Court Opinion

ID: 826291
Source: CourtListenerOpinion
Date Created: 2013-03-01 19:56:13.587728+00
Date Added: 2024-06-11T15:37:06.340032
License: Public Domain

Order                                                                         Michigan Supreme Court
                                                                                    Lansing, Michigan

  September 30, 2011                                                                 Robert P. Young, Jr.,
                                                                                               Chief Justice

  142989                                                                              Michael F. Cavanagh
                                                                                            Marilyn Kelly
                                                                                      Stephen J. Markman
                                                                                      Diane M. Hathaway
                                                                                          Mary Beth Kelly
  ATTORNEY GENERAL, STATE OF                                                              Brian K. Zahra,
  MICHIGAN and CARBOLOGY, INC.,                                                                     Justices
           Plaintiffs-Appellants,
  v                                                        SC: 142989
                                                           COA: 292003
                                                           Ingham CC: 08-001132-CZ
  MERCK SHARP & DOHME CORPORATION,
  f/k/a MERCK & COMPANY, INC.,
             Defendant-Appellee.

  _________________________________________/

        On order of the Court, the application for leave to appeal the March 17, 2011
  judgment of the Court of Appeals is considered, and it is DENIED, because we are not
  persuaded that the question presented should be reviewed by this Court.

          CAVANAGH and HATHAWAY, JJ., would grant leave to appeal.

          MARILYN KELLY, J. (dissenting).

          I dissent from the Court’s order denying plaintiffs’ application for leave to appeal.
  Because the Court of Appeals clearly erred in holding that plaintiffs’ suit is a product
  liability action and thus barred by MCL 600.2946(5), I would reverse its decision and
  reinstate plaintiffs’ claim.

        The facts of this case are straightforward. The case involves a controversy
  surrounding the sale of Vioxx, a pain-relief drug manufactured by defendant Merck
  Corporation. Merck withdrew Vioxx from the market after clinical trials revealed that
  persons using the drug experienced an increased risk of heart attack.

        In 2008, the Michigan Attorney General filed suit under Michigan’s Medicaid
  False Claim Act1 seeking recovery of approximately $20 million in payments the state
  made for Vioxx prescriptions written on behalf of Medicaid recipients. Plaintiffs alleged
  1
      MCL 400.601 et seq.
                                                                                           2

that defendant knowingly made false and deceptive statements about the safety and
efficacy of Vioxx in order to enhance its sales. They claimed that, in doing so, defendant
duped the state into paying for those prescriptions.

      Defendant sought summary disposition, alleging that it was protected from
product liability exposure for drugs approved by the United States Food and Drug
Administration. The trial court denied its motion, ruling that plaintiffs’ action did not
sound in product liability. In a split decision, the Court of Appeals reversed that decision,
holding that plaintiffs’ suit was a product liability action, meaning it falls within the
exemption for liability in MCL 600.2946(5).2

        On appeal to this Court, plaintiffs argue that the Court of Appeals misconstrued
their lawsuit. Specifically, they contend that a claim brought under the Medicaid False
Claim Act is not a product liability action barred by MCL 600.2946(5)3 because it is not a
claim seeking compensation for “damage to property” as used in the act. Rather, it is a
claim seeking the return of payments procured through fraudulent conduct. I agree with
plaintiffs.

        MCL 600.2945(h) defines a “product liability action” as “an action based on a
legal or equitable theory of liability brought for the death of a person or for injury to a
person or damage to property caused by or resulting from the production of a product.”
The Court of Appeals majority held that plaintiffs’ allegations fall within this statutory
definition because they assert legal and equitable theories of liability for damage to
property resulting from the production of a product. Essentially, the court held that
plaintiffs’ alleged financial damages in the form of payments to Medicare patients
amount to “damage to property.” This defies common sense and a rational understanding
of the statutory phrase “damage to property.”

2
    Attorney General v Merck Sharp & Dohme Corp, ___ Mich App ___ (2011).
3
    MCL 600.2946(5) provides, in pertinent part:
                In a product liability action against a manufacturer or seller, a
         product that is a drug is not defective or unreasonably dangerous, and the
         manufacturer or seller is not liable, if the drug was approved for safety and
         efficacy by the United States food and drug administration . . . . This
         subsection does not apply if the defendant at any time before the event that
         allegedly caused the injury does any of the following:
                      (a) Intentionally withholds from or misrepresents to the
         United States food and drug administration information concerning the
         drug . . . .
                                                                                                                 3

        In interpreting statutes, “[t]he fair and natural import of the provision governs,
considering the subject matter of the entire statute.”4 As dissenting Court of Appeals
Judge FITZGERALD noted, “[w]hen examined in the proper context of a product liability
statute, it is clear that ‘damage to property’ means physical damage to property caused by
a defective or unreasonably dangerous product.”5 Here, the damages alleged by plaintiffs
arise from an injury to the state’s Medicaid program and represent an amount of money
wrongfully paid to defendant. No physical damage is involved.

        Moreover, MCL 600.2945(5) applies to a lawsuit by a purchaser, user, or
bystander of a product. Indeed, the definitions of “misuse” and “sophisticated user” in
MCL 600.2945(e) and (j) contemplate that the user of a product will be a potential
plaintiff in a product liability action. By contrast, in this case, the state of Michigan
brought suit for the return of Medicaid payments. Thus, this is not a suit brought by a
user of a product for “damage to property” as contemplated by MCL 600.2945(5).
Accordingly, that statute does not provide immunity for defendant.

       A simple example clarifies the mistake made by the Court of Appeals majority.
Product liability cases are generally brought by or on behalf of people who have suffered
injury or damage to their physical property because of the use of a product. Hence, if a
customer buys a product and it burns down his or her house, that person may bring a
product liability action. However, if that same customer buys a product, such as
fireworks, with the expectation that it will blow up, and it does not work as promised, no
product liability action lies.

        The latter hypothetical situation is analogous to the instant case. Plaintiffs are
attempting to recover money spent for a product that allegedly did not live up to
defendant’s representations. This case is not a product liability action because no
physical injury is claimed. Whether plaintiffs’ action ultimately has merit is unknown at
this stage of the proceedings, but defendant is not entitled to the immunity conferred by
MCL 600.2946(5).

         The judgment of the Court of Appeals should be reversed.

4
    People v McGraw, 484 Mich 120, 124 (2009).
5
    Attorney General, ___ Mich App at ___ (FITZGERALD, J., dissenting).

                           I, Corbin R. Davis, Clerk of the Michigan Supreme Court, certify that the
                     foregoing is a true and complete copy of the order entered at the direction of the Court.
                           September 30, 2011                  _________________________________________
          t0927                                                                Clerk