Wednesday, February 16, 2011

Thinking About Compliance Presumptions

A couple of weeks ago we posted about the recently enacted Wisconsin tort reform statute, which, among a bunch of other things, included a “rebuttable” presumption that a product compliant with federal or state standards isn’t defective. Specifically, the statute provides:


Evidence that the product, at the time of sale, complied in material respects with relevant standards, conditions, or specifications adopted or approved by a federal or state law or agency shall create a rebuttable presumption that the product is not defective.
§895.047(3)(b).

One of our readers questioned whether the other side would gut this presumption by arguing it was meaningless, since what constitutes “rebuttal” is not defined.  Plaintiffs bear the burden of proving defect anyway, so might can contend that the same evidence that they have always needed to get to a jury on the defect element of the tort is also sufficient to rebut the presumption.

Will they try it?  Of course they will. They’re plaintiffs’ attorneys. Their job is to represent their clients with every bit as much vigor as we on the right side of the “v.” represent ours.

That also means it’s our job not to let them.

So we thought today we’d give the question of statutory compliance presumptions some thought.

First of all, what’s the universe of the statutes we’re talking about?  We know of 14 states, and one federal statute, that address compliance with governmental standards, and most of them create presumptions.  Some (Michigan and Texas) are stronger than others. Some are broader than others:

The federal statute, for example, applies only to vaccines, and only to warnings. It provides:

[A] vaccine shall be presumed to be accompanied by proper directions and warnings if the vaccine manufacturer shows that it complied in all material respects with all requirements under the [FDCA and the Vaccine Act] applicable to the vaccine and related to vaccine-related injury or death for which the civil action was brought unless the plaintiff shows –
(A) [fraud or bribery against the FDA], or
(B) by clear and convincing evidence that the manufacturer failed to exercise due care notwithstanding its compliance. . . .
42 U.S.C. § 300aa-22(b)(2).  Note that, unlike the Wisconsin statute, the federal law explicitly addresses the amount (we lawyers say “quantum”) of evidence necessary to overcome the presumption.

The other state statutes that we know of that address compliance in one way or another are:  Arizona:  Ariz. Rev. Stat. Ann. §12-701 (punitive damages only; mentions only “drugs”; compliance bars an award unless plaintiff proves FDA fraud/bribery by “clear and convincing” evidence); Arkansas:  Ark. Code Ann. §16-116-105(a) (compliance generally is “evidence” of non-defectiveness); Colorado:  Colo. Rev. Stat. §13-21-403(1)(b) (compliance generally creates rebuttable presumption; whenever facts exist that establish the presumption, the jury is to be charged); Florida:  Fla. Stat. Ann. §768.1256 (compliance generally creates rebuttable presumption; special exclusion for products recalled or “seized” by the FDA); Indiana:  Ind. Code §34-20-5-1 (compliance generally creates rebuttable presumption); Kansas:  Kan. Stat. Ann. §60-3304(a) (compliance generally “deems” a product non-defective “unless the claimant proves by a preponderance of the evidence that a reasonably prudent product seller could and would have taken additional precautions”); Michigan:  Mich. Comp. L. §600.2946(4-5) (compliance generally creates rebuttable presumption; FDA approved drugs are not defective unless sold after a recall or plaintiff proves FDA fraud/bribery); New Jersey:  N.J. Stat. Ann. §2A:58C-4 (FDA approval of warning creates rebuttable presumption of warning adequacy); North Carolina:  N.C. Gen. Stat. § 99B-6(b)(4) (evaluation of reasonableness  of drug manufacturer "shall" include extent of FDA compliance); North Dakota:  N.D. Cent. Code §28-01.3-09 (compliance generally creates rebuttable presumption); Tennessee:  Tenn. Code Ann. §29-28-104 (compliance generally creates rebuttable presumption); Texas:  Tex. Rev. Civ. Prac. & Rem. C. §82.007 (FDA approval of warning creates rebuttable presumption of warning adequacy; rebuttal limited to FDA fraud bribery, sales after a recall, and some off-label promotion situations); Utah: Utah Code Ann. §78-15-6 (compliance generally creates rebuttable presumption).

The question of what to do with a compliance presumption once a state has created it involves two separate but related issues.

The first issue is the amount of evidence necessary to overcome the presumption.  As is evident from the descriptions we just gave you, the Vaccine Act and Arizona specify that “clear and convincing” evidence is required, while the other states’ statutes are silent.

The second issue is what happens to the presumption once it arguably has been overcome?  Is the jury charged on it and allowed to make up its own mind?  Alternatively, does the presumption vanish once contrary evidence is introduced, so that the jury never finds out about it?

The response, as we see it, to the first issue begins with some of the most basic canons of statutory interpretation – something we expect is followed in every state – (1) that statutes are not to be read as nullities, and in the same vein, (2) that the legislature is not presumed to act futilely. Another related proposition is (3) that an act is not to be construed to product an absurd result.

By enacting what it called a “presumption,” based upon the defendant’s compliance with relevant governmental standards, the legislature had to intend to benefit the compliant defendant in some way, right?  If not, then why do anything at all?

Assuming that the legislature meant its enactment to mean something, then we have to figure out what's the most logical meaning with respect to our clients – in this context, FDA compliant drug/device companies.  In this post-Levine world, we’ve largely been relegated to the old FDA standards as “minimum standards” view of the common law.  See, e.g., Wyeth v. Rowatt, 244 P.3d 765, 780 (Nev. 2010); Dorsett v. Sandoz, Inc., 699 F. Supp.2d 1142, 1149 (C.D. Cal. 2010); In re Trasylol Products Liability Litigation, 2010 WL 4259332, at *4 (S.D. Fla. Oct. 21, 2010), and other depressing precedents.

What these compliance presumptions do after Levine is flip the common law default position regarding the effect of FDA compliance. Under Levine, compliance with FDA warning approval is presumptively not binding in a common-law case “absent clear evidence that the FDA would not have approved” a label change in the nature of what the plaintiff advocates.  Wyeth v. Levine, 129 S. Ct. 1187, 1198 (2009).  But in states where the legislature has enacted a presumption of non-defectiveness by reason of FDA (or other) compliance, the “minimum standard” analysis is upended.  Under those statutes, compliance with the FDA’s approval of a warning now is presumptively binding in a common-law case – unless the plaintiff proves whatever the statute says s/he has to prove to overcome the presumption.  So in those states, we’re dealing with Levine in reverse.

The logic of a statute creating a Levine in reverse situation (where the statutory presumption is that FDA compliance equals non-defectiveness), is that to rebut the presumption, a plaintiff should have to present the same degree of “clear evidence” as required by Levine.  This analogy, which we think is to the closest relevant presumption in an FDA compliance case, would of course only apply where the legislature is silent (unlike Arizona or the Vaccine Act) as to the quantum of proof necessary to overcome the presumption.  But again that’s closely analogous to Levine.  Just as Congress in Levine was silent as to the preemptive effect of FDA compliance, most of the state compliance statutes are equally silent as to how much rebutting it takes to rebut a rebuttable presumption (or how much wood could a wood chuck chuck).

The Levine analogy is just that – an analogy.  It’s not mandated by either statute or common-law postulate.  But neither is anything else.  So we think there are good logical reasons to apply the Levine “clear evidence” rebuttal standard to FDA compliance presumptions with respect to the quantum of evidence question.  For one thing, this standard prevents the statutory presumption from being treated as a nullity, which is precisely what would happen if a plaintiff didn’t need to meet anything more than the pre-existing burden of proof in order to rebut the presumption.  For a second thing, there’s symmetry.  Levine applied a “clear evidence” standard to rebut the presumption against preemption in an FDA compliance context where the default was that compliance wasn’t controlling.  Where a state legislature has determined that compliance is controlling, it makes sense to apply the same rebuttal standard, only in reverse.  Third, the Levine “clear evidence” standard is consistent with the legislative judgment in those two instances (Vaccine Act and Arizona) where a statute actually did address the quantum of proof issue, suggesting that, if other legislatures had bothered to think about the issue, they most likely would have come out the same way.

Now we’ll turn to the second issue.  What happens to a “rebuttable” presumption once it – arguably at least – has been rebutted by evidence of whatever it is that the legislature has provided should constitute rebuttal (which ranges from FDA fraud/bribery in a number of states, to unspecified “additional precautions” in Kansas).  Only one of the compliance statutes, Colorado’s, deals expressly with this issue.  Colorado law provides:

In a product liability action in which the court determines by a preponderance of the evidence that the necessary facts giving rise to a presumption have been established, the court shall instruct the jury concerning the presumption.
Colo. Rev. Stat. §13-21-403(1)(b)(4).  So in Colorado, once the defendant had proven compliance, then the presumption of non-defectiveness is always charged to the jury, and it is a jury question whether the plaintiff has rebutted it.

In the other states, where the legislature is silent, the question of whether the jury is charged on the presumption where some rebuttal evidence has been received will depend on how the state’s law (or possibly federal law in a diversity case, if this question is considered “procedural”) treats presumptions.

There are two theories of presumptions – the more traditional “bubble bursting” theory and the more recent persistent presumption approach.  A bubble bursting presumption vanishes when it is rebutted and the jury is not thereafter instructed on it:

[U]nder what has become known as the Thayer or “bursting bubble” theory, the only effect of a presumption is to shift the burden of producing evidence with regard to the presumed fact.  If that evidence is produced by the adversary, the presumption is spent and disappears.  In practical terms, the theory means that, although a presumption is available to permit the party relying upon it to survive a motion for directed verdict at the close of its own case, it has no other value in the trial.
McCormick on Evidence §344 (footnote omitted) (emphasis added).

The other, more modern approach declares that some rebuttable presumptions are in the nature of substantive law, and it is for the jury to determine whether or not they are rebutted:

The “bursting bubble” theory has been criticized as giving to presumptions an effect that is too “slight and evanescent” when viewed in the light of the reasons for the creation of the rules.  Presumptions, as we have seen, have been created for policy reasons that are similar to and may be just as strong as those that govern the allocation of the burdens of proof prior to the introduction of evidence.  These policy considerations may persist despite the existence of proof rebutting the presumed fact. . . . If the policy behind certain presumptions is not to be thwarted, some instruction to the jury may be needed despite any theoretical prohibition against a charge of this kind.
Id. (footnotes omitted) (emphasis ours).

In this context, the federal approach is about as clear as mud.  See McCormick §344 (“Despite the best efforts of legal scholars, instead of having one rule to govern all presumptions in all proceedings, we are left in some ways in a more confusing state than that which existed prior to the adoption of the Federal Rules.”); Hjelmaas, “Stepping Back from the Thicket:  A Proposal for the Treatment of Rebuttable Presumptions & Inferences,” 42 Drake L. Rev. 427, 447 (1993) (“The [federal] rule is unclear . . . concerning the effect of rebuttal evidence on challenges to an established presumption. . . .  The adoption of Federal Rule of Evidence 301 has not clarified this area of law”); Louisell, “Construing Rule 301:  Instructing the Jury on Presumptions in Civil Actions and Proceedings,” 63 Va. L. Rev. 281 (1977) (Fed. R. Evid. 301 adopts a traditional, bubble-bursting approach, but can be interpreted broadly enough to permit an inference instruction); Mueller, “Instructing the Jury Upon Presumptions in Civil Cases:  Comparing Federal Rule 301 with Uniform Rule 301, 12 Land & Water L. Rev. 219 (1977) (arguing against the traditional bubble bursting interpretation of Rule 301).

We think that compliance presumptions should persist – and that the jury should be charged on them – in any case where there is a jury question as to compliance.  There are two reasons for that.  First, the traditional bubble bursting approach arose, as McCormick points out in the part of the quote that we highlighted; where the presumption was created to assist a party bearing the burden of proof to avoid a “directed verdict at the end of his case.”  Legislatures have passed compliance presumptions to assist defendants, who do not bear the burden of proof (except as to compliance itself).  Thus the statutory compliance presumptions do not fit the rationale of the bubble bursting theory.

Conversely, compliance presumptions are the epitome of the “policy” based presumption, which is created for a reason other than to address a burden of proof problem.  In this respect, we recommend the analysis of the Indiana Supreme Court in a non-drug case Bexis worked on, involving what weight to give the Indiana compliance statute (which, as we've indicated, was silent):

[T]he [compliance] presumption recognized in the statute is not a conventional presumption at all.  A presumption . . . relieves the party with the burden of proof on a presumed fact from having to produce evidence of the presumed fact once that party has proved a basic fact. . . .  But under the statutory presumption at issue here, the presumed fact is the presence or absence of defect and negligence.  And the plaintiffs. . ., not the defendant. . ., have the burden to prove defect and negligence in a product liability action. . . .  Is another implication of this anomaly that, except at the summary judgment stage, there simply is no presumption to be given continuing effect. . .?  We think not. The point of giving “continuing effect” to a presumption through a jury instruction is to further the policies that give rise to the presumption in the first place.  By authorizing the instruction here, we recognize the policy embodied by the Legislature in Indiana Code §34-20-5-1, regardless of whether the provision conforms to the conventional definition of a legal “presumption.”
Schultz v. Ford Motor Co., 857 N.E.2d 977, 985-86 (Ind. 2006) (footnotes omitted).

In the case of the brand new Wisconsin compliance presumption – and, indeed, in the case of compliance presumption statutes generally – the plaintiffs’ side can be expected to seek judicial interpretations that these statutes are meaningless nullities.  They will do this by:  (1) arguing that the presumption is rebutted by the same quantum of evidence that they already have to present to meet their pre-existing burden of proof, and (2) arguing that once they have put on any evidence at all of non-compliance, the presumption “bursts” and drops from the case.

We have to offer persuasive contrary arguments that preserve what the legislature actually wanted to do when it took the affirmative step of changing the common law with respect to FDA (and other) compliance.  Lawmakers didn’t intend to enact a nullity, so the plaintiffs should have to meet the same “clear evidence” standard where state law says compliance equals lack of defect as we do when state law says otherwise.  Furthermore, because legislatures only enact presumptions to favor parties not bearing the burden of proof for substantive policy reasons (because defendants don’t otherwise need them), juries should always be charged on a statutory compliance presumption except in the unusual situation where failure to comply is undisputed.

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