We’d like the answer to that question to be – most of the time. But that’s too much to hope for. After all, lawsuits are brought in California. With its plaintiff-friendly laws, indeed, California is an often sought after venue by mass tort products liability plaintiffs. But, according to a recent California appellate court decision, if the plaintiff isn’t from California or the injury didn’t occur in California, it is unlikely California law applies.
Chen v. Los Angeles Truck Centers, LLC, — Cal. Rptr. 3d –, 2019 WL 6242110 (Cal. App. Nov. 22, 2019) is not a prescription drug or medical device case. It is a products liability action. Plaintiffs were foreign tourists who were injured in bus accident in Arizona. They settled their claims with the bus tour company and bus driver. The pending lawsuit was brought against the Indiana manufacturer of the bus and the California distributor who purchased it and sold it to the tour operator. Id. at *1. So, in our DDL world this is analogous to non-California plaintiffs suing a non-California drug/device manufacturer and a California distributor. Not a wild hypothetical.
Defendants asked the court to apply Indiana law, which it did. Before trial, the Indiana manufacturer settled with plaintiffs. Then a defense verdict was entered in favor of the distributor and plaintiffs appealed the choice of law determination. The appellate court upheld the application of Indiana law.
California employs the governmental interest test in deciding choice of law questions. The test has three-parts: (1) are the laws of each state in fact different; (2) if so, what is each state’s interest in application of its own law under the circumstances of the particular case to determine if there is a true conflict; and (3) if so, which state’s interest would be more impaired if subordinated to the policy of the other state. Id. at *3.
Question 1 – Indiana and California product liability laws are different. Not surprisingly, Indiana law is more favorable for defendants. It “imports a negligence standard into the definition of a defective product.” Id. California law does not.
Question 2 – Only Indiana has a true interest in application of its law in this circumstance. Indiana has a more “business-friendly” product liability rule which “furthers Indiana’s interest in providing an attractive environment for its manufacturers by protecting them from excessive liability or damage awards.” Id. at *4. The court compared that with the policy underlying California’s more plaintiff-friendly law and put it into context given the particular case circumstances:
[T]he underlying basis for the policy is the protection of California residents and other persons within its territorial jurisdiction from injury. California’s interest in imposing that policy becomes hypothetical when the injured persons are not California residents and were not injured in California.
Id. at *5.
Put another way, the policy behind California’s strict liability rule “is to ensure that the costs of injuries resulting from defective products are borne by the manufacturers . . . rather than by the injured persons.” Id. However, the only California party in this case was the distributor. So, California’s interest in protecting its citizens or passing the costs to manufacturers is at best hypothetical when the case does not involve California plaintiffs or a California manufacturer.
Question 3 – The court didn’t need to reach it having answered the second question in the negative, but it examined the issue anyway. For basically all of the same reasons it concluded California’s interest was only hypothetical, it also concluded that Indiana’s law should not be subordinated to California’s. Id. at *7-8. Applying California law in this case “would not protect California residents or anyone who was injured in California.” Id. at *8. Nor would it “protect California residents and persons who are injured in California from having to bear the financial costs of injuries caused by defective products.” Id.
In a drug/device case, this should mean California law does not apply to cases involving non-California plaintiffs and a non-California manufacturer. In that situation, the court would have to use the governmental interest test to choose between the home state of the manufacturer and the home state of the plaintiff (usually also where the injury occurred). Typically, the home state of the plaintiff wins out in those situations, with some limited exceptions (i.e. which law applies to punitive damages claims). But what does this case mean for a suit brought in California by non-California residents against a California manufacturer. If the primary policy behind California’s product liability laws are protection of California residents, the holding of this case should still apply. It is a fairly sweeping holding. Without a California plaintiff or a California-based injury, California law doesn’t apply. And while we often say choice of law decisions are difficult to categorize as pro-defense or pro-plaintiff because they can be used to either sides’ benefit – we’re pretty sure we can say a decision limiting application of California law is a defense win.