Demuth Development Corp. v. Merck & Co., Inc.

• Decision Date: 06 June 1977
• Docket Number: No. 75 C 941.,75 C 941.
• Citation: 432 F. Supp. 990
• Parties: DEMUTH DEVELOPMENT CORP., Plaintiff, v. MERCK & CO., INC., Defendant.
• Court: U.S. District Court — Eastern District of New York

432 F. Supp. 990

DEMUTH DEVELOPMENT CORP., Plaintiff, v. MERCK & CO., INC., Defendant.

No. 75 C 941.

United States District Court, E. D. New York.

June 6, 1977.

John B. Amrod, Garden City, N. Y., for plaintiff.

Hughes Hubbard & Reed, New York City, for defendant by Robert J. Sisk, Pamela Chipega.

NEAHER, District Judge.

This action asserts the novel claim that the publisher of an encyclopedia of chemicals and drugs is liable in damages for allegedly misrepresenting the toxicity of a chemical utilized in plaintiff's product, thereby causing a loss of plaintiff's customers and business. On defendant's prior motion to dismiss the complaint, the court ruled that plaintiff had not stated a claim for relief on grounds of product defamation, since neither plaintiff nor its product had been mentioned in the alleged defamatory reference.¹ The court then declined to dismiss plaintiff's two remaining claims grounded on negligence and willful misrepresentation in view of specific allegations of consequent injury. The case is again before the court on defendant's motion for summary judgment as to those claims based upon undisputed facts revealed in the parties' affidavits and documentation.

Plaintiff, a New York corporation, manufactures and sells an air sterilization appliance, the Demuth Glycol Vaporizer, which had been used in hospitals and by manufacturing firms requiring germ-free environments. Defendant ("Merck"), a New Jersey corporation, is a diversified chemical and pharmaceutical company. As a service to customers and others, it publishes and sells The Merck Index (hereinafter "Index"), advertising it as "an encyclopedia of chemicals and drugs which contains . . . information of value to chemists, biochemists, pharmacists, botanists, physicists, chemical engineers, and others interested in the life sciences." The Index offers information about some 10,000 chemicals, drugs and biologicals with respect to their "general, medical, or veterinary uses as well as toxicity."

The source of the parties' controversy is the Index's treatment of triethylene glycol, a chemical indispensable to the operation of plaintiff's glycol vaporizer. It is triethylene glycol which, when vaporized in plaintiff's appliance, had been used as a germicidal agent to disinfect the air in hospitals, laboratories and other places where germ-free environments were required.

There is no question that, commencing with the publication of the Seventh Edition in 1960, some 276,500 copies of the Index had been circulated prior to August 1974, which linked the human toxicity of triethylene glycol with that of ethylene glycol. All of those copies and a fourth printing of the Eighth Edition in August 1974, which apparently precipitated this suit, contained the following references complained of by plaintiff:

"TRIETHYLENE GLYCOL . . . Human Toxicity: See Ethylene Glycol. P. 1072.

"ETHYLENE GLYCOL . . . Human Toxicity. Constitutes a hazard when ingested; e. g., drinking of anti-freeze fluid. Transient stimulation of CNS followed by depression; vomiting, drowsiness, coma, respiratory failure, convulsions, renal damage, which may proceed to anuria, uremia, death." Pp. 434-35.

Plaintiff alleges in substance that the quoted references misrepresented the toxicity of triethylene glycol, which plaintiff asserts to be completely non-toxic when inhaled as a vapor and significantly less toxic than ethylene glycol when ingested orally. According to the complaint, the Index was widely used by plaintiff's customers as a reliable authority on the toxic effect of chemicals and drugs. It is claimed that the alleged untrue publication caused those customers and potential customers of plaintiff to fear a toxic effect from triethylene glycol and to discontinue or refuse to purchase the glycol vaporizer as unfit and unsafe for air sterilization purposes. Alleging compensatory and punitive damages of $4,000,000, plaintiff seeks compensation for what it claims was either a negligent (second cause of action) or a willful (third cause of action) misrepresentation. Injunctive relief is also sought to restrain Merck from further publication of the complained of description of triethylene glycol.²

Although the issues are novel, Merck urges that they are ripe for summary adjudication. It contends there can be no material question of fact as to the toxicity of triethylene glycol when ingested in liquid form. Merck points to the affidavit admission of plaintiff's president that both ethylene glycol and triethylene glycol are harmful when ingested as liquids in sufficient amount. That concession, Merck argues, is fatal to plaintiff's claim that the Index cross-reference was untrue. This case, however, does not turn on whether a shot glass of ethylene glycol is more lethal than a coffee mug of triethylene glycol. The pivotal question, in light of the facts disclosed on the motion, is whether Merck owed any duty to plaintiff in respect of its publication of information about triethylene glycol. For the reasons which follow, that question must be answered in the negative.

Though the law of New York recognizes that "a negligent statement may be the basis of recovery of damage," the right of action is carefully defined. Advance Music Corp. v. American Tobacco Co., 268 App. Div. 707, 53 N.Y.S.2d 337 (1st Dept. 1945), rev'd on other grounds, 296 N.Y. 79, 70 N.E.2d 401 (1946). The essential requirements of the cause of action are best stated in International Products Co. v. Erie R. Co., 244 N.Y. 331, 337-38, 155 N.E. 662, 664 (1927), as follows:

"Not every casual response, not every idle word, however damaging the result, gives rise to a cause of action. . . . Liability in such cases arises only where there is a duty, if one speaks at all, to give the correct information. And that involves many considerations. There must be knowledge, or its equivalent, that the information is desired for a serious purpose; that he to whom it is given intends to rely and act upon it; that, if false or erroneous, he will because of it be injured in person or property. Finally, the relationship of the parties, arising out of contract or otherwise, must be such that in morals and good conscience the one has the right to rely upon the other for information, and the other giving the information owes a duty to give it with care."

We can agree with plaintiff that Merck published the Index for a serious purpose and expected its readers to rely and act upon it as an authoritative source of accurate information concerning drugs and chemicals. But even if we assume that Merck was under a duty to its readers to provide such information with care, how does that help plaintiff? Plaintiff does not and could not claim it relied to its detriment on misinformation published by Merck. Nor does plaintiff point to any "relationship of the parties, arising out of contract or otherwise," which "in morals or good conscience" placed Merck under any duty towards plaintiff or its business. On the contrary, Merck's right to publish free of fear of liability is guaranteed by the First Amendment, see Gertz v. Robert Welch, Inc., 418 U.S. 323, 340, 94 S.Ct. 2997, 41 L.Ed.2d 789 (1974), and the overriding societal interest in the untrammeled dissemination of knowledge. The right is circumscribed only by laws such as those respecting national secrets, copyright, obscenity, defamation and unfair competition. The court has already held that no claim for defamation is stated and plaintiff does not rely on any grounds other than negligence and willful misrepresentation.

Plaintiff's theory of negligence finds no support in the pertinent New York cases.³ Assuming arguendo the Index reference to triethylene glycol was negligently erroneous⁴ and led plaintiff's customers to cease using its glycol vaporizer, plaintiff would have no claim for damages against Merck. Jaillet v. Cashman, 235 N.Y. 511, 139 N.E. 714 (1923) (Dow, Jones & Company not liable in negligence for incorrect information sent out over its ticker where no contractual or fiduciary relationship with plaintiff); Ultramares Corp. v. Touche, Niven & Co., 255 N.Y. 170, 174 N.E. 441 (1931) (accountants not liable to creditor of client for negligently prepared accounting statements); Kings Creations Ltd. v. Conde Nast Publications Inc., 34 A.D.2d 935, 311 N.Y.S.2d 757 (1st Dept. 1970)(newspaper not liable in negligence for mistake in setting advertisement).

The rule stated in the foregoing authorities has not lost its vitality because of the expanded concept of "privity" evident in the more modern development of product liability law, as plaintiff contends. As one noted commentator points out, where misstatements are claimed to be the cause of loss, even a "reasonable anticipation that the statement will be communicated to others whose identity is unknown to the defendant, or even knowledge that the recipient intends to make some commercial use of it in dealing with unspecified third parties, is not sufficient to create a duty of care towards them." W. Prosser, Law of Torts, 708 (4th ed. 1971). The reason for...