Urland By and Through Urland v. Merrell-Dow Pharmaceuticals, Inc.

• Citation: 822 F.2d 1268
• Decision Date: 17 July 1987
• Docket Number: No. 86-1623,MERRELL-DOW,86-1623
• Parties: , Prod.Liab.Rep.(CCH)P 11,550 Julie Beth URLAND, an infant By and Through William Charles URLAND and Chloe Jill Urland, her natural guardians, and William Charles Urland and Chloe Jill Urland, individually, Appellants, v.PHARMACEUTICALS, INC.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

Page 1268

822 F.2d 1268

56 USLW 2056, Prod.Liab.Rep.(CCH)P 11,550

Julie Beth URLAND, an infant By and Through William Charles

URLAND and Chloe Jill Urland, her natural guardians, and William Charles Urland and Chloe Jill Urland, individually, Appellants, v. MERRELL-DOW PHARMACEUTICALS, INC.

No. 86-1623.

United States Court of Appeals, Third Circuit.

Argued April 6, 1987.

Decided June 24, 1987.

Rehearing and Rehearing In Banc Denied July 17, 1987.

W. David Allen (argued), Allen T. Eaton, Allen T. Eaton & Associates, Washington, D.C., Frank M. McClellan, Temple University School of Law, Philadelphia, Pa., for appellants.

Frank C. Woodside, III (argued), John E. Schlosser, K.C. Green, Kathleen W. Kolodgy, Janet G. Abaray, Dinsmore & Shohl, Cincinnati, Ohio, James M. Beck, Edward W. Madeira, Nina M. Gussack, Pepper, Hamilton & Scheetz, Philadelphia, Pa., for appellee.

Before SLOVITER and BECKER, Circuit Judges, and FISHER, District judge. ^*

OPINION OF THE COURT

SLOVITER, Circuit Judge.

Dismissal of an action on the grounds of the statute of limitations is particularly anguishing when the victim is a minor, the injury grievous, and the alleged wrongful act repellent, if true. See O'Brien v. Eli Lilly & Co., 668 F.2d 704, 712 (3d Cir.1982) (Sloviter, J., concurring). Nonetheless, we are obliged to follow the applicable legal principles. Certainly a federal court sitting in diversity is not free to impose its notions of equity on state courts or on a state legislative body. We will affirm the entry of judgment for defendant in this case because we believe that Pennsylvania law requires us to do so.

I.

Julie Beth Urland and her parents William and Chloe Urland filed suit against Merrell-Dow Pharmaceuticals, Inc., the manufacturer of Bendectin, contending that Mrs. Urland's ingestion of Bendectin while pregnant was the cause of Julie's birth defects. Julie was born on February 8, 1972, with part of her left arm missing. This diversity action was filed on October 7, 1981 against Merrell-Dow in the United States District Court for the Eastern District of Pennsylvania. Merrell-Dow pled the two year Pennsylvania statute of limitations as a defense. The court bifurcated the statute of limitations issue, presenting that issue to the jury as a threshold matter.

II.

Following Julie's birth, the Urlands suspected that Mrs. Urland's ingestion of Bendectin might have been the cause of Julie's birth defects and Mrs. Urland made various inquiries. In 1972, Mrs. Urland contacted several of her treating physicians, the March of Dimes, and the Food and Drug Administration. In her letter to the FDA, she stated that she had taken Bendectin "at the approximate time when the limb buds [were] being formed" and referred to "the questions and doubts" she had concerning this medication. App. at 391. Copies of this letter were sent to the Hon. Hugh Scott of Pennsylvania and Merrell-Dow, then Merrell-National Laboratories Division of Richardson-Merrell, Inc.

The FDA responded that it would refer the letter to the physicians who monitor adverse drug experience, and requested that Mrs. Urland's physician complete the Drug Experience Report which it enclosed. Apparently, this was not done. Senator Scott wrote that he was referring the letter to the appropriate authorities.

Merrell-Dow also responded by letter from Richard H. O'Dillon, M.D., Director of the Product Development Clinical Research Group who stated that the letter was written for the purpose of "reliev[ing] your mind about your use of Bendectin during pregnancy." App. at 394. Dr. O'Dillon described various animal and human tests purportedly showing that Bendectin was not an agent having the potential for causing malformations and stated his "belief, that your child's malformation is unrelated to Bendectin ingestion." App. at 394. The Urlands claim that as a result, they did not sue Merrell-Dow at that time. Nevertheless, the Urlands continued to harbor suspicion that Bendectin was the cause of Julie's birth defects and discussed the possibility of bringing a lawsuit against Merrell-Dow.

In early September 1979, the Urlands were contacted by telephone by a reporter from the National Enquirer who stated that Mrs. Urland's letters had come to light in a trial in Florida involving Bendectin and birth defects. After the phone call Mrs. Urland told her husband about the Florida suit and the allegation made there that Bendectin caused birth defects. Mrs. Urland agreed to meet with the reporter and at that meeting told him that she was suspicious that Bendectin caused Julie's birth defects. Mrs. Urland also agreed to allow a picture of herself and Julie to be used in an article concerning Bendectin to be published by the Enquirer. The front page headline on the National Enquirer dated October 9, 1979 stated "New Thalidomide-Type Scandel--Experts Reveal ... COMMON DRUG CAUSING DEFORMED BABIES." App. at 397. The article quoted various medical sources as stating that Bendectin could cause birth defects, and described various cases of babies born with birth defects from mothers who had taken Bendectin during their pregnancy. The article also described an alleged coverup by Merrell-Dow of the test results indicating possible teratogenicity. The Urlands testified that they were not certain exactly when they purchased a copy of the National Enquirer edition containing their story, although Mr. Urland testified that he thought that he had purchased a copy on October 9, 1979, less than two years before the filing of the present lawsuit. However, he admitted he might have used that date because it appears on the newspaper. Mrs. Urland testified that she had since become aware that the edition dated October 9, 1979 hit the newsstands on October 2, 1979, and went off the newsstands on October 9, 1979.

It is clear that the interview with the reporter took place in September 1979, that at the time of the reporter's phone call Mrs. Urland became aware of the Florida trial alleging a connection between Bendectin and birth defects, and that this information revived her suspicion about Bendectin being a possible cause of Julie's birth defects.

III.

The applicable statute of limitations is set forth in 42 Pa.Cons.Stat.Ann. Sec. 5524(2), which states that an action to recover damages for personal injuries must be commenced within two years. However, the Pennsylvania Supreme Court recognizes an exception to the statute, asserted by the Urlands before the district court, which delays the running of the statute until the plaintiff knew, or through the exercise of reasonable diligence should have known, of the injury and its cause. Ayers v. Morgan, 397 Pa. 282, 292, 154 A.2d 788, 793 (1959). See also Pocono International Raceway, Inc. v. Pocono Produce, Inc., 503 Pa. 80, 85, 468 A.2d 468, 471 (1983).

In a recent explication of the discovery rule, the Pennsylvania Superior Court has set forth the applicable standard as whether "the plaintiff knows, or reasonably should know: (1) that he has been injured, and (2) that his injury has been caused by another party's conduct." Cathcart v. Keene Industrial Insulation, 324 Pa.Super. 123, 136-37, 471 A.2d 493, 500 (1984) (in banc) (footnote omitted). The Cathcart standard has been widely adopted by Pennsylvania courts, see, e.g., Wheeler v. Johns-Manville Corp., 342 Pa.Super. 473, 476-77, 493 A.2d 120, 122 (1985), and has likewise been applied in decisions of this court. See, e.g., Cowgill v. Raymark Industries, Inc., 780 F.2d 324, 330 (3d Cir.1986).

The Urlands relied in addition upon the equitable rule that a defendant will be estopped from asserting the statute of limitations if through fraud or concealment the defendant causes the plaintiff to relax vigilance or deviate from the right of inquiry. Nesbitt v. Erie Coach Co., 416 Pa. 89, 92, 204 A.2d 473, 475 (1964). See also Ciccarelli v. Carey Canadian Mines Ltd., 757 F.2d 548, 556 (3d Cir.1985). A party relying on this doctrine will be entitled to a tolling of the statute of limitations by proving that there has been either intentional or unintentional deception by the defendant. Nesbitt, 416 Pa. at 96, 204 A.2d at 475-76. See also Ciccarelli, 757 F.2d at 556. The district court accepted arguendo the Urlands' position that Merrell-Dow concealed the potential claim, and it instructed the jury, over Merrell-Dow's objection, to assume for purposes of the statute of limitations phase of the case that the 1972 letter written by Dr. O'Dillon to the Urlands was inaccurate and misleading. ¹ By assuming the existence of fraudulent concealment, the district court concluded that the issue of whether the Urlands were time-barred hinged solely on whether they knew or should have known prior to October 7, 1979 that Bendectin was the operative cause of Julie's birth defect.

The jury was given the following interrogatory:

Have Mr. and Mrs. Urland proved by a preponderance of the evidence that neither of them knew, or exercising reasonable diligence should have known, before October 7, 1979, that Bendectin was an operative cause of Julie Beth Urland's birth defect as alleged in their complaint?

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

(A "Yes" answer is in favor of Mr. and Mrs. Urland. A "No" answer is in favor of Merrell Dow Pharmaceuticals, Inc., and will terminate the case.)

The jury responded "no" to the interrogatory, and the district court entered judgment in favor of Merrell-Dow. The Urlands appeal, challenging various rulings of the district court.

IV.

Fraudulent Concealment

A.

The Urlands' principal argument on appeal is that the district court failed to appreciate the differences in the effect on the statute of limitations between the discovery rule and fraudulent concealment. They concede that under the discovery rule, the statute of limitations begins to run when plaintiffs knew or using reasonable diligence should have known of the claim. They contend, however, that under...