DES Plaintiff's Reach for Market Share Liability Rejected Again

If asbestos is the grandfather of mass torts, the DES litigation may be the grandmother, with claims continuing today for harm allegedly caused by in utero exposure to diethylstilbestrol decades ago. DES is a drug once prescribed during pregnancy to prevent miscarriages or premature deliveries. In the U.S. an estimated 5 to 10 million persons were exposed to DES from 1938 to 1971, including pregnant women prescribed DES and their children. So we are 40 years out now, with some litigation remaining.

Recently, a federal court in New York held that a DES plaintiff could not meet the product identification requirement under applicable Texas law.  See Bezuidenhout v. Abbott Laboratories,  No. 10-CV-1011(E.D.N.Y., 1/17/13).

Readers may recall that what is often termed "product identification" is part of the cause in fact requirement of every tort claim.  A plaintiff must show that he or she has been injured not just by a type of product but by a product actually made or sold by the defendant.  In the context of DES, product identification may be especially challenging because the plaintiff's exposure may be in utero and the manifestation of the injury may not come for many years after the exposure.  A tiny minority of jurisdictions have flirted with weakening the traditional cause in fact requirement by adopting some form of the "market share" doctrine, under which defendants may be held proportionately liable to a plaintiff who cannot show which manufacturer sold the product that caused the injury, based on that defendant's sales of the product in the "relevant market."  Flawed and unfair, the concept did not gain wide acceptance.

Bezuidenhout was born in 1957 in Texas. While pregnant, her mother allegedly took DES, which was prescribed to her in Texas, according to the amended complaint. Decades later, plaintiff alleged various personal injury and increased risk of future injuries.  Defendants moved for summary judgment, asserting that plaintiff could not identify which manufacturer made the DES her mother took, as required under Texas law.

Plaintiff argued that Texas law was unsettled, that Texas courts had not clearly rejected the market share theory.  The court said it  need not wade too deeply into Bezuidenhout's "pool of hypotheticals", since it rested upon a false premise—that Texas law, as to proof of causation, is unsettled..."It is not.”  Indeed, the court opined that one of the goals of this case was to unsettle it. Texas does not permit recovery under a collective liability or market share theory. The courts in In re Fibreboard Corp., 893 F.2d 706 (5th Cir. 1990), and Cimino v. Raymark Indust., Inc., 151 F.3d 297, 312 (5th Cir. 1998), held that in Texas, it is a fundamental principle of traditional products liability law that the plaintiff must prove that the defendants supplied the product which caused the injury. Plaintiff tried to bootstrap to an "alternate reality," said the court. The Texas Supreme Court has never chosen to adopt market share liability.  

With the market share approach rejected, plaintiff had not proffered sufficient evidence to identify the defendant as a manufacturer of her mother's DES. Her mother's affidavit contradicted her prior sworn deposition testimony about whose product she might have used.  And, at best, a log from the pharmacist indicated that defendant's DES was among the many medications available at the pharmacy, but did not show which DES her mother took. The court thus found plaintiff failed to raise a genuine issue of material fact regarding the identity of the DES manufacturer.

Consumer Fraud Class Action Decertified in Drug Case

A state appeals court last week de-certified a class action by consumers over alleged misrepresentations in marketing a drug.  See Merck & Co. v. Ratliff, No. 2011-000234 (Ky. Ct. App.,  2/10/12).

The case involved the drug Vioxx, which was a highly effective medication formerly in widespread use for patients with arthritis and other conditions causing chronic or acute pain.  Plaintiff was a former user of Vioxx for his chronic osteoarthritis.  Although Ratliff’s insurance paid for most of the cost of the drug, which was at the time approximately $66 per month, Ratliff contributed about $5 each month out of pocket.  Ratliff discontinued using Vioxx in early 2004.

Plaintiff brought a putative class action on behalf of product users who had not suffered cardio-vascular side effects, alleging that the defendant deceived the members of the proposed class in violation of the state Consumer Protection Act by promoting and/or allowing the sale of Vioxx with the use of unfair, false, misleading or deceptive acts or practices.  As a result, the class purchased the drug when it wouldn't have otherwise.

The case followed a twisting path, to federal court, to the MDL, back to state court, up to the state supreme court on mandamus, and back.  Long story short, the class was certified by the trial court, and that decision eventually became ripe for review by the court of appeals.

The Kentucky rules are similar to the federal class action rules. The trial court certified the class under the prong (like b3) requiring that the questions of law or fact common to members of the class predominate over any questions affecting only individual members, and that a class action
is superior to other available methods for the fair and efficient adjudication of the controversy. The trial court found that common questions of law and fact did predominate, stating that there was a common nucleus of facts from which the potential plaintiffs’ claims arose. All of the potential
plaintiffs were prescribed Vioxx by doctors who supposedly relied on Merck’s assertions that it was safe and effective.

On appeal, Merck contended that plaintiff’s claims would require individualized proof such that common questions would not predominate. Merck argued that individual proof would be necessary to show that Merck made fraudulent or negligent misrepresentations toward each putative class member or his or her physician through the marketing and sale of Vioxx, that the alleged
misrepresentations were received by each putative member’s physician, that each putative member’s physician relied on such representations in his or her decision to prescribe Vioxx over another drug, and the amount of any damages suffered by each putative member.

The court of appeals noted that the common law misrepresentation claims would require proof of causation in the nature of reliance, and while "there are fewer obstacles to a class claim proceeding under the" state consumer protection act, that law still requires loss as a result of the wrongful act. Plaintiffs alleged that there was supposedly a consistent pattern of deception lasting essentially the entire time that Vioxx was on the market, and thus that generalized proof could be used to show the elements of fraud and misrepresentation in this case. This theory concerning generalized proof regarding Merck’s alleged conduct was similar to the rebuttable presumption of reliance and causation known in securities litigation as "fraud-on-the-market." The court of appeals noted that the “fraud-on-the-market” approach had never been recognized in the state for a fraud or misrepresentation case. Indeed, pretty much every other jurisdiction which has been confronted with the theory has rejected it outside of the securities litigation context. See, e.g., Kaufman v. i-Stat Corp, 754 A.2d 1188, 1191 (N.J. 2000); International Union of Operating Engineers Local No. 68 Welfare Fund v. Merck & Co., Inc, 929 A.2d 1076, 1088 (N.J. 2007); Mirkin v. Wasserman, 858 P.2d 568, 584-95 (CA. 1993); Southeast Laborers Health and Welfare Fund v. Bayer Corp., 2011 WL 5061645 (11th Cir. 2011); Buckman Co. v. Plaintiffs’ Legal Committee, 531 U.S. 341 (2001).

Accordingly, causation, reliance, and damages must be shown on an individual basis. Thus, if the action were tried as a class, even after the alleged common questions of Merck’s representations were decided, the case would essentially fragment into a series of amalgamated “mini-trials” on each of these individualized questions. Because these individualized questions would substantially overtake the litigation, and would override any common questions of law or fact concerning defendant’s alleged conduct, the court found that a class action was not the superior mechanism by which to try these cases. See, e.g., Zinser v. Accufix Research Institute, Inc., 253 F.3d 1180, 1192 (9th Cir. 2001).