In this document, which was filed in Mensing v. Wyeth, the Reglan lawyer representing the plaintiff alleges that manufacturers of Reglan or its generic form, Metoclopramide, are knowingly selling a defective product with an inadequate warning label:
The position created by the melding of the Defendants' arguments here creates a “Catch-22” for any plaintiff who is permanently injured by the misrepresented adverse effects of the drug MCP. The name brand manufacturer, Schwarz contends that it owes no duty regarding its misrepresentations in the label of its name brand drug that misstates the actual risk of developing EPS, because Plaintiff did not consume its pills, and only direct product liability claims should be recognized against it. Then, to complete the ironic situation, generic manufacturers argue that the drugs they made that were consumed by Plaintiff - - even if defective for their own misstatements - - are not susceptible to suit either, because their “hands were tied”[FN21] by having to follow the false statements of the name brand manufacturer.
FN21. Unfortunately, the generic manufacturers choose to continue to keep manufacturing and selling generic MCP in light of their knowledge that the label is false.
If the Defendants' arguments, taken as a whole, are correct, Plaintiff would have no remedy for developing tardive dyskinesia, a life-altering, permanent injury that could have been avoided with a simple, accurate statement about the dangers associated with MCP, rather than misstatements. As a result, if the Defendants are correct, the tort system will not only have failed Plaintiff, but it will fail every doctor who prescribes MCP in the future or their patient who will needlessly develop EPS because none of the Defendants will have been found to have a legal duty to accurately state the risks associated with MCP. However, this result should not be the case in light of the duties continued in the Restatement and Minnesota law. In turn, Schwarz's motion should be denied.
SUMMARY
Plaintiff Gladys Mensing was prescribed the medication metoclopramide (“MCP”) for treatment of nausea and vomiting accompanying her condition of diabetic gastroparesis.[FN1] MCP is commonly used to treat nausea and vomiting, but it also increases the rhythmic contraction of the muscles that propel food contents through the digestive tract (i.e., peristalsis), as well as the tone and amplitude of gastric contractions, making it one potentially useful treatment of diabetic gastroparesis.[FN2]
FN1. About 20% of patients with type 1 diabetes, and a lesser percentage of those with type 2 diabetes will develop diabetic gastroparesis. High blood glucose levels in diabetic patients causes chemical changes in nerves and damages the blood vessels that carry oxygen and nutrients to the nerves, including the valgus nerve that is responsible for controlling the emptying of the stomach. Gastroparesis is a disorder in which the stomach either stops or takes too long to empty its contents.
FN2. The stimuli for nausea and vomiting are the operation of the body's subtype-2 Dopamine receptors in the chemoreceptor trigger zone of the central nervous system, and as MCP is a potent dopamine receptor antagonist, it blocks these signals and promotes the digestive process.
One of the known adverse effects of MCP, however, is extrapyramidal symptoms (“EPS”) including tardive dyskinesia.[FN3] Gladys Mensing took generic MCP,[FN4] beginning in at least 2001 and until 2004.[FN5] In March 2005 she began showing signs of tardive dyskinesia,[FN6] was diagnosed with the disorder in May of 2005,[FN7] and is still suffering from the condition.[FN8]
FN3. The extrapyramidal system is a neural network located in the brain that is part of the motor system involved in coordination of movement. The term “extrapyramidal” is meant to distinguish it from the tracts of the motor cortex that reach their targets by traveling through the “pyramids” of the medulla. The extrapyramidal tracts are mainly found in the reticular formation of the pons and medulla, and they target the neurons in the spinal cord involved in reflexes, locomotion, complex movements, and postural control. Extrapyramidal symptoms are various movement disorders. Tardive dyskinesia is a type of movement disorder characterized by a variety of involuntary, repetitive movements manifesting as a side effect of taking dopamine antagonists. Dyskinesia refers to an involuntary movement. Tardive is a reference to the dyskinesia continuing or appearing even after the drugs are no longer taken. Tardive dyskinesia, is characterized by repetitive, involuntary, purposeless movements, including grimacing, tongue protrusion, lip smacking, puckering and pursing of the lips, and rapid eye blinking, but may also include rapid movements of the arms, fingers, legs, and trunk. By contrast, whereas Parkinson's disease patients have difficulty moving, patients with tardive dyskinesia have difficulty not moving.
FN4. See Prescription Record attached to Johnson Affidavit, Ex. 7. All references to “Johnson Affidavit” refer to the Affidavit of Michael K. Johnson in Support of Plaintiff's Opposition to Defendant Actavis Elizabeth, LLC's Motion to Dismiss and Defendant Pliva, Inc.'s Motion to Dismiss or for Summary Judgment and in the Alternative in Support of Plaintiff's Motion for Relief under Fed. R. Civ. P. 56(F) (Docket No. 72) which is incorporated herein by reference.
FN5. See Medical Records attached to Johnson Affidavit, Ex. 3-6.
FN6. See Medical Records attached to Johnson Affidavit, Ex. 8.
FN7. See Medical Records attached to Johnson Affidavit, Ex. 10.
FN8. See Medical Records attached to Johnson Affidavit, Ex. 11.
MCP - - referred to by the name brand as “Reglan” - - was initially marketed in the United States by A.H. Robins and then Wyeth, as Robins' successor, and sold to Schwarz on or about December 27, 2001. In turn, Plaintiff consumed MCP while both Wyeth and Schwarz held the rights and responsibilities of manufacturing name brand Reglan. When the exclusivity of the patent expired, the drug was made in generic versions by the other named Defendants. Plaintiff appears to have never consumed name brand Reglan, but rather only the generic form of the drug. While chemically identical, the fact that she never actually consumed name brand Reglan made by either Wyeth or Schwarz has prompted Schwarz to move for summary judgment. (Wyeth has not made a similar motion).
Plaintiff opposes Schwarz's motion because she is not making a product liability claim against Schwarz. Rather, she is accusing name brand manufacturers Schwarz and Wyeth of negligent misrepresentation, misrepresentation by omission, fraud by concealment, and constructive fraud for misstating the true risks associated with ingesting MCP to the general public, doctors, and patients. Specifically, Schwarz's label advises of a 1 in 500 (.20 %) risk of EPS or tardive dyskinesia. However, more than ten years before Gladys Mensing took the generic drug, peer-reviewed medical literature had established that the risk of developing the disorder was substantially higher. Despite the fact that all the manufacturers knew or should have known that the risk was substantially higher,[FN9] the label still has not been changed, thereby inviting even more people to use it while still believing the chance of developing a life-changing, permanent medical condition was only 1 in 500, not the correct 1 in 4.
FN9. Under Bilotta v. Kelley Co., Inc., 346 N.W.2d 616, 626 (Minn. 1984), a manufacturer is held to an expert's knowledge of the field in which it endeavors. See also O' Hare v. Merck & Co., 381 F.2d 286, 291 (8th Cir. 1967) (“A manufacturer is held to the skill of an expert in its particular field of endeavor, and is obligated to keep informed of scientific knowledge and discoveries concerning that field.”), quoted in Karjala v. Johns-Manville Prods. Corp., 523 F.2d 155, 159 (8th Cir. 1975).
The generic manufacturing defendants have argued that they were powerless to change the label. Plaintiff opposed their motions. However, this Court agreed with the generic manufacturers. Now, the name brand manufacturer of Reglan, Schwarz, has argued that although this Court has already determined that the name brand manufacturers were or are the “sole-keeper” of the label for all MCP manufacturers, the fact that Plaintiff did not consume name brand Reglan means that name brand manufacturers owed her no duty because she was not in privity with them.[FN10]
FN10. Schwarz also argues that Plaintiff's claim of Intention Infliction of Emotional Distress, Count 10 of her Amended Complaint, is time-barred. Plaintiff does not object to entry of Summary Judgment based on this argument.
Well reasoned case law supports the legal proposition that someone who approves or endorses a product, including a manufacturer, has a genuine duty to be truthful in its representations to the consuming public even if the aggrieved member of the public has not been injured by the endorser's product. That is: a separate legal duty arises to be truthful about products when the entity attesting to the qualities of the product knows or should know that people will rely on what it has to say about them. The RESTATEMENT has summarized this duty and the substantive law of Minnesota parallels the obligation to reasonably discharge even a duty that is gratuitously undertaken in circumstances in which the actor knows or should know that people will rely on the action.
For these reasons, Plaintiff opposes the motion.[FN11].
FN11. As an aside, it would indeed be a curious and unfortunate state of affairs if the name brand manufacturers could avert accountability by saying “it wasn't our pills” so that no other obligation arose to them, and the generic manufacturers who made the pills she consumed could avoid responsibility by saying “we trusted, relied upon, and were forced to use the name brand label,” and thereby avoid any accountability for perpetuating representations they both must have come to know were false.
ARGUMENT
I. A Product Manufacturer Owes a Duty to be Truthful in its Product Labels
A name brand manufacturer is one who has the initial, and thus likely the most thorough, acquaintance with the properties and effects of its formulation, and this knowledge obviously carries with it the duty to properly inform and warn doctors and patients to whom its product is prescribed.[FN12] See Felix v. Hoffman-LaRoche, Inc., 513 So.2d 1319, 1320 (Fla. App. 1987), aff'd 540 So.2d 102 (Fla. 1989) (“a drug manufacturer owes a duty to warn prescribing physicians of the dangerous side effects of its prescription drugs.”).
FN12. Not surprisingly, Plaintiffs' records show that she was actually prescribed name brand “Reglan.” See Medical Records attached to Johnson Affidavit, Ex. 3-11. In turn, it can easily be assumed that Plaintiff's prescribing physician was relying on the information contained in name brand manufacturer, Wyeth and later Schwarz's, label, the same information published in the PDR, when he prescribed Reglan to Plaintiff.
To the extent that generic drug manufacturers must or will foreseeably rely on the name brand manufacturer's experience in the formulation of their own warnings and advice, any inaccuracies in the name brand manufacturer's disclosures readily forms the basis a claim of negligent misrepresentation. Yet some courts have feared to “stretch the concept of foreseeability too far,” and have ruled that a name brand manufacturer “has no duty to the users of other manufacturer's products” and thus is not amenable to “a negligent misrepresentation action . ” Foster v. American Home Prods. Corp., 29 F.3d 165, 171 (4th Cir. 1994). It is this premise - - as re-articulated in a variety of federal district court cases - - on which Schwarz relies for its motion seeking summary judgment.
Since it is not only foreseeable that generic manufacturers will initially base their warnings on the information expressed by the name brand manufacturer, but, as per this Court's prior Order dated June 17, 2008 that a generic manufacturer can not deviate from the name brand manufacturer's label, it is equally foreseeable that patients who are either prescribed the generic brands or receive the generic brands from their pharmacy will in fact be relying on the name brand manufacturer's label in choosing whether or not to take the drug. In turn, the issue of whether the representations of a name brand manufacturer could foreseeably affect a generic consumer is worthy of serious legal examination. Fourteen years ago, Foster answered that inquiry “no”, and a number of federal district courts have parroted that conclusion. However, the existence of a legal duty is a de novo question of law, and worthy of serious reconsideration, bearing in mind the elements of the applicable theory of legal liability in which a claim is voiced, this Court's prior Order, the RESTATEMENT and Minnesota case law.
Here, the claims of Ms. Mensing sound largely in negligent or intentional misrepresentation. Interestingly, the cases that have rejected extending a duty to a name brand manufacturer for injuries consumers have experienced from consuming generic pharmaceuticals labeled according to the name brand manufacturer's instructions, have usually focused on theories of successor corporate liability or strict liability theories against the name brand manufacturer[FN13] - - which Plaintiff's claim does not - - or upon another state's formulation of the elements for claims of fraud or misrepresentation.[FN14]
FN13. See In re Minnesota Breast Implant Litigation, 36 F.Supp.2d 863, 873-74 (D. Minn. 1998) (assessing theory of successor liability for purchase of patent from a predecessor manufacturer and strict liability for failure to warn or breach of express and implied warranties).
FN14. Foster v. American Home Prods. Corp., 29 F.3d 165, 171 (4th Cir. 1994). The Foster court's approach to this issue noted the absence of “legal precedent for using a name brand manufacturer's statements about its own product as a basis for liability for injuries caused by other manufacturer's products” even though the “generic manufacturers must include the same labeling information as the equivalent name brand drug ...” Id. at 170.
Foster then assessed the elements of a misrepresentation claim against the facts presented, to conclude that no duty arose under elements of that claim. Id. at 171 (noting under Maryland law the defendant must be shown as “owing a duty of care to the plaintiff” (emphasis omitted) as an element of the claim).
As to a direct claim of product liability against any manufacturer, it “is aphoristic that a plaintiff cannot prevail on claims for negligence, breach of warranty or strict liability unless the plaintiff establishes that the product which allegedly caused the plaintiff's injury was manufactured or sold by the defendant.” Sharp v, Leichus, 2006 WL 15532, at * 2 (Fla. App. 2006) (emphasis omitted). The question of whether it stretches the concept of foreseeability too far to extend the duty a name brand manufacturer owes to consumers of its own product to a duty of properly informing the general public, prescribing doctors or generic manufacturers, if they must use the name brand manufacturer's label, is a separate inquiry. What is clear, however, is that the duty of a drug manufacturer to be truthful is exacted by the law of all jurisdictions, given the importance of accuracy in dealing with drug products, particularly those that have potentially serious health effects, and for which the user has no control or insight separate from the product's maker.[FN15]
FN15. See, e.g., United States v. Dotterweich, 320 U.S. 277, 280, 64 S.Ct. 134, 136 (1943 (“The purposes of this [FDA] legislation thus [is to] touch phases of the lives and health of people which, in the circumstances of modern industrialism, are largely beyond self-protection.”); Kociemba v. G.D.Searle & Co., 707 F.Supp. 1517, 1525 (D. Minn. 1989) (Public policy requires a stricter standard for statements or representations of a pharmaceutical salesman because they sell products which are meant to “be inserted into the human body.”)
II. Minnesota Allows for Claims of Negligent Misrepresentation
In Minnesota, to establish a claim of negligent misrepresentation:[FN16]
FN16. As stated earlier, Plaintiff has also asserted a claim for Misrepresentation by Omission, Fraud by Concealment, and Constructive Fraud. Since all of these elements are essentially contained within the elements of Negligent Misrepresentation, Plaintiff will not discuss these additional three claims separately.
1. There must be a representation;
2. That representation must be false;
3. It must have to do with a past or present fact;
4. The fact must be material;
5. It must be susceptible of knowledge;
6. The representor must know it to be false, or in the alternative, must assert it as of his own knowledge without knowing whether it is true or false;
7. The representor must intend to have the other person induced to act, or justified in acting upon it;
8. That person must be so induced to act or so justified in acting;
9. That person's action must be in reliance upon the representation;
10. That person must suffer damage;
11. That damage must be attributable to the misrepresentation, that is, the statement must be the proximate cause of the injury.
Davis v. Re-Trac Mfg. Corp., 276 Minn. 116, 117, 149 N.W.2d 37, 38-39 (1967).
Clearly, statements by a name brand drug manufacturer about the risks and benefits of taking its medication are representations about present material facts that are based on studies and thus “susceptible of knowledge.” If those statements are false, they are inherently likely to cause damage to anyone who relies on them, and by their nature, the name brand manufacturer's label warnings are inclined to induce the generic manufacturers - - who must rely on them - - and doctors and the patients of the generic manufacturers' reproductions - - who read those labels in deciding whether to accept the risks stated therein - - to rely to their detriment on the truthfulness of the name brand manufacturer's information.
When a doctor can show they would not have prescribed or a patient can show that they would not have taken the drug or endured the actual risk had the falsity of the earlier representation been revealed, the only issue for evaluating the propriety of a negligent misrepresentation claim under the elements of that legal theory in Minnesota, is whether the name brand manufacturer owes a legal duty to the generic manufacturers, doctors or the public at large to be truthful in its statements.
The justification cited by the Foster court for withholding such a duty was the existence of a duty on the part of the generic manufacturers, so as to give rise to a remedy directly against the generic manufacturer of the drugs consumed: “Although generic manufacturers must include the same labeling information as the equivalent name brand drug, they are also permitted to add or strengthen warnings and delete misleading statements on labels, even without prior FDA approval.” Foster, supra, 29 F.3d at 170, citing 21 C.F.R. § 314.70 (1993), emphasis added. However, this Court, in its Order of June 17, 2008 rejected the Foster Court's reasoning. Specifically, this Court held that a generic manufacturer is not permitted to add or strengthen warnings and delete misleading statements on labels that differ from the name brand manufacturer. In turn, the reasoning of Foster, which is also the cornerstone for the majority of the other cases Schwarz has cited in support of its motion, is not applicable or helpful in analyzing the issue before this Court.
Regardless of whether or not such a duty arises on the part of generic manufacturers, a separate legal examination of whether a duty is properly exacted of a name brand manufacturer is worthy of scrutiny. Rather than engage in a conclusory analysis, a more probing consideration is justified to address the question: why shouldn't a name brand manufacturer be held to a duty of stating the truth on its warning label by any who are foreseeably affected by its content?
III. Sound Justifications exist for Imposing a Duty of Truthfulness on Name Brand Manufacturers.
A. The Issuance of a Name Brand Manufacturer's Label may be Seen as an Endorsement
The FDA - - and hence each generic company - - anticipates that the name brand manufacturer would have thoroughly tested and examined the performance and adverse effects of the drug at issue. This independent testing and assessment of the fitness or contraindication of the drug product at issue is the logical equivalent of the actions or undertakings of a product testing company or product endorser. It is essentially advocating the chemical's use in a particular manner for a particular purpose with certain expressed cautions or recommendations.
To the extent that well reasoned decisions of the courts have recognized the existence of a legal duty on the part of product endorsers to liability for their negligent misrepresentation of the efficacy of a product, the same theory of liability should logically exist to hold a name brand drug manufacturer amenable to claims of misrepresentation for breach of this similar duty of care.
In Hanberry v. Hearst Corporation, 276 Cal.App.2d 680, 81 Cal. Rptr. 519 (1969), the court addressed the issue of whether a product endorser owes a legal duty to a consumer who purchases the product of a third-person based in part on the endorsement given by the product endorser, and ruled that a cause of action for negligent misrepresentation was a viable theory against the endorser, though it said that a breach of warranty or strict liability in tort theory was invalid in the absence of “privity.” Id. at 687, 81 Cal. Rptr. at 524. The broader theory of negligent misrepresentation gained legal traction because the court saw the endorser as gaining a benefit itself by giving the endorsement as it promoted the interests of the endorser as well as the interests of the third-party manufacturer, and would foreseeably induce consumers to rely on the endorsement and decide to use the third-party manufacturer's product. The case involved shoes recommended for a particular application by the Good Housekeeping Magazine, which earned its “seal of approval.” The plaintiff was injured when it turned out that the soles lacked a suitable coefficient of friction for the application for which they had been endorsed by Good Housekeeping. In other words, the endorser said the product had certain safe applications and it turned out that the product could not be safely used in the manner stated in the endorser's evaluation.
The statement of a claim in Hanberry rested entirely on the ability to state and prove a claim of negligent misrepresentation, with the legal duty element of that theory being supplied by the act of endorsement for the endorser's own indirect gain. Cases rejecting a legal duty on the part of a product endorser have based their rulings on the pursuit of claims based on warranty or strict liability theories that depend for their proof on privity between the endorser and the party relying upon it[FN17] - - though others have ruled that privity is unnecessary, particularly when the theory asserted is that of negligent misrepresentation[FN18] - - or when the plaintiff failed to prove that the type of injury that occurred was foreseeable to the product endorser,[FN19] or that the plaintiff would rely on its endorsement.[FN20] Here, however, the name brand manufacturer's own testing or awareness of peer-reviewed literature would have signaled the foreseeability of EPS from use of MCP beyond the risks articulated in the name brand manufacturer's own label, which it knew from FDA regulations generic companies would have to use at least as the starting point for their own warnings; warnings which generic consumers would of course rely upon along with doctors and patients in making choices about prescription use.
FN17. See Hanberry v. Hearst Corporation, 276 Cal.App.2d 680, 81 Cal. Rptr. 519 (1969)(rejecting warranty and strict liability theories but endorsing negligent misrepresentation theory).
FN18. See, e.g., Hempstead v. General Fire Extinguisher Corp., 269 F. Supp. 109 (D. Del. 1967) (Underwriters' Laboratories was amenable to a claim of negligent misrepresentation for improperly endorsing a fire extinguisher as fit for a certain application, when in fact it had not actually been tested by UL for 500 pounds of internal pressure and was “inherently dangerous” for exploding when used in the manner employed and did in fact explode when used in that application).
FN19. See Meyers v. Donnatacci, 220 N.J. Super. 73, 531 A.2d 398 (1987) (not foreseeable to the trade association that swimming pool would be used in the manner that caused plaintiff's injuries).
FN20. See Howard v. Poseidon Pools, Inc., 506 N.Y.S.2d 523 (1986), aff'd in part and rev'd in part on other grnds, 522 N.Y.S.2d 388 (App. 1986) (no proof plaintiff relied on the trade association's endorsement of the product; also strict liability and warranty theories were rejected or lack of privity).
The legal basis for a duty to be exacted of a name brand manufacturer as an “endorser” of a chemical formulation and of the contents of a warning label are readily reflected in the case law applicable to product endorsers generally.
B. The Restatement forms a Valid Basis for exacting a Duty of a Name Brand Manufacturer.
“[T]he absence of a duty to speak does not entitle one to speak falsely.” Garcia v. Superior Court, 50 Cal.3d 728, 734-35, 268 Cal. Rptr. 779, 782-83 789 P.2d 960, 963-64 (1990). The Garcia case involved the duty of a parole officer to reveal truthful information to a potential victim of a parolee's dangerous propensities that were known to the officer. Even though there was no duty to speak, the court said that under Restatement of Torts, 2d, § 311 (2d ed. 1965), there was a legal duty when someone chooses to speak to convey truthful information when the speaker should be aware that the listener will likely rely on the information given in deciding what to do themself.
This same duty was held in Friedman v. Merck & Co., 107 Cal.App.4th 454, 477, 131 Cal. Rptr. 2d 885, 902 (2003), to justify a cause of action against a drug manufacturer for negligent misrepresentations as the result of false information being produced about the risk of contracting tuberculosis, though the claim was limited to physical injury and not to emotional harm alone. Restatement section 311 provides:
(1) One who negligently gives false information to another is subject to liability for physical harm caused by action taken by the other in reasonable reliance upon such information, where such harm results
(a) to the other, or
(b) to such third persons as the actor should expect to be put in peril by the action taken.
(2) Such negligence may consist of failure to exercise reasonable care
(a) in ascertaining the accuracy of the information, or
(b) in the manner in which it is communicated.
RESTATEMEN OF TORTS, 2D, § 311 (2d ed. 1965). The exact tenor of the claim against Schwarz is that it negligently gave false information about the risks inherent in name brand Reglan to the public generally, including obviously the generic makers, doctors, and patients who would be considered for administration of the generic chemical compound MCP, and that this false information reflected Schwarz's failure to accurately state risks it knew or should have known actually existed as a result of its formulation. This states a claim under Restatement § 311 against Schwarz for the breach of the duty owed therein. “The rule stated in the Restatement Second of Torts section 311 applies to information voluntarily given without benefit to the actor.” Friedman, supra, 107 Cal.App.4th at 478, 131 Cal. Rptr. 2d at 902.
The rule stated in this Section may also apply where the information given is purely gratuitous, and entirely unrelated to any interest of the actor, or any activity from which he derives benefit.
RESTATEMENT OF TORTS, 2D, § 311, comment c (2d ed. 1965). In Minnesota, a similar formulation of the duty under Restatement § 323 was held to create a duty to speak or act truthfully when the failure to do so would harm third-persons. Specifically, in Nickelson v. Mall of America, 593 N.W.2d 723, 725-26 (Minn. App. 1999), Mall security force stood and watched an assault on the employee of a tenant when the Mall had promised tenants that its force would intervene in assaults to protect their employees during attempted shoplifting situations. The Minnesota Court of Appeals ruled that even though no other legal duty to act existed by law or contract, and no special relationship was shown to exist between the Mall as a landlord and the employee of a tenant, the third-party to that rental contract could still sue the landlord for the failure of the landlord's privately employed security force to intervene to protect her. The duty was based on the third-person's reasonable reliance on such aid. Similarly, in the Minnesota Supreme Court case of Isler v. Burman, 305 Minn. 288, 295, 232 N.W.2d 818, 822 (1975), the court relied on Restatement § 323 to establish a volunteer organization's duty to assure a safe route for participants to travel because it should have known that participants in an event would rely on their representation that the route selected was a safe one:
One who undertakes, gratuitously or for consideration, to render services to another which he should recognize as necessary for the protection of the other's person or things, is subject to liability to the other for physical harm resulting from his failure to exercise reasonable care to perform his undertaking if
(a) his failure to exercise such care increases the risk of such harm, or
(b) the harm is suffered because of the other's reliance upon the undertaking.
RESTATEMENT OF TORTS, 2D § 323 (2d ed. 1965). A similar formulation of duty in Restatement § 552 recognizes the existence of a legal duty of truthfulness in representations made in a business setting that are provided for the guidance of others:
(1) One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.
(2) Except as stated in Subsection (3), the liability stated in Subsection (1) is limited to loss suffered
(a) by the person or one of a limited group of persons for whose benefit and guidance he intends to supply the information or knows that the recipient intends to supply it; and
(b) through reliance upon it in a transaction that he intends the information to influence or knows that the recipient so intends or in a substantially similar transaction.
(3) The liability of one who is under a public duty to give the information extends to loss suffered by any of the class of persons for whose benefit the duty is created, in any of the transactions in which it is intended to protect them.
Restatement of Torts, 2D § 522 (2d ed. 1965). Here, the name brand manufacturer had a public duty under edicts of the FDA to disclose accurate information on the risks inherent in its formulation, and the further confidence it created in its formulation, the greater it benefited financially from enhanced sales of its own products.
Any one of the Restatement formulations of legal duty serves readily as a logical basis for exacting a duty on the part of a name brand drug manufacturer for injuries sustained by patients taking the generic equivalent of the name brand manufacturer's drug and relying on the accuracy of information contained in the disclosure given by the name brand manufacturer.
IV. Minnesota Case law does not Dictate Absence of a Duty
Schwarz cites two Minnesota cases for the proposition that the duty of a name brand drug manufacturer has been held not to extend to its responsibility for false representations relied on by a generic maker of the name brand manufacturer's drug and by the generic manufacturer's customer: In re Minnesota Breast Implant Litigation, 36 F.Supp.2d 863, 873-74 (D. Minn. 1998), and Flynn v. American Home Products Corp., 627 N.W.2d 342 (Minn. App. 2001).
In re Minnesota Breast Implant Litigation, however, dealt mainly with the tangential issue of one corporation's liability for the obligations of a predecessor corporation's patent, and thus focused on the law of successor liability for purchase of a patent from a predecessor manufacturer, rather than undertaking a detailed analysis of the doctrines discussed above. While it also raised the issue of a manufacturer's duties of strict liability for failure to warn and for breach of express and implied warranties, those theories raise only a manufacturer's amenability to a direct product liability suit for the defects in the medical product purchased by a consumer from that manufacturer, rather than focusing on misrepresentations relied upon by others who consumed a different, generic version of the name brand manufacturer's product.
Flynn v. American Home Products Corp., 627 N.W.2d 342 (Minn. App. 2001), did address the liability of a manufacturer for representations made in its warning label to a generic manufacturer in a suit by the consumer of the generic company's drugs. Flynn, however, similarly raised and disposed of the claim on legal theories primarily different than those we have raised, as the thrust of the plaintiff's claim in Flynn was for “consumer-fraud claims of manufacturer fraud on the federal Food and Drug Administration,” for which a state court action was pursued. Id. at 345. The claim was thus not pursued based on a duty owed by the name brand manufacturer to be truthful and accurate in its statements to doctors, the public or generic manufacturers or even Restatement liability, but rather advocated a new tort “characterized by other jurisdictions as ‘fraud-on-the-FDA.”’ Id. at 346.
While both our case and Flynn sought redress for falsehoods perpetrated by the name brand manufacturer of a drug, obviously the court addressed the specific legal theory raised by the claimant, and as to the “fraud-on-the-FDA” claim, the court concluded that it and “statutory consumer fraud claims are preempted by federal law and are not actionable in Minnesota,” id. at 349, because the FDA regulation of drug labeling superseded state common law. Id. at 348. Preemption has not been argued by the defense here, and whereas “[p]olicing fraud against federal agencies is hardly a field which the States have traditionally occupied,” id., certainly common law misrepresentation claims under state law are.
Flynn did note that the Minnesota courts have been hesitant to extend the remedy of negligent misrepresentation beyond claims for “pecuniary loss,” id. at 351, citing Smith v. Brutger Cos., 359 N.W.2d 408, 414 (Minn. 1997), but did not address other Minnesota court decisions in which the tenets underlying the Restatement had extended false representations accompanied by reasonable reliance to personal injury claims, such as Nickelson or Isler discussed above. To the extent that the Minnesota Supreme Court in Isler recognized a cause of action for personal injuries for a plaintiff's reasonable reliance on the false representations of another, the Minnesota Court of Appeals in Flynn is in error when it suggests that it is prohibited from recognizing such a claim under state law.
CONCLUSION
The position created by the melding of the Defendants' arguments here creates a “Catch-22” for any plaintiff who is permanently injured by the misrepresented adverse effects of the drug MCP. The name brand manufacturer, Schwarz contends that it owes no duty regarding its misrepresentations in the label of its name brand drug that misstates the actual risk of developing EPS, because Plaintiff did not consume its pills, and only direct product liability claims should be recognized against it. Then, to complete the ironic situation, generic manufacturers argue that the drugs they made that were consumed by Plaintiff - - even if defective for their own misstatements - - are not susceptible to suit either, because their “hands were tied”[FN21] by having to follow the false statements of the name brand manufacturer.
FN21. Unfortunately, the generic manufacturers choose to continue to keep manufacturing and selling generic MCP in light of their knowledge that the label is false.
If the Defendants' arguments, taken as a whole, are correct, Plaintiff would have no remedy for developing tardive dyskinesia, a life-altering, permanent injury that could have been avoided with a simple, accurate statement about the dangers associated with MCP, rather than misstatements. As a result, if the Defendants are correct, the tort system will not only have failed Plaintiff, but it will fail every doctor who prescribes MCP in the future or their patient who will needlessly develop EPS because none of the Defendants will have been found to have a legal duty to accurately state the risks associated with MCP. However, this result should not be the case in light of the duties continued in the Restatement and Minnesota law. In turn, Schwarz's motion should be denied.
Dated this 4th day of September, 2008.
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