Opinion ID: 4231251
Heading Depth: 2
Heading Rank: 3

Heading: The Facts Underlying This Lawsuit

Text: 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 9 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 10 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 11 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.