Title: T.H. v. Novartis Pharmaceuticals Corp.

State: california

Issuer: California Supreme Court

Document:

SEE CONCURRING AND DISSENTING OPINION 
Filed 12/21/17 
 
 
 
IN THE SUPREME COURT OF CALIFORNIA 
 
 
 
T.H., a Minor, etc., et al., 
) 
 
 
) 
 
Plaintiffs and Appellants, 
) 
 
 
) 
S233898 
 
v. 
) 
 
 
) 
Ct.App. 4/1 D067839 
NOVARTIS PHARMACEUTICALS 
) 
CORPORATION, 
) 
 
) 
San Diego County 
 
Defendant and Respondent. 
)  Super. Ct. No. 37-2013-00070440-
 
 
) 
CU-MM-CTL 
 
____________________________________) 
 
Under California law, a brand-name drug manufacturer has a duty to warn 
of known or reasonably knowable adverse effects arising from an individual’s use 
of its drug.  (See Stevens v. Parke, Davis & Co. (1973) 9 Cal.3d 51, 65.)  In this 
case, we examine whether — and if so, under what circumstances — a brand-
name drug manufacturer may be sued under a theory of “warning label” liability 
when the warning label for its drug was alleged to be deficient, but the plaintiffs 
were injured by exposure to a generic bioequivalent drug bearing the brand-name 
drug’s warning label.   
Plaintiffs’ mother, J.H., was prescribed terbutaline, a generic form of the 
brand-name drug Brethine, to suppress premature labor during her pregnancy.  
Plaintiffs T.H. and C.H. were born full term, but were diagnosed with 
developmental delays at three years of age and autism by the time they turned five.  
Through their father as guardian ad litem, the minors allege that those responsible 
2 
for the terbutaline label knew or should have known — based on studies of the 
drug’s effects in rats and in humans — that the drug posed a serious risk to fetal 
brain development.  They further allege that the drug’s label unreasonably failed 
to include a warning about this risk. 
Federal law explicitly conveys to the brand-name manufacturer — and only 
that manufacturer — the responsibility to provide an adequate warning label for 
both generic terbutaline and its brand-name equivalent, Brethine.  As explained in 
more detail below, only the brand-name drug manufacturer has unilateral authority 
to modify the drug’s label by adding to or strengthening a warning.  Generic drug 
manufacturers are required to follow the brand-name manufacturer’s label to the 
letter.  Accordingly, the manufacturer of Brethine controlled both the form and 
content of the terbutaline warning label.   
Plaintiffs brought suit against defendant Novartis Pharmaceuticals 
Corporation (Novartis), which manufactured Brethine until December 2001, and 
aaiPharma Inc. (aaiPharma), which purchased the rights to and manufactured 
Brethine thereafter — using the same label Novartis had used — when plaintiffs’ 
mother was prescribed the generic bioequivalent in 2007.  Plaintiffs claim that 
Novartis knew or should have known that its warning label failed to alert pregnant 
women or their physicians to the risk Brethine posed to fetal brain development; 
that manufacturers of terbutaline were compelled by federal law to include 
Brethine’s deficient label on their own products; that it was foreseeable Novartis’s 
successor (aaiPharma) would not change or update Brethine’s deficient label; and 
that in reliance on the deficient warning label, plaintiffs’ mother was prescribed 
terbutaline, which adversely affected plaintiffs’ developing brains in utero.  What 
Novartis asserts in response is that its duty to provide a safe and adequate warning 
label for Brethine did not encompass those who were prescribed terbutaline in 
reliance on the Brethine label.  Novartis further contends that any such duty should 
3 
not extend to those who were exposed to terbutaline after Novartis ceased 
manufacturing Brethine and sold its rights in the drug to aaiPharma.   
Such contentions, and the case in which they arise, reach us at a very early 
stage in the litigation.  In reviewing a demurrer, we ask only whether the plaintiff 
has alleged — or could allege — sufficient facts to state a cause of action against 
the defendant.  (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.)  
In our view, plaintiffs have indeed shown that they could allege a cause of action 
against Novartis for warning label liability.  Because the same warning label must 
appear on the brand-name drug as well as its generic bioequivalent, a brand-name 
drug manufacturer owes a duty of reasonable care in ensuring that the label 
includes appropriate warnings, regardless of whether the end user has been 
dispensed the brand-name drug or its generic bioequivalent.  If the person exposed 
to the generic drug can reasonably allege that the brand-name drug manufacturer’s 
failure to update its warning label foreseeably and proximately caused physical 
injury, then the brand-name manufacturer’s liability for its own negligence does 
not automatically terminate merely because the brand-name manufacturer 
transferred its rights in the brand-name drug to a successor manufacturer.  We 
therefore affirm the Court of Appeal, which had directed the trial court to enter an 
order sustaining Novartis’s demurrer with leave to amend plaintiffs’ negligence 
and negligent misrepresentation causes of action. 
I.  BACKGROUND 
From a certain perspective, the claim underlying this lawsuit is quite 
straightforward.  Plaintiffs T.H and C.H., who are fraternal twins, sued defendant 
Novartis for negligence and negligent misrepresentation arising from Novartis’s 
failure to warn of the risks of Brethine, an asthma drug sometimes prescribed 
“off label” to stop or slow preterm labor.  Plaintiffs allege that Novartis knew or 
4 
should have known that Brethine carried a substantial risk of causing 
developmental and neurological damage to the fetus, yet failed to warn of this risk.   
What removes this case from the realm of the ordinary is that plaintiffs’ 
mother was never prescribed Brethine.  Rather, she — like many pregnant women 
experiencing premature labor — was prescribed terbutaline sulfate (terbutaline), 
the generic bioequivalent drug.  Moreover, Novartis stopped manufacturing 
Brethine and sold all rights to the drug in 2001, six years before plaintiffs’ injury.  
During the period it was the brand-name manufacturer, however, Novartis had the 
legal duty to disclose Brethine’s known and reasonably knowable risks in the 
drug’s warning label.  All generic manufacturers, in turn, had a specific legal 
responsibility regarding the label:  to ensure the terbutaline label was identical to 
the Brethine label.  We therefore examine plaintiffs’ allegations against the 
backdrop of the distinctive legal framework governing labeling for brand-name 
and generic pharmaceuticals.   
On review of a demurrer, we accept as true all properly pleaded facts.  
(Shirk v. Vista Unified School Dist. (2007) 42 Cal.4th 201, 205.)  Where particular 
facts are set out below, they are those alleged in plaintiffs’ first amended 
complaint.   
A.  Federal Regulation of Drug Labeling 
The Food, Drug, and Cosmetic Act (FDCA; 21 U.S.C. § 301 et seq.) 
prohibits the marketing of a new brand-name drug unless the manufacturer has 
submitted a new drug application (NDA) and the Food and Drug Administration 
(FDA) has approved the drug as safe and effective for its intended use.  (21 U.S.C. 
§ 355(a).)  The NDA must include an exemplar of the drug’s proposed label (21 
U.S.C. § 355(b)(1)(F)) describing the drug’s indications and usage, 
5 
contraindications, warnings and precautions, and adverse reactions.  (21 C.F.R. 
§ 201.56(e)(1).)      
In 1984, Congress enacted the Hatch-Waxman Act.  (98 Stat. 1585, 1585-
1597, codified as amended at 21 U.S.C. § 355.)  This statute allows a prospective 
generic drug manufacturer to file an abbreviated new drug application (ANDA) 
asserting the generic drug’s bioequivalence to an existing listed drug that has 
already been approved by the FDA.  (PLIVA, Inc. v. Mensing (2011) 564 U.S. 604, 
612 (PLIVA), citing 21 U.S.C. § 355(j).)  Such an application is typically filed as 
the brand-name drug’s patent is about to expire.  The streamlined application 
relieves the generic manufacturer of the need to duplicate the clinical trials 
previously submitted for the equivalent brand-name drug.  (Ibid.)  The generic 
manufacturer must nonetheless “show that the labeling proposed for the new drug 
is the same as the labeling approved for the listed drug.”  (21 U.S.C. 
§ 355(j)(2)(A)(v).)           
So under the federal scheme, “brand-name and generic drug manufacturers 
have different federal drug labeling duties.”  (PLIVA, supra, 564 U.S. at p. 613.)  
It is the brand-name manufacturer that bears responsibility for the accuracy and 
adequacy of its label “as long as the drug is on the market.”  (Wyeth v. Levine 
(2009) 555 U.S. 555, 570-571 (Wyeth).)  The generic manufacturer, on the other 
hand, is responsible only for “an ongoing federal duty of ‘sameness’ ” — that is, 
ensuring that its warning label is the same as the brand-name manufacturer’s.  
(PLIVA, at p. 613.)   
FDA regulations require the brand-name drug manufacturer to update the 
warning label “as soon as there is reasonable evidence of an association of a 
serious hazard with a drug; a causal relationship need not have been proved.”  (21 
C.F.R. § 201.80(e); cf. id., § 314.80(b) [NDA holder “must promptly review all 
adverse drug experience information obtained or otherwise received by the 
6 
applicant from any source”].)  A specific warning is required if the drug is 
commonly prescribed for a disease or condition, even when the drug has not yet 
been approved for that use, where “such usage is associated with serious risk or 
hazard.”  (Id., § 201.80(e).)  Any manufacturer of the drug at issue may request a 
change in the label by submitting a “prior approval supplement” to the FDA, 
which decides whether to approve the requested change in the warning label.  (21 
C.F.R. § 314.70(b)(2)(v); FDA, Abbreviated New Drug Application Regulations, 
57 Fed.Reg. 17950, 17961 (Apr. 28, 1992).)  But a brand-name drug 
manufacturer, unlike a generic manufacturer, may unilaterally update a label, 
without waiting for FDA preapproval, “[t]o add or strengthen a contraindication, 
warning, precaution, or adverse reaction” under the “changes being effected” 
(CBE-0) regulation.  (21 C.F.R. § 314.70(c)(6)(iii)(A); see Wyeth, supra, 555 U.S. 
at p. 568.)  By contrast, a generic manufacturer may use the CBE-0 regulation 
only to conform its label to an updated brand-name label.  (PLIVA, supra, 564 
U.S. at p. 614.)                     
Because federal regulations preclude generic manufacturers from 
unilaterally altering the warning labels on their drugs (PLIVA, supra, 564 U.S. at 
p. 617), federal law preempts state tort claims against generic manufacturers for 
failure to provide adequate warnings.  (Id. at p. 609.)  State tort claims against a 
brand-name manufacturer based on a failure to warn, however, are not preempted.  
(Id. at p. 625.)  
B.  Terbutaline, Brethine, and Novartis 
Terbutaline is a beta-adrenergic agonist, acting upon the beta2 receptors in 
smooth muscle tissue and causing muscles to relax.  The drug was originally 
developed by Draco, a Swedish company, and released for use as a bronchodilator 
to treat asthma.  In 1974, the FDA approved terbutaline as a treatment for asthma 
7 
in the United States.  Astra AB (and later, AstraZeneca LP) licensed the right to 
manufacture and market terbutaline in its oral form to Ciba-Geigy (a predecessor 
to Novartis) under the brand name Brethine.  Novartis owned the NDA for 
Brethine until 2001.     
In 1976, a Swedish physician with ties to Draco published the results of a 
small study indicating that terbutaline was safe and effective as a tocolytic — a 
drug to suppress premature labor in pregnant women — on the theory that the drug 
could relax uterine smooth muscle tissue.  Terbutaline subsequently gained wide 
acceptance as a tocolytic, but neither Novartis nor any other manufacturer sought 
FDA approval for this off-label use.1  Later studies cast doubt on the safety and 
efficacy of terbutaline as a tocolytic.  
In 1978, a study published in the British Journal of Obstetrics and 
Gynaecology questioned the validity and conclusions of the original Swedish 
report.  According to plaintiffs’ complaint, the British study warned that the 
benefits of this class of drugs on preterm labor was “ ‘not yet established,’ ” that 
the evidence was “ ‘too scanty to make conclusions about side effects possible,’ ” 
and that other data suggested “ ‘that labor inhibitors are potentially dangerous.’ ”  
A year later, a study published in the American Journal of Obstetrics and 
Gynecology reported adverse effects in both the pregnant mother and in the fetus 
following terbutaline exposure.  
A team of American clinical investigators in 1982 sought to replicate the 
results of the 1976 Swedish study.  They could not.  In fact, the investigators were 
                                              
1  
Physicians may, in their professional judgment, prescribe a drug for a 
purpose other than that for which it has been approved by the FDA.  (Buckman 
Co. v. Plaintiffs’ Leg. Com. (2001) 531 U.S. 341, 351, fn. 5 [“ ‘Off-label use is 
widespread in the medical community’ ”].)     
 
8 
unable to find any benefit among the pregnant mothers who had been prescribed 
terbutaline as compared to those who received a placebo.  A 1984 study published 
in the Journal of Reproductive Medicine similarly failed to confirm any benefits.   
In 1985, Dr. Theodore Slotkin and a team of Duke University Medical 
Center researchers found that a single dose of terbutaline given to pregnant rats 
interfered with an enzyme necessary for neuronal development in the fetal brain.  
Dr. Slotkin’s study showed that terbutaline can cross the placenta and fetal brain 
barrier in sufficient quantities to affect brain development.  Other studies in the 
1980s revealed that children born to mothers who had received a different beta-
adrenergic agonist had poorer academic achievement and were more likely to have 
impairments in vision and language development than children born to mothers 
who did not receive such treatment.     
In 1989 and 1990, Dr. Slotkin published studies showing that terbutaline 
may interfere with the fetus’s neurobehavioral development, presumably through 
its effects on receptors in the fetal cerebellum.  Shortly thereafter, in 1992, 
scientists from the University of Texas undertook a comprehensive and critical 
evaluation of the literature relating to terbutaline and concluded, in a study 
published in the American Journal of Obstetrics and Gynecology, that the drug 
had not been shown to arrest preterm labor and that chronic exposure may 
adversely affect the fetus.  A 1995 meta-analysis by researchers from the 
University of Pennsylvania likewise concluded that the relevant literature did not 
support the claimed benefit from maintenance tocolytic therapy.  The American 
College of Obstetricians and Gynecologists (ACOG) subsequently issued a 
“Technical Bulletin on Preterm Labor” to its more than 40,000 members, which 
noted the asserted benefit from maintenance tocolytic therapy lacked any 
evidentiary basis and warned that the potential risks of such therapy, to both the 
mother and the fetus, were well documented.  ACOG’s bulletin stated that the risk 
9 
associated with beta-mimetic agents (such as terbutaline) appeared greater than 
that associated with other tocolytic agents.  In 1997, the FDA’s Associate 
Commissioner for Health Affairs issued a “Dear Colleague” letter, which endorsed 
ACOG’s assessment of the benefits and dangers of long-term tocolytic therapy.  
In 2001, the German Central Institute of Mental Health issued a report 
concluding that children whose mothers had received beta-agonist tocolysis had a 
significantly higher rate of psychiatric disorders and psychopathology, and that 
such children scored lower on psychometric tests of cognitive development.  Dr. 
Slotkin’s Duke team released another study in October 2001, which revealed that 
beta2 receptors in the fetal brain, unlike those in mature brains, do not desensitize 
when exposed to continuous doses of terbutaline.  Instead, the fetal receptors 
intensify their sensitivity to terbutaline and thus increase their response to the drug 
as the dosage increases (and the brain develops).   
Over the years, researchers developed –– and companies brought to market 
–– newer and more effective bronchodilators and other asthma treatments.  
Novartis continued to manufacture and distribute Brethine with the intention that it 
be used as a tocolytic.  By 2001, nearly half of all prescriptions for terbutaline 
were for tocolysis, even though the drug was never approved by the FDA for that 
purpose.  In December 2001, Novartis transferred the NDA for Brethine to 
NeoSan Pharmaceuticals Inc., a wholly owned subsidiary of aaiPharma.  
C.  The Facts Underlying This Lawsuit 
On September 5, 2007, plaintiffs’ mother, J.H., was hospitalized because of 
concerns about premature labor.  She was prescribed terbutaline, to be 
administered every six hours, and was discharged on September 25, 2007.  While 
in the hospital, J.H. received a generic version that was manufactured by Lehigh 
Valley Technologies, Inc.; after discharge, she received a generic version that was 
10 
manufactured by Global Pharmaceuticals.  J.H. continued taking terbutaline as 
directed until plaintiffs were born on October 9, 2007.  Plaintiffs appeared to be 
normal until their pediatrician, during a routine checkup in December 2010, 
reported that the twins may have developmental delays.  Despite specialized 
treatment for both children, a pediatric neurologist diagnosed them with autism in 
August 2012.  
Plaintiffs’ first amended complaint alleges that terbutaline passed through 
the placenta and the blood-brain barrier.  As a result, plaintiffs contend, terbutaline 
caused them to suffer severe and permanent neurologic injuries, including an 
inability to speak and significant limitations and abnormalities in their motor 
skills.  Plaintiffs further allege that Novartis knew or should have known that 
terbutaline was of questionable efficacy as a tocolytic agent, that terbutaline 
carried serious risks of side effects for newborns whose mothers received the drug 
during pregnancy, and that federal law required Novartis to report this information 
to the FDA and to update the warning label — something Novartis could have 
done unilaterally.  (See 21 C.F.R. § 314.70(c)(6)(iii)(A).)  Instead, Novartis falsely 
represented that terbutaline was safe and effective and would not cause serious 
side effects in newborns, and it intended for pregnant mothers and their physicians 
to rely on these representations.  The complaint asserted causes of action for 
negligence and negligent misrepresentation, as well as strict liability, intentional 
misrepresentation, concealment, and medical negligence.   
To support and place in factual context their negligence cause of action, 
plaintiffs made a variety of specific allegations regarding Novartis.  They alleged 
that Novartis had a duty to update the label to warn of the drug’s effects on fetal 
development, that Novartis knew or should have known of these effects, that 
J.H.’s physicians prescribed her terbutaline because of their erroneous belief that 
terbutaline was safe to use as a tocolytic, that plaintiffs suffered neurological 
11 
damage as a result of their exposure to terbutaline in utero, and that plaintiffs’ 
injuries were foreseeable.  Meanwhile, plaintiffs’ negligent misrepresentation 
cause of action alleged that Novartis falsely represented that terbutaline was safe 
to use as a tocolytic, that Novartis had no reasonable basis for believing terbutaline 
was safe to use as a tocolytic, that Novartis intended for pregnant mothers and 
their physicians to rely on their false representations concerning the drug’s safety 
as a tocolytic agent, that J.H. and her physicians relied on Novartis’s 
representations, that plaintiffs suffered neurological damage as a result of their 
exposure to terbutaline in utero, and that plaintiffs’ injuries were foreseeable.          
Novartis’s core assertion in its demurrer was that it had no duty to 
plaintiffs.  To justify its position, the company offered two overarching rationales:  
It did not manufacture the terbutaline ingested by their mother; and it had 
transferred the Brethine NDA to another company in December 2001, nearly six 
years before plaintiffs’ mother was prescribed terbutaline.  In addition, Novartis 
argued that plaintiffs had failed to identify with specificity any misrepresentation 
by Novartis or allege that plaintiffs had relied on any such misrepresentation.  In 
opposition to the demurrer, plaintiffs responded that Novartis had a duty to warn 
about the drug’s effects on fetal development during the period it owned the NDA 
and manufactured Brethine; that the six-year gap between Novartis’s divestiture of 
the NDA and plaintiffs’ in utero exposure is relevant to causation (and not the 
existence of the duty); and that the first amended complaint adequately pleaded the 
misrepresentations with specificity, given that the specific misrepresentations are 
more likely to be within Novartis’s knowledge, and adequately pleaded reliance on 
those misrepresentations.     
The trial court sustained the demurrer without leave to amend.  It concluded 
that Novartis owed plaintiffs no duty as a matter of law relating to claims arising 
from terbutaline exposure in 2007.  Agreeing with Novartis, the court also found 
12 
that the fraud-based claims suffered from a lack of specificity and that this defect 
could not be remedied by allegations about Novartis’s conduct prior to the 2001 
NDA divestiture. 
The Court of Appeal reversed and directed that the order sustaining the 
demurrer be modified to grant plaintiffs leave to amend their causes of action for 
negligence and negligent misrepresentation.  The appellate court reasoned that if 
plaintiffs could allege that Novartis failed to warn about fetal risks it knew or 
should have known were associated with terbutaline when used as a maintenance 
tocolytic prior to its divestiture of the brand-name drug in 2001, that the warning 
would have remained on the label in 2007 had Novartis added a suitable warning 
to the label before divestiture in 2001, and that their mother’s physician would not 
have prescribed terbutaline as a maintenance tocolytic had the drug been properly 
labeled, then their claims for negligence and negligent misrepresentation can 
survive demurrer.   
We granted Novartis’s petition for review to decide the existence and scope 
of warning label liability for brand-name drug manufacturers under California law.       
II.  DISCUSSION 
The sole issue before us is whether the demurrer should have been 
sustained with respect to the negligence and negligent misrepresentation claims on 
the ground that Novartis owed no duty of care to plaintiffs.  In reviewing an order 
sustaining a demurrer, we examine the operative complaint de novo to determine 
whether it alleges facts sufficient to state a cause of action under any legal theory.  
(Lee v. Hanley (2015) 61 Cal.4th 1225, 1230.)  Where the demurrer was sustained 
without leave to amend, we consider whether the plaintiff could cure the defect by 
an amendment.  The plaintiff bears the burden of proving an amendment could 
cure the defect.  (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)   
13 
The gist of plaintiffs’ warning label liability claim is that Novartis 
negligently failed to warn about the drug’s risk to fetal brain development.  They 
contend that the deficient label foreseeably and proximately caused harm not only 
to the children of women who were prescribed Brethine, but also to the children of 
women who were prescribed its generic bioequivalent, which was legally required 
to — and did — bear the same deficient label.  Among other things, plaintiffs rely 
on section 311 of the Restatement Second of Torts (section 311), which addresses 
negligent misrepresentation involving physical harm.  Under section 311(1), 
“[o]ne who negligently gives false information to another is subject to liability for 
physical harm caused by action taken by the other in reasonable reliance upon 
such information, where such harm results [¶] . . . [¶] to such third persons as the 
actor should expect to be put in peril by the action taken.”      
Section 311’s theory of liability is intended to be “somewhat broader” than 
that for mere pecuniary loss.  (Rest.2d Torts, § 311, com. a.)  It “finds particular 
application where it is a part of the actor’s business or profession to give 
information upon which the safety of the recipient or a third person depends.”  
(Id., § 311, com. b; see also Prosser, Misrepresentation and Third Persons (1966) 
19 Vand. L.Rev. 231, 254 [explaining that one has a duty not to make a false 
representation to “[t]hose to whom a public duty is found to have been created by 
statute, or pursuant to a statute . . . [and to] [t]hose members of a group or class 
whom he has special reason to expect to be influenced by the representation”].)  
This court applied and followed section 311 in Randi W. v. Muroc Joint Unified 
School Dist. (1997) 14 Cal.4th 1066 (Randi W.).  There, we concluded that a 
school district’s negligent misrepresentations about a former employee in a letter 
of recommendation could render the school district liable for the employee’s 
molestation of a third person — a student at the employee’s new school — even 
though the student had no special relationship with the former school district and 
14 
never received the misleading information.  (Id. at p. 1081.)  In accordance with 
the Restatement, we held “that the writer of a letter of recommendation owes to 
third persons a duty not to misrepresent the facts in describing the qualifications 
and character of a former employee, if making these misrepresentations would 
present a substantial, foreseeable risk of physical injury to the third persons.”  
(Ibid.)  Plaintiffs urge us to hold, in similar fashion, that a brand-name drug 
manufacturer owes a duty to third persons not to misrepresent the safety of its 
drug, if making those misrepresentations would present a substantial, foreseeable 
risk of physical injury to those third persons.    
Duty is indeed the cornerstone of every negligence claim.  In California, the 
general rule governing duty is codified in Civil Code section 1714, subdivision 
(a):  “Everyone is responsible . . . for an injury occasioned to another by his or her 
want of ordinary care or skill in the management of his or her property or person 
. . . .”  Thus, “each person has a duty to use ordinary care and ‘is liable for injuries 
caused by his failure to exercise reasonable care in the circumstances . . . .’ ”  
(Parsons v. Crown Disposal Co. (1997) 15 Cal.4th 456, 472.)  Whether a party has 
a duty of care in a particular case is a question of law for the court, which we 
review independently on appeal.  (Kesner v. Superior Court (2016) 1 Cal.5th 
1132, 1142 (Kesner).)   
The conclusion that a duty exists in a particular case “ ‘is not sacrosanct in 
itself, but only an expression of the sum total of those considerations of policy 
which lead the law to say that the particular plaintiff is entitled to protection.’ ”  
(Dillon v. Legg (1968) 68 Cal.2d 728, 734, quoting Prosser, Law of Torts (3d ed. 
1964) pp. 332-333.)  We invoke the concept of duty to limit “ ‘ “ ‘the otherwise 
potentially infinite liability which would follow from every negligent act,’ ” ’ ” yet 
we do so only where public policy clearly supports (or a statutory provision 
establishes) an exception to the general rule of Civil Code section 1714.  (Kesner, 
15 
supra, 1 Cal.5th at p. 1143.)  When considering whether to depart from the general 
rule, we balance a number of considerations, including “the foreseeability of harm 
to the plaintiff, the degree of certainty that the plaintiff suffered injury, the 
closeness of the connection between the defendant’s conduct and the injury 
suffered, the moral blame attached to the defendant’s conduct, the policy of 
preventing future harm, the extent of the burden to the defendant and 
consequences to the community of imposing a duty to exercise care with resulting 
liability for breach, and the availability, cost, and prevalence of insurance for the 
risk involved.”  (Rowland v. Christian (1968) 69 Cal.2d 108, 113 (Rowland).)   
In the context of prescription drugs, a manufacturer’s duty is to warn 
physicians about the risks known or reasonably known to the manufacturer.  
(Carlin v. Superior Court (1996) 13 Cal.4th 1104, 1112 (Carlin); see generally 
Finn v. G.D. Searle & Co. (1984) 35 Cal.3d 691, 699-700.)  The manufacturer has 
no duty to warn of risks that are “merely speculative or conjectural, or so remote 
and insignificant as to be negligible.”  (Carlin, at p. 1116.)  If the manufacturer 
provides an adequate warning to the prescribing physician, the manufacturer need 
not communicate a warning directly to the patient who uses the drug.  (Ibid.)       
In this case, plaintiffs allege that the terbutaline label failed to warn about 
the risks to fetal brain development and falsely represented that the drug was safe 
for use by pregnant women.  They further claim that Novartis’s control over the 
Brethine label rendered it responsible for any deficiencies in the terbutaline label, 
given that generic drug manufacturers are legally obligated to use the label crafted 
by the brand-name drug manufacturer.  Novartis contends that it owed no duty to 
plaintiffs to update or maintain an accurate label because (1) it did not 
manufacture the terbutaline that caused plaintiffs’ injuries; and (2) it had divested 
ownership of Brethine, the name-brand drug, several years before plaintiffs’ 
mother was prescribed terbutaline.   
16 
To determine whether to create an exception to a brand-name drug 
manufacturer’s duty to warn, we balance the constellation of factors set out in 
Rowland, supra, 69 Cal.2d at page 113.  Three of those factors — foreseeability, 
the certainty of the injury, and the closeness of the connection between the 
plaintiff and the defendant — address the foreseeability of the relevant injury.  
(Kesner, supra, 1 Cal.5th at p. 1145.)  The remaining four — moral blame, the 
policy of preventing future harm, the burden on the defendant and the general 
public, and the availability of insurance — focus on the public policy justifications 
for or against carving out an exception to the general duty in this category of 
cases.  (Ibid.)  Our task is to determine whether a brand-name manufacturer owes 
a duty of ordinary care to those who may be injured by deficiencies in its warning 
label, not whether Novartis acted reasonably under the particular circumstances 
here.  (See Cabral v. Ralphs Grocery Co. (2011) 51 Cal.4th 764, 772-774 
(Cabral).)                
A.  Whether Plaintiffs Exposed to the Generic Bioequivalent Drug Can 
Assert Warning Label Liability Against Novartis, the Brand-name Drug 
Manufacturer     
The first case to recognize warning label liability was Conte v. Wyeth, Inc. 
(2008) 168 Cal.App.4th 89 (Conte).  In Conte the court concluded that a brand-
name drug manufacturer’s common law duty of care when warning of the dangers 
of its drug extended not only to consumers of the brand-name drug, “but also to 
those whose doctors foreseeably rely on the name-brand manufacturer’s product 
information when prescribing a medication, even if the prescription is filled with 
the generic version of the prescribed drug.”  (Id. at p. 94.)  The Court of Appeal’s 
holding predated by more than two years the United States Supreme Court’s ruling 
that federal law requires generic drug manufacturers to conform their warning 
label to the label used by the brand-name manufacturer (PLIVA, supra, 564 U.S. at 
17 
p. 613), and its analysis referenced some — but not all — of the Rowland factors.  
(Conte, at pp. 105-107.)   
Only a handful of courts have followed Conte.  (See, e.g., Dolin v. 
SmithKline Beecham Corp. (N.D.Ill. 2014) 62 F.Supp.3d 705; Chatman v. Pfizer, 
Inc. (S.D.Miss. 2013) 960 F.Supp.2d 641, 654; Kellogg v. Wyeth, Inc. (D.Vt. 
2010) 762 F.Supp.2d 694, 704; Wyeth, Inc. v. Weeks (Ala. 2014) 159 So.3d 649 
(Weeks).)  But our careful review of the federal regulatory scheme and analysis of 
all the Rowland factors persuades us that a brand-name drug manufacturer has the 
duty under California law to warn of the risks about which it knew or reasonably 
should have known, regardless of whether the consumer is prescribed the brand-
name drug or its generic “bioequivalent.”  (See 21 U.S.C. § 355(j)(2)(A)(iv).)     
1.  Foreseeability and related factors 
In determining whether to create an exception to the general statutory duty 
of care, the “major” (Cabral, supra, 51 Cal.4th at p. 771, fn. 2), and ultimately 
“most important” (Kesner, supra, 1 Cal.5th at p. 1145), consideration under 
California law is the foreseeability of physical harm.  Novartis could reasonably 
have foreseen that deficiencies in its Brethine label could mislead physicians about 
the safety of terbutaline, Brethine’s generic bioequivalent, which was legally 
required to bear an identical label.     
A brand-name pharmaceutical manufacturer has a duty under federal law to 
draft, update, and maintain the warning label so that it provides adequate warning 
of the drug’s potentially dangerous effects.  (21 U.S.C. § 352(f)(2).)  The FDA, as 
part of its premarket review process, must approve the text of the proposed label.  
(21 U.S.C. § 355; Wyeth, supra, 555 U.S. at p. 568.)  Although the brand-name 
manufacturer generally must obtain FDA approval before making any change to 
the label, this category of manufacturers may use the “changes being effected” 
18 
(CBE-0) regulation (21 C.F.R. § 314.70(c)(3)) to “add or strengthen a 
contraindication, warning, precaution, or adverse reaction” immediately upon 
filing a supplemental application, without waiting for FDA approval.  (Id., 
§ 314.70(c)(6)(iii)(A).)  
The duty for a manufacturer of generic drugs, on the other hand, is to 
ensure that its warning label is identical to the label of the brand-name drug.  
(PLIVA, supra, 564 U.S. at p. 613.)  In other words, generic manufacturers “have 
an ongoing federal duty of ‘sameness.’ ”  (Ibid.)  A generic manufacturer may use 
the CBE-0 regulation to change its label only to match a revised brand-name label 
or otherwise comply with FDA instructions.  (Id. at p. 614.) 
What a brand-name manufacturer thus knows to a legal certainty is that any 
deficiencies in the label for its drug will be perpetuated in the label for its generic 
bioequivalent.  A brand-name manufacturer will also be aware that although the 
warnings communicated in its drug label are designed for physicians — and are 
intended to influence a physician’s decision whether to prescribe the drug (see 
Stevens v. Parke, Davis & Co., supra, 9 Cal.3d at pp. 64-65) — it is often the 
pharmacist who actually decides whether the patient receives the brand-name drug 
or its generic bioequivalent.  (Bus. & Prof. Code, § 4073.)  Moreover, many 
insurance companies require the substitution of a generic drug for the brand-name 
drug as a matter of course, unless the physician justifies use of the branded drug.  
(PLIVA, supra, 564 U.S. at p. 628, fn. 2 (dis. opn. of Sotomayor, J.).)  
Accordingly, it is entirely foreseeable that the warnings included (or not included) 
on the brand-name drug label would influence the dispensing of the generic drug, 
either because the generic is substituted by the pharmacist or the insurance 
company after the physician has prescribed the brand-name drug, or because the 
warning label on the generic drug is legally required to be identical to the label on 
19 
the brand-name drug.  (Conte, supra, 168 Cal.App.4th at p. 105; accord, Weeks, 
supra, 159 So.3d at p. 670.) 
Under the second Rowland factor, we assess the degree of certainty that the 
plaintiff suffered injury.  This factor, too, strengthens the case for finding a duty of 
care in these circumstances.  Plaintiffs allege that they suffer from global 
neurological impairment, including autism and pervasive developmental delays.  
These are indisputably injuries and are compensable under the law.  (See Kesner, 
supra, 1 Cal.5th at p. 1148.) 
The third Rowland factor implicates the closeness of the connection 
between the defendant’s conduct and the plaintiff’s injury.  The label for a generic 
drug is (and must be) the same as the label for the brand-name drug, so any 
deficiency in the brand-name label will be reflected in the generic label.  Plaintiffs 
allege that the deficient Brethine label led their mother’s physician to prescribe 
terbutaline, which caused their neurological injuries.  This scenario describes a 
close connection between Novartis’s allegedly negligent conduct and plaintiffs’ 
injuries.   
Novartis, meanwhile, relies on O’Neil v. Crane Co. (2012) 53 Cal.4th 335 
(O’Neil).  This is a case we can distinguish.  There, a naval seaman developed 
mesothelioma caused by asbestos exposure.  Following his death, his family filed 
a wrongful death action asserting strict liability and negligence claims against 
several defendants, including the manufacturers of valves and pumps that were 
used in warships.  (Id. at p. 346.)  At the close of evidence, the defendant 
manufacturers moved for nonsuit, pointing out the plaintiffs’ failure to show that 
the decedent had been exposed to asbestos from any of their products.  Plaintiffs 
responded that even if the decedent was never exposed to asbestos from the 
defendants’ products themselves, it was foreseeable that the defendants’ valves 
and pumps would need to be replaced with new asbestos-containing components, 
20 
and that asbestos could be released into the air during the repair and replacement 
process.  (Ibid.)  In reinstating the trial court’s judgment of nonsuit, we invoked 
the Rowland factors and noted, in particular, that the connection between the 
defendant manufacturers’ conduct and the decedent’s injury was “extremely 
remote” (id. at p. 365):  Although component parts of the defendants’ valves and 
pumps had been replaced “during routine maintenance” (id. at p. 344), the 
decedent did not begin to work in the vicinity of these valves and pumps until 
more than 20 years after they were installed — and did not suffer an injury for 
another 40 years.  In addition, the defendant manufacturers did not produce, sell, 
or supply any of the asbestos-containing products that could have caused his 
mesothelioma.  Because the defendants’ asserted misconduct, according to the 
plaintiffs, was simply that they failed to warn about the potential dangers in 
replacement parts sold by other manufacturers — and there was “no reason to 
think a product manufacturer [would] be able to exert any control over the safety 
of replacement parts or companion products made by other companies” — we 
found that the connection between the alleged misconduct and the injury was too 
“attenuate[d]” to warrant imposition of a duty of care.  (Id. at p. 365.)   
Here, by contrast, federal regulations granted the brand-name drug 
manufacturer — and no other manufacturer — control over the active ingredients 
in the generic drug and the content of the warnings included in the generic’s 
label.2  In addition, the temporal connection between Novartis’s allegedly 
                                              
2  
The FDA has been considering for some time a rule that would effectively 
abrogate PLIVA and enable generic drug manufacturers to update a drug’s warning 
label unilaterally, even if the brand-name manufacturer had not yet done so.  (See 
FDA, Supplemental Applications Proposing Labeling Changes for Approved 
Drugs and Biological Products, 78 Fed.Reg. 67985 (Nov. 13, 2013); see Dept. of 
Health and Human Services, Regulatory Agenda, 82 Fed.Reg. 40277, 40279 (Aug. 
24, 2017).)  If adopted, the new rule “would create parity between NDA holders 
 
21 
negligent conduct, on the one hand, and plaintiffs’ exposure to harm and 
subsequent injury, on the other, is much closer than was the case in O’Neil.   
2.  Considerations of public policy 
Foreseeability alone, however, is not sufficient to justify a duty of care in 
every instance.  (Erlich v. Menezes (1999) 21 Cal.4th 543, 552.)  We will not 
recognize a duty of care even as to foreseeable injuries “where the social utility of 
the activity concerned is so great, and avoidance of the injuries so burdensome to 
society, as to outweigh the compensatory and cost-internalization values of 
negligence liability.”  (Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 502.)  
Novartis contends that the circumstances here present such an exceptional case.  
We disagree.   
Time and again we have recognized how “ ‘[t]he overall policy of 
preventing future harm is ordinarily served, in tort law, by imposing the costs of 
negligent conduct upon those responsible.’ ”  (Kesner, supra, 1 Cal.5th at p. 1150, 
quoting Cabral, supra, 51 Cal.4th at p. 781.)  A brand-name drug manufacturer is 
not only in the best position to warn of a drug’s harmful effects (Sindell v. Abbott 
Laboratories (1980) 26 Cal.3d 588, 611):  It is also the only manufacturer with the 
unilateral authority under federal law to issue such a warning for the brand-name 
drug or its generic bioequivalent.  Although federal regulations impose a 
continuing duty on the brand-name manufacturer to update and maintain an 
                                                                                                                                                              
and ANDA holders with respect to submission of CBE-0 supplements for safety-
related labeling changes based on newly acquired information” (78 Fed.Reg., 
supra, at p. 67989) and may conceivably justify reweighing of the Rowland factors 
and some reconsideration of the brand-name manufacturer’s duty in this category 
of cases.       
 
 
 
22 
adequate warning label (see 21 C.F.R. § 201.80(e)), a brand-name manufacturer’s 
incentive to comply with that duty declines once the patent expires and generic 
manufacturers enter the market, since the market share for the brand-name drug at 
that point “may drop substantially.”  (78 Fed.Reg., supra, at p. 67988 [“Among 
drugs for which a generic version is available, approximately 94 percent are 
dispensed as a generic”].)  The possibility that any consumer injured by a deficient 
drug label, including those who were dispensed the generic bioequivalent drug, 
could assert a claim of warning label liability restores the brand-name 
manufacturer’s incentive to update the warning label with the latest safety 
information, even as the brand-name drug’s market share declines.   
If the policy of preventing harm has special relevance to any particular 
endeavor, surely prescription drug labeling is one.  (Sindell v. Abbott 
Laboratories, supra, 26 Cal.3d at p. 611.)  A substantial body of state law serves 
to protect California consumers from the dangers posed by false, misleading, and 
inadequate labeling of prescription medications.  (See, e.g., Bus. & Prof. Code, 
§§ 4070-4078.)  The United States Supreme Court, too, has recognized the pivotal 
role of state tort actions “as a complementary form of drug regulation” with 
respect to drug labeling.  (Wyeth, supra, 555 U.S. at p. 578; see id. at p. 579 
[“State tort suits uncover unknown drug hazards and provide incentives for drug 
manufacturers to disclose safety risks promptly.  They also serve a distinct 
compensatory function that may motivate injured persons to come forward with 
information.  Failure-to-warn actions, in particular, lend force to the FDCA’s 
premise that manufacturers, not the FDA, bear primary responsibility for their 
drug labeling at all times”]; accord, Stevens v. Parke, Davis & Co., supra, 9 Cal.3d 
at p. 65 [recognizing that federal warning-label regulations alone may be 
insufficient to protect patient safety].) 
23 
The brand-name drug manufacturer is the only entity with the unilateral 
ability to strengthen the warning label.  So a duty of care on behalf of all those 
who consume the brand-name drug or its bioequivalent ensures that the brand-
name manufacturer has sufficient incentive to prevent a known or reasonably 
knowable harm.  In O’Neil, by contrast, we found “no reason” to believe that the 
defendant valve and pump manufacturers would have any control over the safety 
of other companies’ replacement parts or companion products (or even the Navy’s 
purchasing choices or specifications).  (O’Neil, supra, 53 Cal.4th at p. 365.)  Our 
no-duty conclusion also rested explicitly on the fact that the replacement parts’ 
“dangerous feature” — i.e., the asbestos — “was not integral to the product’s 
design.”  (Id. at p. 343.)  Here, on the other hand, the brand-name drug 
manufacturer exercised complete control over the contents of the generic drug 
label at the time of its alleged negligence, and the generic drug was legally 
required to be the brand-name drug’s bioequivalent.  We therefore conclude that 
warning label liability is likely to be effective in reducing the risk of harm to those 
who are prescribed (or are exposed to) the brand-name drug or its generic 
bioequivalent.   
Against the public interest in preventing harm, we must balance the 
defendant’s burden and the consequences to the community of imposing a duty of 
care.  The burden that matters, though, is not the cost of compensating individuals 
for injuries that the defendant has actually and foreseeably caused.  As we recently 
explained in Kesner, “shielding tortfeasors from the full magnitude of their 
liability for past wrongs is not a proper consideration in determining the existence 
of a duty.  Rather, our duty analysis is forward-looking, and the most relevant 
burden is the cost to the defendants of upholding, not violating, the duty of 
ordinary care.”  (Kesner, supra, 1 Cal.5th at p. 1152.)      
24 
Strictly speaking, then, the burden on brand-name drug manufacturers of 
satisfying a common law duty of care to those who are prescribed the generic 
version of the drug is zero.  Brand-name manufacturers already have a continuing 
duty to warn of potential risks “as soon as there is reasonable evidence of an 
association of a serious hazard with a drug; a causal relationship need not have 
been proved.”  (21 C.F.R. § 201.80(e).)  A brand-name manufacturer’s burden to 
maintain an adequate warning label persists without regard to the happenstance 
that a given prescription for a brand-name drug may — because of insurance 
company cost-savings rules (Meijer, Inc. v. Warner Chilcott Holdings Co. III Ltd. 
(D.D.C. 2007) 246 F.R.D. 293, 297), or a pharmacist’s discretion (Bus. & Prof. 
Code, § 4073, subd. (c)) — be filled with a generic bioequivalent.  And where the 
brand-name manufacturer provides an adequate label, then it necessarily has also 
fulfilled its duty with respect to the generic bioequivalent.   
Novartis complains that unless the ordinary duty of care is narrowed, the 
brand-name drug manufacturer would end up an insurer for the entire market.  
This would occur, Novartis contends, even though the brand-name manufacturer 
may hold only a small fraction of the combined sales of the brand-name drug and 
its generic bioequivalent.  We disagree.  A brand-name drug manufacturer would 
not be liable where, for example, the injury arose from a defect in the 
manufacturing process of the generic drug (see, e.g., Fisher v. Pelstring (D.S.C. 
2012) 817 F.Supp.2d 791, 818), the generic manufacturer failed to conform its 
label to the brand-name drug’s label (Fulgenzi v. PLIVA, Inc. (6th Cir. 2013) 711 
F.3d 578, 582, 584; Huck v. Wyeth, Inc. (Iowa 2014) 850 N.W.2d 353, 356 (plur. 
opn. of Waterman, J.)), or the generic manufacturer was promoting a use that was 
inconsistent with the FDA-approved label (Arters v. Sandoz, Inc. (S.D. Ohio 2013) 
921 F.Supp.2d 813, 819-820).  Under warning label liability, the brand-name drug 
manufacturer is liable only in a narrow circumstance — when deficiencies in its 
25 
own label foreseeably and proximately caused injury.  If instead tort law simply 
carved out those who were given the generic bioequivalent from obtaining 
otherwise available compensation for injuries attributable to the brand-name drug 
manufacturer’s defective warning label, then consumers would insist on the brand-
name drug over the cheaper bioequivalent, inflating health costs with no 
corresponding increase in safety and in contradiction to the stated federal policy of 
making low-cost generic drugs more available.  (See H.R.Rep. No. 98-857, 2d 
Sess., p. 14 (1984), reprinted in 1984 U.S. Code Cong. & Admin. News, p. 2647.)        
Novartis nonetheless predicts that unless we carve out an exception for 
those taking generic drugs, warning label liability will lead to overwarning — i.e., 
inclusion of a slew of speculative risks in the warning label — which would dilute 
the effectiveness of any individual warning.  But why this would occur is far from 
clear.  To recognize that the duty of care includes all those who would foreseeably 
be affected by a deficient brand-name drug label merely preserves the brand-name 
manufacturer’s duty as it existed when its patent excluded all competitors from the 
market.  Nor has Novartis identified any surge in overwarning since 2008, when 
Conte recognized warning label liability.  (Cf. Carlin, supra, 13 Cal.4th at p. 1116, 
fn. 6 [“[T]here is no evidence that any such [overwarning] problem has emerged 
or that patients have suffered any detriment, despite the fact that strict liability has 
long been the rule in California”].)  Plaintiffs further suggest that the 
consequences of overwarning on physicians’ prescription decisions is uncertain 
(Steven Garber, RAND Institute for Civil Justice, Economic Effects of Product 
Liability and Other Litigation Involving the Safety and Effectiveness of 
Pharmaceuticals (2013) p. xiv [“That claim is controversial within the medical 
community, and there is no direct empirical evidence about it”]) and, in any event, 
can be solved through the FDA’s power to reject a labeling change it deems 
unnecessary or counterproductive.  (See Wyeth, supra, 555 U.S. at p. 571.)   
26 
Novartis cautions that warning label liability could perversely incentivize a 
brand-name manufacturer to withdraw its drug from the market, rather than expose 
itself to the risk of suit by those who — in reliance on the brand-name 
manufacturer’s label — were prescribed the generic bioequivalent and suffered 
injury.  Yet Novartis fails to explain why brand-name manufacturers would find it 
economically advantageous to withdraw drugs from the market rather than simply 
modify the warning labels to include the newly discovered risks.  Nor does it offer 
any evidence that brand-name manufacturers have accelerated their withdrawal 
from the market in the nine years since Conte was decided.  Moreover, a brand-
name drug manufacturer cannot avoid its duty to update and maintain its warning 
label simply by unilaterally exiting the market.  Under FDA regulations, a brand-
name drug manufacturer’s duty to update and maintain the warning label 
continues, even if the brand-name drug has been withdrawn from the market, until 
the FDA (having assured itself that the drug is safe, effective, and correctly 
labeled) withdraws approval of the NDA.  (21 C.F.R. § 314.150(a)(2), (b)(3) & 
(c); FDA, supra, 78 Fed.Reg. at p. 67993.)  A brand-name manufacturer that 
sought to exit the market but was unsure whether the FDA would determine that 
the drug was withdrawn “for reasons other than effectiveness or safety” thus 
would presumably go ahead and update the label.  (Lasker et al., Taking the 
“Product” Out of Product Liability:  Litigation Risks and  Business Implications 
of Innovator and Co-promoter Liability (July 2015) 82 Def. Counsel J. 295, 306.)  
 Novartis complains next that it is unfair to subject a brand-name drug 
manufacturer to liability for harm caused by a competitor’s product — a product  
from which the brand-name manufacturer derives no revenues or profit.  But the 
plaintiffs’ claim here is not that terbutaline is defectively designed or inherently 
dangerous.  It is that terbutaline’s warning label failed to mention the risk to fetal 
brain development, and that Novartis was responsible for the deficient label.  So 
27 
the alleged fault here lies with Novartis, not with its generic competitors.  The 
brand-name drug manufacturer’s burden to adequately label its drug as a means of 
ensuring adequate warnings for the generic bioequivalent is more than offset by 
the substantial benefits federal law confers on the brand-name manufacturer:  a 
monopoly over the market for the life of the patent, which can be extended for the 
time consumed by FDA review of the NDA (see 35 U.S.C. §§ 154, 156(a), (c)); an 
additional five-year exclusivity period if the brand-name drug contains a new 
chemical entity or an additional three years for a new use of a previously approved 
drug (see 21 U.S.C. § 355(c)(3)(E); 21 C.F.R. § 314.108(b)(2), (4), (5)); and the 
higher prices the brand-name drug can continue to command even after the 
exclusivity period expires.  (See Conte, supra, 168 Cal.App.4th at p. 110.)  
Because federal law bundles –– and indeed, only makes available –– those 
benefits along with the responsibility to maintain an adequate warning label, it is 
as logical as it is reasonable for state common law to ensure the brand-name 
manufacturer holds up its end of the deal.  (See Wyeth, supra, 555 U.S. at pp. 578-
579; see generally Struve, The FDA and the Tort System:  Postmarketing 
Surveillance, Compensation, and the Role of Litigation (2005) 5 Yale J. Health 
Pol’y L. & Ethics 587, 605-606 [“The problem of insufficient resources persists, 
as does the [structural] concern that the FDA may be loath to move swiftly to 
address emerging safety issues”].)  The public interest in adequate drug warnings, 
in short, is just as acute when the brand-name drug manufacturer has an effective 
monopoly over the warning label as it was when the brand-name manufacturer 
had a monopoly over the entire market for the drug.  (See Wyeth, supra, 555 U.S. 
at p. 571 [noting that federal regulations “plac[e] responsibility for postmarketing 
surveillance on the manufacturer”].) 
We are equally unpersuaded by Novartis’s contention that warning label 
liability would stifle innovation by substantially raising drug costs and chilling the 
28 
development and marketing of new drugs.  The logic buttressing this argument is 
far from self-evident.  Warnings about a product’s efficacy or danger may indeed 
risk diminishing its value to the manufacturer.  Less obvious is the manufacturer’s 
response to this predicament.  One might just as easily assert that a drug company, 
after adding a new warning, will be incentivized to develop new and safer 
alternatives to the drug so that it can recapture the market for treatment of that 
disease.  (See Carlin, supra, 13 Cal.4th at p. 1117.)   
Indeed, the pharmaceutical industry raised a similar objection in Carlin to 
the imposition of strict liability for the failure to warn about the known or 
reasonably scientifically knowable dangers of a drug.  We found “no clear or 
sufficient basis for concluding that research and development will inevitably 
decrease” as a consequence of imposing liability for failure to warn of known or 
knowable risks (Carlin, supra, 13 Cal.4th at p. 1117) — nor has Novartis offered 
any evidence that drug innovation has declined in the 21 years since Carlin was 
decided.  Carlin therefore saw “no reason to depart from our conclusion . . . that 
the manufacturer should bear the costs, in terms of preventable injury or death, of 
its own failure to provide adequate warnings of known or reasonably scientifically 
knowable risks.”  (Ibid.)         
The same is true here.  When it comes to choosing whether the cost of an 
injury involving prescription medication should be borne by an innocent plaintiff 
or a negligent defendant, our case law has routinely held that the latter should bear 
the cost.  (Sindell v. Abbott Laboratories, supra, 26 Cal.3d at pp. 610-611.)  A 
brand-name drug manufacturer is in the best position to discover and cure 
deficiencies in its warning label, to bear the cost of injury resulting from its failure 
to update and maintain the warning label, to insure against the risk of liability, and 
to spread any increased cost widely among the public.  (Id. at p. 611.)  After all, 
the fault (if any) for a deficient label lies with the brand-name manufacturer alone.  
29 
(Cf. Groll v. Shell Oil Co. (1983) 148 Cal.App.3d 444, 449 [manufacturer of bulk 
fuel owed no duty to the ultimate consumer where the manufacturer provided 
adequate warnings to the distributor, “who subsequently packages, labels and 
markets the product,” and the manufacturer thus “did not have the ability to 
prepare the warning”].)  The balance of preventing harm and avoiding an undue 
burden on drug manufacturers and the public generally thus tips in favor of 
warning label liability.        
Neither of the two remaining Rowland factors weighs in favor of an 
exception to the general duty of care.  To wit:  Significant moral blame attaches 
where a brand-name drug manufacturer fails to warn about the unsafe effects of its 
drug, when those effects are known or reasonably should have been known to the 
manufacturer.  (See Peterson v. San Francisco Community College Dist. (1984) 36 
Cal.3d 799, 814.)  Blameworthiness would not depend on whether the pregnant 
woman, in reliance on the brand-name drug manufacturer’s label, was dispensed 
the brand-name drug or its generic bioequivalent.  Even those women who were 
prescribed the brand-name drug may nonetheless have received the generic 
version, either because the insurance company required it or because the 
pharmacist chose it.  Moreover, both the pregnant woman and her physician would 
have relied on the brand-name drug manufacturer to warn of any serious hazards 
that were “associated” with the drug.  (21 C.F.R. § 201.80(e).)  Indeed, under 
federal law, no other manufacturer could have advised them of the drug’s risks.  In 
these circumstances, potential plaintiffs — the unborn — would be “particularly 
powerless,” while the defendant brand-name drug manufacturer would have the 
best information about the drug’s risks.  (Kesner, supra, 1 Cal.5th at p. 1151.)      
Although we declared in O’Neil that “little moral blame can attach to a 
failure to warn about dangerous aspects of other manufacturers’ products and 
replacement parts” (O’Neil, supra, 53 Cal.4th at p. 365), the context of that 
30 
statement was a situation in which the valve and pump manufacturers had no 
control or influence over the design, manufacturing, or safety of those parts; the 
warning attached to them; or the consumer’s decision whether to purchase such 
products.  (Ibid.)  Here, by contrast, the brand-name manufacturer legally 
controlled the label on the generic bioequivalent drug, and thus had significant 
influence on the decision whether to prescribe it. 
Finally, Novartis offers no reason why a brand-name drug manufacturer 
would be unable to insure against the risk of warning label liability.  Presumably, a 
brand-name manufacturer already insures against the risk of liability arising from 
a deficient warning label when a drug is introduced and the manufacturer has a 
monopoly over that market.  It is far from clear why the brand-name drug 
manufacturer’s exposure would become fatally uncertain merely because the 
brand-name manufacturer is sharing the market with generic manufacturers.  (Cf. 
O’Neil, supra, 53 Cal.4th at p. 365 [“it is doubtful that manufacturers could insure 
against the ‘unknowable risks and hazards’ lurking in every product that could 
possibly be used with or in the manufacturer’s product”].)   
3.  Out-of-state authorities  
Novartis (and its amici curiae) rely in substantial part on what they call the 
“overwhelming” majority of courts that have declined to recognize warning label 
liability owed to those who were prescribed a generic version of the drug in 
reliance on the brand-name drug label.  Although the decisions of our sister states 
and the lower federal courts may be instructive to the extent we find their analysis 
persuasive, they are neither binding nor controlling on matters of state law.  
(People v. Gonzales and Soliz (2011) 52 Cal.4th 254, 296.)  We have respectfully 
considered the authorities cited by Novartis.  We do not find them persuasive in 
analyzing California law.   
31 
The “ ‘leading case’ ” (Strayhorn v. Wyeth Pharms., Inc. (6th Cir. 2013) 
737 F.3d 378, 401) for the proposition that a brand-name drug manufacturer owes 
no duty to warn patients who were dispensed the generic bioequivalent is Foster v. 
American Home Products Corp. (4th Cir. 1994) 29 F.3d 165 (Foster) — so we 
examine that case in some detail.  In Foster, the decedent’s pediatrician prescribed 
Phenergan, a brand-name antihistamine manufactured by the defendant which was 
sometimes used to treat colic.  The pharmacist substituted promethazine, a generic 
bioequivalent.  After being given promethazine several times over the next few 
days, six-week-old Brandy was found dead in her crib.  A pediatrician specializing 
in sudden infant death syndrome at the University of Maryland opined that 
Brandy’s death was caused by promethazine.  (Id. at pp. 167-168.)  The district 
court found the plaintiffs (Brandy’s parents) had stated a claim for negligent 
misrepresentation, despite the fact that the defendant had not manufactured the 
drug ingested by Brandy, but subsequently granted summary judgment because of 
the plaintiffs’ failure to demonstrate that their pediatrician had relied on the 
defendant’s representations.  When the plaintiffs appealed the grant of summary 
judgment and the defendant cross-appealed the district court’s initial 
determination that a negligent misrepresentation claim could lie against the brand-
name manufacturer for harm arising from the generic drug, the Fourth Circuit 
sustained the cross-appeal.  (Ibid.)    
Foster reasoned first that the negligent misrepresentation cause of action 
was in essence a claim of product liability, but “without meeting the requirements 
[Maryland] law imposes in products liability actions” — i.e., “that the defendant 
manufactured the product at issue.”  (Foster, supra, 29 F.3d at p. 168.)  The court 
next addressed the peculiarities of the regulated pharmaceutical market, under 
which “any representations [the defendant] makes when advertising Phenergan 
also apply to generic promethazine”; a warning “will simply not be made” if the 
32 
brand-name manufacturer does not issue one; and a patient who is prescribed 
Phenergan “may actually receive generic promethazine.”  (Id. at p. 169.)  In 
rejecting liability nonetheless, the Foster court assumed that although generic 
manufacturers “must include the same labeling information as the equivalent name 
brand drug, they are also permitted to add or strengthen warnings and delete 
misleading statements on labels, even without prior FDA approval. . . .  
Manufacturers of generic drugs, like all other manufacturers, are responsible for 
the representations they make regarding their products.”  (Id. at p. 170.)  The court 
also concluded that “to impose a duty in the circumstances of this case would be to 
stretch the concept of foreseeability too far” under Maryland law, which had 
recognized the tort of negligent misrepresentation only where “ ‘one party has the 
right to rely for information upon the other, and the other giving the information 
owes a duty to give it with care.’ ”  (Id. at p. 171.)  In the court’s view, no such 
relationship could ever exist because Brandy “was injured by a product that [the 
defendant] did not manufacture.”  (Ibid.) 
At the core of the Foster court’s analysis is an erroneous assumption:  that 
generic drug manufacturers may “add or strengthen warnings and delete 
misleading statements on labels, even without prior FDA approval,” and that they 
can be sued for their failure to do so.  (Foster, supra, 29 F.3d at p. 170.)  In reality, 
generic drug manufacturers are legally obligated to conform their drug label to the 
brand-name manufacturer’s label (PLIVA, supra, 564 U.S. at p. 613) and, so long 
as they fulfill their “duty of ‘sameness’ ” (ibid.), cannot be sued in tort for 
deficiencies in the label.  (See id. at p. 624.)  Fortunately, the Fourth Circuit has 
since recognized its error.  Despite its categorical rejection of any duty in Foster, 
the court recently certified to the Supreme Court of Appeals of West Virginia the 
question “Whether West Virginia law permits a claim of failure to warn and 
negligent misrepresentation against a branded drug manufacturer when the drug 
33 
ingested was produced by a generic manufacturer.”  (McNair v. Johnson & 
Johnson Corp. (4th Cir. May 30, 2017, No. 15-1806) 2017 WL 2333843, *1.)3      
Even on its own terms, though, Foster’s reasoning proves unhelpful in 
construing California law, and finds no support in it.  First, California law does not 
conflate negligent misrepresentation and strict liability in the manner Foster 
believed was true of Maryland law.  (Conte, supra, 168 Cal.App.4th at p. 108.)  
Under our state’s law, there is no per se requirement in negligent 
misrepresentation actions that the misrepresentation be made by the product 
manufacturer.  Consider Hanberry v. Hearst Corp. (1969) 276 Cal.App.2d 680, 
where the plaintiff alleged that defective shoes caused her injuries.  (Id. at p. 682.)  
The Court of Appeal allowed the negligent misrepresentation claims to go forward 
against a nonmanufacturer — the publisher of Good Housekeeping magazine, 
                                              
3  
There is a sad coda to Foster.  The Fourth Circuit’s ruling relieved the 
brand-name manufacturer of any duty to warn of known or knowable risks of the 
drug when a plaintiff had been given the generic equivalent — and (contrary to 
Foster’s key assumption) the generic manufacturer had no ability to deviate from 
the brand-name manufacturer’s label.  As a result, it took until 2000 –– six years 
after Foster was decided –– for the FDA to modify the warning to recommend that 
promethazine not be given to children younger than two years old.  (Starke et al., 
Boxed Warning Added to Promethazine Labeling for Pediatric Use (2005) 352 
New Eng. J. Med. 2653, 2653.)  Four years thereafter, following further review of 
all adverse events that had been reported, the FDA added a boxed warning — the 
strongest type of warning (21 C.F.R. § 201.57(c)(1)) — stating that the drug 
should not be given to children younger than two years old because of the 
potential for fatal respiratory depression.  (Starke et al., supra, at p. 2653; Rostron, 
Prescription for Fairness:  A New Approach to Tort Liability of Brand-name and 
Generic Drug Manufacturers (2011) 60 Duke L.J. 1123, 1146-1147.)  This 
example underscores the reality that the FDA depends heavily on the brand-name 
drug manufacturer exercising its own unilateral ability to strengthen its warning 
label.  (Wyeth, supra, 555 U.S. at p. 579; see generally Weeks, supra, 159 So.3d at 
p. 676 [“The FDA has limited resources to monitor the approximately 11,000 
drugs on the market”].)  Yet Foster’s rule seriously undermines the brand-name 
manufacturer’s incentive to do so.      
34 
which had given the shoes its renowned seal of approval.  (Id. at p. 683.)  This seal 
appeared not only in the pages of its own magazine, but was used by the shoe 
manufacturer in its advertising as well as on the product and its packaging.  (Ibid.)  
The court acknowledged that the defendant publisher was neither the seller nor the 
manufacturer of the shoes, but nonetheless recognized a duty of care because of 
the allegations that the publisher “held itself out as a disinterested third party 
which had examined the shoes, found them satisfactory, and gave its 
endorsement”; and the plaintiff reasonably relied on the endorsement and 
“purchased the shoes because of [it].”  (Id. at pp. 686, 683.)  As to the plaintiff’s 
claim under strict liability, however, the court affirmed the trial court’s dismissal 
— declining to extend strict liability “to a general endorser who makes no 
representation it has examined or tested each item marketed.”  (Id. at p. 688; see 
also Conte, supra, 168 Cal.App.4th at pp. 101-102 [similarly distinguishing 
between strict liability and negligent misrepresentation theories].)4   
                                              
4  
Novartis suggests that we recently conflated strict liability and negligence 
in Webb v. Special Electric Co., Inc. (2016) 63 Cal.4th 167 when we observed that 
“ ‘there is little functional difference between the two theories in the failure to 
warn context.’ ”  (Id. at p. 187.)  Not so.  Webb’s observation was merely that the 
sophisticated user and sophisticated intermediary defenses applied to both theories 
of liability.  (Ibid.)  We did not categorically alter our longstanding recognition 
that “California law recognizes the differences between negligence and strict 
liability causes of action.”  (Johnson v. American Standard , Inc. (2008) 43 Cal.4th 
56, 71; see Saller v. Crown Cork & Seal Co., Inc. (2010) 187 Cal.App.4th 1220, 
1239 [“ ‘Negligence and strict products liability are separate and distinct bases for 
liability that do not automatically collapse into each other because the plaintiff 
might allege both when a product warning contributes to her injury’ ”].)   
 
O’Neil did not erase the distinction between strict liability and negligence, 
either.  Far from conflating the two theories, we said simply that “[t]he same 
policy considerations that militate against imposing strict liability in this situation 
apply with equal force in the context of negligence.”  (O’Neil, supra, 53 Cal.4th at 
p. 366, italics added.)  As we have demonstrated above, O’Neil is soundly 
distinguishable from the situation here.       
35 
Second, California law places greater weight on the element of 
foreseeability in the duty analysis than does Maryland law.  Indeed, this state 
treats foreseeability as “[t]he most important factor” (Kesner, supra, 1 Cal.5th at 
p. 1145), and we do not narrowly circumscribe the kinds of relationships that must 
exist between the plaintiff and the defendant as a predicate to imposing a duty on 
the defendant to prevent injuries arising from its own conduct.  (Id. at p. 1163; see 
Randi W., supra, 14 Cal.4th at p. 1077 [one who negligently provides false 
information to another can owe a duty of care to a third person “who did not 
receive the information and who has no special relationship with the provider”].)5  
By contrast, Foster found that a “duty . . . arises” under Maryland law only “when 
there is ‘such a relation that one party has the right to rely for information upon the 
other, and the other giving the information owes a duty to give it with care.’ ”  
(Foster, supra, 29 F.3d at p. 171, quoting Weisman v. Connors (Md. 1988) 540 
A.2d 783, 790.)  Foster then summarily concluded that “[t]here is no such 
relationship between the parties to this case, as Brandy Foster was injured by a 
product that [defendant] did not manufacture.”  (Foster, at p. 171.)  Even this 
explanation, though, seems to overlook the fact that there is never a direct 
relationship between a prescription drug manufacturer and the ultimate consumer.  
A consumer may obtain a prescription medication only through the physician as a 
                                              
5  
We therefore do not find persuasive those out-of-state cases discounting the 
role of foreseeability (see, e.g., Huck v. Wyeth, Inc., supra, 850 N.W.2d at p. 376 
(plur. opn. of Waterman, J.) [“ ‘foreseeability should not enter into the duty 
calculus’ ”]) or requiring the existence of a specific type of relationship between 
the plaintiff and the defendant (see, e.g., Moretti v. Wyeth, Inc. (9th Cir. 2014) 579 
Fed. Appx. 563, 564 [construing negligent misrepresentation, under Nevada law, 
to “ ‘require[], at a minimum, some form of relationship between the parties’ ”]; 
Schrock v. Wyeth, Inc. (10th Cir. 2013) 727 F.3d 1273, 1282 [“Oklahoma courts 
have also required a relationship between the defendant company and the product 
at issue for other theories of liability, including negligence”]).     
36 
learned intermediary.  (See Carlin, supra, 13 Cal.4th at pp. 1116, 1126.)  A 
physician, in turn, typically relies on the drug’s warning label, the contents of 
which (regardless of whether the medication ultimately dispensed is the brand-
name or generic bioequivalent) are controlled by the brand-name manufacturer.  It 
is difficult to understand why the relationship between the brand-name 
manufacturer and the physician must be deemed to evaporate simply because an 
insurance company or pharmacist subsequently decides to dispense a generic 
version of the drug that bears the warning label crafted by the brand-name 
manufacturer.     
Third, in one crucial respect, Foster is like the vast majority of the out-of-
state cases on which Novartis relies:  it arose in federal court under diversity 
jurisdiction.  Federal courts sitting in diversity are “extremely cautious” about 
recognizing innovative theories under state law (Combs v. Int’l Ins. Co. (6th Cir. 
2004) 354 F.3d 568, 578) and are bound to “apply the applicable state law as it 
now exists.”  (Foster, supra, 29 F.3d at p. 171; see generally Gluck, Intersystemic 
Statutory Interpretation:  Methodology as “Law” and the Erie Doctrine (2011) 
120 Yale L.J. 1898, 1939 [federal courts “pick the narrowest possible answer, 
usually the one that does the least to change the status quo, regardless of its 
predictions of what the state court would do”].)  Because only a handful of 
jurisdictions have adopted the duty recognized in Conte, supra, and followed by 
the Court of Appeal here, it is not surprising that federal courts have been reluctant 
to interpret the law of various states to embrace it.  But the task of this court is not 
to “ ‘opt for the interpretation that restricts liability, rather than expands it’ ” until 
someone else tells us otherwise.  (Travelers Indem. Co. v. Dammann & Co., Inc. 
(3d Cir. 2010) 594 F.3d 238, 253; see also Germain v. Teva Pharmaceuticals, 
USA, Inc. (In re Darvocet, Darvon, & Propoxyphene Products Litigation) (6th Cir. 
2014) 756 F.3d 917, 937 [“federal courts must be cautious”].)  It is instead 
37 
emphatically the province of this court to declare what the law is.  By contrast, 
Novartis’s collection of federal decisions merely attempt to predict the law of 
other states, while operating under a presumption against expanding liability.  (See 
Schrock v. Wyeth, Inc., supra, 727 F.3d at p. 1290 [“As a federal court . . . we have 
limited authority to correct this potential injustice.  It is for the state courts, rather 
than this panel, to engage in the delicate policy considerations predicate to the 
expansion of the scope of state tort law”].)  They are of little use in discharging 
our task. 
We likewise discount decisions from those jurisdictions that differ from 
California by categorically excluding from liability certain defendants (see, e.g., 
Huck v. Wyeth, Inc., supra, 850 N.W.2d at p. 371 (plur. opn. of Waterman, J.) 
[“the tort of negligent misrepresentation does not apply to sellers of products but 
rather is limited to those in the business or profession of supplying information for 
the guidance of others”]) or certain injuries (see, e.g., Flynn v. American Home 
Products Corp. (Minn.Ct.App. 2001) 627 N.W.2d 342, 351 [“the Minnesota 
Supreme Court has recognized negligent misrepresentation involving damages 
only for pecuniary loss, and has expressly declined to recognize the tort of 
negligent misrepresentation involving the risk of physical harm”]) from the tort of 
negligent misrepresentation.  And we find unhelpful the views of those 
jurisdictions that (federal courts predict) will recharacterize under their product 
liability act or similar rule all claims against a product manufacturer, no matter the 
theory, as product liability actions, which can be asserted only against the 
manufacturer of the product.  (See, e.g., Germain, supra, 756 F.3d at pp. 941-954 
[construing the laws of Arkansas, Connecticut, Florida, Georgia, Illinois, 
Kentucky, Louisiana, Maryland, Mississippi, Nebraska, New York, North 
Carolina, Ohio, Texas, Washington, and West Virginia]; Phelps v. Wyeth, Inc. 
(D.Or. 2012) 857 F.Supp.2d 1114, 1121 [Oregon law]; Stanley v. Wyeth, Inc. 
38 
(La.Ct.App. 2008) 991 So.2d 31, 33-34 [noting the “numerous cases where the 
negligent misrepresentation claims were . . . preempted by . . . a state’s enactment 
of products liability law”].)    
At core, what Novartis seems to want is more than just an exception to the 
general duty of care applicable in California — an exception constructed to avoid 
liability where a biologically equivalent product is sold and the warning label used 
is required by federal law to be the label that the brand-name manufacturer 
controls.  Perhaps because there is no logical basis to justify such an exception, 
Novartis instead seeks a more categorical result, though one no easier to justify — 
i.e., an unequivocal declaration that California law relieves a manufacturer of any 
failure-to-warn liability relating to another manufacturer’s products.  True:  An 
exception to California’s general duty of care is ordinarily applicable to relieve a 
manufacturer of the duty to warn consumers about a product’s risks where the 
product is that of another manufacturer.  (O’Neil, supra, 53 Cal.4th at pp. 364-
366.)  For good reason:  A product manufacturer ordinarily will have no control 
over the design or safety of another manufacturer’s product, the other 
manufacturer’s use of dangerous materials, or any warnings the other 
manufacturer might place on the product.  (Id. at pp. 350, 365.)  Nor would there 
be any reason to think that a manufacturer has the ability to influence a customer’s 
decision to buy another manufacturer’s product.  (Id. at p. 365.)  Without such 
predicate connections between one manufacturer and another, it would be difficult, 
if not impossible, for a manufacturer to foresee the dangers lurking in the 
seemingly limitless number of other products that might be used with or in its 
product.  (Ibid.)  But prescription drug markets are different.  They present the 
unusual situation where one entity’s misrepresentations about its own product 
foreseeably and legally “contributed substantially to the harm” caused by another 
entity’s product (i.e., the generic drug bearing the warning label drafted by the 
39 
brand-name manufacturer).  (O’Neil, at p. 362.)  That key circumstance 
distinguishes the situation here from those involving the general run of products.   
The negligence causes of action are potentially viable because of the 
allegedly deficient representations in Novartis’s warning label.  Novartis is not 
being sued for dangers inherent in the generic terbutaline manufactured by some 
other entity.  Nor do plaintiffs claim that any product manufactured by Novartis 
caused them harm.  They claim instead that allegedly deficient representations and 
omissions in Novartis’s warning label caused them harm.  The fact that Novartis 
also manufactured a product is extrinsic to the analysis and does not insulate it 
from liability for its alleged misrepresentations.  (See Conte, supra, 168 
Cal.App.4th at pp. 109-110; accord, Weeks, supra, 159 So.3d at p. 672 [“the [tort] 
claims are not based on the manufacturing of the product but instead allege that 
the label — drafted by the brand-name manufacturer and required by federal law 
to be replicated verbatim on the generic version of the medication — failed to 
warn”].)     
B.  Whether Warning Label Liability Was Extinguished as a Matter of Law 
When Novartis Divested Ownership of Brethine 
We have determined that Novartis owed a duty of care to those who were 
prescribed Brethine or its generic bioequivalent in reliance on Novartis’s warning 
label.  Novartis claims that the demurrer should nonetheless be sustained without 
leave to amend on the ground that it sold the Brethine NDA to aaiPharma in 2001 
and no longer had control over its warning label in 2007, when plaintiffs’ mother 
was prescribed terbutaline.  So we now consider whether Novartis should be 
relieved of all liability for its allegedly negligent failure to update the label as a 
matter of law, despite the fact that aaiPharma continued using the label Novartis 
had crafted.     
40 
Plaintiffs fault Novartis.  But they do not claim the company was 
responsible for any negligent acts or omissions after the transfer of ownership.  
After all, under FDA regulations, only the current NDA holder has the authority to 
unilaterally modify the drug’s warning label.  Plaintiffs claim instead that they 
were harmed by Novartis’s failure to update the label prior to transferring the 
NDA to aaiPharma, in that aaiPharma continued to use the same warning label 
until at least 2007, when their mother was prescribed terbutaline.  In effect, 
plaintiffs claim that the Brethine warning label was deficient at the time Novartis 
transferred the NDA –– and it was reasonably foreseeable that it would remain 
deficient, given the incentives facing any successor manufacturer.   
To address this aspect of plaintiffs’ claim, we must determine whether to 
recognize an exception to a brand-name manufacturer’s duty to warn.  Is a brand-
name drug manufacturer’s duty to warn extinguished simply because the 
deficiency in the label caused the injured plaintiff to be exposed to the drug after 
the manufacturer had transferred the NDA to a successor?  Foreseeablity of harm 
is the touchstone of our duty analysis.  (Kesner, supra, 1 Cal.5th at p. 1148.)  
Plaintiffs allege (or claim they can allege) that Novartis negligently provided 
inaccurate and incomplete warnings about the safety of its drug, that it was 
foreseeable the new NDA holder (aaiPharma) would continue to use Novartis’s 
warning label without modification, that their mother’s physician relied on the 
deficient warning label drafted by Novartis and reiterated by aaiPharma in 
prescribing terbutaline, and that they were harmed in utero by the terbutaline 
ingested by their pregnant mother.  Whether aaiPharma would also be liable for 
any deficiencies in its warning label should not, in plaintiffs’ view, automatically 
negate Novartis’s culpability.    
41 
1.  Foreseeability and related factors 
We explained above why it was foreseeable that Novartis’s failure to 
update the Brethine warning label could affect fetuses exposed to the generic 
version of the drug in utero.  And there is no dispute that plaintiffs have alleged 
injury.  Although Novartis was no longer responsible for updating the warning 
label at the time plaintiffs’ mother was prescribed the drug, aaiPharma was using 
the same label it had inherited from Novartis.  According to plaintiffs, neither 
NDA holder had sufficient financial incentive to update the label:  Nearly half of 
all prescriptions for Brethine or its generic equivalent were to slow preterm labor.  
Under the circumstances, it was certainly foreseeable that aaiPharma would be no 
more conscientious about updating the warning label than Novartis allegedly had 
been. 
Novartis contends the connection between its alleged negligence and 
plaintiffs’ injury was extremely remote, as it had ceased producing the drug six 
years before the injury.  But it is not clear why liability should turn on Novartis’s 
role in the manufacturing process.  What warning label liability stems from is 
Novartis’s failure to warn about a drug’s risks, not its production of a defective 
drug.  The complaint alleges that Novartis and aaiPharma were concurrent 
tortfeasors whose liability stemmed from failure to warn, because each negligently 
failed to update the warning label.   
We agree that Novartis’s failure to update the warning label could 
foreseeably cause harm to plaintiffs.  Under the circumstances arising from the 
federal regulatory regime for prescription drugs, a successor manufacturer’s 
negligent failure to update the warning label is foreseeable.  According to federal 
regulatory rules, a successor brand-name drug manufacturer has no choice but to 
use the former manufacturer’s warning label — or a warning label at least as 
strong as the one used by the previous brand-name manufacturer — unless 
42 
directed otherwise by the FDA.  (Wyeth, supra, 555 U.S. at p. 568 [“Generally 
speaking, a manufacturer may only change a drug label after the FDA approves a 
supplemental application”]; see 21 C.F.R. §§ 314.70(b)(2)(v), (c)(6)(iii), 
314.72(b).)  Unlike other product manufacturers (cf. conc. & dis. opn., post, at pp. 
2-3), a brand-name drug manufacturer knows that, without FDA action, a 
successor manufacturer will produce a drug identical to the original in ingredients 
and design, and bearing an identical warning label (or a label that is at least as 
strong as the one used by the former manufacturer).  (Cf. Cadlo v. Owens-Illinois, 
Inc. (2004) 125 Cal.App.4th 513, 516 [affirming summary judgment in favor of a 
former asbestos insulation manufacturer where there was no evidence the 
manufacturer “had an actual connection with the design, manufacture or 
distribution” of the product causing harm]; id. at p. 520 [distinguishing cases 
where “the maker of the misrepresentation reasonably foresaw that the 
intermediary would repeat the misrepresentation to another person”].)6  Because 
nearly half of all terbutaline prescriptions at the time of sale were written to 
prevent premature labor, it was also reasonably foreseeable that aaiPharma would 
be reluctant to add warnings about the risks to fetal brain development.  In sum, a 
successor drug manufacturer’s negligent conduct can be “ ‘derivative of [the 
brand-name drug manufacturer’s] allegedly negligent conduct’ ” and thus 
foreseeable.  (Kesner, supra, 1 Cal.5th at p. 1148.)   
                                              
6  
Nor can the concurring and dissenting opinion derive any support from the 
scattering of federal district court cases involving a challenge to the adequacy of a 
medical device label.  Federal law preempts state tort actions based on deficient 
warnings for medical devices.  (Riegel v. Medtronic, Inc. (2008) 552 U.S. 312, 
329; cf. Wyeth, supra, 555 U.S. at p. 574 [“despite its 1976 enactment of an 
express pre-emption provision for medical devices, [citation], Congress has not 
enacted such a provision for prescription drugs”].)  
43 
Novartis highlights the six years that elapsed between its surrender of the 
NDA for the drug at issue in this case and the decision to prescribe terbutaline to 
plaintiffs’ mother.  Yet the gap between the transfer of this particular NDA and the 
time at which plaintiffs’ mother was prescribed terbutaline does not bear on the 
question of duty, “which must be addressed at a higher level of generality.”  
(Kesner, supra, 1 Cal.5th at p. 1158.)  In determining whether to create an 
exception to a brand-name drug manufacturer’s duty of care, we do not evaluate 
“ ‘whether a particular plaintiff’s injury was reasonably foreseeable in light of a 
particular defendant’s conduct,’ ” but “ ‘whether the category of negligent 
conduct at issue is sufficiently likely to result in the kind of harm experienced that 
liability may appropriately be imposed . . . .’ ”  (Cabral, supra, 51 Cal.4th at p. 
772.)  So the relevant inquiry is whether a successor drug manufacturer is 
sufficiently likely to continue using the warning label it inherited from the prior 
brand-name manufacturer, even when that label was deficient at the time the NDA 
was transferred.   
It is true enough that a successor drug manufacturer has an obligation, 
under state as well as federal law, to ensure adequacy of the warning label.  But 
the scenario at issue here implicates whether a successor drug manufacturer is 
sufficiently likely –– as a matter of law –– to modify the warning label when the 
brand-name manufacturer, which labored under an identical obligation, 
negligently failed to do so.  In such circumstances, it is at least plausible that a 
successor manufacturer may choose to undertake only a cursory investigation of 
the medical literature, on the assumption that the prior manufacturer must have 
done a more thorough inquiry during the period that it was responsible for 
maintaining the warning label.  This option will seem especially attractive when 
the prior manufacturer has greater resources or expertise than its successor.  A 
successor manufacturer may also undertake an adequate inquiry but make no 
44 
changes to the label in close cases, partially or entirely trusting the judgment of the 
prior manufacturer.  Or a successor manufacturer, like the prior manufacturer, may 
fear an adequate warning would damage the market share for the drug and balance 
its lost revenue and potential exposure in the same way as the prior manufacturer.  
Indeed, plaintiffs claim that neither NDA holder wanted to jeopardize Brethine’s 
use as a tocolytic, which accounted for almost half of the drug’s market share.  
Any or all of these factors could explain why a drug’s warning label may prove 
“stickier” than what is optimal to protect public safety at a reasonable cost, and 
why a successor drug manufacturer would not be categorically distinguishable 
from the prior manufacturer in its likelihood of being conscientious about its 
obligations to disclose relevant risks.   
Under the “general” rule, “ ‘ “every person has a right to presume that 
every other person will perform his duty and obey the law.” ’ ”  (Webb v. Special 
Electric Co., Inc., supra, 63 Cal.4th at p. 191.)  But we have never allowed a 
defendant to excuse its own negligence as a matter of law simply by asserting that 
someone else should have picked up the slack and discharged the duty at issue.  
(See Stewart v. Cox (1961) 55 Cal.2d 857, 864 [“The fact that a third person does 
not perform his duty to protect the plaintiff from harm, either because he makes no 
effort or through his negligence does not succeed, is not a superseding cause”].)  
Nor have we permitted a negligent actor to evade liability simply because another 
party may also be liable for a similar tort.  (See, e.g., Beacon Residential 
Community Assn. v. Skidmore, Owings & Merrill LLP (2014) 59 Cal.4th 568, 583 
(Beacon); accord, Humble Oil & Refining Co. v. Martin (Tex. 1949) 222 S.W.2d 
995, 1001 [“there is a distinction between the general axiom that a person is not 
bound to anticipate the negligence of others and the idea that one may always 
discharge a duty of due care to the public by relying on performance by another of 
the same duty owed by the latter”].)  So while “ ‘[a] person who, himself, is 
45 
exercising ordinary care, has a right to assume that others, too, will perform their 
duty under the law’ ” — and thus may not be negligent in failing to anticipate 
injury that results “ ‘ only from a violation of law or duty by another’ ” — the 
general rule does not apply when “ ‘it is reasonably apparent to one, or in the 
exercise of ordinary care would be apparent to him, that another is not going to 
perform his duty.’ ”  (Stickel v. San Diego Elec. Ry. Co. (1948) 32 Cal.2d 157, 
166, first and second italics added; see id. at pp. 166-167 [“It is but a statement as 
to that common type of negligence, the unreasonable failure to observe what is 
going on about one, including the negligence of others. ‘One may not continue to 
assume that the law is being observed after knowing or having an opportunity, by 
the use of reasonable care, to know that it is not being observed’ ”]; Harris v. 
Johnson (1916) 174 Cal. 55, 58 [“ ‘The general rule . . . that every person has a 
right to presume that every person will perform his duty’ ” applies only “ ‘in the 
absence of reasonable ground to think otherwise’ ”].)  Few if any entities would be 
in a position to know better that the law “ ‘is not being observed’ ” (Stickel, at p. 
167) than a brand-name drug manufacturer that itself had negligently failed to 
update the label.  So the assumption underlying the brand-name drug 
manufacturer’s duty is not at all “that successor corporations will routinely ignore 
th[eir] duty.”  (Conc. & dis. opn., post, at p. 5, italics added.)  It’s that when a 
brand-name drug manufacturer has ignored its own duty, there is a risk that the 
successor manufacturer will adopt the same strategy.  Under these circumstances, 
categorically justifying a manufacturer’s neglect of that risk requires heroic, and 
ultimately unreasonable, assumptions distinguishing an original brand-name 
manufacturer’s behavior from that of its successors.  For these reasons, we find it 
reasonably foreseeable that a successor drug manufacturer could continue to use 
the same label it inherited, even when the label was deficient. 
46 
2.  Considerations of public policy   
According to Novartis, the policy of preventing future harm would not be 
advanced by subjecting the brand-name drug manufacturer to liability after it has 
already divested itself of the drug and no longer has control over the warning 
label.  But in examining the prevention of future harm, we undertake the duty 
analysis “look[ing] to the time when the duty was assertedly owed.”  (Kesner, 
supra, 1 Cal.5th at p. 1150.)  It is during the time Novartis owned the drug that 
both its legal duty and its power to discharge that duty converge.  At that point, 
Novartis did have control over the warning label and could have modified it, 
without waiting for FDA approval, to warn of the risks to fetal brain development.  
Recognizing a brand-name drug manufacturer’s potential responsibility for 
injuries proximately caused by deficiencies in its warning label –– regardless of 
whether the injury occurred before or after divestment — provides a further 
incentive to the brand-name manufacturer to update the label as soon as it knows 
(or should have known) of the unwarned risks.  Consider, on the other hand, the 
implications of allowing the brand-name manufacturer to shield itself from 
liability as soon as it transfers ownership to another manufacturer, as Novartis 
proposes.  What such a rule would do is encourage an economically rational 
brand-name manufacturer to transfer the NDA, rather than add a warning to the 
label, since an updated label would diminish the utility (and thus the value) of the 
drug.7  Such a scenario obviously poses greater risks to consumer safety relative to 
the alternative.         
                                              
7  
This case does not present the question, and we do not decide, whether a 
brand-name manufacturer would remain liable for deficiencies in its warning label 
when the FDA has formally withdrawn its approval of the NDA and has 
determined “that the drug was voluntarily withdrawn from sale for reasons other 
than effectiveness or safety.”  (Lasker, supra, 82 Def. Counsel J. at p. 306; see 21 
C.F.R. § 314.150; 78 Fed.Reg., supra, at p. 67993.)    
47 
Novartis counters with a different scenario.  It claims that under plaintiffs’ 
regime, a successor brand-name drug manufacturer would have an incentive to 
maintain the identical label without change so that the former brand-name 
manufacturer would be forced to share in any liability.  We are skeptical.  When it 
is economically rational for the manufacturer to update the label, it will update the 
label –– regardless of the prospect that a prior manufacturer might share in the 
liability for its own negligent failure to update the label.  Even in a marginal case, 
though, it does not seem especially likely that a successor drug manufacturer 
which knows or should know of an unwarned risk would choose to leave a 
warning label unchanged simply to preserve the possibility that –– if the label 
remained the same as under the former manufacturer –– the former manufacturer 
could be a codefendant in a future tort action.  It seems implausible that a 
successor manufacturer would take that gamble if its proportional share of fault 
would be ever increasing as medical research became more confident about the 
link between the drug and some adverse effect.  After all, the successor 
manufacturer could avoid liability altogether by updating the label to warn about 
the risk.     
The more substantial danger is that neither manufacturer will have 
sufficient incentive to update the label.  Unless there is warning label liability, it 
will be economically rational in some circumstances for a brand-name 
manufacturer to offload the drug to a successor rather than update the warning 
label.  And if the brand-name manufacturer fails to update the label to disclose a 
known or knowable risk, economic interests and simple inertia may lead the 
successor manufacturer to the same strategy.  (See ante, at pp. 44-45.)  The better 
rule is to provide appropriate incentives for the brand-name manufacturer to 
update the warning label at the earliest possible time, given that the successor 
manufacturer cannot remove any aspect of the warning without FDA approval.          
48 
To determine how best to incentivize a drug manufacturer to provide 
prompt warnings, we turn to the very factors on which Novartis trains its attention:  
the extent of the duty’s burden on the defendant and the consequences to the 
community.  Novartis complains first that plaintiffs’ proposed rule would lead to 
immeasurable and perpetual liability for brand-name drug manufacturers.  This 
appears to be an overstatement.  Only during the time it holds the NDA does the 
brand-name drug manufacturer have a duty of care.  Although a breach of that 
duty can have enduring effects — effects that do not magically disappear merely 
because the brand-name manufacturer no longer holds the NDA — a plaintiff 
would still need to prove that the injury was foreseeable at the time the brand-
name manufacturer held the NDA, that the brand-name manufacturer’s deficient 
label proximately caused the injury, and that the prescribing physician relied on 
the brand-name manufacturer’s misrepresentations or omissions.  The passage of 
time would naturally tend to undermine a plaintiff’s ability to prove that an injury 
was foreseeable at that earlier stage,8 that the physician actually relied on the 
defendant’s warning label, or that the defendant’s negligence proximately caused 
injury.  (See Beacon, supra, 59 Cal.4th at p. 583.)  An extended period of time 
also presupposes a lengthy latency period before an injury (or its connection to the 
drug) manifested itself, further complicating the showing of foreseeability, 
reliance, or causation.  (Cf. PLIVA, supra, 564 U.S. at p. 625, fn. 9 [“the FDA 
                                              
8  
Indeed, approximately half of the studies cited in the first amended 
complaint to demonstrate a link between terbutaline exposure in pregnancy and 
fetal brain development postdated Novartis’s sale to aaiPharma.  To avoid the 
distortion caused by hindsight bias, trial courts should be careful to protect the jury 
from needlessly being exposed to or considering scientific studies connecting a 
drug to some harm where those studies postdate transfer of the NDA.      
 
49 
informs us that ‘[a]s a practical matter, genuinely new information about drugs in 
long use . . . appears infrequently’ ”].)   
Yet the question before us involves neither causation nor these other 
elements of negligence.  What role the six-year gap between Novartis’s transfer of 
the NDA to aaiPharma and plaintiffs’ exposure to terbutaline might play in 
plaintiffs’ ability to prove these remaining elements is beyond the scope of this 
proceeding.  We granted review to decide only the threshold question of a brand-
name drug manufacturer’s duty of care and therefore have no occasion to address 
other arguments Novartis might advance to defeat liability.  (See Kesner, supra, 1 
Cal.5th at p. 1157.)9  But we reject Novartis’s contention that a finding of duty 
will result in perpetual liability for brand-name drug manufacturers as well as the 
burden of a trial to address every claim of harm.  Time’s effect on causation, while 
                                              
9  
Recognizing a brand-name drug manufacturer’s duty of care in these 
circumstances does not prevent the manufacturer from arguing in a given case that 
it did not breach its duty given the scientific knowledge at the time; that its label 
could not have proximately caused the harm given the passage of time between the 
transfer of the NDA and the plaintiff’s exposure to the drug, as well as the 
successor’s exclusive responsibility for promoting the assertedly dangerous off-
label use of the drug (see Lyman v. Pfizer, Inc. (D.Vt. July 20, 2012, No. 2:09-CV-
262) 2012 WL 2970627, *17); or that its disclosure of the unwarned risks to the 
successor manufacturer severed any link between its own label and the harm.  But 
our task here is not to decide whether there should be “an exception to the general 
duty of reasonable care on the facts of the particular case before us, but whether 
carving out an entire category of cases from that general duty rule is justified by 
clear considerations of policy.”  (Cabral, supra, 51 Cal.4th at p. 772.) 
 
The concurring and dissenting opinion finds “perhaps most troubling” the 
court’s unwillingness to “predict” when the gap between transfer of the NDA and 
exposure to the drug will be so remote as to preclude a finding of proximate cause.  
(Conc. & dis. opn., post, at p. 9.)  But neither party has briefed the issue of 
proximate cause, nor is proximate cause fairly encompassed within the issue 
presented –– indeed, the issue presented involves exclusively the tort law element 
of duty.  Novartis remains free to contest the existence of proximate cause — as 
well as any of the other elements of negligence and negligent misrepresentation.                
50 
ordinarily a question of fact, becomes a question of law “ ‘where the facts are such 
that the only reasonable conclusion is an absence of causation.’ ”  (State Dept. of 
State Hospitals v. Superior Court (2015) 61 Cal.4th 339, 353; see id. at p. 357 
[sustaining demurrer where the theory of causation was “conjectural, depending 
on a long series of determinations”]; accord, Lyman v. Pfizer, Inc., supra, 2012 
WL 2970627 at p. *17 [affirming grant of summary judgment to a former brand-
name drug manufacturer on causation grounds].)  Similarly, the question of breach 
can be decided as a matter of law where “no reasonable jury could find the 
defendant failed to act with reasonable prudence under the circumstances.”  
(Cabral, supra, 51 Cal.4th at p. 773.)  The burden of a potential trial on a brand-
name drug manufacturer that, under the facts presented, acted unreasonably in 
failing to update the warning label before transferring the NDA — and whose 
negligence proximately caused harm to those exposed to the drug — is not a 
compelling justification for carving out an entire category of cases from the 
general duty of reasonable care.  (See id. at p. 772.)            
Moreover, the greater the gap between transfer of the NDA and the 
plaintiffs’ exposure to the drug, the greater the likelihood that the NDA would 
have been transferred to yet another manufacturer, which would multiply the 
number of potential defendants available to share responsibility for damages.  
Because a defendant’s liability for noneconomic damages is not joint but several 
(Civ. Code, § 1431.2, subd. (a)), a negligent brand-name manufacturer would be 
liable for noneconomic damages only in an amount that was directly proportional 
to its percentage of fault.  (Ibid.)   
Indeed, a brand-name manufacturer could entirely avoid the prospect of 
extended exposure by including an indemnification provision when it transferred 
ownership of the NDA.  (See, e.g., Conte, supra, 168 Cal.App.4th at p. 95, fn. 1.)  
This might lower the sales price of the brand-name drug in the transaction, but not 
51 
in any way that fails to reflect the true costs and benefits of being the NDA holder 
or that is unfair to the seller.  Meanwhile, an indemnification provision may have 
the salutary effect of focusing both the seller and the purchaser, at a critical time, 
on the existence of any known or knowable risks not reflected in the warning 
label.  And, as before, Novartis identifies no reason why it could not insure against 
the effects of any negligence related to the warning label for its drug.  (See 
Vasilenko v. Grace Family Church (2017) 3 Cal.5th 1077, 1091.)  Commercial 
general liability insurance policies cover injuries that accrue from multiple 
occurrences over a period of years (see Montrose Chemical Corp. v. Admiral Ins. 
Co. (1995) 10 Cal.4th 645), and tail coverage is available for injuries caused by 
the insured that did not manifest themselves until well after the manufacturer 
either sold the product or shut down its operations.  (See State of California v. 
Continental Ins. Co. (2012) 55 Cal.4th 186, 195-196.)  
A somewhat analogous situation lay at the heart of a case the court 
addressed recently.  In Centinela Freeman Emergency Medical Associates v. 
Health Net of California, Inc. (2016) 1 Cal.5th 994 (Centinela Freeman), we 
considered the circumstances under which a health care service plan could transfer 
its financial responsibility to pay for its enrollees’ emergency medical services to 
its contracting medical providers.  Under state and federal law, licensed hospitals 
are required to provide emergency medical care to anyone, regardless of the 
patient’s ability to pay.  A health care service plan, in turn, is required to 
reimburse a noncontracting emergency service provider for necessary services, but 
may delegate this responsibility to another entity, such as an individual practice 
association (IPA).  (Id. at pp. 1000-1001.)  The health care service plans in 
Centinela Freeman delegated their financial responsibility for emergency services 
to their contracting IPAs, which were (or became) financially insolvent and 
eventually went out of business.  (Id. at p. 1001.)  When the IPAs failed to 
52 
reimburse the plaintiff emergency service providers for the care they had provided 
to enrollees of the defendant health care services plans, the plaintiffs sued the 
health plans for payment.  (Ibid.)   
The defendant health care service plans made an argument that echoed what 
Novartis argues here:  that they had lawfully transferred their legal responsibilities 
to another entity and had therefore terminated any duty of care.  We unanimously 
rejected the argument that the delegation of financial responsibility to an IPA 
necessarily relieved the health care service plans of any obligation to pay for its 
enrollees’ covered emergency care.  (Centinela Freeman, supra, 1 Cal.5th at p. 
1001-1002.)  What we held instead was that a health care service plan owes 
certain duties to noncontracting emergency service providers:  first, a duty at the 
outset not to delegate its financial responsibility to an IPA “that it knew or should 
have known would not be able to pay for emergency service and care provided to 
the health plan’s enrollees” (id. at p. 1002); and second, a duty not to continue or 
renew a delegation to an IPA “when it knows or should know that there can be no 
reasonable expectation that its delegate will be able to reimburse noncontracting 
emergency service providers for their covered claims.”  (Ibid.)   
Centinela Freeman tends to undermine Novartis’s absolutist position that a 
lawful transfer of its duty to another entity necessarily terminated its liability for 
its own negligence.  Under our ruling in Centinela Freeman, a health care service 
plan remains responsible for the costs of its enrollees’ emergency medical care, 
despite a lawful delegation of that financial responsibility, if the plan knows or 
should know the IPA would be unable to fulfill that financial responsibility.  
(Centinela Freeman, supra, 1 Cal.5th at pp. 1001-1002.)  Here, we find that a 
brand-name drug manufacturer can be liable for the effects of its deficient warning 
label, despite transferring the NDA to a successor, if the harm is reasonably 
foreseeable and is proximately caused by the label.     
53 
Novartis’s argument echoes the position we rejected in Centinela Freeman.  
Although some differences exist between these two scenarios, they do not 
undermine our conclusion that a brand-name drug manufacturer owes a duty to all 
those who may foreseeably and proximately be harmed by its deficient warning 
label.  Unlike the duty we recognized in Centinela Freeman, warning label 
liability does not constitute a continuing duty of care.  (See Centinela Freeman, 
supra, 1 Cal.5th at p. 1019 [“We agree that a health care service plan has a 
continuing duty of care to noncontracting emergency service providers”].)  The 
conduct giving rise to a brand-name drug manufacturer’s liability can occur only 
during the period that it holds the NDA.  Negligent conduct during that period 
may have effects that extend beyond the transfer of the NDA, but a brand-name 
manufacturer is not subject to liability for any of its actions that occur after 
transfer of the NDA.  Moreover, in this case, unlike in Centinela Freeman, we are 
analyzing a duty to prevent physical harm.  Such a duty is broader than the duty to 
prevent pecuniary loss.  (Rest.2d Torts § 311, com. a.)         
Novartis renews its claim that warning label liability would severely chill 
both the innovation and marketing of new drugs if imposed after the brand-name 
manufacturer exits the market.  Yet once again, it offers neither evidence nor a 
persuasive rationale to support its contention –– and no reason for us to prefer 
some unknown increment of drug development over the urgent need to 
compensate a victim whose injury was foreseeably and proximately caused by a 
brand-name manufacturer’s negligence.  (See Carlin, supra, 13 Cal.4th at p. 1117 
[“Upjohn offers no clear or sufficient basis for concluding that research and 
development will inevitably decrease” because of failure-to-warn claims]; id. at p. 
1116, fn. 6 [discounting the risk of overwarning because of the lack of evidence]; 
cf. Kesner, supra, 1 Cal.5th at p. 1156 [noting the defendants “cite no evidence to 
suggest such [preventive] measures would have been unreasonably costly”].)  
54 
After all, the duty imposed here merely reinforces the brand-name drug 
manufacturer’s existing duty to update and maintain the warning label.  It does not 
require a brand-name drug manufacturer to do anything new.         
We explained earlier why significant moral blame attaches to the failure to 
warn about a drug’s risks when the brand-name drug manufacturer knew or should 
have known about those risks.  The fact that the brand-name manufacturer has 
since exited the market does not alter the calculus.  Under plaintiffs’ theory, the 
actionable conduct occurred while the manufacturer still had control over the 
warning label.  Had Novartis updated the warning label before surrendering the 
NDA, the federal regulations make it very likely that the warning would have 
remained on the label in 2007.  (See Wyeth, supra, 555 U.S. at p. 568.)  Although 
it can be difficult to assess the full extent of moral blame before a factual record 
has been developed (Kesner, supra, 1 Cal.5th at p. 1151), concealment of a drug’s 
effects on the fetal brain for the purpose of preserving the drug’s share of the 
premature labor drug market and thus inflating the sales price of the NDA would 
be especially objectionable.  So Novartis fails to show how “ ‘clear considerations 
of policy’ ” justify a categorical exception to the duty of care.  (Kesner, supra, 1 
Cal.5th at p. 1144.)  What the Rowland factors support instead is the conclusion 
that Novartis had a duty to warn about the potential risks of its drug, regardless of 
whether the consumer received the brand-name or generic bioequivalent, and that 
liability for the asserted breach of that duty did not end as a matter of law at the 
moment Novartis sold its rights to aaiPharma, an allegedly concurrent tortfeasor.  
A contrary rule would convey to Novartis and to similarly situated drug 
manufacturers the unjustified benefit of an exception to the general duty of care, 
incentivizing brand-name drug manufacturers that know or should know of 
unwarned risks to unload a problematic drug on another entity instead of 
modifying the drug’s warning label to include those hazards. 
55 
The concurring and dissenting opinion makes much of the fact that no other 
jurisdiction has yet recognized a brand-name drug manufacturer’s duty to maintain 
a warning label in these circumstances.  The legal landscape was just as bare when 
the Court of Appeal recognized a brand-name drug manufacturer’s duty to 
consumers of the generic bioequivalent drug (see Conte, supra, 168 Cal.App.4th at 
p. 101) — a duty we unanimously affirm here.  Rarely, if ever, do jurisdictions 
face precisely the same jurisprudential questions at the same time, nor is our 
system premised on the idea that law congeals across jurisdictions.  To the 
contrary, the common law incorporates the possibility of change as a foundational 
premise:  “[t]he law of torts is anything but static, and the limits of its 
development are never set.  When it becomes clear that the plaintiff’s interests are 
entitled to legal protection against the conduct of the defendant, the mere fact that 
the claim is novel will not of itself operate as a bar to the remedy.”  (Prosser & 
Keeton, Torts (5th ed. 1984) § 1, p. 4.)  Indeed, even if we acknowledge the value 
of reducing uncertainty where possible, what is critical in common law 
adjudication is not that all jurisdictions rapidly converge on a particular 
understanding of tort liability.  Instead a court must carefully weigh whether an 
existing rule should apply in a particular context under current conditions.  
Applying the Rowland factors to address that context, we conclude that brand-
name drug manufacturers owe a duty to those whose injuries are foreseeably and 
proximately caused by the manufacturer’s deficient warning label.   
 
 
56 
III.  CONCLUSION 
We do not doubt the wisdom of crowds in some settings.  But the value of 
an idea conveyed by or through a crowd depends not on how loudly it is 
proclaimed or how often it is repeated, but on its underlying merit relative to the 
specific issue at hand.  Despite the impressive case authority Novartis has 
collected on its behalf, none of it purports to interpret California law.  Yet it is 
California law that we must construe and apply in this case.   
In doing so, we find that brand-name drug manufacturers have a duty to use 
ordinary care in warning about the safety risks of their drugs, regardless of 
whether the injured party (in reliance on the brand-name manufacturer’s warning) 
was dispensed the brand-name or generic version of the drug.  We also conclude 
that a brand-name manufacturer’s sale of the rights to a drug does not, as a matter 
of law, terminate its liability for injuries foreseeably and proximately caused by 
deficiencies present in the warning label prior to the sale.  We therefore affirm the 
Court of Appeal.      
 
 
 
 
 
 
CUÉLLAR, J.  
 
WE CONCUR: 
 
CHIN, J. 
LIU, J.
MAURO, J.* 
 
                                              
* 
Associate Justice of the Court of Appeal, Third Appellate District, assigned 
by the Chief Justice pursuant to article VI, section 6 of the California Constitution. 
 
1 
 
 
 
 
 
 
 
 
CONCURRING AND DISSENTING OPINION BY CORRIGAN, J. 
 
 
I accept the majority’s holding that a brand-name drug manufacturer’s duty 
to warn extends to consumers of a generic bioequivalent, but only because federal 
regulations currently require that generic drugs carry the same warning label as 
appears on the brand-name product.  (See 21 C.F.R. § 314.94(a)(8)(iv); PLIVA, 
Inc. v. Mensing (2011) 564 U.S. 604, 613 (PLIVA).)  This special feature of 
pharmaceutical law, which gives the brand-name manufacturer sole and complete 
control over the warning label, justifies making generic drugs an exception to our 
observation in O’Neil v. Crane Co. (2012) 53 Cal.4th 335, 342 (O’Neil) that a 
manufacturer is generally not liable for injuries caused by another manufacturer’s 
product.1 
                                              
1  
However, the pertinent regulations are now under review and subject to 
imminent change.  In November 2013, the Food and Drug Administration (FDA) 
proposed rule changes that would allow generic drug makers to revise their 
product warning labels, and depart from the labeling of the brand-name drug, 
using the “changes being effected” process.  (Supplemental Applications 
Proposing Labeling Changes for Approved Drugs and Biological Products, 78 
Fed.Reg. 67985 (Nov. 13, 2013) (Supplemental Applications).)  In view of the 
Supreme Court’s preemption decisions, the FDA explained it sought to “create 
parity” between brand-name and generic manufacturers.  (Id. at p. 67989.)  
Moreover, the change was needed to ensure postmarket safety surveillance, 
because the FDA had found that safety-related labeling changes are typically 
required many years after a drug’s initial approval, when generic versions are 
widely prescribed and the original brand-name manufacturer may have left the 
market.  (Id. at p. 67988.)  In 2015, the FDA reopened the comment period and 
scheduled a public meeting on the proposed rule change.  (80 Fed.Reg. 8577 (Feb. 
 
 
2 
 
The majority’s second holding, however, would extend indefinitely a drug 
manufacturer’s duty to warn the customers of its successor, even after sale of the 
product line.  No special feature of FDA law or practice warrants this rule.  
Plaintiffs’ theory of “predecessor liability” represents a substantial and 
unprecedented expansion of tort duties.  The majority cites no case holding a 
predecessor manufacturer liable for failing to warn about injuries caused by its 
successor’s product.  Indeed, it appears that predecessor liability for failure to 
warn has never before been recognized by any court, in any jurisdiction.  To the 
extent the theory has been raised, courts across the country have universally 
rejected it.   
 
For example, in the silicone breast implant litigation, some plaintiffs whose 
implants were manufactured by McGhan Medical Corporation (McGhan) sought 
to sue the Minnesota Mining and Manufacturing Company (3M) on the theory that 
3M was the original designer.  (See, e.g., In re Minnesota Breast Implant 
Litigation (D.Minn. 1998) 36 F.Supp.2d 863, 873.)  3M had sold this product line 
to McGhan in 1984 after patients began complaining of problems.  (Id. at p. 870.)  
In addition to rejecting strict liability claims, published federal decisions 
uniformly held that 3M had no negligence-based duty to warn about the risks of a 
product it no longer manufactured or supplied.  (Id. at p. 874; see Christian v. 
Minnesota Min. & Mfg. Co. (D.Md. 2001) 126 F.Supp.2d 951, 958-959; 
McConkey v. McGhan Medical Corp. (E.D.Tenn. 2000) 144 F.Supp.2d 958, 963-
964.)  Attempts to impose negligence liability on predecessor manufacturers have 
failed in other contexts as well.  (See Cadlo v. Owens-Illinois, Inc. (2004) 125 
Cal.App.4th 513, 520-521 [asbestos insulation]; Potwora ex rel. Gray v. Grip 
(N.J.Super.Ct.App.Div. 1999) 725 A.2d 697, 703-704 [motorcycle helmet]; Fricke 
                                                                                                                                                              
18, 2015).)  If this regulatory change is implemented, our decision to allow suits 
against brand-name manufacturers for injuries caused by generic equivalents will 
need to be reevaluated because the rationale supporting it will be largely, if not 
entirely, undermined.  (See maj. opn. ante, at pp. 20-21, fn. 2.) 
 
3 
v. Owens-Corning Fiberglas Corp. (La.Ct.App. 1993) 618 So.2d 473, 474-475 
[vinegar].) 
 
The majority insists pharmaceutical drugs are different from other products.  
However, both courts that have considered the issue have refused to extend tort 
liability to drug manufacturers after transfer of the product’s New Drug 
Application (NDA) to a successor company.  In In re Darvocet, Darvon and 
Propoxyphene Products Liability Litigation (E.D.Ky. Mar. 7, 2012, MDL Docket 
No. 2226) 2012 WL 767595, plaintiffs who had taken painkillers containing 
propoxyphene sued the drug’s original manufacturer, Eli Lilly and Company 
(Lilly), for negligence and misrepresentation.  Lilly had sold the NDA to another 
company in 2002 and stopped manufacturing the drug altogether in 2004.  (Id. at 
p. *1.)  The district court concluded Lilly had no liability for claims arising after 
the divestiture (id. at pp. *3, *9), and its decision was affirmed on appeal.  (In re 
Darvocet, Darvon, and Propoxyphene Products (6th Cir. 2014) 756 F.3d 917, 
940-941.)  Another federal court reached the same conclusion in Lyman v. Pfizer, 
Inc. (D.Vt. July 20, 2012, No. 2:09-cv-262) 2012 WL 2970627.  Defendant Wyeth 
LLC (Wyeth) had sold its rights to the drug Reglan almost two years before the 
plaintiff took her first dose.  (Id. at pp. *1, *5.)  By that time, “Wyeth could not 
have delivered a stronger warning regarding the drug, or have changed its design 
in any way.”  (Id. at p. *16).  Assuming for sake of argument that Wyeth owed a 
legal duty to the customers of its successor and breached that duty by, among 
other things, failing to update Reglan’s label, the court concluded any negligence 
was too remote as a matter of law to be the proximate cause of the plaintiff’s 
injury.  (Id. at p. *17.) 
 
O’Neil, supra, 53 Cal.4th at pages 363-366, held that a manufacturer has no 
negligence-based duty to warn about the risks of another manufacturer’s product.  
There, we were addressing risks posed by replacement components used in and 
around the manufacturer’s product.  Although it was foreseeable that the product’s 
original components would be replaced with asbestos-containing parts, we stressed 
 
4 
that “ ‘foreseeability alone is not sufficient to create an independent tort duty.’ ”  
(Id. at p. 364.)  Instead, weighing the other Rowland2 factors, we concluded strong 
policy considerations counseled against imposing a duty of care.  (O’Neil, at 
pp. 364-365; see Taylor v. Elliott Turbomachinery Co. Inc. (2009) 171 
Cal.App.4th 564, 583.) 
 
The majority attempts to distinguish O’Neil as applied to a brand-name 
manufacturer’s liability for generic bioequivalents.  (See maj. opn. ante, at pp. 19-
20.)  The distinction does not hold when applied to predecessor liability.  In the 
generic drug context, public policy supports imposing a duty of care on brand-
name manufacturers because the brand-name manufacturer is the only party with 
the practical and legal ability to warn about product risks.  Generic manufacturers 
cannot write their own labels.  Their products are legally required to carry the 
same warnings as appear on their brand-name counterparts.  (21 U.S.C. 
§ 355(j)(2)(A)(v), (4)(G); see PLIVA, supra, 564 U.S. at p. 613.)  Placing a duty of 
care on brand-name manufacturers thus allocates the costs of compensating drug-
related injuries on the party that is best-situated to prevent the harm.  (See Kesner 
v. Superior Court (2016) 1 Cal.5th 1132, 1153 (Kesner).)  In the predecessor 
liability context, however, the opposite is true.  Imposing a duty on predecessor 
manufacturers to warn about potential injuries that could result from successors’ 
products allocates costs to a party that has no ability to change the product’s 
labeling and thus no effective way to control the warnings given to consumers.  
After divestiture, only the successor manufacturer has the ability to warn its 
customers about hazards.  (21 C.F.R. §§ 314.71(a), 314.72(a)(2).)  The same 
considerations led this court to unanimously reject a duty of care in O’Neil.  As we 
explained, “[t]here is no reason to think a product manufacturer will be able to 
exert any control over the safety of replacement parts or companion products made 
by other companies.”  (O’Neil, supra, 53 Cal.4th at p. 365.)  The O’Neil rule is 
                                              
2  
Rowland v. Christian (1968) 69 Cal.2d 108. 
 
5 
consistent with the Restatement of Torts, which advocates liability for post-sale 
failure to warn only if the seller has the ability to identify and communicate 
effectively with those at risk.  (Rest.3d Torts, Products Liability, § 10.) 
 
When a drug manufacturer acquires a new product line, it assumes the 
responsibility to update the warning label if and when reasonable evidence 
demonstrates a link to a serious health hazard.  (21 C.F.R. § 201.80(e).)  
Predecessor manufacturers have a right to presume successors will perform their 
duty and follow the law.  (See Webb v. Special Electric Co., Inc. (2016) 63 Cal.4th 
167, 191; Harris v. Johnson (1916) 174 Cal. 55, 58.)  The majority’s foreseeability 
analysis glosses over this important legal obligation, noting that the successor 
would have no financial incentive to make a labeling change.  (See maj. opn. ante, 
at pp. 43-45.)  However, the prospect of negative publicity, fines, and tort liability 
gives all manufacturers substantial reason to disclose the adverse effects of a drug 
they sell.  Updating the warning label to disclose risks as they become known, and 
ensuring warnings remain adequate, is a drug manufacturer’s legal duty.  (Wyeth v. 
Levine (2009) 555 U.S. 555, 570-571.)  The majority’s assumption that successor 
corporations will routinely ignore this duty, simply because their predecessors 
may have done so, is unfounded.  
 
Moreover, the accumulation of scientific studies will often make the 
correlation with a health risk more clear over time.  The majority’s analysis elides 
this important feature of pharmaceutical practice.  Adverse effects from a drug 
typically appear first in anecdotal case reports.  It can take several years for 
epidemiological studies, the gold standard for establishing causation, to be 
conducted and published.  Indeed, a 2013 FDA study found that the “most critical 
safety-related label changes, boxed warnings and contraindications, occurred a 
median 10 and 13 years after drug approval (and the range spanned from 2 to 63 
years after approval).”  (Lester et al., Evaluation of FDA Safety-related Drug 
Label Changes in 2010 (2013) 22 Pharmacoepidemiology & Drug Safety 302, 
304.)  A connection to adverse effects that appears reasonably clear when a 
 
6 
successor produces a drug may well have been more tenuous, perhaps not even 
rising to the FDA’s “reasonable evidence” standard, when it was the predecessor’s 
product.  Scientific evidence may not demonstrate the link to a health risk until 
after divestiture.  Yet, at that point there is little to nothing a predecessor 
manufacturer can do to warn about the harm. 
 
This case demonstrates the point.  The majority concedes that 
“approximately half” of the studies plaintiffs cite to show terbutaline’s impact on 
fetal brain development postdated Novartis’s sale of the product line.  (Maj. opn. 
ante, at p. 48, fn. 8.)  But this summary does not tell the full tale.  A few rat studies 
in the 1980s showed that terbutaline could cross the placenta and affect fetal brain 
development, and effects in human children were beginning to be documented.  
But most of the early studies were focused on the drug’s effectiveness, or lack 
thereof, at preventing preterm labor.  The first long-term study cited in plaintiffs’ 
complaint that demonstrates a potential impact on human development was 
published in 2001, the same year Novartis sold the Brethine NDA to aaiPharma.  It 
is undisputed that after 2001 Novartis had no ability to change the drug’s warning 
label.  Moreover, the scientific link between terbutaline and autism remains 
questionable.  In 2011, four years after plaintiffs’ mother was given terbutaline 
and nearly 10 years after Novartis’s divestiture, the FDA reviewed the scientific 
literature investigating this link and concluded the studies did not constitute 
“ ‘positive evidence’ ” of a risk to fetal health.  (Food & Drug Admin., letter to 
James P. Reichmann responding to citizen petition, Feb. 17, 2011, Docket No. 
FDA-2008-P-0358, p. 12.)  
 
I discuss these developments not to express a view on the merits of 
plaintiffs’ suit, but simply to point out that the scientific investigation of an alleged 
harmful effect takes time.  Anecdotal case reports, in vivo studies, or animal 
studies that initially suggest an association are sometimes discredited by later 
 
7 
epidemiological studies, which are more authoritative but take longer to conduct.3  
Yet the majority’s new duty rule makes it nearly imperative for manufacturers to 
issue warnings in advance of the science if they are selling a drug’s NDA.  In the 
normal course, a responsible drug manufacturer can monitor scientific 
developments and work with the FDA to determine when additional warnings are 
warranted.  It loses this ability after transferring the NDA to another company.  By 
holding that such a manufacturer owes a duty to warn its successor’s customers 
even many years later, the majority creates an incentive for manufacturers to warn 
about every conceivable harm before transferring an NDA, lest their successors 
fail to include appropriate warnings when a risk is later validated. 
 
It is certainly possible to foresee that a successor manufacturer will shirk its 
legal obligation to warn.  That a harm is foreseeable does not necessarily mean we 
should recognize a duty of care, however.  On “clear judicial days . . . a court can 
foresee forever.”  (Thing v. La Chusa (1989) 48 Cal.3d 644, 668.)  As the majority 
opinion recognizes, an analysis of the Rowland factors requires us to balance 
foreseeability against considerations of public policy.  Several policy reasons 
strongly counsel against imposing a duty of care on predecessor companies to 
warn about risks in products manufactured and sold by their successors. 
                                              
3  
One example of tort liability leapfrogging scientific knowledge occurred in 
the Bendectin litigation.  Several cases alleging the anti-nausea drug Bendectin 
caused birth defects went to trial in the 1980s, leading the manufacturer to 
withdraw the drug from the market.  (Sanders, From Science to Evidence: The 
Testimony on Causation in the Bendectin Cases (1993) 46 Stan. L.Rev. 1, 4-7.)  
However, later scientific studies demonstrated the safety of Bendectin, and its 
active ingredient is now used in several over-the-counter medications.  (Id. at 
pp. 9-10.)  A similar phenomenon occurred in the early 1990s with breast 
implants.  Despite little scientific evidence of an association, thousands of suits 
were filed across the country alleging silicone breast implants caused autoimmune 
disorders.  (Bernstein, The Breast Implant Fiasco (1999) 87 Cal. L.Rev. 457, 477.)  
Eventually, several large-scale epidemiological studies conclusively refuted this 
proposition, finding no link between implants and systemic disease.  (Id. at 
pp. 480-484.) 
 
8 
 
First, as noted, a predecessor manufacturer has no control over the 
successor’s product warnings.  Only the current NDA holder has the power to 
change a drug’s warning label.  (21 C.F.R. §§ 314.71(a), 314.72(a)(2).)  The 
majority therefore imposes a duty of care that is impossible for predecessor 
companies to discharge.  Although this result might increase compensation for 
claims of drug-related injury, it disserves the tort policy of deterring negligent 
behavior.  As this court recently observed, the “goal of products liability law is not 
merely to spread risk but also ‘to “induce conduct that is capable of being 
performed.” ’ ”  (Webb v. Special Electric Co., Inc., supra, 63 Cal.4th at p. 187.)  
Until today, a defendant’s ability to control product warnings has been understood, 
even taken for granted, as an essential prerequisite to imposing liability for failure 
to warn.  Indeed, this very same logic underlies the Supreme Court’s preemption 
holding in PLIVA:  It is unfair to subject generic manufacturers to failure-to-warn 
liability under state law when federal law gives them no ability to alter a drug’s 
warning label.  (See PLIVA, supra, 564 U.S. at p. 624.)  It is no answer to say that 
a predecessor need only ensure that its own warnings are complete and accurate.  
The immediate and efficient cause of plaintiffs’ alleged injury here was their 
mother’s ingestion of (a generic version of) aaiPharma’s drug.  The warnings 
Novartis gave for the product it sold six years earlier are extremely remote from 
this event. 
 
Second, the majority’s holding will likely encourage over-warning by drug 
manufacturers.  Drug manufacturers are already under a duty to update their 
warning labels, and they already face the risk of suit from their own customers if 
they fail to comply with that duty.  The knowledge that they will still be subject to 
liability years in the future, even after divesting a product line, might well cause 
companies to seek the FDA’s permission to add warnings about potential adverse 
effects that have only the barest support in evolving scientific literature.  We have 
noted before that overabundant product warnings breed consumer disregard.  (See, 
e.g., O’Neil, supra, 53 Cal.4th at p. 365.)  Such a problem seems especially acute 
 
9 
in the pharmaceutical drug context, where product inserts and advertising 
frequently include mind-numbing lists of potential side effects. 
 
Third, the majority’s rule could conceivably have the perverse effect of 
diminishing successor corporations’ incentive to update labels as scientific 
evidence develops.  Current product manufacturers already have a disincentive to 
add warnings that may lower their profits.  By holding that predecessor companies 
must potentially share liability for injuries caused by a successor’s product, the 
court effectively reduces successor companies’ exposure to tort liability.  Aware 
that the cost of tort suits can be shared with their predecessors, some successor 
companies may decide to delay or perhaps even forgo additional warnings. 
 
Fourth, and perhaps most troubling, creating a broad duty of care to 
consumers of a successor’s product will expose pharmaceutical companies to 
liability in perpetuity.  There is no logical stopping point for such a duty.  The 
majority asserts that injuries will eventually become too remote for proximate 
causation to be established.  It, however, declines to predict when that time might 
be reached and ventures no opinion about whether the six-year gap in this case is 
long enough.  (But cf. Lyman v. Pfizer, Inc., supra, 2012 WL 2970627 at p. *17 
[finding any negligence of predecessor company too remote as a matter of law for 
a drug ingested less than two years after transfer of the NDA].)  Without any 
limiting principles to guide the proximate cause analysis, the majority’s 
reassurance fails to reassure. 
 
Absent some such limiting principle, a proximate cause inquiry cannot 
reliably prevent excessive liability because proximate cause is ordinarily a 
question of fact for the jury.  (Lacy v. Pacific Gas & Electric Co. (1934) 220 Cal. 
97, 101.)  The issue cannot be decided as a matter of law unless the only 
reasonable conclusion from the facts is an absence of causation.  (State Dept. of 
State Hospitals v. Superior Court (2015) 61 Cal.4th 339, 353.)  Thus, in all but the 
most extreme cases, predecessor liability claims are likely to reach a jury, with 
costly and unpredictable results.  Duty, by contrast, is a question of law for the 
 
10 
court to decide.  (Cabral v. Ralphs Grocery Co. (2011) 51 Cal.4th 764, 770 
(Cabral).)  This court has traditionally relied on duty rules to limit liability, even 
for foreseeable injuries.  (E.g., Kesner, supra, 1 Cal.5th at pp. 1154-1155; O’Neil, 
supra, 53 Cal.4th at pp. 364-366; Parsons v. Crown Disposal Co. (1997) 15 
Cal.4th 456, 476-478.)  In Kesner, for example, we limited the duty to prevent 
take-home asbestos exposure to members of the worker’s household, even though 
this limit excluded other individuals in close contact with the worker who would 
be foreseeably harmed.  (Kesner, at pp. 1154-1155)  This court has acknowledged 
the importance of limits to avoid potentially infinite expansions of tort duty.  The 
majority’s opinion here proposes none. 
 
Exposing drug manufacturers to broad liability with no predictable end 
point has the clear potential to destabilize the pharmaceutical industry and chill 
innovation.  Although the majority contends no evidence has been presented to 
support this prediction (maj. opn. ante, at p. 53), we do not typically demand 
evidence on the Rowland factors.  The Rowland analysis is inherently predictive, 
not evidence-based.  (Cf. Cabral, supra, 51 Cal.4th at p. 772 [Rowland factors are 
evaluated at a broad level of generality and not tied to facts of a particular case].)  
It stands to reason that expanding a drug manufacturer’s exposure to tort liability 
will likely increase the drug’s price.  It may also delay the release of new drugs or 
even keep some beneficial drugs off the market.  “Public policy favors the 
development and marketing of beneficial new drugs, even though some risks, 
perhaps serious ones, might accompany their introduction, because drugs can save 
lives and reduce pain and suffering.”  (Brown v. Superior Court (1988) 44 Cal.3d 
1049, 1063.)  We have previously proceeded with caution in this area, recognizing 
this broad public interest in the availability of affordable drugs.  (See, e.g., id. at 
pp. 1065-1066, 1069 [rejecting strict liability for injuries caused by prescription 
drugs].)  The majority reverses this course.  It imposes a more expansive, enduring 
liability on drug manufacturers than has been recognized elsewhere in tort law. 
 
11 
 
Fifth, there is no reason to think the majority’s predecessor liability holding 
will be limited to the pharmaceutical industry, or even to immediate predecessors.  
Despite its suggestion that pharmaceutical drugs are somehow different, the 
majority opinion identifies no specific feature of drug regulation that makes an 
extension of duty especially desirable or necessary in this context.  What is now to 
stop users of any product from suing a former manufacturer, arguing it was 
foreseeable the successor would fail to update the product’s warnings?  The path 
of least resistance for all successor companies is to continue the product warnings 
used by their predecessors.  It will generally be against a successor’s financial 
interest to add warnings, no matter what the product.  The majority’s rule thus 
opens the door to predecessor liability for all products.  It is also unclear exactly 
how far back this liability would extend.  Some amicus briefs advised that product 
line acquisitions are common in the pharmaceutical industry.  If a product line has 
changed hands two or three times, do all of these manufacturers have a duty of 
care toward the eventual plaintiff?  Apparently they do, given the majority’s 
remarks on joint and several liability.  (See maj. opn. ante, at p. 50.)  Again, 
however, this reasoning suggests no logical stopping point. 
 
Sixth, it is not clear that an expanded duty of care is needed to prevent drug 
manufacturers from concealing risks when their product line is acquired.  These 
transactions involve highly sophisticated parties, and acquiring companies can be 
expected to discover a drug’s known risks when conducting due diligence.  
Plaintiffs here never alleged that Novartis hid risks from aaiPharma.  Moreover, 
the appropriate remedy for this wrong is not an overbroad duty rule, but a fraud or 
breach of contract lawsuit from the acquiring company.  A lawsuit related to the 
acquisition offers a more immediate and effective deterrent than the prospect of 
future tort claims by the acquirer’s customers.  Such an approach would make 
clear the duties of full disclosure and due diligence.  It would also encourage 
successor companies to remain attentive to the evolving science relating to their 
acquisitions. 
 
12 
 
In discussing Centinela Freeman Emergency Medical Associates v. Health 
Net of California, Inc. (2016) 1 Cal.5th 994 (Centinela Freeman), a completely 
distinguishable case, the majority implicitly assumes that drug companies 
commonly sell off product lines to undercapitalized entities in order to “unload” 
(maj. opn. ante, at p. 54) products found to be dangerous.  It cites no evidence or 
authority for these assumptions.  In contrast, we do know it is common for brand-
name manufacturers to stop selling a drug after their exclusivity period ends and 
generic competitors are allowed to enter the market.  (See Supplemental 
Applications, supra, 78 Fed.Reg. at p. 67988; PLIVA, supra, 564 U.S. at p. 644 
(dis. opn. of Sotomayor, J.).)  Because the brand-name drug’s market share 
inevitably declines with the entry of generic equivalents, these transactions may 
make good business sense and have nothing to do with the risks or benefits of the 
product itself.  With respect to this case in particular, plaintiffs did not allege that 
Novartis hid health risks of terbutaline from aaiPharma or committed any 
wrongdoing in connection with the transfer of Brethine’s NDA.  Nor is there a 
basis for speculating that Novartis deliberately sold Brethine to an 
undercapitalized company, or that such transactions are typical.  Plaintiffs’ 
complaint includes no allegations to this effect, and aaiPharma’s bankruptcy did 
not occur until four years after the NDA transfer.4 
 
The majority also suggests that an extended duty of care is needed because 
successor manufacturers may simply rely on their predecessor’s review of the 
medical literature or may trust their predecessor’s judgment of whether a warning 
                                              
4  
Moreover, the court’s holding in Centinela Freeman included a scienter 
requirement, specifying that health care plans may be liable for negligent 
delegation of financial responsibility if they “knew or should have known” the 
transferee would not be able to pay.  (Centinela Freeman, supra, 1 Cal.5th at 
pp. 1001-1002.)  Yet the majority’s analysis here accords no such significance to 
details surrounding the transfer of an NDA.  Novartis would be equally 
responsible under the majority’s duty rule if it had sold Brethine’s NDA to another 
multinational, highly capitalized company. 
 
13 
is required.  (Maj. opn. ante, at p. 43.)  This speculation rests on the mistaken 
assumption that due diligence is a static event, occurring only when an NDA is 
transferred.  But, with the transfer, the new manufacturer assumes the sole and 
continuing responsibility to monitor the drug’s safety and labeling.  (21 C.F.R. 
§ 314.72(b).)  To fulfill this duty, the successor manufacturer must regularly 
monitor research developments as well as consumer feedback related to the drug.  
If the successor fails to update the drug’s warnings to include newly documented 
risks, it may face products liability suits from its customers.  Predecessor liability 
is not necessary to give these injured customers a remedy.  The majority’s holding 
is a solution in search of a problem. 
 
Seventh, with respect to moral blame, the majority focuses too narrowly on 
the facts of this specific case.  The broader question is what moral blame attaches 
to a manufacturer’s failure to warn its successor’s customers about a product 
defect.  A predecessor manufacturer’s share of moral blame may well be lower 
than that of a successor company that fails to update warnings, especially if 
scientific knowledge has advanced over time to provide stronger evidence of the 
product’s link to an adverse effect. 
 
Eighth, and finally, despite the majority’s blithe assurance that drug 
manufacturers can “entirely avoid” perpetual liability through insurance or 
indemnity agreements (maj. opn. ante, at p. 50), there is no precedent for coverage 
against claims arising from another company’s product.  None of the cases cited in 
the majority opinion addressed this unusual scenario.  While insurance might be 
available in theory, the policy would have to cover a potentially enormous future 
risk that the insured would have no ability to mitigate.  At the very least, the 
coverage would be difficult to manage and extremely costly.  Defining the covered 
events could also be difficult, given that the potential plaintiffs would have no 
relationship with the insured.  Even if appropriate insurance does become 
available, the majority’s holding will require that pharmaceutical companies 
maintain it on all drugs for several years after they have stopped selling the 
 
14 
products and realizing a profit.  The high cost of insuring against the majority’s 
extension of the liability will almost certainly drive up the prices for prescription 
drugs.5 
 
For all these reasons, although I join the majority’s decision to affirm Conte 
v. Wyeth, Inc. (2008) 168 Cal.App.4th 89, I dissent from its holding that 
predecessor manufacturers have a duty to warn their successors’ customers about 
risks of a product they no longer make or sell. 
 
 
 
 
 
 
 
 
CORRIGAN, J. 
 
WE CONCUR: 
CANTIL-SAKAUYE, C. J. 
KRUGER, J.   
 
                                              
5  
Nor are indemnity agreements a satisfactory answer.  After today’s holding, 
drug companies subject to suit in California will undoubtedly include indemnity 
provisions in all NDA transfer contracts.  Such provisions could effectively put the 
burden of liability back where it rightfully belongs, i.e., on the actual manufacturer 
of the product used by the plaintiff.  But they would not necessarily relieve the 
predecessor of all costs related to future claims.  Indemnification rights may be 
capped or may exclude costs in defending the underlying lawsuits.  There may 
also be costs if the predecessor must sue to enforce the indemnity agreement. 
 
 
See last page for addresses and telephone numbers for counsel who argued in Supreme Court. 
 
Name of Opinion T.H. v. Novartis Pharmaceuticals Corporation 
__________________________________________________________________________________ 
 
Unpublished Opinion 
Original Appeal 
Original Proceeding 
Review Granted XXX 245 Cal.App.4th 589 
Rehearing Granted 
 
__________________________________________________________________________________ 
 
Opinion No. S233898 
Date Filed: December 21, 2017 
__________________________________________________________________________________ 
 
Court: Superior 
County: San Diego 
Judge: Joan Marie Lewis 
 
__________________________________________________________________________________ 
 
Counsel: 
 
Public Justice, Leslie A. Brueckner; Thorsnes Bartolotta McGuire, Benjamin I. Siminou, Kevin F. Quinn 
and Charlynne I. Rejaian for Plaintiffs and Appellants. 
 
Alan Charles Dell’Ario and Jeffrey R. White for Consumer Attorneys of California and American 
Association for Justice as Amici Curiae on behalf of Plaintiffs and Appellants. 
 
Chavez & Gertler, Nance F. Becker; Public Citizen Litigation Group and Allison M. Zieve for Public 
Citizen, Inc., as Amicus Curiae on behalf of Plaintiffs and Appellants. 
 
William Alvarado Rivera for AARP and AARP Foundation as Amici Curiae on behalf of Plaintiffs and 
Appellants. 
 
Hollingsworth, Eric G. Lasker, Joe G. Hollingsworth, Katharine R. Latimer; Morrison & Foerster, Erin M, 
Bosman and Julie Y. Park for Defendant and Respondent. 
 
H. Sherman Joyce, Lauren Sheets Jarrell; Manufacturers’ Center for Legal Action, Linda E. Kelly, Patrick 
N. Forrest, Leland P. Frost; Shook, Hardy & Bacon, Phil Goldberg, Paul B. La Scala and Gabriel S. 
Spooner for National Association of Manufacturers and American Tort Reform Association as Amici 
Curiae on behalf of Defendant and Respondent. 
 
Hugh F. Young, Jr.; Reed Smith, David E. Stanley and James M. Beck for Product Liability Advisory 
Council, Inc., as Amicus Curiae on behalf of Defendant and Respondent. 
 
Gregory Herbers and Michelle Stilwell for Washington Legal Foundation as Amicus Curiae on behalf of 
Defendant and Respondent. 
 
Martin S. Kaufman; Greenberg Traurig, Robert P. Charrow and Anna B. Laakmann for Atlantic Legal 
Foundation as Amicus Curiae on behalf of Defendant and Respondent. 
 
 
 
 
 
 
 
 
Page 2 – counsel continued – S233898 
 
Counsel: 
 
Deborah J. La Fetra and Anastasia P. Boden for Pacific Legal Foundation as Amicus Curiae on behalf of 
Defendant and Respondent. 
 
Covington & Burling, Jeffrey M. Davidson, Michael X. Imbroscio, Paul W. Schmidt and Gregory L. 
Halperin for Pharmaceutical Research and Manufacturers of America as Amicus Curiae on behalf of 
Defendant and Respondent. 
 
Fred J. Hiestand for The Civil Justice Association of California as Amicus Curiae on behalf of Defendant 
and Respondent. 
 
Williams & Connolly, Kannon K. Shanmugam, Allison Jones Rushing and Connor S. Sullivan for 
Chamber of Commerce of the United States of America as Amicus Curiae on behalf of Defendant and 
Respondent. 
 
Haynes and Boone, Mary-Christine Sungaila and Polly Fohn for International Association of Defense 
Counsel and Federation of Defense & Corporate Counsel as Amici Curiae on behalf of Defendant and 
Respondent. 
 
Shook, Hardy & Bacon and Alicia J. Donahue for Genentech, Inc., and California Life Sciences 
Association as Amici Curiae on behalf of Defendant and Respondent. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Counsel who argued in Supreme Court (not intended for publication with opinion): 
 
Leslie A. Brueckner 
Public Justice 
555 12th Street, Suite 1230 
Oakland, CA  94607 
(510) 520-6205 
 
Benjamin I. Siminou 
Thorsnes Bartolotta McGuire 
2550 Fifth Avenue, 11th Floor 
San Diego, CA  92103 
(619) 236-9363 
 
Eric G. Lasker 
Hollingsworth 
1350 I Street NW 
Washington, D.C.  20005 
(202) 898-5800