Berry v. American Cyanamid Company

• Citation: 341 F.2d 14
• Decision Date: 02 February 1965
• Docket Number: No. 15696.,15696.
• Parties: Donald W. BERRY, Plaintiff-Appellant, v. AMERICAN CYANAMID COMPANY (Lederle Laboratories, a division of American Cyanamid Company), Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

341 F.2d 14 (1965)

Donald W. BERRY, Plaintiff-Appellant, v. AMERICAN CYANAMID COMPANY (Lederle Laboratories, a division of American Cyanamid Company), Defendant-Appellee.

No. 15696.

United States Court of Appeals Sixth Circuit.

February 2, 1965.

Argued by Lloyd S. Adams, Jr., Humboldt, Tenn., Adams & Adams, Humboldt, Tenn., on the brief, for appellant.

Argued by Newton P. Allen, Memphis, Tenn., Armstrong, McCadden, Allen, Braden & Goodman, Memphis, Tenn., and James D. Senter, Jr., Senter & Senter, Humboldt, Tenn., on the brief, for appellee.

Before CECIL and PHILLIPS, Circuit Judges, and TAYLOR, District Judge.

CECIL, Circuit Judge.

This appeal presents questions of law concerning the sufficiency of the plaintiff-appellant's complaint in the District Court. Donald W. Berry, hereinafter referred to as plaintiff, brought this action in a state court of Tennessee to recover damages in the amount of $100,000 from the American Cyanamid Company, defendant-appellee herein. The defendant-appellee will be referred to hereinafter as Lederle, the familiar name of its laboratory division. Lederle removed the case to the United States District Court for the Western District of Tennessee, Eastern Division, on the ground of diversity of citizenship. (Section 1332, Title 28 U.S.C.)

The substance of plaintiff's claim is that he contracted paralytic poliomyelitis as a result of taking Sabin oral polio vaccine produced and marketed by Lederle, under the name of "Orimune." The vaccine was produced by Lederle and by it distributed to physicians in an original closed package to be administered to patients as a measure to prevent poliomyelitis. On August 22, 1962, the vaccine was administered to the plaintiff by his physician. About eight days later, within the incubation period for the disease, plaintiff became extremely ill with acute anterior poliomyelitis, which left him permanently partially paralyzed.

The complaint as amended contained five counts. The first count charged Lederle with common law negligence. The second count was framed under the doctrine of res ipsa loquitur. In this count it was charged that in the ordinary course of events the consumption of Lederle's drug "Orimune" would not cause the patient to contract polio, had Lederle exercised the high degree of care required of a manufacturer of drugs. The third count charged a breach of the implied warranty that the drug was free of any defect rendering it unmerchantable which would not be apparent on reasonable examination of the product. This count was based on the Uniform Sales of Goods Act, then in effect. (Formerly Section 47-1212 et seq. T.C. A.)¹ The fourth count was a common law count for a breach of the implied warranty that the product was reasonably fit for its intended purpose of immunization against contracting the disease commonly called polio.

By the fifth count the plaintiff pleaded breach of implied warranty under the Uniform Sales of Goods Act and also as a common law count. He further alleged in this count that the physician was but a conduit through which Lederle caused its product to reach the ultimate consumer and that the physician was in effect acting for and on behalf of Lederle under the circumstances. It was also alleged on behalf of plaintiff that Lederle consented to and created privity by placing its product in the stream of trade and commerce knowing that it could only reach the ultimate consumer through a physician; and that Lederle's arrangement for ultimately placing its product with a consumer satisfied any legal requirement of privity. It is obvious that this count was designed to bring the case within the rule of General Motors Corporation v. Dodson, 47 Tenn.App. 438, 338 S.W.2d 655. (Cert. den. unpublished.)

Counsel for Lederle moved to strike counts two, three, four and five. The trial judge sustained the motion to count two for the reason that he could not "say that there is any common experience or any ordinary course of events that teaches him that a person cannot contract polio from taking a polio vaccine, except for negligence on the part of the defendant manufacturer." The basis of the motion to dismiss the other three counts was that there was no privity of contract between the plaintiff and the defendant and that the Uniform Sales of Goods Act of Tennessee was not applicable in the absence of privity between the parties. The court sustained the motion to dismiss counts three, four and five, apparently, for these reasons. The plaintiff was granted leave to dismiss the first count without prejudice. The entire action being thus dismissed, the plaintiff appealed.

The plaintiff presents two questions concerning the dismissal of counts three, four and five. 1. Was privity of contract between the parties an essential requirement of Tennessee law to state a good cause of action under the facts of this case? and, 2. Were the facts alleged in the complaint sufficient under Tennessee law to satisfy the requirement of privity? These two questions were discussed together by counsel in their briefs, because they both deal with privity of contract in breach of implied warranty actions. We will first take up the subject of privity as discussed under these two questions.

In general, the trend is away from the requirement of privity between vendor and vendee in products-liability cases.² This is more particularly true in cases involving foods and drugs.³ This being a diversity of citizenship case, we are concerned with the law of Tennessee. Erie Railroad Company v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188. Counsel in his brief says, "There is no case dealing with drugs precisely in point." (In Tennessee.) We might add that we have found none in Tennessee dealing with breach of warranty in any other product that does not require privity between seller and purchaser.

We must reject the argument that there was privity of contract between the plaintiff and Lederle. Privity of contract, as we understand it, is the relationship which subsists between two contracting parties. Clearly here, under the pleading, the plaintiff had no relationship with Lederle. He did not purchase the drug from Lederle. His only contact in the transaction was with his physician. The physician was not an agent of Lederle either in fact or by implication of law.

Counsel for plaintiff cites General Motors Corporation v. Dodson, supra, as being a key case in Tennessee on the subject of privity. In fact, this is the only Tennessee case cited in support of plaintiff's theory of privity of contract.

In the Dodson case, R.P. Dodson and his wife brought separate actions against General Motors Corporation for an alleged breach of warranty concerning a new Oldsmobile automobile purchased from Kemp Motor Company, an authorized General Motors dealer. The substance of the action was that the brakes were defective from the beginning. Mrs. Dodson was severely and permanently injured when the automobile plunged into a ditch as a result of the locking of the brakes. The cases were tried together to a jury and resulted in substantial verdicts for the plaintiffs.

On appeal the court found that General Motors gives the dealer a written express warranty and that it requires its dealers to give the ultimate purchaser the same identical express warranty. The court said at 338 S.W.2d 660:⁴ "The booklet containing the warranty which the manufacturer gave its dealer; and the manual which contained the warranty from the dealer to the ultimate consumer, were both prepared by General Motors and sent with the new automobile to the dealer. General Motors was dictating the two warranties completely: one from itself to the dealer, and one from the dealer to the purchaser or consumer. And, as stated, the two warranties were identical. The practical effect of this entire plan was that General Motors gave the warranty to the ultimate consumer; but for reasons satisfactory to itself, General Motors devised and put into operation the plan whereby General Motors dealt only with the dealers and never with the purchasers who were in fact the beneficiaries of the warranty. Defective parts or workmanship would only be discovered by the use of the automobile, and it was only used by the consumer." The court said at p. 661 that under these facts "the jury could have found that General Motors was the actual person or entity with whom plaintiffs were dealing, and Kemp was a conduit or subterfuge by which General Motors tried to exempt itself from liability to * * * the plaintiffs." The court said further that, if the plaintiffs were wrong about the application of the express warranty, they were correct in their contention that an implied warranty was created by the Uniform Sales of Goods Act, supra.

The court concluded that there was an express warranty and an implied warranty from General Motors to plaintiffs. The court held that the peculiar facts of this case supported the conclusion that the express warranty was between the manufacturer and the ultimate consumer.

On petition for rehearing, the court referred to the manufacturer's advertising through radio, television, magazines and newspapers in which it extolls the virtues of its products. It said at p. 665: "Surely it would not be contended that such advertisements and praise of General Motors' products were made for the benefit of its authorized dealers. These advertisements are made for the ultimate purchasers of General Motors' products who will use and drive them. They form a part of the warranty which General Motors gives the ultimate consumers."

The Dodson case decided two things: 1. Under the facts of the case there was an express warranty running from the manufacturer to the ultimate purchaser, and 2. An implied warranty was created by the Uniform Sales of Goods Act between the manufacturer and the ultimate consumer who was not the immediate vendee. The facts in the case before us do not support an express...