The DDL Blog has paid only sporadic attention to prescription medical product liability in the European Union, with a couple of posts, here and here. Today, however, we discuss an EU Court of Justice (“E.C.J.”) Advocate General’s opinion concerning medical device product liability, and specifically the extent to which a plaintiff from one of the EU Member States could seek insurance recovery in reliance on the more favorable law of a different Member State. The plaintiff’s claim will likely denied. Should it be granted, the implications for expansion of product liability in the EU would be huge.
First, what is this thing called an “Advocate General’s opinion” in the first place? There is no equivalent in the United States. It’s an independent position with the E.C.J organization with the responsibility to advise that court on the cases it hears. Advocate Generals are appointed under the same procedure as judges, meaning that they are much more influential than U.S. judicial clerks, which is why the E.C.J. releases their opinions, as was done here. While the court as a whole in not bound by an Advocate General’s opinion, in practice the E.C.J. almost always hews pretty closely to the conclusions reached by the Advocate General responsible for the matter.
If the plaintiff’s legal theory also seems unusual, that’s what happens when the usual defendant – the medical device manufacturer – is insolvent, and the plaintiff must go forth in search of some other deep pocket. We’re only too familiar with this practice in the United States, where our opponents’ endless searches for deep pocket non-manufacturers to sue has warped the law in many unfortunate ways. Innovator liability comes to mind.
In RB v TUV Rheinland LGA Products GmbH, Celex No. 62018CV0581, slip op. (E.C.J.A.G. Bobeck, Feb. 6, 2020), a medical device (breast implants), made in France, was implanted in a German patient in Germany, allegedly causing injury. Id. ¶1. France requires medical device manufacturers to maintain liability insurance (here, set at 3 million Euros per claim, id. ¶16) against product liability. Germany has no such requirement. Thus the French manufacturer’s insurance had a “territorial clause limiting the cover to damage caused on French territory only.” Id. Then:
[The manufacturer] became insolvent and was liquidated. . . . [T]he founder of the [manufacturer] was sentenced to four years’ imprisonment by a French court for manufacturing and selling products that were dangerous to health.
Id. ¶12. If you’re interested in the details, go here.
The German plaintiff in RB asserted a liability über alles theory of recovery, arguing that the insurance clause, limiting coverage by national boundary, violated EU principles of “non-discrimination.” Id. ¶2. Translating this into plain English – the German plaintiff was trying to create insurance coverage that nobody had ever purchased from the insurer. And if plaintiff could succeed with insurance, would any other Member State restriction on liability be able to survive?
First of all, what is “non-discrimination”? That’s a lot like the Commerce Clause in the United States Constitution. The Treaty on the Functioning of the European Union – one of the treaties that created the EU – provides, “any discrimination on grounds of nationality shall be prohibited.” TFEU art. 18. The question thus became, in RB, are territorial limits in liability insurance a form of prohibited discrimination? That makes this case a big deal, since a discrimination finding would mean: (1) every insurer that thought it was selling insurance limited to occurrences in one of the EU member states would suddenly be on the hook (without receiving additional premiums) for occurrences throughout the EU; and (2) plaintiffs could launch similar attacks against any other Member State’s law that was less favorable to liability than some other Member State.
French law provided that medical device manufacturers (except really big ones that can self-insure) “shall be required to hold insurance intended to cover them for their third-party or administrative liability which may be incurred as a result of harm suffered by third parties arising from personal injury.” RB, Celex No. 62018CV0581 ¶7 (quoting statute). That statute also provided persons claiming injury from covered products with a claim that we in the USA call a “direct right of action” against the insurer. Id. ¶15.
RB initially decided some fine points of jurisdictional question, which we’ll omit. Suffice it to say that the Advocate General opined that the E.C.J. had jurisdiction over the matter. See Id. ¶¶23, 25, 32, 38, 42 (asserting three bases for jurisdiction).
On the merits, the Advocate General found a lack of any on-point EU law to apply. EU law imposes strict liability on product manufacturers, but the EU-wide product liability directives cited in RB were “silent on compulsory insurance.” Id. ¶54. Those directives did “not seek to harmonise [even after Brexit, EU organs apparently still use British English] the sphere of liability for defective products beyond the matters expressly regulated.” Id. Thus, EU member states could “set out the conditions” under which product liability insurance was mandated and violations were punished. Id. ¶55. EU law “remains silent on the insurance obligations of manufacturers.” Id. ¶56. Manufacturers themselves “are only required to have measures in place to provide sufficient financial coverage . . . without prejudice to more protective measures under national law.” Id. (citation and quotation marks omitted). That reference to “national law”:
makes clear that the EU legislature did not intend to provide for one harmonised solution in that regard, such as compulsory insurance against civil liability to be taken out by all manufacturers of medical devices.
Id. ¶57. Plaintiff was entitled to no relief under these EU product liability directives.
Since “none of those [EU] directives contain specific provisions regarding insurance against civil liability for harm caused to end users of medical devices,” “the case at hand is to be examined in the light of primary EU law. Id. ¶58. The Advocate General found no basis for plaintiff’s claim there, either.
First, it was “impossible” to shoehorn insurer liability into “free movement of goods,” because French-mandated mandatory insurance “d[id] not concern the movement of goods in any conventional sense but [only] the conditions of subsequent use.” Id. ¶ 59. Thus, “the rules on the free movement of goods do not provide a basis for attempting to compensate for the absence of rules in the host Member State on compulsory insurance against civil liability of manufacturers of medical devices.” Id. ¶71. The French mandatory insurance requirement simply did not hinder sale of medical devices into Germany, which had no similar requirement:
[T]he question is . . . whether the fact that the compulsory insurance attached to medical devices that are manufactured in France does not ‘travel’ with those goods constitutes a barrier to free movement from the perspective of an end user based in another Member State. To that question, [the] answer would be a clear ‘no.’ The fact that the insurance does not ‘travel’ with the goods, even if it is compulsory in the home Member State . . . is not an issue that is covered by [EU law].
RB, Celex No. 62018CV0581 ¶¶74-75.
Second, the territorial limitation did not encroach on EU citizens’ “freedom to receive (insurance) services” from other Member States. Id. ¶81.
[T]he insurance obligation at issue does not prevent insurance companies from covering medical devices produced in France but used in another Member State. Manufacturers and insurance companies can indeed decide, within the exercise of their contractual freedom, on the territorial scope of the insurance contract, beyond the legal minimum required by French law.
Id. But somebody would have to pay a premium – no freebie for this plaintiff.
Since plaintiff did not travel anywhere (having surgery where she resided), her claim “would push the freedom to receive services beyond its logical limits.” Id. ¶85. She never sought any non-German “services” until after her injury had happened, which “throws the true problem of this case into sharp relief: the absence of any clear rule of EU law preventing the territorial limitation in question, which leads to a series of hypotheses and conjectures as to how to create such a rule after the fact.” Id. ¶89.
Third, the general prohibition of nationality-based discrimination enshrined in TFEU art. 18 was not implicated. Article 18 was not “a general, free-standing prohibition of discrimination” in the absence of implementing legislation. Id. ¶92. With “no special provisions on the specific subject of the insurance obligation and its scope,” id. ¶100, to find a violation would require reading article 18 to equalize all differences in product liability among the Member States:
[I]f EU law provides for and enforces free movement of goods, it could be argued that it must also provide for and enforce equal responsibility and liability for cases in which those goods prove to be defective. Goods often carry risks, and free trade allows those risks to circulate and potentially create harm anywhere. It seems only fair that all patients, anywhere in the European Union, who suffer adverse consequences from defective products produced in a Member State, should have the chance to obtain adequate compensation.
Id. ¶105. Thus, plaintiff’s final argument necessarily advocated (albeit not explicitly) that “equal protection of all European citizen-consumers precludes a national rule that, in effect, limits insurance cover to persons who undergo surgery on the territory of the Member State.” Id. ¶108. The Advocate General rightly declined to read “non-discrimination” as giving plaintiffs the ability to pick and choose all the most favorable aspects of the product liability law of every EU Member State.
[S]uch an expansionist interpretation of Article 18 TFEU could make the legislation of any of the Member States potentially applicable on the same territory without any clear and objective criteria as to which legislation should prevail in a given dispute, with the victim being able to choose the most favourable legislation.
Id. ¶115. So the EU could “harmonise” product liability insurance requirements. But unless and until it does, plaintiff, as a resident of one Member State, has no right to demand to be compensated under the more favorable insurance requirements of a different Member State, simply because that was where the product happened to be manufactured. Id. ¶121.
We’ve previously criticized E.C.J. precedent that lowered the bar in the product liability area, but the bullet that our clients look likely to dodge in RB is even more serious. If plaintiff were to prevail in this seemingly limited dispute − over the availability of product liability insurance − all future plaintiffs would have a “free-standing” non-discrimination principle to use as a battering ram against any number of country-specific defenses and other limitation on liability. Imagine a United States regime where, if one state adopted innovator liability, or rejected the learned intermediary rule, “non-discrimination” required every other state to follow suit, and you’ll understand the implication of the arguments at issue in RB.
What next? It usually takes between four and twelve months after the Advocate General has provided an opinion for the E.C.J. itself to render a decision. As of this writing, no decision date has apparently been scheduled.