Cal Biz Lit

DRI Product Liability Conference: Summing Up

   This has been a fun and busy three days.  I learned a thing or two, met some great people, and put up a ton of posts.  Page views were very high, so I guess somebody was reading.  And I appreciate DRI President Marc Williams' kind words here. 

    My take-away points from this three day conference are these:

    First, the rest of the world thinks that we Californians are certifiable lunatics, determined to crush whatever private enterprise remains and turn the state into a European-style chemical-free paradise.  I heard this explicitly from out-of-state attorneys in attendance, and it was the implicit message from a number of non-California speakers. 

    And yet actual facts and law presented at the conference didn't really support this position:  California Associate Justice Ming Chin's presentation on Johnson v. American Standard, Inc. (2008) 43 Cal.4th 56, and Saul Alinksy's brief discussion of the recent California decision in Taylor v. Elliott Turbomachinery (February 25, 2009) ____Cal.App.4th ___ (First Dist., ) No. A116816, both demonstrated moderate, business-friendly, reasonable approaches to product liability law.  And before anybody despairs too much the business climate here, we should remember that this has been a hotbed of economic activity involving semiconductors, software and the internet, which in many ways have been the crown jewels of economic developement in the United States for quite a number of years.  And despite one statement to the contrary during the conference, California has not turned its manufacturing rules over to the European Community.

    As I've often stated in CalBizLIt.com and elsewhere, from a legal point of view, California isn't necessarily better or worse than the rest of the country, but it sure is different.  A business's failure to understand and address those differences can put it on very treachorous ground.

    Second, the tendency to predict the unpredictable -- likely litigation from new technologies -- is just irresistible.  I know my crystal ball has been as clouded as anyone when it came to predicting the "next big thing" in litigation.  The fact is, these are known unknowns, and it isn't likely that we will be able to predict what litigation, if any, is going to arise out of new green technologies.  As in most manufacturing, the only things companies can do are be careful, follow the law, be conservative in their safety practices and buy insurance.  Predictions about where this is all going are nothing more than guesses.

    I think every trial lawyer (and probably everyone who speaks in public) should be required to attend a class on how to use Power Point.  This is no longer a revolutionary technique:  the idea is to use pictures, schematics, and very limited text to supplement the presentation.  This is good to know in trial, and it's good to know when you speak at a seminar. 

    Finally, the most valuable thing anybody can do at a conference like this is encourage innovative ways for attacking litigation problems.  We need to think like good plaintiff attorneys -- always be on the lookout for approaches nobody has tried before.  Probably the best example of this was Dr. Gillis's presentation on DNA challenging. Everybody would benefit by seeing more simulated trial presentations from top, innovative practitioners, and there was none of that this time.  On the other hand, the fewer war stories, the better;  war stories always sound best after the days is over and after a few cocktails (although it's the tellers to whom they sound the best). 

    And of course, every seminar should have at least one presentation by Dean Chemerinsky, the rock star of law professors.

Final Presentation From DRI Product Liability Conference: An Explosion Investigation, or Ignorance Meets Ignition

    I wasn't able to stick around for all of this, but did hear SEA Inc.'s Mark Mulcahy do a demo of an explosion investigation he conducted involving a fellow who saw fit to weld around a highly volatile separation tank used for biodiesel production.  The welder was badly injured, had complete amnesia of the event, but he and his employer denied he had been welding.

    In a very CSI-like presentation, with plenty of 8 X 10 glossies with circles and arrows, Mark demonstrated how they proved otherwise.  Very entertaining.

Blogging From DRI's Product Liability Conference: Chemical And Toxic Torts

    I want to learn more about this, but if it works as advertised, this is  something pretty amazing.  Bruce Gillis, M.D., MPH, from The Cytokine Institute made a presentation yesterday afternoon.  The institute describes its business related to toxic torts this way: 

. . .a fast growing DNA- and genomic-based research and consulting organization that is reshaping and redefining the way the world perceives and manages the impacts and uncertainty associated with chemical and toxic exposures, as well as their effects on human health, the environment, and a company’s economics.

    What this means in the world of toxic torts:  they undertake challenge testing of a plaintiff or decedent's DNA, exposing the DNA to the chemicals alleged to have made him or her sick.  If the challenge comes back positive, it only means it could have caused the disease.  But if it comes back negative, there is no way. 

    So far, they've studied the genomic changes unique to lead exposures, and those unique to exposures to a variety of molds. Obviously, most lead exposures don't cause the neurological symptoms associated with lead, most mold exposures don't cause the associated respiratory symptoms, most benzene exposures don't cause leukemia, etc.  And The Cytokine Institute claims that it can use this challenge testing with DNA samples to determine whether a plaintiff is one of the few individuals who could have the illness or disease from the exposure, or in the vast majority of persons who could not.

Blogging From DRI's Product Liability Conference: Preemption

    For years, I would hear from associates from UCLA School of Law that Professor Erwin Chemerinsky was the best law professor in the world.  He later moved on, first to Duke, then to the position of Dean of the newly established U.C. Irvine School of Law.  I’d never heard him speak before, and I see now what they were talking about.

    In just forty-five minutes, Dean Chemerinsky  did a great run-down on the general principles of preemption, and then laid out the Supreme Court's strange, strange trip from 2000 to 2009 in the world of (mostly) implied preemption.  For most of this decade, every time the Supremes considered a preemption case, it found preemption

• Geier v. American Honda Motor Company, 529 U.S. 861 (2000) – preemption even when there is a savings clause.

• Lorillard Tobacco v. Riley, 533 U.S. 525 (2001) – 5-4, court finds that federal law regulating content of tobacco ads preempts state law concerning location of tobacco ads.

• American Insurance Company v. Garamendi, 539 U.S. 396 (2001) – California statute provided that insurance companies doing business in California who had sold Holocaust-era policies in Europe had to disclose those policies was preempted by the “implied dormant foreign affairs power of the President.”  Dean Chemerinsky:   “I’ve been teaching Constitutional law for 29 years, and until this case, I’d never heard of the ‘implied dormant foreign affairs power of the President.’”

• Chamber of Commerce of the United States v. Brown 128 S.Ct. 2408 (2008) – California law that anyone who receives more than $10,000 from the state can’t use those funds to engage in anti-union activity.  Preempted by Federal labor regulatory scheme.

• Riegel v. Medtronic, Inc., 128 S.Ct. 999 (2008) – preemption clause in the medical device amendments to the Food and Drug Act bar common-law tort claims challenging the safety or effectiveness of a medical device that had received pre-market approval.

    But then along come Altria Group, Inc. v. Good, 129 S.Ct. _____(2008) and Wyeth v. Levine, 129 S.Ct. 1187 (2009), rejecting preemption. 

    The latter case is most significant, because of its 7-2 finding of no conflict preemption.  The reason:  because nothing kept Wyeth from giving more warnings than what was approved by the FDA;  it could  even modify the label and ask for approval afterwards. 

    But according to Dean Chemerinsky, the most significant thing about this decision may be  is Justice Thomas’s concurring opinion, suggesting that his views have changed on implied preemption have dramatically shifted.  After eighteeen years on the Supremes voting with the majority in favor of preemption in all of the previous cases up to Altria, he apparently doesn’t believe in implied preemption anymore:

. . .because I cannot join the majority’s implicit endorsement of far-reaching implied pre-emption doctrines. In particular, I have become increasingly skeptical of this Court’s “purposes and objectives” pre-emption jurisprudence.

    Per Dean Chemerinsky, this change of heart on the part of Justice Thomas  will make implied preemption more problematic in the future.

More From DRI's Product Liability Conference: The Sophisticated User Defense

     I surprised several non-Californians attending here last night by saying that I consider the California Supreme Court to be a fairly conservative court.  Of course, non-Californians all read about the Court’s same sex marriage decision, and many assumed that the Court was making social policy to fit its own beliefs.  Without getting into the same sex marriage issue, which is way, way off topic for CalBizLit, the current Supreme Court nearly always does what most conservatives ask of courts and judges in general:  it applies traditional rules of statutory and Constitutional construction to the facts and laws that come before it.  Whether I agree with the Court's rulings or not, I don't often find a pre-existing agenda. 

 This morning, we heard from Ming Chin, Associate Justice of California’s Supreme Court, and the author of Johnson v. American Standard, Inc. (2008) 43 Cal.4th 56.  CalBizLit blogged on this decision, which established the sophisticated user defense in California, here.  The case is a pretty good example of how a conservative court nonetheless moves  the law. 

    Unlike the other speakers, Justice Chin began with some stand-up at the dais, making jokes at the expense of fellow speaker Saul Alinsky and rolling out an old Johnny Carson chestnut.  Then, on to the sophisticated user defense.

    The sophisticated user defense holds as follows:  the manufacturer of a product has no obligation to provide warning to a sophisticated user if the sophisticated user knew, or should have known, of the risk.  It makes no difference whether the case is based on negligence or strict liability.  Nor does it matter what the individual user actually knows:  the question is what a sophisticated user knew or should have known.

    According to Justice Chin, the idea of the duty to warn is to provide users with educated choices.  But the sophisticated user defense posits that not every risk requires a warning, that excess warnings are themselves pose risk, and that manufacturers are not insurers of the safety of those who should know the risks.

    In his follow-up presentation, Saul Alinsky argued that in a sense, the sophisticated user defense is very much related to the rule that there is no duty to warn of open and obvious risks, because the user will be able to recognize those risks without the warning.  He also notes that in New York and other jurisdictions, the sophisticated user defense is going to be fact driven, and present a jury question. 

    But Johnson was a summary judgment case.  And a legal duty case.  And generally in California, issues of duty are decided by the court, not by juries.

    Saul also discussed the recent California Court of Appeals decision of Taylor v. Elliott Turbomachinery (February 25, 2009) ____Cal.App.4th ___ (First Dist., ) No. A116816, which was unusual, and defense-oriented, in two respects:  first, in holding that there is no duty to warn of another’s products, and second, in looking at the social utility of the defendant’s activity (in this case, contributing to the winning of World War II).

DRI Product Liability Blogging Continues: Green Acres Is The Place To Be – Will ‘Green Buildings’ Be Fertile Ground For Novel Theories of Liability Against Building Product Manufacturers and Building Developers?

Speakers are Sky Woodward, Dominic DiCicco and Jonathan Rodriguez.

     We begin with the propositions that:  (a)  the construction industry has been one of the greenest industries in the world;  (b) huge federal, state and local impetus for green construction;  (c) real estate industry highly prioritizes green construction.

    By green, we are talking about conservation of energy, water and materials, and a reduced impact on human health and environment.

    What is different for risk of liability?  New uses of materials and perhaps new duties.  Per Mr. DiCicco, what are the potential exposures from those new duties?  Nobody really knows.  An example, per Ms. Woodward:  1970’s energy policy resulted in construction of tight buildings.  HVAC was then designed to bring more outside air into the tight buildings.   This  resulted in increased  moisture and serious damage to building materials and serious liability, particularly in the southeast.  So we don’t know what the unintended consequences of green construction will be.  Mr. DiCicco analogizes to the Chinese drywall fiasco, where there was quick import not because of environmental concert, but because of a materials shortage, with a resulting serious liability problem.

    But per Mr. DiCicco (who is with Zurich), even with the uncertainties, the insurance industry is looking at this as an opportunity.

    Does the LEED process provide a road map for plaintiffs?  Possibly:  allergens in agramaterials  or “sustainable” materials that result in early building failure.  The green materials aren’t “tried  and true” over many years the way traditional materials are, so we won’t know for quite awhile how they will perform.

    When is a building a product?  California and Florida looked at this and concluded that a building is the sum of its component parts, and the manufacturers of those parts can be subject to product liability claims.  Jimenez v.  Superior Court (T.M. Cobb Co.) (2002) 29 Cal.4th 473.

DRI Product Liability Conference: Clarification on Europe's Influence on California

    CalBizLit blogged on one of the early sessions at DRI, quoting Sidley Austin's Chris Bell that "California, in addition to Proposition 65, has been 'bringing the EU to the state.  If it can’t be marketed in Europe, it can’t be marketed in California.'"

    Well, I live and practice in California, and bow to no one in my awe for California's ability to enact idiotic laws and regulations, but this one sure was news to me.  So Chris and I exchanged some e-mails on the subject, and we seem to agree that actually, California has done no such thing.  California requires most video monitors, televisions and other video displays to be EU RoHS compliant.  But there is nothing here approaching Europe's near-universal regulation of electronic devices.

    The rather arcane, applicable statutes are Health and Safety Code sections 25214.9-25214.10, Public Resources Code section 42463 and the corresponding regulation. 

    On the other hand, the much, much broader EU RoHS directive is here.

Greenwashing – What Manufacturers Need to Know About Their Environmental Product Representations

     As previously announced, I'm attending DRI's Product Liability Conference in San Diego, and providing summaries as time permits.  Not quite live-blogging, but trying to keep it current.  There is nothing affiliated with DRI about these posts.   Needless to say, my only affiliation with DRI is that I'm a member and I'm here.

     We had a very good last minute substitute speaker today, Victoria Davis Lockard, an attorney from Alston & Bird LLP in Atlanta.

      The term “greenwashing” is attributed to an environmentalist named Jay Westervfeld, who criticized  the hotel industry’s practice of using placards suggesting guests could help “save the environment” by reusing their sheets and towels;  Westervfeld maintained, logically enough, that the hotels were motivated by profit, not by any real environmental agenda.

    Underlying today’s discussion are TerraChoice’s “Six Sins of Greenwashing” (now updated as “Seven Sins of Greenwashing”) and the FTC Green Guides.

    The original Six Sins of Greenwashing were  hidden trade-offs, lack of proof, vagueness, irrelevance, less of two evils, fibbing.  TerraChoice, a green marketing company, generated the report (available on its web site) after looking at 1700 purportedly green products at big box stores, and found all but one were guilty of one or more of these sins.

    The FTC Green Guides (16 CFR § 260), aren’t enforceable as law, but carry weight with the FTC and the courts in evaluating alleged Section 5 violations.

    The general principles of the Green Guides are these:

• Qualifications or disclosures must be clear, prominent and understandable;

• The environmental attribute or benefit must be presented in a way that is clear;

• The environmental marketing claim cannot be overstated;

• If there are comparative statements (e.g., 50% more recyclable materials) it must make the basis for the comparison sufficiently clear that it is not deceptive.

    There is specific guidance for statements of recyclability.   If a product is described  as  recyclable, it must be accepted at established and commonly available recycling programs.  The use of an SPI code (i.e., the triangle with an number in the middle) is the same thing as saying the product is recyclable.  If the recycling options are limited, the limitations must be stated.

    The USDA rules on "Organic" claims:  There are three levels, 100% organic, “organic” (which means 90%) and “made with organic ingredients” (which means 70% organic).  These relate only to foods.  So cosmetic makers and makers of personal care products technically aren’t subject, but consumer lawsuits have urged that they are if they make those representations.

    Victoria poses the following litigation risks:

• Consumer “no injury” class actions:   She acknowledges we aren’t seeing a lot of these yet.

• Competitor claims under the Lanham Act, or actions before the National Advertising Division of the Better Business Bureau.

• Section 5 Enforcement actions by the FTC – there have been 37 actions from 1990 to 2000, and none since.

• State attorney general actions under state consumer protection laws.

    In California, this is one area where the Unfair Competition Law may have some continuing vitality.  While citizens’ suits are problematic in the aftermath of California’s Proposition 64 (which amended our Unfair Competition Law to require that the plaintiff have sustained injury in fact and lost money or property as a result of the unfair, unlawful or fraudulent practice), there is no such requirement when the Attorney General or another public prosecutor files suit.  Cases of this type have political sex appeal in California, and pose a real risk for companies that run afoul of the six sins or the green guides.

    Chris Bell raised two areas of concern, among others:  One relates to companies pitching “carbon offsets” for everything from air travel to conventions, when there is no agreement, policy, regulation, or anything else that provides a bench mark for what is or is not an appropriate carbon offset.  The second has to do with claims of sustainability that can’t be entirely documented throughout a company’s supply chain.  In California, these mis-steps, as well, might result in the Attorney General prosecuting Unfair Competition Law litigation.

The Future is Green – A Panel Discussion on the Emerging and Regulatory Landscape in the U.S. and the E.U.

    This is a panel, moderated by Thomas C. Regan of LeClairRyan in Newark, and with Christopher Bell of Sidley Austin LLP and Rod Freeman, of Lovells LLP in London.  It occurred to me  that no defense lawyer (including the publisher of CalBizLit) ever went broke raising dire alarms about litigation to come.  But I have some doubts about the extent to which the litigation threats  described by this panel are real.

    The panel began with a good summary of the current European regulatory structure for chemicals and other products.  First and foremost is the development and expansion of the precautionary principle – that when there is doubt about whether or not there is risk, the risk will be avoided.  This began in the environmental movement, but has now been extended to product regulation generally (e.g., General Product Safety Directive).

     Also, there has been a blurring of regulations to protect the environment with regulations to protect human health:  Restriction on Hazardous Substances in Electrical and Electronic Equipment (2006 – RoHS Directive) is expressly intended to protect both.

     And proposed changes to Europe's Energy Using Products (EUP) Directive  would extend  the CE marking regime to Eco-Design for energy-using products.  Products can’t be marketed in much of Europe without the CE mark, so the issue of green manufacturing becomes increasingly important.

      Meanwhiile, the Registration, Evaluation, Authorisation and Restriction of Chemicals regulation  (“REACH”) (also human safety and environmental considerations) has a very detailed set of requirements concerning public disclosure of safety data, liability for non-compliance and product recalls.

     Next, there was a discussion of American lawsuits on public nuisance theories, alleging that the emission of greenhouse gases causes a public nuisance.  The targets so far have been coal-fired power plants, oil and automobiles.  These cases, to date are at the motion stage.  There is one case in New York, one in San Francisco (although involving alleged damages to a village in Alaska).  One case in Federal Court in North Carolina has been successful at the trial court stage, involving emissions that took part in another case.

     The speaker, Chris Bell, posited the potential for design defect product liability cases. 

     EPA is poised to issue a Clean Air Act “endangerment finding” that greenhouse gases are pollutants that endanger public health or welfare.  There is also a clean air act amendment under discussion in the House with a citizen suit provision.  A potential plaintiff would be one who has suffered  “or reasonably expected to suffer a harm attributable, in whole or in part, to a violation or failure to act.”

     New claimed toxicological effects are being debated in the U.S. and  EU regulatory community before they hit the courtrooms:  endocrine disruption, adverse impacts at the genetic level, nuanced developmental effects.  By the time this gets to the courtroom, there will be a large peer-reviewed body of evidence, and an up-hill battle for the defense.

     California, in addition to Proposition 65, has been "bringing the EU to the state.  If it can’t be marketed in Europe, it can’t be marketed in California."  And California has “issued mandatory data call in to many carbon nanotube manufacturers and importers.”

DRI Product Liability Conference: The Grass Is Not Always Greener on the Other Side

    Well, between the hotel's wireless connection and Verizon Wireless's problems, the live blogging got off to a slow start today, but we're ready to post on some of the presentations now.

    Leading off today's conference is this presentation by Best, Best & Krieger's Beth Dorris (she's with the firm's Natural Resources Department and in its firm's Natural Resources Department) and Fulton “Tony” Gale from Starbucks.

    Thanks to Beth, I can make available here an excellent paper by her, Danielle Sakai & Kira Johnson, The Perils of Going Green.

    The takeaway messages from this presentation, insofar as they relate to potential litigation, are, first, that practices that are and are not green aren’t always easy to separate:  at one point, MTBE seemed like a great gasoline additive, but it turned out to be a disaster for the aquifer; years ago, American industry replaced CFCs with HCFCs in refrigeration systems to protect the ozone layer.  Now it turns out that HCFCs are generators of greenhouse gases;  the choice between plastic and paper bags is a Hobson’s choice – both are environmentally unfriendly.

    Second, 16 CFR 260.6 – 260.7 are federal regulations that prohibit inaccurate or misleading representations of environmental attributes, although the regulations really have no teeth.

    It seems to me that the most serious California risk here is under this state’s Consumer Legal Remedies Act, which prohibit misrepresentations of a product’s attributes or characteristics;  this would certainly include misrepresentations or misleading statements about a product’s purported “green” attributes.

    But I have to say, I don’t know where this all really fits in with product liability law:  the typical product liability claim or the typical CLRA claim requires evidence that the plaintiff sustained injury.  I have a hard time seeing how a plaintiff is going to be able to claim injury to him or herself from incorrect representations about the “greenness” of a product.