May 2008

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

South Carolina High Court Rejects Use of Opt-In Class Action
The creation of an opt-in class action in a lawsuit against a synthetic stucco manufacturer was improper because opt-in class actions are inconsistent with South Carolina's class certification process, the South Carolina Supreme Court ruled. The plaintiffs consisted of a class of individuals who owned property that had the stucco product applied to the exterior. Although the stucco manufacturer sought to decertify the class, the lower court held that the class met all of the state's requirements for a class action, explaining that the differences between the class members' claims were not so great that they weighed against class certification. In addressing the issue of class notification, however, the lower court established an "opt-in" notification procedure because it found that the approach was the most "pragmatic." In reviewing the court's class notification procedure, the high court found that while federal rules on class notification mandate the use of "opt-out" classes, South Carolina does not specifically require their use. Although South Carolina's procedural rules gave courts broader discretion, past decisions have demonstrated the state's preference for opt-out class actions. The court rejected the notion that an opt-in class action was different from an opt-in class notification procedure as a distinction in name only. In addition, the court found that opt-in class actions were inconsistent with the state's procedural rules for class certification because they would undermine the due process reasoning behind the class certification process and convert a class action into a form of permissive joinder in which the individuals that are proper class members would be denied a trial by jury. The court further reasoned that the opt-in method improperly places concerns of judicial economy over the interests of the class members by forcing smaller class actions and increasing the likelihood that some class members would not be compensated. The court concluded that opt-in class actions were improper because they resulted in de facto decertification that would eviscerate the purpose behind class actions (Salmonsen v. CGD, Inc., S.C. S.Ct.; CCH Products Liability Reporter, May 21, 2008, ¶17,994 (ip access user)).

CPSC Lighter Certification Premepts Texas Design Defect Claim
A design defect claim against a lighter manufacturer was preempted by federal regulations on the certification and testing of child-resistant lighters by the Supreme Court of Texas. A 6 year-old child was severely burned when her 5 year-old brother accidentally set fire to her dress with a lighter. The parent of the injured child received a $5 million award which an appeals court affirmed because there was sufficient support for the parent’s design defect claim. The lighter's manufacturer, however, argued that the design defect claim was not a proper basis for affirming the judgment because it was impliedly preempted by the Consumer Product Safety Commission's (CPSC) child-resistant lighter testing. The parent argued that her state tort claims were preserved under the Consumer Product Safety Act's savings clause. Although the savings clause specifically retains state tort claims, the Texas Supreme Court found that the clause could not preserve claims that are in actual conflict with federal law or regulations from being impliedly preempted. The court explained that rather than mandate specific child-resistant features, the CPSC's regulations require child-resistant lighters to undergo testing in which no more than 15 percent of a test group of children are able to operate the lighter. The CPSC had granted certification to the lighter involved in the child's injury because only 10 percent of the test group were able to operate it. In finding that the parent's design defect claim conflicted with the CPSC's certification of the lighter, the court determined that the testing protocol's 15 percent threshold was a deliberate decision to balance utility and safety. The court reasoned that CPSC's certification of the lighter did not represent a minimum safety floor which state tort law could extend beyond. The court further noted that the CPSC determined that a more stringent standard was possible but specifically rejected imposing one. The court concluded that the design defect was preempted because it conflicted with federal regulations and, therefore, could not serve as a proper basis to affirm the jury's award (BIC Pen Corp. v. Carter, Tex. S.Ct.; CCH Products Liability Reporter, May 7, 2008, ¶17,980 (ip user access) and CCH Consumer Product Safety Guide, April 30, 2008, ¶75,762 (ip access user)).

FDA’s Rejection of SSRI Suicidality Warning Preempts Warning Claim
The Food and Drug Administration's (FDA) public rejection of a suicidality warning for a class of antidepressants known as selective serotonin reuptake inhibitors preempted state failure-to-warn claims brought on behalf of two adults who committed suicide while using the drugs, the U.S. Court of Appeals for the Third Circuit held. The families of the two adults argued that their claims were not preempted because the FDA-mandated labeling constituted a minimum standard because FDA regulations specifically allowed drug manufacturers to provide stronger drug warnings. Although the FDA eventually issued a suicidality warning for pediatric patients, it found there was no evidence that the drugs were associated with suicidal thinking in adults over the age of 24. In finding that the families' claims were preempted, the appeals court held that the FDA's rejection of an adult suicidality warning was within its authority to remove false and misleading statements from a drug's label. The court noted that the families sought to rely on some of the same studies the FDA found to be unreliable in reaching its conclusion. The court did not decide whether the FDA-mandated labeling was a minimum standard; however, it found that the FDA's public rejection of the families proposed warning was sufficient to preempt a state law claim that would require that same warning. Lastly, the court dismissed the families' argument that the rejection of the proposed warning should not be given weight because it did not occur within the FDA's formal warning amendment process, reasoning that otherwise a manufacturer would need to propose a warning it did not believe was necessary to receive a formal rejection (Colacicco v. Apotex Inc., 3d Cir.; CCH Products Liability Reporter, May 7, 2008, ¶17,977 (ip access user)).

Products Safety

U.S. Supreme Court Asked To Review Preemptive Effect of Seat Belt Standard
The parents of a 12-year-old who was killed in a motor vehicle accident have asked the U.S. Supreme Court to review a decision by the U.S. Court of Appeals for the Fifth Circuit [CCH Consumer Product Safety Guide ¶75,555 (ip access user)] holding that their common law claim based on the vehicle maker’s failure to install a lap/shoulder seat belt in the vehicle’s center rear seat was preempted by federal safety standards regulating the options available to manufacturers for the placement of lap/should sear belts. The high court was asked to determine whether NHTSA regulations on sear belt placement there were no supported by a safety purpose could be a proper basis for preemption and whether all common law claims alleging defects in safety restraint systems were preempted by the motor vehicle safety standard at issue in spite of the National Motor Vehicle Safety Act’s savings clause. (Carden v. General Motors Corp., Docket No. 07-7302, CCH Consumer Product Safety Guide, Report No. 913, April 30, 2008)

$House Bill Targets Foreign Manufacturers of Faulty Products
By Sarah Borchersen-Keto, CCH News Bureau Staff Writer
A bill introduced in the House of Representatives would make it easier for consumers to seek compensation for damages resulting from faulty products made overseas. The Protecting Americans from Unsafe Foreign Products Act (H.R. 5913), introduced by Rep. Linda T. Sanchez (D-Cal.), would allow U.S. citizens to serve foreign manufacturers with court documents where the foreign manufacturer resides, is found, has an agent or transacts business. The changes relax requirements which sometimes required Americans to travel to foreign countries or translate documents in order to initiate a lawsuit. (CCH Consumer Product Safety Guide, Report No. 914, May 14, 2008)

$320,000 Civil Penalties To Be Paid by Makers’ of Children’s Outerwear
Eight firms have agreed to pay $320,000 to provisionally settle allegations that they failed to report to the CPSC, as required by federal law, that their children’s hooded sweatshirts and/or jackets were sold with drawstrings at the hood and neck. The firms are Life is Good, Inc., Tru Religion Appearl, Inc, The Cayre Group Ltd., DollarDays International, LLC, Kohl’s Department Stores Inc., Seena International Inc., Nieman Marcus Group Inc., and Gildan Active Wear SRL. (CCH Consumer Product Safety Guide, May 14, 2008, ¶56,617 (ip access user))