Law

We learned of this development late yesterday afternoon and published a very brief “breaking news” post alerting our readership.  At that point we had not yet read the Court’s entire 137-page opinion, Tincher v. Omega Flex, Inc., No. 17 MAP, slip op. (Pa. Nov. 19, 2014).  Now we have.  While it’s clear that the most obnoxious aspects of the Azzarello regime − the bizarre pre-trial procedure for determining “unreasonably dangerous” as a matter of law, the absolutist negligence/strict liability dichotomy, and the “plaintiff wins” guarantor/any element jury instruction (for those of you not familiar with Pennsylvania law, this is what jurors are instructed: “The supplier of a product is the guarantor of its safety.  The product must, therefore, be provided with every element necessary to make it safe for its intended use, and without any condition that makes it unsafe for its intended use,” Azzarello, 391 A.2d at 559 n.12) – have been disapproved, what’s taken their place is less clear.

On the theory that you can’t beat something with nothing, ever since Phillips Bexis had been advocating the Third Restatement of Torts as an alternative, even though there were significant aspects of the Third Restatement that could hardly be called defense friendly.  Yes, Azzarello was that bad.  The Court, however, did not adopt the Third Restatement in Tincher.  Instead, it has adopted a more mainstream (compared to Azzarello) approach to Restatement Second §402A, that in places is also informed by Third Restatement principles.  We’ll be discussing that in more detail.

 

It could have been better, at least for non-drug device defendants (see the dissenting part of the concurrance/dissent), but compared to Azzarello the result is excellent.

First, how does Tincher affect drugs and medical devices, the primary focus of this blog?  For prescription products, the short answer is “not much.”  One of the adverse consequences of Azzarello’s negligence/strict liability dichotomy was precedent that rejected state of the art as a “negligence principle.”  Largely as a result of concerns over liability for scientifically undiscovered risks (something the Supreme Court never really had to address), in Hahn v. Richter, 673 A.2d 888 (Pa. 1996) (another case Bexis briefed) the Court excluded prescription medical products entirely from Azzarello strict liability using Restatement §402A, comment k.  See Tincher, slip op. at 59 n.13 (describing Hahn holding as “where adequacy of warnings associated with prescription drugs is at issue, strict liability is not recognized as basis for liability”).  Thus Tincher’s reworking of strict liability doesn’t affect prescription medical products because that theory wasn’t applicable in the first place.  Indeed, one of Bexis’ worries about the Third Restatement was that eventually it might call the Hahn strict liability exemption into question.  Without the Third Restatement, that doesn’t happen.

However, Azzarello strict liability has been imposed on manufacturers of over-the-counter (“OTC”) drugs.  Dunson v. McNeil-PPC, Inc., 2009 WL 1178651, at *4-5 (Pa. Super. April 24, 2009); Wolfe v. McNeil-PPC, Inc., 773 F. Supp. 2d 561, 568 (E.D. Pa. 2011).  Thus, OTC manufacturers will be able to take advantage of the post-Azzarello landscape, even on current appeals, if they’ve properly preserved the issue.

Generic drug manufacturers, however, should note Tincher’s express rejection of absolute liability.  Slip op. at 85.  This closes one (nonexistent) loophole to preemption that the Superior Court had attempted to leave open in the Reglan Trilogy .

So what do we have?  Fortunately, most of the first half (56 pages) of the Court’s opinion is prefatory and don’t require much discussion.  The Court engages in a long historical review of early Pennsylvania strict liability cases under §402A.  The purpose of this is to underscore how the Court in those cases made a number of overly broad and less-than-thought-out statements in the course of adopting and applying §402A.  E.g., Tincher, slip op. at 44 (Webb v. Zern “offered little explanation of its reasoning for formally adopting the Second Restatement”); 49 n.11 (other “interim” cases decided “without offering any insight into foundational matters of concern”); 50 (several decisions “lapsed, generally, into comparisons with the more familiar negligence and warranty causes of action”).  In discussing the plurality decision in Berkebile v. Brantly Helicopter Corp., 337 A.2d 893 (Pa. 1975), the Tincher court observed that the infamous “every element necessary to make it safe” language arose in a discussion of warning defects.  Slip op. at 55.  Tincher summed up the early §402A cases thusly:

Tincher discussed Azzarello.  It pointed out that the “every element” language from Berkebile “was quoted subsequently out of context by the majority in Azzarello as the standard of proof in a strict liability action.”  Slip op. at 56.  It explained the removal of “unreasonably dangerous” from jury consideration and pointed out that court’s reliance on the Cronin case from California.  Id. at 57-58.  “According to the [Azzarello] Court, in cases of an alleged defective design, the dispositive question is whether the product is safe for its intended use.”  Id. at 59.  Azzarello required that the jury be instructed that the manufacturer was a “guarantor” of safety and “should not be instructed on the “unreasonably dangerous” standard.”  Id.

In discussing post-Azzarello cases, Tincher analyzed in detail the majority, concurring and dissenting opinions in Lewis, the holding of which was to exclude evidence of industry standards in strict liability cases as “negligence” related.  Slip op. at 60-62.  It also addressed “doctrinal separation” and the Court having been “adaman[t] that negligence concepts have no place in a strict liability action” expressed in the Kimco case refusing to allow comparative negligence in strict liability cases.  Id. at 62-63 & n.14.

Turning to more recent cases, Tincher focused primarily on their discussions of the Third Restatement of Torts – not surprising, given that this was a question that the Court expressly intended to decide in Tincher.  In Phillips, only one justice was willing to decide the case based on the Azzarello negligence/strict liability dichotomy.  That justice thought the Third Restatement question waived (which in fairness it probably was, as Bexis raised it in an amicus brief).  Tincher, slip op. at 64.  One justice in Phillips did not agree on the negligence analysis.  Three concurring justices in Phillips (including (then) Justice Castille) “advocated taking the opportunity to address foundational matters, to reassess Pennsylvania’s Second Restatement approach, and to examine the range of readily accessible, corrective measures, including adoption of the Third Restatement.”  Slip op. at 65.

Tincher also discussed various Third-Restatement-related statements in the decade following the 2003 Philllips opinion.  In particular this discussion included the dissent from dismissal of the Bugosh appeal as improvidently granted, also joined by Chief Justice Castille, that included the following points:  (1) the “categorical divide between strict liability and negligence principles,” is “far more problematic” in design and warning cases; (2) “the alternative of a judicially imposed mandatory insurance scheme . . . is unpalatable and incongruent with the general rejection of a pure loss-spreading tort”; (3) Azzarello “was not reasoned well in its time and has not withstood the test of time”; (4) the legislature was “best positioned” to address product liability but had failed to act; and (5) “the difficulties . . . are with Azzarello rather than the Second Restatement itself.”  Tincher, slip op. at 69-72.  See also Id. at 73-74 & n.16 (discussing Third Circuit’s Berrier prediction of adoption of Third Restatement and several “tangential” recent decisions).

After all that preface, Tincher overruled Azzarello.  “Azzarello articulates governing legal concepts which fail to reflect the realities of strict liability practice and to serve the interests of justice.”  Slip op. at 74.  It got rid of Azzarello’s relegation of the “unreasonably dangerous” prong of §402A to a preliminary question of law to be decided courts rather than juries.  It criticized Azzarello for “approv[ing], and thereby essentially requir[ing], instructions which informed the jury that, for the purposes of a supplier’s strict liability in tort, ‘the product must, therefore, be provided with every element necessary to make it safe for its intended use’.”  Id. at 75.  “Subsequent decisional law has applied Azzarello broadly, to the point of directing that negligence concepts have no place in Pennsylvania strict liability doctrine.”  Id.  These errors, Tincher went on to explain, “led to puzzling trial directives that the bench and bar understandably have had difficulty following in practice, including in the present matter.”  Id.

Thus, Tincher disapproves of three key aspects of prior Pennsylvania strict liability law:  (1) the “each and every element”/”guarantor” jury instruction; (2) taking “unreasonably dangerous” issues away from the jury and giving them to courts; and (3) the strict separation of negligence and strict liability concepts.

These problems arose, first because Azzarello had treated §402A as if it were a statute, which was improper:

Jury Instruction:  Nor were the “generalities” in Azzarello “that negligence-related rhetoric saddles a plaintiff in a strict liability case with an additional and unwarranted burden of proof” necessary.  Id. at 76-77.

Azzarello’s imposition of a lock-step strict liability jury instruction omitting reasonableness and foreseeability was excessive and unwise:

The Tincher Court does not offer a replacement strict liability charge.  Instead it refers to “the fashioning of suggested jury charges applicable to a particular case.”  Id. at 128.

Unreasonably Dangerous:  Taking risk-utility balancing away from the jury and giving it to “judges” because the “unreasonably dangerous” element of §402A sounded in negligence was also “problematic on its face.”  Id. at 82.  Keeping risk-utility separate from the “condition of the product” “is incompatible with basic principles of strict liability.”  Id.  It also places courts in an untenable position:

Going forward, “severing findings relating to the risk-utility calculus from findings related to the condition of the product is impracticable and inconsistent with the theory of strict liability.”  Slip op. at 129.  Instead of a special procedure – with plaintiffs excused from ever meeting their burden of proof – the jury explicitly considers risk-utility, and “whether the party has met its burden of proof” is decided under the normal standard otherwise applicable to jury questions.  Id. at 132.

Negligence versus Strict Liability:  The notion of an absolute dichotomy between negligence and strict liability was also “confusing” and ultimately not “viable”:

The dichotomy between strict liability and negligence often arose in evidentiary matters.  Tincher does not directly address particular evidentiary exclusions, none of which was before the Court, id. at 127, but holds generally that neither side’s interests are superior.  Thus “evidentiary considerations . . . should not be mistaken for the question of whether a substantive duty in strict liability exists or should exist, or what constitutes a breach.”  Id. at 89.  “As with any other tort relationship, the supplier and the consumer are protecting legitimate but conflicting interests.”  Id. at 91.  On the consumer’s side, are “interests in the safe continued use of a product and, relatedly, in the cost of any injury,” counterbalanced by “economic, moral, and visceral interests in the sales price of the product, the availability of new or innovative products, and in any spillover effects.”  Id.  On the supplier’s side are “generat[ing] a sustained profit” along with “maintaining a reputable name and in providing new or innovative products,” counterbalanced by “a moral interest in providing a safe product with minimal negative externalities.”  Id.  It is this “balance of interests respecting what is socially or economically desirable” that should determine what is relevant evidence.”  Id. at 92.

Lewis and its state-of-the-art progeny had precluded such “negligence evidence in all strict liability actions.  Tincher recognizes that result as excessive:

It appears that the Tincher court viewed Azzarello’s chief vice as lack of judicial “modesty.”  “This case speaks volumes to the necessity of reading legal rules – especially broad rules -- against their facts and the corollary that judicial pronouncements should employ due modesty.”  Id. at 79.  Trying to “extrapolate broad lessons” from Azzarello, its progeny tied the law in knots:

Third Restatement Relevant but Not Adopted:  This “modesty” and distaste for what transpired in the wake of Azzarello more than anything explains the Tincher court’s reluctance to exchange their demonstrably failed body of broad product liability principles for another body of broad product liability principles represented by the Third Restatement.  As for former, “what drives the [ALI] and treatise writers does not make comparative modesty, nuance, and reticence in the judiciary mistaken (much less make indecisive) in a jurisdiction, like Pennsylvania, where the area, to date, has been the exclusive province of the common law.”  Tincher, slip op. at 111-12.  As for the latter:

The Court seemed comfortable with many of the principles in the Third Restatement – save its universal alternative design requirement, which it viewed as “problematic” because it “articulat[ed] the burden of proof in terms of evidence (alternative design).”  Slip op. at 108-09.  The court was not impressed with using evidence in that fashion.  Nor did the Court wish to create “a priori categorical exemptions for some products.”  Id. at 109.  It counted itself among those that “cannot foresee all the myriad products and circumstances that may arise.”  Id. at 110.  The majority (because at this point the concurrence becomes a dissent) views “public policy” as being “that compensation is available for an injury caused by any type of defective product”) (emphasis original).  Instead it “settle[d] for the incremental approach.”  Id. at 116.

Otherwise the majority – as well as the dissent – was receptive to the Third Restatement’s view of alternative design as “highly probative” of the existence of defect in the “typical” design defect case:

Renovating §402A:  In deciding with what to replace Azzarello, if not the Third Restatement, Tincher quickly rejected “absolute” liability.  Slip op. at 85 (“experience has taught otherwise and, in modern application, strict liability doctrine is a substantially narrower theory”).  It decided to stick with a “properly calibrated” version of Restatement Second §402A.  The Court sought guidance from classic negligence concepts – duty and breach.  “The duty in strict liability pertains to the duty of a manufacturer and of suppliers in the chain of distribution to the ultimate consumer.”  Id. at 87-88 (referencing Restatement §402A, comment c).  Strict liability exists so that:

Composite Standard:  After thoroughly discussing each alternative, Tincher adopted a “composite” standard including both “consumer expectation” and “risk utility” definitions of defect, recognizing drawbacks to each.

The Tincher court understood that a composite test invites a distinction between simple and complex products that could potentially cause the same problems as Azzarello if factual distinctions are “mistaken for establishment of a distinct burden of proof, and treated as doctrine.”  Slip op. at 103-05 (discussing Barker and Soule cases from California).  The Tincher court viewed the Third Restatement as another variant of the “combined” approach, folding consumer expectation principles into an overall risk/utility approach.  Id. at 104 (“a variation upon those tests primarily based upon a risk-utility determination by requiring proof of a reasonable alternative design”).

Consumer expectation:  The consumer expectation standard is that “the product is in a defective condition if the danger is unknowable and unacceptable to the average or ordinary consumer.”  Slip op. at 95.  “The nature of the product, the identity of the user, the product’s intended use and intended user, and any express or implied representations by a manufacturer or other seller are among considerations.”  Id. (citing, among other things, Restatement §402A, comment i).  Limitations of the consumer expectation test are:  (1) “obvious dangers” exempt products from liability; and (2) the test becomes “arbitrary” if applied to “complex” products “whose danger is vague or outside the ordinary consumer’s contemplation.”  Id. at 97-98.

Risk/Utility:  The “risk/utility” standard is” a test balancing risks and utilities or, stated in economic terms, a cost-benefit analysis.”  Tincher, slip op. at 98.  “The risk-utility test offers courts an opportunity to analyze post hoc whether a manufacturer’s conduct in manufacturing or designing a product was reasonable, which obviously reflects the negligence roots of strict liability.”  Id. at 99.  Limitations of the risk/utility test are:  (1) “not be[ing] immediately responsive in the (typical) case implicating allegations relating to a particular design feature”; and (2) “in some respects, it conflicts with bedrock moral intuitions regarding justice in determining proper compensation.”  Id. at 99-100.

Choice of Theories:  In choosing between the two in any given case, the Court recognized that “the theory of strict liability as it evolved overlaps in effect with the theories of negligence and breach of warranty.”  Slip op. at 121.  It “combin[es] the balancing of interests inherent in those two causes of action.”  Id.  Reflecting this “duality of purpose,” a composite formulation of strict liability “articulate[s] a standard of proof which stated the consumer expectations test and the risk-utility test in the alternative.”  Id. at 122.  The Court further viewed this duality as springing from the abolition of privity – while the manufacturer “engages in a risk-utility calculus,” intermediate sellers “implicitly represent[]” the non-defectiveness of the product as in a warranty claim.  Id. at 123.

The Court speculates that it’s possible there could be situations that would justify reversing the burden of proof.  Tincher, slip op. at 133-35.  This is primarily another bad idea out of California.  The Court ultimately didn’t decide anything, or change the usual civil burden of proof, but it’s something else that’s now out there.  Bexis’ work is never done.

The court mentioned that the law could change about other things – “foundational issues regarding manufacturing or warning claims” and “subsidiary” issues “such as the availability of negligence-derived defenses, bystander compensation, or the proper application of the intended use doctrine.”  Id. at 135.  Again, issue-spotting; nothing more.

Having not adopted the Third Restatement, the Court declined to make any special holding about the retroactivity of its decision.  Id. at 136.  Having “preserved the issue and presented its claim that Azzarello should be overruled” the defendant “is entitled to the benefit of [the] decision.”  Id.  Thus, there’s nothing in Tincher to prevent the usual retroactive application of an appellate decision.

“[T]he general rule is that all decisions are to be applied retroactively.”  Commonwealth v. Gray, 503 A.2d 921, 926 (Pa. 1985).

Bottom line?  Azzarello was so bad for defendants that practically anything is an improvement.  Tincher gets rid or three really pro-plaintiff things:  the “plaintiff wins” Azzarello jury instruction, the negligence/strict liability dichotomy which is the basis for several awful evidentiary exclusions, and the jury not being to decide risk utility with the plaintiff bearing the  burden of proof.  We don’t particularly like the consumer expectations test, as it has been prone to abuses in other jurisdictions, however, Tincher explicitly recognizes that theory’s problems and authorizes defendants to challenge its use in inappropriate cases.  Nothing in Tincher undermines the application of Restatement §402A, comment k in Hahn.  All in all, defendants are significantly better off today than they were yesterday.