Source: https://www.mcguirlfirm.com/product-liability-cases-of-interest-from-2011-and-2012.html
Timestamp: 2019-04-22 12:50:58+00:00

Document:
By Robert J. McGuirl, Esq. and James C. Suozzo, Esq.
New Jersey federal and state courts and the U.S. Supreme Court, in addition to a federal court in New York, have issued a number of opinions regarding products liability and related issues since the beginning of 2011. Below is a synopsis of some of the more interesting and important of those decisions.
a 5-2 vote, the New Jersey Supreme Court extended the stream-of-commerce theory for providing jurisdiction over a manufacturer who knew or reasonably should have known of the distribution system through which its products were being sold in the forum state, as articulated over twenty years ago in Charles Gendler & Co. v. Telecom Equipment Corp., 102 N.J. 460 (1986).
Last year the United States Supreme Court reversed the New Jersey Supreme Court.
In 2001 Plaintiff Nicastro severed four fingers when his hand was caught in the blades of a metal recycling machine. The machine was made by J. McIntyre Machinery Ltd. of the United Kingdom, and sold through McIntyre Machinery America Ltd. of Ohio, an independent company which filed for bankruptcy in 2001. The foreign manufacturer J. McIntyre argued it did not have sufficient minimum contacts with New Jersey to justify the state’s exercise of personal jurisdiction. It did not place the machine into the stream of commerce directed towards New Jersey, denied marketing the machine in this state, and did not have any contacts or relationships here. (It had attended various trade shows and conventions in cities throughout the U.S. but never in New Jersey.) J. McIntyre denied knowledge of the distribution of its machinery by McIntyre America. Plaintiff argued that New Jersey could exercise jurisdiction because J. McIntyre placed an allegedly defective machine into the stream of commerce in such a way that its geographical market was the entire United States.
The New Jersey Supreme Court agreed that this was enough for jurisdiction, despite acknowledging that J. McIntyre did not have a presence or minimum contacts in New Jersey. The facts demonstrated Defendant’s “calculated efforts to penetrate the overall American market” and “clearly knew or should have known that the products were intended for sale and distribution to customers located anywhere in the United States.” The Court analyzed the development of the law of personal jurisdiction, including Gendler and Asahi Metal Industry Co. v. Superior Court of Calif., 480 U.S. 102 (1987) and noted: “The power of a state to subject a person or business to the jurisdiction of its courts has evolved with the changing nature of the American economy.” The marketplace was now global and transnational, and it was fair to subject a foreign manufacturer to in personam jurisdiction in New Jersey in a products liability suit if the product was sold via a distribution scheme that targeted an American market. Such a wide geographic market obviously includes New Jersey, and so long as the foreign manufacturer knows the distribution scheme by which it receives economic benefits, even if it does not control that distribution, it will be subject to jurisdiction here. The majority felt that its ruling did not offend “traditional notions of fair play and substantial justice” and noted that a state has a strong interest in protecting its citizens from defective products as well as a paramount interest in insuring a forum for its injured citizens who have suffered catastrophic injuries.
In Wyeth v. Levine, 129 S.Ct. 1187 (2009), the Supreme Court held that federal law did not preempt state tort claims against brand-name drug manufacturers for failure to warn. The question in Pliva was whether the same applies to generic drug manufacturers, and the Supreme Court said no, ruling that plaintiffs’ claims were barred due to conflict preemption. The federal statutes and regulations applying to brand-name versus generic manufacturers differed, allowing for the differing decisions.
The FDA had approved metoclopramide, a drug used to treat digestive tract problems, under the brand name Reglan. Years later, generic manufacturers began producing the drug. Information developed that long-term use of metoclopramide can cause tardive dyskinesia, a severe neurological disorder. Warning labels for the drug have been strengthened several times over the years, most recently in 2009.
Plaintiffs were prescribed Reglan in 2001 and 2002, but both received the generic drug from their pharmacies. Both plaintiffs developed tardive dyskinesia after taking the generic drug for several years. Both sued the generic drug manufacturers that produced the metoclopramide, claiming the manufacturers were liable under state tort law for failing to provide adequate warning labels. The manufacturers argued that federal statutes and FDA regulations preempted the state tort claims by requiring the same safety labeling for generic metoclopramide as was mandated at the time for Reglan. The Court of Appeals in the Fifth and Eighth Circuits rejected those arguments and held that plaintiffs’ claims were not preempted. The Supreme Court reversed, concluding that federal drug regulations applicable to generic drug manufacturers directly conflict with, and therefore preempt, the state law claims.
Where state and federal law directly conflict, state law must give way. Such a conflict exists where it is impossible for a private party to comply with both state and federal requirements. If the manufacturers had independently changed their labels to satisfy their state-law duty to attach a safer label to their generic metoclopramide, as plaintiffs argued they should have, the manufacturers would have violated the federal requirement that generic drug labels be the same as the corresponding brand-name drug labels. Therefore it was impossible for them to comply with both state and federal law. And even if the generic manufacturers had fulfilled their federal duty to ask for FDA help in strengthening the corresponding brand-name label, assuming such a duty exists, they would not have satisfied their state tort law duty. State law demanded a safer label; it did not require communications with the FDA about the possibility of a safer label.
Plaintiffs argued that the defendants failed to ask the FDA for help in changing the corresponding brand-name label, and that precluded a preemption defense. The Supreme Court rejected that argument, noting that it would render conflict preemption meaningless by making most conflicts between state and federal law illusory. The Supremacy Clause would have no force outside of express preemption. The Supreme Court held that when a party cannot satisfy its stated duties without the federal government’s special permission and assistance, which is dependent on the exercise of judgment by a federal agency, that party cannot independently satisfy those state duties for preemption purposes.
The Supreme Court’s decision in Wyeth was distinguished because a brand-name drug manufacturer can, without pre-approval, add to or strengthen a warning label under the FDA’s changes-being-effected (“CBE”) process. A generic drug manufacturer cannot utilize the CBE process to unilaterally strengthen its label, according to the FDA. The Supreme Court noted that federal statutes and regulations that apply to brand-name drug manufacturers differ, by Congress’ design, from those applicable to generic drug manufacturers, and different laws can lead to different preemption results.
Post script: This decision last year resulted in the dismissal of a host of cases against generic drug manufacturers. The ruling in Pliva affects potentially millions of people since nearly 80% of prescriptions in this country are filled with a generic, sometimes without notice to the patient. As Justice Thomas wrote for the five person majority in Pliva, “Congress and the FDA retain the authority to change the law and regulations if they so desire.” Neither has shown such desire since the decision was announced last summer.
Van Dunk v. Reckson Assoc. Realty Corp.
An employee injured in the course and scope of his employment cannot sue his employer in tort, unless the employer committed an intentional wrong. That “intentional wrong” exception to the workers’ compensation bar has been narrow. However, the Appellate Division’s 2010 opinion in this case opened the door a bit further by allowing suit against an employer even when there were no prior accidents, close calls or deception of OSHA. The New Jersey Supreme Court has narrowed the opening with its decision earlier this summer.
Plaintiff Van Dunk was employed as a laborer by Defendant James Construction Company, an excavator contractor hired to construct a retention pond. The employer’s superintendent for the project, Key, had received formal OSHA safety training and knew that OSHA required employees in an excavation to be protected from cave-ins. However, Key did not utilize any type of protective system to make the trench more stable. He did not utilize sloping to make the trench more stable because it was a confined area, and the space considerations also led Key not to construct a trench box.
The trench was constructed without any type of protective system. Employees had difficulty lining the trench with fabric, and Plaintiff volunteered to go into the trench to fix it. However, Key stopped him because he was concerned for Plaintiff’s safety in case the trench failed, which was a possibility. The crew continued to line the trench with the fabric which bunched up. In his frustration, the superintendent directed Plaintiff to enter the excavation to correct the problem. Within minutes the trench collapsed, injuring Plaintiff.
OSHA investigated the accident site and issued a citation to Plaintiff’s employer for a “willful” violation of its regulations in failing to utilize an adequate protection system.
The Supreme Court reviewed N.J.S.A. 34:15-8 and the case law interpreting it, starting with Millison v. E.I. Du Pont de Nemours & Co., 101, N.J. 161 (1975) through Laidlow v. Hariton Mach. Co., Inc., 170 N.J. 602 (2002) and its progeny. The two-prong test enunciated in Millison was refined in Laidlow, where the Supreme Court held that no one fact was dispositive in assessing the employer’s actions. The analysis had to be based on the totality of the circumstances. The Supreme Court in Laidlow then found that where such conduct involving the intentional, and deceptively timed, engaging and disengaging of safety equipment led to the machine’s crushing of an employee’s hand, Millison’s conduct and context prongs both were satisfied. However, the Supreme Court declined to issue a per se rule that removal of safety devices or OSHA violations equate to intentional wrongs. Laidlow and its progeny, three cases decided by the Supreme Court on the same day in 2003, noted that other factors to be considered included employees’ statements to employers regarding safety issues, the seriousness of any potential injury that could occur, and any systematic deception of OSHA, such as when an employer fails to abate prior OSHA citations or only puts guards on machines when OSHA is inspecting the premises.
However, the Supreme Court found that OSHA’s finding the employer’s regulatory noncompliance was “not an accident or negligence” was a far cry from satisfying the requirement of proofs demonstrating substantial certainty of injury or death. A willful violation could encompass an intentional disregard or plain indifference, and therefore such a violation was not dispositive of whether the employer committed an intentional wrong. Consistent with its decision in Laidlow, the Supreme Court considered the finding of an OSHA violation just one factor among the totality of circumstances to be considered.
Key “made a quick but extremely poor decision,” but even considering what he knew about safety and the condition of the ground at the work site, “none singly or in combination provide an objectively reasonable basis for expecting that a cave-in almost certainly would occur during the brief time plaintiff was sent into the trench.” The plaintiff had to be satisfied with the relief provided under the Workers’ Compensation Act. An employer’s reckless act, or gross negligence, will not overcome the workers’ comp bar to tort suits.
In concluding its similar analysis of the context prong, which involves a determination as a matter of law whether the circumstances of the worker’s injury are plainly beyond anything the legislature could have contemplated as entitling the employee to recover only under the Workers’ Compensation Act, the Court left open the door for a single act to one day satisfy both prongs and permit an employer to be sued in tort. A “single egregiously wrong act by an employer might, in the proper circumstances, satisfy the intentional wrong standard.” However, this case did not provide those circumstances. The Appellate Division’s decision was reversed.
The Supreme Court considered whether plaintiff’s lawsuit against the marketers of Accutane was barred by the two-year statute of limitations. Suit was filed about nine years after plaintiff was first prescribed the acne drug as a twelve-year-old. The prescribing doctor did not mention the risk of inflammatory bowel disease (IBD) because he was not aware of it. When the FDA approved Accutane years before, it did not require a warning of possible gastrointestinal side effects such as IBD. Although the brochure plaintiff was provided warned to be on the alert for stomach pain, diarrhea and rectal bleeding, plaintiff did not experience any gastrointestinal side effects during the initial or subsequent times she used the drug. However, about seven months after she completed her fourth course on Accutane, plaintiff was hospitalized in 1999 for bloody diarrhea and abdominal pain and was diagnosed with ulcerative colitis. Still, plaintiff was prescribed Accutane again in 2000 after her dermatologist consulted with her gastroenterologist, who had no objection. Plaintiff had no gastrointestinal side effects during or after this fifth course of Accutane. In September 2003 plaintiff was prescribed her sixth course of the drug, which she took until January 2004. Plaintiff suffered side effects and some increased diarrhea. In December 2005 plaintiff filed suit.
Defendant moved to dismiss the suit as untimely. After a hearing, the judge denied the motion, ruling that plaintiff’s delay was reasonable under the circumstances. The jury awarded damages to plaintiff. Defendant appealed and the Appellate Division affirmed. The Supreme Court granted certification on the issue of the timeliness of plaintiff’s Complaint, and affirmed because a reasonable person in plaintiff’s situation would not have known by December 2003 of the relationship between Accutane and ulcertative colitis.
The discovery rule balances the need to protect injured persons against the injustice of compelling a defendant to defend against a stale claim. It postpones the accrual date of a cause of action if the plaintiff is unaware either that she has been injured or that the injury is due to the fault of an identifiable individual or entity. Where the relationship between injury and the knowledge of fault is not evident, a plaintiff can invoke the discovery rule if he establishes that a reasonable person in those circumstances would not have been aware within the statutory period that she was injured through the fault of another.
In enacting the Product Liability Act (PLA), New Jersey’s legislature intended to reduce the lawsuit-related burden on manufacturers of FDA-approved products. The PLA provides that if a warning has been approved by the FDA, a presumption arises that the warning was adequate. This has been denominated as a super-presumption in that compliance with FDA standards should be virtually dispositive of such claims. The Supreme Court noted that “nothing in the language of the PLA or its legislative history suggests, even obliquely, an intention on the part of the drafters to alter our long-standing discovery rule jurisprudence.” The question at the heart of the appeal was what, if any, role the PLA’s presumption of adequacy plays in the judicial analysis of whether plaintiff acted reasonably in delaying the filing of her suit. The Supreme Court favored the “middle-of-the-road” approach suggested by the Appellate Division. A judge at a Lopez hearing may consider the presumption of adequacy, but at that stage should not view it as a virtually dispositive super-presumption. Rather it should be treated like any presumption, capable of being overcome by evidence which tends to disprove the presumed fact. “If, in the face of the evidence, reasonable people would differ regarding the presumed fact, the presumption will be overcome.” The burden remains on the plaintiff to show that a reasonable person in her circumstances would not have been aware, within the prescribed statutory period, that she had been injured by a defendant’s product.
The Supreme Court held that plaintiff’s suit may proceed because the evidence not only overcame the presumption, but established under all the circumstances, plaintiff reasonably was unaware that defendant caused her injury until after December 2003. The Court noted how the initial doctor did not warn of the risk of IBD; how plaintiff took four courses of the drug without experiencing any GI issues; how plaintiff’s gastroenterologist did not know of a connection between Accutane and ulcerative colitis at the time she developed that disease, which waxes and wanes; and did not experience any GI effects while on her fifth course of the drug. Further, the 2003 warning did not mention IBD or colitis, nor did any other consent form that plaintiff received. Her doctors never said anything to lead plaintiff to believe there was any connection.
Post script: Roche removed Accutane from the market in 2009, citing litigation costs and competition from generics.

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