Opinion ID: 1432329
Heading Depth: 1
Heading Rank: 7

Heading: market-share liability

Text: In Sindell v. Abbott Labs., 26 Cal.3d 588, 607 P.2d 924, 163 Cal. Rptr. 132, cert. denied, 449 U.S. 912 (1980), the Supreme Court of California modified the traditional alternate liability theory and adapted it to DES cases. Under the Sindell court's market-share theory, a plaintiff need only join a sufficient number of manufacturers to represent a substantial share of the market. Once the plaintiff has met this threshold requirement, the burden of proof shifts to each defendant to exculpate itself by showing that it could not have supplied the offending drug. Those defendants that are unable to prove their innocence are liable for the plaintiff's damages. Sindell, at 612. The court in Sindell, however, recognized that holding each of the defendants jointly and severally liable for all of plaintiff's harm would have been unfair. In view of the large number of manufacturers, the court reasoned that there may be a substantial likelihood that none of them supplied the drug which caused plaintiff's harm. Sindell, at 602-03. To overcome this difficulty, the court held that each defendant would be liable only for the proportion of the judgment represented by its share of that market ... Sindell, at 612. Underlying the court's reasoning is the notion that, although market-share liability might not effect a correct matching of plaintiffs and defendants in each case, each defendant ultimately will be held liable only for the amount of harm that it statistically is likely to have caused. Sindell, at 612-13. The Sindell court reasoned that the use of DES to prevent miscarriage causes harm in a certain percentage of cases. Therefore, according to the court, a defendant who produced 10 percent of the DES that was placed on the market to prevent miscarriage statistically would be likely to have caused 10 percent of the harm. Thus, if the court apportioned damages according to each defendant's market share, then theoretically each defendant would be held liable only for approximately as much harm as it caused. The only jurisdiction outside of California recognizing the market-share theory is South Dakota. See McElhaney v. Eli Lilly & Co., 564 F. Supp. 265 (D.S.D. 1983). The courts in New Jersey ( Namm ), Massachusetts ( Payton v. Abbott Labs, 386 Mass. 540, 437 N.E.2d 171 (1982)), and Michigan ( Abel ) indicate the possibility that on an adequate record they might recognize some relaxation of the traditional identification requirement in appropriate circumstances so as to allow recovery against a defendant of that portion of a plaintiff's damages which is represented by that defendant's contribution of DES to the relevant market. Although the Sindell market-share theory is conceptually attractive, we find it also an inappropriate theory due to its inherent distortion of liability. Although the court in Sindell was unclear on this point, the decision arguably requires that defendants pay 100 percent of the plaintiff's damages even though these defendants may represent less than 100 percent of the market. The inherent distortion of defendants' actual liability under the market-share liability theory is best illustrated by a hypothetical. Assume that plaintiff's damages are $100,000, and she joins enough DES manufacturers to represent 60 percent of the relevant market. Defendant X occupies 20 percent of the relevant market and one-third of the market that all joined defendants represent. If defendant X is liable only for its share of the relevant market, it would be liable for 20 percent of the damages, or $20,000. If defendants are required to pay 100 percent of the judgment, however, then defendant X must pay one-third of the judgment, or $33,333, which is equivalent to one-third of the market that all the joined defendants represent. In other words, defendant X would have to pay 67 percent ($13,333) more than its share of the relevant market. See Fischer, Products Liability  An Analysis of Market Share Liability, 34 Vand. L. Rev. 1623, 1646 (1981). It is evident that the definition of substantial market share directly affects the degree to which the defendant's liability is distorted. The lower the percentage of the market that is required to be joined, the higher will be the resulting distortion. We reject the Sindell market-share theory of liability. Not only does the Sindell court fail to define substantial share of the relevant market, the theory distorts market liability by providing that the substantial market share bears joint responsibility for 100 percent of plaintiff's injuries.