Many states have legislation on the books that insulates non-manufacturing intermediate sellers from strict liability.  Here’s a bunch that we’re aware of.  Colo. Rev. Stat. §13-21-402(2); 18 Del. Code Ann. §7001; Ga. Code Ann. §51-1-11.1(b); Idaho Code §6-1407; Ill. Ann. Stat., Ch. 735 §5/2-621(a)-(c) (ignore the WL red unconstitutionality flag; the prior provision remains); Iowa Code §613.18; Kan. Stat. Ann. §60-3306; Ky. Rev. Stat. Ann. §411.340; La. Rev. Stat. Ann. §9:2800.52(5); Md. Code Ann. § 5-311; Minn. Stat. Ann. §544.41; Mo. Rev. Stat. §537.762; Miss. Code. Ann. § 11-1-63(h); Neb. Rev. Stat. §25-21, 181; N.C. Gen. Stat. §99B-2; N.D. Cent. Code §28-01.1-06.1; Ohio Rev. Code Ann. §2307.78; S.D. Comp. L. §20-9-9; Tenn. Code Ann. §29-28-106; Tex. Civ. Prac. & Rem. Code Ann. § 82.003; Wash. Rev. Code Ann. §7.72.040; Wis. Stat. Ann. §895.047(2).  If we missed any, let us know and we’ll add them.  Some of these are “innocent supplier” statutes, many with caveats about the manufacturer being subject to suit.  Some are “sealed container” statutes.  What they have in common is the imposition of limits on the liability of non-manufacturing distributors of products.  

Have these statutes been applied to the distributors of prescription medical products?  Yes, we’re happy to report, and that’s what this post is about.

For some reason this issue has come up a lot in Kentucky.  The Sixth Circuit affirmed the applicability of the Kentucky “middleman” statute to a pharmacy in Flint v. Target Corp., 362 F. Appx. 446, 449 (6th Cir. 2010).  The issue was discussed at some length in another pharmacy case, Smith v. Wyeth Inc., 488 F. Supp.2d 625 (W.D. Ky. 2007), that also found that the defendant was qualified as a “middleman” selling prescription drugs:

[Plaintiff] did not, however, allege that an express or implied warranty was made that the drugs were fit for her use.  Therefore, the Court holds Plaintiff cannot utilize the first exception set out in the Middleman Statute. . . .  Plaintiff only alleges that the pharmacy defendants filled the prescription as it was presented to them from the health care providers.  Because the pharmacy defendants are subject to jurisdiction, Plaintiff did not sufficiently allege in her Complaint that they altered the condition of the drugs, and Plaintiff did not adequately allege that they breached an express warranty or knew or should have known of the danger to Plaintiff, the Middleman Statute bars Plaintiff's claims against them as a matter of law.

Id. at 629-630.  Nor did the learned intermediary rule take the pharmacy outside of the statute.  Id. at 630.  Accord Salisbury v. Purdue Pharma, L.P., 166 F.Supp.2d 546, 551-552 (E.D. Ky. 2001) (Kentucky statute precludes distributor liability).

In Georgia, an appellate court held that “strict product liability applies only to a manufacturer, not a ‘product seller,” and further that “a pharmacist and pharmacy that package and label drugs manufactured by another are product sellers, not manufacturers, within the meaning of strict product liability.”  Robinson v. Williamson, 537 S.E.2d 159, 161 (Ga. App. 2000).  Accord Wheat v. Sofamor, S.N.C., 46 F. Supp.2d 1351, 1365-66 (N.D. Ga. 1999) (defendant that “is not a product manufacturer . . . cannot be held strictly liable for any alleged product defect” under Georgia statute); Jones v. Sofamor S.N.C., 1999 WL 1062103, at *9 (N.D. Ga. April 29, 1999) (same).

In Missouri, the state’s “innocent seller” statute is “an independent basis for granting [a distributor] summary judgment.”  In re Temporomandibular Joint (TMJ) Implants Products Liability Litigation, 97 F.3d 1050, 1059 (8th Cir. 1996) (affirming dismissal of medical device distributors under Missouri and Tennessee law).  Missouri’s statute supported a fraudulent joinder holding regarding a distributor in a tampon suit:

Defendants argue that joinder of [the distributor] is fraudulent because of the Missouri “innocent seller” statute. . . .  In this case, the claims against [the distributor], both the strict liability allegations and those sounding in negligence, are based on [its] status as the seller of the tampons which allegedly caused the complained of injuries.  . . .[T]the manufacturer of the tampons is properly before the Court and available for full recovery.

Wichmann v. Proctor & Gamble Manufacturing Co., 2006 WL 3626904, at *2 (E.D. Mo. Dec. 11, 2006), reconsideration denied, 2007 WL 735017 (E.D. Mo. March 8, 2007).  Plaintiffs’ argument based on failure to test failed because “there is no reasonable basis in law or fact which would impose a duty on the part of [a] seller of the subject tampons, to inspect or test.”  Id.  AccordKampelman v. Codman & Shurteef, Inc., 2009 WL 2382775, at *5 (E.D. Mo. July 31, 2009) (hospital sued as distributor of medical device entitled to dismissal under Missouri statute); Spears v. Bayer Corp., 2004 WL 7081940, at *3 (W.D. Mo. Mar. 29, 2004) (innocent seller of OTC product entitled to dismissal under Missouri statute).

Tennessee has a “sealed container” type statute restricting distributor liability.  It was applied in product liability case involving a medical device (a bronchoscope) in Young v. Olympus America Inc., 2010 WL 1856539 (W.D. Tenn. May 5, 2010),motion to amend denied, 2010 WL 2985796 (W.D. Tenn. July 26, 2010):

Plaintiffs have not contested Defendant’s assertion that the bronchoscope at issue was sold in a sealed container, thereby barring any product liability claim under Tennessee law against Defendant except a claim for breach of express or implied warranty.  According to [an] affidavit . . . Defendant receives the bronchoscopes in question as finished goods packaged in a sealed container. Plaintiffs have not come forward with any evidence from which a reasonable juror could conclude otherwise.

Id. at *4 (footnote omitted).

In Moore v. Johnson & Johnson, 907 F. Supp.2d 646 (E.D. Pa. 2012), reconsideration denied, 2013 WL 5298573 (E.D. Pa. Sept. 20, 2013), the court invoked the Washington distributor statute as the basis for finding fraudulent joinder in an OTC drug case, where a pharmacy also qualified as a distributor:

The complaint includes two strict liability counts against [the distributor], as well as a cause of action for breaching the implied warranty of merchantability.  The WPLA plainly precludes such claims and [the distributor] is fraudulently joined on these counts.

Id. at 666 (footnote omitted).  The negligence count also failed because “a seller does not have a duty to inspect or test a product for possible defects unless he has reason to know the product is likely to be dangerously defective,” and the plaintiff could allege no facts that the “product seller defendant knew or should have known of an alleged product defect” as requierd by the statute  Id. at 668-69.

Most recently, in Wornner v. Christian Home Health Care, Inc., 2014 WL 130331 (E.D. La. Jan. 14, 2014), another fraudulent joinder case, the Louisiana statute precluding distributor liability was conclusive, since there was no evidence establishing its status as a “manufacturer,” and “[n]either has Plaintiff sufficiently alleged that [the distributor] should be held liable as a non-manufacturing seller of a defective product because she has failed to allege that [it] knew or should have known of any defect in the [medical device].”  Id. at *4.

In another recent case, the Illinois distributor statute preclude liability, even under a fraudulent joinder standard in Millman v. Biomet Orthopedics, Inc., 2013 WL 6498394, at *4-5 (N.D. Ind. Dec. 10, 2013).  Plaintiff did not challenge the affidavit establishing that the supplier did not create the defect, participate in the medical device’s design or manufacture, and had no actual knowledge of the defect.  Id. at *2.  Interestingly, the distributor prevailed even though its representative was present for the surgery at issue.  Id. at *5 (representative being an “observer” at surgery “doesn't equate to a claim that the [distributor] ‘participated’ in the surgical procedure”).  Accord In Re Yasmin & Yaz (Drospirenone) Marketing, Sales Practices & Products Liability Litigation, 692 F. Supp.2d 1012, 1020-21 (S.D. Ill. 2010), aff’d, 643 F.3d 994, (7th Cir. 2011) (Illinois distributor statute requires dismissal of pharmacy); In Re Yasmin & Yaz (Drospirenone) Marketing, Sales Practices & Products Liability Litigation, 2010 WL 4904488, at *3 (S.D. Ill. Nov. 24, 2010) (same).

A similar Ohio supplier’s statute precluded liability in King v. Centerpulse Orthopedics, Inc., 2006 WL 456478 (N.D. Ohio Feb. 24, 2006).  Plaintiff could not credibly allege that the supplier made any representation about the product.  Id. at *5.  Nor, given the lack of allegations in the complaint, could the supplier otherwise be liable, because the other theories “requires active conduct by the supplier that causes or contributes to the plaintiff’s injury.”  Id. at *3.  See also Szanto v. Target Corp., 2010 WL 346297, at *9-10 (Minn. App. Feb. 2, 2010) (affirming dismissal of distributor of OTC drug under Minnesota statute); Smith v. Alza Corp., 948 A.2d 686, 693 (N.J. Super. App. Div. 2008) (New Jersey statute provides “immunity to retailers and wholesalers who have no significant responsibility for the alleged product defect”); Braswell v. Invacare Corp., 2009 WL 3735986, at *3 (S.D. Miss. Nov. 5, 2009) (distributor held fraudulently joined under Mississippi statute); Thornburg v. Stryker Corp., 2006 WL 1843351, at *3-4 (Mag. S.D. Ind. June 29, 2006), adopted, 2006 WL 2191979 (S.D. Ind. Aug. 1, 2006) (Indiana statute required dismissal of device distributor); Landree v. University Medical Products USA, Inc., 2004 WL 413287, at *2 (D. Minn. March 1, 2004) (summary judgment granted under Minnesota statute; where no evidence of actual distributor knowledge of defect);Uribe v. Sofamor, S.N.C., 1999 WL 1129703, at *18 (D. Neb. Aug. 16, 1999) (summary judgment granted to device distributor under Nebraska statute barring non-manufacturer liability); cf.Paracelsus Healthcare Corp. v. Philips Electronics North America, 2001 WL 627428, at *4 (D.N.D. May 7, 2001) (some claims dismissed under North Dakota statute in economic loss suit brought by hospital purchasing a device).

Given everything we've learned about state legislation limiting the liabilty of non-manufacturing distributors, we have concluded that this would be an excellent subject for a California referendum.