Shanks v. Upjohn Co.

Citations: 835 P.2d 1189; 1992 Alas. LEXIS 73; 1992 WL 145170Docket: S-3729, S-3760

Court: Alaska Supreme Court; June 26, 1992; Alaska; State Supreme Court

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Sharon L. Shanks, representing the estate of Harvey Hale Rice, appealed against The Upjohn Company following the suicide of Rice after he began taking Xanax, a medication produced by Upjohn. Shanks asserted multiple claims, including negligence, strict liability for design defects, failure to warn, and breach of warranty. The superior court granted Upjohn's motions for partial summary judgment, dismissing all claims except for strict liability failure to warn. The trial subsequently focused solely on negligence principles, resulting in a jury verdict favoring Upjohn and an award of costs and attorney's fees against Shanks' estate.

The case originated from a physician's prescription of Xanax and Tylenol #3 to Rice for back pain, with warnings about sedation effects. After taking the medication, Rice died by suicide, leading to Shanks' claim that Xanax was a proximate cause of his death. Shanks alleged that the drug was defective due to inadequate warnings and that Upjohn was strictly liable for violations of the Alaska Food, Drug and Cosmetic Act regarding warnings. Evidence presented during the trial included conflicting testimony about the potential risks of suicidal behavior associated with Xanax, with Shanks claiming that Upjohn was aware of such risks, while Upjohn defended that Xanax does not cause suicidal ideation. The appellate court vacated the award of attorney's fees and reversed the judgment, remanding the case for a new trial on the strict liability design defect and failure to warn claims.

Both parties presented proposed jury instructions to the superior court, which included Shanks' requests for separate instructions on negligence, strict products liability, and negligence per se. The superior court declined to provide instructions on strict liability design defect and negligence per se, and also rejected Shanks' proposed instructions on strict liability failure to warn, opting instead to instruct the jury solely on negligence principles. The jury ultimately found in favor of Upjohn, concluding that Upjohn was not negligent in its warnings related to Xanax. Subsequently, the superior court entered judgment for Upjohn, ordering the estate to pay $225,000 in attorney's fees while declining to assess costs against Mr. Rice's widow and children. Shanks' motion for judgment notwithstanding the verdict (J.N.O.V.) or a new trial, citing attorney misconduct, was denied. Shanks is appealing the summary judgment and denial of her new trial motion, while Upjohn cross-appeals the decision not to hold statutory beneficiaries liable for costs and fees. The appellate issues include whether the superior court erred by exempting prescription drugs from strict products liability claims regarding design defects, improperly instructing the jury on failure to warn by incorporating negligence, dismissing negligence per se claims under the Alaska Food, Drug and Cosmetic Act, and denying Shanks' motion for a new trial based on allegations of misconduct. Shanks asserts that her strict liability design defect claim was improperly dismissed and contends that the court should not adopt a rule exempting prescription drug manufacturers from such claims, as proposed by Upjohn citing California Supreme Court precedent. The court emphasizes that it is not bound by the trial court's legal conclusions and is tasked with adopting the most persuasive legal principles. Strict liability principles dictate that manufacturers are liable for defects in products placed on the market which result in injury, encompassing manufacturing defects, design defects, or failures to provide adequate warnings.

A trial court may instruct the jury on product design defects based on two criteria: 1) if the plaintiff shows the product did not perform as safely as expected by an ordinary consumer during intended use, or 2) if the plaintiff demonstrates that the design caused injury, and the defendant fails to prove that the design's benefits outweigh its risks. In dismissing Shanks' design defect claim, the superior court referenced the California Supreme Court's ruling in Brown v. Superior Court, which determined that the Barker design defect test is not applicable for prescription drug manufacturers. The Brown court held that consumers lack expectations about drug safety performance aside from those communicated by physicians, rendering the “consumer expectation” aspect of the Barker test unsuitable for prescription drugs. While the "risk/benefit" analysis remains applicable, applying the consumer expectation prong was deemed contrary to public interest due to the unique nature of prescription drugs and the implications for manufacturers regarding insurance costs and product development. Shanks argued for consistent application of the consumer expectation prong across all products, but the court disagreed, highlighting the variability in consumer knowledge and the complexity of prescription drug effects, which complicates the determination of ordinary consumer expectations. The court concluded that these expectations are often irrelevant for imposing strict liability on drug manufacturers, though it acknowledged the need for an adjusted expectation standard that considers the distinctive aspects of prescription drugs and the physician's role in their use.

Prescribing doctors act as the primary consumers of prescription drugs, making decisions based on their evaluations and available treatment options. Their expectations regarding drug performance and safety, informed by FDA-approved warnings, are crucial for imposing strict liability on manufacturers. A prescription drug is considered defectively designed if it fails to meet the safety expectations of an ordinary doctor when used as intended. The excerpt critiques the Brown court's rejection of a "risk/benefit" analysis in this context, arguing that the societal value of prescription drugs does not justify different liability standards for manufacturers of harmful drugs, like thalidomide, compared to beneficial ones, like penicillin. It questions the assumption that limiting strict liability claims would enhance drug availability and affordability, highlighting that liability suits typically involve both negligence and strict liability theories. Furthermore, it asserts that the costs of strict liability litigation should be borne by manufacturers, who can mitigate these costs through insurance and pricing strategies. The excerpt also references the Eighth Circuit's stance against the Brown decision, emphasizing that the public interest in safe drugs should not overshadow the necessity of strict liability for all products, including life-saving medications.

The risk/benefit analysis of the Barker test is deemed essential for evaluating the liability of prescription drug manufacturers, with the superior court's failure to apply this test identified as an error. The court outlines that when assessing whether a drug's design benefits outweigh its risks, various factors must be considered. These include the severity and likelihood of adverse side effects, the feasibility and implications of safer alternative designs, and the seriousness of the medical condition the drug treats. The decision emphasizes that the fact-finder should weigh the drug's benefits against the necessity of maintaining strict liability for design defects to ensure consumer safety. 

On appeal, the applicability of comment k to § 402A of the Restatement (Second) of Torts is debated, with many courts accepting its principles. Upjohn seeks to have comment k interpreted to grant immunity from strict liability claims for all prescription drugs. While acknowledging the policy rationale behind comment k—which protects manufacturers of beneficial products with inherent risks—the court refrains from formally adopting it. The reasons for this include the confusion it creates between negligence and strict liability, and the inconsistent interpretations of comment k's scope among courts. Some have broadly exempted all prescription drugs from strict liability claims, while others have not clearly addressed the issue, leading to further ambiguity in legal standards.

Certain courts interpret comment k of the Restatement (Second) of Torts to exempt only those prescription drugs deemed "unavoidably dangerous" on a case-by-case basis. Examples include Hill v. Searle Laboratories and Savina v. Sterling Drug, Inc. The court expresses a desire to avoid confusion by not adopting comment k, suggesting that the risk/benefit analysis of the Barker test allows drug manufacturers to defend against strict liability claims for design defects. Consequently, the court concludes that prescription drugs are not exempt from such claims, rejecting the rationale of jurisdictions that apply comment k. The court introduces the "ordinary doctor expectation" test as a suitable method to evaluate prescription drug safety.

The case, concerning whether Rice used Xanax as intended and whether its design caused injury, must return to the superior court due to unresolved material facts. Regarding the failure to warn claim, the superior court previously dismissed all but one claim, but only provided instructions based on negligence to the jury, which Shanks contests. The court acknowledges the complexities in distinguishing between negligence and strict liability in failure to warn cases, recognizing that negligence principles often inadvertently influence strict liability discussions regarding warnings about risks.

The policy behind strict liability necessitates a clear distinction from negligence doctrines. In strict liability cases, the focus is on the defective product itself rather than the defendant's conduct. Liability arises from the product's defect, not from negligent actions. The court has ruled that instructing juries on negligence concepts in strict liability failure to warn cases is reversible error, as seen in Patricia R. v. Sullivan. The jury instructions in the current case were flawed; specifically, they improperly framed Shanks' strict liability failure to warn claim as a negligence claim and incorrectly placed the burden on Shanks to prove knowledge of risks by the manufacturer. Under strict liability, a product is deemed defective if it poses a risk without adequate warnings, and the manufacturer is liable unless it can prove that the risk was scientifically unknowable at the time of distribution. The court found that the superior court's emphasis on negligence deprived Shanks of her strict liability claim. Although Shanks did not challenge the definition of "adequate warnings," the court noted that adequate warnings should clearly indicate the risk, communicate the seriousness of potential harm, and alert the reasonably prudent person. For prescription drugs, warnings must adequately inform physicians of scientifically knowable risks, and inadequacies in directions for safe use can also support strict liability claims. The focus on both warnings and directions in the jury instruction was deemed appropriate.

The adequacy of warnings and directions for prescription drugs is assessed with the understanding that they are aimed at prescribing physicians rather than patients. In evaluating these warnings under strict liability, courts should not incorporate negligence concepts deemed problematic in prior rulings. Shanks contested the superior court's refusal to instruct the jury on her negligence per se and strict liability claims under specific Alaska statutes. The doctrine of negligence per se, based on the Restatement (Second) of Torts, establishes that a statutory violation constitutes negligence if it protects a specific class from particular harm. Courts must determine if the conduct aligns with the statute’s scope using established criteria. A court can refuse a negligence per se instruction only if the statute is obscure, outdated, or vague. The superior court did not abuse its discretion, as the statutes in question offer little clarity beyond common law duties regarding adequate warnings and are vague regarding prescription drug requirements. The jury found no negligence on Upjohn’s part regarding warnings, negating the need for remand. Additionally, Shanks claimed attorney misconduct by Upjohn’s counsel, which effectively challenged the denial of her motion for a new trial. The court emphasized that such decisions are at the trial court's discretion and should only be disturbed in exceptional cases to avoid injustice. The grounds for Shanks' motion did not constitute attorney misconduct, nor did the court's decision result in a miscarriage of justice.

The superior court incorrectly dismissed Shanks' strict liability design defect claim and failed to present her strict liability failure to warn claim to the jury. It correctly declined to instruct the jury on her negligence per se claim and denied her motion for a new trial based on attorney misconduct. Consequently, the superior court's judgment is reversed and remanded for further proceedings, with the award of attorney's fees vacated. 

The document includes details on prescription drug warnings, specifically mentioning Xanax (Alprazolam) and Tylenol #3 (acetaminophen with codeine), highlighting that Xanax's warnings are intended for physicians rather than patients. The "learned intermediary" rule indicates that manufacturers fulfill their warning obligations by informing prescribing physicians. It also notes that certain unique prescription drugs may require direct warnings to patients. The discussion references a dissent in a prior case advocating for a broad application of the "consumer expectation" standard in prescription drug cases and acknowledges limited application of strict liability to prescription drugs while addressing concerns about the impact of products liability litigation on drug availability and costs.

Strict liability is imposed on manufacturers and retailers to ensure that the costs of injuries from defective products are borne by those who produce them, rather than by victims who cannot protect themselves. This liability relieves plaintiffs from the burdensome evidentiary requirements associated with negligence claims. The court rejects the argument that judicial deference should be given to the FDA’s determinations about the safety and efficacy of prescription drugs, asserting that such deference would neglect judicial duties in light of serious injury allegations from FDA-approved drugs. 

Alaska's strict liability rule, based on Section 402A of the Restatement (Second) of Torts, differs from the original by not requiring plaintiffs to prove that a product is "unreasonably dangerous." Comment k of Section 402A discusses "unavoidably unsafe products," particularly in the context of drugs, which may carry serious risks but are justified for their intended use, such as rabies vaccines. If these products are properly prepared, marketed, and accompanied by appropriate warnings, sellers are not liable for adverse outcomes, even when significant risks are known. The Brown court acknowledged the confusion surrounding Comment k, noting that it has been the subject of extensive analysis and criticism by legal commentators.

There is a consensus that the strict liability doctrine referenced is fundamentally based on negligence. The trial court provided jury instruction No. 19 outlining the plaintiff's theory of recovery against Upjohn, asserting that the negligence in providing inadequate warnings about XANAX caused the plaintiff's loss. For the plaintiff to succeed, the jury must find by a preponderance of the evidence that: 1) XANAX's effects legally caused the decedent's conduct leading to death; 2) Upjohn knew or should have known these effects; 3) Upjohn negligently failed to warn Dr. Dobyns; 4) Harvey Rice's estate incurred an actual loss; and 5) Upjohn's negligence was a legal cause of that loss. All five elements must be proven for the plaintiff to prevail; absence of any element necessitates a verdict for Upjohn.

Jury instruction No. 20 defined negligence as the failure to exercise reasonable care, which is the care that a reasonably prudent person would use in similar circumstances. The jury must evaluate whether the parties involved exercised reasonable care. 

Instruction No. 21 clarified that "adequate warnings and directions" are those that sufficiently inform a healthcare provider of a drug's intended effects and safe usage. The jury must assess the reasonableness of the warnings given that they were directed to a health professional. Manufacturers are only liable for failures to provide warnings if the adverse effects are known or should be known to them. A manufacturer is not liable if adequate warnings are provided and not followed by the prescribing doctor. Relevant case law supports the notion that manufacturers generally do not have a duty to warn patients directly about prescription medication risks, except in limited circumstances.

Warnings to both prescribing physicians and patients enhance safe drug use and informed healthcare decisions; however, the law only recognizes a duty to warn in specific situations outlined in Polley. Since these exceptions do not apply in this case, Shanks' claims regarding a drug manufacturer's direct duty to warn consumers are dismissed. According to AS 17.20.290(a)(1) of the Alaska Food, Drug and Cosmetic Act, misbranded drugs cannot be manufactured or sold, and AS 17.20.090(6) defines misbranding in terms of inadequate labeling and warnings. Shanks cites Ross Laboratories v. Thies (1986) as a pivotal case, where the manufacturer was found negligent for failing to provide warnings, establishing that the Act protects consumers and can underpin tort liability. However, this case is not analogous because the product in Thies was available over-the-counter without a prescription. Additionally, Shanks alleges misconduct by Upjohn's counsel for referencing documents not admitted into evidence and for contacting a potential expert witness before Shanks formally retained them.