October 2009

From the editors of Wolters Kluwer Law & Business, this update describes important developments from CCH products liability and safety publications.

If you have any comments or suggestions concerning the information provided or the format used, we'd like to hear from you. Please send your comments to pamela.maloney@wolterskluwer.

Products Liability

High Court Denies Cert in Tobacco and Choice of Law Actions
The U.S. Supreme Court has denied requests for review (Adamo v. Brown & Williamson Tobacco Corp., Dkt. No. 09-15; and Williams Controls, Inc. v. Cuesta, Dkt. No. 09-81) in orders issued on October 5. In the first, an the estate of a woman who died after developing lung cancer after smoking a tobacco manufacturer's cigarettes for over 40 years had petitioned the High Court to review a New York Court of Appeals decision [Adamo v. Brown & Williamson Tobacco Corp. CCH Products Liability Reporter ¶18,142 (ip access user) (IntelliConnect)] finding in favor of the tobacco manufacturer in the estate's products liability action after a jury had found for the deceased. In the second, a manufacturer of fixed, non-adjustable accelerator pedals installed in another manufacturer's trucks asked the Court to review a decision by the Oklahoma Supreme Court [sub nom Cuesta v. Ford Motor Co., CCH Products Liability Reporter ¶18,237 (ip access user) (IntelliConnect)] holding that Michigan law applied to a class action against both manufacturers alleging that the pedals were defective.

Review of Safeguards in Punitive Damages Awards Sought
A motor vehicle manufacturer has asked the U.S. Supreme Court (Dkt. No. 09-297) to review a decision by the California Court of Appeal upholding a jury award of punitive damages to a driver who was left paraplegic after a rollover accident [Benetta Buel-Wilson v. Ford Motor Co., CCH Products Liability Reporter ¶17,937 (ip access user) (IntelliConnect)]. The jury's award, in the amount of approximately $246 million, was initially reduced to $75 million, and was further reduced to $55 million. Although the $75 million award represented a one-to-one ratio to the consumer's total compensatory damages, reductions in the compensatory award mandated that the punitive award be reduced to $55 million, which represented a two-to-one ratio. The manufacturer acknowledged that the Supreme Court had already addressed the issues relating to its due process right to fair notice of the amount of punitive damages that could be assessed and asked instead that the Court determine what constituted fair notice to which citizens are entitled so they can tailor their conduct to comply with the law and thereby avoid liability for punitive damages altogether. Specifically, the manufacturer asked whether state law, as applied, deprived defendants of fair notice if it permits the imposition of punitive damages for conduct that reasonable persons could have concluded was lawful.

Remand Ordered in Smoker Wrongful Death Suit
A federal district court erred when it allowed a cigarette manufacturer and its parent company to achieve diversity jurisdiction by incorrectly ruling that the state law claims brought by the survivor of an Alaska resident who died from lung cancer against the tobacco companies and an Alaska retailer, which sold the cigarettes, were preempted and, thus, constituted fraudulent joinder, the U.S. Court of Appeals for the Ninth Circuit ruled in remanding the case back to the federal district court for remand to state court. The survivor’s wrongful death action was brought in Alaska state court against the companies and the Alaska retailer and included products liability, failure to warn, and breach of warranty claims. The companies removed the case to federal district court, arguing that the survivor's state law claims against the Alaskan retailer were preempted by congressional policy against removing tobacco from the market, and that the retailer, therefore, was fraudulently joined, resulting in complete diversity of citizenship between the tobacco companies and the survivor. The Ninth Circuit disagreed with the use of the affirmative defense of implied preemption as a basis for asserting fraudulent joinder in order to invoke diversity jurisdiction. The appellate court said that the tobacco companies' preemption argument should have been brought in the context of attacking the merits of the survivor's case, rather than as a basis for removing it to federal court. According to the appellate court, the complaint sufficiently alleged a strict products liability claim under Alaska law, and because it was not obvious that the survivor failed to state a claim against the retailer without looking to the federal law of preemption, the court could not find that the joinder was fraudulent. Because the retailer was not fraudulently joined, there was no complete diversity of citizenship, and the case should have been remanded to state court, the court of appeals ruled. (Hunter v. Philip Morris USA (9thCir) CCH Products Liability Reporter ¶18,295 (ip access user) (IntelliConnect))

Burned Consumer's Claim Against Candle Maker to Proceed
Sufficient evidence existed to send to a jury a consumer's strict products liability claim against a candle maker for burn injuries caused by an alleged manufacturing defect in a citronella candle, the U.S. District Court for the Middle District of Florida held. After burning the candle one evening, the consumer was burned by hot wax and oil when she tried to extinguish the candle. The court found that, in accordance with case law and for the purposes of a manufacturing defect only, the consumer was entitled to an inference of a defect by showing that the malfunction occurred during normal usage of the product. Although the consumer was entitled to the inference, the inference only aided in establishing her prima facie case for jury consideration, the court said. Testimony and evidence demonstrated that material issues of fact existed as to whether the candle malfunctioned during normal use. Other claims by the consumer, however, were dismissed. The court found she failed to offer any direct evidence of a design defect in the candle—specifically, her failure to offer expert evidence foreclosed any claim based on a design defect. In addition, she admitted that she never read the warnings on the label affixed to the bottom of the candle’s metal bucket and, thus, failed to demonstrate that a failure to warn was the proximate cause of her injury. The court also determined that because she did not demonstrate that she was in privity with the candle manufacturer, she could not sustain a claim for breach of implied warranty under Florida law. Finally, the consumer's claims for negligent manufacture and design could not be sustained as she failed to offer any evidence to support her contention that the candle maker breached a duty to her or that any such breach was the cause of her injury. (Cooper v. Old Williamsburg Candle Corp. (MDFla) CCH Products Liability Reporter ¶18,284 (ip access user) (IntelliConnect))

Rulings Issued in FEMA Trailer Litigation
The U.S. District Court for the Eastern District of Louisiana, presiding over Federal Emergency Management Agency (FEMA) Trailer Formaldehyde Products Liability Litigation, issued a number of rulings as the action moved to the bellwether trial phase. The residents in the multi-district litigation claimed injuries resulting from alleged exposure to the release of formaldehyde and/or formaldehyde vapors in emergency housing units (EHUs) provided by FEMA after Hurricanes Katrina and Rita. First, the court held that bellwether plaintiffs, a woman and her minor child who were residents in the EHUs, failed to carry their burden of proving that the manufacturer of the EHUs breached an express warranty. The court also determined that the residents’ claims against the United States were barred by the Federal Tort Claim Act's (FTCA) two-year statute of limitations, and their claims against a FEMA contractor that serviced the EHUs were not prescribed by operation of a one-year liberative prescription under Louisiana law. According to the court, the government contractor defense could not be claimed by a government contractor hired by the United States to deliver, install, and maintain the residents’ EHU. Finally, the court ruled that an individual assistance/technical assistance contractor (IA/TAC), which contracted with FEMA to deliver, install, and maintain FEMA EHUs to residents, was not a "manufacturer" within the meaning of the LPLA as the residents had asserted. (In re: FEMA Trailer Formaldehyde Products Liability Litigation (EDLa) CCH Products Liability Reporter ¶18,288 (ip access user) (IntelliConnect), ¶18,289 (ip access user) (IntelliConnect), ¶18,290 (ip access user) (IntelliConnect), ¶18,291 (ip access user) (IntelliConnect), and ¶18,292 (ip access user) (IntelliConnect))

Court Makes Expert Opinion Findings in Osteoporosis Drug Action…
The general causation opinions of three experts on behalf of patients in a multi-district litigation who alleged that their taking a prescribed, FDA-approved, oral drug for the treatment or prevention of osteoporosis caused them to develop osteonecrosis of the jaws (ONJ) were sufficiently reliable for a jury to consider as evidence at trial, the U.S. District Court for the Southern District of New York ruled in an opinion covering a number of the parties' witnesses. The patients' strict products liability and negligence claims against the drug manufacturer were predicated primarily on a failure to warn theory, and the patients' experts were leading experts in the field of oral maxillofacial pathology and on the topic of ONJ and who formed their opinions in part by relying on their clinical experiences and their review of the available scientific literature and evidence. The court also excluded the general causation opinion of an epidemiologist testifying on behalf of the patients because it was unreliable, and limited the expert testimony of a board-certified anatomic and clinical pathologist, who was a former medical officer with the Food and Drug Administration's Center for Devices and Radiological Health, to testifying about general FDA regulatory requirements and procedures, and offering an opinion as to the drug manufacturer's regulatory compliance, as such testimony could be helpful to the jury. On behalf of the drug company, the court allowed five experts to testify because their credentials (all were associated with reputable universities), training, and clinical experiences made them all qualified to render opinions about the causal link between the osteoporosis drug or oral bisphosphonates and ONJ and about related data. Three of the experts also could offer opinions criticizing the causal mechanisms proposed by the patients' experts. (In re: Fosamax Products Liability Litigation (SDNY) CCH Products Liability Reporter ¶18,286 (ip access user) (IntelliConnect))

… and Finds Enough Evidence for Jury in 3-Year, ONJ Onset Cases
In a second ruling relating to cases of ONJ onset prior to three years of using the osteoporosis drug, the U.S. District Court for the Southern District of New York found there was sufficient evidence on which a jury could conclude that the osteoporosis drug could cause ONJ before three years of continuous use of the drug. Although the court found that the testimony of one of the patients’ general causation experts was unreliable because of inconsistencies between his testimony for the litigation and his prior published opinions, testimony by two other of the patients’ general causation experts, as well as the evidence upon which the two physician experts relied, raised a genuine issue of material fact for trial. (In re: Fosamax Products Liability Litigation (SDNY) CCH Products Liability Reporter ¶18,287 (ip access user) (IntelliConnect))

Product Safety

Malfunction Indicator Lamp Requirement Made Permanent
In a final rule effective August 31, 2009, NHTSA made permanent an existing requirement that trailers with antilock brake systems (ABS) be equipped with an external malfunction indicator lamp. The indicator lamp requirement, which is included in the federal motor vehicle safety standard that governs air-braked vehicles, was originally scheduled to sunset on March 1, 2009, but had previously been extended to September 1, 2009. The agency had established a sunset date for this requirement because of the increasing numbers of post-2001 tractors which have an in-cab trailer ABS malfunction lamp, making the external trailer lamp redundant. In light of additional safety purposes served by the external lamp, the agency made the requirement permanent. NHTSA stated that it not only warns the driver of a malfunctioning trailer ABS, but, unlike the in-cab lamps, indicates which trailer in double and triple trailer applications has a malfunction, and it assists federal and state roadside inspectors and maintenance personnel in identifying a malfunctioning trailer ABS. The rulemaking was conducted in response to petitions from the Commercial Vehicle Safety Alliance. Petitions for reconsideration must be received by October 9, 2009. (CCH Consumer Product Safety Guide ¶42,012 (ip access user) (IntelliConnect))

Determinations of Lead Limits in Certain Materials Issued
In a final rule effective August 6, 2009, the Consumer Product Safety Commission determined that certain materials do not exceed the lead content limits specified under section 101(a) of the Consumer Product Safety Improvement Act of 2008 (CPSIA). Under that section consumer products designed or intended primarily for children 12 years old and younger that contain more than 600 ppm of lead (as of February 10, 2009); 300 ppm of lead (as of August 14, 2009); and 100 ppm after three years (as of August 14, 2011), unless the Commission determines that it is not technologically feasible to have this lower limit, are considered to be banned hazardous substances under the Federal Hazardous Substances Act (FHSA). Products below these lead content limits are not banned; however, in the absence of Commission action, these products and materials used to make children's products remain subject to the lead limits and consequently, to the testing requirements of certain provisions of section 14(a) of the Consumer Product Safety Act (CPSA), as amended by section 102(a) of the CPSIA. By this rule, the products and materials determined by the Commission to fall under the lead content limits, are no longer subject to section 101(a) of the CPSIA and no testing of these products and materials is required under section 102(a) of the CPSIA. (CCH Consumer Product Safety Guide ¶42,013 (ip access user) (IntelliConnect))

CPSC Interprets Civil Penalty Factors
As required by the Consumer Product Safety Improvement Act of 2008 (CPSIA), the Consumer Product Safety Commission issued a final rule providing its interpretation of the civil penalty factors found in the Consumer Product Safety Act (CPSA), the Federal Hazardous Substances Act (FHSA), and the Flammable Fabrics Act (FFA), as amended by the CPSIA. The statutory provisions require the Commission to consider certain factors in determining the amount of any civil penalty. The rule is effective September 1, 2009. Comments must be received by October 1, 2009. (CCH Consumer Product Safety Guide ¶42,014 (ip access user) (IntelliConnect))

Criteria Issued for Testing Laboratories Accreditation
A notice of requirements providing the criteria and process for acceptance of accreditation of third party conformity assessment bodies for testing pursuant to specific CPSC regulations relating to bicycle helmets, dive sticks and similar articles, rattles, bicycles, and bunk beds was issued by the Consumer Product Safety Commission. The requirements for accreditation of third party conformity assessment bodies were effective September 2, 2009. Comments in response to this notice of requirements should be submitted by October 2, 2009. (CCH Consumer Product Safety Guide ¶57,311 (ip access user) (IntelliConnect))

NHTSA Amends Order of Succession
NHTSA amended the regulation specifying the order of succession to the Administrator noting that a change in the order of succession better serves the agency's mission. The mission of NHTSA is to save lives, prevent injuries and reduce economic costs due to road traffic crashes, through education, research, safety standards and enforcement activity. The Senior Associate Administrator for Vehicle Safety is responsible for overseeing all of NHTSA's rulemaking, enforcement, and research programs, as well as NHTSA's National Center for Analysis. The amendment was effective September 8, 2009. (CCH Consumer Product Safety Guide ¶42,015 (ip access user) (IntelliConnect))

TGH International Trading Fined $31,500 For Violating FHS Act
TGH International Trading Inc. (TGH), of Los Angeles, California, was fined $31,500 in civil penalties to settle Consumer Product Safety Commission allegations that the company knowingly imported and sold toys that did not meet the requirements of the Federal Hazardous Substances Act. TGH imported more than 11,000 toys between March 2005 and June 2006. The toys contained small parts which could present choking and aspiration hazards to young children. The CPSC is not aware of any incidents or injuries involving toys that were distributed into commerce. In agreeing to settle the allegations, TGH denied that it violated federal law. (CCH Consumer Product Safety Guide ¶57,312 (ip access user) (IntelliConnect))

Civil Penalty of $100,000 Imposed on Hill Sportswear
Hill Sportswear Inc. of Paramount, California, was fined $100,000 in civil penalties for failing to report to the CPSC immediately, as required by federal law, that children's hooded sweatshirts it manufactured and sold had drawstrings at the neck. In November 2008, a three-year-old boy died when the drawstring on his Hill Sportswear hooded sweatshirt reportedly became stuck on playground set and he strangled. Under federal law, a company must report to the Commission within 24 hours of receiving information reasonably supporting a conclusion that the company's product contains a defect that could create a substantial risk of injury to the public, presents an unreasonable risk of serious injury or death, or fails to comply with any consumer product safety rule or any other rule, regulation, standard, or ban enforced by the CPSC. Hill Sportswear and CPSC announced a recall of the sweatshirts in February 2009. (CCH Consumer Product Safety Guide ¶57,313 (ip access user) (Intelliconnect))

$510,000 In Civil Penalties for Failure to Report Drawstrings
Kohl's Department Stores Inc. of Menominee Falls, Wisconsin, was fined $425,000 in civil penalties to resolve allegations that it knowingly failed to report to the that it had sold children's hooded sweatshirts with drawstrings at the neck. A recall of the products was announced in March, 2009, by the CPSC and the importer, Seattle Cotton Works, LLC, of Bellevue, Washington. (CCH Consumer Product Safety Guide ¶57,314 (ip access user) (IntelliConnect))

Two additional companies, Maran Inc. of North Bergen, New Jersey, and K.S. Trading Corporation of Moonachie, New Jersey, have agreed to pay $85,000 to resolve CPSC staff allegations that the firms knowingly failed to report that children's hooded sweatshirts or jackets that they sold had drawstrings at the neck. Children's upper outerwear with drawstrings pose a strangulation hazard to children. (CCH Consumer Product Safety Guide ¶57,315 (ip access user) (IntelliConnect))

Provisions of Early Warning Reporting Rule Amended
A final rule issued by the National Highway Traffic Safety Administration amends certain provisions of the early warning reporting (EWR) rule published pursuant to the Transportation Recall Enhancement, Accountability, and Documentation (TREAD) Act and adds requirements for information identifying products involved in a recall. The rule modifies the threshold for submitting quarterly EWR reports for light vehicle, bus, medium-heavy vehicles (excluding emergency vehicles), motorcycle, and trailer manufacturers. It further requires manufacturers submitting EWR reports to submit product names that are consistent from reporting quarter to quarter and amends the definition of “other safety campaign.” It also amends regulations pertaining to defect and noncompliance reporting to add requirements that tire manufacturers provide a range of tire identification numbers of recalled tires and that manufacturers provide the country of origin of a component involved in a recall. The effective date of this final rule is October 19, 2009. Compliance by bus manufacturers producing 100 or more but fewer than 500 buses annually is not required until September 13, 2010. (CCH Consumer Product Safety Guide ¶42,016 (ip access user) (IntelliConnect))

CPSC Launches Social Networking Initiative
In keeping with its commitment to protect the lives of children and families, the Consumer Product Safety Commission has launched “CPSC 2.0,” a comprehensive social networking initiative that will make lifesaving and other safety information more accessible to consumers. Utilizing a variety of technologies and social media sites, CPSC will rapidly expand its reach to millions of consumers. CPSC Chairman Inez Tenenbaum stated, “Through social media, CPSC can directly reach millions of the moms, dads and others who need our safety information the most.” (CPSC News Release, #09-346, September 22, 2009, CCH Consumer Product Safety Guide, Report No. 948, October 5, 2009)