Toxic Tort Case Essentials
August 31, 1992
I. THE GENESIS OF MARKET SHARE LIABILITY
A. Background Of The DES Litigation
From the late 1940s until 1971, the synthetic drug
diethylstilbestrol (hereinafter "DES") was prescribed for pregnant
women to prevent miscarriages. Smith v. Eli Lilly & Co., 560 N.E. 2d
324, 327-328 (Ill. 1990). In 1971, the FDA banned the marketing of DES to
pregnant women after medical studies suggested "a statistically significant
association between the outbreak in young women of clear cell adenocarcinoma
with the material ingestion of DES during pregnancy." Id. at 328.
Subsequent to the ban, numerous lawsuits were filed against manufacturers of DES
by the daughters of women who took the drug during their pregnancies ("DES
daughters"). Id.
One significant difficulty encountered by plaintiffs in DES cases was proving
the identities of the manufacturers which supplied the particular DES used by
their mothers when the plaintiffs were in utero. As many as 300 companies
produced DES and many of these manufacturers were no longer in business. The
problems of proof were exacerbated by the long periods of time between the
mothers' ingestion of DES and the injury to the DES daughters. Many mothers used
the drug at least twenty years prior to the filing of lawsuits by their
daughters; meanwhile, medical records which might have identified the
manufacturer of the DES ingested by a particular mother were lost or destroyed.
In the DES cases, the courts balanced the
fundamental tort principal that the plaintiff has the burden of proving that a
particular defendant caused the injury with competing tort interest that between
an innocent plaintiff and a manufacturer of a defective product, the latter
should bear the cost of injury. See, Sindell v. Abbott Labs, 26 Cal. 3d
588, 610-611 (1980), cert. denied, 449 U.S. 912 (1980). The courts, after
balancing these interests, applied the concept of burden shifting, that is, the
burden of proof on the issue of the identities of the culpable manufacturers
in a DES case is shifted to the defendants under theories described as
"enterprise liability," "alternative liability," and
"market share liability." Smith, supra at 329. California
adopted a market share theory of liability in the well-known case of Sindell
v. Abbott Laboratories, supra. In Brown v. Superior Court, 44 Cal. 3d
1049 (1988), the California Supreme Court reaffirmed this theory and also
resolved some remaining issues that were not superficially addressed in Sindell.
B. The Sindell Decision
In Sindell, the trial courts dismissed a DES daughter’s action due
to her inability to prove which of the defendants manufactured the specific DES
that was ingested by her mother. The California Supreme Court reversed, holding
that it was reasonable to measure a defendant’s liability to the plaintiff by
the percentage of the national DES market for which the defendant was
responsible. Id. at 611-612. In explaining its decision to remove the
defendant identification requirement from plaintiff’s burden of proof, the Sindell
court pointed out that scientific and technological advances in modern society
create goods that may harm consumers, but which are not traceable to the
manufacturer because of their fungible nature. Id. at 610.
The Sindell court discussed three principles of tort law that would
support a market share theory of liability. First, as between an innocent
plaintiff and a manufacturer of a defective product, the latter should bear the
cost of injury. Id. at 610-611. Second, defendants are better able than
innocent plaintiffs to bear the cost of injury resulting from the manufacturing
of a defective product. Id. at 610-611. Finally, because the manufacturer
is in the best position to discover and guard against defects in its products
and to warn of harmful effects, holding the manufacturer liable for defects and
failure to warn will provide an incentive to ensure product safety. Id.
The court expressed that these policy considerations were particularly
important in cases involving medication because "the consumer is virtually
helpless to protect himself from serious, sometimes permanent, sometimes fatal,
injuries caused by deleterious drugs." Id. The holding is not
without the recognition of the difficulties in determining market shares that
market share liability could thus lead to manufacturers being held liable for a
different portion of the damages than its actual share of the market would
justify. Id. at 611-612.
The market share theory of liability developed in Sindell provides
that where a plaintiff is unable through no fault of her own, to identify which
defendants supplied the drugs that allegedly caused her injuries and the
drugs are produced from an identical formula, plaintiff need only join a
"substantial share" of themanufacturers in order to be
able to shift the burden of proof to defendants. Id. at 611-612. The Sindell
court did not describe what would constitute a "substantial share"
other than to reject a suggestion that it should be 75-80% of the market. Id.
at 612. This presents some obvious practical problems vis-à-vis determining
whether the theory is application in a particular case.
Assuming plaintiff meets the above conditions, the burden then shifts to the
defendants to prove that they could not have made the particular drug that
injured the plaintiff. Id. at 612. Any manufacturer-defendants unable to
demonstrate that they did not make the product used by the plaintiff’s mother
are then held severally liable for the proportion of the judgment that reflects
their total market share. Id.; Brown v. Superior Court, supra, 44
Cal. 3d at 1072-1076. Thus, if all of the defendants joined were not responsible
for 100% of the relevant market, the plaintiff cannot recover 100% of the
judgment. Id. at 1075.
C. Criticisms of Market Share Liability
The theory of market share liability is not without its detractors. Some
criticisms of market share liability are set forth below.
The elimination of a plaintiff’s burden of proof on causation renders it
speculative whether any particular defendant caused her injury and shifting
the burden of proof to the defendants almost guarantees a finding for
plaintiff on causation. Sindell, supra, 26 Cal. 3d at 615
(Richardson, J., dissenting). The result: the imposition of a liability
which exceeds absolute liability. Id. at 614 (Richardson, J.,
dissenting) (citing Dale Coggins, Industry-Wide Liability, 13 Suffolk
Univ.L.Rev. 980 (1979).)
A plaintiff proceeding under the market share theory, unlike a traditional
tort plaintiff, is relieved of her duty to prove causation and offered
"a wider selection of potential defendants and a greater opportunity
for recovery than an ordinary plaintiff." Id. at 618
(Richardson, J., dissenting).
While the enhanced exposure to liability engendered by this theory
encourages manufactures to spend more time testing so as to reduce the
possibility of marketing unsafe drugs, it will also hurt consumers "in
terms of continued suffering and lives lost" caused by the resulting
delay in making those drugs available. Richard P. Murray, Sindell v.
Abbott Laboratories: A Market Share Approach to DES Causation,
69 Cal.L.Rev. 1179, 1201 (1981). Comment k to §402a of Restatement (Second)
of Torts states that manufactures should not be held strictly liable
for injuries caused by products that are properly prepared and marketed and
which contain adequate warnings "merely because [they have]
undertaken to supply the public with an apparently useful and desirable
product, attended with a known but apparently reasonable risk." Id.
Manufacturers may react to the imposition of market share liability by
reducing or delaying efforts to develop new drugs, to the detriment of the
public. See Sindell supra, 26 Cal. 3d at 619 (Richardson, J.,
dissenting).
A system of equality under the law is not fostered by a rule which allows
liability to be predicated upon a defendant’s wealth. Sindell, supra
at 618 (Richardson, J., dissenting). Moreover, such a rule may be
particularly harsh on smaller companies who must absorb higher costs from
the enhanced exposure to liability. Id.
Practical questions going to the applicability of the market share theory
remain, such as how does one define the relevant market and what constitutes
a substantial share of that market? Sindell, supra, at 612
(Richardson, J., dissenting). It is unclear from the court’s opinion
whether 75-80% is too high or too low of a figure.
II. TREATMENT OF MARKET SHARE LIABILITY IN
OTHER JURISDICTIONS
A. Limited Adoption of Sindell
Sindell has been widely criticized and, thus far, it appears that only
one federal district court has adopted market share liability in the same form
as in California. McElhaney v. Eli Lilly & Co., 564 F.Supp. 265,
270-271 (D.S.D. 1983). McElhaney applied Sindell in a DES case
that was decided under South Dakota law. Id.
Examples of jurisdictions that have rejected market share liability include
Iowa (Mulcahey v. Eli Lilly & Co., 386 N.W. 2d 67, 75 (Iowa 1986)), Missouri
(Zafft v. Eli Lilly & Co., 676 S.W. 2d 241, 246 (Mo. 1984)), and
Illinois (Smith v. Eli Lilly & Co., 560 N.E. 2d 324,
337 (Ill. 1990)). Reasons for rejecting market share liability include: (1) the
fact that there is only a small amount of, or in some cases no, reliable
information available to establish the defendants’ percentages of the market,
(2) the burden of determining market share would greatly tax the trial courts in
terms of time and money spent in trying to establish market shares based on
unreliable or insufficient data, (3) the imposition of liability is too
speculative when it is quite possible the real defendant is not before the
court, and (4) it is unrealistic to believe true percentages of market shares
can be established by defendants in a particular lawsuit. Smith, supra
at 338.
B. Some
Jurisdictions Have Developed Their Own Form Of Market Share Liability In DES
Cases.
1. Washington
Washington adopted the "market share alternate liability" theory in
Martin v. Abbott Laboratories, 689 P.2d 368 (1984). Washington’s
Supreme Court rejected Sindell, mistakenly reading Sindell as
calling for joint and several liability. Id. at 380-381; see Brown,
supra, 44 Cal. 3d at 428 (holding that Sindell calls for several, but
not joint, liability.)
Under market share alternate liability, a plaintiff needs to commence suit
against only one defendant, as opposed to a "substantial share" of the
market as required under Sindell. Id. at 382. A plaintiff does not
have to "prove that a defendant produced or marketed the precise DES taken
by her mother." Id. The plaintiff need only establish by a
preponderance of the evidence that a defendant produced or marketed the type
(e.g., dosage, color, shape, markings, size, or other identifiable
characteristics) of DES taken by the plaintiff’s mother. Id.
A defendant can avoid liability by proving it did not produce or market the
type of DES taken by plaintiff’s mother; that it did not market DES in the
geographic area where plaintiff’s mother obtained the drug; or that it did not
market the drug at the time plaintiff’s mother took it. Id. If there is
insufficient evidence to determine accurate market share figures in the
plaintiff’s particular geographic market, then other figures may be used; for
instance, countywide, statewide, or nationwide figures. George v. Parke-Davis,
733 P.2d 507, 512 (Wash. 1987). However, the relevant market for determining
liability should be as narrowly defined as the evidence in the given case
allows. Id.
Under Martin, the joined defendants are presumed to have equal market
shares and so are equally liable for plaintiff’s injuries. Id. at 383.
They can rebut this presumption by demonstrating their true market share of the
relevant geographic market and thus reduce their potential liability. Id.
The liability of any defendants who are unable to demonstrate their market
shares will be increased to fully account for 100% of plaintiff’s judgment. Id.
at 383.
Martin has been criticized by the Illinois Supreme Court in Smith
v. Eli Lilly, supra, which pointed out two purported flaws in this
variation of market share liability. First, a plaintiff need only sue one
defendant and "[i]f that sole defendant is a small contributor to the DES
market, … it possibly could shoulder complete liability without proof of its
being cause in fact for the injury." Id. Second, a small
company could be held liable for more than its presumptive share if it is unable
to prove its market share. Id. at 333. "Thus, the small company
could be held liable for 50% or more of the damages when common sense dictates
that it surely could not have distributed such a high percentage of the DES used
in the market." Id.
2. Wisconsin
Wisconsin rejected Sindell on the grounds that market share liability
has limited practical applicability. Collins v. Eli Lilly & Co., 342
N.W. 2d 37, 48 (1984) (pointing out the difficulty of defining and proving
market share where the relevant records are possibly no longer available.)
Wisconsin’s approach is based instead on the risk of injury each manufacturer
contributed to the plaintiff. Id. at 49.
Under the Wisconsin approach, a plaintiff may sue only one defendant and may
recover all damages from the one defendant. Id. at 50. Moreover,
she "need not prove that a defendant produced or marketed the precise DES
taken by the plaintiff’s mother. Rather, as in Washington, the plaintiff need
only establish by a preponderance of the evidence that a defendant produced or
marketed the type … of DES taken by the plaintiff’s mother." Id.
If more than one defendant is joined, damages are to be apportioned among the
defendants according to the jury’s assignment of liability under Wisconsin’s
comparative negligence laws. Id.
In determining each defendant’s percentage of liability, the jury can
consider a number of factors in apportioning damages, such as the market of the
defendant, whether the defendant conducted safety tests on DES, the role the
defendant played in seeking FDA approval of the drug, and whether the defendant
issued warnings. Id. at 53. Wisconsin’s approach has been
criticized as expanding liability beyond Sindell because a defendant can
be held liable for merely creating a risk of harm, as opposed to a probability
of harm. Smith, supra, 560 N.E. 2d at 334.
3. New York
The New York Court of Appeals has criticized the California, Wisconsin and
Washington versions of market share liability. Hymowitz v. Eli Lilly & Co.,
539 N.E. 2d 1069 (N.Y. 1989), cert. denied, 493 U.S. 944 (1989). Instead
of adopting any of those three approaches, the New York court developed a theory
that utilizes a national market and apportions "liability so as to
correspond to the over-all culpability of each defendant, measured by the amount
of risk of injury each defendant created to the public-at-large." Id.
at 1078. A defendant can avoid liability only through proof that it did not
market DES for pregnancy use during the relevant period. Id. Further,
liability is several only and will not be inflated if all manufacturers are not
before the court. Id.
The New York version of market share differs from Washington’s in that
New York uses a national market, whereas Washington courts will attempt to
define as narrow a market as the evidence will allow (e.g., the
geographical area where plaintiff’s mother bought the drug). It also differs
from Wisconsin’s approach in that the risk of injury measured is to the public
at large, not to a particular plaintiff.
New York’s approach has been criticized for its inability to equate
liability to actual harm caused. See Smith, supra, 560 N.E. 2d at 334.
For instance, since a national market is used, a particular defendant cannot
escape liability even if it proves that it did not market the drug in the
geographical market where the plaintiff’s mother bought the drug. Hymowitz,
supra, 539 N.E. 2d at 1078.
III. HAS MARKET SHARE LIABILITY BEEN EXTENDED BEYOND DES
CASES?
A. Market Share Liability Was Rejected In A Salk Polio Vaccine Case.
A California appellate court rejected the use of market share liability in an
action against a manufacturer of a polio vaccine. Sheffield v. Eli Lilly
& Co., 144 Cal.App. 3d 583, 599 (1983). Although like DES the vaccine
was a general drug produced according to a uniform formula, unlike Sindell,
the injuries did not result from the use of a drug generally defective when used
for the purpose it was marketed; rather the injury occurred because some
manufacturer made and distributed a defective product. The product that
allegedly injured the plaintiffs was not a unit of a total generic
pharmaceutical product but a deviant defective vaccine. Id. at 594, 596.
B. Market Share Has Been Applied In A
DPT Vaccine Case.
A federal district court, applying California law, held that Sindell
market share liability was applicable in a case involving injuries from the DPT
vaccine. Morris v. Parke, Davis & Co., 667 F.Supp. 1332, 1342 (C.D.
Cal. 1987). Unlike Sheffield, plaintiff’s injury in Morris was
caused by a manufacturing defect present in all of the defendants’
D.P.T. products, namely, "'common inadequacies' in manufacturing, testing,
storage, and marketing." Morris, supra, at 1342.
The court also held that a plaintiff proceeding under a Sindell market
share theory of liability could pursue a claim for breach of express warranty. Id.
at 1342. However, subsequent to Morris, the California Supreme Court
explicitly rejected the proposition that a plaintiff who proceeds on a market
share theory may prosecute causes of action for fraud or breach of warranty. Brown
v. Superior Court, supra, 44 Cal.3d at 1072. Brown was
a "DES daughter" case and did not address whether market share
liability could be applied in a D.P.T. case. It is thus unclear whether the
California courts would agree with the Morris court’s willingness to
use Sindell in a D.P.T. case.
C. Market Share Liability Has Been Rejected In
Asbestos Cases.
In Mullen v. Armstrong World Industries, Inc., 200 Cal.App.3d 250
(1988), plaintiffs argued that market share liability should be extended from
DES cases to asbestos cases, reasoning that asbestos products, like DES, are
fungible in nature and present similar problems of proof. Id. at 255. The
court disagreed because asbestos products are not produced from the same formula
and have widely different toxicities. Id. a 255-256. Since the "fungibility"
requirement was not met, the court declined to apply market share liability to
asbestos cases. Id. at 257.
In White v. Celotex Corp., 907 F.2d 104 (9th Cir. 1990), an
action for asbestos-related personal injuries, the ninth circuit affirmed the
district court’s order granting summary judgment to defendant asbestos
manufacturers, distributors and supplies which was based upon plaintiff’s
inability to provide evidence identifying the companies responsible for the
asbestos to which plaintiff was allegedly exposed. In affirming summary
judgment, the ninth circuit reaffirmed the holding in In Re Related
Asbestos Cases, 543 F.Supp. 1152 (N.D. Cal. 1982) that the market share
theory is wholly inappropriate in asbestos personal injury cases.
In University of New Hampshire v. U.S. Gypsum, 756 F.Supp. 640 (D.N.H.
1991), an asbestos abatement action brought by a university against various
manufacturers and distributors of asbestos insulation, the district court
granted defendants’ motion for partial summary judgment finding that certain
of plaintiff’s "non-traditional" theories of liability, including
market share liability, were not applicable in this case. Id. at 653,
655.
In reaching this holding, the court noted that many courts have declined to
apply the market share theory in drug cases "and almost all have refused to
apply it in asbestos cases." Id. at 655 (see cases cited at
655-656). Since asbestos is not a "fungible" product, as other
jurisdictions have held, the district court rules that the market share theory
did not apply to asbestos property damage cases. Id. at 655-656.
D. Market Share Liability Rejected in HIV,
Breast Implant and Lead Poisoning Cases
In Poole v. Alpha Therapeutic Corp., 696 F.Supp. 351 (N.D. Ill.
1988) (plaintiffs sued for death from AIDS-related complications where HIV virus
was allegedly passed to decedent through defendant’s anti-hemophilic factor),
plaintiffs moved to amend their complaint to add a cause of action for market
share liability. The court for the Northern District of Illinois discussed
Illinois’ "limited" acceptance of a market share theory in the DES
litigation, as shown in Smith v. Eli Lilly, 527 N.E. 2d 373 (Ill. 1988). Poole,
supra, 696 F.Supp. at 353. The district court denied the plaintiffs’
motion to amend their complaint due, in part, to the Smith court’s
reluctance to extend market share liability to non-DES cases. Poole, supra
at 354.
In Lee v. Baxter Healthcare Corp., 721 F.Supp. 89 (D. Md. 1989), aff'd.,
898 F. 2d 146 (4th Cir. 1990) a breast implant case, a district court
applying Maryland law granted defendant’s motion for summary judgment. In
opposing summary judgment, the plaintiff argued that, under a market share
liability theory, she did not need to identify the specific manufacturer of the
defective breast implant in order to prevail against defendant at trial. The
court disagreed because Maryland courts "apply traditional products
liability law" and do not recognize market share liability. Id. at
93. Moreover, even assuming that Maryland did recognize this theory, the court
found it would not apply it to a breast implant case because there was no
showing that defendant had a substantial share of the breast implant market, and
breast implants, unlike DES, are not inherently dangerous products. Id.
at 93-94.
Lastly, in Santiago v. Sherwin-Williams Co., 782 F.Supp. 186 (D.
Mass. 1992), the district court granted defendants’ (bulk distributors of lead
to paint manufacturers) motion for partial summary judgment to preclude a
plaintiff who suffered from lead poisoning from proceeding under a market share
theory. In its discussion, the court observed that some courts have accepted the
market share theory in DES cases, but others have rejected it in both DES and
non-DES (e.g., asbestos, toxic chemicals, breast implant, AIDS virus,
tetracycline, benzidine, vaccine and tire rim) cases. Id. at 190-191,
fn.7.
First, the court rejected application of market share liability because
the evidence showed that factors other than lead-based paints might have caused
or contributed to plaintiff’s injury, leaving the jury to speculate as to the
degree to which each defendant contributed to that injury. Id. at 193.
Additionally, the court stated it would be too difficult – given plaintiff’s
alleged residential exposure to lead paint over a 54 year period – to define
the market for purposes of determining each defendant’s market share. Id.
at 194. Finally the court noted that no court had previously applied this theory
to a defendant that merely supplied an ingredient to a product made, packaged
and sold by others. Id.
IV. Conclusion
Motivated by public policy concerns, the Sindell court created a
theory of liability that represents a significant departure from traditional
tort law. Since then, a few variations on the Sindell theory of market
share liability have been adopted in other jurisdictions; however, that
application has been limited to DES cases. Recent cases do not indicate that
this situation will change in the near future.