Express warranty is one of those claims that is often raised in prescription medical product liability actions, but seldom pursued with any intensity. A lot of express warranty claims drop out right away because most courts, under TwIqbal or equivalent state pleading rules, require plaintiffs to plead the precise language of the purported warranty. As a bunch of cases from our TwIqbal Cheat Sheet establish, most plaintiffs can’t even do that – demonstrating that the majority of express warranty claims are patently bogus.
Express warranty can assume greater importance in preemption cases. Some courts view “express warranty” as based on voluntarily-made statements that aren’t governed by the FDA and thus don’t involve preemptive “requirements” when made by manufacturers of PMA medical devices. That sentiment is particularly strong in the Third Circuit. See Horn v. Thoratec Corp., 376 F.3d 163, 168 n.7 (3d Cir. 2004); Michael v. Shiley, Inc., 46 F.3d 1316, 1325 (3d Cir. 1995). Also, a number of states have tort reform statutes that abolish just about all pre-existing common-law causes of action. Express warranty is often one of the few exceptions allowed in addition to the statutory cause(s) of action.
The latter scenario was the occasion of the Third Circuit’s excellent smack down of an exclusively express warranty class action in In re Avandia Marketing, Sales Practices & Products Liability Litigation (D’Apuzzo), ___ F. Appx. ___, 2014 WL 5334729 (3d Cir. Oct. 21, 2014). Plaintiff D’Apuzzo, a New Jersey resident, sought to bring a no-damages class action for purely economic loss to recover “for the higher cost, including co-payments” that he allegedly suffered because the drug in question was more expensive but purportedly no better. Id. at *1. New Jersey, however, has a comprehensive product liability statute that both abolishes common-law causes of action and prohibits actions for purely economic loss. Id. at *1 & nn.7-8. The statute was clear, and New Jersey authority controlling, so plaintiff appealed only the dismissal of his express warranty claims.
The district court had Twiqballed the express warranty claims because, as we’ve already mentioned, plaintiff failed to plead any language that constituted an express warranty. Id. at *2. The Third Circuit could have rendered a TwIqbal decision on express warranty, but avoided doing so:
We agree with the District Court that D’Apuzzo’s allegations were general and vague. But we need not decide whether D’Apuzzo was required to provide the exact text and time period of the warranties because we can decide this case on another ground – D’Apuzzo’s failure to state an express warranty claim as a matter of New Jersey law.
Id. So much the better for us. Instead of a TwIqbal decision that probably would have ended up on our cheat sheet but no more, the Third Circuit gave us a much rarer and more important decision applying substantive law – the law of the Uniform Commerce Code, which is in effect in almost every jurisdiction.
The substantive elements of a UCC express warranty claim are: “(1) [defendant] made an affirmation of fact, promise, or description about the product; (2) this affirmation of fact, promise, or description became part of the basis of the bargain for the product; and (3) the product ultimately did not conform to the affirmation of fact, promise, or description.” Id. at *3 (citing New Jersey UCC, §12A:2-313). The only statement that plaintiff pointed to as supposedly constituting an express warranty was a general statement that the drug at issue was “safe and effective.” Id.
Thus the question that the Third Circuit decided is of general interest – “whether the statement that [a drug] is ‘safe and effective’ for its intended use − contained on a label disclosing contraindications, risk factors, and potential side effects − is sufficient to create an express warranty.” Id. at *4. Notably this “safe and effective” information is required by the FDA. Id. at *3 (“FDA regulations required [the manufacturer] to disclose the highest dose for which the safety and efficacy of [its drug] had been established in clinical trials”).
The Third Circuit held as a matter of law that no express warranty was created, and thus affirmed dismissal of the express warranty claims. The “safe and effective” language did not relate sufficiently to any claim involving any particular person. “[T]he statement D’Apuzzo cites, when considered alone, does not claim [the drug] will be safe and effective in every case for every consumer.” Id. That could not be an express warranty, particularly “when considering the entirety of the [product] label”:
Crucially, [the drug’s] labeling discloses contraindications, risk factors, and possible side effects of the drug, thereby indicating the drug might prove dangerous or ineffective for some people. . . . [discussion of product-specific risks omitted] These contraindications, risk factors, and possible side effects are the primary reasons D’Apuzzo required a prescription to obtain [the drug]. Because [defendant] disclosed [the drug’s] contraindications, risk factors, and possible side effects on the drug’s label, the statement on that same label that the [drug] has been shown in clinical trials to be “safe and effective” for its intended use cannot be read as an unqualified guarantee that [it] would be safe and effective for all consumers.
Id. All prescription drugs have general safety and effectiveness statements in their label. Likewise all prescription drugs have “contraindications, risk factors, and possible side effects.” Thus the D’Apuzzo rationale is equally applicable to all drugs (and medical devices). Because it’s a UCC decision, D’Apuzzo is equally applicable to just about all states’ laws.
Because New Jersey case law hadn’t addressed the question, D’Apuzzo looked to cases interpreting identical UCC language in other states. Id. at *4. The court followed prescription medical product cases from Connecticut and Ohio that interpreted the same provision. Id. (citing Basko v. Sterling Drug, Inc., 416 F.2d 417, 428 (2d Cir. 1969); Fraser v. Wyeth, Inc., 857 F. Supp.2d 244, 257-58 (D. Conn. 2012); In re Meridia Products Liability Litigation, 328 F. Supp. 2d 791, 818 (N.D. Ohio 2004)). This precedent enforced a “well-established principle that ‘safe and effective’ are relative terms in the pharmaceutical industry – ‘safe’ drugs harm some people and ‘effective’ drugs do not work in every case.” D’Apuzzzo, 2014 WL 5334729, at *4 (citation omitted).
Therefore only “unqualified representation[s]” or “absolute assurances” of safety could qualify as enforceable express warranties. Id. at *4-5. The purported class action failed because plaintiff “does not allege [defendant] made unqualified promises or affirmations of fact regarding [the drug],” “has not alleged [defendant] promised [the drug] would be safe for all consumers,” and the defendant’s “disclosure of [the drug’s] contraindications, risk factors, and potential side effects on the drug’s label indicates [it] did not make such an unqualified guarantee.” Id. An express warranty claim based on nothing more than a product label’s FDA-required “safe and effective” statements could not survive:
D’Apuzzo alleges only that [defendant] represented [its drug] as “safe and efficacious” in one source – [the drug’s] “labels and packaging” − and on appeal points to only one qualified statement on the label. Because [defendant] disclosed [the drug’s] contraindications, risk factors, and potential side effects and D’Apuzzo does not allege [defendant] made unqualified guarantees of safety or effectiveness, D’Apuzzo has failed as a matter of New Jersey law to state an express warranty claim.
Id. at *5 (citation omitted).
Finally, the plaintiff argued that an express warranty could be established by something that wasn’t “express” at all – “fail[ure] to disclose or understated known [product] risks that rendered [the drug] potentially dangerous.” Id. Nice try; no cigar. Non-disclosure wasn’t an express warranty claim at all:
Failure to warn and express warranty are different causes of action. A failure to warn claim is a type of product liability action governed by the New Jersey Products Liability Act. . . . But D’Apuzzo’s appeal is based on express warranty, which is specifically excluded from the scope of the PLA because it is not a product liability cause of action.
Id. at *6. While the point should be obvious, it’s also helpful to have a court state that “express” means what it says and to reject an attempt to equate warranty with omissions in warnings.
All in all, D’Apuzzo is a most useful opinion for dispatching the kind of bogus express warranty claims most typically asserted in drug and medical device product liability litigation. Our only regret is that it’s not a “precedential” opinion published in F.3d.