Dow Chemical Co. v. Mahlum
| Decision Date | 31 December 1998 |
| Docket Number | No. 28600,28600 |
| Citation | 114 Nev. 1468,970 P.2d 98 |
| Parties | , Prod.Liab.Rep. (CCH) P 15,458 The DOW CHEMICAL COMPANY, Appellant/Cross-Respondent, v. Charlotte MAHLUM and Marvin S. Mahlum, Respond ents/Cross-Appellants. |
| Court | Nevada Supreme Court |
This is an appeal and cross-appeal from a judgment against the Dow Chemical Company ("Dow Chemical") for fraud and negligence in connection with alleged defects in silicone gel breast implants manufactured by Dow Corning Corporation ("Dow Corning"). 1
The issues before this court are whether substantial evidence in the record supports the jury verdict and whether a new trial was warranted based on numerous alleged trial errors. We conclude that the verdict in this case cannot stand as to the fraud and accessory liability claims. We also conclude, however, that the verdict as to the negligence claim is supported by substantial evidence. Accordingly, we reverse the district court's judgment in part and affirm it in part. In addition, we conclude that the district court did not abuse its discretion in denying Dow Chemical's new trial motion.
In 1943, Dow Chemical and Corning Incorporated formed Dow Corning for the express purpose of developing commercial and industrial uses for silicone technology. Dow Chemical and Corning Incorporated were, and continue to be, Dow Corning's only stockholders, each owning fifty percent of Dow Corning's stock. Dow Chemical and Corning Incorporated each also initially occupied four of ten seats on Dow Corning's board of directors; later, each parent held five seats out of fifteen.
In 1948, Dr. V.K. Rowe, a toxicologist at Dow Chemical, co-authored an article entitled "Toxicological Studies on Certain Commercial Silicones," which was published in the Journal of Industrial Hygiene and Toxicology. The article, while addressing the hazards surrounding the workplace handling of silicones, concluded that commercial silicones as a group were physically "inert" and were very low in toxicity.
From the 1940s until the 1970s, "every organosilicon compound" made by Dow Corning was sent to Dow Chemical for toxicological testing. While the majority of these tests concerned industrial handling hazards associated with the tested substances, Dow Chemical reports periodically advised Dow Corning on adequate product warnings or on the need for further testing before marketing a particular product. The products containing such silicone ingredients included cosmetics, bathroom caulk, hair conditioner, and foot ointment.
In 1956, Dow Corning commissioned a study co-authored by Dow Chemical employee M.B. Chenoweth entitled "The Physiological Assimilation of Dow Corning 200 Fluid" ("the Chenoweth study"). This study, in its introductory paragraph, noted that prior Dow Chemical experiments had shown that many silicones were inert, and that the increasing use of silicones for medicinal purposes had triggered a need for information on their biological ramifications. The study further revealed that Dow Corning 200 fluid ("DC 200"), when injected intramuscularly in rats and administered orally in dogs, had migrated to all major organs of the body, including the brain. (DC 200 fluid is chemically equivalent to the Dow Corning 360 fluid ("DC 360") used in the breast implants at issue in this case .) This study was not published to the medical or scientific community.
In 1957, Dow Corning requested Dr. Rowe to set up a study on six silicone materials submitted by Dow Corning. Dr. Rowe arranged for the study ("the Miami study") to be performed by a professor of pharmacology at the University of Miami School of Medicine, Dr. William Deichmann. Although Dr. Deichmann performed the testing, Dr. Rowe designed the testing protocol for the research (i.e., the number and type of test animals, the duration of the test, and the test methods).
Two versions of the Miami study were prepared by Professor Deichmann for Dow Corning on the same date. The first, entitled "Six Silicone Materials," reported that six silicone compounds (the first five of which were different concentrations of DC 200 and the sixth, a substance identified as "Z-4141") that were fed to male and female rats resulted in no deleterious effects, with the following exceptions: (1) all six compounds reduced the number of granulocytic (white blood) cells in the peripheral blood of female rats, (2) the livers of all the rats fed the sixth compound (Z-4141) were significantly heavier than those of the control rats, and (3) the sixth compound induced a fatty infiltration or degeneration in the liver. The second version of the study, entitled "Five Silicone Materials," omitted all references to the sixth compound and its effects. The second version also explained that initial testing had suggested a depression in the number of leukocytes (white blood cells) in all female rats over a period of 90 days, but that subsequent work on control animals showed that silicone was not the cause of the decrease.
In 1959, Dow Corning established the non-profit Center for Aid to Medical Research, which provided the medical community with medical products and research regarding the uses of silicone for medical applications. In the early 1960s, Dr. Thomas Cronin, a plastic surgeon and researcher from Baylor University, approached Dow Corning about the possibility of using silicones in breast implants. In 1962, Dow Corning commenced clinical trials on silicone breast implants. Dow Corning sold $93,000.00 worth of breast implants in 1962. 2
In 1964, Dow Corning formed its Medical Products Division. Also in 1964, Dow Chemical acquired a substantial interest in Gruppo Lepetit, an Italian pharmaceutical company that had, in some foreign countries, an exclusive distribution agreement with Dow Corning to market Dow Corning's medical line, including its breast implants. Lepetit sold Dow Corning breast implants outside the United States throughout Europe, South America, and Australia.
From its inception, Dow Corning has enjoyed physical proximity with Dow Chemical, being located just "across the road and down the way" in Midland, Michigan. In 1965, Dow Corning created a Bioscience Research Department to explore the potential biological activities of organosilicon compounds. The department was housed in the same building as Dow Chemical's toxicology and research laboratories until 1970. Until 1968, Dow Corning lacked its own toxicology laboratory and staff and relied on outside contract laboratories, such as Dow Chemical, for toxicological testing and information. Dow Corning scientists often sought input from Dr. Rowe and other Dow Chemical scientists regarding silicone technology and toxicological effects. In 1968, Dow Corning established its own toxicology laboratory, but for the first two years, it shared the same building as Dow Chemical's toxicology laboratory. Dow Corning continued thereafter to share laboratory facilities and animals with Dow Chemical, and its scientists continued to consult with Dow Chemical personnel regarding toxicological research. From 1968 until 1973, Dow Corning's new toxicology laboratory and staff were headed by a former Dow Chemical toxicologist, Kenneth Olson. In 1973, Olson returned to work for Dow Chemical; Olson testified that in his capacity as the chief toxicologist for Dow Corning, he likely knew that Dow Corning's breast implants contained silicone fluid as a component.
Dow Chemical was not the sole testing facility doing research for Dow Corning. Between 1964 and 1976, Dow Corning commissioned outside laboratories, often those recommended by Dow Chemical, to conduct animal testing and long-term studies on breast implants and other silicone products. In 1967, Dow Corning entered into a joint research and development agreement with Dow Chemical "relating to the physiological effects resulting from ingestion or injection into the systems of animals or men of particular physiologically active silicones." The two companies also agreed to "jointly share the costs and ... share the profits and losses of any commercialization."
Also in 1967, Dow Corning implemented a two-year study on miniature Silastic breast implants in dogs, conducted by an outside laboratory, the Food and Drug Research Laboratories, Incorporated ("FDRL"). An internal Dow Corning memorandum in 1967 referenced that Dr. Rowe was one of the consultants who recommended this study. Although the study appears to have been principally designed by FDRL, part of the testing protocol may have involved Dr. Rowe.
In 1970, Dow Corning enlisted Dow Chemical to conduct a pathology test on the biological effects of DC 360 fluid. Gary Sparschu, a Dow Chemical research pathologist, reported to Dow Corning...
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