Toxic Tort Litigation Blog : Toxic Tort Lawyer & Attorney : Epstein Becker Green Law Firm : Product Liability, Contamination, Pollution

People living near manufacturing plants increasingly seek judicial solutions to environmental issues.  In the wake of an environmental incident (such as a release of contaminants into the air or groundwater), fear and suspicion hinder constructive dialog and problem solving by manufacturers and their communities.  Environmental issues, as much as any other corporate concern, tend to have a ripple effect, often causing repercussions with far-reaching impact on company business.  An accidental release may result in adverse public relations, worker safety disputes, boycott of company products in the market place, adverse regulatory consequences and bad feeling in the community.  How a company responds to media attention at the outset has an important effect on how the community, including elected officials, health authorities, regulatory agencies and prospective jurors, react to the issues presented.  Accordingly, a company must plan in advance how it will respond to an environmental crisis and what steps it will take to minimize the fallout from such a crisis. 

A Value Assurance Plan should be considered as one significant component of a corporate response to homeowner concerns over property values.  A Value Assurance Plan, sometimes referred to as a "VAP", is a contractual promise to assure  homeowners that the equity in their homes will be protected if they sell their homes and realize less than full value from the sale due to an environmental concern in the community.  A VAP promises to compensate those homeowners who sell (or have sold) their homes by paying them the difference between the property's sale price and its fair market value prior to the discovery of possible contamination.  As part of the arrangement, the company may also offer to reimburse the closing costs and the moving expenses of residents who leave the community.  Often, the reassurance that a VAP provides is successful in preventing the panic selling (the rush to the door) that often strikes communities shortly after public disclosure of an environmental problem. 

To implement a Value Assurance Plan, a company needs  creative lawyering and a consultant who has a strong understanding of the economic dynamics driving the property diminution claims and who can accurately assess the potential exposure to the company of taking alternative courses of action, including taking no action at all.  Two such high qualified consultants are Jerry Dent  at Alvarez & Marsal in Birmingham, Alabama, and  Dwight Duncan at EconLit in Phoenix, Arizona. 

How can a brand-name pharmaceutical manufacturer owe a duty to patients who take only a generic version of its product? In a case of first impression in California, a state appellate court held on November 7, 2008 that Wyeth, Inc. owed a duty to plaintiff Elizabeth Conte, who developed a serious and irreversible neurological condition as a result of taking metoclopramide, the generic version of Wyeth’s Reglan, which is used to treat gastroesophageal reflux disease. In so holding, the California appellate court declined to follow the holdings of a majority of courts that have grappled with this issue.

In Elizabeth Ann Conte v. Wyeth, Inc. et al., the Court of Appeal of the State of the California in the First Appellate District in San Francisco, held that a brand-name pharmaceutical manufacturer’s common law duty to use due care when providing product warnings extends not only to consumers of its own product, but also to those patients whose doctors foreseeably rely on the name-brand manufacturer’s product information in prescribing a medication, even if the prescription is filled with the generic version of the drug. In reversing summary judgment granted to Wyeth by the trial court, the appellate court accepted Conte’s argument that Wyeth should be liable for her injuries because a brand-name manufacturer that disseminates information about its product owes a duty of care to ensure the information’s accuracy to all physicians who prescribe the drug in reasonable reliance on that information, even if the patient ends up taking the product’s generic equivalent.

The court agreed with Wyeth that Conte could not pursue a strict products liability claim against Wyeth. Indeed, Conte did not allege that Wyeth was strictly liability due to inadequate warnings. Rather, she claimed that Wyeth failed to exercise due care in disseminating its product information to physicians.  The court rejected Wyeth’s contention that Conte’s case was merely a product liability suit masquerading as a negligence case. The court held that the plaintiff could pursue claims of intentional and/or negligent misrepresentation based upon Wyeth’s labeling information about the safety of metoclopramide, the risks of its long term use, and the likelihood of serious side effects. 

Was the court correct in determining that Wyeth owed the plaintiff a duty in a negligence context where no such duty could be found to exist in a strict liability case? As a matter of public policy, should a brand-name drug manufacturer be subjected to what Wyeth argued might be “permanent and uncontrolled liability” in perpetuity. Even as a brand-name manufacturer’s sales decrease over time, its potential product liability exposure may actually increase because of higher market share won by generic competitors. Ironically, the generic manufacturer takes precious market share from the brand-name manufacturer at the same time that the court shifts the generic’s product liability exposure back to the pioneer. 

We believe that the better reasoned analysis of this issue may be found in Foster v. American Home Products Corp. (4th Cir. 1994) 29 F.3d. 165 (2003), in which the Fourth Circuit held that a manufacturer of a name-brand drug could not be held liable under a theory of negligent representation for an injury arising from the ingestion of a generic version of the drug. Taken to its logical extreme, in the brave new world envisioned by the Conte court, it may not matter that a plaintiff cannot identify the manufacturer of a product that caused an alleged injury so long as the plaintiff can plausibly claim to have relied on some other manufacturer’s operator’s manual.