Civil Justice Memo
No. 36 February 1999
Products Liability and the Threat to Contraception
In the 1970s, science promised American women a contraceptive revolution. Things haven’t worked out the way they were supposed to. Today, American women have no more—and possibly fewer—birth control options than women in the rest of the developed world. Only three new contraceptive products have reached the American market in the last decade—Depo-Provera, the female condom, and Norplant—and each represents a variation on already existing technology. Other new products in the near-term pipeline, including a cervical ring and a patch, are simply new delivery vehicles for existing hormonal agents. The once-promising idea of contraceptives based on the human immune system remains a long way off; even contraceptive implants and injections for men, now being tested abroad, still rely on hormone technology. Today, the most popular birth control method among American women is surgical sterilization.
What happened to the promised contraceptive revolution? One problem is that research funding dried up, especially within the for-profit sector. According to one report, American companies spent a mere $22 million on contraceptive research in 1995, a year in which Americans spent $2.9 billion on birth control products. In fact, only two American for-profit companies, Ortho and Wyeth-Ayerst, continue to fund significant research on contraceptive development. Instead, nearly all birth control research is now carried out by philanthropic entities; the three nonprofits active in the area, together with the National Institute of Health, have a total contraceptive research budget of about $50 million, less than one-fifth of what it ordinarily takes to bring a single new drug to market.
Pharmaceutical companies frequently attribute their withdrawal from contraceptive research to their fear of product liability litigation. In response, some defenders of the American tort system have portrayed these fears as exaggerated or even disingenuous. Instead, these supporters contend, the tort system penalizes only bad or dangerous innovations, not innovation in general, and responsible manufacturers should have no qualms about introducing new products that they genuinely and reasonably believe are safe.
Unfortunately, a screening of the history and current status of contraceptive litigation makes the manufacturers’ concerns seem only too plausible. As medical experts have long known, because contraceptives are used by otherwise healthy people—a population unwilling to tolerate even limited side effects—they are unusually susceptible to the risk of a so-called “mass tort” episode in which, after a period of apparent market success and consumer acceptance, the product becomes the subject of widespread concern and thousands of users sue within a short period of time, claiming injury. Not surprisingly, such litigation can be ruinous to defendants when significant numbers of plaintiffs prevail in court. But, mass tort litigation exacts a staggering toll on a defendant’s operations even when a company’s legal defense is largely or completely successful. And, unfortunately, there seems to be little that a responsible and cautious manufacturer can do to avoid becoming embroiled in a mass tort, short of avoiding entirely product lines perceived as vulnerable. Academic models of perfect—or imperfect—deterrence notwithstanding, manufacturers behave quite rationally when they choose not to devote their company’s discretionary resources to developing products that carry the risk of a disaster that could overcome the entire company, including its non-contraceptive- related lines of business.
Where exactly did the mass tort come from? At least part of the answer is that mass products liability litigation is the by-product of some procedural innovations intended to aggregate claims and speed their resolution. Changes in federal rules first made it easier to assemble class actions, a litigation device that permits a few representative plaintiffs to sue on behalf of hundreds or even thousands of other parties with similar claims. And, in a further effort to achieve judicial efficiency, particularly in the mass tort context, Congress and the federal courts developed the device known as multi-district litigation (MDL) which permits similar cases from many federal districts to be consolidated in a single court for pretrial proceedings, including settlement negotiations. Finally, judicial expansion of the time-honored doctrines of res judicata and collateral estoppel have made it easier to bind a losing defendant in subsequent suits brought by new plaintiffs with similar claims—even though a loss (or several losses) by pioneering plaintiffs will do nothing to bind later plaintiffs in subsequent suits.
These seemingly neutral procedural innovations interacted with some distinctive aspects of the American legal system to create the current litigation explosion. First of all, there is the American institution of the contingent fee—traditionally one-third of the plaintiff’s net recovery after out-of-pocket costs—which permits plaintiffs to sue with little risk of personal expense. America is also virtually unique in its use of lay juries to decide civil cases, a practice that carries with it the attendant risks of sympathy verdicts, confusion about complex scientific evidence, and prejudice against large corporate defendants. Moreover, since the 1970s, American substantive tort law has evolved in a number of ways that increase the likelihood of recovery as, for example, with the shift away from negligence toward strict liability in which a manufacturer pays damages for injuries whenever a jury finds that its product has a “defect” that was not obvious to the consumer. In addition, case law has begun to recognize suits in which plaintiffs can claim damages for exposure to a risk, even without proof that the risk has yet resulted in any concrete harm.
The result of all these factors has been the rise of “entrepreneurial lawyers” who specialize in mass recruitment, mass prosecution, and mass settlement of personal injury cases. These attorneys have created new institutional structures previously unknown to the plaintiff's bar, including steering committees with extensive co-operation between firms, investment pools for risk and profit sharing, stables of allied experts, and shared computerized data- bases—they have become what one observer calls “investment engines” standing ready to mobilize for mass torts. And, as Frederick the Great famously said of a standing army, once you have one, the tendency is to use it.
Entrepreneurial lawyers first deployed their forces in the contraceptive field during the Dalkon Shield disaster, the worst medical debacle in the modern history of birth control. In 1976, the A.H. Robins company withdrew its Dalkon Shield intrauterine device (IUD) from the market after scientists found that the device caused unacceptably high rates of pelvic infection and other serious health problems, including septic abortions and infertility, in its users. Approximately 2.2 million women were fitted with the device before its withdrawal. Thousands of lawsuits followed, forcing Robins into bankruptcy. To this day, the Dalkon Shield affair remains the sole episode in which the American tort system rendered an unambiguous verdict against a contraceptive product and its manufacturer.
Much less known to the general public is the subsequent—and cautionary—legal tale of the Copper-7, once the most popular IUD in the U.S. The G.D. Searle company introduced the Copper-7 to the American market in the mid-1970s. Between 1974 and 1986, about 10 million American women used the Copper-7. Unlike the Dalkon Shield, the Copper-7 enjoyed Food and Drug Administration approval and received wide endorsement by health advocates. But, when Robins’ 1984 bankruptcy stalled the Dalkon Shield litigation, Searle became a target of opportunity for plaintiffs’ attorneys who had already developed expertise in IUD cases and who found it natural to accept cases from claimants who had developed health problems that they attributed to their use of the Copper-7. By 1986, Searle had 500 IUD suits pending against it.
In the meantime, in 1985, just before the Copper-7 litigation broke, Searle had been acquired by the large chemical company, Monsanto. Monsanto was actually interested in Searle’s $1.5 billion per year Nutrasweet business and got Searle’s other product lines as a seeming afterthought. In 1986, faced with difficulties securing further product liability insurance and the expense of defending the already existing lawsuits against it, Searle stopped selling the Copper-7 in the United States. At the time, the Copper-7 was the most popular IUD on the American market; it continued to be widely used in both Canada and Europe, where IUDs are the most popular form of birth control.
One of Searle’s most formidable adversaries was the Minneapolis law firm of Robins [no relation to A.H. Robins], Zelle, Larson & Kaplan, which—fuelled by a war chest drawn from the $37 million settlement of its inventory of Dalkon Shield cases—spent four years culling through and computerizing 800,000 documents on behalf of its approximately 150 Copper-7 clients, readying itself to proceed one jury at a time if necessary. In 1988, two years after the Copper-7 became unavailable to the U.S. market, Robins, Zelle saw the first major return on its investment.
In that year, a Minnesota jury awarded one of Robins, Zelle’s clients, a young married woman named Esther Kociemba, $8.75 million on her claim that a Copper-7 IUD had triggered a pelvic infection that left her infertile. Most of that sum represented punitive damages to chastise Searle for its purportedly flagrant disregard of consumer safety—this despite the jury’s express rejection of Ms. Kociemba’s claim that the company had negligently designed or manufactured the IUD and even though the IUD was available only through physicians and carried a warning clearly describing its risks. The judge eventually lowered the award, but by less than 10 percent, to $8.15 million dollars.
Monsanto may have remained under the happy illusion that, as an acquiring parent company, its assets were safe from plaintiffs’ attacks. But, later that week, it received a rude awakening. Another Copper-7 plaintiff, also represented by Robins, Zelle, received court permission to add Monsanto itself as a defendant in her suit. Her lawyers argued that, upon acquiring Searle, Monsanto had incurred its own obligation to warn prospective users of the Copper-7’s dangers and, by failing to do so, had become a party to Searle’s supposed fraud on consumers. Now, juries—which can levy punitive damages again and again in different courtrooms based on the same underlying corporate misconduct—could look at Monsanto’s balance sheet, not just the subsidiary’s, in coming up with their numbers. By the end of the week, Monsanto’s share price had fallen by 11 percent, wiping out a fortune in shareholder value. The financial papers were full of dire predictions of “the next A.H. Robins.”
Searle and Monsanto did not let that happen. Within months, Searle had settled not only the Kociemba suit but 76 other Copper-7 suits handled by Robins, Zelle. Over 20 years after introducing the Copper-7 and more than 10 years after removing the device from the U.S. market, Searle was still mopping up the last lawsuits over the Copper-7. As of late 1996, of the 2,063 suits filed against Searle, 40 U.S. suits and 346 foreign complaints remained. Most cases had settled for nominal sums or were dismissed. Of the 24 cases actually tried, Searle won 19 and lost 5. Four of those cases cost Searle a total of $689,000 in damages, and the fifth was Kociemba.
To sum up, Searle prevailed in the substantial majority of the suits actually tried; the product itself was not discredited in the eyes of health authorities; and to this day the Copper-7 continues to enjoy FDA approval even after its informal withdrawal from the market. In fact, several years ago the nonprofit Population Council developed an improved variant of the Copper-7 called the Copper-T. The Copper-T is now the most widely used IUD in the world; after an uneventful return to the U.S. market through a small company, Ortho has quietly taken up the device for wider distribution. Yet despite this record, Searle faced 20 years of grueling litigation, and an acquiring company, although uninvolved in any of the key decisionmaking, faced the threat of liability at substantial risk to its shareholders.
The most sobering illustration of the dangers of mass tort litigation in the contraceptive field, however, is still playing itself out, even at this writing. In 1991, Wyeth-Ayerst, a subsidiary of American Home Products, introduced the Norplant contraceptive to the U.S. market after 30 years of development and testing. Norplant is a device made up of six tiny hormone-releasing rods that are coated in silicone and implanted under the skin in the arm; its effects last for five years. It has the approval of the FDA, the World Health Organization, and the endorsement of the American Society for Reproductive Medicine. About a million American women tried it and Norplant quickly became the tenth most popular form of birth control among American women; worldwide 4.5 million women have used the device. In its best year, 1992, Norplant accounted for 6 percent of its manufacturer’s profits, against less than 2 percent of its sales.
The magic word, however, was silicone. The same lawyers and medical experts who had just obtained a $4 billion settlement against makers of silicone breast implants—a settlement cast into serious question by the last month’s report from a panel of court-appointed neutral medical experts that there is no scientific evidence that the introduction of silicone into the body causes almost any of the harms claimed by plaintiffs—turned their attention to Norplant with its silicone coating. The lawyers were the same; some even harkened back to the Copper-7 litigation in the 1980s. Their favored scientific and medical experts were the same. Even the claims were largely the same—the now-discredited shifting constellation of symptoms attributed to an ill-defined array of auto-immune disorders. Published reports suggest that at the peak of the litigation, there were approximately 50,000 individual Norplant claims pending against Wyeth and American Home Products. Faced with four cases comprising 145 individual plaintiffs, one beleaguered Pennsylvania federal judge noted that the plaintiffs’ complaints were virtually identical, right down to the typos. In the meantime, new Norplant insertions in the U.S. dropped from 800 a day to 60.
In 1995, with 98 federal suits pending (representing thousands of individual claimants), the panel of judges charged with overseeing multi-district litigation ordered that most of the federal suits be consolidated in Texas for purposes of discovery. The plaintiff's bar celebrated the decision with a wingding in Houston’s Four Seasons Hotel that drew 100 attorneys for two days of planning and strategy. One press report of the conference described individual lawyers trumpeting their offices’ handling of 500, even 1,000 or more, Norplant cases. They talked of a computerized central document depository to feature “bullets through the heart or bullets through the brain that will knock the defense to the dirt.” One lawyer expressed optimism that the meeting augured great cooperation between counsel, unlike a similar occasion convened on behalf of breast implant litigators that, as he recalled, had degenerated into an actual food fight.
The Norplant litigation quickly came to exemplify many of the most controversial features of mass tort litigation:
Unwieldiness and assembly-line treatment: The law firm of Ness, Mottley, Loadholt, Richardson, and Poole alone boasted some 20,006 plaintiffs as clients in the federal MDL. One court order last year required discovery of Ness, Motley clients to proceed in the staggering form of interrogatory answers and production of medical records on behalf of roughly 3,500 plaintiffs every 60 days. The court required law firms with fewer than 600 clients to turn over responses at the more leisurely pace of 100-plaintiff blocks every 60 days.
Swelling the ranks with weaker claims: After repeated efforts to obtain medical histories and similar information from claimants, on September 15, 1998, Judge Richard Schell dismissed with prejudice the claims of some 1,131 plaintiffs who repeatedly failed to comply with the court’s discovery orders, with the disturbing conclusion that counsel had simply lost track of their clients—and that the plaintiffs themselves were indifferent to their own claims. In fact, the publicity attendant on mass tort litigation draws weaker claimants into the fray, while case consolidation and the prospect of settlement make it economically attractive for lawyers to file suit on behalf of those whose cases might not have justified individual efforts. Lawyers know that they are more likely to obtain lucrative positions as lead counsel in class action or multi-district litigation if they bring larger numbers of cases to the table. And, more often than not, this leads to a dynamic in which so many cases are headed to trial that both sides come under intense pressure to settle; simply put, both sides have so much invested in the litigation that neither feels it can risk losing.
Efforts to certify an overbroad and unmanageable class: In August 1996, Judge Schell denied plaintiff’s motion to certify a nationwide class action representing “all persons . . . who have suffered or may suffer injury as a result of using Norplant” (emphasis added). Reasonably enough, Judge Schell had reservations regarding whether factual issues in all the cases were sufficiently alike to make the consolidated and representative treatment of a class action appropriate. Instead, he ordered that three “bellwether” cases go forward toward trial, each involving a group of five plaintiffs, in order to develop a clearer record on which to determine whether he should certify a class.
Immature science and legal theories: As the charges against silicone collapsed under the weight of developing scientific evidence, plaintiffs' lawyers shifted to claims involving the more mundane—and well-warned of—side effects associated with hormonal birth control methods. In the federal MDL, plaintiffs actually abandoned a number of their legal theories, including negligent manufacture, negligent design, and design defect, in order to concentrate on their claims that American Home Products failed to give adequate warning of Norplant’s alleged side effects.
In March 1997, as part of the initial “bellwether” trial, Judge Schell dismissed the first five plaintiffs’ cases outright, holding that, under applicable law, the plaintiffs could not show their doctors that inadequate disclosure of Norplant’s potential side-effects was a direct cause of their alleged injuries. In fact, each plaintiff’s personal physician testified that the manufacturer fully informed him of the danger of the side effects suffered by his patient and that neither that information, nor additional information contained in company files, would have changed his decision to prescribe Norplant. In the course of his decision, currently on appeal to the Fifth Circuit, Judge Schell hinted that some of the remaining bellwether cases were similarly vulnerable.
Faced with these reverses, plaintiffs changed their theater of operation to the ostensibly more sympathetic Texas state court system, where some 7,500 individual Norplant claims are now pending, approximately 4,500 of them consolidated before Judge Mario Ramirez in Hidalgo county at the far southern tip of the state. The Hidalgo County action carried the fondest hopes of plaintiffs’ attorneys across the country since it had survived the same pretrial motions that had proven fatal to the federal litigation and was ready to be tried to a jury. When the case went to trial in January 1998, however, plaintiffs’ counsel were in for a most unpleasant experience. A week into trial, one plaintiff’s attorney accused another of telling his client to lie about whether she had ever been examined by a certain expert witness. Judge Ramirez then granted a mistrial over American Home Products’ vehement objections that the plaintiffs were trying to obtain a mistrial because they were losing the case. When the shouting was over, there were multiple motions for sanctions in the trial itself and a series of cross-complaints before the state bar for attorney misconduct. The case has yet to be tried again. And, in May 1998, in an unrelated disciplinary proceeding, two of the most active members of the Texas plaintiffs’ bar were disqualified from further participation in state Norplant cases on the ground that they had hired a legal assistant who had previously worked for the defendant; this left 3,000 women in four Texas counties without representation.
The next Texas state case to go forward was, if anything, an even greater debacle for plaintiffs. On September 11, 1998, after two weeks of testimony, an 11-member Brownsville jury took a mere two hours to return a defense verdict. The Brownsville case was of particular interest because the area had been the target of an advertising campaign against “lawsuit abuse” funded by contributions from manufacturers. Not only did the jury reject plaintiff’s claims of injury, they openly questioned why she had failed to see a doctor during the two years she had supposedly experienced symptoms. One juror suggested that “It was just like she just wanted to hit the lotto;” another called it a “ridiculous” grab for money.
Where does the Norplant litigation stand after the Brownsville verdict? Much of it remains below the radar screen in state courts around the country. But, with some of the gag orders that had previously inhibited comment now out of the way, Wyeth-Ayerst reports that 3,700 Norplant lawsuits remain outstanding against it and American Home Products, many involving more than one plaintiff. Judge Schell himself has reported that, as of September 30, 1998, in the federal MDL alone, 3,083 cases remain on hold while the Fifth Circuit appeal is under consideration.
As to results, the company reports that 14 cases were dismissed on the merits before trial and about 7,000 claims were dismissed, presumably through settlement, while many others were voluntarily withdrawn. The best indication is that there have been only three trials; two ended in mistrials and the third in a defense victory. If plaintiffs’ counsel’s comments in the press are any indication, the litigation is foundering everywhere, having run into a host of unfavorable pretrial rulings and delays or denials of class certification; some law firms have even dropped out of the litigation altogether. Yet, it would be rash to predict the future course of the litigation, given the sheer numbers of individual claimants being processed and the ever-live chance that one of the shifting medical and legal theories—or a sympathetic plaintiff—will finally succeed in unlocking the tumblers.
Even if American Home Products ultimately prevails in every remaining case, it will still have reason to regret the day it introduced Norplant. In January 1998, a merger between SmithKline Beecham and American Home Products fell through a week after it was announced, and the financial press reported that concern about American Home Products’ Exposure in the Norplant and (combination diet drug) fen-phen litigation was one of the reasons. In October 1998, a mere 10 months later, a second merger, this time between American Home Products and Monsanto fell though for the same reasons. As they say, the market works and exacts a high price for risk.
Is anyone surprised that American companies spend 20 times as much on cosmetics research as on contraceptive development? On this record, what rational business planner wouldn’t concentrate on lipstick and deodorant?
Almost three years ago, when Congress last seriously debated the question of products liability reform, a number of prominent women’s groups opposed limits on damages. According to statements made by the leaders of these groups, liability limits should be of concern to women because the effect of these restrictions would fall more heavily on women than on men.
How, exactly, did the defense of the tort system come to be defined as a women’s issue? Two rationales were offered. The first—rather ironic in light of the history above—was that “women’s products” are more likely to generate product liability suits, presumably because women’s products are marketed with less concern for user safety than those aimed at men. The second rationale was that because many women who file personal injury lawsuits are not in the labor market, they are less likely than men to receive high “economic damage” awards predicated on lost earnings; thus, they stand in greater need of the “non-economic” damages that the proposed reform would have capped at the half-million-dollar level.
On the face of it, an argument can certainly be made that an unusually high share of products giving rise to mass tort litigation are related to women’s health and childbearing. Aside from the contraceptive cases already discussed, and silicone breast implants, the list could be extended to include the morning sickness drug Bendectin, the artificial estrogen compound diethylstilbestrol (DES), and tampon-related toxic shock syndrome. At the same time, one could assemble an equally impressive list of mass tort cases in which the plaintiffs were mostly, sometimes exclusively, men: Agent Orange (the first real mass tort, consolidating more than 600 actions representing claims by, among others, some 2.4 million Vietnam veterans, their wives and children, born or unborn, against seven corporate defendants and the U.S. Government), the heart-valve cases, the anticholesterol drug MER/29, penile implants, or the most overwhelming mass tort of all—asbestos exposure, predominantly a men’s action. As a basis for comparison, from 1974 to 1986, the peak years for Bendectin litigation, Bendectin cases constituted 1.7 percent of all products liability cases filed in federal court. In 1990 alone, asbestos cases were approximately 6.4 percent of all civil filings in the United States.
It may be more accurate, and better capture the realities of litigation, to say that claims of injury involving childbearing, children, and the reproductive system seem unusually likely to draw notice if they generate mass torts. Even in the case of Agent Orange, in which men were the primary subjects of exposure, a substantial share of complainants alleged injuries such as infertility, loss of conjugal relations, and genetic damage. But, the volatility of these issues undercuts the claim that the tort system undervalues women’s injuries because they are frequently “non-economic” in nature. In fact, juries have repeatedly shown intense sympathy in the form of large monetary awards for loss of reproductive potential and injury to family relationships. Thus, in one famous case, a jury required A.H. Robins to pay $1.75 million in compensatory and $7.5 million in punitive damages to a woman whose use of the Dalkon Shield eventually led her to undergo a hysterectomy, although at the time of the operation, she was in her 40s and already had three children.
In short, our current legal system gives companies good reason to avoid the development and manufacture of products that may cause risks relating to fertility and childbearing. Contraceptives are a particularly vulnerable product because, in addition to implicating reproductive potential, they are an elective product used by otherwise healthy women. While patients who suffer serious illnesses may willingly accept the risks of treatment with potent therapeutic drugs, even slight side effects from a discretionary product may provoke a consumer, who considers herself otherwise healthy, to bring suit.
Unless they can somehow change the medical, legal, or economic realties of this situation, women’s groups’ well-intentioned skepticism about legal reform will be in conflict with their widely-held commitment to contraceptive choice. It is increasingly clear that an unintended consequence of the current product liability system is to limit women’s informed choices in the area of birth control.
The case of childhood vaccines, another product area devastated by mass tort litigation, provides a useful parallel. By 1986, many manufacturers of childhood vaccines had dropped out of the market and the country had less than six months of vaccine stores left. Congress reacted to the crisis by passing the National Vaccine Injury Compensation Program, that while providing some specified recourse for families to pursue injury claims, also discouraged further private mass tort litigation against the industry. In 1990, just four years later, a New York Times article heralded a major revival in vaccine research by private pharmaceutical companies. Among the fruits of that research is the development of vaccine technology that is safer than the older vaccines that occasioned the program in the first place.
Women (and men) who want to preserve and widen contraceptive choice should support similar product liability reform—and stop defending an unworkable status quo.