Dechert Re:Torts - Key Developments in Product Liability and Mass Torts

Issue 14 - March 2024

Dechert Re:Torts is a monthly newsletter covering news and developments related to product liability and mass torts litigation.

Inside this issue:

A Prescription for Liability: Michigan Repeals Flagship Drug Immunity Law
Unclear for Takeoff: Canadian Airline Liable for Chatbot Misinformation
It’s (Still) Important Enough to Get It Right
Gilead Appeals New “Duty to Innovate” Negligence Claim: A Potential Shift in Manufacturer Liability?
A Package Deal: FDA and Manufacturers Halt PFAS Use in Disposable Food Containers
FDA Urges Careful Evaluation of Third-Party Data in Regulatory Submissions

Hot Topics

A Prescription for Liability: Michigan Repeals Flagship Drug Immunity Law

Michigan’s recent repeal of immunity provisions under its Product Liability Act has potentially significant implications for pharmaceutical companies operating and litigating there. Since 1995, Michigan’s Product Liability Act granted an absolute presumption of non-defectiveness to the manufacturer and seller of an FDA-approved pharmaceutical product if “the drug and its labeling were in compliance with [FDA]’s approval at the time the drug left the control of the manufacturer or seller.” Garcia v. Wyeth-Ayerst Lab’ys, 385 F.3d 961, 964 (6th Cir. 2004). The Act permitted narrow exceptions where a plaintiff demonstrated that bribery or fraud corrupted the approval process. See id. For nearly 30 years, pharmaceutical companies enjoyed unparalleled protection under this provision. See, e.g., In re Proton-Pump Inhibitor Prod. Liab. Litig., 2022 WL 5265300 (D.N.J. Sept. 20, 2022) (dismissing 197 Michigan plaintiffs from the proton-pump inhibitor MDL).

The Michigan legislature repealed this provision effective February 13, 2024. As a result, pharmaceutical companies now face a weaker “rebuttable presumption” against liability for FDA-approved drugs: “the manufacturer or seller is not liable if, at the time the specific unit of the product was sold or delivered to the initial purchaser or user, the aspect of the product that allegedly caused the harm was in compliance with” FDA and other relevant regulatory standards. See Mich. Comp. Laws Ann. § 600.2946(4).

The impact of this repeal remains unclear. For instance, it is not clear whether it applies to all products liability cases filed after the effective date, even if they allege injuries that occurred before the effective date; or whether pharmaceutical companies with major operations in Michigan, originally attracted by its immunity provision, may search for another home.

Even after the repeal, pharmaceutical companies have other protections. For example, Michigan has caps on damages in products liability actions, for both noneconomic damages and if a product causes death or permanent loss of a vital bodily function, subject to annual adjustment based on the consumer price index. See id. § 600.2946a.

Takeaway: Michigan repealed the longstanding presumption of non-defectiveness enjoyed by FDA-approved products, removing a one-of-a-kind protection after almost 30 years.

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Unclear for Takeoff: Canadian Airline Liable for Chatbot Misinformation

Last month, the British Columbia Civil Resolution Tribunal (“BCCRT”) determined that Air Canada would be forced to honor a company policy that its chatbot had invented. Moffatt v. Air Canada, 2024 BCCRT 149.

The dispute arose in 2022 when a customer asked Air Canada’s support chatbot for information about applying for a bereavement fare discount. Id. at ¶ 2. The chatbot told the customer he would be partially refunded for his ticket if he applied for the reimbursement within 90 days of his ticket purchase. Id. at ¶ 15. But this was not Air Canada’s policy, which requires passengers to request bereavement fares prior to their ticket purchase. Id. at ¶ 19. When the customer attempted to apply for the discount post-flight, the airline refused, stating that the chatbot had erred and the request should have been submitted before the flight. Id. at ¶¶ 21-23. Air Canada argued that the chatbot was a “separate legal entity” that is responsible for its own actions and further argued that it was not liable because the chatbot provided the customer a direct link to Air Canada’s correct policy. Id. at ¶¶ 27-28.

The BCCRT rejected both arguments. First, the Tribunal found that Air Canada was responsible for all information disseminated on its website, whether it originated from a static page or from its chatbot. Id. at ¶ 27. Second, the Tribunal held that it was not the customer’s responsibility to discern that one part of Air Canada’s website (the chatbot) was inaccurate and that another part (the linked policy) was correct. Id. at ¶ 29.

BCCRT decisions are not precedent setting in Canada, let alone the United States. But this reasoning, if adopted in United States courts, would be of interest across a variety of industries, including the drug and device space. For example, FDA regularly monitors websites and social media postings and issues warning letters based on digital representations about a drug’s uses and efficacy. Cf. Victor v. R.C. Bigelow, Inc., No. 13-CV-02976-WHO, 2014 WL 1028881, at *12 (N.D. Cal. Mar. 14, 2014) (considering off-label representations in connection with misbranding and false advertising claims); see also Wilson v. Frito-Lay N. Am., Inc., No. 12-1586 SC, 2013 WL 1320468, at *6 (N.D. Cal. Apr. 1, 2013) (“It is true that statements not actually printed on a label itself can constitute ‘labeling’ for FDCA purposes.”). If drug and device makers employ generative AI tools to field inquiries and communicate information, they should consider how to reduce exposure to potential liability.

Takeaway: Those seeking to implement AI tools for customer communication should take steps to ensure that chatbots are trained to provide accurate information. Chatbot tools should also be accompanied by conspicuous disclaimers.

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It’s (Still) Important Enough to Get It Right

In last month’s edition of Re:Torts, we covered a recent oral argument in City of Huntington, W.Va. v. Amerisourcebergen Drug Corp. (Jan. 24, 2024) (No. 22-1918) in which the Fourth Circuit asked if it should certify a question to the Supreme Court of West Virginia as to whether West Virginia law permits a public nuisance claim against national pharmaceutical companies. We noted that the Fourth Circuit was indicating a cautious approach toward these issues but had yet to issue a certification. It has now done so.

The Fourth Circuit recently asked the West Virginia high court: “Under West Virginia’s common law, can conditions caused by the distribution of a controlled substance constitute a public nuisance and, if so, what are the elements of such a public nuisance claim?” Order at 4, City of Huntington, W.Va. v. Amerisourcebergen Drug Corp. (Mar. 18, 2024) (No. 22-1918). The Fourth Circuit explained that a “negative answer to this question is outcome determinative to the present appeal” and that “there is no controlling appellate decision, constitutional provision, or statute of West Virginia answering this question.” Id. The answers reached by the Supreme Court of West Virginia, and by the Ohio Supreme Court to a similar question certified by the Sixth Circuit in Trumball County v. Purdue Pharma, L.P., may meaningfully inform the contours of these claims and Re:Torts will continue its coverage of them.

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Jurisdictional Jabber

Gilead Appeals New “Duty to Innovate” Negligence Claim: A Potential Shift in Manufacturer Liability?

On February 21, 2024, Gilead Sciences, Inc. petitioned the California Supreme Court, challenging a lower court’s decision that allowed a negligence claim based on alleged delay in the development of a new product. The claim involved two Gilead HIV medications, tenofovir disoproxil fumarate (“TDF”) and tenofovir alafenamide (“TAF”). Beginning in 2018, thousands of individuals who used TDF filed cases alleging they experienced adverse effects. They do not allege that TDF is ineffective or that the product or its warnings were defective. Rather, they claim that Gilead acted negligently by delaying the development and release of TAF, which Plaintiffs allege offered a safer alternative treatment for some TDF patients and breached its duty of reasonable care to those patients by deferring the development of TAF in order to maximize profits from TDF.

In 2022, a California trial court presiding over the coordinated litigation denied Gilead’s motion for summary judgment, and in January 2024, the Court of Appeal affirmed. Gilead Tenofovir Cases, No. CJC-19-005043, JCCP No. 5043 (Cal. Super. Ct. June 13, 2022), aff’d, 98 Cal. App. 5th 911, 317 Cal. Rptr. 3d 133 (1st Dist. 2024). The Court of Appeal reasoned that a manufacturer’s duty of care could extend to decisions about developing and releasing safer alternatives. The Court acknowledged that “in many cases the parties will dispute, as they do in this case, whether the manufacturer actually knew that the alternative candidate was superior when the manufacturer made the decision or decisions at issue.” Gilead Tenofovir Cases, 98 Cal. App. 5th at 946, 317 Cal. Rptr. 3d at 165.

Gilead asserts that this expanded duty is a significant deviation from established products liability law, unduly expands manufacturer liability, and is impracticable given the complexities of the pharmaceutical industry’s innovation and regulatory processes. Gilead has asked the California Supreme Court to address and answer the following question affirmatively: “Did the Court of Appeal err in concluding that a manufacturer of a non-defective product has a duty to produce a different product that is safer for a subset of consumers?” Petition for Review at 6, Gilead Tenofovir Cases, No. S283862 (Cal. Feb. 21, 2024).

The appeal raises legal and policy issues that go to the heart of tort law and the balance it strikes between deterring harmful conduct and adopting reasonable limitations on liability. The Court of Appeal’s decision leaves open the questions of when a duty to develop or launch a new product is triggered and how a plaintiff will satisfy the need to tie an alleged breach of that duty to an injury.

Gilead’s appeal has drawn amicus support from varied industry, patient advocacy, and legal groups who align in their concern that the new duty will disrupt California law, conflict with the FDA’s drug-approval regime, and discourage scientific and technological innovation.

The Supreme Court of California is expected to decide by May 2024 whether to grant review and take up these issues.

Takeaway: The closely watched Gilead appeal seeks reversal of a novel expansion of a manufacturer’s duty under California product liability law in the form of a duty to develop a safer alternative product under certain circumstances. Whether and how the California Supreme Court addresses the issue will be of interest to pharmaceutical and other manufacturers operating and facing product liability litigation in California.

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Regulatory Review

A Package Deal: FDA and Manufacturers Halt PFAS Use in Disposable Food Containers

On February 28, FDA announced that all four authorized manufacturers of PFAS containing grease-proofing agents have voluntarily stopped the sale of PFAS-containing coatings for food wrappers and packaging. Prior to the phaseout, these PFAS-containing coatings were often applied to paper and paperboard packaging to create a grease and oil barrier, as well as to make the packaging water resistant. The phaseout of PFAS-containing coatings for food contact purposes began over a decade ago. FDA’s announcement last month follows manufacturers’ confirmation that grease-proofing substances containing PFAS are no longer sold for food contact applications in the United States. However, certain PFAS-containing food packaging could continue to be commercially available until June 2025, as existing product inventories are exhausted.

These initiatives parallel efforts by state and local governments to eliminate PFAS in disposable food packaging and other consumer products. For example, states such as Minnesota and California began enacting statutes banning the sale of food packaging containing PFAS as early as 2021. Approximately 12 states have now passed statutes curbing the sale of food packaging in which PFAS was “intentionally added” during the manufacturing process. And another six states are considering similar bans. Though state restrictions on the intentional addition of PFAS to food packaging are not limited to grease-proofing purposes, FDA’s and manufacturers’ phaseout is likely to aid downstream users in complying with those states’ laws.

Takeaway: Market forces and stricter regulations are accelerating the transition away from PFAS in industrial and consumer applications. The recent voluntary market phaseout of PFAS-containing coatings for food packaging is the latest example of this continuing trend.

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FDA Urges Careful Evaluation of Third-Party Data in Regulatory Submissions

The FDA is urging caution when using data generated by third-party laboratories and testing services. In a recent FDA publication, sponsors and manufacturers of medical devices were instructed to “carefully evaluate the third parties they engage to conduct performance testing and to independently verify all testing results.” The instruction was prompted by the FDA’s observation that an increasing number of submissions contain unreliable and even fabricated data, resulting in the FDA’s inability to authorize marketing for the associated medical devices.

In addition to urging companies to carefully scrutinize third-party data, the FDA has continued to develop its bioresearch monitoring program aimed at addressing data integrity issues in new product approval and marketing applications and pharmacovigilance activities. In 2023, the program conducted 400 data reliability assessments of marketing applications.

Unreliable scientific and medical data plagues more than FDA submissions. Increasing instances of deficiencies have been noted throughout scientific publications, ranging from minor inaccuracies requiring correction to fabrications warranting retraction. When accuracy issues arise, publications are often retracted or withdrawn without explanation. In some cases, the contents of retracted studies continue to be distributed as references embedded within other scholarly works.

Because scientific article submissions often receive minimal vetting and oversight prior to publication, independent monitoring efforts have emerged. One such platform is Retraction Watch, a blog started by biomedical reporters in 2018. Initially supported by grant funding, the platform began as a first step towards the creation of a retractions database. This past September, Retraction Watch announced a partnership with the publishing nonprofit, Crossref, which will link information about 42,000 retractions identified by Retraction Watch to Crossref’s digital objection identifier system.

The consequences of the rise in unreliable science extend to companies seeking FDA approval, patients seeking medical treatment, and legal practitioners evaluating scientific publications and expert witnesses. As the FDA noted, the submission of unreliable test results can stall approvals of otherwise beneficial medical advancements. Moreover, the process of scrutinizing scientific data for regulatory submissions, as well as scientific publications and potential expert witnesses in the litigation context, is made more complex by increases in junk science.

Takeaway: Recent FDA warnings regarding inaccuracies in third-party testing underscore the importance of data integrity in scientific research and the need for robust monitoring and verification systems to ensure the reliability of scientific data.

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