Public policy favors scientific and medical research. So do we. While the theories of various claims asserted against sponsors of medical research—and the reasons for rejecting them—vary greatly, the underlying incentive to promote good research certainly plays a role in protecting those that sponsor and conduct medical research from virtually unlimited liability for alleged downstream harms. Indeed, the very concept of proximate cause that is now so embedded in tort law derives from public policy, as spelled out in Palsgraf:
A cause, but not the proximate cause. What we do mean by the word “proximate” is, that because of convenience, of public policy, of a rough sense of justice, the law arbitrarily declines to trace a series of events beyond a certain point. This is not logic. It is practical politics. Take our rule as to fires. Sparks from my burning haystack set on fire my house and my neighbor’s. I may recover from a negligent railroad. He may not. Yet the wrongful act as directly harmed the one as the other. We may regret that the line was drawn just where it was, but drawn somewhere it had to be. We said the act of the railroad was not the proximate cause of our neighbor’s fire. Cause it surely was. The words we used were simply indicative of our notions of public policy. Other courts think differently. But somewhere they reach the point where they cannot say the stream comes from any one source.
Palsgraf v Long Is. R.R. Co., 248 NY 339, 352-53 (N.Y. 1928). Our homage to Palsgraf is not mere coincidence to the decision we discuss here, which follows logically from Palsgraf even if not proximately so.
In Heath v. EcoHealth Alliance, No. 1:23-cv-08930 (JLR), 2024 U.S. Dist. LEXIS 231002 (S.D.N.Y. Dec. 19, 2024), the court dismissed negligence and strict liability theories asserted against a non-profit that received an NIH grant and gave some of the money as a subgrant to an outside lab. This is not a products case, as plaintiff’s decedent never took any product connected to the research from the lab. No, the claims asserted in Heath were far more contrived. Per plaintiff’s allegations—the case was decided on a motion to dismiss—$76,000 of defendant’s grant money went to the lab in Wuhan, China, that allegedly released the virus responsible for the COVID-19 pandemic and later the death of plaintiff’s decedent. (The allegation of the decedent’s death was actually that he died after being diagnosed with COVID-19, which is not exactly the same. His obituary is silent on the cause of death.) If we had resolved to be more understanding of the motivations of plaintiffs this year, then we might empathize with the desire to hold someone responsible for personal tragedy. Yet we do know something about proximate cause, product liability law, and tort law more broadly, so we can only go so far in terms of the choice of defendant in Heath. The estate in Heath was not alone in its choice, however, as there were at least two failed prior cases against this same defendant asserting similar theories in New York state courts. Heath was in federal court by reason of diversity jurisdiction because plaintiff is a Colorado resident, as was her decedent.
As far as we can tell, imposing liability on the defendant in Heath would have been unprecedented by a good measure. The court rightly dismissed the claims and denied leave to amend. The reasoning for the rejection does bear some review because it supports rejecting other attempts to impose liability related to research activities that might not be so far removed from the plaintiff’s injuries. Consistent with another theoretical resolution to be more evenhanded, we do note that the court in Heath left out a few things beyond a harkening back to Palsgraf. First, this being a case sitting in diversity and the claims being so obviously based on major extensions of New York law, we would have liked to see some nod to Erie restraint. Given that New York trial courts had rejected the same extensions in the two cited cases against the same defendant, Erie principles virtually eliminated a prediction that the Court of Appeals of New York would create limitless liability for directing subgrant money to an alleged bad actor. Second, while New York has a strict liability theory that is not limited to product liability, its non-products variant sounds in nuisance and has been limited to an activity carried out on defendant’s land or as part of a for-profit business that is proximal to the plaintiff’s interests. Heath need not have taken a deep dive into other attempted expansions of nuisance theories, but it might have set some harder lines on what sort of activities could not give rise to strict liability (e.g., a non-profit passing on a portion of federal grant money through a subgrant).
Heath went beyond a mere smell test and considered whether the allegations in plaintiff’s complaint stated a claim for negligence or strict liability. On the former, the court’s examination of duty was dispositive. “New York courts have been cautious in extending liability to defendants for their failure to control the conduct of others.” 2024 U.S. Dist. LEXIS 231002, *6 (citation omitted). The allegations here related to conduct by the Wuhan lab, over which defendant had no right of control and exercised no control. “The key consideration critical to the existence of a duty in these circumstances is that the defendant’s relationship with either the tortfeasor or the plaintiff places the defendant in the best position to protect against the risk of harm; and that the specter of limitless liability is not present because the class of potential plaintiffs to whom the duty is owed is circumscribed by the relationship.” Id. at *7 (citation and punctuation omitted). Defendant was far from in the best position to protect against any risk related to the Wuhan lab and nobody could have reasonably expected its limited funding would give it the ability to do so. Similarly, “The remote connection between Defendant’s allocation of funding to the [lab] and Plaintiff’s husband’s eventual death from COVID-19 would also create the risk of widespread, insurerlike liability, since the class of potential plaintiffs is so large and undefined.” Id. at *10 (citation omitted). Thus, the defendant owed no duty to plaintiff’s decedent in connection with its subgrant.
As noted above, New York has a strict liability theory based on “an ultrahazardous or abnormally dangerous activity,” not just in connection with the manufacture or sale of a product, which defendant clearly did not do. Even if this theory could ever be applied to a non-profit that was not directly affecting its neighbors with an activity on its property, an expansion to liability for the “funding of biomedical research” would be quite a reach. In this case, the plaintiff did not allege that defendant did relevant research itself or that its money to the lab was earmarked for the research that plaintiff claims led to the release of the virus responsible for the pandemic. Id. at *16. Nothing about funding research here was linked to any of the factors recognized for ultrahazardous activities, including that it created a high risk of harm or that funding research is uncommon or inherently inappropriate. So, the complaint did not come close to stating a claim for strict liability as recognized by New York law. This makes sense if you consider that the non-product liability strict liability was intended, in the language of the seminal New York case, for an “unpreventable miscarriage of the activity for harm resulting thereto from that which makes the activity ultrahazardous, although the utmost care is exercised to prevent the harm.” Plaintiff’s core claim was that the pandemic was preventable—although not by defendant—and that something far less than utmost care was exercised by the Wuhan lab. To impose liability on a mere partial funder of research that can be connected by some stream of non-proximate causation to an injury would certainly be a miscarriage of justice. To do so would have a terrible chilling effect on research. We are glad that Heath did its part to keep the chill away.