United States: Product Liability Update: October 2017

MASSACHUSETTS

Massachusetts Federal Court In Multi-District Litigation Holds Under Six States' Laws That Manufacturer Of Brand-Name Pharmaceutical Is Not Liable For Injuries Caused By Generic Equivalents Whose Manufacturers Were Required To Adopt Branded Manufacturer's Allegedly Inadequate Warnings

In In re Zofran (Ondansetron) Products Liability Litigation, 2017 U.S. Dist. LEXIS 130965 (D. Mass. Aug. 4, 2017), a multi-district litigation ("MDL") in the United States District Court for the District of Massachusetts, parents and guardians of children with birth defects sued the manufacturer of a brand-name prescription anti-nausea drug, asserting claims for misrepresentation and negligent undertaking in promoting the drug off-label for pregnancy-related nausea and not adequately disclosing birth defect risks. A number of plaintiffs alleged maternal exposure only to generic equivalents of the brand-name drug, but asserted the branded or innovator manufacturer was liable as it had "created a market" for pregnancy use, should have known generic alternatives would enter that market and knew generic manufacturers were legally required to copy the branded manufacturer's labeling. Defendant moved to dismiss these "innovator liability" claims on the ground that its product had not caused plaintiffs' harm.

The court first noted that none of the highest courts in the six states whose law governed plaintiffs' claims—Georgia, Indiana, Kentucky, Massachusetts, New York and Oklahoma—had directly ruled on the issue. On the other hand, the overwhelming majority of courts, "including all seven federal circuits to have addressed the issue," have held that a brand-name manufacturer cannot be held liable for injuries caused by a generic equivalent. Moreover, the general tort law jurisprudence of the states in question supported adherence to the majority position and hence dismissal of plaintiffs' claims.

Regarding plaintiffs' request at least to certify the question to the highest courts of the states that have a certification procedure (all but New York), the court found certification unnecessary under Georgia law because an intermedi ate appellate court had directly decided the issue, or under the laws of Indiana, Kentucky and Oklahoma because the Sixth and Tenth Circuits had decided the issue under those states' laws without requesting certification. While there was "some su perficial appeal" to certifying the question to the Massachusetts Supreme Judicial Court ("SJC"), two Massachusetts trial courts had recently followed the "overwhelming and well-reasoned majority view" and hence the MDL court concluded it could make an informed and intelligent prediction that the SJC would do likewise. The court expressed awareness that its ruling would leave consumers injured by generic drugs without a remedy, because the United States Supreme Court had held claims against generic manufacturers preempted by the federal law requirement that their labeling be identical to that of the brand-name manufacturer. Nonetheless, just because Congress had exempted generic manufacturers from liability, it did not follow that branded manufacturers should bear that liability.

Massachusetts Federal Court Holds Medical Device Distributor Not Fraudulently Joined As Design Defect and Failure-to-Warn Claims Not Preempted by FDA Regulations That Do Not Prohibit But Merely Require Notification of Design or Labeling Changes, and Distributor May Be Liable On Implied Warranty Claims Even Without Taking Title to Product

In In re Stryker LFIT V40 Femoral Head Prods. Liab. Litig., 2017 U.S. Dist. LEXIS 140808 (D.Mass., Aug. 31, 2017), plaintiffs in three state court actions brought claims against two out-of-state manufacturers and a Massachusetts distributor for breach of the implied warranty of merchantability (the Massachusetts nearequivalent of strict liability) for injuries allegedly caused by a hip replacement device based on design defect and failure-to-warn theories. The manufacturers removed the actions to the United States District Court for the District of Massachusetts, where a related multi-district litigation was pending, asserting diversity jurisdiction and alleging the non-diverse distributor was fraudulently joined. Plaintiffs moved to remand to state court.

In opposing plaintiffs' motion, the manufacturers first argued plaintiffs' claims against the distributor were preempted by 21 C.F.R. §§ 807.81 and 807.20(a)-(c), United States Food and Drug Administration ("FDA") regulations which the manufacturers asserted prohibited a medical device distributor from altering the design or warnings of FDAregulated devices. The court found, however, that the plain language of the regulations required a distributor to register and submit a premarket notification before repackaging or relabeling a device, but did not prohibit those actions. Accordingly, a distributor's position differs from that of a generic pharmaceutical manufacturer, whose labeling federal law unequivocally requires be identical to that of the corresponding FDA-approved brand-name drug, and plaintiffs' claims against the distributor were not preempted.

The manufacturers next argued the distributor could not be liable for breach of warranty, as it never actually took title to the hip implants but merely acted as a "conduit" in their sale. The court noted that Massachusetts Supreme Judicial Court ("SJC") precedent cited by the manufacturers merely addressed whether a product sale had occurred, and not whether it was necessary for a warranty claim that defendant have held title. Moreover, Mass. Gen. L. ch. 106, § 2-318 eliminates any requirement of privity in breach of warranty actions against a "manufacturer, seller, lessor or supplier of goods," suggesting possession of title was not required. And other SJC rulings had specifically held distributors may be liable for implied warranty product liability claims. As there was a reasonable legal basis for plaintiffs' claims against the distributor, the court granted plaintiffs' motion to remand.

Massachusetts Federal Court Holds Commercial Breach of Implied Warranty Claims For Purely Economic Loss Require Contractual Privity

In Organic Mulch & Landscape Supply of New Eng., LLC v. Probec, Inc., 2017 U.S. Dist. LEXIS 113716 (D. Mass. July 21, 2017), a corporation asserted a claim for breach of the implied warranties of merchantability and fitness for a particular purpose against the manufacturer of allegedly defective industrial ice-bagging equipment sold to plaintiff by a distributor, whom plaintiff also sued after the distributor refused to remove the equipment, refund the purchase price and pay consequential damages. The manufacturer moved for judgment on the pleadings based on lack of contractual privity with plaintiff.

Plaintiff argued the motion should be denied because the Massachusetts legislature unambiguously abolished the privity requirement through the enactment of Mass. Gen. Laws ch. 106, § 2-318, which provides that "[l]ack of privity between plaintiff and defendant shall be no defense in any action brought against the manufacturer" of goods for breach of warranty. In the alternative, plaintiff asked the court to certify the question of whether privity was required to the Massachusetts Supreme Judicial Court ("SJC").

The court denied the request for certification and granted the manufacturer's motion. The court first pointed to a line of SJC cases recognizing certain distinctions under section 2-318 between contract-based and tort-based warranty claims, and quoted SJC dicta that "contract-based warranty claims involving commercial transactions may generally call for different treatment than tort-based warranty claims." Then, citing opinions by four different federal district court judges, the court asserted that based on the SJC authority "courts have since uniformly held that a contract-based breach of warranty claim arising in a commercial context requires a showing of privity of contract." In light of this uniformity, there was no need to certify the question.

First Circuit Rejects Fraud And Unfair And Deceptive Practices Claims Based On Allegedly Inflated "Compare At" Price Tag For Lack of Actual Injury Where No Allegation Product Was Not Worth Price Paid; Unjust Enrichment Claim Fails Due To Existence Of Sales Contract

In Shaulis v. Nordstrom, Inc., 865 F.3d 1 (1st Cir. 2017), plaintiff filed a putative class action in Massachusetts Superior Court against a clothing retailer alleging fraud, breach of contract, unjust enrichment and violations of the Code of Massachusetts Regulations ("CMR"), Federal Trade Commission Act ("FTCA") and Mass. Gen. Laws ch. 93A, the Massachusetts unfair and deceptive practices statute. Plaintiff purchased a sweater from the retailer with a "Compare At" price on its tag that purported to identify a 77% savings, but plaintiff asserted the tag was deceptive as the retailer never sold the sweater at that price and absent the tag she would not have purchased the sweater.

Defendant removed the action to the United States District Court for the District of Massachusetts and moved to dismiss, arguing plaintiff failed to allege a legally cognizable injury under any theory. The district court agreed. Plaintiff did not allege the sweater was worth less than she paid, and her disappointment concerning the bargain she was receiving did not suffice. Further, although the "Compare At" tag violated both the CMR and FTCA, neither regime provided a private right of action.

On plaintiff's appeal as to her Chapter 93A and common law claims, the United States Court of Appeals for the First Circuit affirmed. The court first noted that the Massachusetts Supreme Judicial Court's ("SJC") recent decisions under Chapter 93A held that a plaintiff cannot rely on a "per se" theory of injury but rather must show "real economic damages." Here, plaintiff failed to allege any damages beyond being induced to make a purchase she would not have made, which impermissibly merged the alleged deception with the injury. Plaintiff also lacked any objective claim she expected to receive a higher quality product than she did. Plaintiff's argument that her travel costs to and from the retailer constituted actual injury also failed, as she had not alleged the price tag induced her travel.

Regarding plaintiff's common law claims, her fraud claim failed for the same reasons as her ch. 93A claim. There was no breach of contract claim as plaintiff agreed to pay the stated price. Nor could she recover for unjust enrichment, as under Massachusetts law that equitable remedy cannot override an otherwise valid contract.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
7 Nov 2018, Other, Boston, United States

Please join us on Wednesday, November 7 at the Westin Waltham Hotel for our quarterly New England M&A Forum, which brings the latest in market trends and recent legal developments to the New England M&A professionals' community.

13 Nov 2018, Webinar, Boston, United States

Social media platforms present countless opportunities for companies looking to connect to consumers and clients in real time.

Similar Articles
Relevancy Powered by MondaqAI
Foley Hoag LLP
Foley Hoag LLP
Foley Hoag LLP
Foley Hoag LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Foley Hoag LLP
Foley Hoag LLP
Foley Hoag LLP
Foley Hoag LLP
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions