It may be tempting to dismiss as boilerplate the “choice of law” discussion that precedes the “standard of review” in a typical brief. But while choice of law may not always be challenging or pivotal, just as often it is both. Today’s case, Peterson v. C.R. Bard Incorporated, 2021 WL 799305 (D. Or. Mar. 2, 2021), is a good example.
In Peterson, the plaintiff, then a resident of Pennsylvania, received the defendant’s IVC (inferior vena cava) filter at a Pennsylvania hospital. He moved to Oregon, where he suffered his alleged injury and underwent surgery to remove the filter. The filter was designed and tested in Arizona and its manufacture was directed from Arizona. The plaintiff filed suit in the District of Oregon and argued that Oregon law applied to his substantive claims and also to his claim for punitive damages. (We’ll tell you why he wanted this result in a minute.) The defendant argued that Pennsylvania law applied to the product liability claims and Arizona law governed the punitive damages claim. The defendant’s arguments carried the day, and here’s how the district court broke it down.
As a federal court sitting in diversity, the court applied the choice-of-law rules of the forum state, Oregon. Under Oregon’s choice-of-law rules, Oregon law applies if the plaintiff lived in Oregon at the time of his injury and suffered his injury in Oregon (he did), unless one of two possible exceptions applies.
Under the first exception, Oregon law does not apply if the defendant can show that (1) “the use in Oregon of the product that caused the injury could not have been foreseen,” and (2) “none of the defendants’ products of the same time were available in Oregon in the ordinary course of trade at the time of the injury.” Peterson, 2021 WL 799305 at *2 (citations omitted). With respect to the first question, “the question is not whether the defendant could have foreseen that somebody would be injured in Oregon, but whether the defendant could have foreseen that the particular plaintiff before the court would be injured in Oregon.” Id. (emphasis in original). With respect to the second question, “a defendant may not merely show that the exact product at issue was unavailable in Oregon. [It] must also show that products of the same type as the product at issue were unavailable in Oregon.” Id. at *2-3.
In this case, the court found that the defendant satisfied the first requirement, as the defendant could not have foreseen that the plaintiff, who received his IVC filter in Pennsylvania, would suffer his injury in Oregon. But the defendant could not satisfy the second test. While it had discontinued Oregon sales of the plaintiff’s filter before the plaintiff suffered his injury, it did not provide evidence that it had discontinued all products of the same type, so this exception did not apply.
The second exception requires an issue-by-issue interest analysis of sorts, determining separately, for each issue, whether “the application of the law of a state other than Oregon . . . is substantially more appropriate” than the application of Oregon law. Id. at *3. As the court explained, “each state having relevant contacts . . . may not be equally concerned with regulating all issues in the case, but may only be concerned with those issues that actually implicate its policies in a significant way.” Id. Against this backdrop, the court first considered which state’s law governed the plaintiff’s product liability claims then separately considered the punitive damages claim. With respect to the product liability claims, the court acknowledged that the plaintiff lived in Oregon at the time of his injury and still lived in Oregon, but it emphasized that the plaintiff did not sustain his injury until after the product was taken off the market in Oregon. But because the plaintiff received his IVC filter in Pennsylvania, the court found that Pennsylvania was “directly implicated” from “a purely economic standpoint,” and also had “an interest in its citizens receiving safe products in its hospitals.” Id. at *5. The court concluded that “Pennsylvania would sustain the most serious legal, social, and economic consequences of the choice-of-law determination,” so Pennsylvania law applied to the product liability claims.
The court began by explaining that compensatory damages and punitive damages “serve distinct purposes.” Id. While compensatory damages “are intended to redress the [plaintiff’s] concrete loss . . . ,” punitive damages “operate as private fines, intended to punish the defendant and to deter future wrongdoing.” Id. at *6 (internal punctuation and citations omitted). This distinction affects the choice-of-law analysis for punitive damages claims. While some states “emphasize the defendant’s conduct in the state where the product was marketed and sold,” others “emphasize the defendant’s conduct in the state where the product was designed and manufactured,” reasoning that “the focus, for purposes of choice-of-law analysis, needs to be on the place where the defendant’s alleged corporate misconduct occurred.” Id. (citations omitted). The court concluded,
Although this is a close call, I conclude Arizona law should apply to the issue of punitive damages. . . . [The defendant] designed, tested, and manufactured the product in Arizona. [It] also developed the products instructions and marketing material in Arizona; developed written communications to physicians in Arizona; trained its sales force on how to interact with physicians in Arizona; and communicated with the FDA about the . . . filter in Arizona. At bottom, although the [defendant’s] alleged misconduct eventually spread beyond Arizona, the foundation of that misconduct was formed in Arizona. . . . [The defendant’s] Arizona business activities form the foundation of [the plaintiff’s] claim for punitive damages, tipping the balance in favor of applying Arizona law.
Id. at *7. So the court held that Pennsylvania law applied to the product liability claims and Arizona law applied to the punitive damages claims. Why did this matter? The court predicted that Pennsylvania would extend comment k’s “unavoidably unsafe products” exception, which expressly bars strict liability claims against manufacturers of prescription drugs, to bar claims against manufacturers of prescription medical devices like the defendant’s filter. (Of course it does, notwithstanding the nonsensical debate on which we reported here and here and here and here.) This was fatal to the plaintiff’s strict liability claims, while the claims “would likely [have] survive[d] summary judgment” if Oregon law applied. Id. at *1. Pennsylvania has adopted the learned intermediary doctrine, while Oregon has not. And Arizona law bars punitive damages claims against a product manufacturer that “adheres to government specifications,” while Oregon does not. Id.
We like nothing better than a decision that is both correctly reasoned and defendant-friendly, and Peterson is just such a decision. We will keep you posted on the good and the bad. In the meantime, stay safe out there.