Smith v. Cutter Biological, Inc., a Div. of Miles Inc.

• Decision Date: 29 November 1991
• Docket Number: No. 14754,14754
• Citation: 72 Haw. 416,823 P.2d 717
• Parties: , 60 USLW 2399, Prod.Liab.Rep. (CCH) P 13,056 John SMITH, Plaintiff-Appellant, v. CUTTER BIOLOGICAL, INC., A DIVISION OF MILES INC., Miles Laboratories, Inc., Travenol Laboratories, Inc., Armour Pharmaceutical Corporation, Alpha Therapeutics Corporation, and United States of America, Defendants-Appellees.
• Court: Hawaii Supreme Court

Page 717

823 P.2d 717

72 Haw. 416, 60 USLW 2399, Prod.Liab.Rep.

(CCH) P 13,056

John SMITH, Plaintiff-Appellant, v. CUTTER BIOLOGICAL, INC., A DIVISION OF MILES INC., Miles

Laboratories, Inc., Travenol Laboratories, Inc., Armour

Pharmaceutical Corporation, Alpha Therapeutics Corporation,

and United States of America, Defendants-Appellees.

No. 14754.

Supreme Court of Hawai'i.

Nov. 29, 1991.

Reconsideration Denied Dec. 19, 1991.

Syllabus by the Court

1. Procedures dealing with preparation of blood components is not limited to preparation of blood or blood plasma.

2. A component of blood is "that part of a single-donor unit of blood separated by physical or mechanical means." 21 C.F.R. § 606.3(c) (1990).

3. Under the Hawaii Revised Statutes (HRS) § 327-51 (1985), Factor VIII, a blood protein used by hemophiliacs for proper blood coagulation, is a component prepared from blood.

4. The Hawaii Blood Shield Statute, HRS § 327-51 (1985) does not preclude actions in negligence merely for the reason that the actual tortfeasor is not identified.

5. When the occasion arises for which there is no specific rule to apply, this court may fashion an appropriate rule of law. Armstrong v. Cione, 69 Haw. 176, 738 P.2d 79 (1987).

6. Traditional proof in a negligence case includes the factor of causation.

7. Tort law, as a continually expanding field, includes "mass" torts where the injury may not be discovered for many years, and where traditional rules of negligence can no longer be applied when strict requirements are difficult to meet; therefore new rules of causation must be adopted for innocent plaintiffs who would otherwise be left without a remedy.

8. The harsh result of burdening an innocent plaintiff without a remedy is unfair and out of step with current efforts to allow recovery when the proper case is brought.

9. Alternative liability generally presumes that the plaintiff must prove that all defendants acted tortiously and simultaneously, that the harm resulted from one of their actions, and that plaintiff has joined all parties who acted tortiously.

10. When plaintiff complains of actions by defendants which, even if tortious, occurred at different times, the theory of alternative liability is inappropriate.

11. The theory of concert of action is a joint tort where the defendants' joint plan is the basis of the cause of action, and defendants are subject to joint and several liability.

12. Concert of action is not a proper basis for liability in Factor VIII cases, as joint and several liability is too harsh a burden in these circumstances.

13. Enterprise or industry-wide liability applies where there is joint control of the risk, and thus industry-wide misconduct.

14. Where the industry is closely regulated by the Food and Drug Administration, it is unfair to hold industry defendants liable for following those standards.

15. There is an inherent unfairness in holding one or two parties responsible as joint and several tortfeasors merely because plaintiff cannot identify which defendant actually caused his injuries.

16. The market share theory of liability is supported by many policies including that: 1. fairness dictates that defendants bear the financial burden, 2. defendants in these cases are usually in a better position to bear the loss, 3. defendants should have control over the lethal effect of drugs, 4. it is difficult for consumers to keep records of manufacturers, 5. objectives of tort law will be served, and 6. payment of damages should foster deterence.

17. The market share theory of liability measures the likelihood that a defendant supplied the injurious product by the percentage that defendant bears of the entire production of that product in the market.

18. In defining the market, culpability for marketing an injurious product is a better policy to measure liability than attempting to measure the probability that a defendant caused the injury, and it is measured by the national market, so that each defendant is liable for the risk of injury which it created to the public-at-large.

19. Under market share theory of liability, plaintiffs should use due diligence to 20. Individual defendants may exculpate themselves from liability, under the market share theory, upon proof that they had no product on the market at the time of the injury.

join all manufacturers, but failure to do so is not a defense; however, plaintiffs' maximum recovery will depend on joining as may viable defendants as possible.

21. Market share alternate liability is conducive to the application of several liability, but not joint liability.

22. Factor VIII manufacturers unable to exculpate themselves from potential liability are designated members of the market and are, at first, presumed to have equal portions of the market; they are then liable for that same percentage of plaintiff's judgment; the presumption is rebuttable upon proof of actual share, at which time the remaining defendants will be liable for the difference in the judgment to 100 percent of the market.

John Rapp and Charles Kozak, Honolulu, for plaintiff-appellant.

Richard L. Berkman (Dechert Price & Rhoads, of counsel, Philadelphia, Pa., Arthur F. Roeca, Roeca & Louie, of counsel, Honolulu, with him on the brief), for defendant-appellee Baxter Healthcare Corp. f/k/a Travenol Laboratories, Inc.

Geoffrey R.W. Smith (McDermott, Will and Smith, of counsel, Washington, D.C., Burnham H. Greeley and Janice T. Futa, Greeley, Walker & Kowen, of counsel, Honolulu, Duncan Barr and Deborah H. Leibman, O'Connor, Cohn, Dillon & Barr, of counsel, San Francisco, Cal., with him on the brief), for defendant-appellee Cutter Laboratories.

Before LUM, C.J., and PADGETT, HAYASHI, WAKATSUKI and MOON, JJ.

LUM, Chief Justice.

This court has accepted a request to address certified questions from the Ninth Circuit Court of Appeals. Smith v. Cutter Biological, Inc., 911 F.2d 374 (9th Cir.1990).

I. CERTIFIED QUESTIONS OF LAW

1. Does Hawaii's Blood Shield Law, Haw.Rev.Stat. § 327-51, preclude Smith from bringing a strict liability claim?

2. Does Hawaii's Blood Shield Law, Haw.Rev.Stat. § 327-51, preclude Smith from bringing a negligence claim?

3. Would Hawaii allow recovery in this case when the identity of the actual tortfeasor cannot be proven? If Hawaii would allow recovery, what theory (i.e. burden- shifting, enterprise liability, market share or other) would the Hawaii Supreme Court adopt?

Id. at 376. In considering our response to the questions, we note that the issue as to questions two and three concerns the causation factor in negligence. The instant problem is that the plaintiff cannot identify which particular defendant caused his injury.

Our consideration of the issues is limited to the facts as stated in this record. Procedurally, this case reached the Ninth Circuit Court on a summary judgment motion. The order granting summary judgment did not rule on duty and breach as to the manufacturers; summary judgment was granted on the basis that plaintiff failed to prove causation.

The other elements of negligence, i.e., duty, breach and damages, are not at issue here. We note that at least two courts have determined, in cases similar to the instant action, that there was no breach of duty. Jones v. Miles Laboratories, Inc., 887 F.2d 1576 (11th Cir.1989); McKee v. Cutter Laboratories, Inc., 866 F.2d 219 (6th Cir.1989). However, those cases are distinguishable. ¹ We do not render an opinion as to whether appellant here will overcome the obstacles met by plaintiffs in those cases; the duty and breach issue here has not only not been decided, it is not before this court on the certified questions. Therefore, we do not deal with the viability of those questions.

Our conclusions deal only with this case--as it comes to us. Therefore, on our reading of the record as it stands, the relevant statutes, and the relevant case law, we answer "yes" to question one, and "no" to question two. Our answer to question three is "yes," using the alternative market share theory of recovery, as defined herein. ²

II.

Appellant is a hemophiliac who has tested HIV-positive with the AIDS virus. ³ He claims that his exposure to the AIDS virus occurred in 1983 or 1984, through injections of the Antihemophilic Factor Concentrate (Factor VIII or AHF). ⁴ Factor VIII, as more fully discussed in Part III, is a blood protein which enables the blood to properly coagulate when a hemophiliac suffers a bleeding episode. The original source of the Factor VIII is through blood donors.

The United States Tripler Army Medical Hospital (U.S.) was appellant's dispensary for Factor VIII during the period of time in which appellant claims to have been infected. According to appellant, appellee manufacturers ⁵ furnished to the U.S., the Factor VIII which was used by appellant. Upon appellant's first being tested for HIV antibodies in 1986, the results were positive.

Appellant filed suit against the four appellee manufacturers of Factor VIII for negligence and strict liability. ⁶ Defendants moved for summary judgment. Despite acknowledging "that this is a case in which it might be reasonable to apply the principles of market share theory of liability," the district court granted summary judgment in favor of appellees, holding that appellant failed to prove specifically which manufacturer's product caused his infection. Appellant took the case to the Ninth Circuit, which certified the questions to this court.

III.

The first question asks whether the Hawaii Blood Shield Law precludes a strict liability claim. The blood shield statute reads as follows:

Exemption from strict liability. No physician, surgeon, hospital, blood bank, tissue bank, or other person or entity who donates, obtains, prepares, transplants, injects, transfuses, or otherwise transfers, or who assists or participates in obtaining, preparing, transplanting, injecting, transfusing, or otherwise transferring any...