(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).
Argued January 3 , 200 7 -- Decided March 29 , 2007
LEFELT, P.J.A.D. (temporarily assigned), writing for a majority of the Court.
Plaintiff Robert Rowe, a Michigan resident, filed a complaint in New Jersey against two New Jersey pharmaceutical manufacturers, Hoffman-Law Roche, Inc. and Roche Laboratories, Inc. Rowe alleged the defendants failed to warn adequately about the health risks associated with Accutane, a drug manufactured by defendants and approved in 1982 by the United States Food and Drug Administration (FDA) to treat acne. Most of defendants’ Accutane-related manufacturing and sales activities and FDA communications took place in or emanated from New Jersey.
Rowe has lived in Michigan his entire life. In February 1997, a Michigan
physician prescribed him Accutane. The prescription was filled in Michigan. Rowe used the
Accutane in Michigan for three months. About three months after he discontinued his
use of Accutane, Rowe became depressed and contemplated suicide. In September 1997, he
crashed a car into a house during an apparent suicide attempt. Thereafter, he
sought psychiatric treatment in Michigan and Ohio. In 2001, Rowe sued defendants in
New Jersey, alleging that Accutane caused him to become severely depressed and suicidal
and that defendants failed to warn him adequately about these risks. He also
claimed that defendants did not adequately test Accutane and were aware of its
potential adverse psychological effects, but failed to advise the FDA.
Defendants moved for summary judgment, seeking dismissal of the lawsuit on the ground
that Michigan law applied. Under Michigan law, the FDA approval results in a
conclusive determination that the health risk warnings issued by defendants were adequate. Under
New Jersey law, FDA approval creates only a rebuttable presumption of adequacy. The
trial court dismissed Rowe’s complaint, concluding that as between Michigan and New Jersey,
Michigan had the strongest governmental interest in applying its statute to the failure-to-warn
issue.
A divided panel of the Appellate Division reversed, finding that New Jersey had
the strongest interest in applying its law, as the alleged conduct of defendants
with respect to the Accutane warning had occurred largely in New Jersey; New
Jersey has a strong interest in deterring the manufacture of unsafe products within
its borders; and Michigan’s purpose in enacting its statute may have been to
protect only Michigan businesses, an interest not implicated here. Rowe v. Hoffman La
Roche, Inc.,
383 N.J. Super. 442 (App. Div. 2006). Judge Wefing dissented, noting
that Michigan’s interests also include concern about the effect of litigation on the
availability and cost of prescription medications for its citizens; New Jersey had no
interest in compensating an out-of-state resident; and by applying New Jersey law, our
courts would become a haven for out-of-state litigants who reside in states that
protect pharmaceutical manufacturers.
The matter comes before the Court as an appeal as of right based
on the dissent in the Appellate Division.
HELD: Michigan law applies to the failure-to-warn claim brought by a Michigan resident
alleging injuries in Michigan involving an FDA-approved prescription drug prescribed and used in
Michigan. Michigan’s interest in promoting the availability of affordable prescription medications to its
citizens outweighs New Jersey’s interest in deterring New Jersey corporations from providing inadequate
warnings.
1. The flexible, two-step governmental-interest analysis is applied to determine the choice of
law question in tort suits filed in New Jersey. The first step requires
a determination of whether a conflict exists between the laws of the interested
states. If there is no conflict, the forum state applies its own law.
If there is a conflict, the second step requires a determination of which
state has the greatest interest in governing the issue. The Court must identify
the governmental policies underlying the law of each state and determine whether those
polices are affected by each state’s contacts to the litigation and to the
parties. (pp. 7-8)
2. The Michigan statute, Mich. Comp. Laws § 600.2946(5), creates a conclusive presumption that
a drug is not defective if the drug and its labeling were approved
by the FDA. New Jersey’s statute, N.J.S.A. 2A:58C-4, provides that FDA approval creates
only a rebuttable presumption that a drug warning is adequate. Thus, an actual
conflict exists. The Court must determine whether the policies underlying the statutes are
affected by the states’ contacts to the litigation and the parties. If a
state’s contacts do not align with the policies related to the disputed issue,
then that state generally will not be found to have the greatest interest
in governing the issue. (pp. 9-11)
3. The New Jersey statute was enacted to balance the interest of the
public and the individual, with a view towards economic reality. It was also
intended, at least in part, to establish clear rules with respect to specific
matters where uncertainty had been created by New Jersey court decisions. (pp. 11-12)
4. In this case, New Jersey’s interest in allowing Rowe’s suit is not
as strong as its interest was in Gantes v. Kason Corp.,
145 N.J. 478 (1996), where the Court held that New Jersey’s statute of limitation, not
Georgia’s statute of repose, applied to a products liability dispute. In Gantes, New
Jersey’s interest in discouraging the manufacture and sale of unsafe products was furthered
because the plaintiff’s suit was timely. Georgia’s interest was not frustrated because its
statute of repose was designed to stabilize Georgia’s insurance industry and to keep
stale claims out of its courts. (p. 13).
5. The New Jersey statute at issue in this case impliedly accepts that
FDA regulations and labeling requirements are sufficient, at least in part, to deter
pharmaceutical companies from manufacturing unsafe drugs. The law’s purpose is not to encourage
tort recoveries by plaintiffs. It is to reduce the burden placed on manufacturers
of FDA-approved products by product liability litigation. The Legislature carefully balanced the need
to protect individuals against the need to protect an industry with a significant
relationship to our economy and public health. New Jersey’s interest in applying its
law to Rowe’s failure-to-warn issue is thus congruent with Michigan’s interest. (pp. 13-15)
6. The Michigan statute was adopted with the express purpose of immunizing pharmaceutical
companies that market FDA-approved prescription drugs from liability in products liability suits. Its
purposes is also to make prescription drugs more affordable and available to Michigan
residents, as unlimited liability for drug manufacturers adds substantially to their cost. The
statute’s purpose was not limited to protecting Michigan pharmaceutical manufacturers. (pp. 15-19).
7. In this case, New Jersey’s interest in ensuring that its corporations are
deterred from producing unsafe products and providing inadequate warnings in the context of
an FDA-approved drug is limited. That interest is outweighed by Michigan’s interest in
making more prescription drugs available at reasonable cost to its citizens. To allow
a life-long Michigan resident who received an FDA-approved drug in Michigan and alleged
injuries sustained in Michigan to bypass his own state’s law and obtain compensation
for his injuries in this State’s courts completely undercuts Michigan’s interests, while overvaluing
New Jersey’s true interest in this litigation. (pp. 19-20).
The judgment of the Appellate Division is REVERSED and the case is REMANDED
to the Law Division for reinstatement of the trial court’s order dismissing the
lawsuit.
JUDGE STERN, P.J.A.D., (temporarily assigned), joined by JUSTICE LONG, has filed a decision
CONCURRING IN PART and DISSENTING IN PART, expressing the view that although the
governmental-interest analysis controls and there is an actual conflict of interest between the
two states’ laws, application of that analysis and the principles of Gantes results
in the conclusion that New Jersey’s interest in deterring its companies from providing
inadequate warnings outweighs Michigan’s interests.
JUSTICE S LaVECCHIA, WALLACE, RIVERA-SOTO and HOENS join in JUDGE LEFELT’s opinion. JUDGE STERN,
joined by JUSTICE LONG , filed a separate opinion, concurring in part and dissenting
in part. CHIEF JUSTICE ZAZZALI and JUSTICE ALBIN did not participate.
SUPREME COURT OF NEW JERSEY
A-
19 September Term 2006
ROBERT ROWE,
Plaintiff-Respondent,
v.
HOFFMAN-LA ROCHE, INC., and ROCHE LABORATORIES, a member of the Roche Group,
Defendants-Appellants,
and
ABC CORPORATION (said name being fictitious) and DRS. JOHN DOE 1-10,
Defendants.
Argued January 3, 2007 – Decided March 29, 2007
On appeal from the Superior Court, Appellate Division, whose opinion is reported at
383 N.J. Super. 442 (2006).
Paul W. Schmidt, a member of the District of Columbia bar, argued the
cause for appellants (Gibbons, Del Deo, Dolan, Griffinger & Vecchione, attorneys; Mr. Schmidt,
Michael R. Griffinger, Diane E. Lifton and Kristine V. Ryan, on the briefs).
Brian J. Molloy argued the cause for respondent (Wilentz, Goldman & Spitzer, attorneys;
Mr. Molloy and Jeffrey J. Brookner, on the brief).
Ingo W. Sprie submitted a brief on behalf of amicus curiae Pharmaceutical Research
and Manufacturers of America.
Anita Hotchkiss, Steven A. Karg and Kerry J. Roach submitted a joint brief
on behalf of amici curiae Product Liability Advisory Council, Inc. and New Jersey
Defense Association (Porzio, Bromberg & Newman and Norris, McLaughlin & Marcus, attorneys; Ms.
Hotchkiss, Mr. Karg, Ms. Roach, John T. Chester, of counsel and on the
brief).
Michael G. Donahue, III, submitted a brief on behalf of amicus curiae Association
of Trial Lawyers of America-New Jersey (Stark & Stark, attorneys).
Edward J. Fanning, Jr., submitted a brief on behalf of amicus curiae Healthcare
Institute of New Jersey (McCarter & English, attorneys; Mr. Fanning and David R.
Kott, of counsel; Mr. Fanning, Mr. Kott and Marielena Piriz, on the brief).
JUDGE LEFELT (temporarily assigned) delivered the opinion of the Court.
Plaintiff Robert Rowe, a Michigan resident, filed a complaint in Essex County against
two New Jersey pharmaceutical manufacturers, defendants Hoffmann-La Roche, Inc. and Roche Laboratories, Inc.
Rowe alleged that the manufacturers failed to warn adequately about the health risks
associated with Accutane, a drug manufactured by defendants and approved in 1982 by
the United States Food and Drug Administration (FDA) to treat recalcitrant nodular acne.
Under Michigan law, the FDA approval results in a conclusive determination that the
health risk warnings issued by defendants regarding the drug were adequate. Mich. Comp.
Laws § 600.2946(5)(2006). New Jersey law, however, considers the FDA approval to have created
only a rebuttable presumption of adequacy. N.J.S.A. 2A:58C-4. Thus, plaintiff’s suit is viable
in New Jersey but precluded in Michigan. After comparing Michigan’s and this State’s
governmental interests in resolving the adequacy-to-warn issue, we conclude that Michigan’s interest is
paramount and its conclusive presumption applies. Consequently, we reverse the contrary Appellate Division
decision, Rowe v. Hoffmann-La Roche Inc.,
383 N.J. Super. 442 (App. Div. 2006),
and reinstate the trial court’s decision dismissing Rowe’s complaint.
I.
The facts and procedural history pertaining to this dispute are relatively uncomplicated. Hoffmann-La
Roche is a New Jersey corporation, and while the record does not reveal
Roche Laboratories’ state of incorporation, both companies have their principal place of business
in Nutley, New Jersey. Hoffman-La Roche manufactures, labels, and packages Accutane in Nutley,
and Roche Laboratories markets, sells, and distributes the drug also from Nutley. While
some production and marketing efforts occurred outside New Jersey, almost all of the
manufacturing and sales activities by the two companies (hereinafter Hoffmann), including Accutane-related communications
with the FDA, took place in or emanated from New Jersey.
Robert Rowe has lived in Michigan all of his life. When Rowe was
sixteen years old, in February 1997, a Michigan physician prescribed Accutane to treat
his recalcitrant acne. A Michigan pharmacist filled Rowe’s prescription, and he used the
medicine in Michigan for about three months until May 1997. Approximately three months
after he discontinued his use of Accutane, in August 1997, Rowe became depressed
and contemplated suicide. In September 1997, Rowe was arrested after crashing a car
into a house during an apparent suicide attempt. Thereafter, Rowe sought psychiatric treatment
in Michigan and Ohio.
In March 2001, Rowe brought suit against Hoffmann in Essex County, New Jersey.
He alleged that Accutane caused him to become severely depressed and suicidal and
that Hoffmann failed to warn him adequately about these risks. He also claimed
Hoffmann did not adequately test Accutane, and that Hoffmann was aware of the
drug’s potential adverse psychological effects but failed to advise the FDA of those
effects.
After denying Rowe’s allegations, Hoffmann moved for summary judgment, seeking dismissal of the
lawsuit, contending that Michigan law governed. The trial court, relying on the Appellate
Division’s decision in Deemer v. Silk City Textile Machine Co.,
193 N.J. Super. 643 (App. Div. 1984), concluded that between New Jersey and Michigan, Michigan had
the strongest governmental interest in applying its statute to the failure-to-warn issue, and
dismissed Rowe’s complaint. A divided panel of the Appellate Division reversed. Rowe, supra,
383 N.J. Super. at 442.
The Appellate Division majority disagreed with the trial court and held that New
Jersey had the strongest interest in applying its law to Rowe’s failure-to-warn claim.
Id. at 466. The majority recognized that “the cited conduct of [Hoffmann] with
respect to the Accutane warning occurred largely in New Jersey.” Id. at 456.
Relying on this Court’s opinion in Gantes v. Kason Corp.,
145 N.J. 478
(1996), the majority recognized and weighed our strong interest in deterring the manufacture
of unsafe products within its borders. Rowe, supra, 383 N.J. Super. at 458-59.
The majority found our interest outweighed Michigan’s because Michigan’s purpose in enacting the
provision at issue may have been to protect only Michigan businesses, an interest
not implicated here because Hoffmann is not a Michigan drug manufacturer. Id. at
460-61. The majority further concluded that no evidence existed in the record to
support a finding that Michigan enacted its statute in response to a shortage
of prescription drugs in that state. Ibid. Even if Michigan intended to create
a “more hospitable commercial atmosphere, to encourage drug manufacturers to locate in that
state,” the majority believed that application of New Jersey’s statute would foster that
purpose. Id. at 461 n.5.
Judge Wefing dissented. She noted that, contrary to the majority’s assertion, the policy
behind Michigan’s statute was not limited to the protection of Michigan businesses. Id.
at 467. The judge found that “the actions of the Michigan Legislature sprang
from concern about the effect of litigation on the availability and cost of
prescription medications for its citizens.” Id. at 469. The judge also questioned the
majority’s analysis of New Jersey’s interest, concluding that this State had no interest
in compensating Rowe because Rowe was a Michigan resident. Ibid. Finally, Judge Wefing
was concerned that by applying New Jersey law to this issue, New Jersey
courts would become a haven for out-of-state litigants who reside in states that
protect pharmaceutical manufacturers. Id. at 470.
II.
The parties’ arguments on appeal mirror the two Appellate Division opinions, with Rowe
advancing the majority’s views and Hoffmann siding with Judge Wefing.
Although the Association of Trial Lawyers of America-New Jersey (ATLA) supports the Appellate
Division majority’s opinion, all of the other amici curiae, Product Liability Advisory Council,
Inc., Healthcare Institute of New Jersey, New Jersey Defense Association, and the Pharmaceutical
Research and Manufacturers of America, contend the majority erred by applying New Jersey
law to this dispute. ATLA and the Healthcare Institute also take conflicting positions
regarding the decision’s impact on New Jersey’s economy. The Product Liability Advisory Council
and the New Jersey Defense Association request that this Court take judicial notice
of their contention that since 1996, over ninety percent of mass-tort claims against
New Jersey pharmaceutical companies in New Jersey courts have been brought by non-New
Jersey residents. The Advisory Council and the Defense Association conclude by arguing that
“New Jersey’s strong interest in discouraging . . . forum shopping and the
associated expense that many thousands of out-of-state residents place on this state’s courts
and its taxpayers should therefore be accorded great weight.”
III.
When law suits are filed in New Jersey, we apply our choice-of-law rules.
Erny v. Estate of Merola,
171 N.J. 86, 94 (2002). In tort suits,
such as this one, we no longer mechanistically apply the law of the
place of wrong. Fu v. Fu,
160 N.J. 108, 118 (1999). Instead, we
currently subscribe to the more flexible governmental-interests analysis. Erny, supra, 171 N.J. at
94. Compare Clement v. Atl. Cas. Ins. Co.,
13 N.J. 439, 442 (1953)
(utilizing the place of wrong test) with Mellk v. Sarahson,
49 N.J. 226,
234-35 (1967) (utilizing interest analysis).
In applying the governmental-interests analysis, two steps are involved. Erny, supra, 171 N.J.
at 100-01. “The first step in the analysis is to determine whether a
conflict exists between the laws of the interested states. Any such conflict is
to be determined on an issue-by-issue basis.” Veazey v. Doremus,
103 N.J. 244,
248 (1986). If there is no actual conflict, then the choice-of-law question is
inconsequential, and the forum state applies its own law to resolve the disputed
issue.
If there is an actual conflict, the second step “seeks to determine the
interest that each state has in resolving the specific issue in dispute.” Gantes,
supra, 145 N.J. at 485. The Court must “identify the governmental policies underlying
the law of each state” and determine whether “those policies are affected by
each state’s contacts to the litigation and to the parties.” Veazey, supra, 103
N.J. at 248. We must apply the law of “the state with the
greatest interest in governing the particular issue.” Ibid.
All parties agree that this case presents an actual conflict. Michigan provides:
In a product liability action against a manufacturer or seller, a product that
is a drug is not defective or unreasonably dangerous, and the manufacturer or
seller is not liable, if the drug was approved for safety and efficacy
by the [FDA], and the drug and its labeling were in compliance with
the [FDA]’s approval at the time the drug left the control of the
manufacturer or seller.
[Mich. Comp. Laws § 600.2946(5).]
In contrast, New Jersey’s law provides:
In any product liability action the manufacturer or seller shall not be liable
for harm caused by a failure to warn if the product contains an
adequate warning or instruction or, in the case of dangers a manufacturer or
seller discovers or reasonably should discover after the product leaves its control, if
the manufacturer or seller provides an adequate warning or instruction . . .
.
If the warning or instruction given in connection with a drug or device
or food or food additive has been approved or prescribed by the [FDA],
a rebuttable presumption shall arise that the warning or instruction is adequate.
[N.J.S.A. 2A:58C-4.]
The Michigan statute thus creates a conclusive presumption that the drug is not
defective if the drug and its labeling were approved by the FDA, while
New Jersey’s statute creates a rebuttable presumption that a drug warning is adequate
if it was approved by the FDA. Compare Zammit v. Shire US, Inc.,
415 F. Supp.2d 760, 764-65 (E.D. Mich. 2006) (holding that defendant drug
manufacturer was not liable to plaintiff for failure to warn under section 600.2946(5)
because drug was approved by the FDA), with Feldman v. Lederle Labs.,
125 N.J. 117, 156-57 (1991) (recognizing that the presumption is only rebuttable, and not
conclusive).
Because an actual conflict exists between New Jersey and Michigan on the very
issue in dispute — Rowe’s failure-to-warn claim against Hoffmann — we must advance to the
next step of the governmental interest analysis. That requires that we identify the
policies underlying the New Jersey and Michigan statutes and determine whether those policies
are affected by the “state[s’] contacts to the litigation and the parties.” Fu,
supra, 160 N.J. at 119 (quoting Veazey, supra, 103 N.J. at 248); see
also Earl M. Maltz, Do Modern Theories of Conflict of Laws Work? The
New Jersey Experience,
36 Rutgers L. J. 527 (2005). If the contacts of
a state do not “align with the policies” relating to the disputed issue,
then that state generally will not be found to have the greatest interest
in governing the issue. Erny, supra, 171 N.J. at 101 (citing Veazey, supra,
103 N.J. at 248). So, for example, if a particular policy is designed
to enhance a specific group and that group is neither a party to
nor potentially affected by the litigation, then that state’s interest is not aligned
with its policy and it would be unlikely that that state would have
the strongest governmental interest in deciding the issue. See White v. Smith,
398 F. Supp. 130, 134 (D.N.J. 1975) (“If a strong state policy or interest
will be neither fostered by applying that state’s law, nor frustrated by the
failure to apply it, it is highly unlikely that that state has any
interest whatsoever in blanketing that particular issue with its law.”).
IV.
It is in the weighing of each state’s interests in deciding the adequacy-of-warning
issue that we part company with the Appellate Division majority. In our view,
the majority of the panel overvalued New Jersey’s interest and undervalued Michigan’s.
The New Jersey statute at issue, N.J.S.A. 2A:58C-4, was enacted in 1987 as
part of the New Jersey Products Liability Act (NJPLA), N.J.S.A. 2A:58C-1 to -7,
in order to re-balance the law “in favor of manufacturers.” William A. Dreier,
et al., N.J. Prods. Liab. & Toxic Torts Law at 15:4 (2007). “The
Legislature intended for the Act to limit the liability of manufacturers so as
to ‘balance[] the interests of the public and the individual with a view
towards economic reality.’” Zaza v. Marquess & Nell, Inc.,
144 N.J. 34, 47-48
(1996) (quoting Shackil v. Lederle Labs.,
116 N.J. 155, 188 (1989)). Furthermore, at
least in part, the NJPLA was intended “to establish clear rules with respect
to specific matters as to which the decisions of the courts in New
Jersey have created uncertainty.” Senate Judiciary Committee, Statement to Senate Committee Substitute for
S.B. No. 2805, at 1 (Mar. 23, 1987).
The legislative history of the NJPLA does not specifically address why the Legislature
created only a rebuttable presumption of adequacy for FDA approval of prescription drug
warnings. Rowe argues, however, that New Jersey has an interest in applying its
rebuttable presumption of adequacy here because Hoffmann is a New Jersey company that
has manufactured Accutane in New Jersey. Rowe contends his argument is supported by
this Court’s decision in Gantes, supra,
145 N.J. 478, a contention we now
address.
In Gantes, the representative of a deceased Georgia resident filed a products liability
action against a New Jersey manufacturer in New Jersey. 145 N.J. at 483-84.
The plaintiff alleged that the decedent was killed when a shaker machine, manufactured
by the defendant, struck the decedent in the head at the decedent’s place
of employment in Georgia. Id. at 482. The defendant had manufactured the shaker
machine in New Jersey thirteen years before the accident. Id. at 481. Under
Georgia law, the plaintiff’s lawsuit was barred because Georgia had a statute of
repose that prohibited products liability actions being brought more than ten years after
the original sale of the product. Id. at 485. New Jersey law, however,
contained no statute of repose. Under New Jersey law, the plaintiff was permitted
to proceed with the lawsuit because the plaintiff filed suit within New Jersey’s
two-year statute of limitation. Ibid. The issue before the Court was whether the
Georgia statute of repose or the New Jersey statute of limitation applied to
the products liability action.
This Court held that New Jersey’s statute of limitation, not Georgia’s statute of
repose applied, id. at 497-98, reasoning that New Jersey “has a strong interest
in encouraging the manufacture and distribution of safe products . . . [and]
deterring the manufacture and distribution of unsafe products.” Id. at 490. In Gantes,
although plaintiff was not a New Jersey resident and the injury did not
occur in New Jersey, our strong interest in deterring the manufacture of unsafe
products in this State was directly furthered because plaintiff’s suit was timely and
not otherwise barred. Georgia’s interest was not frustrated by the application of our
statute of limitations because its statute-of-repose was designed to stabilize Georgia’s insurance industry
and to keep stale claims out of its courts. Id. at 493.
New Jersey’s interest in allowing Rowe’s suit to proceed is not as strong
as our interest was in Gantes. Rowe argues that unlike Michigan’s conclusive presumption,
our law provides only a rebuttable presumption of adequacy. However, the law does
create a presumption of adequacy rather than simply recognizing FDA approval as one
factor to be considered in determining the adequacy of the warnings. See Rowe,
383 N.J. Super. at 465 n.8 (noting that at least nine states either
establish a rebuttable presumption of adequacy “or simply allow FDA-approval as a factor
to be considered in determining the adequacy of such warning”).
The NJPLA impliedly accepts that the presumption of adequacy will not be rebutted
in all cases. It accepts FDA regulation as sufficient, at least in part,
to deter New Jersey pharmaceutical companies from manufacturing unsafe prescription drugs. The FDA
requires that the labeling accompanying a prescription drug “describe serious adverse reactions and
potential safety hazards” and that the labeling “be revised to include a warning
as soon as there is reasonable evidence of an association of a serious
hazard with a drug.” 21 C.F.R. § 201.00(e). If any labeling “is false or
misleading in any particular and was not corrected within a reasonable time,” among
other enforcement options, the FDA may withdraw approval for the drug. 21 U.S.C.A.
§ 355(e). As this Court has stated, “absent deliberate concealment or nondisclosure of after-acquired
knowledge of harmful effects, compliance with FDA standards should be virtually dispositive” of
a failure-to-warn claim. Perez v. Wyeth Labs., Inc.,
161 N.J. 1, 25 (1999).
The Legislature also provides in the NJPLA that FDA approval of prescription drugs
conclusively prohibits an award of punitive damages in products liability actions. See N.J.S.A.
2A:58C-5. This provision, along with the rebuttable-presumption contained in N.J.S.A. 2A:58C-4, cede to
FDA regulation some of this State’s interest in policing local pharmaceutical manufacturers, thereby
reducing New Jersey’s interest in applying its law to this case.
The predominant object of the law is not to encourage tort recoveries by
plaintiffs, whether New Jersey citizens or not, in order to deter this State’s
drug manufacturers. On the contrary, the law limits the liability of manufacturers of
FDA-approved products by reducing the burden placed on them by product liability litigation.
The Legislature carefully balanced the need to protect individuals against the need to
protect an industry with a significant relationship to our economy and public health.
New Jersey’s interest in applying its law to Rowe’s failure-to-warn issue, when properly
discerned, is not antithetical to Michigan’s interest but substantially congruent.
The relevant Michigan statute, Mich. Comp. Laws § 600.2946(5), was enacted by the Michigan
Legislature in 1996 as part of a comprehensive reform of Michigan’s tort law.
Senate Fiscal Agency Bill Analysis to S.B. 344 & H.B. 4508, at 1
(Jan. 11, 1996). The Michigan Legislature’s express purpose was to immunize pharmaceutical companies
that market FDA-approved prescription drugs from liability in a products liability suit. See
Mich. Comp. Laws § 600.2946(5).
Hoffmann additionally argues that Michigan’s interest in enacting this law was to make
prescription drugs more available to Michigan residents. The Appellate Division majority found this
interest to be unsupported by the record. Rowe, supra, 383 N.J. Super. at
461. Contrary to that finding, however, Michigan’s interest in making prescription drugs more
available to its residents is supported by the legislative history of the law.
Commenting on section 600.2946(5), its proponents stated that “[d]rug companies spend large sums
of money and expend enormous energy getting approval for their products. Many valuable
products never reach the market or are withdrawn because of successful lawsuits (or
the threat of future lawsuits) even though there is no medical evidence that
they are harmful.” House Legislative Analysis Section to S.B. 344, at 9 (June
8, 1995). Supporters in the Michigan State Senate recognized that “[c]onsumers . .
. suffer when they are denied new products that would increase public safety
or improve their quality of life . . . . [P]roduct liability litigation
. . . has added substantially to the cost and unavailability of many
goods and services.” Senate Fiscal Agency Bill Analysis to S.B. 344 & H.B.
4508, at 10 (Jan. 1, 1996).
Hoffmann’s claim also is supported by case law. For example, Garcia v. Wyeth-Ayerst
Labs.,
385 F.3d 961 (6th Cir. 2004), considered a constitutional challenge to Section
600.2946(5). Citing legislative history, the court noted that “it appears that the Michigan
legislature was concerned that unlimited liability for drug manufacturers . . . could
add substantially to the cost and unavailability of many drugs.” Id. at 967;
see also Elissa Levy, Note, The Health Act’s FDA Defense to Punitive Damages:
A Gift to Drug Makers or to the Public,
74 Fordham L. Rev.
2425, 2440 n. 101 (2006) (citing Henderson v. Merck & Co., No. 04-CV-05987-LDD,
2
005 WL 2600220, at *7 (E.D. Pa. Oct. 11, 2005) (“Michigan has a
strong interest in applying its law to ensure that Michigan residents . .
. are not burdened with excessively high payments for prescription drugs, . .
. even if that means immunizing non-resident pharmaceutical companies who do business in
Michigan.”)).
The Appellate Division majority also believed that Michigan’s interest in enacting Section 600.2946(5)
“may have been to protect Michigan businesses.” Rowe, supra, 383 N.J. Super. at
460. In support of this finding, it cited Ammend v. Bioport, Inc.,
322 F. Supp.2d 848 (W.D. Mich. 2004), which held that Section 600.2946(5)’s conclusive
presumption applied to a products liability claim against a Michigan manufacturer. Id. at
876. According to the panel’s majority, the Ammend court recognized that Section 600.2946(5)’s
“core purpose” was to regulate Michigan drug manufacturers.
That interpretation of Ammend is too broad. As Judge Wefing noted in her
dissent, the Michigan Legislature had “a wider concern than a parochial desire to
protect local pharmaceutical manufacturers.” Rowe, supra, 383 N.J. Super. at 468 (Wefing, J.,
dissenting). The court in Ammend merely recognized that one of the Michigan Legislature’s
purposes in enacting Section 600.2946(5) was to regulate Michigan manufacturers. Ammend, supra, 322
F. Supp.
2d at 876. The court neither discussed any of the other
Michigan Legislature’s policy concerns, such as the desire to increase access to affordable
prescription drugs for Michigan residents, nor concluded that the regulation of Michigan manufacturers
was the exclusive purpose of Section 600.2946(5).
Michigan “was concerned that unlimited liability for drug manufacturers would threaten the financial
viability of many enterprises and could add substantially to the cost and unavailability
of many drugs.” Garcia, supra, 385 F.
3d at 967. This concern is echoed
by others. For example, speaking of vaccines, several commentators have noted that “the
prospect of multi-million dollar verdicts instead [of encouraging safer vaccines] induced manufacturers to
abandon the vaccine market altogether.” W. Kip Viscusi, et al. The Effect of
Products Liability Litigation on Innovation: Deterring Inefficient Pharmaceutical Litigation: An Economic Rationale for
the FDA Regulatory Compliance Defense,
24 Seton Hall L. Rev. 1437, 1470 (1994);
see also Shackil v. Lederle Labs.,
116 N.J. 155, 181 (1989) (“The overriding
public policy of encouraging the development of necessary drugs is not unfamiliar to
products-liability law.”).
V.
This case presents a true conflict of laws because both New Jersey and
Michigan have interests that would be furthered by applying their respective statutes to
Rowe’s failure-to-warn claim against Hoffmann. After properly discerning and weighing the respective policies
of New Jersey and Michigan, however, we reach a result different from the
Appellate Division majority. In this instance, New Jersey’s interest is limited and outweighed
by Michigan’s interest in making more prescription drugs generally available to its citizens.
Furthermore, comity precludes closing our eyes to Michigan’s interest. Even if we were
to question the effectiveness of the Michigan statute in accomplishing its goal, “it
is the forum state’s duty to disregard its own substantive preference.” Fu, supra,
160 N.J. at 130-31 (quoting O’Connor v. Busch Gardens,
255 N.J. Super. 545,
549 (App. Div. 1992)). The question is not whether Michigan or New Jersey
passed the better law; that is a normative judgment best suited for the
legislative process. Our inquiry is limited to which state has the greatest interest
in applying its law to Rowe’s failure-to-warn claim.
To allow a life-long Michigan resident who received a FDA-approved drug in Michigan
and alleges injuries sustained in Michigan to by-pass his own state’s law and
obtain compensation for his injuries in this State’s courts completely undercuts Michigan’s interests,
while overvaluing our true interest in this litigation.
In this instance, where the challenged drug was approved by the FDA and
suit was brought by an out-of-state plaintiff who has no cause of action
in his home state, this State’s interest in ensuring that our corporations are
deterred from producing unsafe products which was determinative in Gantes and however weighty
in other contexts ▬ is not paramount. Our interest in deterring local manufacturing corporations
from providing inadequate product warnings, within the context of an FDA approved drug,
must yield to Michigan’s interest.
See footnote 1
VI.
The judgment of the Appellate Division is reversed and the case is remanded
to the Law Division for reinstatement of the trial court’s order dismissing the
lawsuit.
JUSTICES LaVECCHIA, WALLACE, RIVERA-SOTO, and HOENS join in JUDGE LEFELT’s opinion. JUDGE STERN
filed a separate opinion concurring in part and dissenting in part in which
JUSTICE LONG joins. CHIEF JUSTICE ZAZZALI and JUSTICE ALBIN did not participate.
SUPREME COURT OF NEW JERSEY
A-
19 September Term 2006
ROBERT ROWE,
Plaintiff-Respondent,
v.
HOFFMANN-LA ROCHE, INC., and ROCHE LABORATORIES, a member of the Roche Group,
Defendants-Appellants,
and
ABC CORPORATION (said name being fictitious) and DRS. JOHN DOE 1-10,
Defendants.
_____________________________
JUDGE STERN (temporarily assigned), dissenting.
I travel the same path as the majority but reach a different destination.
Thus, although I fully join in Points I, I and III of the
majority opinion, I respectfully dissent from the result reached in Points IV and
V.
As the majority develops, under the governmental-interest analysis, which defendants acknowledge to be
the controlling test for evaluation of the issue before us,
See footnote 2
we must determine
whether an actual conflict of laws exists as to a particular issue, and,
if so, we must then “identify the governmental policies underlying the law of
each state” and determine “how those policies are affected by each state’s contacts
to the litigation and to the parties.” Veazey v. Doremus,
103 N.J. 244,
248 (1987). After performing that balance, we must apply the law “of the
state with the greatest interest in governing the particular issue.” Ibid.
I agree with the majority that “there is an actual conflict between the
laws of the respective states.” Gantes v. Kason Corp.,
145 N.J. 478, 484
(1996) (citing Veazey, supra, 103 N.J. at 248). As a result, we must
inquire as to “the interest that each state has in resolving the specific
issue in dispute.” Id. at 485. This is done by “identify[ing] the governmental
policies underlying the law of each state and how those policies are affected
by each state’s contacts to the litigation and the parties.” Ibid. (quoting Veazey,
supra, 103 N.J. at 248). In that respect, “[i]f a state’s contacts are
not related to the policies underlying its law, then the state does not
possess an interest in having its law apply.” Veazey, supra, 103 N.J. at
248. Finally, New Jersey’s interest “must be compared and weighed against any governmental
interest” of the other state “in light of [that state’s] contacts with the
litigation and the parties.” Gantes, supra, 145 N.J. at 493.
As developed by the majority, the Accutane involved in this case was prescribed
in Michigan and then taken there by plaintiff, a Michigan resident. However, it
was manufactured in, and distributed from, New Jersey, and the very compliance with
Federal Food and Drug Administration (“FDA") processes, which gives rise to an immunity
in Michigan, was conducted and completed in New Jersey. Therefore, both states have
significant interests worthy of protection: New Jersey, the situs of the manufacturer, in
governing its manufacturers for the protection of consumers, and Michigan, where the drug
was prescribed and consumed, in promoting the availability of medication at reasonable prices.
Moreover, both states also have an interest in considering the impact of litigation
on employers and workers as well as the local economy, resulting in Michigan
legislation and the New Jersey Products Liability Act, N.J.S.A. 2A:58C-1 to -11.
See footnote 3
As also fully developed by the majority, Gantes, supra, involved a New Jersey
products liability action against a New Jersey manufacturer filed on behalf of a
decedent killed in Georgia “when she was struck in the head by a
moving part of a shaker machine.” 145 N.J. at 482. The New Jersey
courts assumed, for purposes of summary judgment, “that defendant manufactured the machine in
New Jersey.” Ibid. Under Georgia law, the plaintiff’s lawsuit was barred by a
statute of repose prohibiting commencement of products liability actions more than ten years
after the original sale of the product. Id. at 485. Under New Jersey
law, the suit was subject only to our two-year statute of limitations, N.J.S.A.
2A:14-2. Ibid. The issue involved in Gantes was, therefore, whether the Georgia statute
of repose or the New Jersey statute of limitations controlled the plaintiff’s ability
to commence the action.
The Gantes Court held that New Jersey’s statute of limitations, not Georgia’s statute
of repose, applied. Id. at 498. The majority reasoned that New Jersey has
a substantial governmental interest in deterring the manufacture of unsafe products in New
Jersey. Id. at 489-90. According to Justice Handler:
This court has recognized generally that a purpose of the tort laws is
to encourage reasonable conduct, and, conversely, to discourage conduct that creates an unreasonable
risk of injury to others. That deterrent goal of the tort laws is
effectuated through the recognition of a duty to exercise reasonable care and the
imposition of liability for the breach of such a duty. We note also
that Georgia has recognized that “courts are concerned not only with compensation of
the victims but with admonition of the wrongdoer” and that the “‘prophylactic’ fact
of preventing future harm has been quite important in the field of torts.”
The interest in deterrence has been recognized as a relevant factor to be
considered in choice-of-law decisions.
The goal of deterrence, acknowledged generally to be part of tort law, is
especially important in the field of products-liability law. In Fischer v. Johns-Manville Corp.,
193 N.J. Super. 113, 124 [] (1984), aff’d,
103 N.J. 643 [] (1986),
the Appellate Division noted that since Henningsen v. Bloomfield Motors, Inc.,
32 N.J. 358 [] (1960), this State’s judiciary has been “in the vanguard of the
development of a responsive and progressive products liability law” and “has led the
country in its ideological commitment to the protection of consumers and concomitant consequence
of inducing those who place products into the stream of commerce to act
with social responsibility.” Judge Pressler observed in her dissent below: “the development of
[products liability law in New Jersey] and the consequent imposition of strict liability
on manufacturers has been a powerful force -- perhaps the most powerful force
-- in effecting, over the last two and a half decades, product safety
and social responsibility by industry.”
We conclude that this State has a strong interest in encouraging the manufacture
and distribution of safe products for the public and, conversely, in deterring the
manufacture and distribution of unsafe products within the state. That interest is furthered
through the recognition of claims and the imposition of liability based on principles
of strict products-liability law.
[Id. at 489-90 (citations omitted).]
In the context of the statute of limitations issue, the Court also articulated
why deterrence is a sufficient reason to hold New Jersey manufacturers under the
ambit of New Jersey law:
In light of this State’s commitment to protection of the public against the
manufacture and distribution of unsafe products and the strong governmental interest in deterrence
against such practices, it does not seem “pointless” to apply this State’s statute
of limitations to resident manufacturers, even if the suit would be barred against
foreign manufacturers. The difference in result is grounded in the distinctive policy concerns
that each state has in making its domestic manufacturers amenable to suits. A
governmental interest based on a policy of deterrence that seeks to discourage domestic
manufacturers from the manufacture and distribution of unsafe products through the allowance of
a products-liability action is not unnecessarily burdensome nor is it discriminatory or baseless.
[Id. at 491.]
Thus, although the decedent in Gantes was not a New Jersey resident and
the injury did not occur in New Jersey, this Court permitted her administrator
to proceed with the lawsuit against the New Jersey manufacturer in light of
New Jersey’s interest in deterring the manufacture and distribution of unsafe products within
the State. The very same principle applies in this case directed to the
adequacy of the product’s warnings.
I recognize that Gantes is distinguishable because, unlike the unregulated defendant in that
case, the manufacture and distribution of prescription drugs are extensively regulated by the
FDA. However, our Legislature, unlike the Legislature of Michigan, has determined that FDA
regulation and approval is not per se sufficient to deter pharmaceutical companies from
providing inadequate warnings or to preclude lawsuits. Only “a rebuttable presumption shall arise
that the warning or instruction is adequate.” N.J.S.A. 2A:58C-4.
Although our Legislature has precluded punitive damages by virtue of FDA approvals,
See footnote 4
it
has determined not to preclude all actions based on inadequate warnings. See N.J.S.A.
2A:58C-4, -5. Therefore, neither the preclusion of punitive damages nor the FDA approval
of the warning substantially lessens New Jersey’s interest in consumer protection. Unlike Michigan,
our Legislature has not completely precluded this type of action. See Perez v.
Wyeth Labs., Inc.,
161 N.J. 1, 24-25 (1999). Accordingly, I believe the Gantes
approach is warranted and controls the disposition of this case. In fact, it
seems to me that our Legislature permits recovery, notwithstanding FDA approvals, in the
exceptional circumstances in which the presumption can be overcome, because those situations involve
matters in which deterrence is needed the most. Michigan's legitimate interests cannot be
said to outweigh the need to deter conduct in this State that our
Legislature, as a matter of sound public policy, seeks to prevent.
Certainly, as the majority develops, Michigan has significant interests in furthering its legislative
design. However, those interests in protecting consumers with respect to prescription costs and
availability (and even more broadly with respect to tort reform) are remote and
outweighed in a New Jersey forum when the Michigan resident brings his or
her suit in New Jersey against a New Jersey manufacturer,
See footnote 5
particularly because he
or she is subject to the “rebuttable” presumption of the warning or label’s
adequacy.
Accordingly, I would affirm substantially for the reasons expressed in Judge Wecker’s opinion
for the Appellate Division, as supplemented herein.
Finally, I note there is now pending in the Michigan Senate two bills
passed by the Michigan House of Representatives which would enact a rebuttable presumption
similar to our own with retroactive applicability. See H.B. 4044-4045, 94th Leg., Reg.
Sess. (Mich. 2007). It would seem jurisprudentially sound to wait a reasonable period
of time in which to see what happens in the Michigan Senate with
respect to the proposed legislation in order to evaluate if the actual conflict
is resolved and to avoid a split decision on an issue of such
significance as the one now being decided.
JUSTICE LONG joins in this opinion.
SUPREME COURT OF NEW JERSEY
NO. A-19 SEPTEMBER TERM 2006
ON APPEAL FROM Appellate Division, Superior Court
ROBERT ROWE,
Plaintiff-Respondent,
v.
HOFFMAN-LA ROCHE, INC., and
ROCHE LABORATORIES, a member
Of the Roche Group,
Defendants-Appellants,
And
ABC CORPORATION (said name
Being fictitious) and DRS.
JOHN DOE 1-10,
Defendants.
DECIDED March 29, 2007
Justice Long PRESIDING
OPINION BY Judge Lefelt, P.J.A.D. (t/a)
CONCURRING/DISSENTING OPINION BY Judge Stern, P.J.A.D. (t/a)
DISSENTING OPINION BY
CHECKLIST
Footnote: 1
We note that our dissenting colleagues suggest that we withhold issuing this
decision for an unspecified period to determine whether a bill, which has passed
the Michigan House, becomes law. The Bill, H.B. 4044-4045, 94th Leg., Reg. Sess.
(Mich. 2007), if adopted by Michigan would repeal Mich. Comp. Laws § 600.2946(5), and
enact a rebuttable presumption that products are safe if they are subject to,
and comply with, pertinent government safety standards. Because of the uncertain duration and
predictability of legislative activity, however, we decline to accede to the dissenters’ suggestion.
We are confident that should the Bill become law, the parties in this
case will take whatever actions they believe are warranted.
Footnote: 2 Whether the result would be different under another test or analysis need not
be considered in this case. See Earl M. Maltz, Do Modern Theories of Conflict
of Laws Work? The New Jersey Experience,
36 Rutgers L.J. 527, 534-48 (2005).
Footnote: 3
For purposes of this opinion, I assume the reasons behind the Michigan
legislation are as broad as stated by the Appellate Division dissent. See Rowe
v. Hoffmann-La Roche Inc.,
383 N.J. Super. 442, 467-70 (App. Div. 2006) (Wefing,
J., dissenting).
Footnote: 4
There is an exception “where the product manufacturer knowingly withheld or misrepresented
information required to be submitted under the agency's regulations, which information was material
and relevant to the harm in question[]. . . .” N.J.S.A. 2A:58C-5(c). Michigan
has a similar exception to its immunity statute. Mich. Comp. Laws § 600.2946(5).
Footnote: 5
It seems clear that Michigan courts would apply Michigan law to this
case, resulting in the type of “forum shopping” that attracts plaintiff to New
Jersey. See Sutherland v. Kennington Truck Serv., Ltd.,
562 N.W.2d 466, 471-72 (Mich.
1997). However, whenever an action is commenced in New Jersey involving a tort
or injury that occurred out-of-state, a choice of law analysis is required with
respect to the relevant issue that gives rise to an “actual conflict.” As
such, “forum shopping” does not necessarily equate with recovery under New Jersey law.
Furthermore, the ability to litigate in this State flows from jurisdiction over the
defendant and notions of due process, not choice of law principles that will
be contested in the course of the litigation. In any event, as stated
in Gantes, supra,
[i]n this case, plaintiff does not seek to use New Jersey’s court system
to litigate a dispute that has only a slight link to New Jersey
and where the only plausible reason to select this State is because it
is a hospitable forum. This action is materially connected to New Jersey by
the fact that the allegedly defective product was manufactured in and then shipped
from this State by the defendant-manufacturer.
[145 N.J. at 492.]
Moreover, as the Michigan legislation appears to be unique, see Restatement (Third) of
Torts: Product Liability § 6, we need not fear the filing of an onslaught
of Accutane product liability cases here.