Product Liability Cases of Interest from 2011 and 2012

PERSONAL JURISDICTION OVER FOREIGN MANUFACTURER

J. McIntyre Machinery, Ltd. v. Nicastro___ U.S. ___, 131 S.Ct. 2780 (2011)

In Nicastro v. McIntyre Machinery America, Ltd., 201 N.J. 48, 987 A.2d 575 (2010), by
a 5-2 vote, the New Jersey Supreme Court extended the stream-of-commerce theory for providing jurisdiction over a manufacturer who knew or reasonably should have known of the distribution system through which its products were being sold in the forum state, as articulated over twenty years ago in Charles Gendler & Co. v. Telecom Equipment Corp., 102 N.J. 460 (1986).
Last year the United States Supreme Court reversed the New Jersey Supreme Court.

In 2001 Plaintiff Nicastro severed four fingers when his hand was caught in the blades of a metal recycling machine. The machine was made by J. McIntyre Machinery Ltd. of the United Kingdom, and sold through McIntyre Machinery America Ltd. of Ohio, an independent company which filed for bankruptcy in 2001. The foreign manufacturer J. McIntyre argued it did not have sufficient minimum contacts with New Jersey to justify the state’s exercise of personal jurisdiction. It did not place the machine into the stream of commerce directed towards New Jersey, denied marketing the machine in this state, and did not have any contacts or relationships here. (It had attended various trade shows and conventions in cities throughout the U.S. but never in New Jersey.) J. McIntyre denied knowledge of the distribution of its machinery by McIntyre America. Plaintiff argued that New Jersey could exercise jurisdiction because J. McIntyre placed an allegedly defective machine into the stream of commerce in such a way that its geographical market was the entire United States.

The New Jersey Supreme Court agreed that this was enough for jurisdiction, despite acknowledging that J. McIntyre did not have a presence or minimum contacts in New Jersey. The facts demonstrated Defendant’s “calculated efforts to penetrate the overall American market” and “clearly knew or should have known that the products were intended for sale and distribution to customers located anywhere in the United States.” The Court analyzed the development of the law of personal jurisdiction, including Gendler and Asahi Metal Industry Co. v. Superior Court of Calif., 480 U.S. 102 (1987) and noted: “The power of a state to subject a person or business to the jurisdiction of its courts has evolved with the changing nature of the American economy.” The marketplace was now global and transnational, and it was fair to subject a foreign manufacturer to in personam jurisdiction in New Jersey in a products liability suit if the product was sold via a distribution scheme that targeted an American market. Such a wide geographic market obviously includes New Jersey, and so long as the foreign manufacturer knows the distribution scheme by which it receives economic benefits, even if it does not control that distribution, it will be subject to jurisdiction here. The majority felt that its ruling did not offend “traditional notions of fair play and substantial justice” and noted that a state has a strong interest in protecting its citizens from defective products as well as a paramount interest in insuring a forum for its injured citizens who have suffered catastrophic injuries.

There was a vociferous dissent. Justice Hoens concluded that the majority had “replaced a carefully balanced test … with an unbounded one that presumes that participation in the global economy, without more, bespeaks purposeful availment of the benefits of this jurisdiction.” In a separate dissent, Justice Rivera Soto believed that this decision was “ripe for review and correction by the Supreme Court of the United States.”

The dissenters were correct. The United States Supreme Court reversed, noting that it would violate due process if New Jersey exercised jurisdiction when J. McIntyre never engaged in any activities in this state that revealed intent to invoke or benefit from the protection of New Jersey laws. The sovereign’s exercise of power requires some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws. It is the defendant’s purposeful availment that makes jurisdiction consistent with “fair play and substantial justice” noted in International Shoe. No stream of commerce doctrine can displace that general rule for products liability cases, the plurality ruled. (The majority consisted of Justices Kennedy, Roberts, Scalia and Thomas; Justices Breyer and Alito concurred in the judgment; Justices Ginsburg, Sotomayor and Kagan dissented.)

The majority noted that the standards for determining state jurisdiction over an absent party have been unclear since Asahi, which mentioned a relation between jurisdiction and stream of commerce. Justice Brennan’s concurrence in that case, joined by three other justices, “discarded the central concept of sovereign authority in favor of considerations of fairness and foreseeability.” The premise was that “the defendant’s ability to anticipate suit renders the assertion of jurisdiction fair.” Foreseeability was the touchstone of jurisdiction under Justice Brennan’s concurrence in Asahi, but that view was rejected by Justice O’Connor writing for an equal number of justices. She wrote: “The placement of a product into the stream of commerce, without more, is not an act of the defendant purposefully directed toward the forum state.” Courts after Asahi have sought to reconcile the competing opinions. The majority ruled: “The Court’s precedents make clear that it is the defendant’s actions, not his expectations that empower a State’s courts to subject him to judgment.”

Nicastro did not establish that J. McIntyre engaged in conduct purposefully directed at New Jersey. “The British manufacturer had no office in New Jersey; it neither paid taxes nor owned property there; and it neither advertised in, nor sent any employees to, the State.” The manufacturer attended trade shows in this country and agreed to sell products in the U.S. Those facts “reveal an intent to serve the U.S. market, but they do not show that J. McIntyre purposefully availed itself of the New Jersey market.” The majority ended its decision by noting that “the stream-of-commerce metaphor cannot supersede either the mandate of the Due Process Clause or the limits on judicial authority that Clause ensures.”

FEDERAL DRUG REGULATIONS APPLICABLE TO GENERICS PREEMPT STATE LAW FAILURE TO WARN CLAIMS

Pliva, Inc. v. Mensing___ U.S. ___, 131 S.Ct. 2567 (2011)

In Wyeth v. Levine, 129 S.Ct. 1187 (2009), the Supreme Court held that federal law did not preempt state tort claims against brand-name drug manufacturers for failure to warn. The question in Pliva was whether the same applies to generic drug manufacturers, and the Supreme Court said no, ruling that plaintiffs’ claims were barred due to conflict preemption. The federal statutes and regulations applying to brand-name versus generic manufacturers differed, allowing for the differing decisions.

The FDA had approved metoclopramide, a drug used to treat digestive tract problems, under the brand name Reglan. Years later, generic manufacturers began producing the drug. Information developed that long-term use of metoclopramide can cause tardive dyskinesia, a severe neurological disorder. Warning labels for the drug have been strengthened several times over the years, most recently in 2009.

Plaintiffs were prescribed Reglan in 2001 and 2002, but both received the generic drug from their pharmacies. Both plaintiffs developed tardive dyskinesia after taking the generic drug for several years. Both sued the generic drug manufacturers that produced the metoclopramide, claiming the manufacturers were liable under state tort law for failing to provide adequate warning labels. The manufacturers argued that federal statutes and FDA regulations preempted the state tort claims by requiring the same safety labeling for generic metoclopramide as was mandated at the time for Reglan. The Court of Appeals in the Fifth and Eighth Circuits rejected those arguments and held that plaintiffs’ claims were not preempted. The Supreme Court reversed, concluding that federal drug regulations applicable to generic drug manufacturers directly conflict with, and therefore preempt, the state law claims.

Where state and federal law directly conflict, state law must give way. Such a conflict exists where it is impossible for a private party to comply with both state and federal requirements. If the manufacturers had independently changed their labels to satisfy their state-law duty to attach a safer label to their generic metoclopramide, as plaintiffs argued they should have, the manufacturers would have violated the federal requirement that generic drug labels be the same as the corresponding brand-name drug labels. Therefore it was impossible for them to comply with both state and federal law. And even if the generic manufacturers had fulfilled their federal duty to ask for FDA help in strengthening the corresponding brand-name label, assuming such a duty exists, they would not have satisfied their state tort law duty. State law demanded a safer label; it did not require communications with the FDA about the possibility of a safer label.

Plaintiffs argued that the defendants failed to ask the FDA for help in changing the corresponding brand-name label, and that precluded a preemption defense. The Supreme Court rejected that argument, noting that it would render conflict preemption meaningless by making most conflicts between state and federal law illusory. The Supremacy Clause would have no force outside of express preemption. The Supreme Court held that when a party cannot satisfy its stated duties without the federal government’s special permission and assistance, which is dependent on the exercise of judgment by a federal agency, that party cannot independently satisfy those state duties for preemption purposes.

The Supreme Court’s decision in Wyeth was distinguished because a brand-name drug manufacturer can, without pre-approval, add to or strengthen a warning label under the FDA’s changes-being-effected (“CBE”) process. A generic drug manufacturer cannot utilize the CBE process to unilaterally strengthen its label, according to the FDA. The Supreme Court noted that federal statutes and regulations that apply to brand-name drug manufacturers differ, by Congress’ design, from those applicable to generic drug manufacturers, and different laws can lead to different preemption results.

Post script: This decision last year resulted in the dismissal of a host of cases against generic drug manufacturers. The ruling in Pliva affects potentially millions of people since nearly 80% of prescriptions in this country are filled with a generic, sometimes without notice to the patient. As Justice Thomas wrote for the five person majority in Pliva, “Congress and the FDA retain the authority to change the law and regulations if they so desire.” Neither has shown such desire since the decision was announced last summer.

WORKERS’ COMPENSATION BAR TO SUING ONE’S EMPLOYER

Van Dunk v. Reckson Assoc. Realty Corp.____ N.J. ___ (2012); 2012 WL 2377854, Decided June 26, 2012

An employee injured in the course and scope of his employment cannot sue his employer in tort, unless the employer committed an intentional wrong. That “intentional wrong” exception to the workers’ compensation bar has been narrow. However, the Appellate Division’s 2010 opinion in this case opened the door a bit further by allowing suit against an employer even when there were no prior accidents, close calls or deception of OSHA. The New Jersey Supreme Court has narrowed the opening with its decision earlier this summer.

Plaintiff Van Dunk was employed as a laborer by Defendant James Construction Company, an excavator contractor hired to construct a retention pond. The employer’s superintendent for the project, Key, had received formal OSHA safety training and knew that OSHA required employees in an excavation to be protected from cave-ins. However, Key did not utilize any type of protective system to make the trench more stable. He did not utilize sloping to make the trench more stable because it was a confined area, and the space considerations also led Key not to construct a trench box.

The trench was constructed without any type of protective system. Employees had difficulty lining the trench with fabric, and Plaintiff volunteered to go into the trench to fix it. However, Key stopped him because he was concerned for Plaintiff’s safety in case the trench failed, which was a possibility. The crew continued to line the trench with the fabric which bunched up. In his frustration, the superintendent directed Plaintiff to enter the excavation to correct the problem. Within minutes the trench collapsed, injuring Plaintiff.

OSHA investigated the accident site and issued a citation to Plaintiff’s employer for a “willful” violation of its regulations in failing to utilize an adequate protection system.

Plaintiff sued several defendants including his employer, claiming that no immunity under the Workers’ Compensation Act was appropriate under the totality of the circumstances. The employer argued that Key’s actions did not amount to an “intentional wrong” as interpreted by case law, and that the mere possibility of injury did not equate with “substantial certainty.”

The Supreme Court reviewed N.J.S.A. 34:15-8 and the case law interpreting it, starting with Millison v. E.I. Du Pont de Nemours & Co., 101, N.J. 161 (1975) through Laidlow v. Hariton Mach. Co., Inc., 170 N.J. 602 (2002) and its progeny. The two-prong test enunciated in Millison was refined in Laidlow, where the Supreme Court held that no one fact was dispositive in assessing the employer’s actions. The analysis had to be based on the totality of the circumstances. The Supreme Court in Laidlow then found that where such conduct involving the intentional, and deceptively timed, engaging and disengaging of safety equipment led to the machine’s crushing of an employee’s hand, Millison’s conduct and context prongs both were satisfied. However, the Supreme Court declined to issue a per se rule that removal of safety devices or OSHA violations equate to intentional wrongs. Laidlow and its progeny, three cases decided by the Supreme Court on the same day in 2003, noted that other factors to be considered included employees’ statements to employers regarding safety issues, the seriousness of any potential injury that could occur, and any systematic deception of OSHA, such as when an employer fails to abate prior OSHA citations or only puts guards on machines when OSHA is inspecting the premises.

The Supreme Court in Van Dunk felt that these leading cases on the proof essential to finding an intentional wrong were as important to the case at bar as understanding the federal statutory scheme governing workplace safety on construction sites. Congress passed the Occupational Safety and Health Act of 1970 to assure safe and healthful working conditions. Administrative regulations were put forth setting employment safety standards. Through OSHA, the Secretary of Labor is authorized to make inspections of employer workplaces and to issue citations where violations are noted. OSHA also investigates after some accidents, and did so in this case after Mr. Van Dunk was injured. OSHA issued a “willful violation” citation to his employer for failing to protect its employees from cave-ins. Noting that Key, the employer’s on-site competent person, admitted that he knew the requirements of the standard, and the condition of the ground (water had seeped in, and an excavator was being used, which he knew could unsettle the ground), the OSHA report concluded that the employer intended the “result, i.e. noncompliance was not an accident or negligence.”

However, the Supreme Court found that OSHA’s finding the employer’s regulatory noncompliance was “not an accident or negligence” was a far cry from satisfying the requirement of proofs demonstrating substantial certainty of injury or death. A willful violation could encompass an intentional disregard or plain indifference, and therefore such a violation was not dispositive of whether the employer committed an intentional wrong. Consistent with its decision in Laidlow, the Supreme Court considered the finding of an OSHA violation just one factor among the totality of circumstances to be considered.

It turned its attention to the conduct and context prongs of the analysis, noting that the analyses for each are related and overlap to some degree. An intentional wrong must amount to a virtual certainty of injury. “A probability, , or knowledge that such injury or death ‘could’ result, is insufficient.” The Supreme Court, under the facts in Van Dunk, could not reach the conclusion that the employer, by violating the OSHA safety requirements pertaining to trenches deeper than five feet, knew there was a substantial certainty of injury. In contrast with the Appellate Division, the Supreme Court seemed unwilling to put the employer on the hook for one mistake without a history of violations. Looking back at Laidlow and its progeny, the Court was mindful of the durational aspect of the employer’s intentional noncompliance with OSHA requirements or other demonstrations of a longer-term decision to forego required safety devices or practices.” In contrast, “The events that transpired at this construction site do not equate to the more egregious circumstances involving intentional and persistent OSHA safety violations that, in the past, we found defeated an employer’s motion for summary judgment on the conduct prong analysis.”

Key “made a quick but extremely poor decision,” but even considering what he knew about safety and the condition of the ground at the work site, “none singly or in combination provide an objectively reasonable basis for expecting that a cave-in almost certainly would occur during the brief time plaintiff was sent into the trench.” The plaintiff had to be satisfied with the relief provided under the Workers’ Compensation Act. An employer’s reckless act, or gross negligence, will not overcome the workers’ comp bar to tort suits.

In concluding its similar analysis of the context prong, which involves a determination as a matter of law whether the circumstances of the worker’s injury are plainly beyond anything the legislature could have contemplated as entitling the employee to recover only under the Workers’ Compensation Act, the Court left open the door for a single act to one day satisfy both prongs and permit an employer to be sued in tort. A “single egregiously wrong act by an employer might, in the proper circumstances, satisfy the intentional wrong standard.” However, this case did not provide those circumstances. The Appellate Division’s decision was reversed.

DISCOVERY RULE ALLOWS CASE TO GO FORWARD DESPITE PLA’S PRESUMPTION OF ADEQUACY OF FDA-APPROVED WARNINGS

Kendall v. Hoffman-LaRoche, Inc. 209 N.J. 173 (2012)

The Supreme Court considered whether plaintiff’s lawsuit against the marketers of Accutane was barred by the two-year statute of limitations. Suit was filed about nine years after plaintiff was first prescribed the acne drug as a twelve-year-old. The prescribing doctor did not mention the risk of inflammatory bowel disease (IBD) because he was not aware of it. When the FDA approved Accutane years before, it did not require a warning of possible gastrointestinal side effects such as IBD. Although the brochure plaintiff was provided warned to be on the alert for stomach pain, diarrhea and rectal bleeding, plaintiff did not experience any gastrointestinal side effects during the initial or subsequent times she used the drug. However, about seven months after she completed her fourth course on Accutane, plaintiff was hospitalized in 1999 for bloody diarrhea and abdominal pain and was diagnosed with ulcerative colitis. Still, plaintiff was prescribed Accutane again in 2000 after her dermatologist consulted with her gastroenterologist, who had no objection. Plaintiff had no gastrointestinal side effects during or after this fifth course of Accutane. In September 2003 plaintiff was prescribed her sixth course of the drug, which she took until January 2004. Plaintiff suffered side effects and some increased diarrhea. In December 2005 plaintiff filed suit.

Defendant moved to dismiss the suit as untimely. After a hearing, the judge denied the motion, ruling that plaintiff’s delay was reasonable under the circumstances. The jury awarded damages to plaintiff. Defendant appealed and the Appellate Division affirmed. The Supreme Court granted certification on the issue of the timeliness of plaintiff’s Complaint, and affirmed because a reasonable person in plaintiff’s situation would not have known by December 2003 of the relationship between Accutane and ulcertative colitis.

The discovery rule balances the need to protect injured persons against the injustice of compelling a defendant to defend against a stale claim. It postpones the accrual date of a cause of action if the plaintiff is unaware either that she has been injured or that the injury is due to the fault of an identifiable individual or entity. Where the relationship between injury and the knowledge of fault is not evident, a plaintiff can invoke the discovery rule if he establishes that a reasonable person in those circumstances would not have been aware within the statutory period that she was injured through the fault of another.

In enacting the Product Liability Act (PLA), New Jersey’s legislature intended to reduce the lawsuit-related burden on manufacturers of FDA-approved products. The PLA provides that if a warning has been approved by the FDA, a presumption arises that the warning was adequate. This has been denominated as a super-presumption in that compliance with FDA standards should be virtually dispositive of such claims. The Supreme Court noted that “nothing in the language of the PLA or its legislative history suggests, even obliquely, an intention on the part of the drafters to alter our long-standing discovery rule jurisprudence.” The question at the heart of the appeal was what, if any, role the PLA’s presumption of adequacy plays in the judicial analysis of whether plaintiff acted reasonably in delaying the filing of her suit. The Supreme Court favored the “middle-of-the-road” approach suggested by the Appellate Division. A judge at a Lopez hearing may consider the presumption of adequacy, but at that stage should not view it as a virtually dispositive super-presumption. Rather it should be treated like any presumption, capable of being overcome by evidence which tends to disprove the presumed fact. “If, in the face of the evidence, reasonable people would differ regarding the presumed fact, the presumption will be overcome.” The burden remains on the plaintiff to show that a reasonable person in her circumstances would not have been aware, within the prescribed statutory period, that she had been injured by a defendant’s product.

The Supreme Court held that plaintiff’s suit may proceed because the evidence not only overcame the presumption, but established under all the circumstances, plaintiff reasonably was unaware that defendant caused her injury until after December 2003. The Court noted how the initial doctor did not warn of the risk of IBD; how plaintiff took four courses of the drug without experiencing any GI issues; how plaintiff’s gastroenterologist did not know of a connection between Accutane and ulcerative colitis at the time she developed that disease, which waxes and wanes; and did not experience any GI effects while on her fifth course of the drug. Further, the 2003 warning did not mention IBD or colitis, nor did any other consent form that plaintiff received. Her doctors never said anything to lead plaintiff to believe there was any connection.

Post script: Roche removed Accutane from the market in 2009, citing litigation costs and competition from generics.

WITH PROPER CONTROLS IN PLACE, DEFENDANTS CAN USE AS THEIR EXPERTS PHYSICIANS WHO HAVE TREATED PLAINTIFFS IN MASS TORT LITIGATION

In re Pelvic Mesh/Gynecare Litigation 426 N.J.Super. 167 (App.Div.2012)

Several hundred plaintiffs from many states individually filed suit in New Jersey against defendants Johnson & Johnson and Ethicon, Inc., alleging they suffered injuries caused by a line of defendants’ medical products. In February 2008, the first of the plaintiffs in these New Jersey cases filed suit against defendants alleging injuries sustained as a result of the surgical implantation of a pelvic mesh/Gynecare product. The Supreme Court assigned the cases to the Law Division, Atlantic County, for joint case management. A dispute arose over the defendants’ use as their experts any physicians who had previously treated any plaintiff.

In March 2009 defendants retained as a consulting expert Elizabeth Kavaler, M.D. In October 2009, while reviewing medical records of a plaintiff who had filed suit two months earlier, defense counsel discovered that Dr. Kavaler had surgically implanted a Gynecare product during treatment of that plaintiff. Defense counsel immediately informed plaintiffs’ liaison counsel and advised Dr. Kavaler not to disclose to the defense any information about the plaintiff she had treated. Defense counsel then discontinued discussion with Dr. Kavaler pending determination of her eligibility to serve as a defense expert. Later, the plaintiff who had been treated by Dr. Kavaler testified in deposition that she stopped seeing Dr. Kavaler in July 2008, that is, some eight months before defendants first engaged her services as an expert.

Defendants retained other consulting experts but experienced similar issues, and discontinued their discussions with those potential experts. In January 2011, defendants moved to establish a protocol similar to ones used in some federal litigation for consulting with and possibly retaining as defense experts physicians who had treated a plaintiff in the pelvic mesh litigation. Defendants proposed that a treating physician would have no communication with the defense about his or her own patient-plaintiff and would not be used as an expert witness in the patient-plaintiff’s own case. Plaintiffs’ counsel opposed the motion and cross-moved for a protective order barring defendants from retaining or consulting with any physician who at any time had treated any of the plaintiffs in the pelvic mesh litigation.

After the parties provided additional information, the trial court issued an order and written decision dated May 26, 2011 barring defendants from consulting with or retaining any physician who had at any time treated any plaintiff in the pelvic mesh litigation as identified in plaintiffs’ list. At the time of the court’s order, the number of plaintiffs had risen to more than 220. One thousand physicians were thus disqualified as potential defense experts. At the time appellate briefs were filed in December 2011, the list numbered about 450 plaintiffs and about 1,300 physicians.

In their appeal to the Appellate Division, the defendants argue that the May 26, 2011 disqualification and protective order profoundly impairs defendants’ ability to defend these lawsuits because it prevents them from employing qualified experts in cases against plaintiffs other than their own current or past patients. According to defendants, not only does the order severely limit the pool of qualified and willing physicians that defendants can consult and engage as expert witnesses but it places defendants in the precarious position of consulting and preparing experts only to have them later disqualified as new plaintiffs are added to the litigation, as already occurred with Drs. Zyczynski and Kavaler. Defendants contend the trial court’s order will force them to rely on physicians who have less direct patient experience and knowledge of their pelvic mesh products, or perhaps experts who do not practice medicine in the United States. On the other hand, plaintiffs will have the advantage of consulting with and presenting testimony at trial from American physicians who have treated patients and are personally familiar with the use of defendants’ pelvic mesh products.

The Appellate Division reviewed a host of cases concerning the use of experts and a physician’s duty of loyalty to patients and obligation to cooperate in litigation. It announced, “The key issue in this appeal is not whether the physician-patient privilege prevents engagement of a treating physician as an expert for the defense. The issue is whether some other rule or judicial or public policy categorically bars a treating physician from serving as an expert witness against the ‘litigation interests’ of his or her patient, although in a different plaintiff’s case.” The Appellate Division concluded that the trial court’s ruling was a mistaken exercise of authority to manage this litigation. The trial court inappropriately equated a plaintiff’s “litigation interest” with a patient’s “medical interests” to a preemptive level not previously recognized by binding authority.

Defendants committed to using their experts only as witnesses against plaintiffs that they had never treated and generally as consultants with respect to the nature and use of defendants’ products. With appropriate sensitivity to physician-patient confidentiality, defendants proposed a protocol and protective order that barred the expert from assisting the defense regarding a patient-plaintiff’s specific medical condition. Our system of civil justice does not bar a physician from expressing a position in litigation of one plaintiff that is contrary to the “litigation interests” of a current or past patient in another case. Plaintiffs’ argument does not give adequate consideration to binding Supreme Court and Appellate Division authority on the subject of defense access to and use of relevant information from treating physicians. In fact, the Supreme Court has not barred outright the ability of one party in litigation to take advantage of adverse opinions of another party’s professional expert because of prior contacts and consultations. The relatively insignificant risks in these cases that a treating or consulting specialist may reveal privileged information if consulted or retained by the defense, the Appellate Division noted, can be addressed through appropriate protective measures. The defense has proposed a protective order precluding those physicians from providing any information to the defense about their current or prior patient-plaintiffs.

As applied here, the Supreme Court’s discussions of related issues in Stempler, Stigliano, and Fitzgerald support the position taken by defendants that a treating physician is not categorically precluded by the physician-patient privilege, by other rules of evidence, or by case law from testifying adversely to a patient’s interests in litigation, even if such testimony might erode the patient’s trust in the physician. The Appellate Division noted that “the physician’s information that defendants seek to use is neither the particular diagnosis or condition of a patient that the physician treated nor the fruit of expert consultation to assess or prepare plaintiffs’ claims. Rather, it is the physician’s overall knowledge regarding the nature, use, risks, and safety of defendants’ pelvic mesh products and the conditions that patients may experience as a result of their use.”

The Appellate Division noted that “our mass tort procedures for managing coordinated litigation will unfairly hinder defendants’ right to defend lawsuits such as these if plaintiffs as a group may engage as experts any qualified physicians with knowledge and experience but defendants may not.” Further, the fact that plaintiffs have filed suit in this State and taken advantage of our Rule 4:38A for joint case management should not affect the availability of relevant evidence to both sides. “It should not preemptively limit defense access to the same pool of qualified witnesses and consultants knowledgeable about defendants’ products as available to plaintiffs.”

With regard to a physician’s “duty of loyalty” referenced in some case law, the Appellate Division “disavow[ed] any suggestion that a physician, or any witness for that matter, has a duty to support substantively a litigant’s claims or defenses. The duty of a witness is to tell the truth when testifying and to provide information accurately in anticipation of testimony.” The Appellate Division felt “it beyond the scope of judicial authority to impose a ‘duty of loyalty’ upon physicians to support, at least by enforced silence, a current or past patient’s claims in litigation.”
Additionally, the Code of Medical Ethics does not require that physicians avoid taking an adverse position to their patients’ “litigation interests” but that they avoid adverse effects upon their patients’ “medical interests.” Also, the Code of Medical Ethics does not expressly place constraints on the adverse participation of a treating physician in litigation if treatment of a patient has ended.

In overturning the trial court’s Order, the Appellate Division recommended “that some additional protections in the proposed protocol and protective order will serve to prevent misuse of a treating physician’s services as a defense expert. First, counsel and the trial court should fix an appropriate time for plaintiffs’ counsel to identify past or present treating or consulting physicians for any new plaintiff added to the litigation. Second … defense counsel should give notice to plaintiffs’ counsel of their intent to contact any past or current treating or consulting physician for the purposes of exploring whether that physician might be engaged as a defense expert.” Additionally, “any physician who is retained or otherwise substantively consulted by the defense shall notify any current patient-plaintiffs of that engagement and provide to the patient the opportunity to transfer her care and treatment to a different physician.” Finally, plaintiffs can apply to the trial court when they feel that the defendants’ retention of a particular treating physician will unduly prejudice a patient-plaintiff, including for example, by interference with access to that physician as a fact witness. “If plaintiffs make such a particularized showing, the court shall consider appropriate protective measures, including disqualifications where lesser measures are not sufficient or feasible.”

PLAINTIFFS FAIL TO OVERCOME PLA’S REBUTTABLE PRESUMPTION OF ADEQUACY OF FDA-APPROVED LABELING

DeBoard v. Wyeth, Inc. 422 N.J.Super. 360 (App.Div.2011)

Plaintiffs Loretta DeBoard and Dora Bailey, women who contracted breast cancer after being treated with hormone replacement therapy drugs Premarin, Prempro, and Provera, appealed orders of summary judgment in favor of drug manufacturers Wyeth, Inc., Wyeth Pharmaceuticals, Inc. (collectively Wyeth) and Pharmacia & Upjohn Company (Upjohn), entered by Judge Jamie D. Happas dismissing their product liability and other claims based on inadequate testing and warnings.

All three drugs are FDA approved and are available only by prescription. Both DeBoard and Bailey commenced taking Premarin and Provera in 1991 and were switched by their physicians to Prempro in 1996. DeBoard's breast cancer was diagnosed in August 2001, and Bailey was diagnosed in 2002. Both women ceased hormone replacement therapy upon diagnosis of their cancer.

DeBoard filed suit against Wyeth and Upjohn alleging violations of the New Jersey Products Liability Act as the result of defendants' alleged failure to warn, fraud, intentional and negligent misrepresentation, and violations of the New Jersey Consumer Fraud Act. Similar claims were asserted by Bailey and her husband approximately one year later. (See case summary below.) The two women's claims formed a part of the hormonal replacement therapy (HRT) litigation that was designated as a mass tort and assigned to Middlesex County for discovery and trial.

Following discovery, in March 2008 motions for summary judgment were filed by Wyeth and Upjohn in the Bailey matter. While those motions were pending, defendants moved for summary judgment in the DeBoard action, as well. The motions were consolidated, and following argument, in July 2008 Judge Happas granted summary judgment in a lengthy opinion in the Bailey matter, which she incorporated into a letter opinion granting summary judgment in DeBoard's case.

Plaintiffs appealed from the judge's summary judgment orders, and their appeals were consolidated. On appeal, plaintiffs challenged the presumption of adequacy that Judge Happas applied to the drug warnings, arguing first that the presumption cannot apply prior to 1995 because the combined use of estrogen and progesterone constituted an off-label use of the drugs. They then argued that the judge misconstrued established law regarding the application of the presumption, and that the judge failed to draw all favorable inferences from plaintiffs' evidence of defendants' conduct.

The Appellate Division affirmed substantially on the basis of the well-considered and exhaustive opinion of Judge Happas in the Bailey matter, which the appellate judges determined to be well supported by the evidence and legally unassailable. (See below.)

Bailey v. Wyeth, Inc. 424 N.J.Super. 278 (Law Div.2008)

The Appellate Division in 2011 approved for publication the lengthy opinion that Judge Happas drafted and entered in 2008. Judge Happas granted defendants’ motions for summary judgment in a claim by a consumer who contracted breast cancer from hormone replacement therapy regimen. All three drugs were approved by the FDA, two to treat menopausal symptoms and for prevention of osteoporosis, and one for the treatment of uterine bleeding due to hormone imbalance. Plaintiff had sued the drug manufacturer asserting claims of failure to warn under Products Liability Act (PLA), violations of Consumer Fraud Act, and common law claims of fraudulent and negligent misrepresentation. In a decision later viewed favorably by the Appellate Division in the related DeBoard case (above), Judge Happas ruled that: (1) the statutory presumption under the PLA that a drug manufacturer's warning label was adequate if approved by the Food and Drug Administration (FDA) was not limited only to cases involving direct-to-consumer prescription drugs; (2) the consumer's summary judgment evidence did not support the claim that the manufacturer deliberately concealed or failed to disclose knowledge of breast cancer risk from estrogen/progestin therapy regimen, as required for a consumer to rebut the statutory presumption under PLA; (3) the manufacturer of estrogen and single-dose estrogen/synthetic progestin hormone drugs did not manipulate the post-market approval regulatory process with the FDA, as required for a consumer to rebut the statutory presumption; (4) the consumer's claim for economic damages under the Consumer Fraud Act was subsumed by the PLA; and (5) the consumer's common law claims for fraudulent misrepresentation and negligent misrepresentation were subsumed by the PLA.

Proposed labeling is submitted as part of a New Drug Application (NDA) and reviewed by the FDA. Among other things, the labeling must contain potential safety hazards associated with the drugs’ use. Often several versions of the labeling are exchanged between the manufacturer and FDA before the final labeling is approved. The labeling must be revised to include a warning as soon as there is reasonable evidence of an association of a serious hazard with a drug. The FDA has authority to impose warnings about off-label or unapproved uses when there is evidence of a clinically significant risk. Pharmaceutical companies may distribute information regarding off-label use provided the company complies with the enumerated requirements. Physicians frequently prescribe drugs for off-label or unapproved uses. Allowing physicians to do so is an accepted and necessary corollary of the FDA’s mission to regulate in this area without directly interfering with the practice of medicine.

The FDA has promulgated class labeling guidelines for a limited number of drugs, including the three at issue in this case. A labeling guideline is a mandatory requirement.

The New Jersey Legislature went further than those in other states and accorded deference to the FDA's determination of appropriate labeling of prescription drugs by including a rebuttable presumption in the PLA. Pursuant to N.J.S.A. 2A:58C–4, defendants who comply with FDA regulations are granted a rebuttable presumption of adequate labeling. While the parties agree that the PLA accords a rebuttable presumption of adequacy based on FDA approval, they dispute the effect and operation of the rebuttable presumption. New Jersey courts have recognized that before the FDA warning presumption will be deemed rebutted, the plaintiff must produce a specific type of evidence demonstrating intentional misconduct by the manufacturer. Presently, the presumption of an adequate warning based on compliance with FDA regulations will be deemed rebutted only if the following proof is presented: (i) deliberate concealment or nondisclosure of after-acquired knowledge of harmful effects, or (ii) manipulation of the post-market regulatory process.

In the case at bar, Judge Happas ruled that Plaintiffs failed to present any evidence of deliberate concealment or nondisclosure of after-acquired knowledge by either Wyeth or Upjohn. Upon reviewing the voluminous exhibits and documents submitted by both parties, the court found no support in the evidence for plaintiffs’ claim that Wyeth manipulated the regulatory process by putting specific representations in the Prempro label which it knew to be untrue, and minimized or discounted studies that showed an increased breast cancer risk. The court also shot down plaintiffs’ attempt to overcome the presumption of adequacy by citing letters from the FDA to Wyeth concerning marketing materials. A full review of the relevant documents reveals that the FDA actively exercised its regulatory authority and took prompt and effective action. Wyeth was never issued a warning letter. Furthermore, Wyeth promptly addressed all recommendations and concerns raised by the FDA.

The decision of Bailey's physicians to prescribe Provera off-label, and the fact that the FDA had not yet approved Provera for the particular indication for which it was prescribed to Bailey, does not rebut the statutory presumption of adequacy to which the Provera labeling is entitled, the court found. During the time period when she was prescribed Provera, the drug was subject to both scientific and regulatory scrutiny. The FDA had the authority to require a specific risk of breast cancer warning in the labeling and was sufficiently knowledgeable on this issue to determine whether such a warning was necessary. The FDA's decision not to include a risk of breast cancer warning on the Provera label was deliberate and informed. Plaintiffs cannot use the fact that Provera was prescribed off-label to rebut the statutory presumption of adequacy.

The court recognized that some of the conduct of Wyeth and Upjohn cited by plaintiffs may have been less than exemplary. However, the actions and/or inactions of defendants have to be viewed in light of plaintiffs' failure to warn claim and the presumption of adequacy established by our Legislature. The court ruled that plaintiffs did not present compelling or substantial evidence of the type necessary to rebut the presumption of adequacy.

As for plaintiffs’ non-PLA causes of action, the court rejected plaintiffs’ claim that their purely economic loss arising from defendants’ alleged fraudulent misrepresentations of their product (which led to plaintiffs’ receipt of less than what they were promised) is separate and distinct from the damages they incurred as a result of Bailey’s ingestion of the products. Both the Consumer Fraud Act and negligent misrepresentation claims are subsumed by the PLA, which is the exclusive remedy for harm caused by a product.

PLAINTIFFS’ SUIT AGAINST PRODUCT-LINE SUCCESSOR SURVIVES DESPITE BANKRUPTCY SALES ORDER SPECIFICALLY PROTECTING PURCHASER FROM STATE SUCCESSOR LIABILITY CLAIMS

Morgan Olson LLC v. Frederico (In re Grumman Olson Industries, Inc.) 2012 WL 1038672 (S.D.N.Y. 2012).

Plaintiff and her husband filed suit in the Superior Court of New Jersey against Morgan Olson, LLC and other defendants alleging that she was seriously injured in 2008 by a defective truck. The truck was manufactured in 1994 by Grumman Olson. After that company went bankrupt, in 2003 Defendant Morgan Olson purchased certain assets of the debtor at a Section 363 Sale. The Sale Order purported to limit Morgan’s potential liability arising from the sale of those assets for tort claims based on allegedly defective products manufactured and sold by Grumman prior to the sale. The Sale Order specifically released Morgan from “any liability for claims against the Debtor or the Lot 2 Assets, including but not limited to, claims for successor or vicarious liability, by reason of such transfer under the laws of the United States, [or] any state.” The bankruptcy proceedings were closed in 2006. In 2008 plaintiff struck a telephone pole with the FedEx truck she was driving, which had been manufactured by the now defunct Grumman Olson. Unable to sue the debtor, in 2009 plaintiffs sued the successor Morgan Olson which had continued to manufacture Grumman’s line of trucks. The New Jersey Supreme Court had held a decade earlier that the state’s product-line exception to the general rule against corporate-successor liability applies even when the successor has purchased the predecessor’s assets at a bankruptcy sale.

Morgan re-opened Grumman’s bankruptcy case in an effort to forestall the New Jersey state court action. The Bankruptcy Court in New York had retained jurisdiction “to interpret, implement and enforce the provisions” of the Sale Order. Morgan brought an adversary proceeding in the Bankruptcy court seeking declaratory and injunctive relief barring plaintiff’s claims in the New Jersey, noting that the Sales Order specifically prohibited successor liability claims against it in any state. Both Morgan and plaintiffs cross-moved for summary judgment. The legal question was whether the Sale Order exonerated Morgan from liability to plaintiffs. Chief Bankruptcy Judge Bernstein answered that question in the negative, granted plaintiffs’ motion, denied Morgan’s motion and dismissed the adversary proceeding. See In re Grumman Olson Indus., 445 B.R. 243 (Bankr. S.D.N.Y. 2011). Morgan appealed to the United States District Court, which reviewed the Bankruptcy Court’s purely legal decision de novo.

Relying on the Ramirez and Lefever cases, plaintiffs argued that Morgan was liable under New Jersey successor liability law because it continued to manufacture and market the same product line and actively exploited the good will in the Grumman Olson name. Further, the bankruptcy court did not “deal with” the plaintiffs’ claims (because they did not yet exist), so, under Lefever, there would be no bar to the imposition of successor liability. If the claims had been “dealt with” by the bankruptcy court, then the supremacy of federal law in the area of bankruptcy would preempt claims under the state theory of successor liability.

Morgan argued that the type of successor liability authorized by the New Jersey Supreme Court in Lefever tramples on the supremacy of federal bankruptcy law. Morgan noted that imposing successor liability would directly conflict with the Sale Order. Moreover, the imposition of successor liability on Morgan would effectively defeat the possibility of debtors selling assets “free and clear” of liabilities, which would prevent maximizing the value of debtors’ assets at the time of sale.

The district court saw this case as pitting enforcement of the Sale Order under the Bankruptcy Code versus plaintiffs’ right to due process. “The present case actually turns on the question whether, assuming arguendo that there is a viable basis for state successor liability based on prepetition conduct of the debtor, a bankruptcy court’s sale order may be enforced to extinguish those claims where no injury occurred to the claimant until after the bankruptcy closed, such that the claimant was not provided with notice of, or an opportunity to participate in, the bankruptcy proceedings that gave rise to that order.”

Plaintiffs argued that they were “future claimants” unknown during the bankruptcy, and unable to have their claim discharged in bankruptcy. The court analyzed the meaning of the term “claim” in light of the Bankruptcy Code, examined a host of decisions, and noted that a proper definition of “claim” was inextricably tied to due process and notions of fundamental fairness. Notice is the cornerstone underpinning Bankruptcy Code procedure, and obviously plaintiffs received none during the Grumman Olson bankruptcy. For due process reasons, it would be inequitable to hold plaintiffs bound by orders issued during a bankruptcy of which they had no notice. “Because parties holding future claims cannot possibly be identified and, thus, cannot be provided notice of the bankruptcy, courts consistently hold that, for due process reasons, their claims cannot be discharged by the bankruptcy courts’ orders.” The same result applied in the case before the court despite the “free and clear” provisions of the Section 363 Sale Order.

Morgan did not address plaintiffs’ due process arguments. The district court did: “Enforcing the Sale Order against the Fredericos to take away their right to seek redress under a state law theory of successor liability when they did not have notice or an opportunity to participate in the proceedings that resulted in that order would deprive them of due process.” The court also noted that no future claims representative was appointed during the bankruptcy, and no provisions were made for unrepresented future claimants.

The question was whether the Sale Order prevents plaintiffs from even bringing their state court suit against Morgan in the first place. In light of due process requirements that were not met, the court held that the Sale Order could not be enforced despite its “free and clear” provisions seemingly barring the type of claim plaintiffs pursued. In the end, constitutional requirements of due process trumped the bankruptcy court order its intent and to maximize the value of the debtors’ assets. Morgan Olson has filed an appeal with the Second Circuit which is pending. A split exists among the Circuits which may portend further appeal to the U.S. Supreme Court.

SUMMARY JUDGMENT BASED ON SPOLIATION OF EVIDENCE
AND INNOCENT RETAILER STATUTE

Bashir v. Home Depot
2011 WL 3625707 (D.N.J.) (08/16/11)

Sellers and renters of equipment manufactured by other entities are not always able to extricate themselves from suits under the “innocent retailer” section of New Jersey’s Product Liability Act (PLA). Plaintiff Bashir was injured by a stump grinder he rented from Home Depot. Home Depot was the retail lessor of that product, which was designed and manufactured by Husqvarna. The manufacturer includes an operating manual with the stump grinder and expects that users of the machine will read the operation and safety portions of the operating manual prior to use. In addition, Husqvarna includes notices on the stump grinder itself instructing users to read the operating manual before using the machine.

Home Depot allows rental customers to waive their right to receive the operating manual. A Home Depot employee tests each machine before renting it to a customer, and provides training. The employee acknowledged that customers should still read the operator's manual, despite receiving training from him on how to use a particular machine. Plaintiff rented a stump grinder from Home Depot and then brought it home. Plaintiff hired a day-laborer to assist him. Plaintiff was injured when the stump grinder's blade came into contact with his leg while a day-laborer operated the machine in Plaintiff's backyard.

In an Amended Complaint, Plaintiff alleged that the stump grinder was defectively designed and that Husqvarna failed to include proper safety warnings with the machine. Plaintiff also claimed that, although Husqvarna included warnings with the stump grinder that advised users to read the operating manual, Home Depot allowed its renters to waive reading the operating manual, and attempted to substitute reading the operating manual by providing its own training. Defendants filed the following motions: (1) a motion for summary judgment by Home Depot based on N.J.S.A. § 2A:58C–9(b); and (2) a motion for summary judgment by both Defendants based on Plaintiff's spoliation of evidence. Plaintiff opposed both motions, and both motions for summary judgment were denied.

Under the Product Liability Act, a product lessor will be relieved from liability for injuries caused by a defective product it leases to the public, provided that it files “an affidavit certifying the correct identity of the manufacturer of the product which allegedly caused the injury.” N.J.S.A. § 2A:58C–9(a). Upon filing the affidavit, the product seller is then “relieved of all strict liability claims.” N.J.S.A. § 2A:58C–9(b). Home Depot argues that since it provided Plaintiff with sworn statements identifying Husqvarna, a named defendant in this case, as the designer and manufacturer of the stump grinder, it met its obligation under the statute and should be granted summary judgment.

However, the PLA provides that a product seller can be held liable, even if it identifies the product manufacturer, under several delineated circumstances, including when the seller exercises some significant control over the design, manufacture, packaging or labeling of the product relative to the alleged defect which caused the injury. N.J.S.A. § 2A:58C–9(d)(1). The burden is on the party seeking to take advantage of the immunity in subsection (b) to prove that the factors in subsection (d) do not apply by presenting evidence to that effect or by pointing to a lack of evidence in the record supporting opposite conclusions.

In this case, Plaintiff offered evidence that Home Depot exercised significant control over the safety warnings involving the stump grinder. In particular, Home Depot permitted renters to waive reading the operating manual containing the safety warnings and provided them with its own training on how to use the product. In addition, Plaintiff presented evidence in the form of expert testimony showing that Home Depot did not take adequate measures to warn those renters of the dangers involved in using the stump grinder. Therefore, Home Depot's motion for summary judgment was denied.

Both Defendants moved for summary judgment based on spoliation of the evidence, arguing that Plaintiff (1) failed to secure the identity of the day-laborers who operated the stump grinder and witnessed the accident and (2) returned the stump grinder without notifying Home Depot about the accident. The District Court cited various cases showing that a “duty to preserve evidence ... arises where there is: (1) pending or probable litigation involving the defendants; (2) knowledge by the plaintiff of the existence or likelihood of litigation; (3) foreseeability of harm to the defendants, or in other words, discarding the evidence would be prejudicial to defendants; and (4) evidence relevant to the litigation.” Hirsch v. General Motors Corp., 266 N.J.Super. 222, 250, 628 A.2d 1108 (Law Div.1993). However, “[t]he scope of the duty to preserve evidence is not boundless. A ‘potential spoliator need do only what is reasonable under the circumstances.’ ” Callahan v. Stanley Works, 306 N.J.Super. 488, 496, 703 A.2d 1014 (Law Div.1997) (quoting Hirsch, 266 N.J.Super. at 251, 628 A.2d 1108).

The Defendants argued that Plaintiff had a duty to ensure that the witnesses to the accident could be found and to preserve the post-accident condition of the stump grinder. They claimed that Plaintiff's instruction to his mother-in-law, after the ambulance arrived on the scene, to take the day-laborers home and return the stump grinder to Home Depot, demonstrates that he feared discovery of some evidence showing culpable conduct on his part. According to the Defendants, the only reason that Plaintiff had to be concerned about the discovery of such evidence is if he contemplated an action or claim and intended to hide the facts. The Defendants claimed that Plaintiff must have known that destroying crucial evidence about the witnesses and the stump grinder would prejudice the Defendants and that he intended to bring a claim for his injury against some entity.

The Court declined to conclude that Plaintiff's instructions to his mother-in-law concerning the stump grinder and the day-laborers show that he intended to hide crucial evidence related to the accident. The Court noted that Defendants presented no evidence showing that Plaintiff knew of the existence or likelihood of litigation at that time. “In fact, Plaintiff testified that he did not consider litigation or consult an attorney until several months after the accident.” This second motion for summary judgment was also denied.

DISTRIBUTOR HAS DUTY WHEN SERVICING AN UNSAFE MACHINE

Torres-Pena v. Siegmeister Sales & Service Inc.
2011 WL 2496283 (N.J.Super.A.D.) (06/24/11)

Plaintiff was a recent immigrant from Mexico who had a sixth grade education. He was severely injured at his job in a supermarket when his hand was mangled in a meat grinder from which the employer had removed protective devices. Summary judgment had been granted in favor of defendant Siegmeister Sales & Service, Inc. (“Siegmeister”), the distributor of the meat grinder and the party responsible for certain maintenance duties on the machine. Plaintiff appealed and the Appellate Division reversed the trial court’s grant of summary judgment based on its legal conclusion that Siegmeister did not have a duty of care to plaintiff to warn his employer of the absence of guards on the meat grinding machine.

In Hopkins v. Fox & Lazo Realtors, 132 N.J. 426 (1993), the Court held that the legal determination of whether a defendant had a duty of care to a plaintiff is “fact specific” and requires “principled” examination of factors including “the relationship of the parties, the nature of the attendant risk, the opportunity and ability to exercise care, and the public interest in the proposed solution.” Id. at 439. The Appellate Division’s analysis of those factors, and relevant precedents, led it to a different conclusion from that reached by the trial court. The Appellate Division held that the summary judgment record supports imposition of a duty of care upon Siegmeister in the performance of its service tasks as they relate to use and operation of an unsafe machine. Whether Siegmeister failed to conform to that duty, and whether its failure was a proximate cause of the accident and plaintiff's injuries, are disputed issues of fact for a jury to decide.

“The opportunity and ability to exercise care were present, and the public interest in avoiding such injuries is strong. The proposed solution—warning the owner, reporting continuing deficiency of the machine to the manufacturer, and refusing to service dangerous machinery—has prospects of being an effective tool in preventing accidents in the work place and is not unduly burdensome to the service provider. In fact, the manufacturer has itself devised that solution for the problem of irresponsible employers risking the health and safety of employees to enhance productivity.”

Biro Manufacturing Co., the manufacturer of the machine, had been dismissed from the case after some discovery was conducted. Plaintiff filed an amended complaint against Siegmeister for strict liability and negligence, and his employer, Tropical Sun, Inc. which “willfully and knowingly disengaged and/or removed a safety device” (a Laidlow intentional tort claim against one’s employer which is not barred by the workers' compensation statute). Biro had taken several steps to address the longstanding problem of purchasers removing protective devices from its grinders to increase productivity. “Bowl guards” were affixed with steel fasteners and then welded permanently to the tray in which meat is placed for grinding. A magnetically-activated interlock system prevented use of the machine when the tray and attached guards were removed for cleaning or otherwise. The only way to separate the guards from the tray was to saw them off.

Biro had provided financial incentives to distributors since 1995 to report removal of guards and to assist owners in correcting the deficiency. It had also instructed distributors not to service machines from which guards had been removed. If the owner of a machine did not cooperate in rectifying the safety risk, Biro filed a report with the federal Occupational Safety and Health Administration (OSHA). Biro provided in its distributor agreements, including the one entered into with Siegmeister, that distributors must assure that all warning labels are in place and that purchase orders must instruct purchasers not to remove, bypass or alter any safety guards, interlocks, devices or warnings. Additionally, the distributor agreement between Siegmeister and Biro also required the distributor to insure that all safety guards, interlocks, devices and warnings, were on the Biro product and functional.

PLAINTIFF’S EXPERT SURVIVES DAUBERT CHALLENGE; PLAINTIFF’S COMPARTIVE NEGLIGENCE IS INADMISSIBLE

McGarrigle v. Mercury Marine 838 F.Supp.2d 282 (D.N.J. 2011)

A boat operator who fell overboard brought a consumer products liability action against the manufacturer of the boat's outboard engine, seeking recovery for injuries caused by the engine's propellers when the boat went over the operator as he tried to climb back aboard the boat. The parties moved for summary judgment on the issue of admissibility of testimony by the operator's liability expert. The District Court, inter alia, held that the liability expert's testimony was reliable, connected to disputed factual issues, and thus was admissible. With respect to the plaintiff’s cross motion, the Court held that the evidence of the boat operator's comparative negligence was inadmissible, but evidence of the boat operator's conduct surrounding the accident was admissible on the issue of proximate cause. Finally, the boat owner's failure to read the owner's manual before allowing operation of the boat was inadmissible on issues of comparative fault or proximate cause.

The facts revealed that plaintiff was operating his father's boat, a twelve foot aluminum fishing boat equipped with a 15 horsepower Mercury Marine outboard engine, when he was pitched overboard. As plaintiff fell into the water, his grasp on the tiller caused the boat to spin in a clockwise motion. The boat circled plaintiff several times, coming closer to plaintiff with each rotation. Plaintiff did not try to swim towards the shore. Plaintiff tried to grab hold of the circling boat and climb on board, but the boat went over him and the propeller from the engine struck his face and neck causing severe injuries.

The Mercury Marine outboard engine should have been operated with a “lanyard” stop switch. The purpose of the lanyard is to provide a safety device to stop the engine in the event of the operator being thrown overboard. One end of the lanyard is inserted into the “run/off” switch while the other end is fastened to the operator. If the operator moves far enough away from the engine, or is thrown overboard, the lanyard will turn the engine off in order to prevent injury from a runaway boat. Plaintiff admits that had a lanyard been used, the accident would not have happened. However, when plaintiff's father purchased the engine, he did not receive a lanyard stop switch. He did, however, receive an owner's manual which described the nature, function, and purpose of the lanyard and the dangers of failing to use it. Neither the father nor his son read the owner's manual. Defendant's expert admits that it is well known that there are people who will operate the boat who have not read the owner's manual. The father stated that had he read the manual, he would have obtained a lanyard.

A. Expert Admissibility

Defendant argued that plaintiffs' liability expert should be precluded from testifying because he and his opinions could not survive the Daubert/Kumho Tire analysis. Federal Rule of Evidence 702 governs the admissibility of expert testimony. The three requirements outlined in Rule 702 are referred to as qualification, reliability and fit. As to qualification, Defendant argued that Dr. Fisher was not an expert regarding small fishing boats and 15 horsepower engines. Defendant maintaied that Dr. Fisher's expertise was in the area of design and construction of ships and large maritime structures and the contracts and financing of such activities. Plaintiffs responded that defendant's definition of qualifications was so narrow that only former employees of outboard engine manufacturers would qualify. Plaintiffs stated that Dr. Fisher had extensive experience in the area of boating safety; that he had been a professor of naval architecture, had written and edited books on small crafts, and given seminars on relevant topics. Noting that the Third Circuit instructs that the qualification requirement should be interpreted liberally, the Court found that Dr. Fisher was qualified to testify as an expert in the case.

After a detailed analysis, the Court also found that Dr. Fisher's opinion was sufficiently reliable under Rule 702. A trial court has considerable leeway in deciding in a particular case how to go about determining whether particular expert testimony is reliable. Factors the court should consider in determining whether an expert's opinion is reliable include: (1) whether the expert's method consists of a testable hypothesis; (2) whether the method has been subject to peer review; (3) the known or potential rate of error; (4) the existence and maintenance of standards controlling the method's operation; (5) whether the method is generally accepted; (6) the relationship of the expert's method to those that have been established to be reliable; (7) the qualifications of the expert witness testifying based on the methodology; and (8) the non-judicial uses.

The testimony of the boat operator's liability expert was reliable, as the expert's reliance on an industry standard for “marine structures” was reasonable given the absence of specific standards for recreational boats. “If there is a gap between the ASTM F 1166–07 standards as written and as applied by Dr. Fisher, any inconsistencies go to the weight of the evidence, not to its admissibility.” The expert's proposed alternative design for the engine's stop switch (Lanyard A) was used by the rest of industry and in the manufacturer's other models. Defendant also argued that there was no reliable basis for Dr. Fisher's opinion on a safer alternative design by using Lanyard A because he had not conducted certain tests or research on accident occurrence using one type of lanyard versus the other. However, an alternative design that is in use by an industry can be evidence of its reliability.

The third and final requirement is that the expert testimony “fit,” meaning a connection must exist between the expert opinion offered and the particular disputed factual issues in the case. In order for an expert's testimony to fit, the scientific knowledge must be connected to the question at issue. The issue in this case was whether the lanyard stop switch used by defendant was defectively designed and caused plaintiff's injuries. Dr. Fisher was offering an opinion that the lanyard was defectively designed because it allowed the operator to start and operate the boat without using the lanyard. His conclusions flowed from his experience and methodology of identifying another lanyard stop switch commonly used in the industry that required the key to be inserted before the engine will start. Thus, Dr. Fisher and his opinions met the requirements under Rule 702 and Daubert.

B. Plaintiff's Cross Motion

Plaintiff filed a cross motion, arguing that defendant should not be permitted to introduce evidence of plaintiff's alleged comparative negligence. Defendant sought to introduce evidence that plaintiff's decision to operate his father's small fishing boat in water too high and at a speed too great was the only reason he lost control of the boat and was ejected overboard. Defendant also sought to introduce evidence of plaintiff's behavior after being ejected as the reason for his injuries. Finally, defendant sought to introduce evidence that plaintiff's father failed to read the owner's manual, or offer it to his son to read.

The District Court cited numerous cases regarding a non-worker plaintiff’s conduct and when same can be relevant. In New Jersey consumer design defect cases, the conduct of an injured plaintiff is not relevant in determining the existence of a manufacturing defect or design defect. However, a plaintiff's conduct may be relevant to the question of proximate cause in that a jury may find that plaintiff's conduct had been the sole cause of the accident. In addition, if the consumer plaintiff knows of the danger or risk and nonetheless voluntarily proceeds in the face of the known danger or risk, a plaintiff's comparative negligence can be submitted to the jury. However, contributory negligence is not a defense to a strict-liability action when a plaintiff's negligent conduct consists of merely failing to discover or guard against the possibility of a defect in a product.

The District Court ruled that there was no evidence that plaintiff intentionally proceeded in the face of a known danger. The deposition testimony presented showed that plaintiff did not read the manual and did not know that the engine was to be operated with a lanyard. Therefore, evidence of plaintiff's comparative negligence as to a known risk was not permitted. However, evidence that plaintiff operated the boat in water too high and at a speed too great causing him to lose control and be ejected was be permitted on the issue of proximate cause. Likewise, defendant was also be permitted to introduce evidence of plaintiff's actions after he was ejected from the boat before contact with the engine's propeller. Plaintiff's conduct surrounding the accident was essential to the facts determining how the accident occurred. In order to present a prima facie case of how the accident occurred, plaintiff must detail his actions using the engine. Therefore, defendant was permitted to introduce such facts as evidence of proximate cause, but not as evidence of comparative negligence.

With regard to evidence of plaintiff's father's failure to read the owner's manual, plaintiff produced testimony by defendant's expert stating that defendant knew that operators would not read the manual before operating the engine. Under New Jersey law, in applying strict liability in torts for design defects, manufacturers cannot escape liability on grounds of misuse or abnormal use if the actual use causing the injury was objectively foreseeable. The evidence showed that the failure to read an owner's manual before operation of the engine was foreseeable by defendant and, therefore, the facts of plaintiff's father's failure to read the manual or provide it to his son to read was not to be introduced to show comparative fault or proximate cause.

ABOUT THE AUTHOR: Robert J. McGuirl, Esq. and James C. Suozzo, Esq.
Robert J. McGuirl and James C. Suozzo are attorneys at the Law Offices of Robert J. McGuirl, LLC in Park Ridge where they devote a substantial portion of their time to product liability and medical device litigation. Bob and Jim have taught continuing legal education courses for many years on products liability and medical device litigation for various national, state, county and specialty bar groups as well as spoken on the topic to clients, engineers, industry groups and members of the general public. Their writings have appeared in legal, trade and industry periodicals, journals, books, seminars and other publications.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.