Toxic Tort Case Essentials

A. Background Of The DES Litigation

From the late 1940s until 1971, the synthetic drug diethylstilbestrol (hereinafter "DES") was prescribed for pregnant women to prevent miscarriages. Smith v. Eli Lilly & Co., 560 N.E. 2d 324, 327-328 (Ill. 1990). In 1971, the FDA banned the marketing of DES to pregnant women after medical studies suggested "a statistically significant association between the outbreak in young women of clear cell adenocarcinoma with the material ingestion of DES during pregnancy." Id. at 328. Subsequent to the ban, numerous lawsuits were filed against manufacturers of DES by the daughters of women who took the drug during their pregnancies ("DES daughters"). Id.

One significant difficulty encountered by plaintiffs in DES cases was proving the identities of the manufacturers which supplied the particular DES used by their mothers when the plaintiffs were in utero. As many as 300 companies produced DES and many of these manufacturers were no longer in business. The problems of proof were exacerbated by the long periods of time between the mothers' ingestion of DES and the injury to the DES daughters. Many mothers used the drug at least twenty years prior to the filing of lawsuits by their daughters; meanwhile, medical records which might have identified the manufacturer of the DES ingested by a particular mother were lost or destroyed.

In the DES cases, the courts balanced the fundamental tort principal that the plaintiff has the burden of proving that a particular defendant caused the injury with competing tort interest that between an innocent plaintiff and a manufacturer of a defective product, the latter should bear the cost of injury. See, Sindell v. Abbott Labs, 26 Cal. 3d 588, 610-611 (1980), cert. denied, 449 U.S. 912 (1980). The courts, after balancing these interests, applied the concept of burden shifting, that is, the burden of proof on the issue of the identities of the culpable manufacturers in a DES case is shifted to the defendants under theories described as "enterprise liability," "alternative liability," and "market share liability." Smith, supra at 329. California adopted a market share theory of liability in the well-known case of Sindell v. Abbott Laboratories, supra. In Brown v. Superior Court, 44 Cal. 3d 1049 (1988), the California Supreme Court reaffirmed this theory and also resolved some remaining issues that were not superficially addressed in Sindell.

In Sindell, the trial courts dismissed a DES daughter’s action due to her inability to prove which of the defendants manufactured the specific DES that was ingested by her mother. The California Supreme Court reversed, holding that it was reasonable to measure a defendant’s liability to the plaintiff by the percentage of the national DES market for which the defendant was responsible. Id. at 611-612. In explaining its decision to remove the defendant identification requirement from plaintiff’s burden of proof, the Sindell court pointed out that scientific and technological advances in modern society create goods that may harm consumers, but which are not traceable to the manufacturer because of their fungible nature. Id. at 610.

The Sindell court discussed three principles of tort law that would support a market share theory of liability. First, as between an innocent plaintiff and a manufacturer of a defective product, the latter should bear the cost of injury. Id. at 610-611. Second, defendants are better able than innocent plaintiffs to bear the cost of injury resulting from the manufacturing of a defective product. Id. at 610-611. Finally, because the manufacturer is in the best position to discover and guard against defects in its products and to warn of harmful effects, holding the manufacturer liable for defects and failure to warn will provide an incentive to ensure product safety. Id.

The court expressed that these policy considerations were particularly important in cases involving medication because "the consumer is virtually helpless to protect himself from serious, sometimes permanent, sometimes fatal, injuries caused by deleterious drugs." Id. The holding is not without the recognition of the difficulties in determining market shares that market share liability could thus lead to manufacturers being held liable for a different portion of the damages than its actual share of the market would justify. Id. at 611-612.

The market share theory of liability developed in Sindell provides that where a plaintiff is unable through no fault of her own, to identify which defendants supplied the drugs that allegedly caused her injuries and the drugs are produced from an identical formula, plaintiff need only join a "substantial share" of themanufacturers in order to be able to shift the burden of proof to defendants. Id. at 611-612. The Sindell court did not describe what would constitute a "substantial share" other than to reject a suggestion that it should be 75-80% of the market. Id. at 612. This presents some obvious practical problems vis-à-vis determining whether the theory is application in a particular case.

Assuming plaintiff meets the above conditions, the burden then shifts to the defendants to prove that they could not have made the particular drug that injured the plaintiff. Id. at 612. Any manufacturer-defendants unable to demonstrate that they did not make the product used by the plaintiff’s mother are then held severally liable for the proportion of the judgment that reflects their total market share. Id.; Brown v. Superior Court, supra, 44 Cal. 3d at 1072-1076. Thus, if all of the defendants joined were not responsible for 100% of the relevant market, the plaintiff cannot recover 100% of the judgment. Id. at 1075.

The theory of market share liability is not without its detractors. Some criticisms of market share liability are set forth below.

1. The elimination of a plaintiff’s burden of proof on causation renders it speculative whether any particular defendant caused her injury and shifting the burden of proof to the defendants almost guarantees a finding for plaintiff on causation. Sindell, supra, 26 Cal. 3d at 615 (Richardson, J., dissenting). The result: the imposition of a liability which exceeds absolute liability. Id. at 614 (Richardson, J., dissenting) (citing Dale Coggins, Industry-Wide Liability, 13 Suffolk Univ.L.Rev. 980 (1979).)
2. A plaintiff proceeding under the market share theory, unlike a traditional tort plaintiff, is relieved of her duty to prove causation and offered "a wider selection of potential defendants and a greater opportunity for recovery than an ordinary plaintiff." Id. at 618 (Richardson, J., dissenting).
3. While the enhanced exposure to liability engendered by this theory encourages manufactures to spend more time testing so as to reduce the possibility of marketing unsafe drugs, it will also hurt consumers "in terms of continued suffering and lives lost" caused by the resulting delay in making those drugs available. Richard P. Murray, Sindell v. Abbott Laboratories: A Market Share Approach to DES Causation, 69 Cal.L.Rev. 1179, 1201 (1981). Comment k to §402a of Restatement (Second) of Torts states that manufactures should not be held strictly liable for injuries caused by products that are properly prepared and marketed and which contain adequate warnings "merely because [they have] undertaken to supply the public with an apparently useful and desirable product, attended with a known but apparently reasonable risk." Id. Manufacturers may react to the imposition of market share liability by reducing or delaying efforts to develop new drugs, to the detriment of the public. See Sindell supra, 26 Cal. 3d at 619 (Richardson, J., dissenting).
4. A system of equality under the law is not fostered by a rule which allows liability to be predicated upon a defendant’s wealth. Sindell, supra at 618 (Richardson, J., dissenting). Moreover, such a rule may be particularly harsh on smaller companies who must absorb higher costs from the enhanced exposure to liability. Id.
5. Practical questions going to the applicability of the market share theory remain, such as how does one define the relevant market and what constitutes a substantial share of that market? Sindell, supra, at 612 (Richardson, J., dissenting). It is unclear from the court’s opinion whether 75-80% is too high or too low of a figure.

Sindell has been widely criticized and, thus far, it appears that only one federal district court has adopted market share liability in the same form as in California. McElhaney v. Eli Lilly & Co., 564 F.Supp. 265, 270-271 (D.S.D. 1983). McElhaney applied Sindell in a DES case that was decided under South Dakota law. Id.

Examples of jurisdictions that have rejected market share liability include Iowa (Mulcahey v. Eli Lilly & Co., 386 N.W. 2d 67, 75 (Iowa 1986)), Missouri (Zafft v. Eli Lilly & Co., 676 S.W. 2d 241, 246 (Mo. 1984)), and Illinois (Smith v. Eli Lilly & Co., 560 N.E. 2d 324, 337 (Ill. 1990)). Reasons for rejecting market share liability include: (1) the fact that there is only a small amount of, or in some cases no, reliable information available to establish the defendants’ percentages of the market, (2) the burden of determining market share would greatly tax the trial courts in terms of time and money spent in trying to establish market shares based on unreliable or insufficient data, (3) the imposition of liability is too speculative when it is quite possible the real defendant is not before the court, and (4) it is unrealistic to believe true percentages of market shares can be established by defendants in a particular lawsuit. Smith, supra at 338.

Washington adopted the "market share alternate liability" theory in Martin v. Abbott Laboratories, 689 P.2d 368 (1984). Washington’s Supreme Court rejected Sindell, mistakenly reading Sindell as calling for joint and several liability. Id. at 380-381; see Brown, supra, 44 Cal. 3d at 428 (holding that Sindell calls for several, but not joint, liability.)

Under market share alternate liability, a plaintiff needs to commence suit against only one defendant, as opposed to a "substantial share" of the market as required under Sindell. Id. at 382. A plaintiff does not have to "prove that a defendant produced or marketed the precise DES taken by her mother." Id. The plaintiff need only establish by a preponderance of the evidence that a defendant produced or marketed the type (e.g., dosage, color, shape, markings, size, or other identifiable characteristics) of DES taken by the plaintiff’s mother. Id.

A defendant can avoid liability by proving it did not produce or market the type of DES taken by plaintiff’s mother; that it did not market DES in the geographic area where plaintiff’s mother obtained the drug; or that it did not market the drug at the time plaintiff’s mother took it. Id. If there is insufficient evidence to determine accurate market share figures in the plaintiff’s particular geographic market, then other figures may be used; for instance, countywide, statewide, or nationwide figures. George v. Parke-Davis, 733 P.2d 507, 512 (Wash. 1987). However, the relevant market for determining liability should be as narrowly defined as the evidence in the given case allows. Id.

Under Martin, the joined defendants are presumed to have equal market shares and so are equally liable for plaintiff’s injuries. Id. at 383. They can rebut this presumption by demonstrating their true market share of the relevant geographic market and thus reduce their potential liability. Id. The liability of any defendants who are unable to demonstrate their market shares will be increased to fully account for 100% of plaintiff’s judgment. Id. at 383.

Martin has been criticized by the Illinois Supreme Court in Smith v. Eli Lilly, supra, which pointed out two purported flaws in this variation of market share liability. First, a plaintiff need only sue one defendant and "[i]f that sole defendant is a small contributor to the DES market, … it possibly could shoulder complete liability without proof of its being cause in fact for the injury." Id. Second, a small company could be held liable for more than its presumptive share if it is unable to prove its market share. Id. at 333. "Thus, the small company could be held liable for 50% or more of the damages when common sense dictates that it surely could not have distributed such a high percentage of the DES used in the market." Id.

Wisconsin rejected Sindell on the grounds that market share liability has limited practical applicability. Collins v. Eli Lilly & Co., 342 N.W. 2d 37, 48 (1984) (pointing out the difficulty of defining and proving market share where the relevant records are possibly no longer available.) Wisconsin’s approach is based instead on the risk of injury each manufacturer contributed to the plaintiff. Id. at 49.

Under the Wisconsin approach, a plaintiff may sue only one defendant and may recover all damages from the one defendant. Id. at 50. Moreover, she "need not prove that a defendant produced or marketed the precise DES taken by the plaintiff’s mother. Rather, as in Washington, the plaintiff need only establish by a preponderance of the evidence that a defendant produced or marketed the type … of DES taken by the plaintiff’s mother." Id. If more than one defendant is joined, damages are to be apportioned among the defendants according to the jury’s assignment of liability under Wisconsin’s comparative negligence laws. Id.

In determining each defendant’s percentage of liability, the jury can consider a number of factors in apportioning damages, such as the market of the defendant, whether the defendant conducted safety tests on DES, the role the defendant played in seeking FDA approval of the drug, and whether the defendant issued warnings. Id. at 53. Wisconsin’s approach has been criticized as expanding liability beyond Sindell because a defendant can be held liable for merely creating a risk of harm, as opposed to a probability of harm. Smith, supra, 560 N.E. 2d at 334.

The New York Court of Appeals has criticized the California, Wisconsin and Washington versions of market share liability. Hymowitz v. Eli Lilly & Co., 539 N.E. 2d 1069 (N.Y. 1989), cert. denied, 493 U.S. 944 (1989). Instead of adopting any of those three approaches, the New York court developed a theory that utilizes a national market and apportions "liability so as to correspond to the over-all culpability of each defendant, measured by the amount of risk of injury each defendant created to the public-at-large." Id. at 1078. A defendant can avoid liability only through proof that it did not market DES for pregnancy use during the relevant period. Id. Further, liability is several only and will not be inflated if all manufacturers are not before the court. Id.

The New York version of market share differs from Washington’s in that New York uses a national market, whereas Washington courts will attempt to define as narrow a market as the evidence will allow (e.g., the geographical area where plaintiff’s mother bought the drug). It also differs from Wisconsin’s approach in that the risk of injury measured is to the public at large, not to a particular plaintiff.

New York’s approach has been criticized for its inability to equate liability to actual harm caused. See Smith, supra, 560 N.E. 2d at 334. For instance, since a national market is used, a particular defendant cannot escape liability even if it proves that it did not market the drug in the geographical market where the plaintiff’s mother bought the drug. Hymowitz, supra, 539 N.E. 2d at 1078.

A California appellate court rejected the use of market share liability in an action against a manufacturer of a polio vaccine. Sheffield v. Eli Lilly & Co., 144 Cal.App. 3d 583, 599 (1983). Although like DES the vaccine was a general drug produced according to a uniform formula, unlike Sindell, the injuries did not result from the use of a drug generally defective when used for the purpose it was marketed; rather the injury occurred because some manufacturer made and distributed a defective product. The product that allegedly injured the plaintiffs was not a unit of a total generic pharmaceutical product but a deviant defective vaccine. Id. at 594, 596.

A federal district court, applying California law, held that Sindell market share liability was applicable in a case involving injuries from the DPT vaccine. Morris v. Parke, Davis & Co., 667 F.Supp. 1332, 1342 (C.D. Cal. 1987). Unlike Sheffield, plaintiff’s injury in Morris was caused by a manufacturing defect present in all of the defendants’ D.P.T. products, namely, "'common inadequacies' in manufacturing, testing, storage, and marketing." Morris, supra, at 1342.

The court also held that a plaintiff proceeding under a Sindell market share theory of liability could pursue a claim for breach of express warranty. Id. at 1342. However, subsequent to Morris, the California Supreme Court explicitly rejected the proposition that a plaintiff who proceeds on a market share theory may prosecute causes of action for fraud or breach of warranty. Brown v. Superior Court, supra, 44 Cal.3d at 1072. Brown was a "DES daughter" case and did not address whether market share liability could be applied in a D.P.T. case. It is thus unclear whether the California courts would agree with the Morris court’s willingness to use Sindell in a D.P.T. case.

In Mullen v. Armstrong World Industries, Inc., 200 Cal.App.3d 250 (1988), plaintiffs argued that market share liability should be extended from DES cases to asbestos cases, reasoning that asbestos products, like DES, are fungible in nature and present similar problems of proof. Id. at 255. The court disagreed because asbestos products are not produced from the same formula and have widely different toxicities. Id. a 255-256. Since the "fungibility" requirement was not met, the court declined to apply market share liability to asbestos cases. Id. at 257.

In White v. Celotex Corp., 907 F.2d 104 (9^th Cir. 1990), an action for asbestos-related personal injuries, the ninth circuit affirmed the district court’s order granting summary judgment to defendant asbestos manufacturers, distributors and supplies which was based upon plaintiff’s inability to provide evidence identifying the companies responsible for the asbestos to which plaintiff was allegedly exposed. In affirming summary judgment, the ninth circuit reaffirmed the holding in In Re Related Asbestos Cases, 543 F.Supp. 1152 (N.D. Cal. 1982) that the market share theory is wholly inappropriate in asbestos personal injury cases.

In University of New Hampshire v. U.S. Gypsum, 756 F.Supp. 640 (D.N.H. 1991), an asbestos abatement action brought by a university against various manufacturers and distributors of asbestos insulation, the district court granted defendants’ motion for partial summary judgment finding that certain of plaintiff’s "non-traditional" theories of liability, including market share liability, were not applicable in this case. Id. at 653, 655.

In reaching this holding, the court noted that many courts have declined to apply the market share theory in drug cases "and almost all have refused to apply it in asbestos cases." Id. at 655 (see cases cited at 655-656). Since asbestos is not a "fungible" product, as other jurisdictions have held, the district court rules that the market share theory did not apply to asbestos property damage cases. Id. at 655-656.

In Poole v. Alpha Therapeutic Corp., 696 F.Supp. 351 (N.D. Ill. 1988) (plaintiffs sued for death from AIDS-related complications where HIV virus was allegedly passed to decedent through defendant’s anti-hemophilic factor), plaintiffs moved to amend their complaint to add a cause of action for market share liability. The court for the Northern District of Illinois discussed Illinois’ "limited" acceptance of a market share theory in the DES litigation, as shown in Smith v. Eli Lilly, 527 N.E. 2d 373 (Ill. 1988). Poole, supra, 696 F.Supp. at 353. The district court denied the plaintiffs’ motion to amend their complaint due, in part, to the Smith court’s reluctance to extend market share liability to non-DES cases. Poole, supra at 354.

In Lee v. Baxter Healthcare Corp., 721 F.Supp. 89 (D. Md. 1989), aff'd., 898 F. 2d 146 (4^th Cir. 1990) a breast implant case, a district court applying Maryland law granted defendant’s motion for summary judgment. In opposing summary judgment, the plaintiff argued that, under a market share liability theory, she did not need to identify the specific manufacturer of the defective breast implant in order to prevail against defendant at trial. The court disagreed because Maryland courts "apply traditional products liability law" and do not recognize market share liability. Id. at 93. Moreover, even assuming that Maryland did recognize this theory, the court found it would not apply it to a breast implant case because there was no showing that defendant had a substantial share of the breast implant market, and breast implants, unlike DES, are not inherently dangerous products. Id. at 93-94.

Lastly, in Santiago v. Sherwin-Williams Co., 782 F.Supp. 186 (D. Mass. 1992), the district court granted defendants’ (bulk distributors of lead to paint manufacturers) motion for partial summary judgment to preclude a plaintiff who suffered from lead poisoning from proceeding under a market share theory. In its discussion, the court observed that some courts have accepted the market share theory in DES cases, but others have rejected it in both DES and non-DES (e.g., asbestos, toxic chemicals, breast implant, AIDS virus, tetracycline, benzidine, vaccine and tire rim) cases. Id. at 190-191, fn.7.

First, the court rejected application of market share liability because the evidence showed that factors other than lead-based paints might have caused or contributed to plaintiff’s injury, leaving the jury to speculate as to the degree to which each defendant contributed to that injury. Id. at 193. Additionally, the court stated it would be too difficult – given plaintiff’s alleged residential exposure to lead paint over a 54 year period – to define the market for purposes of determining each defendant’s market share. Id. at 194. Finally the court noted that no court had previously applied this theory to a defendant that merely supplied an ingredient to a product made, packaged and sold by others. Id.

Motivated by public policy concerns, the Sindell court created a theory of liability that represents a significant departure from traditional tort law. Since then, a few variations on the Sindell theory of market share liability have been adopted in other jurisdictions; however, that application has been limited to DES cases. Recent cases do not indicate that this situation will change in the near future.