Source: https://www.aterwynneblog.com/oregon_business_litigatio/products_liability/
Timestamp: 2019-04-20 05:20:49+00:00

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If the manufacturer of a defective product sells its assets and goes out of business, can a party injured by the product sue the purchaser of the assets on a products liability theory? The general rule of successor liability is that purchaser is not liable for the debts and liabilities of the transferor, unless (1) the purchaser agreed to assume the liabilities, (2) the transaction amounts to a consolidation or merger, (3) the purchaser is a mere continuation of the seller, or (4) the transaction was entered into fraudulently to escape liability.
In Gonzalez v. Standard Tools and Equipment Co., the plaintiff sought to add a fifth exception to the no-liability rule, called the "product line" exception. Courts in other states have adopted that exception, holding that, where a successor company continues to produce the same type of product as the original company, the successor assumes tort liability for defects in units from the same product line. The Court of Appeals last month rejected plaintiff's argument, declining to add a new exception to the "long-established rule" of successor liability.
In Gaeta v. Perrigo Pharmaceuticals Co.,the Ninth Circuit this week joined its sister circuits in holding that the Supreme Court case Wyeth v. Levine, 129 S. Ct. 1187 (2009), which established that failure-to-warn cases against brand name drug manufacturers are not preempted by federal law, also established no preemption of such claims against generic drug manufactures.
In Gaeta, a minor child had been treated with a "hepatotoxic" drug -- one know to cause liver failure -- after having two benign moles removed. He was prescribed ibuprofen for pain but his parents purchased Perrigo's generic over-the-counter ibuprofen. The child developed a fever and was eventually referred to the emergency room with a diagnosis of liver failure. He received a liver transplant.
The child's parents filed suit against Perrigo alleging, among other things, that Perrigo failed to warn prescribing physicians and consumers of the increased risk of acute liver injury and renal failure when ibuprofen is taken concurrently with other hepatotoxic drugs.
Perrigo opposed the claim on two preemption grounds: First, that it is impossible for Perrigo to comply with both state law duties to warn and the FDA regulations governing generic drugs; and, alternatively, that plaintiffs' state law claim obstructs the full accomplishment of the purposes and objectives of Congress in enacting the approval process for manufacturers of generic drugs.
The Ninth Circuit rejected both arguments, finding that California's state law duty to warn -- by placing an appropriate label on generic ibuprofen -- would neither be impossible to comply with nor obstruct the objectives of Congress. The Court further held that, absent evidence that the FDA would have rejected the specific hepatotoxicity warnings proposed by plaintiffs, their state law failure-to-warn claim was not preempted by FDA regulations.
Mayola Williams' products liability case has completed its third journey to the U.S. Supreme Court, as the Court today dismissed Philip Morris' appeal of a $79.5 million punitive damages award.
Williams' husband died in 1997 of cancer after years of smoking cigarettes sold by Philip Morris USA. A Multnomah County jury awarded to Williams $821,485.50 in compensatory damages for wrongful death (later reduced to $521,485) and $79.5 million in puntive damages against Philip Morris. The trial judge reduced the punitive damages to $32 million, but the Oregon Court of Appeals reinstated the jury's award.
The U.S. Supreme Court in two separate appeals directed the Oregon Supreme Court to reconsider whether the punitive damages were excessive under the Due Process Clause of the Constitution. Last year the Oregon Supreme Court declined to reach the constitutional issue, affirming the punitive damages on state law procedural grounds.
Today's dismissal in Philip Morris USA v. Williams ends the U.S. Supreme Court's inquiry into whether the Oregon Supreme Court properly avoided the Due Process issue in its most recent decision. The Court's order states it had "improvidently granted" review last June, and as a consequence the punitive damages verdict stands.
In an opinion long-awaited in product liability circles, the U. S. Supreme Court today affirmed the Vermont Supreme Court and held that federal food and drug law does not pre-empt state law failure-to-warn tort claims. Wyeth v. Levine is a pharmaceutical case brought by a patient who was injured following administration of Wyeth's drug Phenergan. Wyeth argued that the state law claims were pre-empted because it is impossible for the company to comply with both the state law duties underlying those claims and the company's federal labeling duties. The Court rejected that argument. The Court also rejected Wyeth's reliance on the preamble to a 2006 regulation which declared that state law failure-to-warn claims threaten the FDA's statutorily-prescribed role. Justice Stevens delivered the opinion of the Court. You can find that opinion and the concurrences and dissent here .
The U.S. Supreme Court has agreed to review for the third time the $79.5 million in punitive damages that a Multnomah County jury awarded in a tobacco products liability case. The court today accepted review in Williams v. Philip Morris USA, following the Oregon Supreme Court's decision earlier this year to affirm the punitives award of 97 times compensatory damages. The state court reached that result by citing a state law defect in a proposed jury instruction on punitive damages, thereby avoiding the question of the instruction's compliance with the federal constitutional standards for due process.
The U.S. Supreme Court today agreed to review only whether the state court was prohibited from, in effect, ignoring its directive to apply the federal constitutional standard. It will not address whether the punitive damages are excessive under the Due Process Clause.
See the petition for writ of certiorari here , our coverage of the most recent state court ruling here, and the SCOTUS Blog report on the case here.

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