From July 2002 to April 2007, Plaintiff Mary Cleo Couick took generic metoclopramide pills for treatment of gastroesophasgeal reflux. Reglan, the name-brand version of the drug, was manufactured by Wyeth, Inc. and Schwarz Pharma, Inc. Couick stipulated that she only took the generic version of this drug. However, Couick filed suit against both the name-brand manufacturers and generic manufacturers claiming that they failed to adequately warn her doctors about the risks associated with metoclopradmide, which caused her to develop tardive dyskinesia.

Against name-brand manufacturers, Couick brought claims for negligence, breach of undertaking special duty, misrepresentation by omission, negligent misrepresentation, constructive fraud, fraud by concealment, intentional infliction of emotional distress, negligent infliction of emotional distress, unfair and deceptive trade practices, breach of express warranty, and breach of implied warranties. In response, name-brand manufacturers filed a motion for summary judgment.

The Court first found that since “[e]ach of [Couick’s] claims [are] based on the premise that Wyeth and Schwarz are liable for Couick’s physical condition because they failed to adequately warn Couick’s doctors about the dangers of metoclopramide,” Couick’s claims, while masked in various legal theories, were a single claim for products liability.

The Court then held that under clear North Carolina and Fourth Circuit authority, a “name-brand manufacturer’s statements regarding its drug [cannot] serve as the basis for liability for injuries caused by another manufacturer’s drug.” As a result, the Court granted name-brand manufacturers’ motion for summary judgment.

This case is instructive to products liability practitioners in two main respects. First, despite a plaintiff’s artful pleading, claims based upon personal injury or property damage as a result of the manufacture, construction, design, selling, advertising, etc. of the product, is generally considered only one claim under a state’s products liability law. Second, the rule that a name-brand manufacturer is not liable for injuries caused by another manufacturer remains intact. See Foster v. Am. Home Products Corp., 29 F.3d 165 (4th Cir. 1994). Recently, we have reported on a number of cases here against drug manufacturers. This re-affirmed rule will become particularly important as these types of suits increase.

Prior to this amendment, the Commission considered the following factors in its determination of the amount of a civil penalty: “the severity of the risk of injury; the occurrence or absence of injury; and the number of defective products or the amount of substance distributed.” Now, the Commission is required to consider the following additional factors:

Of interest is not that the Commission now has additional factors to consider but some of the reasons that this was not a unanimous vote of approval. Chairman Inez M. Tenenbaum, Commissioner Robert S. Adler, Commissioner Thomas H. Moore, and Commissioner Nancy Nord voted to approve this rule. Chairman Tenenbaum, along with Commissioners Adler and Moore filed a joint statement of approval, and Commissioner Nord filed an independent statement of approval. [PDF]. Commissioner Anne M. Northup, on the other hand, “voted against the proposed Final Rule Interpreting Civil Penalty Factors because it fail[ed] to take the agency where [she] believe[d] it should arrive five years from now.” [PDF].

The case involves the sudden acceleration of a vehicle, making it a very timely topic. On December 11, 1999, Sonya L. Watson was driving her 1995 Ford Explorer with Patricia Carter and two other passengers in the vehicle when she lost control, veered off the interstate, and rolled four times. Carter did not survive the accident and Watson was rendered a quadriplegic. Watson and Carter filed a products liability action against Ford, claiming that the accident occurred because the cruise control system was defective, and that their injuries were enhanced because the seat belts were defective.

At trial (which was conducted in Greenville County, SC), the Plaintiffs presented (and the trial court allowed) three types of evidence that was the subject of Ford’s appeal. First, the Plaintiffs presented testimony of Dr. Antony Anderson, an electrical engineer from the United Kingdom. He opined that electromagnetic interference (“EMI“) took hold of the vehicle’s cruise control system, causing it to suddenly accelerate. Dr. Anderson further testified that Ford could have prevented the accident through an alternative design. Second, the Plaintiffs presented the testimony of Bill Williams, a purported automotive industry veteran, as an expert on cruise control diagnosis. Finally, the Plaintiffs offered evidence of similar accidents involving sudden acceleration in Ford Explorers.

While Kim Gentry was shopping at Petco Animal Supplies, Inc., she picked up a York Peppermint Pattie that was for sale and bit into it. I know what you are all thinking: Yes, it is another issue that candy is sold at Petco and that people eat it in the store. After Ms. Gentry discovered that there was larvae inside the candy, she was treated for food poisoning. Since the event, she had undergone psychological counseling. Gentry filed a lawsuit against the manufacturer, The Hershey Company; the distributor, Liberty Distribution, L.L.C.; and the retailer, Petco, for strict liability, breach of implied and express warranties, negligence, and negligence se.

On Petco’s motion for summary judgment, the Court agreed with Petco on Gentry’s negligence per se claim as Gentry did not point to any statutory provision other than those under the Federal Food, Drug, and Cosmetic Act and Tennessee Food, Drug, and Cosmetic Act, which have been held to have no private action attached. The Court also found that Petco was not liable for strict liability because the applicable statute in Tennessee only permits a strict liability action against a seller when the seller is also the manufacturer or when the manufacturer cannot be located or is insolvent.

This case again shows the importance of expert testimony, as the use of expert testimony was instrumental in absolving Hershey and Liberty from strict product liability. As a result of this decision, Ms. Gentry will be able to present her case on implied warranty and negligence to a jury.

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

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.

What is important to know for manufacturers, importers, distributors, and retailers as well as practitioners defending these entities are the facts that gave rise to this settlement agreement. From January 2002 to March 2002, Schylling imported tin pails from one of its manufacturers in Hong Kong. On March 2, 2002, testing results ordered by Schylling revealed that certain wooden handles on these pails were not in compliance with the CPSA. As a result, on March 26, 2002, Schylling performed a unilateral recall.

Five years later, in August 2007, a news reporter from the Chicago Tribune contacted Schylling reporting that he had purchased a non-compliant top from a U.S. consumer. As a result, Schylling submitted a report to the CPSC regarding both the tops and pails it imported from 2001 to 2003. The CPSC announced a recall of these items on August 22, 2007 and Schylling reported to its customers that they were working to resolve the issue and ensure the safety of all future products.

The Schylling recall and resulting settlement agreement has provided all manufacturers, importers, distributors, retailers and their counsel instructions that the CPSC must be notified when there is even a potential risk of violation and that unilateral recall and investigation will not protect against this type of civil penalty.

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.

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.

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.

First, the CPSC explained that “given the breadth of the definition of children’s products, there were numerous products that were technically noncompliant” but that would not likely cause lead absorption into the human body. While the CPSC utilized exclusions under the CPSIA, certain products such as youth all-terrain vehicles, children’s bicycles, lead crystals and rhinestones in children’s apparel, and brass materials in toys were denied exemption requests.

With respect to lead-in-paint limit enforcement, the CPSC reported 117 violations during Fiscal Year 2009, most of which were found during staff screening. Interestingly, the CPSC reported that they had “not seen the same implementation and enforcement issues with regard to lowering the lead paint limits as it has seen with the lead content limits.” Therefore, it did not identify any hurdles or make any improvement recommendations to Congress with respect to lead-in-paint.

All manufacturers and retailers first need to be aware of the lead limits now in effect as well as the proposed lower limits to be implemented in August 2011. However, based on the tone of the recommendations made to Congress, it appears that the CPSC is trying to address the burdens that these restrictions put on manufacturers and retailers without compromising the safety of our children. We all should be on the look out for possible revisions to the current CPSIA and its possible effect on liability for violations.

The Eastern District of Pennsylvania in Anastasio v. Kahn, No. 09-5213, 2010 WL 114879 (E.D. Pa. Jan. 13, 2010) [PDF] was recently asked to decide this question and held that owners and operators of property used as a parking lot were not sellers under Section 402A of the Second Restatement of Torts.

Plaintiff Theresa Anastasio exited an Acme supermarket on the sidewalk while operating a battery-powered scooter. The sidewalk and parking area were on the same level and there were “no marked crossings, crosswalks, skywalks, tunnels or any other sort of pathway, markings or stripings on the premises to mark off where a pedestrian . . . could go to be sure they were safe from motor traffic.” Id. at *1. As Anastasio was proceeding into the parking area, Defendant Harvey Kahn, Jr. struck her with his vehicle. As a result of this accident, Anastasio filed suit against Kahn, the supermarket, and the owners and operators of the parking lot asserting claims under both the Americans with Disabilities Act and state law strict liability.

The supermarket and the owners and operators of the parking lot moved to dismiss the strict liability claims, asserting that (1) the parking lot is not a “product” and (2) they are not “sellers” under Section 402A. The Court agreed and dismissed those claims. In so doing, the Court stated that this specific question had not been addressed by any Pennsylvania state court or the U.S. Court of Appeals for the Third Circuit. Therefore, the Court looked to interpretations of the word “seller” by Pennsylvania courts and found that, while interpreted broadly, it always involved the “transfer of possession of the subject product.” For instance, the Court cited to two decisions, one finding that United Airlines was not a seller because it was not in the business of transferring possession of an aircraft, and another finding that an amusement park was not a seller because it did not transfer control or possession of the park ride at issue.

Relying on this precedent and decisions from other jurisdictions, the Court found that since there was no transfer of a parking space, the supermarket and the owners and operators of the parking lot were not “sellers” and were not subject to strict liability under Section 402A. The Court also noted that this decision was in line with Pennsylvania law that strict liability principles are generally inapplicable to real property. Since the Court found that defendants were not “sellers” under Section 402A, it did not have to address defendants’ second argument that the parking lot was not a “product.”

This question had not previously been addressed in the Pennsylvania courts; it’s likely that it has not been addressed in many jurisdictions. Owners and operators of parking lots, or similar real property, that are faced with a strict liability claim should be aware of this argument and the precedent holding these persons and entities are not “sellers.”

On December 29, 2009, the Consumer Product Safety Commission (“CPSC”) announced its unanimous vote to impose a $1.25 million civil penalty on RC2 Corporation for selling products that contained lead that exceeded the allowable limits. Federal regulations governing lead levels in children’s products have been in effect since 1978. These regulations prohibit children’s products from containing more than 0.06 percent lead by weight in paint or surface coatings.

On September 26, 2007, RC2 Corporation recalled a number of toys in the Thomas & Friends Wooden Railway product line after it discovered that the surface paint contained lead in excess of the 0.06 percent limit. These toys were imported from China and distributed by RC2 Corporation for sale to individual consumers. This recall of more than 1.5 million toys “spawned numerous class-action lawsuits in state and federal courts, alleging the company marketed and advertised the toys nationwide as safe for kids.” 20 No. 12 ANPRODLLR 3. These actions were settled in 2008 for $30 million, “providing eligible class members with cash refunds or replacement toys.” Id.

This recall also led to the CPSC imposing a $1.25 million civil penalty on RC2. CPSC Commissioner Anne M. Northup recently commented [PDF] on the imposition of this civil penalty stating that “it is entirely appropriate for the agency to assess civil penalties against companies that mistakenly import products in violation of the federal safety standards.” Further, Northup stated this type of penalty is intended to serve as a “financial deterrent against companies taking a casual approach toward their product safety compliance responsibilities” and to “serve as a further reputational disincentive.” Interestingly, Northup also opined that the agency must clarify its application of the statutory definition of “knowing” in 15 U.S.C. § 2069(d) used by the agency to impose such penalties before the standard is challenged by manufacturers. Clarification of this term might be a fertile field for litigation.

Finally, as a result of this recall, Congress passed the Consumer Product Safety Improvement Act, which reduced the allowable lead limit to 0.009 percent. The aim of stricter regulations on lead levels was to protect the safety of children. However, it appears that Chinese manufacturers may have just found a replacement for lead—a known carcinogen, cadmium. The Associated Press reported on January 11, 2009 that Chinese manufacturers have been substituting cadmium for lead and that “U.S. product safety authorities say they are launching an investigation into the presence of the toxic metal cadmium in children’s jewelry imported from China after disclosure of lab tests showing that some pieces consisted primarily of the dangerous substance.” (See this site’s previous coverage of this issue here.). While the CPSC has not recalled an item with cadmium, the CPSC has already stated that it is “moving swiftly to deal with the replacement of lead with cadmium in certain children’s products imported from China.”

As with the highly publicized recall of the Thomas & Friends Wooden Railway project line, the public can expect that the anticipated recalls of cadmium containing products sold throughout the United States will spawn litigation by consumers, further regulation by the CPSC of the consumer market, and the imposition of large civil penalties on American retailers. American retailers should be aware of this shift to the use of cadmium and have measures in place to protect themselves, as it appears that Chinese manufacturers are continuing to expose American corporations to liability in the millions of dollars.