Consumer Class Actions and Mass Torts : Class Action Lawyer & Attorney : J. Russell Jackson : Skadden Law Firm : Complex Class Actions : Consumer Class Actions & Mass Torts Law Blog

We defense lawyers have grown so accustomed to plaintiffs trying to repackage a products liability claim as one for consumer fraud that we sometimes forget to check a state's products liability statute for potential defenses when the complaint fails to mention it and instead cites the state's consumer fraud act.  But by failing to look at the product liability statute, we may be passing up an important defense, as was demonstrated in Mitchell v. Proctor & Gamble, 2010 WL 728222 (S.D. Ohio Mar. 1, 2010).

The plaintiff in Mitchell brought a putative class action against the maker of an over-the-counter heartburn medicine, Prilosec OTC.  The plaintiff, who said he was the only one who became ill after a buffet-style dinner party, claimed that taking Prilosec OTC predisposed consumers to contracting food-borne illnesses.  His class was defined as all consumers of Prilosec OTC from 2004 to the present.  He asserted causes of action for strict liability failure to warn, negligent failure to warn, violations of Ohio's Consumer Sales Practices Act, breach of express warranty, and breach of implied warranty.

The court first analyzed the defendants' argument that the entire action was preempted by Ohio's Products Liability Act.  The OPLA defined a "products liability claim" as a civil claim seeking recovery for compensatory damages from a manufacturer for death, personal injury, emotional distress, or property damage arising from the product's design, any warning or instruction, or the product's failure to conform to a warranty.  Id. at *2-*3.  The OPLA had eliminated all common-law product liability causes of action.

The plaintiff sought recovery for "treatments for food-borne illnesses," "the purchase price of the product," and the difference between the market value of the product and its actual value.  But the court held that "[plaintiff] cannot separate out his claims from the purview of the OPLA simply by claiming only economic losses.  His claims . . . are products liability claims.  And the injury he is alleged to have suffered relates directly to that product."  Id. at *4.

The court also noted that there was a long line of authority holding that where a plaintiff used the consumer fraud statute (the OCSPA) to assert claims that were primarily rooted in products liability claims, the OPLA preempted those claims, too.  Id.  Accordingly, the court dismissed all of plaintiff's claims without prejudice for him to plead a proper claim under the OPLA, which he had not previously cited.  Thus, an unpled product liability statute proved to be the Defendant's best weapon to defeat a host of consumer fraud claims. 

In dicta, the court also commented on the inadequacy of the factual pleadings under the Rule 8 standard of Twombly/Iqbal.  Plaintiff alleged that he attended a dinner, that he had been taking Prilosec, and that he was the only one who became sick.  That, the court held was not enough:

Nowhere in [plaintiff's] factual allegations does he connect his assertion that Prilosec OTC increase the risk of foodborne illness with the circumstances surrounding his illness.  Thus, his Amended Complaint is full of "naked assertions" that are lacking "further factual enhancement."  This Court cannot make inference upon inferences to provide the factual enhancement to [plaintiff's] claims.

Id. at *5 (citations omitted).

Ultimately, the court held that plaintiff should have another chance to plead an OPLA claim with sufficient factual particularity.  But it was clear from Mitchell that both the common law and OCSPA claims were preempted -- proving once again that it pays to check statutes that are not cited in the complaint when making decisions about motions to dismiss and affirmative defenses.

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You may not know it, but I'm famous!  Well, not really famous -- but I was mentioned in the New York Times yesterday.  And well, it wasn't really me, but my doppelganger.  They screwed my name up, calling me "Jackson Russell."  Nevertheless, there I was, sort of, being part of an article about a woman who has sued a mobile phone manufacturer and a mobile service provider because, according to the three-page complaint, they "failed to properly warn of the hazard of cell phone use while driving that created a reasonably foreseeable risk of an accident," allegedly resulting in an accident that killed the plaintiff's mother.  The plaintiff has sued in Oklahoma state court for compensatory and punitive damages in excess of $10 million.

My brief mention in the article was on the common knowledge defense.  It is commonly known that using a handheld mobile phone without a hands-free device increases the risk of accidents.  Manufacturers warn about it in the product literature.  Service providers post billboards about it.  Governmental authorities and public interest groups erect signs warning against it.  And most notably, it is illegal, and all licensed drivers are charged with knowledge of that law.  On this point, tort law is clear:  one has no duty to warn of a commonly known hazard.  And what sort of warning would possibly alter the behavior of the driver who insists on using a hand-held mobile phone while possessed of the common knowledge about the risks?  Simply put, there is none.

Interestingly, the Times reporter actually spoke with the driver of the truck that collided with the plaintiff's mother, who had pled guilty to negligent homicide.  The driver does not blame the mobile phone company, and is quoted as saying:  "It's our choice if we're going to talk on the cellphone while driving or walking down the street or in the office."

The article about the Oklahoma lawsuit appeared with a much larger article in the author's "Driven to Distraction" series, entitled "Promoting the Car Phone, Despite Risks."  This article reads like a plaintiff's complaint, attempting to establish "who knew what when" and pairing the history of marketing for early mobile phones called "car phones" and the scientific research about the risks of distracted driving.  It continually suggests that using hands-free devices does not eliminate the risk of using mobile phones while driving because the problem is "the distraction that comes from focusing on a conversation, not the road."  (Of course the same could be said for conversations with passengers, as well as the distraction that results from eating fast food, drinking beverages, singing along with the radio, putting on make-up or operating an electric razor while driving.)  The article mentions critics who demand "placing overt warnings on the packaging and screens of cellphones."  But in the end, drivers are charged by law with the duty to operate their vehicles responsibly and focusing on the road, regardless of the potential activity that may distract them, and regardless of whether they are "warned" to do so.

In light of the larger Times article, I thought it might be useful to offer more analysis of such claims, rather than my doppelganger's mere mention of the common knowledge doctrine.  To begin with, it would be tough for the plaintiff in a case such as this to establish a legal duty running from the phone manufacturer -- and particularly the service provider -- to someone other than their customer.  A product seller does not owe a duty to the world, and particularly where the product has functioned properly and injury has resulted only from the purchaser's misuse of the product, there can be no duty imposed on the product seller.  This is true in cases where firearm manufacturers are sued for injuries caused to third parties from criminal activity, and it presumably would be true if a plaintiff sued McDonald's for causing driver distraction by selling a billboard-advertised "extra value" meal to a driver from the "drive-thru" window.

Similarly, any duty running from the product seller to the purchaser who injures himself driving while using a hand-held mobile phone may be extinguished in many states by the illegal acts doctrine, which basically holds that a person who injures himself performing an illegal activity may not sue to recover for injuries incurred during that illegal activity.

Moreover, finding a viable cause of action will be difficult for mobile phone plaintiffs as well.  There are two basic product liability theories that could be asserted in these cases:  (1) design defect, and (2) failure to warn.  The design defect claim hardly seems plausible.  Although the "Promoting the Car Phone" article describes one engineer who suggested in the 1960s that there be a lock on the dial to prevent dialing while driving, the simple fact is that it would be difficult to posit a feasible alternative design that did not also detract from the benefits of having a mobile phone in the car.  It is recognized that mobile phones contribute to automobile safety by allowing us to report dangerous driving and accidents, obtain emergency roadside repairs, and receive directions in unfamiliar locations without consulting maps.  Indeed, there have been lawsuits against some automobile manufacturers seeking to impose liability for not having digital mobile assistance capabilities in their cars, and one Oklahoma court even refused to dismiss a cause of action against a mobile service provider who failed to provide a customer with triangulation information to help locate the customer's mother, who had disappeared on the way to the doctor and, allegedly as a result of the delay in locating her, lost the opportunity for rescue and medical attention.  See Frey v. AT&T Mobility LLC, 2008 WL 4415328 (N.D. Okla. Sept. 23, 2008).

As I previously noted, the failure to warn theory would be difficult not only because of common knowledge about the risks of using hand-held mobile phones while driving, but also because the mobile phone manufacturers already include such warnings in their product literature. 

Actual causation and proximate causation also would be extremely difficult to prove.  What kind of warning actually would change the conduct of a driver who, in this day and age, insists on using a hand-held mobile phone while driving?  And given the remoteness of the manufacturer and the service provider from the injured plaintiff -- and the intervening illegal conduct of the driver -- can there be causation as a matter of law?

The few cases to have addressed the question squarely answer the question in the negative.  For example, in Williams v. Cingular Wireless, 809 N.E.2d 473 (Ind. App. 2004), a plaintiff sued a mobile phone company for giving its customer a mobile phone that the customer was using when he collided with the plaintiff.  The court first concluded that there was no relationship between the mobile phone company and the plaintiff that would give rise to a legal duty on the company to protect the plaintiff.  Moreover, even though many states were adopting statutes that made driving while using a hand-held mobile phone illegal, the court held that there was no foreseeability:

Although we agree that it may be foreseeable that a person who is using a cellular phone while driving might be in an accident, we do not agree with the leap in logic Williams urges us to make that it is likewise foreseeable to a legally significant extent that the sale of the phone would result in an accident.  A cellular phone does not cause a driver to wreck a car.  Rather, it is the driver's inattention while using the phone that may cause an accident.  Drivers frequently use cellular phones without causing accidents, and, of course, cellular phones are used in all sorts of places other than in vehicles.  We do not conclude that there was a high degree of foreseeability that the sale of the phone would result in an accident.

 Id. at 478 (citation omitted).

The court went on to consider where public policy requires placing the responsibility for safe driving:

Simply because an action may have some degree of foreseeability does not make it sound public policy to impose a duty.  For example, many items may be used by a person while driving, thus making the person less attentive to driving.  It is foreseeable to some extent that there will be drivers who eat, apply make up, or look at a map while driving and that some of those drivers will be involved in car accidents because of the resulting distraction.  However, it would be unreasonable to find it sound public policy to impose a duty on the restaurant or cosmetic manufacturer or map designer to prevent such accidents.  It is the driver's responsibility to drive with due care.  Similarly, Cingular cannot control what people do with the phones after they purchase them.  To place a duty on Cingular to stop selling cellular phones because they might be involved in a car accident would be akin to making a car manufacturer stop selling otherwise safe cars because the car might be negligently used in such a way that it causes an accident.

. . . Ultimately, sound public policy dictates that the responsibility for negligent driving should fall on the driver.  Legislation has already been drafted to address the issue of cellular phone use while driving and to place the responsibility on the driver to refrain from doing so.  We are confident that the legislature is taking appropriate measures to protect public safety, and that is both its right and duty.

Id. at 478-79; see also Steele v. Cingular Wireless LLC, 2007 WL 2456104 (Cal. App. Aug. 30, 2007) (describing trial court's demurrer on plaintiff's claim that mobile phone provider owed a duty to plaintiff, who was injured in an accident allegedly caused by the provider's customer while talking on a mobile phone).

At the end of the day, I don't expect lawsuits against mobile phone companies for traffic-related harm to gain much traction.  The problems with duty, foreseeability, and causation are simply too great to make this a lucrative area for litigation.  The simple fact is that there are many potential distractions for drivers:  fast food, beverages, the radio, electronic billboards, and mobile phones, just to name a few.  But the legal responsibility for driving safely and avoiding dangerous distractions rests with the driver, and as a matter of public policy it simply makes no sense to impose on product manufacturers liability that would simply be passed through to their customers in the form of increased prices.

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According to the Helena, Montana Independent Record, the makers of the Louisville Slugger line of bats was held liable yesterday for the death of a an 18-year-old pitcher who was hit in the head by a ball that the batter had hit with an approved aluminum Louisville Slugger bat.  Plaintiff's theory was that the aluminum bats were defective because they only give the pitcher an average of 400 milliseconds to respond in a defensive stance.  Plaintiff also argued that the manufacturer failed to warn about this alleged hazard.

In an earlier article, the Independent Record had reported that a defense lawyer said in his opening that the ball that struck the pitcher was traveling at 99.8 miles per hour, and that nearly every home run hit with a wooden bat exceeds 100 miles per hour.

It apparently took the jury 12 hours of deliberations to conclude that the manufacturer failed to adequately warn, that the failure to warn caused the young pitcher's injury, and that the bat itself was not defectively designed.

I'll freely admit that I was not there to hear the evidence and I have not read the warning that was on the aluminum bat, but it is hard for me to fathom any warning that would have changed the conduct of the pitcher or the batter in a way to prevent this tragic injury. 

The jury awarded $792,000 to the pitcher's estate, and $58,000 to the parents for their emotional distress.  The judge is now considering the issue of punitive damages.

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A few weeks ago, I wrote about a Sixth Circuit decision which held that the Foreign Sovereign Immunities Act ("FSIA") did not deprive a court of jurisdiction over certain causes of action against the Holy See for harm caused by bishops, archbishops, and other US supervisory employees who failed to report or warn about pedophile priests.  On Tuesday, the Ninth Circuit issued a decision that -- although it refused to find jurisdiction for the acts of the Holy See's US supervisory employees -- found jurisdiction over the Holy See for respondeat superior liability for the conduct of a priest/employee who admitted to acts of sexual abuse on parishioners and students.  See Doe v. Holy See, Nos. 06-35563, 06-35587 (9th Cir. Mar. 3, 2009). 

This is the second federal appellate decision holding that the Holy See itself may be held to account in US courts for sexual abuse committed by Catholic Church employees in the United States.  Given how the financial status of some Catholic dioceses has impacted the progress of sexual abuse litigation in U.S. courts, the cumulative effect of the Sixth and Ninth Circuit's decisions -- providing jurisdiction over the ultimate "deep pocket" defendant -- may be to breathe new life into priest sexual abuse litigation and drive settlement values higher. 

In Doe, Father Andrew Ronan had admitted to molesting a minor as parish priest in the Archdiocese of Armagh, Ireland.  He was removed from his position and placed in the employ of the Archbishop of Chicago at St. Philip's High School, where he admitted to molesting at least three male students.  The Holy See then allegedly placed Father Ronan in a parish priest position in Portland, Oregon.  Plaintiff alleged that he came to know Father Ronan as his "priest, counselor, and spiritual advisor," and that using his position of trust and authority, Father Ronan sexually abused Plaintiff on repeated occasions "in several places including the monastery and surrounding areas."  Slip. op. at 2250.  Doe sued the Holy See, the Archdiocese, the Chicago Bishop, and the Order of Friar Servants (of which Ronan was a member).  The Holy See moved to dismiss, claiming that the court lacked jurisdiction over it under the Foreign Sovereign Immunities Act.  The District Court held that the "tortious act" exception to the FSIA applied, giving it jurisdiction over all of Doe's claims except the claim for fraud.  The District Court also had held that the "commercial activity" exception to the FSIA was inapplicable to the conduct pled in the complaint.

The Ninth Circuit partially affirmed, based on a detailed analysis of the FSIA.  The Doe decision is particularly interesting because of the split that arose in the three-judge panel regarding the applicability of the "commercial activity" exception.  The majority per curiam opinion holds that the court did not have appellate jurisdiction to consider the "commercial activity" exception argument because it was the subject of Doe's cross-appeal and did not independently meet the requirements of the collateral order doctrine.

The Dissent:  The Commercial Activity Exception

But in a well-reasoned dissent, Judge Marsha Berzon argued that the court had appellate jurisdiction to consider the argument because it was an alternative ground upon which they could affirm the District Court's finding of jurisdiction.  Slip op. at 2583, 2585-87 (Berzon, J., dissenting).  Judge Berzon's dissent lays out the broadest reading yet of jurisdiction over the Holy See, using the "commercial activity" exception.  According to Judge Berzon, Father Ronan met all of the requirements for the commercial activity exception:  he was employed in a non-sovereign capacity with no sovereign duties, and the plaintiff's negligence claims were based on Father Ronan's employment relationship with the Holy See.

Judge Berzon addressed, in her dissent, the question whether Father Ronan's pastoral duties could really be deemed "commercial activity" under the FSIA.  She observed that "a foreign state engages in 'commercial' activities when it 'do[es] not exercise powers peculiar to sovereigns,' but rather 'exercise[s] only those powers that can be exercised by private citizens.'"  Slip. op. at 2589 (quoting Argentina v. Weltover, 504 U.S. 607, 614 (1992)).  The question, she explained, is not whether the sovereign is acting with profit motives or so-called sovereign objectives, but rather whether the type of activity it engaged in is one by which a private party engages in commerce.  Id.  Indeed, in Weltover, the government had not made a profit, and the court noted that "'[e]ngaging in a commercial act does not require the receipt of fair value, or even compliance with the common law requirements of consideration.'"  Id. (quoting Weltover).

Looking at the employment relationship, then, Judge Berzon explained:

In sum, a foreign state engages in commercial activities when it engages in acts that any private citizen has the power to undertake, regardless of the state's motive or the possibility of making a profit therefrom.  Applying the Weltover definition of "commercial activity," this Circuit has repeatedly held that an employment relationship between a foreign sovereign and its employee constitutes commercial activity, so long as the employee is not a civil service, diplomatic, or military employee.

                                                      * * *

But on the allegations in the complaint, Ronan was not a civil service, diplomatic, or military employee . . . Providing religious, educational, and counseling services is not a peculiarly governmental function; it is something that non-governmental employers can do.

To reach this conclusion, I do not rely at all on the consideration that "churches receive financial support from their parishioners."  Maj. Op. at 2561.  The fact that Ronan's provision of pastoral services coincides with and depends upon his parishioners giving donations is neither necessary nor sufficient to show that the Holy See's employment of Ronan is a commercial activity under Weltover's nature-not-purpose test.  Instead, the critical factor in the commercial activity analysis in this case is that the Holy See's employment activities alleged in Doe's complaint are not distinctly sovereign in nature -- that they are the sort of functions that private parties, not just sovereign governments, can perform.

                                                      * * *

. . . The FSIA's purpose is not to insulate religious institutions from suit; it juxtaposes commercial activities not to religious activities, but to governmental activities.  The Holy See differs from other foreign states in the nature of the non-sovereign activities it carries out and, in all likelihood, in the ratio of its non-sovereign activities to its sovereign activities.  But it is like other sovereigns in the respect essential here:  It engages in a range of non-sovereign activities in the United States, and the FSIA's commercial activity exception lifts the shield of immunity from such non-sovereign activities.

 Id. at 2590-93 (citations omitted).

Judge Berzon's dissent drew a sharp rebuttal from Judge Ferdinand Fernandez, who wrote a concurrence because he was "loath to leave her disquisition standing alone."  According to Judge Fernandez, "Doe's claim that church functions are simply commercial transactions because parishioners do give donations to the church bespeaks the veriest cynicism about religion and a church's position within religion."  Slip op. at 2602 (Fernandez, J., concurring). 

Judge Fernandez believed that the fundamental problem with Judge Berzon's analysis stemmed from the fact that the Holy See is an unusual type of foreign sovereign that engages in a significant amount of non-commercial, non-sovereign activities:

I fail to see how engaging in providing religious counseling is "trade and traffic or commerce."  Id.  Nor, by the way, can a mere private actor give priestly counseling or consolation to a believer.  This does not require a focus on purpose; it goes to the very nature of the religious activity itself. . . .  Again, Holy See has not acted in the market at all.  It has simply provided religious counseling to a church communicant, a service that this unique sovereign entity is designed for.

                                                      * * *

. . . We hierophants of the law are adept at redefining ordinary concepts, but it is no more appropriate to declare that religious services are commercial activities than it would be to declare that ponies are small birds.

Id. at 2604-05 (citations omitted).

The Court's Holding:  The Tortious Act Exception

As noted above, the majority held that it did not have appellate jurisdiction to consider the "commercial activity" exception to the FSIA.  Thus, it confined its analysis to the "tortious act" exception.

To begin with, the court had to determine which acts were attributable to the Holy See in conducting the jurisdictional analysis.  It followed the presumption that various organizations have separate juridical status, and thus refused to attribute the actions of the archdiocese or the bishops to the Holy See.  Indeed, it noted that the standard it applied is "most similar to the 'alter ego' or 'piercing the corporate veil' standards applied in many state courts to determine whether the actions of a corporation are attributable to its owners."  Slip op. at 2569.  But the complaint had done an effective job of pleading that the Holy See itself employed Father Ronan and placed him in positions, so the court attributed those acts to the Holy See for the purpose of its jurisdictional analysis.  Slip op. at 2563, 2570.

The court then performed its analysis of the tortious act exception.  It concluded that:

Doe's respondeat superior claim based on Ronan's actions comes within the tortious act exception.  Doe has clearly alleged that Ronan was an employee of the Holy See, acting within the scope of his employment, when he molested Doe.  We conclude, however, that Does claims against the Holy See for negligent retention and supervision and failure to warn cannot be brought under the tort exception because they are barred by the FSIA's exclusion for discretionary functions, section 1605(a)(5)(A).

Slip op. at 2571.

In reaching its conclusion -- which differs from the Sixth Circuit's decision on the issue of allowing actions based on negligent supervision and failure to warn -- the Ninth Circuit took care to note that this plaintiff did not plead any policy that was specific and mandatory on the Holy See and failed to describe any documents, promulgations or orders.  Slip op. at 2576.  In contrast, the Sixth Circuit's plaintiff had described a "1962 Policy," including the document embodying it and the approvals it had received.

But the primary difference between the Ninth Circuit's opinion and the Sixth Circuit's opinion was the finding that the Holy See could be vicariously liable for the actions of the pedophile priest himself.

Cases seeking recovery for priest sexual abuse often have difficulties with statutes of limitations, proof, and the inability to meet the predominance and superiority elements of the class action rule.  But if the Sixth and Ninth Circuit's recent opinions mean that the Holy See can now be held into these cases regularly, this has the potential to fundamentally change the course of this type of litigation.

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Yesterday the California Supreme Court refused to accept review of the nonplussing decision in Conte v. Wyeth, Inc., in which the California Court of Appeal held that a pharmaceutical manufacturer could be liable for failure to warn of risks associated with a generic drug that it neither manufactured nor sold.

Jim Beck and Mark Herrmann give a characteristically thorough and compelling explanation for why the Court of Appeal's Conte decision was wrong as a matter of both law and public policy.  They also point out -- thankfully -- that under California law, the Conte decision has little, if any, stare decisis effect on other panels of the Court of Appeal who consider the same issue.

One wonders, however, whether the Justices ever considered the practical effects of the Conte rule on lawyers' advice to their clients.  After Conte, how do deal lawyers involved in pharmaceutical transactions accurately quantify and evaluate liability risks?  Thoughts, readers?

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