Court Opinion

ID: 9916423
Source: CourtListenerOpinion
Date Created: 2024-01-09 23:02:11.342677+00
Date Added: 2024-06-11T13:25:22.234014
License: Public Domain

Filed 1/9/24
                CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                   FIRST APPELLATE DISTRICT

                          DIVISION FOUR

 GILEAD TENOFOVIR CASES.

 GILEAD LIFE SCIENCES,
 INC.,                                  A165558
         Petitioner,
                                        (San Francisco City &
 v.
                                        County Super. Ct.
 THE SUPERIOR COURT OF                  No. CJC-19-005043,
 THE CITY AND COUNTY OF                 JCCP No. 5043)
 SAN FRANCISCO,
         Respondent;

 PLAINTIFFS IN JCCP NO.
 5043,
         Real Parties in Interest.

       Defendant Gilead Life Sciences, Inc. (Gilead), a
pharmaceutical manufacturer, developed and sold one of the first
medications to treat HIV/AIDS. That drug, tenofovir disoproxil
fumarate (TDF), was approved for sale by the Food and Drug
Administration (FDA) in 2001. Although TDF was effective in
suppressing the effects of HIV, its use carried a risk of skeletal
and kidney damage. The 24,000 plaintiffs in this coordinated
proceeding allege that they suffered these or other adverse effects
from their use of TDF.
      While Gilead was developing TDF, it discovered a similar,
but chemically distinct, potential drug, tenofovir alafenamide
fumarate (TAF). Plaintiffs allege that Gilead’s early testing
indicated TAF could be as effective as TDF at treating HIV/AIDS,
while carrying a lower risk of adverse effects. According to
plaintiffs, however, Gilead elected to defer development of TAF
because it was concerned that the immediate development of TAF
would reduce its financial return from TDF. Years later, Gilead
resumed the development of TAF and obtained FDA approval for
its sale in 2015.
      Although plaintiffs are seeking compensation for injuries
caused by their use of TDF, they do not assert any claim seeking
to prove that TDF is defective. Instead, they characterize their
claim as one for ordinary negligence, contending that Gilead’s
decision to defer development of TAF to maximize its profits
breached its duty of reasonable care to users of TDF. They also
assert a claim for fraudulent concealment, reasoning that Gilead
had a duty to disclose information about TAF to users of TDF.
      Gilead filed a motion for summary judgment or summary
adjudication. With respect to plaintiffs’ claim for negligence,
Gilead argued that a plaintiff seeking to recover for harm caused
by a manufactured product must prove that the product was
defective. Given plaintiffs’ decision not to prove a defect, Gilead
contended, they cannot recover for harm caused by their use of
TDF. With respect to fraudulent concealment, Gilead argued

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that it had no duty to disclose facts relating to TAF when it had
not been approved as an alternative to TDF for the treatment of
HIV/AIDS. The trial court denied the motion in its entirety.
Gilead then filed a writ petition in this court. Because of the
potentially dispositive nature of these issues for this large
coordinated proceeding, we issued an order to show cause. After
oral argument, we requested supplemental briefing on certain
issues raised by plaintiffs’ negligence claim, including whether, if
the law does not require proof of a defect, the factors set forth in
Rowland v. Christian (1968) 69 Cal.2d 108 (Rowland)
nonetheless warrant an exception to the duty of care in this
context.
      We now grant the petition for writ of mandate in part and
deny it in part. We affirm the trial court’s denial of Gilead’s
motion insofar as it sought summary adjudication of plaintiffs’
negligence claim. First, we conclude that the legal duty of a
manufacturer to exercise reasonable care can, in appropriate
circumstances, extend beyond the duty not to market a defective
product. Second, in light of that conclusion, we then explain why
Rowland supplies the appropriate framework for evaluating
plaintiffs’ negligence claim. Third, applying Rowland, we
consider two proposed exceptions to the duty of care. The first
exception mirrors Gilead’s original argument by precluding
negligence liability for prescription drugs without proof of a
defect. The second exception is narrower in that it would allow
plaintiffs to assert a claim for negligence without proof of a
defect, but only as to decisions the drug manufacturer made after

                                  3
obtaining the results of Phase III clinical trials of the alternative
drug. We find that the broader proposed exception is
unwarranted, and that the narrower exception is unsupported on
the present record, although we do not preclude the possibility
that Gilead could establish it on a more developed record.
      Finally, we reverse the trial court’s decision insofar as it
denied Gilead’s motion for summary adjudication of plaintiffs’
claim for fraudulent concealment. We conclude that Gilead’s
duty to plaintiffs did not extend to the disclosure of information
about TAF.
                         BACKGROUND
I.    Plaintiffs’ Allegations
      Plaintiffs allege that in 1991 Gilead obtained an exclusive
license to develop tenofovir, a substance known to be “an
incredibly potent antiretroviral,” as a treatment for HIV/AIDS.
Tenofovir could not be used as a medication in its pure form,
however, because it is not effective when administered orally and
produces “rapid and severe decline in kidney function” when
injected directly into the body. To create a usable medication
from tenofovir, Gilead was required to develop an alternative
form of the chemical, known generally as a “prodrug,” that would
be safe and effective when administered orally.
      Gilead eventually created TDF, a prodrug form of tenofovir,
and focused its development efforts on that compound. TDF was
approved by the FDA for sale as a treatment for HIV/AIDS
in 2001. It was recognized at the time, however, that use of TDF
carried the potential for harmful side effects.

                                  4
      At some point during its work, Gilead developed a second
prodrug form of tenofovir, TAF, that also showed promise in the
treatment of HIV/AIDS. Plaintiffs allege that TAF is more stable
in the body than TDF, a property that permits TAF to be
administered at a lower dose than TDF. The use of a smaller
dose allegedly makes TAF more effective as a treatment while
reducing adverse side effects.
      Plaintiffs allege that even before Gilead obtained
regulatory approval to market TDF in 2001, the company “knew
[TAF] to be more efficacious and less toxic to kidneys and bones
than TDF.” In 2002, Gilead undertook Phase I/II testing of TAF.
According to the complaint, apparently quoting a Gilead
document, this testing was done with the “explicit goal of ‘. . .
deliver[ing] a more potent version of tenofovir that can be taken
in lower doses, resulting in better antiviral activity and fewer
side effects.’ ” In 2004, however, Gilead discontinued
development of TAF. At the time, Gilead allegedly explained its
decision by stating publicly that the differences between TDF and
TAF were insufficient to justify further investment in TAF’s
development.
      Plaintiffs allege, on the contrary, that Gilead’s decision to
discontinue work on TAF was actually driven by a conscious
business strategy to maximize the financial value of TDF. If TAF
were developed immediately as a treatment, plaintiffs allege, its
superiority to TDF would have resulted in its replacement of TDF
as an HIV/AIDS treatment. By deferring development of TAF, in
contrast, Gilead was able to maximize its sales of TDF, while

                                  5
using the later release of TAF to extend the patent coverage of
tenofovir-related medications. As plaintiffs allege, this strategy
“would effectively monetize both drugs.”
      Following its pause in the development of TAF in 2004, and
continuing through 2011, Gilead obtained FDA approval to sell a
series of HIV/AIDS medications that featured TDF in
combination with antiviral drugs produced by other
manufacturers. Gilead eventually resumed work on TAF and
received FDA approval to sell TAF as a treatment for HIV/AIDS
in 2015. In 2011, Gilead’s President allegedly told investors that
TAF would be a “kinder, gentler” version of TDF.1
      The complaint asserted claims for negligence, strict
products liability, breach of express and implied warranties, and
fraudulent concealment. Over the course of the litigation,
however, plaintiffs significantly narrowed the scope of their
claims. In two separate stipulations, plaintiffs dismissed with
prejudice their causes of action for strict liability and breach of
warranty, as well as any claims “that solely provide support for
failure to warn liability.” By the time of the summary judgment
motion, plaintiffs’ only remaining claims were for negligence and
fraudulent concealment.

      1 According to the statement of undisputed material facts

Gilead submitted in connection with the summary judgment
motion, Gilead resumed work on TAF in 2011 and conducted a
Phase III study to compare TDF- and TAF-based medications
in 2013. That study, Gilead’s motion conceded, provided
“substantial evidence that TAF had less impact than TDF on
renal function [and] bone metabolism.”

                                  6
II.   Gilead’s Summary Judgment Motion
      Although the allegations on which plaintiffs’ negligence
cause of action is based did not change over the course of the
litigation, the framing of their claim evolved. By the time Gilead
filed its summary judgment motion, plaintiffs’ contention was
that Gilead’s 2004 decision to postpone development of TAF,
despite its knowledge that TAF presented a safer alternative to
TDF, breached its duty of reasonable care to users of its TDF
medications. Plaintiffs aver that they will not attempt to
demonstrate that TDF’s design was defective, nor that TDF
should be withdrawn from the market. Rather, what matters is
that “Plaintiffs and their physicians were deprived of the choice
between TDF or TAF by Gilead’s actions.”
      Gilead did not, for purposes of the summary judgment
motion, dispute plaintiffs’ primary allegations of actionable
conduct. Rather, its motion was premised solely on evidence of
the FDA’s approval of a series of medications featuring TDF.
Based on this approval, Gilead argued that plaintiffs’ claim for
negligence (1) is preempted by federal law and (2) fails to state a
claim under state tort law. The latter argument was premised on
Gilead’s contention that a product seller is liable only for harm
caused by products proven to be defective. Because plaintiffs do
not seek to prove that TDF-containing medications are defective,
Gilead argued, plaintiffs cannot hold the company liable for harm
caused by TDF. Acknowledging plaintiffs’ current claim that
Gilead had a duty of reasonable care to commercialize a TAF-
based medication once it knew of TAF’s superiority to TDF,

                                 7
Gilead argued that “there is no such thing as a claim to redress
alleged injuries caused by a defendant’s product without
‘prov[ing] that a defect caused [the] injury’—i.e., without proving
a design defect.”
      Plaintiffs’ claim for fraudulent concealment alleged that
Gilead actively concealed that TAF was a safer means for
delivering tenofovir into the body; that the toxicity of tenofovir
was not unavoidable; and that Gilead’s true motive for shelving
TAF development was financial. With respect to this claim,
Gilead argued that (1) it was preempted by federal law; (2) Gilead
had no duty to disclose to plaintiffs information “about an
unapproved drug that they were not taking”; and (3) plaintiffs
could not demonstrate that information about TAF’s safety,
provided prior to TAF’s approval by the FDA, would have been
material to their doctors’ decisions to prescribe TDF. As noted,
the summary judgment motion was denied, and these writ
proceedings followed.2
                          DISCUSSION
I.    Negligence
      Civil Code section 1714 (section 1714), which states the
statutory rule of negligence, provides that “[e]veryone is
responsible . . . for an injury occasioned to another by his or her

      2 In connection with its writ petition and again in

connection with a subsequent motion to stay proceedings, Gilead
filed separate motions for judicial notice. Although we granted
the relief sought by Gilead in both instances, we did not expressly
rule on its motions for judicial notice in doing so. Because both
motions for judicial notice were rendered moot by our grant of the
relief Gilead was seeking, we now deny the motions.

                                  8
want of ordinary care or skill in the management of his or her
property or person.” (Civ. Code, § 1714, subd. (a).) The familiar
elements of a negligence cause of action are duty, breach,
causation, and damages. (Achay v. Huntington Beach Union
High School Dist. (2022) 80 Cal.App.5th 528, 535.) “In
California, the ‘general rule’ is that people owe a duty of care to
avoid causing harm to others and that they are thus usually
liable for injuries their negligence inflicts.” (Southern California
Gas Leak Cases (2019) 7 Cal.5th 391, 308; see Brown v. USA
Taekwondo (2021) 11 Cal.5th 204, 214 (USA Taekwondo)
[section 1714 “establishes the default rule that each person has a
duty ‘to exercise, in his or her activities, reasonable care for the
safety of others’ ”].) “Whether a duty exists is a question of law to
be resolved by the court.” (USA Taekwondo, at p. 213.)
      Drawing on the language of section 1714, plaintiffs
characterize Gilead’s duty as simply the duty “to exercise
reasonable care not to cause foreseeable injury to the users of its
products.” But it is generally more appropriate to consider the
claimed duty in its factual context. (See, e.g., Verdugo v. Target
Corp. (2014) 59 Cal.4th 312, 336 [considering whether duty of
reasonable care obligates department store to maintain an AED
for use in a medical emergency]; Conte v. Wyeth, Inc. (2008)
168 Cal.App.4th 89, 103 (Conte) [considering “whether a name-
brand prescription drug manufacturer in disseminating product
warnings owes a duty of care to patients who take a generic
version of the drug pursuant to a prescription written in reliance
on the name-brand maker’s information”].) Doing so is

                                  9
particularly important here because Gilead occasionally describes
plaintiffs’ proposed duty as imposing obligations—such as a “duty
to innovate”—that plaintiffs expressly disavow. Plaintiffs do not
claim that a manufacturer that obtains FDA approval to sell a
prescription drug has a legal duty to invent a safer alternative
drug, and by failing to do so may be held liable to users of the
existing drug for injuries caused by the disclosed side effects of its
use.3 On the contrary, their negligence claim is premised on
Gilead’s possession of such an alternative in TAF; they complain
of Gilead’s knowing and intentional withholding of such a
treatment following its invention. While we agree with Gilead
that a duty that placed manufacturers “under an endless
obligation to pursue ever-better new products or improvements to
existing products” would be unworkable and unwarranted,
plaintiffs are not asking us to recognize such a duty.
      The factual basis for plaintiffs’ claim, as alleged in the
complaint and confirmed by their supplemental briefing, is that
(1) Gilead voluntarily invented TAF as part of the same research
effort that led to the development of TDF; (2) prior to pausing
work on TAF, Gilead had developed TAF sufficiently to evaluate
its performance in a controlled trial, referred to as a Phase I/II
trial; (3) by the time it paused work in 2004, Gilead knew that

      3 We use the term “invent” here, rather than “develop,”

because the meaning of “develop” in the pharmaceutical context
is ambiguous. Gilead refers to the entire process of drug creation,
from invention through FDA approval, as drug development.
Because plaintiffs’ claim is focused only on the latter stages of
this process, Gilead’s general reference to a “duty to develop”
obscures the precise nature of plaintiffs’ claim.

                                 10
TAF would treat HIV/AIDS as effectively as TDF, yet would
allow patients to avoid the bone and kidney side effects
associated with TDF; and (4) Gilead made the decision to defer
further commercialization of TAF for the purpose of extending
the duration of its patent protection for tenofovir-related
treatments, thereby increasing its financial return, rather than
because of any concerns for TAF’s successful commercialization.
Again, while Gilead’s briefing disputes plaintiffs’ assertions about
its knowledge and motivation, it did not contest those assertions
for the purposes of the summary judgment motion presently
under review. We therefore accept the allegations of the
complaint in adjudicating Gilead’s present arguments.4
      In context, then, the duty question we must address is
whether a drug manufacturer, having invented what it knows is
a safer, and at least equally effective, alternative to a
prescription drug that it is currently selling and that is not
shown to be defective, has a duty of reasonable care to users of
the current drug when making decisions about the
commercialization of the alternative drug.5

      4 Although Gilead cites some evidence in the appellate

record to support its rebuttal of plaintiffs’ factual allegations,
that evidence was submitted in connection with proceedings in
the litigation that occurred prior to the summary judgment
motion. Plaintiffs contend that Gilead’s evidence is contradicted
by evidence similarly submitted by plaintiffs.
      5 At a few points in the complaint, plaintiffs allege that

Gilead knew “or should have known” that TAF was safer than
TDF. In general, however, plaintiffs’ complaint, summary
judgment papers, and briefs in this court, assert without

                                  11
      A.     Negligence Without Proof of Defect
      Gilead’s original argument against plaintiffs’ negligence
claim in its writ petition was based on plaintiffs’ decision to
abandon any attempt to prove that TDF is defective. (Plaintiffs
state that their decision is not a concession that TDF is not
defective, but rather arises from a concern that any claim
requiring proof that TDF is defective would be subject to federal
preemption.6) Gilead argued that, in the products liability
context, a manufacturer satisfies its duty of reasonable care by
making a product that is not defective. Therefore, according to
Gilead, a manufacturer cannot be held liable in negligence for
harm its product causes if the plaintiff’s showing does not include
proof that the injury was caused by a defect.
      The concept of a “defect” is one of the defining components
of the doctrine of strict products liability, which provides that the
manufacturer of a product is liable “if a defect in . . . its product

qualification that Gilead knew TAF was safer than TDF.
Moreover, actual knowledge appears to be necessary to the
motivation plaintiffs attribute to Gilead’s decision—Gilead’s
alleged concern that TAF would “cannibalize” sales of TDF and
its belief that TAF’s later release would allow Gilead to maximize
its financial return by extending the duration of its patent
protection for tenofovir-related treatments. We therefore analyze
plaintiffs’ claim as premised on actual knowledge, although we
take no position on whether plaintiffs should be permitted to
include a constructive knowledge theory on remand, should they
seek to do so.
      6 Plaintiffs contend that the doctrine has developed in such

a way as to severely limit the availability of design defect claims.
(See, e.g., Bernstein, (Almost) No Bad Drugs: Near-Total
Products Liability Immunity for Pharmaceuticals Explained
(2020) 77 Wash. & Lee L.Rev. 3, 32–37 (Bernstein).)

                                  12
causes injury while the product is being used in a reasonably
foreseeable way.” (Soule v. General Motors Corp. (1994) 8 Cal.4th
548, 560 (Soule).)7 Prior to California’s adoption of the doctrine
in Greenman v. Yuba Power Products, Inc. (1963) 59 Cal.2d 57
(Greenman), negligence was the primary tort theory under which
persons could recover for injuries caused by a manufactured
product. (E.g., Escola v. Coca Cola Bottling Co. (1944) 24 Cal.2d
453, 457.) Because strict liability “focusses not on the conduct of
the manufacturer but on the product itself ” (Brown, supra,
44 Cal.3d at p. 1056), it was intended to simplify a consumer
plaintiff’s evidentiary burden, as well as to serve the public policy
function of placing the financial burdens associated with
defective products on manufacturers, who are liable regardless of
any fault in their conduct. (See Cronin v. J.B.E. Olson Corp.

      7 Product defects fall into three categories:  manufacturing
defects, design defects, and defects of warning. A manufacturing
defect occurs from “a flaw in the manufacturing process, resulting
in a product that differs from the manufacturer’s intended
result.” (Brown v. Superior Court (1988) 44 Cal.3d 1049, 1057
(Brown).) A design defect can be found (1) “if the plaintiff
demonstrates that the product failed to perform as safely as an
ordinary consumer would expect when used in an intended or
reasonably foreseeable manner” (Barker v. Lull Engineering Co.
(1978) 20 Cal.3d 413, 429 (Barker)) or (2) “if the jury finds that
the risk of danger inherent in the challenged design outweighs
the benefits of such design.” (Id. at p. 430; see generally Kim v.
Toyota Motor Corp. (2018) 6 Cal.5th 21, 30.) A failure-to-warn
defect results if the manufacturer “did not adequately warn of a
particular risk that was known or knowable in light of the
generally recognized and prevailing best scientific and medical
knowledge available at the time of manufacture and
distribution.” (Carlin v. Superior Court (1996) 13 Cal.4th 1104,
1112 (Carlin).)

                                 13
(1972) 8 Cal.3d 121, 133 (Cronin) [“the very purpose of our
pioneering efforts in this field was to relieve the plaintiff from
problems of proof inherent in pursuing negligence [citation] and
warranty [citation] remedies, and thereby ‘to insure that the
costs of injuries resulting from defective products are borne by
the manufacturers’ ”].)
      The purpose of requiring proof of a defect is to prevent
strict liability from expanding into absolute liability, in which
manufacturers would effectively be made insurers for the safety
of their products. (See, e.g., Cronin, supra, 8 Cal.3d at pp. 133–
134; Soule, supra, 8 Cal.4th at p. 568, fn. 5; Daly v. General
Motors Corp. (1978) 20 Cal.3d 725, 733; see also Jiminez v. Sears,
Roebuck & Co. (1971) 4 Cal.3d 379, 383 (Jiminez) [noting that
“the manufacturer’s strict liability depends upon what is meant
by defect”].) Early commentators, including Greenman’s author,
Justice Traynor, remarked on the difficulty of defining what
constitutes a “defect.” (See Traynor, The Ways and Meanings of
Defective Products and Strict Liability (1965) 32 Tenn. L.Rev.
363, 366–367; Wade, On the Nature of Strict Tort Liability for
Products (1973) 44 Miss. L.J. 825, 832 [“It is not without reason
that some people, in writing about it, speak of the requirement of
being ‘legally defective,’ including the quotation marks”]; see also
Barker, supra, 20 Cal.3d at p. 427 [“the term defect as utilized in
the strict liability context is neither self-defining nor susceptible
to a single definition applicable in all contexts”].) But while the
“formidable task” (id. at p. 418) of defining the term “defect” may
have been necessary to constrain the reach of strict liability, in

                                  14
negligence the requirement of a duty of care imposes its own
limits on the potential scope of liability, governed by an array of
policy considerations as they bear on a particular context. (See,
e.g., Kesner v. Superior Court (2016) 1 Cal.5th 1132, 1143
(Kesner) [“ ‘ “Courts . . . invoke[] the concept of duty to limit
generally ‘the otherwise potentially infinite liability which would
follow from every negligent act. . . .’ ” ’ ”] (quoting Bily v. Arthur
Young & Co. (1992) 3 Cal.4th 370, 397); Rowland, supra,
69 Cal.2d at pp. 112–113.) In our view, neither logic nor
jurisprudential history compels the conclusion that the two
concepts must be coextensive in every case in which a plaintiff is
injured by a product.
      The adoption of strict liability in Greenman did not purport
to displace negligence as a cause of action. It was soon settled
that a plaintiff seeking compensation for harm caused by a
product can plead and prove a claim for negligence as well as
strict liability. (E.g., Jiminez, supra, 4 Cal.3d at p. 387 [“No valid
reason appears to require a plaintiff to elect whether to proceed
on the theory of strict liability in tort or on the theory of
negligence”]; T.H. v. Novartis Pharmaceuticals Corp. (2017)
4 Cal.5th 145, 177, fn. 4 (T.H.) [affirming that strict liability and
negligence furnish distinct bases for liability].) After Greenman,
plaintiffs harmed by products can focus on the product and prove
a defect, or they can focus on the manufacturer’s conduct and
prove a breach of the duty of care—or both. In theory, there is no
reason why a plaintiff who suffers harm as a proximate result of
a manufacturer’s breach of the duty of reasonable care should be

                                   15
denied relief merely because the product that was the direct
cause of harm did not satisfy the legal definition of “defective.”
      That said, Gilead’s argument that proof of a defect is a
necessary element of a negligence claim for injury from a product
is not new to the law. The same argument was made, although
not resolved, early in the development of strict liability law in
Hasson v. Ford Motor Co. (1977) 19 Cal.3d 530 (Hasson). The
plaintiff there was injured when the brakes failed on his four-
year-old car. (Id. at p. 536.) The jury concluded that the car was
not defective at the time it was sold, but it found the
manufacturer liable in negligence. (Id. at p. 539.) The
manufacturer argued that the jury’s verdict was fatally
inconsistent because “strict liability based upon a ‘defect’ of
design or manufacture encompasses all of the conceptual bases
which would give rise to a traditional common law liability for
negligence of a manufacturer. In effect, the newer law subsumes
the old. Accordingly, . . . a special finding that there was no
‘defect’ obviates any finding of ‘negligence.’ ” (Id. at p. 540.)
Unfortunately for our present purposes, the Supreme Court
declined to “examine in detail the abstract legal relationship
between the terms ‘defect’ and ‘negligence’ ” and did not render a
ruling on the manufacturer’s argument. (Ibid.)8 Since Hasson,

      8 Hasson did conclude that the jury’s finding of no defect at

the time the car was manufactured did not preclude a finding of
negligence liability, but it did so by construing the negligence
claim in a way that did not involve design. The court reasoned
that, in light of the instructions given, the jury could have
concluded “that the braking system and the fluid were, at the

                                  16
no California case appears to have expressly considered the issue
before us.9 Nonetheless, a variety of cases demonstrate, contrary
to Gilead’s argument, that a manufacturer’s duty of reasonable
care can extend more broadly than the duty to make a non-
defective product, thereby permitting recovery even when there is
no showing that the injury resulted from a product defect.

outset, sound and fit for their intended purpose,” giving rise to
the finding of no defect, “but that Ford was nonetheless liable for
its failure during the ensuing four years to warn of conditions
which might develop in use.” (Hasson, supra, 19 Cal.3d at
p. 543.) The court pointed out that, while the instructions
permitted the jury to construe Ford’s failure to warn as a product
defect, they did not require it to do so, and thus the failure to
warn could have been the predicate for the jury’s negligence
finding without also leading to a finding of defect. (Ibid.)
      9 In Toner v. Lederle Laboratories (9th Cir. 1987) 828 F.2d

510, 513 (Toner), the Ninth Circuit held, based on the Idaho
Supreme Court’s answers to certified questions (see Toner v.
Lederle Laboratories (1987) 112 Idaho 328, 330), that under
Idaho law the jury’s verdict absolving the vaccine manufacturer
under strict liability was not fatally inconsistent with its verdict
finding it liable in negligence. The court concluded that the jury
could have found that the vaccine that harmed the plaintiff was
not defective, while also finding the manufacturer negligent for
failing to develop an alternative, safer vaccine of which it was
aware. (Toner, 828 F.2d at p. 513; but see, e.g., Burton v. E.I. du
Pont de Nemours and Co., Inc. (7th Cir. 2021) 994 F.3d 791, 817–
819 [concluding that, under Wisconsin law, a negligence claim
requires proof of a defect].) In a federal case arising out of the
same facts at issue here, the court recently “reject[ed] Gilead’s
argument to the extent it asserts it cannot be held liable for
negligence if it is not liable under a strict-liability theory,” but
the question there was whether certain states require a plaintiff
asserting a negligence claim to prove that the product was
“unreasonably dangerous.” (Holley v. Gilead Sciences, Inc.
(N.D.Cal. Sept. 28, 2023, No. 18-cv-06972-JST) 2023 U.S.
Dist.Lexis 176115, at *61–*62.)

                                 17
      The most prominent such case is Mexicali Rose v. Superior
Court (1992) 1 Cal.4th 617 (Mexicali Rose), which considered
whether restaurants can be held liable for injury caused by a
naturally occurring substance in their food—there, a chicken
bone in a chicken enchilada. (Id. at p. 620.) In its analysis, the
Supreme Court first summarized the prevailing rule: “If the
injury-producing substance is natural to the preparation of the
food served, it can be said that it was reasonably expected by its
very nature and the food cannot be determined to be unfit for
human consumption or defective.” (Id. at p. 630.) “Thus,” the
court concluded, “a plaintiff in such a case has no cause of action
in implied warranty or strict liability.” (Id. at pp. 630–631.)
      The inability to prove a defect, however, was not fatal to a
plaintiff ’ s recovery for injury caused by a naturally occurring
substance. Plaintiffs may still, the court held, assert a claim for
negligence and prove that the presence of the substance resulted
from the restaurant’s failure to exercise ordinary care in
preparation of the non-defective dish. As the court confirmed,
“[t]he expectations of the consumer do not, however, negate a
defendant’s duty to exercise reasonable care in the preparation
and service of the food. Therefore, if the presence of the natural
substance is due to a defendant’s failure to exercise due care in
the preparation of the food, an injured plaintiff may state a cause
of action in negligence.” (Mexicali Rose, supra, 1 Cal.4th at
p. 631.)
      Mexicali Rose expressly rejected the argument that a
restaurant’s liability should be limited to food classified as

                                 18
defective under the law of strict liability, thereby barring any
claim for recovery “when a substance natural to the preparation
of the food product has caused injury.” (Mexicali Rose, supra,
1 Cal.4th at p. 632.) The court reasoned that allowing a cause of
action for negligence “corresponds to modern developments in
tort law,” including “our modern emphasis on Civil Code
section 1714.” (Ibid.) “[W]e believe it is a question for the trier of
fact to determine whether the presence of the injury-producing
substance was caused by the failure of the defendants to exercise
reasonable care in the preparation of the food, and whether the
breach of the duty to exercise such care caused the consumer’s
injury.” (Id. at p. 633.)
      Although Mexicali Rose did not expressly consider the issue
raised by Gilead—the need to prove a defect to recover for harm
caused by a product—its holding effectively resolves the claim.
Mexicali Rose holds that a plaintiff may recover under the
doctrine of negligence for harm caused by a product otherwise
subject to the doctrine of strict liability, notwithstanding the
plaintiff’s inability to prove a product defect. And although the
decision arose in the atypical context of restaurant “products,” it
does not suggest that its ruling is limited to that context, and
Gilead, when asked to address the decision at oral argument,
provided no justification for restricting the decision to food
products. Importantly, Mexicali Rose illustrates the continued
utility of the negligence cause of action in products liability
actions. Although the legal concept of a “defect” is
extraordinarily useful, it should not in every case constitute the

                                 19
outer boundary of a manufacturer’s liability for its conduct. The
circumstances under which a manufacturer might appropriately
be held liable for injury caused by its products are simply too
varied to be so constrained. Under section 1714, harm resulting
from a manufacturer’s failure to exercise reasonable care may be
compensable, even if the product causing the harm does not meet
the legal definition of “defective.”
      The Courts of Appeal have also permitted recovery under
claims of negligence in the absence of a defect. (See, e.g., Lunghi
v. Clark Equipment Co. (1984) 153 Cal.App.3d 485 (Lunghi);
Hernandez v. Badger Construction Equipment Co. (1994)
28 Cal.App.4th 1791 (Hernandez).) The plaintiff’s decedent in
Lunghi was killed by a machine manufactured several years
earlier. The jury entered judgment for the defendant, finding no
defect in the product’s design. (Lunghi, at p. 489.) The Court of
Appeal reversed, concluding the trial court had erred in refusing
to instruct on negligence. (Id. at p. 491.) As the court explained,
“[e]ven if, properly instructed, the jury had found that none of the
mechanical design features in issue . . . constituted a defect, it
could still have found that [the defendant’s] knowledge of the
injuries caused by these features imposed a duty to warn of the
danger, and/or a duty to conduct an adequate retrofit campaign.
A finding that [defendant] had not met the standard of
reasonable care with regard to either of these duties would have
had some support in the evidence, and would have been
consistent with a finding that the product’s design was not
defective.” (Id. at p. 494, italics omitted.) To similar effect is

                                  20
Hernandez, which also involved an injury from heavy equipment
manufactured several years prior. Although the jury found
against the plaintiff on the issue of design defect (Hernandez, at
p. 1802), the court affirmed a verdict of negligence on the theory
that the manufacturer, once it began offering as standard
equipment a safety device that would have prevented the
plaintiff’s injury, could be found liable under a duty to take
reasonable steps to prevent injury to users of earlier models
lacking the device. (Id. at p. 1828.)
      Gilead argues that Hernandez and Lunghi are inapposite
because, in its view, they stand only for the proposition that a
product can be free of defects at the time it is manufactured and
sold, but can “become defective,” for example as a result of
technological developments or new information or understanding.
Neither case, however, held that the products had become
“defective” as that term is used in strict products liability law,
nor characterized such a finding as a prerequisite to imposing a
duty to warn or to retrofit under principles of negligence.
Whether or not the products could have been characterized as
“defective” at the time of the plaintiffs’ injuries, the plaintiffs did
not have to prove that they were, and the characterization is
legally irrelevant to a finding of negligence liability.
      In short, although the utility of a cause of action for
negligence in products liability actions has been greatly reduced
by the doctrine of strict liability, it has not been eliminated. In
those circumstances in which a manufacturer’s duty of
reasonable care properly extends beyond the duty not to market a

                                  21
defective product, a claim for negligence continues to provide a
remedy.
      We are not persuaded by Gilead’s arguments to the
contrary. Gilead relies on isolated language from a variety of
decisions that characterize products liability law as premised on
the existence of a defect. Because the doctrine of strict liability
provides the rule of law for the vast majority of products liability
cases, this is an understandable generalization. As the Supreme
Court has had frequent reason to observe, however, “ ‘ “ ‘cases are
not authority for propositions not considered.’ ” ’ ” (Geiser v.
Kuhns (2022) 13 Cal.5th 1238, 1252.) The mere fact that a
decision contains language that can be construed to suggest that
a defect is a sine qua non for recovery against a manufacturer
does not make the decision authority for that proposition unless
the issue has been considered and the conclusion embraced. (Id.
at p. 1252 [the cited case “is not controlling because that issue
was not presented in [the case]”].)
Merrill v. Navegar, Inc.
      Gilead places primary reliance on Merrill v. Navegar, Inc.
(2001) 26 Cal.4th 465 (Merrill), which considered the connection
between claims of negligent and defective design in construing
former Civil Code section 1714.4. That statute, repealed in 2002
(Stats. 2002, ch. 906, § 2), prohibited recovery against gun
manufacturers on a classic risk/benefit theory of design defect.10

      10 Former Civil Code section 1714.4, subdivision (a), read:

“In a products liability action, no firearm or ammunition shall be
deemed defective in design on the basis that the benefits of the

                                 22
(Merrill, at p. 470.) The plaintiffs attempted to avoid the bar of
former section 1714.4 by alleging that semi-automatic assault
pistols were negligently designed “because, given their particular
characteristics, the benefits of making them available to the
general public—which were nonexistent—did not outweigh the
risk they might inflict serious injury or death when discharged.”
(Ibid.)
      In rejecting the attempt, the court recognized that a
plaintiff in a products liability action can recover under theories
of both strict liability and negligence. (Id. at p. 478.) In a
products liability action based on negligence in the design of a
product, however, “the test of negligent design ‘involves a
balancing of the likelihood of harm to be expected from a machine
with a given design and the gravity of harm if it happens against
the burden of the precaution which would be effective to avoid the
harm.’ ” (Id. at p. 479.) “Thus,” the court observed, “ ‘most of the
evidentiary matters’ relevant to applying the risk/benefit test in
strict liability cases ‘are similar to the issues typically presented
in a negligent design case.’ ” (Id. at p. 480.) Although the
plaintiffs argued “that they seek to hold [the defendant] liable for
‘negligent conduct, not for making a defective product,’ ” the court
found the distinction immaterial because “in asserting that the
[assault pistol] had a ‘negligent design’ and that [the defendant]
‘negligently designed’ it, plaintiffs have in fact alleged that the

product do not outweigh the risk of injury posed by its potential
to cause serious injury, damage, or death when discharged.”
(Merrill, supra, 26 Cal.4th at p. 478.)

                                  23
[assault pistol] is, in the words of [former] section 1714.4,
subdivision (a), ‘defective in design.’ ” (Ibid.) The court rejected
the plaintiffs’ effort to recast the claim as one for “negligent
distribution to the public,” because it was already implicit in
negligence and strict liability theories of products liability that
the manufacturer was in the business of distributing goods to the
public. (Id. at p. 481.) Therefore, the court concluded, the
plaintiffs’ allegation that the defendant made the assault pistol
available to the general public “adds nothing to the standard
products liability action.” (Ibid.)
      As this summary suggests, Merrill did not consider
whether every negligence claim against a manufacturer must
include proof of a defect. Rather, it concluded that, regardless of
how the plaintiffs labeled it, the gravamen of their purported
negligence claim was that the assault pistol “was defective in
design because the risks of making it available to the general
public outweighed the benefits of that conduct, and that
defendants knew or should have known this fact.” (Merrill,
supra, 26 Cal.4th at p. 481.) This is not a holding that every
negligence claim to recover for injuries from a product (unless
based on failure to warn or manufacturing defects) is necessarily
one for negligent design, measured by one of Barker’s two tests
for design defects.
      In arguing for a broader interpretation of Merrill, Gilead
relies on the decision’s introductory summary of the law of
products liability: “As Professors Prosser and Keeton explain,
‘Products liability is the name currently given to the area of the

                                  24
law involving the liability of those who supply goods or products
for the use of others to purchasers, users, and bystanders for
losses of various kinds resulting from so-called defects in those
products.’ [Citation.] As relevant here, a plaintiff may seek
recovery in a ‘products liability case’ either ‘on the theory of strict
liability in tort or on the theory of negligence.’ [Citations.] The
rules of products liability ‘focus responsibility for defects, whether
negligently or nonnegligently caused, on the manufacturer of the
completed product.’ [Citation.] Thus, under either a negligence or
a strict liability theory of products liability, to recover from a
manufacturer, a plaintiff must prove that a defect caused injury.
[Citations.] Under a negligence theory, a plaintiff must also
prove ‘an additional element, namely, that the defect in the
product was due to negligence of the defendant.’ ” (Merrill,
supra, 26 Cal.4th at pp. 478–479, italics added.) Read in
isolation, the italicized language from Merrill certainly supports,
if not flatly confirms, Gilead’s legal theory.
      We decline to find Merrill controlling on this issue for three
reasons. First, as explained above, the requirement of a defect in
every products liability case was not an issue actually considered
in Merrill. Rather, the court addressed only whether the legal
test for negligent design overlapped with the test for defective
design in such a way that the plaintiffs could not evade a ban on
recovery under a theory of design defect by alleging negligent
design.
      Second, the authority cited by Merrill in its summary of the
law did not consider this issue, either. The primary authority

                                  25
was an early law review article on products liability law by
Professor William Prosser, which was published only three years
after California adopted strict products liability in Greenman—
well before the doctrine’s legal framework was well defined.
(Prosser, Strict Liability to the Consumer (1966) 18 Hastings L.J.
9.) The cited portion of the article did not purport to opine on the
requirements of a negligence claim in products liability actions;
the point was that the evidence supporting a claim of defect
under strict liability “does not appear to differ in any significant
respect from the proof of negligence.” (Id. at p. 50.) The
California cases cited by Merrill as authority, Jiminez, supra,
4 Cal.3d 379, and Cronin, supra, 8 Cal.3d 121, are similarly
beside the point. Cronin considered whether a plaintiff alleging
defective design must demonstrate that the alleged defect made
the product “unreasonably dangerous” and ultimately rejected
this element. (Id. at pp. 132–134.) Jiminez held that a trial
court erred in refusing to instruct the jury on negligence and res
ipsa loquitur in a products liability case. (Jiminez, supra,
4 Cal.3d at pp. 384–387.) Neither decision holds that a plaintiff
alleging negligence in a products liability action must in every
case prove a product defect; although Jiminez adopted, without
discussion, defendant’s assertion that proof of a defect was
required, it explained that “under the facts of the case before us
instructions on negligence would serve the plaintiff better than
instructions on defect in several respects,” suggesting the jury

                                 26
might have found the manufacturer liable in negligence without
finding the product defective. (Id. at pp. 383–384.)11
      Third, accepting Merrill as controlling authority on this
point would require a conclusion that the decision was intended
to overrule, sub silentio, the various cases discussed above that
permit a negligence claim to proceed in the absence of proof of a
product defect. There is simply no indication that Merrill
intended such a change.
      Although Gilead does not expressly distinguish the
argument, it also contends that, even if Merrill does not establish
that proof of a defect is required in every case, the court’s
analysis demonstrates that plaintiffs here are likewise asserting
a claim for negligent design, and only repudiate the label in an
effort “to avoid their concession that the TDF medications are not
defective.” As an initial matter, plaintiffs’ decision to forgo a
claim that TDF is defective is not a concession that TDF is not
defective. (Cf. Toner, supra, 828 F.2d at p. 513 [“We decline to
treat Toner’s litigation decision not to pursue the warning theory

      11 The plaintiff was injured by a ladder that broke while he

was using it on the cement floor of his garage. He had tried to
use it only once previously to prune a tree but stopped because
the ground was too muddy. (Jiminez, supra, 4 Cal.3d at p. 381.)
There was some evidence that the ladder may have broken
because its previous use on soft soil caused the load on its legs to
be unevenly distributed. (Id. at p. 382.) The court opined that a
jury instructed on negligence might have found the manufacturer
liable for failing to warn that the ladder should not be used on
soft ground, but if instructed only on strict products liability,
could have concluded that the ladder was not defective because it
was safe for use on hard ground, even if use on soft ground would
be considered a normal use of the product. (Id. at p. 385.)

                                  27
as if it were a stipulation that Toner had adequate warning”].)
And in any event, we find plaintiffs’ claim to be significantly
different from the negligence claim in Merrill. Plaintiffs do not
contend that Gilead was negligent because it made TDF available
for sale, or because the risks of TDF outweighed its benefits.
Rather, they contend that Gilead breached its duty of reasonable
care by postponing, solely to maximize profit, its effort to
commercialize TAF as a treatment for HIV/AIDS while
continuing to market a medication with serious side effects that
it knew TAF would have enabled patients to avoid.
      Unlike in Merrill, we cannot say that these allegations
“add[] nothing to the standard products liability action.” (Merrill,
supra, 26 Cal.4th at p. 481.) Gilead’s alleged financially
motivated deferral of the development of TAF for seven years,
despite its recognition of TAF’s superiority, is discrete conduct
independent of the design and marketing of TDF. For this
reason, plaintiffs’ cause of action, unlike a typical negligent
design case, will focus on “the reasonableness of the
manufacturer’s conduct,” rather than “the condition of the
product itself.” (Barker, supra, 20 Cal.3d at p. 434.)
Brown v. Superior Court
      Gilead also relies on Brown, supra, 44 Cal.3d 1049, which
held that prescription drugs are exempt from strict liability
claims of defective design pursuant to comment k to section 402A
of the Restatement Second of Torts, pages 353–354. (Brown, at

                                 28
p. 1061.)12 The court did not exempt prescription drugs from
such claims because it concluded that prescription drugs cannot
be defectively designed. On the contrary, as the court recognized,
the design of a prescription drug might be found defective under
the risk/benefit test if, for example, the plaintiff demonstrates
that a particular component of the drug rendered it unsafe and
that removal of that component would not have affected the
efficacy of the drug or if other, less harmful drugs were available
to treat the same condition. (Id. at p. 1062.) Rather, the court’s
decision was grounded in public policy concerns. Subjecting
prescription drug manufacturers to strict liability for design
defects, the court worried, might discourage drug development or
inflate the cost of otherwise affordable drugs. (Id. at p. 1063.)
      Gilead points to the first two sentences of Brown’s
footnote 12, which read as follows: “Our conclusion does not
mean, of course, that drug manufacturers are free of all liability
for defective drugs. They are subject to liability for
manufacturing defects, as well as under general principles of
negligence, and for failure to warn of known or reasonably
knowable side effects.” (Id. at p. 1069, fn. 12.) According to
Gilead, the first sentence establishes that “a defect is a necessary
precondition of any such suit.”

      12 Section 402A of the Restatement Second of Torts governs

claims for strict products liability; comment k exempts from such
claims “unavoidably unsafe products,” which the comment
defines as “products which, in the present state of human
knowledge, are quite incapable of being made safe for their
intended and ordinary use.” (Rest.2d Torts, § 402A, com. k,
pp. 353–354; Brown, supra, 44 Cal.3d at p. 1058.)

                                  29
      As with Merrill, however, the court in Brown was not
considering whether every claim against a manufacturer of
prescription drugs must prove that the drug was defective. The
“conclusion” to which the first sentence of footnote 12 refers is the
court’s holding that “a manufacturer is not strictly liable for
injuries caused by a prescription drug so long as the drug was
properly prepared and accompanied by warnings of its dangerous
propensities that were either known or reasonably scientifically
knowable at the time of distribution.” (Brown, supra, 44 Cal.3d
at p. 1069.) Since the existence of a defect is the sine qua non of
strict products liability—and the plaintiffs alleged that the drug
was defective (id. at p. 1055)—it is not surprising that the court
referred to manufacturers of “defective drugs” when explaining
that its holding about strict liability did not exempt them from
liability on other grounds. Those words reflect the issue before
the court. Because the court had no occasion to consider any
claim that was not premised on a defect, in context the sentence
cannot be read to mean that every viable claim against a
prescription drug manufacturer requires proof that the drug was
defective.
      Gilead further contends that the reference to “general
principles of negligence” in the second sentence of the footnote
could only mean claims for negligent design defect, which here
plaintiffs have abandoned. It is true that footnote 12 has been
read to preserve claims for negligent design defect in light of the
court’s rejection of strict liability design defect claims. (See, e.g.,
Garrett v. Howmedica Osteonics Corp. (2013) 214 Cal.App.4th

                                  30
173, 182; Artiglio v. Superior Court (1994) 22 Cal.App.4th 1388,
1393.) But even if the court had in mind claims of negligent
design defect, again the context of the footnote prevents us from
construing it to say that no other negligence claims are
cognizable. Nothing in the case presented that question.
      Gilead also suggests that Brown’s reasoning may call into
question some aspects even of negligent design defect claims
insofar as the court’s policy concerns about evaluating the merits
of a drug’s design are relevant whether the claim is based in
strict liability or negligence.13 It is unnecessary for us to explore
this issue in depth given plaintiffs’ disavowal of a design defect
claim, and we again note that we do not view the negligence
claim here as a disguised claim that TDF, at the time of its
distribution to plaintiffs, was negligently designed. Not only does
the claim require the trier of fact to consider conduct independent
of TDF’s design—Gilead’s alleged recognition of TAF’s superiority
and its reasons for pausing development—but even as to TDF’s
design, the claim does not depend on an evaluation of the risks

      13 Gilead echoes an argument expressed by some

commentators that there is a tension between Brown’s
preservation of claims for negligent design defect and its rejection
(Brown, supra, 44 Cal.3d at pp. 1066–1068) of the case-by-case
approach to the application of comment k adopted in Kearl v.
Lederle Laboratories (1985) 172 Cal.App.3d 812. (See Conk, Is
There A Design Defect in the Restatement (Third) of Torts:
Products Liability? (2000) 109 Yale L.J. 1087, 1125–1126; O’Neill,
Jr., Unavoidably Unsafe Products and the Design Defect Theory:
An Analysis of Applying Comment K to Strict Liability and
Negligence Claims (1989) 15 Wm. Mitchell L.Rev. 1049, 1061–
1062 & fn. 90.)

                                 31
and benefits of TDF as an HIV/AIDS medication, as would be
necessary in a claim for negligent design. Although the
characteristics of TDF as a medication are central to plaintiffs’
claim, these characteristics will not be evaluated in the abstract
to determine, on balance, whether TDF should have been
marketed at all. The risks and benefits of TDF relative to each
other are irrelevant to plaintiffs’ claim, which does not call into
question Gilead’s decision to market TDF. On the contrary,
plaintiffs’ claim is entirely consistent with a conclusion that the
benefits of TDF use for hundreds of thousands of HIV/AIDS
sufferers have vastly exceeded the harm from its side effects.
Rather, the critical question for plaintiffs’ purposes is simply
whether Gilead’s years-long delay in bringing TAF to market,
despite knowing its equivalent efficacy and superior safety to
TDF, breached a duty of reasonable care to users of TDF if the
reason was solely to maximize Gilead’s profits. Such a claim is
meaningfully different from the abstract consideration of risks
and benefits central to a claim of negligent design.
Other Cases
      Although a lengthy discussion is not required, the other
cases Gilead cites similarly do not stand for the proposition that
any negligence claim in the products liability context requires
proof of a defect. Gilead points to the Supreme Court’s statement
in Soule, supra, 8 Cal.4th at page 568, footnote 5, that
manufacturers “are liable in tort only when ‘defects’ in their
products cause injury.” But the court was not considering any
question about negligence liability or its scope; the question

                                 32
before it was whether a jury should be instructed on Barker’s
“consumer expectations” test for product defect in every case, or
whether in some cases only the risk/benefit test is appropriate.
(Soule, at p. 568.) The statement quoted by Gilead came in a
footnote responding to an argument that “any limitation on use of
the consumer expectations test contravenes Greenman’s purpose
to aid hapless consumers,” and the court’s point was simply that
strict liability is not unlimited. (Id. at p. 568, fn. 5.)
      Likewise, Gilead’s reliance on Milwaukee Electric Tool
Corp. v. Superior Court (1993) 15 Cal.App.4th 547 ignores its
context. In suggestive introductory language quoted by Gilead,
Milwaukee Tool states, “we conclude Milwaukee owes a general
duty to produce defect-free products, which translates into a duty
similar to that in negligence law not to depart from the
appropriate standards of care in manufacturing its product.” (Id.
at p. 551.) The issue actually considered in Milwaukee Tool,
however, was the application of a then-recent Supreme Court
decision concerning the defenses of assumption of the risk and
comparative fault. (Id. at pp. 550, 559–564.) Although the court
discussed the relationship between strict liability and negligence
(id. at pp. 555–559), the discussion occurred entirely in this
context. Milwaukee Tool did not consider whether a claim for
negligence could be asserted in the absence of a product defect.

                                   33
      Accordingly, we conclude that plaintiffs’ negligence claim is
not foreclosed by their decision to forgo any attempt to prove that
TDF is defective.14
      B.   New Duty Versus Exception to Existing Duty
      We pause here to consider the parties’ dispute about the
proper legal framework for analyzing plaintiffs’ negligence claim,
since it is relevant to how we proceed in light of our conclusion in
the preceding subsection. According to Gilead, the question is
whether plaintiffs can establish a “new” duty—one that would
impose further obligations on manufacturers that have produced
a non-defective prescription drug. According to plaintiffs, the
duty they are invoking is simply the one imposed on all persons
by section 1714, so the question is whether Gilead can establish
that an exception to that duty is warranted under the Rowland
factors. Both in the trial court, and originally in these writ
proceedings, Gilead’s view of the proper question led it to disavow
any invocation of Rowland, citing the Supreme Court’s
explanation that “[t]he multifactor test set forth in Rowland was
not designed as a freestanding means of establishing duty, but
instead as a means for deciding whether to limit a duty derived
from other sources.” (USA Taekwondo, supra, 11 Cal.5th at
p. 217.)

      14 Although plaintiffs now disavow any intent to prove

negligent design, we agree with Gilead that the trial court’s
ruling was in error to the extent it suggested plaintiffs can
pursue a claim for negligent design without proving the
equivalent of a design defect. Plaintiffs do not argue otherwise
on appeal.

                                 34
      Gilead’s position has some logical appeal if one accepts the
premise that, in the products liability context, the duty
section 1714 imposes on a manufacturer is simply to ensure that
any product it offers for sale is not defective. In that case,
plaintiffs would have to identify a proper basis for the imposition
of a greater duty.15 Because we have disagreed with the premise,
however, we are unpersuaded that the burden lies with plaintiffs
to establish the existence of a duty beyond that imposed by
section 1714.
      In arguing that plaintiffs should be required to establish
the existence of a new duty, Gilead relies on cases that concern
the existence of a duty to protect against harm from third parties.
(E.g., USA Taekwondo, supra, 11 Cal.5th at p. 215; Golick v.
State of California (2022) 82 Cal.App.5th 1127, 1140.) In that
context, there must be a “special relationship” between the
plaintiff and the defendant to give rise to a duty; the duty cannot
be created through application of the Rowland factors. (USA
Taekwondo, at pp. 216–222.) But the reason for requiring a
special relationship is that “the law imposes a general duty of
care on a defendant only when it is the defendant who has

      15 Plaintiffs argue that Gilead can be held liable under a

“negligent undertaking” theory. (See Artiglio v. Corning Inc.
(1998) 18 Cal.4th 604, 612–614.) Gilead responds, first, that this
theory is waived both because it was not pled in the complaint
and because plaintiffs failed to raise it in response to Gilead’s
summary judgment motion, and second, that it fails on the merits
in any event. We do not address these arguments given our
conclusion that Gilead has not established its entitlement to
summary adjudication under an “ordinary negligence” theory
pursuant to section 1714.

                                 35
‘ “created a risk” ’ of harm to the plaintiff, including when ‘ “the
defendant is responsible for making the plaintiff’s position
worse.” ’ ” (Id. at p. 214.) Here, Gilead itself created the risk of
harm to plaintiffs by selling TDF, a drug with harmful side
effects, making inapposite the cases on which Gilead relies.16
      Gilead also argues that its conduct, which it characterizes
as the failure to bring a product to market, constitutes
nonfeasance, rather than misfeasance, and quotes USA
Taekwondo’s observation that the law is “ ‘reluctan[t] to impose
liability’ ” for nonfeasance. (USA Taekwondo, supra, 11 Cal.5th
at p. 214.) The court’s observation, however, was made in
support of the general rule that a party has no duty to prevent
harm by a third person, and was not a ruling that a party’s
failure to act cannot constitute a breach of the duty of reasonable
care. As the court clarified in a footnote, “[a]lthough our
precedents have sometimes referred to the distinction between
‘misfeasance’ and ‘nonfeasance,’ we now understand this
terminology to be imprecise and prone to misinterpretation. ‘The
proper question is not whether an actor’s failure to exercise
reasonable care entails the commission or omission of a specific
act.’ [Citation.] Rather, it is ‘whether the actor’s entire conduct
created a risk of harm.’ ” (Id. at p. 214, fn. 6.) We are satisfied
that, in this case, that question can be answered affirmatively,
and accordingly that Gilead must establish that an exception to

      16 The fact that Gilead was the manufacturer of both drugs

is also an essential element of its alleged motivation for delaying
the commercialization of TAF and breaching its duty of care.

                                  36
the imposition of a duty of care is warranted under the Rowland
factors.
      Gilead’s failure to offer a Rowland analysis in the trial
court—to say nothing of its failure to do so in this court before we
requested supplemental briefing—constitutes sufficient reason
for us to decline to reach the issue. However, in its response to
our request, Gilead urged us to decide the applicability of a
Rowland exception if we concluded that it furnished the proper
framework for analyzing the claimed duty. Given the posture in
which the case has come to us—on writ review of the denial of
Gilead’s summary judgment motion—we believe that, to avoid to
the extent possible the need for piecemeal adjudication and to
provide guidance for the parties and the trial court, it is
appropriate to exercise our discretion to address the Rowland
factors to the extent the record permits us to do so.
      C.    Application of the Rowland Factors
      In Rowland, the California Supreme Court “identified
several considerations that, when balanced together, may justify
a departure from the fundamental principle embodied in Civil
Code section 1714.” (Cabral v. Ralphs Grocery Co. (2011)
51 Cal.4th 764, 771 (Cabral).) The Rowland analysis “is
conducted ‘at a relatively broad level of factual generality.’
[Citation.] We analyze the Rowland factors to determine ‘not
whether they support an exception to the general duty of
reasonable care on the facts of the particular case before us, but
whether carving out an entire category of cases from that general
duty rule is justified by clear considerations of

                                 37
policy.’ ” (Kuciemba v. Victory Woodworks, Inc. (2023) 14 Cal.5th
993, 1021 (Kuciemba).) “By making exceptions to Civil Code
section 1714’s general duty of ordinary care only when
foreseeability and policy considerations justify a categorical no-
duty rule, we preserve the crucial distinction between a
determination that the defendant owed the plaintiff no duty of
ordinary care, which is for the court to make, and a
determination that the defendant did not breach the duty of
ordinary care, which in a jury trial is for the jury to make. . . .
While the court deciding duty assesses the foreseeability of injury
from ‘the category of negligent conduct at issue,’ if the defendant
did owe the plaintiff a duty of ordinary care the jury ‘may
consider the likelihood or foreseeability of injury in determining
whether, in fact, the particular defendant’s conduct was negligent
in the first place.’ ” (Cabral, at p. 773.)
      The Rowland factors fall into two categories. “Three
factors—foreseeability, certainty, and the connection between the
plaintiff and the defendant—address the foreseeability of the
relevant injury, while the other four—moral blame, preventing
future harm, burden, and availability of insurance—take into
account public policy concerns that might support excluding
certain kinds of plaintiffs or injuries from relief.” (Kesner, supra,
1 Cal.5th at p. 1145). Issues related to foreseeability are assessed
on the basis of information available at the time of the alleged
negligence, while “ ‘our duty analysis is forward-looking’ in
regard to policy issues surrounding burdens that would be placed
on defendants.” (Kuciemba, supra, 14 Cal.5th at p. 1022.)

                                   38
               1. Gilead’s Proposed Expansive Exception
      In requesting a Rowland exception to the duty of
section 1714, Gilead proposes two alternatives. The first, the
more expansive exception, would hold that when an FDA-
approved prescription drug is accompanied by an adequate
warning of its side effects, and is not shown to be defective in
design or manufacture, the manufacturer does not owe users of
the current drug a duty of reasonable care in its decisions about
commercializing any alternative drug the manufacturer might
invent. We emphasize that it is a necessary premise of this
analysis that the same manufacturer has developed both drugs.
As discussed above, the manufacturer’s duty with respect to any
alternative drug arises only because its sale of the first drug has
created the risk of harm. (See O’Neil v. Crane Co. (2012)
53 Cal.4th 335, 342 (O’Neil) [“a product manufacturer may not be
held liable . . . for harm caused by another manufacturer’s
product unless the defendant’s own product contributed
substantially to the harm, or the defendant participated
substantially in creating a harmful combined use of the
products”].)
      Because plaintiffs assert that Gilead knew TAF was safer
than TDF, we also conduct the Rowland analysis under the
assumption that the drug manufacturer knows that the
alternative drug is safer than (and at least as effective as) the
current drug. As noted earlier, we offer no opinion about whether
plaintiffs should be permitted to argue constructive knowledge on
remand, assuming they were to seek to do so, but we think a

                                 39
different Rowland analysis would be required for a claim based
on constructive knowledge. Among other things, a constructive
knowledge standard would be more susceptible to hindsight bias
by the jury, and would therefore present more challenging policy
issues than in a case in which no duty arises in the absence of
proof that the manufacturer knew it had developed a safer and at
least equally effective alternative.
            i.     Foreseeability factors
      The first three Rowland factors are commonly referred to
as the foreseeability factors: “the foreseeability of harm to the
plaintiff, the degree of certainty that the plaintiff suffered injury,
and the closeness of the connection between the defendant’s
conduct and the injury suffered.” (Rowland, supra, 69 Cal.2d at
p. 113.) Again, we evaluate these factors on the basis of
information available at the time of the alleged negligence.
(Kuciemba, supra, 14 Cal.5th at p. 1022.) In considering
foreseeability, we focus not on particularities of the defendant’s
conduct and the plaintiff ’ s injury, but on “whether the category of
negligent conduct at issue is sufficiently likely to result in the
kind of harm experienced that liability may appropriately be
imposed . . . .” (Cabral, supra, 51 Cal.4th at p. 772.)
      Foreseeability of injury. Of the seven Rowland factors, the
foreseeability of harm to a plaintiff from the defendant’s conduct
is “[t]he most important factor to consider in determining
whether to create an exception to the general duty to exercise
ordinary care articulated by section 1714.” (Kesner, supra,
1 Cal.5th at p. 1145.)

                                  40
      In any case involving a drug with a proper warning of side
effects, it is a given that injury from side effects is foreseeable.
We agree with Gilead, however, that in this context the relevant
question is whether it is foreseeable that the new, safer, drug
would enable users to avoid the injury. Gilead posits several
considerations that it contends weigh against foreseeability, such
as the degree to which the new drug avoids side effects, the
relative efficacy of the new drug, and any additional side effects
of the new drug. However, because Gilead’s proposed expansive
exception would impose no duty of care notwithstanding the
manufacturer’s knowledge that the new drug is at least equally
effective and poses a lower risk of side effects, we think it is
foreseeable that the manufacturer’s delay in commercializing the
new drug will cause some users to suffer injury they could have
avoided had the new drug been available. Although the factors
Gilead identifies affect the extent of harm that will be
anticipated, and therefore will factor into any evaluation of the
reasonableness of the manufacturer’s conduct, they do not alter
the conclusion that Gilead’s proposed expansive exception will
result in foreseeable injury. Speaking generally, as we must in
applying Rowland, Gilead’s proposed expansive exception, which
would permit manufacturers to delay the release of a safer drug
indefinitely, will make otherwise avoidable injury foreseeable.
      Degree of certainty that the plaintiff suffered injury. “The
second Rowland factor, the degree of certainty that the plaintiff
suffered injury, ‘has been noted primarily, if not exclusively,
when the only claimed injury is an intangible harm such as

                                  41
emotional distress.’ ” (Kesner, supra, 1 Cal.5th at p. 1148.)
Because we assume the existing drug creates identifiable and
characteristic physical injury, the fact of injury is certain.
      Closeness of the connection between the defendant’s conduct
and the injury. This factor is “strongly related to the question of
foreseeability itself.” (Cabral, supra, 51 Cal.4th at p. 779.) The
premise of our analysis is that some patients will suffer the
warned-of side effects associated with the existing drug and the
manufacturer knows that the alternative drug would allow some
of those patients to avoid them. We therefore find the connection
close even though, as Gilead points out in its foreseeability
analysis, there are two additional steps in the causal chain that
are necessary in order for patients to avoid the harm: first, the
FDA must approve the alternative drug candidate, and second,
the patient’s doctor must decide to switch the patient to the new
medication after it is approved. Of the two, we view the second
consideration as less significant because once the FDA has
approved an alternative that is safer and at least equally
effective for the patient concerned, the manufacturer would
reasonably expect doctors to prescribe the new medication in
place of the old. (Cf. T.H., supra, 4 Cal.5th at p. 167 [close
connection where defective label led doctor to prescribe the
drug].)
      As to the question of FDA approval, we do not doubt that
there is often considerable uncertainty associated with it. While
plaintiffs’ claim here was brought after the FDA approved TAF,
hindsight bias should not be permitted to affect the analysis.

                                  42
Plaintiffs do not dispute the assertion by Gilead and its amici
that, of medicines entering clinical trials, fewer than one out of
eight will obtain FDA approval. However, because we are
considering a categorical exception that would apply at any point
in the development process to a drug candidate that the
manufacturer knows to be as effective as, and safer than, an
existing drug, these two common grounds for denial of FDA
approval are likely to be adequately addressed. That makes FDA
approval far less uncertain than might otherwise be the case.17
      While the record does not tell us whether the example of
TAF is typical, plaintiffs emphasize that TAF was another form
of the known compound tenofovir; Gilead made its decision to
pause development after TDF had already been approved by the
FDA, and after Gilead had the results of its Phase I/II testing of
TAF. Plaintiffs contend that Gilead knew FDA approval of TAF
would not be difficult, and their allegation that Gilead was
motivated by its concern that TAF would cannibalize sales of
TDF and believed it could maximize profitability by extending
the life of its tenofovir patents necessarily assumes as much.
Nothing in the record presented to us establishes that drug

      17 Some commentators have argued that any design defect

claim that requires a court to predict whether the FDA would
approve what a plaintiff proposes as a “reasonable alternative
design” of the allegedly defective drug is unworkable given the
uncertainty involved. (See, e.g., Twerski, The Demise of Drug
Design Litigation: Death by Federal Preemption (2018) 68 Am. U.
L.Rev. 281, 295.) We do not see the same uncertainty, at least as
a categorical matter, in a situation in which the manufacturer
has developed an alternative drug that it knows to be safer than
its original drug.

                                 43
companies are never able, at any point, to assess the likelihood of
FDA approval of a particular medicine beyond what can be
gleaned from general industry averages. Drug manufacturers’
decisions about whether to continue to pursue commercialization
of a drug are presumably informed in part by their assessment of
the likelihood of FDA approval; Gilead does not argue to the
contrary. We are not persuaded that the need for FDA approval
necessarily renders the harm unforeseeable or severs what would
otherwise be a close connection between the manufacturer’s
decisions and the patients’ harm.
      Finally, citing O’Neil, supra, 53 Cal.4th at p. 365, Gilead
argues that we should not find a close connection because the
alleged negligent conduct is not the manufacturer’s sale of the
injurious product, i.e., the existing drug. But O’Neil concerned
the circumstances under which a manufacturer could be held
liable for injuries caused by products it did not manufacture, sell,
or supply. That is not the situation we are considering here, and
the fact that the alleged negligence is the decision to delay
commercialization of the alternative drug rather than the sale of
the existing, more dangerous drug does not make the connection
between the negligent conduct and the injury remote where the
manufacturer has control over the timing of the availability of
the safer drug. (See T.H., supra, 4 Cal.5th at p. 168
[distinguishing O’Neil based on brand-name drug manufacturer’s
control over the content of the label].)

                                 44
      Accordingly, the foreseeability factors weigh against
Gilead’s proposed expansive Rowland exception to the duty of
reasonable care.
            ii.    Public policy factors
      “[F]oreseeability alone is not sufficient to create an
independent tort duty. ‘ “ . . . [The] existence [of a duty] depends
upon the foreseeability of the risk and a weighing of policy
considerations for and against imposition of liability.” ’ ” (Erlich
v. Menezes (1999) 21 Cal.4th 543, 552.) “The overall policy of
preventing future harm is ordinarily served, in tort law, by
imposing the costs of negligent conduct upon those responsible.
The policy question is whether that consideration is outweighed,
for a category of negligent conduct, by laws or mores indicating
approval of the conduct or by the undesirable consequences of
allowing potential liability.” (Cabral, supra, 51 Cal.4th at p. 781;
see Merrill, supra, 26 Cal.4th at p. 502 [foreseeability may be
overcome “where the social utility of the activity concerned is so
great, and avoidance of the injuries so burdensome to society, as
to outweigh the compensatory and cost-internalization values of
negligence liability”].)
      The final four factors of the Rowland test are referred to as
the “public policy factors” (Cabral, supra, 51 Cal.4th at p. 781):
“the moral blame attached to the defendant’s conduct, the policy
of preventing future harm, the extent of the burden to the
defendant and consequences to the community of imposing a duty
to exercise care with resulting liability for breach, and the

                                 45
availability, cost, and prevalence of insurance for the risk
involved.” (Rowland, supra, 69 Cal.2d at p. 113.)
      Moral blame. Developing and selling a life-saving drug,
even one with potentially severe side-effects, is morally
praiseworthy. But that is not the conduct at issue; Gilead seeks
an exception that would allow, in a sense, the opposite conduct: a
manufacturer’s decision not to market, or to delay marketing, a
drug it invented that would avoid the harm caused by an existing
drug that the manufacturer continues to sell. “We have said that
if there were reasonable ameliorative steps the defendant could
have taken, there can be moral blame ‘attached to the
defendants’ failure to take steps to avert the foreseeable harm.’ ”
(Vasilenko v. Grace Family Church (2017) 3 Cal.5th 1077, 1091
(Vasilenko).)
      Moral blame is typically found when the defendant benefits
financially from its conduct. (Kuciemba, supra, 15 Cal.5th at
p. 1025; Kesner, supra, 1 Cal.5th at p. 1151.) In general, drug
manufacturers reasonably expect to profit from the medicines
they sell, and the exception Gilead seeks would allow them to
extend the time patients are subjected to the risks associated
with a more dangerous drug precisely because delaying the
commercialization of a safer alternative would confer a financial
benefit.
      In addition, “[r]elative inequality between the parties may
also bear upon moral blame. ‘We have previously assigned moral
blame, and we have relied in part on that blame in finding a
duty, in instances where the plaintiffs are particularly powerless

                                 46
or unsophisticated compared to the defendants or where the
defendants exercised greater control over the risks at issue.’ ”
(Kuciemba, supra, 15 Cal.5th at p. 1026.) Users of a particular
medicine generally have no ability to avoid its harmful side
effects. (Brown, supra, 44 Cal.3d at p. 1063.) And it is the
manufacturer’s decisions about commercialization of the safer
alternative that are the primary determinants of whether
patients will continue to be subject to those risks. (Compare
Vasilenko, supra, 3 Cal.5th at p. 1091 [finding little moral blame
because “landowners have limited ability to reduce the danger
and generally exercise no greater control over the danger than
the invitees who cross” public streets] with Kesner, supra,
1 Cal.5th at p. 1151 [finding moral blame because “commercial
users of asbestos benefitted financially from their use of asbestos
and had greater information and control over the hazard than
employees’ households”].)
      We can agree with Gilead that a manufacturer’s decision to
delay the commercialization of a safer drug may be made for
morally neutral, or even worthy, reasons. But while we do not
assume in considering the requested exception that any claimed
violation of duty will involve the precise conduct that plaintiffs
attribute to Gilead in this case, our task is to evaluate the degree
of moral blame that attaches to negligence in a drug
manufacturer’s decisions about commercializing a safer drug, not
to potential non-negligent reasons for its actions. (See, e.g.,
Kesner, supra, 1 Cal.5th at p. 1151 [“negligence in their use of
asbestos is morally blameworthy”]; Regents of University of

                                 47
California v. Superior Court (2018) 4 Cal.5th 607, 631 [“Some
measure of moral blame does attach to a university’s negligent
failure to prevent violence against its students”].) Gilead argues
that we are concerned here only with drugs that are not shown to
be defective and so should be considered “reasonably safe.” But
even putting aside what plaintiffs contend are increasingly
insurmountable legal barriers to the assertion of design defect
claims notwithstanding their substantive merit, a life-saving
drug may be considered reasonably safe, in the sense that its
risks are outweighed by its benefits, even when its side effects
are grievously injurious. That such side effects are an acceptable
trade-off when life is at stake does not mean that the
manufacturer’s decision to continue to subject patients to those
injuries unnecessarily by delaying or withholding a safer
alternative is morally unobjectionable.
      In sum, although moral blame “can be difficult to assess in
the absence of a factual record” (Kesner, supra, 1 Cal.5th at
p. 1151), we conclude based on the considerations above that
negligence in a decision that deprives people of a safer drug and
leaves them reliant on a more dangerous drug is morally
blameworthy.
      Policy of preventing future harm. The “policy of preventing
future harm is ordinarily served, in tort law, by imposing the
costs of negligent conduct upon those responsible.” (Cabral,
supra, 51 Cal.4th at p. 781.) For the purpose of the Rowland
analysis, “[t]he policy question is whether that consideration is
outweighed, for a category of negligent conduct, by laws or mores

                                48
indicating approval of the conduct or by the undesirable
consequences of allowing potential liability.” (Id. at pp. 781–782.)
This factor thus “examines both the positive and the negative
societal consequences of recognizing a tort duty.” (Kuciemba,
supra, 15 Cal.5th at p. 1026.)
      Plaintiffs argue that recognizing a duty would result in
speedier delivery of improved medications, whereas Gilead
contends that the fear of liability or litigation would
disincentivize manufacturers from undertaking the development
of improved drugs in the first place, or would perversely skew
their development priorities once they have produced some data
suggesting that a drug candidate is safer.
      Gilead purports to find support for its argument in Brown,
because the court rejected strict liability out of a concern that it
would make pharmaceutical manufacturers reluctant to
undertake research projects to develop new drugs or to distribute
others that are available to be marketed. (Brown, supra,
44 Cal.3d at p. 1063.) But as the court pointed out in its analysis,
that possibility arises in significant part because strict liability
makes manufacturers liable for unforeseen and unforeseeable
harm. (See id. at pp. 1063–1064; see also Carlin, supra,
13 Cal.4th at p. 1117 [Brown’s policy-based rejection of strict
liability for design defects was premised on the fact that it would
“potentially subject drug manufacturers to liability for flaws in
their products that they have not, and could not have,
discovered”].) As we have discussed, the court expressly declined
to protect them from claims based in negligence, in which the

                                  49
harm must be foreseeable. (Brown, at p. 1069, fn. 12.)18
Moreover, while drug manufacturers have continued to resist the
imposition of liability in other contexts by asserting that it would
chill innovation, courts after Brown have declined to accept those
assertions as unsupported by an evidentiary showing. (See, e.g.,
Carlin, supra, 13 Cal.4th at p. 1117; T.H., supra, 4 Cal.5th at
p. 173; Conte, supra, 168 Cal.App.4th at p. 106.) It is similarly
unsupported here.
      Gilead elsewhere argues that the imposition of the duty
plaintiffs propose is unnecessary, contending that “[i]f a drug
manufacturer has a treatment that is much better or safer than
what is already on the market, it has an economic imperative to
bring it to market as soon as possible.” Plaintiffs disagree,
arguing that the patent system incentivizes drug manufacturers
to try to extend their monopolies for as long as possible, with
deleterious effects on innovation and competition. (See, e.g.,
Bernstein, supra, at pp. 71–74; Gurgula, Strategic Patenting by
Pharmaceutical Companies—Should Competition Law Intervene?,
IIC Int Rev Ind Prop Copyr Law 2020; 51(9): 1062–1085,
https://doi.org/10.1007/s40319-020-00985-0 [as of Jan. 4, 2024].)

      18 Plaintiffs also note that Brown’s categorical exemption

for strict liability design defect claims is the minority view among
courts that have adopted comment k (see Moss v. Wyeth Inc.
(D. Conn. 2012) 872 F.Supp.2d 162, 167–168), and assert that
fear of potential liability in other jurisdictions has not damaged
the pharmaceutical industry. The significance of that point,
however, may be diminished by what plaintiffs elsewhere
describe as the substantial elimination of design defect claims by
federal preemption.

                                 50
Plaintiffs’ argument supports a conclusion that the duty of care
serves an important policy function, but even if we credit Gilead’s
suggestion that the duty aligns with economic imperatives that
drug manufacturers already face, it would tend to undermine the
hypothesis that imposition of the duty would radically alter their
incentives to improve existing drugs or develop new ones. And
again, we are considering here a duty that arises only with the
manufacturer’s knowledge that the alternative drug candidate it
has invented is safer and would allow harm to be avoided. (See
T.H., supra, 4 Cal.5th at p. 185 [policy of preventing future harm
is furthered when the duty is placed on the entity with the power
to act].) Moreover, although below we conclude that Gilead has
not supported its proposed narrower exception on the existing
record, the potential availability of a narrower exception
militates against a conclusion that the broader one is necessary
to avoid the undesirable social consequences that Gilead posits.
      Finally, we emphasize that the duty of reasonable care does
not require the pursuit of commercialization at all costs. Even if
we assume that there will be some circumstances in which the
duty causes a manufacturer to pursue a potentially safer product
longer than it otherwise would have, resulting in some failed or
wasted efforts, that loss must be weighed against the benefit to
the community from successful efforts, which will result in safer
products.
      In short, we are not persuaded that Gilead has established
that there are “undesirable consequences of allowing potential
liability” (Cabral, supra, 51 Cal.4th at p. 782) that should

                                 51
override the ordinary rule “imposing the costs of negligent
conduct upon those responsible” in these circumstances (id. at
p. 781).
      The burden to the defendant and consequences to the
community. Because the “consequences to the community”
portion of this factor overlaps with our discussion of the policy of
preventing future harm (cf. T.H., supra, 4 Cal.5th at pp. 168–
173), we focus here on what Gilead contends will be an additional
burden; namely, a flood of lawsuits because patients will contend
that every improved medicine released by a manufacturer should
have been made available sooner.
      We think Gilead overstates the threat given the
narrowness of the duty at issue. It does not apply generally to
“improved” products, but only to products that the manufacturer
knows will avoid significant side effects of a manufacturer’s
existing product. Gilead does not establish that this situation
arises so frequently as to result in a flood of litigation. On the
contrary, if this situation were common, the claim likely would
have arisen long ago. Nor, contrary to Gilead’s argument, will
the duty upend products liability by creating a “perfect product”
law. As we have noted, the duty does not require manufacturers
to perfect their drugs, but simply to act with reasonable care for
the users of the existing drug when the manufacturer has
developed an alternative that it knows is safer and at least
equally efficacious. Manufacturers already engage in this type of
innovation in the ordinary course of their business, and most

                                 52
plaintiffs would likely face a difficult road in establishing a
breach of the duty of reasonable care.
      Availability and cost of insurance. Gilead contends that
recognition of a duty “would massively expand manufacturers’
existing exposure to liability,” which in turn would increase the
cost of insurance “if it were available at all” and thereby raise the
price of prescription medicines. But for the reasons discussed
above, we are not persuaded that the expansion of liability is
anywhere near as “massive” as Gilead suggests, and as plaintiffs
note, there is nothing in the record regarding the cost and
availability of insurance. We find that the parties have not
supplied enough information “to settle the question of insurance
one way or the other.” (Vasilenko, supra, 3 Cal.5th at p. 1091.)
      Again, the most important factor to be evaluated in
applying Rowland is the prevention of foreseeable harm. In the
narrow circumstances in which it applies, plaintiffs’ duty would
prevent manufacturers from delaying the development of safer
treatments, thereby avoiding foreseeable harm to a potentially
large class of persons. Although the duty may impose some
burdens on pharmaceutical manufacturers, we are not persuaded
that they would be so great as to overcome the benefit of safer
products. The expansive exception proposed by Gilead is
therefore not appropriate.
            2. Gilead’s Narrower Exception
      Although Gilead does not offer two separate Rowland
analyses, at various points in its supplemental briefing it
suggests, as a fallback position, a narrower exception tied to

                                 53
manufacturers’ Phase III clinical trials, which are the final stage
in the process required to obtain approval of a new drug.
Following the submission of preclinical trial data to the FDA, the
manufacturer conducts clinical trials in three phases. (21 C.F.R.
§§ 312.23(a)(8), 312.21(a)–(c) (2022).) “Phase I clinical trials are
conducted on healthy volunteers to determine the maximum
tolerated dose, adverse events, and pharmacokinetics of a
product. Phase II studies are conducted on a statistically
relevant number of patients having a specific disease to
determine initial efficacy in humans for that disease, and to
identify possible adverse effects and safety risks. Phase III
studies consist of wide-scale studies on patients with the disease
for which the drug is intended and evaluate the overall risks and
benefits of the drug.” (Deveny v. Entropin, Inc. (2006)
139 Cal.App.4th 408, 413, fn. 2.) Phase I trials “are generally
conducted on a small number of healthy volunteer subjects,”
whereas Phase II trials “usually involve several hundred people”
and Phase III trials consist of “several hundred to several
thousand” subjects. (Schiff v. Prados (2001) 92 Cal.App.4th 692,
696, fn. 2.)
      Gilead’s narrower exception would hold that when an FDA-
approved prescription drug is accompanied by an adequate
warning of adverse side effects, and is not shown to be defective
in design or manufacture, the manufacturer does not owe users of
the previously-approved drug a duty of reasonable care in its
decisions about commercializing an alternative drug until
Phase III trials have established its safety and effectiveness.

                                 54
      We conducted our analysis of the broader Rowland
exception under the assumption that the duty of care arises when
the manufacturer knows that the alternative drug candidate is
safer than, and at least as effective as, the existing drug. But in
many cases the parties will dispute, as they do in this case,
whether the manufacturer actually knew that the alternative
candidate was superior when the manufacturer made the
decision or decisions at issue. Gilead’s narrower exception
essentially proposes, as a policy matter, that the amount of
knowledge necessary to trigger the imposition of a duty of care
cannot exist before the manufacturer has the results of Phase III
trials of the alternative drug.19
            i.     Foreseeability factors
      It is reasonable to expect a manufacturer to learn more
about a drug candidate’s safety and efficacy at each stage of the
investigation process, so as a general matter, we see no reason to
doubt that a manufacturer will be able to foresee with greater
confidence that a new drug will avoid the harmful side effects
associated with the existing drug, while providing the same
therapeutic benefit, after Phase III than after Phase II.

      19 Notwithstanding its Phase III proposal, Gilead actually

contends that “[t]he earliest point at which it would be
reasonably foreseeable that injury from an existing non-defective
medicine could be prevented by a new product is when the FDA
approves the drug and the drug’s comparative safety has been
proven in head-to-head to studies.” According to Gilead, head-to-
head studies are not necessary to obtain FDA approval, but are
required to justify any claim comparing the safety or
effectiveness of two drugs, and can be conducted during Phase III
trials or after FDA approval.

                                    55
Plaintiffs, however, argue that a manufacturer’s knowledge prior
to the conclusion of Phase III trials will vary, depending on how
much is already known about the compound being studied and on
what the Phase I and II results show.
      While some generalizations are probably necessary to
evaluate the appropriateness of any proposed Rowland exception,
here no factual record has been developed in the trial court that
would allow us to assess the parties’ competing claims. In the
absence of such a record, we cannot say whether it is possible to
make any meaningful generalizations about what can reasonably
be known after Phase II trials as compared to Phase III trials,
and what those generalizations would be. And we do not know,
for example, how often, or under what circumstances, a drug’s
apparent promise after Phase II is undermined by unexpected
results in Phase III—or how often uncertain Phase II results are
followed by confirmed successes in Phase III. Thus, on the
existing record, Gilead has not established that it is not
foreseeable before Phase III trials that the manufacturer’s
conduct would cause otherwise avoidable injury.
            ii.   Public policy factors
      The policy rationale for Gilead’s narrow exception is that
allowing a jury to decide on a case-by-case basis whether the
manufacturer had the requisite knowledge creates too much
uncertainty, giving rise to unacceptable burdens on
manufacturers, such as disincentivizing innovation and causing
excessive and unwarranted litigation. The exception would
create a safe harbor period in the drug development process in

                                 56
which manufacturers may make decisions without fear that they
may be second-guessed by a jury, and conversely, would let them
know with certainty at what point their decisions could be
scrutinized for failure to exercise reasonable care.
      We do not rule out the possibility that such an exception
could be warranted. “In conducting its [duty] analysis, the court
may take into account factors that might escape the jury’s
attention in a particular case, such as the overall social impact of
imposing a significant precautionary obligation on a class of
actors. These cases are properly decided as duty or no-duty
cases. When no such categorical considerations apply and
reasonable minds could differ about the competing risks and
burdens or the foreseeability of the risks in a specific case,
however, courts should not use duty and no-duty determinations
to substitute their evaluation for that of the factfinder.” (Cabral,
supra, 51 Cal.4th at p. 773, fn. 3 [quoting Rest.3d Torts, Liability
for Physical and Emotional Harm, § 7, com. i, pp. 81–82].) As
Brown indicates, “categorical considerations” may come into play
in the prescription drug context, although nothing in that case
suggests that manufacturers need greater protection than the
decision itself supplies.
      Still, we believe a decision to delay commercialization of a
new drug, when it is made earlier in the development process,
may be more complicated and challenging for a jury to evaluate,
and more susceptible to hindsight bias, than one made after
Phase III trials are completed. Phase III trials are likely to be
substantially more difficult and expensive than those occurring

                                 57
during Phases I and II, so the burden on pharmaceutical
manufacturers is undoubtedly greater if those trials are
undertaken out of a “precautionary obligation.” On the other
hand, plaintiffs counter that the proposed exception would render
the remaining duty of care largely toothless because
manufacturers often have sufficient information after Phase II
and, like Gilead, could simply make the relevant decisions at that
point in order to avoid liability.
      Ultimately, however, the problem remains the lack of a
factual record by which to assess whether it is appropriate to
recognize a categorical exception for decisions made before the
completion of Phase III trials. We recognize that the
appropriateness of a Rowland exception can sometimes be
identified early in a case, even on a motion addressed to the
pleadings. (See, e.g., Kuciemba, supra, 14 Cal.5th at p. 1004;
Kesner, supra, 1 Cal.5th at p. 1142.) In other cases, it is raised
later, at summary judgment or even after a jury verdict. (E.g.,
Vasilenko, supra, 3 Cal.5th at pp. 1082–1083; Cabral, supra,
51 Cal.4th at p. 770.) While the Rowland analysis does not focus
on the defendant’s specific conduct, it may still present difficult
factual questions that cannot be reliably resolved simply by
weighing competing assertions in briefs by the parties and their
amici. We conclude that Gilead has failed to establish that its
narrow exception is warranted on the current record. However,
our conclusion does not prevent Gilead from seeking the
exception based on a record developed later in the trial court,

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both before that court and, if necessary, on appeal from an
adverse judgment.
II.   Fraudulent Concealment
      Plaintiffs’ cause of action for fraudulent concealment
alleges that Gilead was required to disclose that (1) TAF was a
safer means for delivering tenofovir into the body, (2) the toxicity
of tenofovir was not unavoidable, and (3) Gilead’s true motive for
shelving TAF development was financial. Gilead argues that it is
entitled to summary adjudication of this claim because it was
under no duty to disclose to plaintiffs facts relating to TAF, which
was not available as an alternative to TDF for the treatment of
HIV/AIDS. We agree.
      “ ‘[T]he elements of an action for fraud and deceit based on
a concealment are: (1) the defendant must have concealed or
suppressed a material fact, (2) the defendant must have been
under a duty to disclose the fact to the plaintiff, (3) the defendant
must have intentionally concealed or suppressed the fact with the
intent to defraud the plaintiff, (4) the plaintiff must have been
unaware of the fact and would not have acted as he did if he had
known of the concealed or suppressed fact, and (5) as a result of
the concealment or suppression of the fact, the plaintiff must
have sustained damage.’ ” (Roddenberry v. Roddenberry (1996)
44 Cal.App.4th 634, 665–666.)
      As explained in Bigler-Engler v. Breg, Inc. (2017)
7 Cal.App.5th 276, in the absence of a fiduciary relationship
between the parties, the law “ ‘presuppose[s] the existence of
some other relationship between the plaintiff and defendant in

                                 59
which a duty to disclose can arise.’ [Citation.] . . . [¶] Our
Supreme Court has described the necessary relationship giving
rise to a duty to disclose as a ‘transaction’ between the plaintiff
and the defendant . . . . Such a transaction must necessarily
arise from direct dealings between the plaintiff and the
defendant; it cannot arise between the defendant and the public
at large.” (Id. at pp. 311–312.) Once the necessary relationship
is found, a duty arises “to disclose facts material to the
transaction.” (LiMandri v. Judkins (1997) 52 Cal.App.4th 326,
337.) We have recently held, for example, that a vehicle
manufacturer owes a duty to purchasers of its vehicles to disclose
known defects. (Dhital v. Nissan North America, Inc. (2022)
84 Cal.App.5th 828, 844; see similarly, Snow v. A. H. Robins Co.
(1985) 165 Cal.App.3d 120, 134–135 [manufacturer of
intrauterine device had duty to disclose higher pregnancy rates
from its use].)
      Assuming that plaintiffs’ use of Gilead’s product, TDF,
created the relationship necessary to invoke the law of
concealment, we nonetheless conclude that such a duty did not
extend to the disclosure of information about TAF. Gilead owed a
duty to plaintiffs to disclose information material to the
transaction that created the disclosure relationship—plaintiffs’
use of TDF as a medicine. The facts material to this treatment
decision concerned the efficacy, side effects, risks, and cost of
TDF, which plaintiffs and their physicians could compare with
similar information about other available medicines in deciding
the best course of treatment. For the 14 years between the

                                 60
commencement of Gilead’s sales of TDF and the FDA’s approval
of TAF as an HIV/AIDS medication, TAF was not available to
patients as a treatment. Information about a chemical compound
that was not available as a treatment, and could not possibly
become available as a treatment for many years as a result of the
time-consuming FDA approval process, would not have been
material to the treatment decision. Even the acknowledgment by
Gilead that the toxicity of tenofovir was avoidable, as plaintiffs
allege, would have been of no use to patients in deciding whether
to take TDF, since their choice was between TDF and other
available medications, not between TDF and its allegedly safer
counterpart, TAF.
      Plaintiffs argue that disclosure of information about TAF
might have affected physicians’ practices in prescribing TDF, but
their reasoning is impermissibly speculative. Plaintiffs argue, in
effect, that the disclosure of information suggesting that TAF was
a superior alternative to TDF might have biased physicians
against the use of TDF. This bias, they theorize, would have
caused physicians to decrease their use of TDF, even though the
disclosure would have in no way changed the value of TDF
relative to other available treatments.20 It is not clear, however,

      20 For example, plaintiffs cite evidence suggesting some

Gilead employees were concerned that disclosure of information
about TAF would change medical perceptions of the risk profile of
TDF. Such a change in perception, however, would not have been
based on the relative value of TDF and other available
medications. Rather, it would have been the result of bias
against TDF generated by physicians’ knowledge that Gilead
could, if it chose, have produced a safer drug.

                                 61
that information about TAF should be considered material to the
treatment decision merely because it might have changed that
decision for irrational reasons. Plaintiffs’ contention is, in any
event, entirely speculative and does not make information about
TAF material to the decision to use TDF.
      Plaintiffs also cite their allegation that Gilead stopped
work on TAF because Gilead believed that a TAF-containing
medication would “cannibalize” its sales of TDF. Even if true,
that motivation did not create a duty to disclose information
about TAF. TAF could cannibalize TDF sales only if TAF existed
as an alternative treatment. So long as Gilead chose to avoid
cannibalization by keeping TAF from the market, information
about TAF’s efficacy and risks relative to TDF had no bearing on
physicians’ or patients’ treatment decisions.
                          DISPOSITION
      Gilead’s petition for a writ of mandate is denied in part and
granted in part. Let a peremptory writ of mandate issue
directing the superior court to vacate its order denying Gilead’s
motion for summary judgment, dated June 13, 2022, and enter a
new and different order denying summary adjudication of
Count I of plaintiffs’ Master Long Form Complaint for Damages
and granting summary adjudication of Count V of that document.
The stay imposed in our order of September 9, 2022, shall remain
in effect until issuance of the remittitur. Plaintiffs shall recover
their costs on appeal.
                                      GOLDMAN, J.

WE CONCUR:

                                 62
BROWN, P. J.
BURNS, J. *

* Associate Justice of the Court of Appeal, First Appellate

District, Division Five, assigned by the Chief Justice pursuant to
article VI, section 6 of the California Constitution.

                                63
Trial Court:                             City and County of San Francisco Superior
                                         Court

Trial Judge:                             Honorable Andrew Y.S. Cheng

Gilead Sciences, Inc., Defendant and     SIDLEY AUSTIN, Debra Pole, Joshua
Petitioner:                              Anderson, Sean Commons, David Carpenter,
                                         Collin Wedel
                                         ORRICK, HERRINGTON & SUTCLIFFE,
                                         Andrew Silverman, Siobhan Atkins, Cesar
                                         Lopez-Morales, E. Joshua Rosenkranz

Superior Court of the City & County of   No attorneys listed
San Francisco, Respondent:
Plaintiffs in JCCP No. 5043 Gilead       GRANT & EISENHOFFER, M. Elizabeth
Tenofovir Cases, Real Parties in         Graham
Interest                                 JENNER LAW, Robert K. Jenner
                                         MOSKOVITZ APPELLATE TEAM, Myron
                                         Moskovitz
                                         KERSHAW, COOK & TALLEY, William A.
                                         Kershaw
                                         SCHNEIDER WALLACE COTTRELL
                                         KONECKY, Amy Eskin
                                         ESNER, CHANG & BOYER, Andrew N.
                                         Chang, Holly N. Boyer
The California Chamber of Commerce,      DLA PIPER, Justin R. Sarno, Adam Pierson,
The Chamber of Commerce of the           Ilana H. Eisenstein, Ben C. Fabens-Lassen
U.S.A., The Alliance for Automotive
Innovation, The Washington Legal
Foundation, Amici
Washington Legal Foundation, Amicus      WASHINGTON LEGAL FOUNDATION,
                                         Cory L. Andrews
Pharmaceutical Research and              COVINGTON & BURLING, Ashley M.
Manufacturers of America                 Simonsen, Alice L. Phillips, Michael X.
(“PHRMA”), Amicus                        Imbroscio, Emily Ullman, Gregory L.
                                         Halperin

American Association for Justice and     THE ARKIN LAW FIRM, Sharon J. Arkin
Consumer Attorneys of California,        AMERICAN ASSOCIATION FOR JUSTICE,
Amici                                    Jeffrey R. White

                                  64
Product Liability Advisory Council,    BUCHALTER, Mary-Christine Sungaila, Paul
Inc., Amicus                           A. Alarcon
Public Justice, Amicus                 PUBLIC JUSTICE, Karla Gilbride

                                  65