Third Circuit Holds Clean Air Act Does Not Preempt State Tort Claims

Two Pennsylvania women brought a state law nuisance claim in federal court against the owner of coal fired power plant that allegedly damaged their property through the emissions of ash, chemicals, and odors.  The power plant, which is owned by GenOn Power, was apparently in compliance with the state and federal environmental regulations that govern the operation of coal power plants.  The lawsuit was initially dismissed by the district court, which held the suit was preempted by the Clean Air Act.   The Third Circuit recently reversed the district court and held that the Clean Air Act is not preemptive.

In its decision, the Third Circuit found that “nothing in the Clean Air Act [indicates] that Congress intended to preempt state common law tort claims.”  The Court further stated that the Clean Air Act is “a regulatory floor, not a ceiling, and expressly held that states are free to impose higher standards on their own sources of pollution, and that state law tort is permissible way of doing so.”  The Third Circuit relied in large part on the Supreme Court’s holding in International Paper Co. v. Ouellette, 479 U.S. 481 (1987),which held that the Clean Water Act did not preempt state law tort claims.

The Third Circuit’s ruling appears to go against strong authority supporting preemption.  In Am. Elec. Power Co., Inc. v. Connecticut, the Supreme Court held that the Clean Air Act preempted federal common law nuisance claims as a means to curb emissions from a power plant. 131 S. Ct. 2527 (2011). In that case, the Supreme Court noted that the EPA has been designated to serve as the emission regulator and is better suited to do so than judges issuing ad hoc injunctions.  Additionally, the Fourth Circuit has held that that state law nuisance claims against power plants are preempted because they threaten the comprehensive regulatory scheme. See N. Carolina, ex rel. Cooper v. Tennessee Valley Auth., 615 F.3d 291, 303 (4th Cir. 2010).

This new ruling is very significant as it opens the door to a potential onslaught of litigation.  It means that residents can pursue property claims against power plants even though they are in compliance with state and federal regulations.  That sound that citizens in Northeast are hearing is the sound of their electricity rates and bills clicking higher.

 

Third Circuit Upholds Application of “Negligence-Type Concepts” in Products Liability Cases

Earlier this month, on July 12, the Third Circuit upheld a jury’s verdict in favor of a manufacturer of bicycle helmets, and in doing so, affirmed the lower court’s application of a relatively new interpretation of product liability law.  Covell v. Bell Sports, Inc., No. 10–3860, —F.3d—, 2011 WL 2690396 (3d Cir. July 12,  2011). The case was filed by the parents of a 36-year-old schoolteacher who sustained serious brain injuries when he was hit by a car while bicycling to work in 2007.  The parents, in their capacity as guardians, filed suit against the manufacturer of their son’s helmet, alleging that it was defectively designed and lacked adequate warnings.  At trial, over the plaintiffs’ “strident objections,” the court permitted the helmet manufacturer to introduce expert testimony regarding the Consumer Product Safety Commission’s “Safety Standard for Bicycle Helmets.” In turn, the plaintiffs responded with their own expert regarding the CPSC safety standard.  Both experts testified at trial that the CPSC standard forms the “starting point” for any bicycle helmet design, and both agreed that the helmet at issue satisfied CPSC standards in all respects.  At the conclusion of trial, the court instructed the jury that in determining whether the helmet was defective, it could consider evidence of standards in the industry, including the CPSC standards.

The Third Circuit recognized the “core conflict” that exists within provisions of the “strict liability regime” of the Restatement (Second) of Torts: that courts are to ignore evidence that the seller “exercised all possible care in the preparation and sale of his product,” yet imposes liability only for products that are “unreasonably dangerous.”  It is, of course, often impossible for a jury to determine whether a product is “unreasonably dangerous” without referencing evidence that the seller did or did not exercise “care in the preparation” of its product. Ultimately, the court held that federal courts applying Pennsylvania law are to use the Restatement (Third) of Torts to guide both their decisions regarding the admittance of evidence and in their usage of jury instructions.  In this regard, it allows for a more negligence-friendly products liability regime than previously recognized in Pennsylvania, where juries may properly consider industry standards and government regulations.  This is certainly a defense-friendly analysis and decision.  Short of doing away with strict liability laws in their entirety, incorporating more negligence-type concepts into the analysis of manufacturer liability is a positive approach.

Emily Pincow of the Product Liability Monitor blog has additional thoughts on the case here.

Claims for Injuries Allegedly Related to Cell Phone Usage Found Preempted

Recently, the Third Circuit affirmed the dismissal of a plaintiff’s complaint seeking damages for injuries as a result of cell phone usage on the ground that his claims were preempted by Federal Communications Commission (“FCC”) regulations. Farina v. Nokia, Inc., No. 08-4034, 2010 WL 4138502 (3d Cir. Oct. 22, 2010) [PDF]. In that case, the Plaintiff, Francis Farina (“Farina”), brought a class action against numerous cell phone manufacturers and retailers. Farina asserted that cell phones were unsafe to be operated without headsets because, without a headset, the user is exposed to dangerous amounts of radio frequency (“RF”) radiation and current marketing of cell phones as safe violated state law. The FCC regulations at issue adopted a maximum absorption rate that measured the amount of energy absorbed in human tissue.

In reviewing the decision of the District Court, the Third Circuit discussed the three types of federal preemption of state law — express preemption, field preemption, and conflict preemption. First, the Third Circuit found no express preemption by 47 U.S.C. Section 332(c)(7)(B)(iv) that provided the following: “No State or local government or instrumentality thereof may regulate the placement, construction, and modification of personal wireless service facilities on the basis of the environmental effect of radio frequency emissions to the extent that such facilities comply with the Commission’s regulations concerning such emissions.” (emphasis added). Defendants argued that the term “facilities” included alternations to cell phones. The Third Circuit disagreed finding that “facilities” related to infrastructures and not transient cell phones, concluding no express preemption.

Next, the Third Circuit found no field preemption stating that “[w]hile the FCC may have ‘primacy over the areas of technical standard and competitive market structure for cellular service . . . neither Congress nor the FCC has evinced an intent to occupy the entire field.”

Finally, however, the Third Circuit found conflict preemption accepting Defendants’ argument that “Farina’s suit would erect an obstacle to the accomplishment of the objectives of Congress.” Farina’s claims were based on alleged false and misleading statements that cell phones were safe to use without a headset. The Third Circuit pointed out that in order to establish his claims, “Farina must show that [the FCC] standards are inadequate that they are insufficiently protective of public health and safety.” That said, the Third Circuit was tasked with determining “whether suits challenging the adequacy of the FCC’s RF regulations are preempted.” Defendants argued that Farina’s suit conflicts with the FCC regulations because a finding of liability would “upset the FCC’s delicate balancing of efficiency and uniformity with the health and safety of the public.” Permitting a jury to find that cell phones that meet the FCC standards are nevertheless unreasonably dangerous would upset its objectives and balance, and thus the Third Circuit decided such suits are preempted.

The Drug and Device Law blog offers an interesting discussion and analysis of the decision here. It appears that this is another in a series of cases in which the courts try to make sense of conflict preemption in the wake of Wyeth v. Levine, 129 S. Ct. 1187 (2009).

Third Circuit Affirms Summary Judgment in Favor of Ford as a result of Plaintiff’s Lack of Expert Testimony

Have you ever thought that traveling in a vehicle going above 65 miles per hour could cause cancer? One Pennsylvania resident, Ted McCracken (“McCracken”), thought so and asked the Eastern District of Pennsylvania to award him damages as a result of such alleged injury. Pro se Plaintiff McCracken filed an action against Ford Motor Company asserting that he contracted thyroid cancer as a result of the insufficient protection Ford windshields provided from ambient radiation in the air that increases to dangerous levels inside a cabin when a vehicle travels at speeds in excess of 65 miles an hour. McCracken v. Ford Motor Co., No. 09-3995, 2010 WL 3010304 (3d Cir. Aug. 3, 2010) [PDF]. McCracken asserted eight causes of action, including strict products liability and defective design.

Ford filed a motion to dismiss on a number of grounds and the District Court of Pennsylvania dismissed all McCracken’s claims, except for strict products liability and defective design, and entered a scheduling order. Pursuant to this scheduling order, McCracken’s expert report was due on April 6, 2009. After this deadline had passed, McCracken filed a motion for an extension of time to retain an expert and a motion for the appointment of an expert under Fed. R. Evid. 706. The District Court denied his motions and Ford moved for summary judgment based upon McCracken’s lack of expert testimony. The District Court granted summary judgment in favor of Ford and McCracken appealed.

On appeal, McCracken asserted that he submitted sufficient evidence to survive summary judgment even without the testimony of an expert. This evidence included data regarding environmental radiation, a list of books and articles on radiation, the deposition testimony of a representative of the Pennsylvania Department of Environmental Protection, and affidavits from him and his mother stating that they observed increased readings on a Geiger meter when the vehicle accelerated. The Third Circuit found that this “evidence” was not enough to withstand summary judgment on the cause of McCracken’s cancer or the defective design of Ford’s windshields.

McCracken’s second argument on appeal is that the District Court erred in not appointing him an expert. The Third Circuit agreed with the District Court that “the purpose of Rule 706 is not to provide ‘litigation assistance’ to a party unable to retain an expert on its own.” The Third Circuit found no error by the District Court. McCracken asserted four more arguments on appeal, all not worth discussing here, which were all rejected by the Third Circuit.

This case is another example of a Plaintiff asking our Courts to buy into his or her theory of injury based on “because I said so.” The Third Circuit correctly found that Ford was entitled to summary judgement where plaintiff either could not find an expert to support his theory or he disregarded the court’s instructions by failing to find such an expert within their deadlines.

As a side note, this is McCracken’s thirteenth lawsuit asserting this general ambient radiation theory. He has sued numerous defendants including other automobile manufacturers, manufacturers of other types of vehicles that can travel in excess of 65 miles per hour, nuclear power plants, and energy companies. See McCracken v. R.E. Ginna Nuclear Power Plan, LLC, No. 08-cv-6217L, 2010 WL 1404115, at *4 (W.D.N.Y. Mar. 31, 2010).

Foreseeable Misuse in Pennsylvania

Does foreseeable misuse have a place in determining liability in a products liability action? In Pennsylvania, it doesn’t. Recently, the Third Circuit, applying Pennsylvania law, rejected a consumer’s argument that the meaning of “intended use” included all uses “reasonably foreseeable” by the manufacturer. Jacobson v. BMW of North America, LLC, No. 08-4322, 2010 WL 1499809 (3d Cir. Mar. 23, 2010).

In 1999, Robert Jacobson (“Jacobson”) went to do errands with his two sons, Ryan and Christopher, in his BMW 325i. Jacobson stopped at a convenience store, parked, placed the gear shift in park, turned off the engine, engaged the emergency brake, removed the keys from the ignition, and exited the vehicle, leaving his sons inside. Ryan, playing with the gear shift, placed the vehicle in reverse or neutral and the vehicle began to roll. Christopher exited the vehicle without injury. However, Ryan sustained severe injuries as a result of his exit from the vehicle. Thereafter, Jacobson filed a action against BMW alleging that it should have had a device in place that would have prevented the car from shifting out of park.

At trial, the jury returned a verdict in favor of BMW. Jacobson filed a motion for a new trial, which was denied, and filed the present appeal. Jacobson raised four errors on appeal, including an argument that the court gave an erroneous jury instruction on the definition of “design defect.”

Under Pennsylvania law, “a manufacturer can be deemed liable only for harm that occurs in connection with a product’s intended use by an intended user.” On appeal Jacobson cited to two Third Circuit opinions, Pacheco v. The Coats Co., 26 F.3d 418, 422 (3d Cir. 1994) and Sheldon v. West Bend Equipment Corp., 718 F.2d 603, 608 (3d Cir. 1983) for the proposition that “intended use” under Pennsylvania law includes all uses “reasonably foreseeable by the manufacturer.” The Court disagreed and held that this proposition had been expressly rejected by the Pennsylvania Supreme Court in Pa. Dep’t of Gen. Servs. v. U.S. Mineral Prods. Co., 898 A.2d 590 (Pa. 2006). The Court found no error in the underlying court’s decision to omit “foreseeability” from its jury instruction on “intended use.”

This case seems to represent the current state of Pennsylvania law; however, practitioners and courts alike recognize the potential for change. As recognized by the Eastern District of Pennsylvania in July 2009, McGonigal v. Sears Roebuck and Co., No. 07-CV-4115, 2009 WL 2137210 (E.D. Pa. Jul. 16, 2009), Pennsylvania courts note that “negligence concepts should not be imported into strict liability law.” However, the McGonigal court also stated that “[t]he role of negligence concepts in strict liability doctrine in Pennsylvania features numerous unsettled issue of law.” The Supreme Court of Pennsylvania was recently afforded the opportunity to clarify strict liability law in Bugosh v. I.U. N. Am., Inc., 971 A.2d 1228 (Pa. 2009) — as recognized by Drug and Device Law blog back in April 2009 — however, the appeal was dismissed as been “improvidently granted.” As a result, Pennsylvania law still contains inconsistencies with the hope for clarification someday.

More than 10 Years Later, Drug Settlement Litigation is Still Going

On November 19, 1999, American Home Products Corporation, now known as Wyeth, entered into a settlement agreement with class members of a diet drug nationwide class action, creating a settlement trust to pay claims of class members that were injured by ingesting certain diet drugs. On August 28, 2000, the Eastern District of Pennsylvania entered an order certifying and approving the nationwide settlement class. Now, more than 10 years later, there is still litigation surrounding claimants seeking benefits under this settlement agreement.

In fact, in the past two weeks, on April 6, 2010 and April 13, 2010, the Eastern District of Pennsylvania and Third Circuit, respectively, upheld the decisions by the settlement trust to deny benefits. In re Diet Drugs Products Liability Litigation, No. 99-20593, 2010 WL 1404624 (E.D. Pa. Apr. 6, 2010); In re Diet Drugs Products Liability Litigation, No. 09-2424, 2010 WL 1473752 (3d Cir. Apr. 14, 2010).

The decision by the Eastern District of Pennsylvania on April 6, 2010 involved claimant Betty Brown-Riddle. In order to seek benefits from the trust, Brown-Riddle had to submit evidence that she she suffered from “moderate aortic regurgitation,” as set forth in the Settlement Agreement. Brown-Riddle submitted a statement by her treating physician that she suffered from “mild to moderate aortic insufficiency.” Thereafter, the trust forwarded Brown-Riddle’s claim for review. The reviewing physician found that there was no reasonable medical basis for her treating physician’s finding that she suffered from moderate aortic regurgitation. As a result, the trust denied her claim and she sought review. After a series of administrative reviews pursuant to the Settlement Agreement, Brown-Riddle’s found its way into the district court for review.

The Court found that Brown-Riddle merely disagreed with the reviewing physician’s determination that she lacked a medical basis for her claim. She failed to identify or substantiate any specific errors and rested on her physician’s “check-the-box diagnoses.” The Court affirmed the decision of the trust denying benefits.

Similar to the above case, on April 13, 2010, the Third Circuit reviewed a claim of a class member that had been denied benefits. In this case, the Court affirmed the decision of the district court that the claimant did not provide adequate proof of diet drug ingestion required to support her claim because her supporting affidavits provided a dispense date when the drugs were off the market and stated dosages that were inconsistent with the dosages at which the drugs were issued. Further, addressing an argument by claimant, the Court found that the form she had to fill out in connection with her claim for benefits did not constitute a contract for benefits.

These decisions by the the Eastern District of Pennsylvania and the Third Circuit show that even when a mass class action is settled, litigation continues and our courts are continually asked to evaluate expert evidence as it would in a case of traditional posture. Plaintiffs in these types of cases are not off the hook of providing expert testimony. It will be interesting to note when litigation surrounding this class settlement ends — 10 more years, maybe 20.

Defective Sperm Not Actionable in the Third Circuit

In a case we briefly addressed Friday, and in what has been called the first decision of its kind, the U.S. Court of Appeals for the Third Circuit this month upheld a lower court’s 2009 ruling that genetic defects in sperm from a sperm bank cannot form the basis of a products liability suit. To allow such a claim to go forward, the court held, would be tantamount to recognizing a claim for “wrongful life.” D.D. v. Idant Laboratories, Slip Copy, No. 09-3460 (3d Cir. April 1, 2010).

The Plaintiff brought suit both in her individual capacity and as parent and guardian of her minor daughter against the New York-based sperm bank, setting forth causes of action for strict products liability and breach of express and implied warranties of merchantability. The Plaintiff began her research to find a sperm bank in 1994, when she was promised by Defendant Idant Laboratories that its donors went though a rigorous screening process to ensure they had good genetic backgrounds and that the company employed a screening program that far exceeded mandated standards. She thereafter purchased sperm from the Defendant and gave birth to her daughter in 1996. The Plaintiff then began to notice abnormalities in her daughter’s development. Subsequent genetic testing revealed that the child had Fragile X syndrome, a genetic mutation that causes mental retardation and behavioral disorders, as a result of the genetic defect of the sperm donor.

Initially, the district court judge ruled that, pursuant to New York law, the sperm bank could be sued under products liability laws because “the sale of sperm is considered a product and is subject to strict liability.” However, two months later, the judge reversed himself and dismissed the case in its entirety, predicting that New York’s appellate court would reject Plaintiff’s claims.

The Third Circuit affirmed the judge’s second decision. In a thought-provoking opinion penned by Circuit Judge Maryanne Trump Barry, (interestingly, she’s Donald Trump’s older sister), she held that the child’s impaired genetic makeup was not a cognizable injury. She explained:

Wrongful life cases pose particularly thorny problems in the damages context. Simply put, a cause of action brought on behalf of an infant seeking recovery for wrongful life demands a calculation of damages dependant upon a comparison between the Hobson’s choice of life in an impaired state and nonexistence. This comparison the law is not equipped to make. . . . The difficulties that [the child] now faces and will face are surely tragic, but . . . she like any other child, does not have a protected right to be born free of genetic defects. To find to the contrary would invite litigation for any number of claimed injuries and, even more problematic, require courts to identify certain traits below some arbitrarily established marker of perfection as “injuries.”

D.D. at *10, 11 (internal citations omitted).

“Whether it is better never to have been born at all than to have been born with even gross deficiencies,” Judge Barry quoted from a separate court’s opinion, “is a mystery more properly to be left to the philosophers and the theologians.” This is certainly an interesting lawsuit that has generated an intriguing opinion and sparked considerable discussion. To see some other bloggers’ and commentators’ views on the issue, see here, where the author notes the fallacy of considering one’s personal imperfection an injury for which another is to be held responsible, and here, where a reader disagreed with the lower court’s initial ruling allowing the case to go forward, arguing that creating a life is a “gamble” irrespective of how the parent goes about it.

Product Liability Claim is Barred by the Economic Loss Doctrine

In New Jersey, where a sophisticated buyer enters into a contract with a sophisticated seller of an allegedly defective product that causes damage to the product itself as well as something other than the product, the buyer’s remedy against the seller may only be contractual. On February 5, 2010, the Third Circuit, in a diversity action, opined that the New Jersey Supreme Court would apply the economic loss doctrine, barring the product liability claims of a manufacturer of food and beverage items against the producer of the raw materials. Travelers Indemnity Co. v. Dammann & Co., No. 09-1225, 2010 WL 395915 (3d Cir. Feb. 5, 2010) [PDF].

The procedural posture of this case would likely bore you and create a lot of extra reading to get the important lesson from this case across to you. That said, I will only briefly recite the basic underlying facts of this case. Dammann is a producer of raw foods, including vanilla beans. Dammann sold IFF vanilla beans, by written contract, for incorporation into IFF’s food and beverage flavoring. IFF incorporated Dammann’s beans into its vanilla extract only later to find out that the beans were contaminated with mercury. As a result, IFF filed claims against Dammann for breach of express warranty, breach of implied warranty, and product liability.

The New Jersey District Court reasoned that IFF’s product liability claim sounded in contract and therefore, the economic loss doctrine barred the application of the New Jersey Product Liability Act to IFF’s claim. IFF appealed. On appeal, the Third Circuit had to determine whether, under New Jersey law, the economic loss doctrine barred claims such as IFF’s claim. The Court stated that no New Jersey case had specifically decided the sort of claim IFF alleged, which involved a defective product, the vanilla bean, and damage to other property, IFF’s flavoring products contaminated with mercury.

The Court found that there were two schools of thought resolving this question. The majority employs some variation of the following test:

Tort remedies are unavailable for property damage experienced by the owner where the damage was a foreseeable result of a defect at the time the parties contractually determined their respective exposure to risk, regardless whether the damage was to the goods themselves or to other property.

On the other hand, the minority test differentiates between damage to the product itself and other property. The Court held that the New Jersey Supreme Court would likely join the majority and apply the economic loss doctrine to bar IFF’s claim. The Court reasoned this way because New Jersey precedent consistently held that “contract law [was] better suited to resolve disputes between parties where a plaintiff alleges direct and consequential losses that were within the contemplation of sophisticated business entities with equal bargaining power and that could have been the subject of their negotiations.” Further, the Court found that IFF alleged damages, including scrapping of contaminated finished flavoring, claims from customers, testing costs, plant cleaning costs, and lost profits were purely economic damages.

Practitioners should be aware of both the majority and minority rules on this issue and be on the look out to see if the New Jersey Supreme Court resolves this issue as the Third Circuit predicted it would rule in this matter.

da Vinci on Trial

No, Leonardo da Vinci has not been brought back to life and put on trial, it is the new da Vinci Surgical System that was the subject of a recent products liability lawsuit that was decided in favor of the manufacturer by the Third Circuit on January 28, 2010.

In Mracek v. Bryn Mawr Hospital, No. 09-2042, 2010 WL 318372 (3d Cir. Jan. 28, 2010) [PDF], Plaintiff Ronland Mracek was diagnosed with prostate cancer and underwent a prostatectomy. Mracek was told by his surgeon that he intended to use the da Vinci robot to assist in the surgery. However, during Mracek’s surgery, the da Vinci robot became nonoperational and merely displayed error messages. As a result, Mracek’s surgeon used laparoscopic equipment instead.

Approximately one week after Mracek’s surgery, he suffered a gross hematuria and now has severe groin pain and erectile dysfunction. Thereafter, Mracek filed suit against the hospital and the manufacturer of the da Vinci robot, Intuitive Surgical, Inc., asserting claims for strict product liability, strict malfunction liability, negligence, and breach of warranty. The hospital was voluntarily dismissed from the case and Intuitive moved to dismiss the complaint. The United States District Court for the Eastern District of Pennsylvania agreed with Intuitive and dismissed Mracek’s complaint.

Mracek appealed to the Third Circuit solely on his strict malfunction liability claim. While a plaintiff can prove a defect using circumstantial evidence under the malfunction theory of liability, the plaintiff must still produce “evidence of the occurrence of a malfunction and . . . evidence eliminating abnormal use or reasonable, secondary causes for the malfunction.” Id. at *1 (internal citations omitted). Further, even if a plaintiff is able to prove the existence of a defect in this manner, he or she still has the burden of proving the defect caused the plaintiff’s injury and that the defect existed when it left the manufacturer’s control.

Mracek’s claim failed on multiple levels. First, the Third Circuit stated that the mere fact that “the robot displayed ‘error’ messages and was unable to complete the surgery” was insufficient evidence to eliminate reasonable, secondary causes for the malfunction. Id. at * 2. Further, the Court found that his own testimony and the testimony of two treating physicians regarding his pre and post operative condition was insufficient to prove that his erectile dysfunction and groin pain were caused by the robot’s alleged malfunction. The Third Circuit affirmed the dismissal of Mracek’s complaint. Id.

This opinion again demonstrates the importance of expert testimony in products liability actions. It instructs that merely coming to court and stating that a product malfunctioned is insufficient. Plaintiffs who fail to prove proximate cause should have their claims dismissed.