You’ve no doubt heard of the 5 W’s (who, what, where, when, why) as applied in journalism or police investigations. They also apply to litigation. For example, personal jurisdiction and forum non conveniens are “where” issues, statute of limitations and statute of repose are “when“ issues, and the metaphysical doubt we defense hacks experience while laboring under the skeptical eyes of pro-plaintiff judges and the vast indifference of the skies is a big – perhaps the biggest – “why” question.
There are also “who” questions, such as whether the plaintiff has standing or whether the right entities are being sued. That last issue crops up all the time, including when plaintiffs pursue parent or innovator companies, pharmacies, sales reps, distributors, etc.
In Brown v. GlaxoSmithKline, LLC, 323 Or. App. 214 (Oregon Ct. of App. Dec. 14, 2022), the issue was whether a hospital that charged for a pharmaceutical drug administered to a patient in its emergency department was a “seller” engaged in the business of selling the drug subject to strict product liability under Oregon’s product liability statute. The trial court granted the hospital’s motion for summary judgment, holding that the hospital was not “in the business of selling” the drug. The plaintiff appealed, got the appellate court to overturn the summary judgment, and kept the hospital in the case.
The issue turned on statutory interpretation, specifically ORS 30.920, which sets out the elements of a product liability claim in Oregon. That statute applies strict liability to “one who sells … a product” if they are “a seller … engaged in the business of selling … such a product.” The hospital argued that “common sense tells us that the hospitals are not sellers of products” but, rather, “quintessential service providers.” The trial court agreed with this “common sense,” but the appellate court reasoned that the plain words of the statute trumped common sense.
The hospital did not advertise the drug for sale to the public and members of the public could not walk in and purchase the drug. But after the drug was administered to the plaintiff at the hospital, the hospital billed the plaintiff and her insurer for the treatment she received, including a specific charge for the drug. According to the Oregon appellate court, that looked like a sale. The hospital transferred ownership of a product to another in exchange for valuable consideration.
But wait a minute, argued the hospital, however one chooses to characterize that charge for the drug, it is not as if the hospital was engaged in the business of selling. The charge for the drug was merely ancillary to the rendering of the service of medical care.
At this point, the court looked to comment f of Rest. Torts (2d) of Torts section 402A, which Oregon courts typically employ in scrutinizing the contours of ORS 30.920. Comment f states that for one to be in the “business of selling” it “is not necessary that the seller be engaged solely in the business of selling such products.” One is not in the business of selling if one is, say, a homemaker who on one occasion sells a jar of jam to a neighbor, or if one sells one’s automobile to a friend or even a dealer. At the same time, comment f explicitly says that a motion picture theater selling popcorn to customers is a seller, even if showing movies is the main part of the business.
The Brown court saw the hospital as more like the theater selling popcorn than Uncle Frank unloading his old Buick on some poor unsuspecting fellow citizen.
The hospital contended that a “seller” had to advertise/promote the product and be either a wholesaler or retailer. The Oregon court rejected that contention. The court also rejected the hospital’s contention that selling was different from using, dispensing, or administering during the course of treatment.
There were Oregon statutes enacted after 30.920 that directly excluded as sellers doctors who provide products as part of medical treatment, or health care facilities providing breast implants as part of a medical implant procedure. Notably, hospitals were never generally excluded as sellers by the Oregon legislature. The Brown court also distinguished older, pre-ORS 30.920 cases treating blood suppliers as service providers, not sellers, as well as cases from other states dealing with either different statutes or with common law.
The Brown court concluded that the plaintiffs presented sufficient evidence to create an issue of fact as to whether the hospital was a seller. The court went on to mention that the record showed that the hospital’s “ongoing commercial activity consisted in some part” of selling the drug because it maintained a stick of that drug to administer to hospital patients, “and it is reasonable to infer” that the hospital “would charge patients for the drug as part of medical services it provided.”
That last part leaves us wondering whether Oregon hospitals could elude “seller” status by not directly charging patients for drugs. Someone smarter than us has probably already noodled over that possibility.