- Trends in Market Share Liability Theory For 2008
- December 21, 2009 | Author: Marc R. Jones
- Law Firm: Marshall, Dennehey, Warner, Coleman & Goggin - Cherry Hill Office
The market share theory of liability was created by the courts to address the difficult situation in large product and toxic tort liability cases for plaintiffs whereby "...multiple defendants have all produced the same or similar products, but plaintiff has been exposed to but one or some of them, and through circumstances beyond plaintiff's control, it cannot be determined which manufacturer supplied the product that injured the plaintiff." Sindell v. Abbott Labs, 607 P.2d 924 (Cal.), cert. denied 499 U.S. 912, 101 S.Ct. 285, 66 L.Ed.2d 140 (1980); see also Sholtis v. American Cyanamid Company, 238 N.J.Super. 8, 22 (App.Div. 1989).
Market share liability emerged as a response to the problematic diethylstibesterol ("DES") litigation of the 1980s, during which plaintiffs were unable to identify the specific defendants responsible for their injuries. Grimm, Daniel J. "Accounting for Risk Disparity: An Alternative to Market Share Liability," 2006 Colum.Bus. L.Rev. 549-550. This theory was first developed in California, and it requires that the plaintiff in this situation first join a "substantial percentage" of those who produce the "fungible products before he or she will be allowed to proceed with his or her case." Any named defendant who could not then exculpate itself would be held liable "for the proportion of the judgment represented by its share of that market." The court in Sindell found market share liability because the DES injuries arose from a fungible product created by an identical formula that obscured specific causation among defendants.
Plaintiffs attempts, however, to advance market share liability beyond the DES context have largely failed. See e.g. Leng v. Celotex Corporation, 554 N.E.2d 468 (Ill.), cert. denied 555 N.E.2d 337 (Ill. 1990); Vigiolto v. Johns-Manville Corp., 826 F.2d 1058 (3rd Cir. 1987), aff'g 643 F.Supp. 1454 (W.D.Pa. 1986); Nicolet, Inc. v. Nutt, 525 A.2d 146 (Del. 1987), aff'g In re Asbestos Litigation, 509 A.2d 1116 (Del.Sup.Ct. 1986); Celotex Corp. v. Copeland, 471 So.2d 533 (Fla. 1985); Mullen v. Armstrong World Industries, Inc., 200 Cal.App.3d 250, 246 Cal.Rptr. 32 (1988), all declining to adopt market share liability for asbestos exposure.
In addition to the above cases declining to impose market share liability in the asbestos arena, market share liability has also been rejected in litigation involving cigarettes, breast implants, benzene, toxic chemicals, lead pigment and blood products. Id.; see also Grimm, Daniel J. "Accounting for Risk Disparity: An Alternative to Market Share Liability," 2006 Colum.Bus. L.Rev. at 553.
In 1989 the New Jersey Supreme Court, in the case of Shackil v. Lederle Labs, 116 N.J. 155, 168 (1989), declined to adopt market share liability in a vaccine context and noted that most courts have declined to apply it in an asbestos context because "products containing asbestos are not uniformly harmful - with many products containing different degrees of asbestos." Interestingly, however, the New Jersey Supreme Court left open the possibility that its decision in the vaccine context:
...should not be read as forecasting an inhospitable response to the theory of market share liability in an appropriate context, perhaps one in which its application would be consistent with public policy and where no other remedy would be available.
The New Jersey Supreme Court in 1994 also held that, to apply the market share liability theory requires a product that is produced by multiple defendants that is uniformly similar and where the plaintiff has been exposed to but one or some of them, and through circumstances beyond the plaintiff's control, it cannot be determined which manufacturer supplied the product that injured the plaintiff. Cecil Becker v. Baron Brothers, 138 N.J. 145, 160 (1994).
The law in New Jersey on the issue of market share liability in the context of asbestos is clear and consistent with the majority of courts in other jurisdictions - specifically that it is not applicable. It is also clear, however, that New Jersey is leaving open the proverbial "back door" to this theory of liability and is reserving the right to rely upon it at some time in the future should an "appropriate context" arise. The majority of courts are also clear that, thus far, only the DES context provides the "appropriate context" for the courts to apply this theory.
Pennsylvania, like New Jersey, has also declined to adopt the market share theory of liability for the following products: asbestos products, Vigiolto v. Johns-Manville Corp., 643 F.Supp. 1454 (W.D.Pa. 1986); DES products, Burnside v. Abbott Laboratories, 505 A.2d 973, 986 (Pa.Super.Ct. 1985); tires and rim materials, Cummins v. Firestone Tire & Rubber Co., 495 A.2d 963 (Pa.Super.Ct. 1985); electric cables, Pennfield Corporation v. Meadow Valley Electric, Inc., 604 A.2d 1082 (Pa.Super.Ct. 1992); and lead pigment, Swartzbauer v. Lead Industrial Association, Inc., 794 F.Supp. 142 (E.D.Pa. 1992) and City of Philadelphia v. Lead Industries Association, Inc., 994 F.2d 112 (3rd Cir. 1993). But also like New Jersey, Pennsylvania has also left the "back door" open to use the market share theory if an "appropriate factual" situation is presented that requires that it be used.
Florida also has declined to adopt the market share theory outside of the DES context. The theory was first recognized in Florida in the case of Conley v. Boyle Drug Company, 570 So.2d 275 (Fla. 1990). The Conley case was a DES case, and the uniform nature of the drug, coupled with the fact that the product was manufactured by over 200 companies, made it an ideal factual set-up to permit the market share remedy. However, the Florida courts, like New Jersey and Pennsylvania, have not extended it to asbestos litigation, Celotex Corporation, supra, 471 So.2d 533, and they have also declined to extend it to blood products. The Florida courts have concluded that asbestos and blood products lack the uniform consistency and have differing levels of harm and divergent toxicities that preclude the use of the market share liability theory.
The courts in New York have chosen to adopt components of the market share liability theory. In the case of Hymowitz v. Eli Lilly & Company, 539 N.E.2d 1069, 1078 (N.Y. 1989), the Court of Appeals of New York established an expansive form of market share liability that precluded DES manufacturers from exculpating themselves from liability even if they could prove that their products did not cause injury. The courts in New York have rejected traditional causation principles in the DES context, and they have imposed liability on the basis of "net risk" divorced from causes in fact. If a defendant was found to have produced DES at any point during the period of injury, this was sufficient to establish market share liability even if they did not sell their products in New York at the time and their products could not have injured the plaintiff.
In practice, the market share theory of liability has changed very little in the apportionment of liability among product manufacturers outside of the DES context. The majority of courts that have considered the market share approach have, thus far, declined to apply it to a wide variety of products such as asbestos, blood products, lead pigments and others. This is the good news for products manufacturers and their insurers. The bad news is that almost universally, these same courts have not ruled out using it in the future for some unknown scenario that fits the "DES mold." These cases create a level of uncertainty in the product liability and toxic tort arenas that, at some point, there may be a product that fits the same or similar scenario as DES in which the market share theory is expanded beyond its current usage.