Product legal responsibility circumstances to observe in 2023

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(Reuters) – Some of the most closely watched U.S. product liability cases, including mass torts over opioid painkillers and the heartburn medicine Zantac, began to wind down in 2022. Others, however, are just picking up steam. Below are some of the top product liability cases to watch in the coming year.

EARPLUGS AND TALC: THE ‘TEXAS TWO-STEP’

Can companies avoid mass tort liability by unloading it into bankruptcy court? The strategy, known as the “Texas two-step,” drew attention in 2021, when Johnson & Johnson created a new subsidiary to take on claims that talc products caused cancer and placed it into bankruptcy. J&J has said that its talc products are safe.

3M Co followed suit in July, transferring liability a record-breaking mass tort over its military-issue earplugs to its subsidiary Aearo Technologies, the earplugs’ original maker, which promptly filed for bankruptcy. (3M has disputed that the maneuver is a true Texas two-step, since it did not create a new subsidiary, but the effect is similar.)

A North Carolina bankruptcy judge blessed J&J’s strategy, while an Indiana bankruptcy judge and a Florida district judge have both rejected 3M’s. The cases are now being appealed, and the outcomes could signal whether the two-step will be a viable strategy in the future – or set up a split for the Supreme Court.

SOCIAL MEDIA AND TEEN MENTAL HEALTH

Product liability litigation so far has concerned physical products – industrial chemicals, drugs, medical devices, consumer goods. A recently consolidated multidistrict litigation takes aim at something less tangible: social media platforms.

Plaintiffs allege that Meta Platforms Inc’s Instagram and Facebook, ByteDance Ltd’s TikTok and other social media platforms lead to addiction and poor mental health outcomes in teens, including eating disorders, self-harm, depression and suicidal thoughts. They accuse the companies of deliberately using algorithms that encourage addiction despite knowing the consequences. A Meta spokesperson said that the company had numerous measures in place to protect teen users, including parental controls and a feature dedicated to reporting content that promotes eating disorders. TikTok did not reply to a request for comment.

The case will test whether the traditional product liability mass tort model can be extended to a radically new context – one in which the product is intangible, and plaintiffs’ injuries are highly personal mental health problems. For now, the litigation is in its early stages but will heat up in 2023, as plaintiffs are expected to file a master complaint, and defendants their motions to dismiss, in the spring.

GUNS AS PUBLIC NUISANCE

Gun manufacturers and retailers are well protected from lawsuits seeking to hold them responsible for mass shootings, thanks to the federal Protection of Lawful Commerce in Arms Act. The 2005 law says that companies cannot be sued over crimes committed with weapons that were sold legally.

Both plaintiffs and state lawmakers have explored ways to get around the law. One that has risen to prominence recently is the use of public nuisance theories. While public nuisance claims have been more traditionally used to force companies to pay to clean up damage to the environment, states including New York, New Jersey and Delaware have passed laws allowing gun makers to be sued for creating a public nuisance – for example, through reckless marketing or by failing to stop illegal trafficking.

The laws may soon be put to the test. A gunmaker association in May lost a challenge to New York’s law, but that case remains on appeal. Meanwhile, manufacturers are suing to block the laws in New Jersey and Delaware. The outcomes of these cases could determine whether public nuisance poses a real threat to the gun industry.

ABBOTT INFANT FORMULA

Abbott Laboratories’ recall last spring of infant formula made in its Sturgis, Michigan, factory after reports of serious bacterial infections in four babies made headlines and led to a nationwide formula shortage that has persisted all year. A U.S. Food and Drug Administration inspection found serious safety problems at the plant, which was finally allowed to reopen in July under an agreement with the agency.

The company may face significant legal fallout in the coming year. Plaintiffs’ lawyers say a mass tort litigation consolidated in August could eventually include hundreds of personal injury claims and some wrongful death claims related to Similac, Alimentum and EleCare branded formula allegedly tainted with Cronobacter sakazakii bacteria, which can cause serious illness including meningitis, though as of Dec. 15 there were only 38 pending cases.

The litigation also includes class action claims on behalf of consumers whose children did not get sick but who say they paid a premium for Abbott’s formula that they would not have paid if they knew it could be contaminated.

Abbott in December moved to dismiss the claims on multiple grounds, arguing that the plaintiffs failed to support their claims that it acted negligently, and that motion remains pending. The company has said there is no evidence its formula ever made any babies sick.

THE CASE THAT COULD EXTEND STATE COURTS’ REACH

The U.S. Supreme Court in November heard arguments over whether states can require corporations to consent to the jurisdiction of their courts when they register to do business there – a case that could have potentially far-reaching impacts on product liability litigation.

The dispute arises from a petition by Virginia resident Robert Mallory, who asked the nation’s top court to revive his lawsuit in Pennsylvania state court against his former employer, Virginia-based Norfolk Southern Railway Co, claiming he developed colon cancer because of asbestos exposure on the job. He says he can sue the railway in Pennsylvania because of a state law requiring any company that registers to do business there to consent to jurisdiction, regardless of where either party in the lawsuit is actually based.

The Supreme Court ruled in 2014 in Daimler AG v. Bauman that companies can be sued where they are “at home.” Upholding jurisdiction based on Pennsylvania’s law could open the door to lawsuits against large corporate defendants in Pennsylvania or other states with similar laws, including Georgia – another tool for the plaintiffs’ bar to seek out favorable venues.

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Brendan Pierson reports on product liability litigation and on all areas of health care law. He can be reached at brendan.pierson@thomsonreuters.com.