The Restatement (Third) of Torts: Products Liability: the ALI's cure for prescription drug design liability.

• Author: Shifton, Mark D.
• Position: American Law Institute

"It has not been a well-kept secret. Anyone familiar with the law of products liability knows that [the Restatement (Second)] is out of date and requires revision." (1)

"We conclude that [the Restatement (Third)] has no basis in the case law ... Accordingly, we do not adopt ... the Third Restatement." (2)

INTRODUCTION

In 1997, the American Law Institute ("ALI") adopted the Restatement (Third) of Torts: Products Liability ("Restatement (Third)"). (3) After over thirty years as the definitive, yet somewhat confusing road map along the products liability highway, the Restatement (Second) of Torts ("Restatement (Second)") was turned on its head. Before new case law involving the Restatement (Third) has been given a chance to develop, commentators have risen either to praise the Restatement (Third) as a clear guide to the chaotic products liability maze, (4) or to reject it as a pro-defense, industry-favoring curtailment of manufacturer liability. (5)

Few disagree that the Restatement (Third) radically changes the nature of prescription drug design litigation. (6) Critics of the Restatement (Third) assert that the new standard sets a nearly impossibly high threshold for plaintiffs seeking to hold prescription drug manufacturers liable for defective design. (7) One court has agreed, describing the Restatement (Third) as setting a "[s]tandard that will never allow liability [for the defective design of prescription drugs]." (8) Some critics argue that the Restatement (Third) effects sweeping changes to prescription drug design litigation, and "comes very close to eliminating design defect claims altogether." (9) Other commentators argue that the Restatement (Third) is not a true "restatement" of the law at all, but rather a complete revision. (10)

The Restatement (Third)'s reporters respond that these changes are not only justified, but necessary. (11) The failure of the Restatement (Second) in bringing about judicial uniformity has led courts to carve out their own respective "niches" in the law. (12) Due to evolving notions of strict liability and its application to prescription drug manufacturers, the analytical framework provided by the Restatement (Second) is hopelessly out of date. (13) According to the reporters, "Anyone familiar with the law of products liability knows that [the Restatement (Second)] requires revision." (14)

Historically, safer alternative drug designs have often been unavailable. As a result, most prescription drug litigation has involved failure to warn and manufacturing defect claims, as opposed to claims that drugs have been defectively designed. (15) In the past two decades, however, courts have begun to take cognizance of design defect claims involving prescription drugs. (16) As courts are increasingly confronted with claims of defectively designed prescription drugs, they may look to the ALI for guidance on how to proceed. (17)

Courts and commentators have long debated the proper judicial treatment of defective design claims involving prescription drugs. Some commentators have argued that prescription drugs, as a product category, are fundamentally different from other consumer products. (18) A number of courts have agreed, citing a public policy supporting the research and development of new prescription drugs, and have sought to limit prescription drug manufacturer liability for defective design. (19) Other courts have refused to create a bright-line distinction between all prescription drugs and other consumer products. (20) According to its reporters, the Restatement (Third) clarifies murky judicial doctrine and reconciles these competing viewpoints. (21) Whether the ALI properly balances the societal utility of developing new prescription drugs against the need for liability for defective drug designs has been hotly debated.

Part I of this Note will trace the history and evolution of strict liability for defectively designed prescription drugs. This Part will explore exactly what makes a prescription drug "defective," and the standards adopted by the ALI in both the Restatement (Second) and (Third) will be explained. In addition, Part I will highlight the two competing methods by which different jurisdictions apply the Restatement (Second) standard. While most jurisdictions apply the Restatement (Second) to allow the imposition of strict liability on the basis of defective design against a prescription drug manufacturer, (22) a sizeable minority of jurisdictions apply the Restatement (Second) to except prescription drug manufacturers from strict liability on the basis of defective design. (23)

Part II will discuss the current controversy regarding the Restatement (Third), section 6(c), and the competing philosophies regarding society's view of prescription drugs. Whether there should be a bright-line distinction between prescription drugs and other consumer goods will be explored, as well as the proper role of courts in reviewing prescription drug designs. The role of the FDA regulatory process in reviewing prescription drug designs, and how that role fits within the Restatements (Second) and (Third) will also be explored. Having established the fundamental disagreements between the two Restatements, Part II will discuss the arguments in favor and against the competing applications of both. Part II will also describe several recent federal cases discussing the Restatement (Third) in the context of defectively designed prescription drug claims.

Part III will argue that the Restatement (Second), applied as it is by the majority of jurisdictions, is preferable to the Restatement (Third). Under the Restatement (Second), manufacturers of prescription drugs that serve an important societal interest will be excepted from strict liability on the basis of defective design, while manufacturers of less important drugs will remain strictly liable for the defective design of their products. In contrast, the Restatement (Third), by rejecting the judicial risk-utility review of prescription drug designs, and deferring to the FDA regulatory process, reinforces an artificial distinction between prescription drugs and other consumer products. Part III explains that as the paradigm embraced by the Restatement (Third) has not been followed by most jurisdictions, the Restatement (Third) is an attempt by the ALI not to clarify the current state of law, but to endorse the approach employed by a minority of courts.

1. THE EVOLVING PARADIGM OF STRICT LIABILITY FOR DEFECTIVELY DESIGNED PRESCRIPTION DRUGS

   1. The Foundations of Strict Liability

      The modern doctrine of strict products liability found its birth in Justice Traynor's concurrence in Escola v. Coca-Cola Bottling Co., after an exploding glass bottle of Coca-Cola injured a California waitress's hand. (24) While the California Supreme Court allowed the plaintiff's negligence claim to reach the jury under the doctrine of res ipsa loquitur, Justice Traynor argued that the bottle's manufacturer should be held absolutely liable "[w]hen an article it has placed on the market, knowing that it is to be used without inspection, proves to have a defect that causes injury to human beings." (25) Justice Traynor continued:

      [P]ublic policy demands that responsibility be fixed wherever it will most effectively reduce the hazards to life and health inherent in defective products that reach the market.... It is to the public interest to discourage the marketing of products having defects that are a menace to the public. If such products nevertheless find their way into the market it is to the public interest to place the responsibility for whatever injury they may cause upon the manufacturer, who, even if he is not negligent in the manufacture of the product, is responsible for its reaching the market. However intermittently such injuries may occur and however haphazardly they may strike, the risk of their occurrence is a constant risk and a general one. Against such a risk there should be general and constant protection and the manufacturer is best situated to afford such protection. (26) The broad strokes of public policy painted by Justice Traynor forged the path for the modern doctrine of strict products liability. (27) These groundbreaking arguments created a fundamental shift in tort law, as under strict liability theory, a plaintiff need not prove negligence on the part of a defendant in order to recover for his injuries. (28) The focus of the strict products liability inquiry is not on the manufacturer's behavior, but on the product itself. (29) To recover under a strict products liability claim, the plaintiff need only show that: (1) the product was defective; and (2) the defect was a proximate cause of the plaintiff's injuries. (30) If the product is considered defective, the plaintiff may recover for his injuries, regardless of the care employed by the manufacturer of the product. (31)

      Under strict products liability theory, a manufacturer may be held strictly liable for three types of product defects--defective manufacture, failure to warn, or defective design. (32) A manufacturing defect occurs when a product is not produced as the manufacturer intended. (33) In such a case, while the overall design of the product may be sound, one specific manufactured unit is flawed, causing injury to the user. (34) A product may also be considered defective when the manufacturer fails to provide adequate warnings regarding the risks associated with using the product. (35) In a failure to warn case, a plaintiff need not prove that the product was defective in the traditional sense; a plaintiff need only show that the manufacturer knew or should have known that use of the product carries risks which the manufacturer failed to warn the plaintiff against. (36) In addition, even if produced exactly as the manufacturer intended and accompanied by adequate warnings, a product may still be defective by design. (37) Most early products liability cases involving...