Opinion ID: 2121050
Heading Depth: 1
Heading Rank: 4

Heading: judicially promulgated market share theories

Text: In Sindell v. Abbott Laboratories (1980), 26 Cal.3d 588, 607 P.2d 924, 163 Cal.Rptr. 132, the California Supreme Court rejected the plaintiff's three bases for her cause of action and instead modified the alternative liability theory, thus fashioning its form of market share liability. In reaching this conclusion, the court reasoned that in a contemporary complex industrialized society, advances in science and technology create fungible goods which may harm consumers and which cannot be traced to any specific producer. It then went on to give three policy reasons for developing market share liability. First, as between an innocent plaintiff and a manufacturer of a defective product, the manufacturer should bear the cost of the injury. Second, it believed that the manufacturer was in a better position to bear the cost involved in an injury. Third, because the manufacturer is in the best position to recognize defects in products and to guard against them, holding the producer liable for these defects would provide an incentive to product safety. Under the remedy as fashioned in Sindell, the plaintiff must first join as defendants the manufacturers of a substantial share of the DES which her mother may have taken, and must prove a prima facie case on every element except identification of the direct tortfeasor. After joining the manufacturers, the burden of proof shifts to defendants to demonstrate that they could not have manufactured the DES that caused plaintiff's injuries. If a defendant fails to meet this burden, the court fashions a market share theory to apportion damages according to the likelihood that any of defendants supplied the product by holding each defendant liable for the proportion of the judgment represented by its share of that market. The intended result of the rule is that each manufacturer's liability for an injury is approximately equivalent to the damages caused by the DES it manufactured. The Sindell court realized that the rule was not flawless and, in Brown v. Superior Court (1988), 44 Cal.3d 1049, 751 P.2d 470, 245 Cal.Rptr. 412, the California Supreme Court resolved some of the ambiguities. Brown held that liability in the market share theory is not joint and several, rather it is only several. Furthermore, in cases in which all manufacturers in the market are not joined, liability will be limited to the market share represented, resulting in a less than 100% recovery for a plaintiff. From its inception Sindell has not been widely accepted. In Sindell, Justice Richardson, joined by two other justices, dissented, arguing that the majority was abandoning a traditional tort requirement for the creation of a new, modified, industry-wide tort. Justice Richardson argued that the theory will result in imposition of liability on pure conjecture and that it rewards the plaintiff who, unlike the ordinary plaintiff, no longer has to take the chance that the responsible defendant cannot be reached or is unable to respond financially. Therefore, it is readily apparent that `market share' liability will fall unevenly and disproportionately upon those manufacturers who are amenable to suit in [those few jurisdictions which adopt some form of the theory]. ( Sindell, 26 Cal.3d at 617, 607 P.2d at 940, 163 Cal.Rptr. at 148 (Richardson, J., dissenting).) The dissent stressed that the opinion has the effect of making pharmaceutical companies insurers of their industry and that because of the sweeping effect of market share liability, the policy decision to introduce and define it should rest not with the court but with the legislature. Other than the overall concept of market share liability, which will be addressed later in this opinion, the rule as specifically developed in Sindell has been extensively criticized, and as of this date only one Federal district court has adopted it in the same form. ( McElhaney v. Eli Lilly & Co. (D.S.D.1983), 564 F.Supp. 265, 270-71 (applying what it thought would be South Dakota law).) Criticisms include that the court failed to identify the relevant market for purposes of determining a particular defendant's market share, i.e., local, countrywide, statewide or national, and a manufacturer's liability will vary widely depending on which market is used. This uncertainty undermines the court's claim that market share liability approximates each defendant's responsibility for the injuries caused by its own products. (Fischer, Products LiabilityAn Analysis of Market Share Liability, 34 Vand.L.Rev. 1623, 1643-44 (1981).) The court also failed to define what constitutes a substantial share of the market, one which is sufficient to shift the burden of proof to the defendant. A law review article that influenced the court suggested that plaintiff join 75% to 80% of the manufacturers (Comment, DES and a Proposed Theory of Enterprise Liability, 46 Fordham L.Rev. 963, 995-96 (1978)), but the court rejected this as too high and held that only a substantial percentage is required ( Sindell, 26 Cal.3d at 612, 607 P.2d at 937, 163 Cal. Rptr. at 145). Moreover, Sindell failed to specify how the market for DES can be allocated fairly when DES has been prescribed for uses other than as a miscarriage preventative. (See also Miller & Hancock, Perspectives on Market Share Liability: Time for a Reassessment?, 88 W.Va.L.Rev. 81, 88-91 (1985); Note, The DES Causation Conundrum: A Functional Analysis, 32 N.Y.L.Sch.L.Rev. 939, 959-61 (1987).) Further attestation to the flaws in the specifically developed procedure in California is the fact that it was rejected by the three other State supreme courts which have recognized some form of market share liability, as well as by our own appellate court in the case now before us. 173 Ill.App.3d 1, 18, 122 Ill.Dec. 835, 527 N.E.2d 333; Hymowitz v. Eli Lilly & Co. (1989), 73 N.Y.2d 487, 511, 539 N.E.2d 1069, 1077-78, 541 N.Y.S.2d 941, 949-50; Collins v. Eli Lilly Co. (1984), 116 Wis.2d 166, 188-192, 342 N.W.2d 37, 48-49; Martin v. Abbott Laboratories (1984), 102 Wash.2d 581, 600, 689 P.2d 368, 380.
The theory most closely paralleling the Sindell rule is the market share alternate liability theory which the Washington Supreme Court adopted in Martin v. Abbott Laboratories (1984), 102 Wash.2d 581, 689 P.2d 368. As in Sindell, Martin found unavailing the enterprise and alternative liability, concert of action and civil conspiracy theories. It further believed that the California approach was insufficient because the court failed to define what constituted a substantial share of the market and, the Martin court mistakenly believed, it distorted liability by providing that the substantial market share bears joint responsibility for 100% of plaintiff's injuries. The Washington court nonetheless did not outrightly reject the market share theory. It reasoned that each defendant contributed to the risk of injury to the public and consequently to the risk of injury to the plaintiff. Thus, each defendant shares in some measure a degree of culpability in producing or marketing DES. The market share alternate liability theory that the Washington court formulated allows the plaintiff to bring suit against only one defendant. The plaintiff must prove that her mother took DES; the DES caused subsequent injuries; the defendant produced or marketed the type of DES taken by plaintiff's mother; and the production and marketing of DES breached a legally recognized duty to the plaintiff. The burden then shifts to the defendant to prove by a preponderance of evidence that it did not produce or market the type of DES taken by the mother; did not produce or market DES in that geographical area; or did not produce or market DES at that time. The defendant or defendants unable to exculpate themselves become members of the plaintiff's DES market. In George v. Parke-Davis (1987), 107 Wash.2d 584, 592, 733 P.2d 507, 512, the court clarified that the geographic market area ideally should be defined on a local level; however, where such evidence is unavailable, county, State, or even national figures may be admissible to determine the market share. Defendants are presumed initially to have an equal market share and are liable on a pro rata basis. They may rebut this presumption by proving their actual market share and are then only liable for that percentage of the damages. The presumptive share of the defendants that are unable to establish their actual market share is adjusted upward so that 100% of the market is accounted for. If all defendants are able to establish their actual market share and the percentage of the market represented is less than 100%, plaintiff's recovery is limited to that percentage of the market which is actually represented. Our appellate court in this case and a Federal district court in Massachusetts have subsequently adopted this theory. 173 Ill. App.3d at 18, 122 Ill.Dec. 835, 527 N.E.2d 333; McCormack v. Abbott Laboratories (D.Mass.1985), 617 F.Supp. 1521, 1527 (court held the theory was consistent with statements the State supreme court made in Payton v. Abbott Labs (1982), 386 Mass. 540, 437 N.E.2d 171). The Martin alternative was formulated in part on the erroneous belief that Sindell created joint and several liability and that it increased the share of each defendant found liable by the share attributed to nonjoined manufacturers. ( Martin, 102 Wash.2d at 601-02, 689 P.2d at 380-81; but see Brown v. Superior Court, 44 Cal.3d at 1075, 751 P.2d at 487, 245 Cal.Rptr. at 428.) Our appellate court was also under the same misconceptions. (173 Ill.App.3d at 18, 122 Ill.Dec. 835, 527 N.E.2d 333.) Defendants Boyle and Massengill contend that instead of refining Sindell so that liability will more closely equate the harm caused, this theory has the realistic potential of creating liability well in disproportion to a manufacturer's market share. First, under Sindell the plaintiff must at least bring a substantial number of potential defendants before the court, whereas Martin only requires plaintiff to sue one defendant. If that sole defendant is a small contributor to the DES market, such as Boyle and Massengill, it possibly could shoulder complete liability without proof of its being the cause in fact for the injury. Second, a smaller company which no longer has records of its actual market share will be given a presumptive share under Martin which is equal to that portion of the damages unattributed. Thus, the small company could be responsible for 50% or more of the damages when common sense dictates that it surely could not have distributed such a high percentage of the DES used in the market. Also, defendants assigned presumptive shares are held liable for the share of the market attributable to companies no longer in business or not otherwise amenable to suit. This makes those defendants insurers of products which others made. Therefore, this theory can be substantially unfair to any company that is unable to prove its market share, especially if that company is small.
The Wisconsin Supreme Court addressed the DES liability issue in Collins v. Eli Lilly Co. (1984), 116 Wis.2d 166, 342 N.W.2d 37. The court rejected unalloyed market share liability, concluding that it does not constitute the most desirable course to follow in DES cases because the theory, while conceptually attractive, is limited in practical applicability. (116 Wis.2d at 189, 342 N.W.2d at 48.) It found that defining the market and apportioning the market share is nearly an impossible task if it is to be done fairly and accurately and that a second mini-trial to determine market share would be a waste of judicial resources. Therefore, Wisconsin formulated its alternative, commonly referred to as the risk contribution theory. The public policy grounds articulated in support of this theory were that: Each defendant contributed to the risk of injury to the public and, consequently, the risk of injury to individual plaintiffs   . Thus each defendant shares, in some measure, a degree of culpability in producing or marketing    a drug with possibly harmful side effects. Moreover, as between the injured plaintiff and the possibly responsible drug company, the drug company is in a better position to absorb the cost of the injury.    Finally, the cost of damages awards will act as an incentive for drug companies to test adequately the drugs they place on the market for general medical use. (Emphasis in original.) 116 Wis.2d at 191-92, 342 N.W.2d at 49. Under the theory, the plaintiff must also allege that her mother ingested DES and this caused plaintiff's injuries; that defendant manufactured or marketed the type of DES ingested; and that the defendant's conduct constituted a breach of a legally cognizable duty to the plaintiff. The plaintiff need only sue one drug company and that company need not constitute a substantial share of the market. Once the plaintiff has proven a prima facie case under negligence or strict liability, the burden shifts to the defendant to prove by a preponderance of the evidence that it did not produce or market DES for the prevention of miscarriage during the relevant time period or in the relevant geographical market area. If only one company is sued and no others are impleaded, that company is liable for all the damages if it cannot exculpate itself. If more than one defendant is joined or impleaded, damages are determined according to the jury's assignment of liability under Wisconsin's comparative negligence statute. The court included a number of factors for the jury to consider in apportioning damages, such as the market share of the defendant, whether the company conducted safety tests on DES, the role the company played in seeking FDA approval of the drug, and whether the company issued warnings. No court, other than the Wisconsin court, addressing the DES causation issue has gone so far as to impose total liability on a defendant merely for creating a risk of harm. It has been said that this theory contravenes the fundamental tort principle that a mere possibility is insufficient to satisfy causation. (See Note, The DES Causation Conundrum: A Functional Analysis, 32 N.Y.L.Sch.L.Rev. 939, 965-66 (1987) (imposition of liability under this approach requires a substantial reduction in the degree of proof traditionally required, and thus threatens over-deterrence and inequity).) It has been contended that Collins does not resolve its perceived errors in market share liability, but rather further exacerbates them. (Miller & Hancock, Perspectives on Market Share Liability: Time for a Reassessment?, 88 W.Va.L.Rev. 81, 99-101 (litigation costs will increase, there is a risk of overwhelming the jurors with evidence, and the Sindell mini-trial is transformed into a maxi-trial on a plethora of issues).) Furthermore, it is possible that liability will far exceed the probability that a defendant caused the injuries. Comment, TortsProducts LiabilityWhere a Plaintiff Cannot Identify Which Drug Company Manufactured the DES Ingested, a Cause of Action Exists Under the Market-Share Alternate Theory of Liability, 55 Miss.L.J. 195, 210 (1985).
The court of appeals of New York recently declined to accept Wisconsin's risk contribution theory, believing that it would only be feasible on a limited scale. ( Hymowitz v. Eli Lilly & Co. (1989), 73 N.Y.2d 487, 539 N.E.2d 1069, 541 N.Y.S.2d 941.) The court was wary of setting loose, for application in the hundreds of cases pending in this State, a theory which requires the fact finder's individualized and open-ended assessment of the relative liabilities of scores of defendants in every case. ( Hymowitz, 73 N.Y.2d at 511, 539 N.E.2d at 1077-78, 541 N.Y.S.2d at 949-50.) It concluded that the injustice resulting from delays in recoveries and inconsistent results militated against adoption of the theory. New York also criticized and rejected the California and Washington versions of market share liability, noting the difficulty of determining market share. However, the Hymowitz court did develop its own version of market share liability. New York's theory utilizes a national market. The court did this realizing that a national market could not provide a reasonable link between liability and the risk created by a defendant to a particular plaintiff. Instead, this theory apportions liability so as to correspond to the over-all culpability of each defendant, measured by the amount of risk of injury each defendant created to the public-at-large. ( Hymowitz, 73 N.Y.2d at 512, 539 N.E.2d at 1078, 541 N.Y.S.2d at 950.) A defendant can exculpate itself only through proof that it did not participate in the marketing of DES for pregnancy use. The rule also provides that liability is several only, and is not to be inflated if all the manufacturers are not before the court. Though it is too early to determine how Hymowitz will be received, it certainly is the most radical in its departure from established tort principles and it is admittedly flawed in that it cannot equate liability to actual harm caused. ( Hymowitz, 73 N.Y.2d at 512, 539 N.E.2d at 1078, 541 N.Y.S.2d at 950; see Shackil v. Lederle Laboratories (1989), 116 N.J. 155, 197, 561 A.2d 511, 532 (O'Hern, J., dissenting) (recognizing Hymowitz as perhaps the most controversial of the market share decisions); Note, Hymowitz v. Eli Lilly: New York Adopts a National Risk Doctrine for DES, 25 Tort & Ins. L.J. 150 (1989); but see Twerski, Market ShareA Tale of Two Centuries, 55 Brooklyn L.Rev. 869 (1989).) Just as the previous theories have not been embraced by subsequent courts, it is unlikely that New York's theory will receive broad acceptance.