which is to say nothing. Half a century later, all the asbestos manufacturers are bankrupt, so the employees of all the various entities sue Landowner.

Why bother with all the ins and outs of premises liability? Just call the tort “negligent/intentional misrepresentation,” and under Conte all privity-related limitations upon premises liability evaporate. If Landowner could have known, everything else is “foreseeable.”

Finally, let’s try a hypo closer to home:

Careful Drug Co. gets word from the field that its drug, “X”, might cure high blood pressure when a doctor comes to it with a case series. Careful takes a look at its data and concludes that the doctor might just be right. It encourages the doctor to publish the data, and, because this would otherwise be an off-label use, immediately begins a clinical trial. Rival manufacturer, Flybynight, upon reading the published article, immediately promotes its competing drug, “Almost X,” off label for curing high blood pressure, and gets a huge market share because Almost X is much cheaper. Careful’s expensive clinical trial reveals that, when X is used long term it causes cancer. Everybody sues Almost X, and it declares bankruptcy/settles cheap/whatever. Everybody then sues Careful.

Under Conte omniforeseeability, is there liability against Careful where the article being used by Flybynight in its off-label promotion discussed Careful’s similar drug? Of course! Isn’t it foreseeable that the doctors would draw the analogy between the two closely related products (especially since that’s precisely what Flybynight’s reps were saying)? And to that, we can add that the relevant warnings for X and Almost X were identical because they were in same class. And isn’t it foreseeable that doctors would rely more on Careful, given it’s much better reputation, than Flybynight? How about if preliminary, short-term, results of Careful’s clinical trial were favorable and were published?

Because prescriber reliance is “foreseeable,” the responsible manufacturer (Careful) gets hit with liability for the sloppiness/illegal actions of a competitor (Flybynight). There’s nothing it can do about it, since it has no control over the competitor – short of closing its eyes to a potentially breakthrough new use for its product.

As these hypotheticals demonstrate, once the fundamental limitation of product liability that only the manufacturer can be liable for defects in its product goes bye-bye, a huge free rider problem develops. Liability for older products made by less successful manufacturers gets shifted to more successful manufacturers and their newer products. These newer products may well be safer. Or, as in the second hypothetical, liability arising from one manufacturer’s corner-cutting ends up being imposed upon a more reputable manufacturer that followed the rules.

And in the prescription medical product area it gets worse. Conte-style liability can only drive up the cost of new drugs – all of them. Generic drugs are cheaper precisely because their manufacturers did not incur the cost of drug development – costs which run into the hundreds of millions of dollars for each successful FDA approval. Because they are cheap, generics typically drive the pioneer manufacturer’s drug off the market (or into a very small market share) within a few years, if not sooner. Generic drugs will stay cheap under Conte. But imposing liability in perpetuity upon pioneer manufacturers for products they no longer sell or get any profit from means that the pioneer manufacturers (being for-profit entities) have to recoup that liability expense somewhere. There’s only one place it can come from. That’s as an add-on to the costs of new drugs that still enjoy patent protection.

Conte-style liability also is a disincentive to innovation - probably a dramatic one. That’s because imposing liability based upon labels/warnings that doctors once read years earlier when they were first introduced to a drug – or class of drugs – will inevitably hit the innovator the hardest. Remember penicillin? Of course. People won the Nobel Prize for that. Remember the second drug in the same class as penicillin?

Didn’t think so.

Well, that’s the way it is in medicine as just about everywhere. The innovator – the inventor of the first drug or device in its class – will get the most publicity and the most prestigious position. Its drug/device is going to be the one discussed the most in medical schools and in lectures to practicing physicians. The labeling for the first-of-its-class product is going to be what doctors read most and remember most vividly when they encounter it for the first time.

First impressions are important.

Now, back to Conte. Why was Wyeth’s liability at issue at all? Because the plaintiff had no warning causation case against the generic manufacturer (actually more than one, but that’s irrelevant) under well-established learned intermediary rule principles. The doctor testified that he hadn’t read and didn’t rely upon the generic manufacturer’s labeling. 2008 WL 4823066 at *13-15. That's summary judgment city for lack of warning causation (the unread, unrelied upon warning couldn't possibly have caused any injury). But the doctor also testified that he probably read the pioneer drug’s warnings, at least back when he first encountered the drug, years ago. Id. at *4 (prescriber testified that “he ‘probably’ read” the pioneer warnings “during his residency training” and that he “generally refers” to the Physician’s Desk reference (which contained the pioneer warnings) “in his clinical practice”).

So Conte transfers liability from the generic company that produced the drug and made a profit from it to the company that invented it – innovated – years ago.

But why should only generic drug-using plaintiffs get a free shot at a second defendant?

Nothing in Conte’s omniforeseeability reasoning is unique to generic drugs. Lots of drugs have what the FDA calls “class labeling.” You can search for them on the FDA’s website. Lots more in the same class undoubtedly have essentially identical labeling even if not formally mandated as class labeling. Statin drugs would be one example. There are certainly a bunch of those. SSRIs are another class of drugs that have experienced a lot of litigation lately. Think about birth control pills, bone screws (our sentimental favorites) or implantable defibrillators. The list goes on and on.

So anytime a plaintiff, as in Conte, has trouble proving warning causation against the actual manufacturer of a drug, what’s the potential target? The plaintiff will look to any manufacturer of the same class of drug whose labeling the prescribing doctor remembers – even vaguely, as in Conte – first learning about. And in virtually every case, that target is going to be the innovative manufacturer that first entered the field. Why? Because that’s the one that the doctor is going to remember.

First impressions are, after Conte, going to be expensive.

And what does Conte have to say about this sort of jurisprudential policy considerations? Essentially nothing. The decision chooses to ignore what isn’t in the record:

While there is much that could and will be said in various fora about the burdens, societal consequences, cost, and insurance implications of [defendant’s] potential liability, the limited record on summary judgment does not provide the information necessary to inform such a debate. These broader consequences of the duty we identify today cannot be considered on the limited facts in the record.

2008 WL 4823066, at *9. Well, of course not. Why would the defendant have any reason to anticipate that a wide-ranging theory of liability that even the court concedes is contrary to every precedent cited to it? Id. at *10-11 (refusing to follow all prior precedent from other jurisdictions); cf. id. at *5 (admitting issue is “one of first impression in California”).

"See no evil; hear no evil; speak no evil," doesn't mean there's no evil.

Conte is the very definition of “unprecedented.” And along with other precedent, the court refuses to consider policy either. What’s left is a very thin reed, indeed.

Whatever happened to the proposition “we may not as judges ignore what we know as men”? E.g., United States v. Maze, 414 U.S. 395, 403 n.7 (1974). We’re just a couple of bloggers and even we can think these things through without Brandeis briefs.

So the more we look at Conte, the worse it gets. It violates our sense of personal responsibility, shared by courts for 55 years, that manufacturers should be liable for defects in their own products – and only for defects in their own products. Conte will expand liability to deep pocket defendants, while letting free riders – whose conduct probably should subject them to liability – off the hook.

Unless, of course, the defendants sue each other as "concurrent torfeasors." 2008 WL 4823066, at * 11.

And the policy implications are truly awful. Conte holds manufacturers liable for competing products they can’t do anything about, on the basis of supposed “misrepresentations” they can’t change because they no longer control them, if they ever did. The liability is without end – as long as anybody makes the product. And in the drug/device area, Conte-style liability will inevitably serve as a lead weight around the ankles of the companies that invented the most significant breakthrough products.

Conte is bad law and worse policy.

We certainly hope Wyeth succeeds in getting it reversed.

2 comments:

Medical Schools Sacramento said...

it is really a nice blog and i got a lot of information through this blog so keep it up and make it convenient for all the community specially for the medical students.

Jonathan said...

The final paragraph is completely off target. Wyeth currently maintains control of its labeling materials as it always has in the past. Brand name manufacturers have access to post-marketing reports that detail patients adverse reactions to drugs and also have the legal ability to unilaterally strengthen labeling information without the prior approval of the FDA. Given the high frequency with this Reglan (or generic) users developed tardive dyskinesia, it is undeniable that Wyeth was aware of this medical problem and chose to remain passive.

Additionally, this type of legal liability will barely affect pharmaceutical companies who earn billions upon billions of dollars in profits for new blockbuster drugs. The new legal interpretation will take a small chunk out of big pharmas bottom-line but will do little do stifle the innovation of drugs that are actually needed.