Sometimes it happens. For eleven years, we have published our annual “worst of” the year post on the Thursday before Christmas and our annual “best of” the year post on the Thursday before New Year’s.
Guess what? In a development that we weren’t entirely surprised to see happen, the California Supreme Court recognized not only innovator liability, but innovator liability in perpetuity, later during the same day that our 2017 “worst of” post was published, which coincidentally was the first day of winter. Winter is not just coming, it’s now here. California’s tort climate just became much colder for our pharmaceutical clients.
So we’re publishing this addendum to this week’s “worst of” post. This year there will be two number one worst of the worsts. Given everything else that’s happened in 2017, we suppose that is appropriate.
- T.H. v. Novartis, 2017 WL 6521684, slip op. (Cal. Dec. 22, 2017). Innovator liability, which effectively shifts 100% of potential liability for drug injuries to the 10% of the drug market that branded drugs represent, received the nod of all seven justices in this 4-3 decision. Y et, remarkably, the majority took the view that “the burden on brand-name drug manufacturers” to warn “those who are prescribed the generic version of the drug is zero.” That attitude, an insouciance towards any policy supporting prescription drugs (Brown cited not at all by the majority, and only once, parenthetically, by the somewhat less restrained concurrence) was apparent throughout. The result is pharmaceutical companies being disfavored, even compared to asbestos manufacturers. The same dismissively pro-plaintiff attitude that recently caused the same court to invite all mass tort plaintiffs to sue in California (2016-1) rears its ugly head again. T.H. defined negligence “duty” broadly and vaguely – “each person has a duty to use ordinary care and is liable for injuries caused by his failure to exercise reasonable care in the circumstances” – so that it could characterize even this vast expansion of liability to non-manufacturers as some sort of “exception” to the a general rule that allegations of negligence make anyone liable to everyone for anything. But then T.H. inconsistently discounted a mountain of contrary federal precedent because federal courts aren’t supposed to predict novel expansion of state-law liability. At least Sindell, bad as it was, was honest about its unprecedented result. T.H. is not the first time we’ve seen an opinion putting the “duty” rabbit in the hat like this to support a novel liability theory; Lance (2014-2) did the same to allow a stop-selling “negligence” theory. Lance has preemption problems, and T.H. might, too, at least on the case-specific off-label use facts. The majority appears to believe that off-label risk warnings can be added “unilaterally,” which they can’t. Somewhere, Justice Traynor, who conceived of product liability as ensuring the liability followed profit from product sales and ability to control product quality, must be spinning in his grave. Innovator liability violates both principles, and also lets off the hook the party that profited from the product and directly controlled its risk. Almost as bad – and even more extreme – is the second holding that innovator liability is effectively perpetual. Bookending California’s expansive “product line” form of successor liability, T.H. creates “product line” predecessor liability; so that even sale of all rights to the product before (here, six years before) the relevant product sale does not extinguish liability. It must have been a clear day, since the majority was able to foresee forever. On this issue T.H. was 4-3 (with the vote of a randomly selected “assigned” justice being the difference), with the dissenters rightly focusing on: (1) lack of control over a successor’s warnings; (2) overwarning of scientifically questionable risks; (3) insufficient deterrence of the actual product manufacturers; (4) “destabilization” of the pharmaceutical industry by perpetual, unlimited liability; (5) liability spillover to other products; (6) an unrealistic attitude towards corporate transactions; (7) relative lack of moral blame; and (8) unavailability of insurance for risks of competing products and the resultant increase in the price of branded drugs. Although T.H. is a bit less blunt in expressing the motivations for its novel liability holding than Weeks (2014-1), the California court’s underlying intent to use common-law liability to hold branded drugs hostage to federal action eliminating generic preemption is found in both in the majority’s footnote 2 and the first paragraph of the concurrence. We trashed T.H. here, and will undoubtedly be doing that again.