PEARL O NEILL v. NOVARTIS CONSUMER HEALTH, INC.,

Filed 2/27/07

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

APPEAL from a judgment of the Superior Court of Los Angeles County, Anthony J. Mohr, Judge. Affirmed.

Robinson, Calcagnie & Robinson, Mark P. Robinson, Jr., Sharon J. Arkin; Lopez, Hodes, Restaino, Milman & Skikos, Ramon Rossi Lopez, Steve Skikos and Melinda Davis-Nokes for Plaintiffs and Appellants.

Kaye Scholer, Aton Arbisser, Jan E. Dodd, Tanja K. Shipman, Joshua Stambaugh and Randolph S. Sherman for Defendant and Respondent.

______________________

This is an appeal from a defense verdict in two cases tried concurrently in coordinated litigation against Novartis Consumer Health, Inc.,^[1]the manufacturer of pharmaceutical products containing phenylpropanolamine (PPA). Appellants claim the court erred in refusing to instruct the jury that compliance with government standards cannot be considered as a basis for assessing the safety of a product in a design defect claim. They claim the court erroneously allowed respondent to present evidence which did not meet the admissibility standards established in People v. Kelly (1976) 17 Cal.3d 24 to challenge the findings of an epidemiological study on the safety of PPA. They assert the court erred in allowing Novartis to present evidence implying that the Food and Drug Administration (FDA) affirmatively approved the marketing of Novartiss PPA products while precluding appellants from utilizing contradicting evidence in their opening statement or their case in chief. They also claim error in other evidentiary rulings. We find no error and affirm the judgment.

FACTUAL AND PROCEDURAL SUMMARY

We begin with background on PPA, the pharmaceutical ingredient which is at the center of this action. Novartis used PPA as the active ingredient for nasal decongestion in two cough and cold products, Triaminicin and Tavist-D.^[2] Because the ingredient was in commercial use prior to 1972, it was grandfathered into FDA approval, subject to a three-phase monograph process for determining whether it was safe and effective. Under the relevant federal law, monographed drugs could be legally marketed pending the FDAs final determination on their safety and efficacy. (21 C.F.R. 330.10 (2006).)

In 1976, the FDA began the first stage in the monograph process for cough and cold products, including PPA. In January 1985, the FDA issued its first formal position on PPA as part of the second phase of its process, the tentative final monograph for over-the-counter nasal decongestant products. The FDA did not categorize PPA as safe and effective, due to concerns that it elevated blood pressure. At the same time, the FDA tentatively approved another decongestant, pseudoephedrine, as safe and effective. Because of FDA concerns about the safety of PPA, in 1992 a pharmaceutical industry trade association proposed to the FDA that an epidemiological study be conducted. Association members funded the study, which came to be known as the Yale Study, or Hemorrhagic Stroke Project.

In August 1994, the FDA published its final rule for over-the-counter nasal decongestant products, the third phase of its monograph process. The FDA issued final approval of pseudoephedrine as safe and effective, but deferred categorization of PPA, explaining: [B]ecause of still unresolved safety issues concerning phenylpropanolamine preparations, the agency is deferring action on this drug. . . . Therefore, phenylpropanolamine preparations will not be categorized or further discussed in this document.

The Yale Study results were submitted to the FDA on May 10, 2000. On October 19, 2000, members of the nonprescription drugs advisory committee for the FDAs Center for Drug Evaluation and Research conducted a hearing on the safety of PPA in light of the Yale Study findings. The panel concluded that PPA was unsafe and recommended to the FDA that PPA be removed from the market.

On November 3, 2000, the FDA advised PPA manufacturers that it intended to initiate rulemaking to classify phenylpropanolamine as nonmonograph (not generally recognized as safe and effective) for [over-the-counter] use and that as an interim measure to protect the public health, you should voluntarily discontinue marketing any drug products containing phenylpropanolamine. PPA manufacturers, including Novartis, immediately removed all products containing PPA from the market. On August 14, 2001, the FDA published in the Federal Register its proposal to withdraw approval, in which it declared its intention to withdraw approval of all products containing PPA because of the association [of] phenylpropanolamine [with] increased risk of hemorrhagic stroke.

Appellants are two women who suffered strokes which they attribute to their use of Novartis products containing PPA. Linda Lutz was 48 years old when she suffered an intracerebral hemorrhage in May 1996. She had used Triaminicin, a Novartis product which contained PPA. Ms. Lutz is confined to a wheelchair due to paralysis of the left side of her body. Pearl ONeill suffered an intracerebral hemorrhage in March 1995, following her first use of Tavist-D, a Novartis product containing PPA. She was 35 years old at the time.

Ms. ONeill and Ms. Lutz each filed suit against Novartis. Their actions were consolidated with all other state-wide PPA cases. After consolidation, a master complaint and master answer were drafted and adopted. The ONeill and Lutz cases were selected for a consolidated trial. The cases went to the jury on three causes of action: strict liability design defect,^[3]strict liability failure to warn, and fraud by concealment. After a lengthy trial, the jury returned defense verdicts on all causes of action. This is a timely appeal from the judgment in favor of Novartis.

DISCUSSION

I

Appellants assert prejudicial error resulted from the courts admission of FDA evidence and its failure to limit the jurys use of that evidence with respect to the design defect claim. We begin with the claim of instructional error.

Appellants assert the court erred in refusing to instruct the jury that compliance with government standards cannot be considered as a basis for assessing the safety of a product in a design defect claim. At different points during the trial, appellants submitted special instructions which explained that compliance with FDA rules does not preclude liability for design defect. They asked that the court instruct: FDA standards and regulations are only minimal in nature and do not establish the standard of care for a reasonable manufacturing company under the circumstances of this case. It is not a defense to a claim that a product is defective that the manufacturer built the product in accordance with government standards or specifications. Appellants also requested that the court give the following instruction: Even if a manufacturer of over the counter products literally complies with FDA regulations, it is not immune from liability under the laws of the State of California for injuries caused by its products.

The court refused these instructions, and instead instructed: FDA action or inaction, though not dispositive, may be considered to show whether a product is safe or not safe. Appellants claim this instruction failed to inform the jury that government standards were not relevant to the design defect claim. This is not an accurate statement of the law.

In Ramirez v. Plough, Inc. (1993) 6 Cal.4th 539, the plaintiff sued a drug manufacturer, alleging that he contracted Reyes syndrome as a result of ingesting St. Joseph Aspirin for Children, manufactured by defendant. He asserted two theories for products liability: failure to warn based on lack of a Spanish-language warning, and failure to withdraw the product from the market. As to the lack of a Spanish-language warning, defendant argued that the standard of care for packaging and labeling nonprescription drugs, including the necessity of including foreign language label or package warnings, has been appropriately fixed by the dense layer of state and federal statutes and regulations that control virtually all aspects of the marketing of its products. (Id. at p. 548.) While noting that [c]ourts have generally not looked with favor upon the use of statutory compliance as a defense to tort liability[,] the Supreme Court acknowledged there is room for such a defense where the evidence shows only the ordinary situation contemplated by the statute or administrative rule. (Id. at pp. 547-548.)

After a lengthy review of the regulatory process governing the labeling of nonprescription drugs, the Supreme Court observed that state and federal legislative and administrative bodies, including the FDA, are able and willing to define the circumstances under which foreign language communications should be mandated. (Ramirez v. Plough, Inc., supra, 6 Cal.4th at pp. 550-553.) The court concluded that the prudent course is to adopt for tort purposes the existing legislative and administrative standard of care on this issue. The feasibility and advisability of foreign-language labeling for nonprescription drugs will, no doubt, be reviewed periodically by the FDA and other concerned agencies. Indeed, we are conscious that our decision here may prompt review by the California Legislature. That is as it should be, for further study might persuade the Legislature, the FDA, or any other concerned agency to revise the controlling statutes and regulations for nonprescription drugs. (Id. at p. 553.)

Ramirez is known primarily for this holding as to foreign-language labeling. But the court also rejected plaintiffs alternative ground for product liability, that defendant should not have marketed the childrens aspirin at all because the risks of Reyes syndrome outweighed any benefit to be derived from the product, particularly in light of the availability of nonaspirin pain relievers. (See Barker v. Lull Engineering Co. (1978) 20 Cal.3d 413, 431-432.) The court held, as a matter of law, that defendant may not be held liable for failing to withdraw its product from the market in early 1986, when plaintiffs mother purchased and used it. (Defendant did cease distribution of [the product] effective December 31, 1986.) Although devastating, Reyes syndrome was then and remains now a rare and poorly understood illness. A few scientific studies had shown an association between aspirin and Reyes syndrome, but the methodology of those studies had been questioned and the FDA had determined that further studies were needed to confirm or disprove the association. Pending completion of those studies, the FDA concluded that product warnings were an adequate public safety measure. Although the FDAs conclusion is not binding on us, we think it deserves serious consideration. Plaintiff has submitted nothing that causes us to doubt the FDAs judgment in this matter that in early 1986 aspirin could be considered a reasonably safe product for administration to children, when distributed with appropriate warnings. (Ramirez v. Plough, supra, 6 Cal.4th at p. 556.)

The trial court properly incorporated the essence of this holding when it instructed the jury that F.D.A. action or inaction, though not dispositive, may be considered to show whether a product is safe or not safe.

Appellants disagree, relying on McLaughlin v. Sikorsky Aircraft (1983) 148 Cal.App.3d 203. In McLaughlin, two members of the military were injured when their Navy helicopter crashed. They sued the manufacturer, which had built the helicopter to Navy specifications, alleging strict liability based on defective design. Before trial, the plaintiffs obtained a ruling that compliance with owner specifications is not a defense to claims of strict liability in tort. (Id. at p. 208.) Despite this ruling, and over plaintiffs objection, the manufacturer presented evidence that it had complied with military specifications in designing the aircraft. The McLaughlin court held it was error to allow the jury to consider the military specifications as even a factor in determining design defect. (Id. at p. 209.)^[4]

In light of this damaging evidence, the McLaughlin plaintiffs proffered, and the court refused, the following instruction: It is not a defense to a claim that a product is defective that the manufacturer built the product, in this case, the helicopter, in accordance with government standards or specifications. (McLaughlin v. Sikorsky Aircraft,supra, 148 Cal.App.3d at p. 209.) The court held this, too, was error: Had the court precluded all evidence of government specifications, plaintiffs proffered instruction may not have been warranted. However, because the court allowed evidence of military specifications on the issue of whether the aircraft was defective, plaintiffs instruction was essential to the jurys understanding of strict product liability. (Ibid.) Defendants counsel had argued, in spite of the courts in limine ruling, that defendant complied with Navy specifications in designing the aircraft, and that this was a factor showing the product was not defective. The court held that without a proper instruction, the jury was given the erroneous impression that defendants following of government plans and specifications was evidence there was no defect in the product. (Ibid.)

We find the holding in McLaughlin inapplicable because it is based on an entirely different factual scenario. The governmental entitythe Navywas the owner for whom the helicopters were being manufactured. It furnished the specifications to the defendant, a government contractor, to have the helicopters built according to its plans.The government was not acting as a regulatory body in providing helicopter specifications to the manufacturer. In contrast, the government agency in our case, the FDA, is the regulatory body charged with protecting the public health by ensuring that drugs are safe and effective. (21 U.S.C. 393(b)(2); FDA v. Brown & Williamson Tobacco Corp. (2000) 529 U.S. 120, 134.) While the FDAs standards and decisions do not immunize a drug manufacturer from liability, they are nevertheless entitled to serious consideration on the issue of the safety of PPA at the time of appellants injuries. (See Ramirez v. Plough, Inc., supra, 6 Cal.4th at p. 556.)

Appellants argue the courts refusal to give their requested instructions on consideration of FDA standards and actions with respect to their design defect claims was even more prejudicial because of instructions given on their other theory of strict liability, failure to warn.^[5] The court instructed: FDA action or inaction, though not dispositive, may be considered to show whether a risk was known or reasonably scientifically knowable. [] Mere compliance with regulations or directives as to warnings, such as those issued by the United States Food and Drug Administration may not be sufficient to immunize the manufacturer of the drug from liability. The warnings required by such agencies may be only minimal in nature and when the manufacturer knows of, or has reason to know of, greater dangers not included in the warning, its duty to warn may not be fulfilled.

Contrary to appellants claim, these instructions did no harm to their design defect claim. They highlighted the limited effect compliance with FDA regulations has on a manufacturers duty to warn of known or knowable dangers. But they did not suggest that FDA regulations set the standard for determining whether there was a design defect.

We find no instructional error.

II

Appellants claim the court committed prejudicial error by permitting Novartis to challenge the validity of the Yale Study with scientific evidence that did not meet the admissibility standards established in People v. Kelly, supra, 17 Cal.3d 24, 30-31. They argue that in asserting that some of the cases in the Yale Study were misclassified, Novartis was improperly permitted to hack[] at the A cell by looking for errors only on the risk side of the study--in the group of cases classified as exposed to PPA--rather than following proper methodology by reviewing both exposed and control cases.^[6]

People v. Kelly sets out the standards in California^[7]for admission of expert testimony based upon the application of a new scientific technique: (1) the reliability of the method must be established, usually by expert testimony, and (2) the witness furnishing such testimony must be properly qualified as an expert to give an opinion on the subject. [Citations.] Additionally, the proponent of the evidence must demonstrate that correct scientific procedures were used in the particular case. (People v. Kelly, supra, 17 Cal.3d at p. 30, italics omitted.)

Appellants argument is focused on the testimony of two of Novartiss experts, Dr. Mark Alberts and Dr. Donald Goldmann.^[8] Both experts testified about the proper methodology for a case control study, and described certain aspects of the Yale Study which in their opinion deviated from that methodology. Among their concerns was the possibility that three of the cases were misclassified, which would have had a significant impact on the studys results, given the very small number of cases in the subgroup upon which the studys conclusions were based.^[9] Dr. Alberts testified that in one case, the records indicated the focal time^[10]for the stroke preceded the patients use of the PPA-containing product. Dr. Goldmann testified that the reclassification of that case from unexposed to exposed during the course of the study was inconsistent with the proper conduct of a case control study. He and Dr. Alberts both testified that under the protocol for the study, a second case should have been excluded because the patient had a preexisting history of transient ischemic attacks. In his opinion, the case should have been submitted to an impartial panel to decide whether to include it. There also was an issue about whether that patient had been exposed to PPA because she initially stated she had taken Sudafed, not Tavist-D. The witnesses also testified that a third case was possibly misclassified.

The Kelly rule tests the fundamental validity of a new scientific methodology, not the degree of professionalism with which it is applied. [Citation.] Careless testing affects the weight of the evidence and not its admissibility, and must be attacked on cross-examination or by other expert testimony. (People v. Cooper (1991) 53 Cal.3d 771, 814.) Novartiss evidence that some cases in the Yale Study were misclassified was not based on new scientific methodology; it was a challenge to the professionalism with which the methodology was applied. The Kelly standards for admission of new scientific methods do not apply. We find no error in the courts admission of this evidence.

We also find no undue prejudice from admission of this evidence. Appellants were not taken by surprise by the testimony of these experts; Novartis timely disclosed its intent to rely on their experts opinions criticizing the Yale Study, including identification of specific cases that may have been misclassified. Novartis also provided deposition designations of its experts, which included portions questioning the methodology used in the Yale Study. In response to appellants request to exclude this evidence under Evidence Code section 352, as unduly time consuming and highly prejudicial, the court found the evidence too probative to exclude, but gave appellants additional time so that they could adequately address the criticism of the Yale Study.

Appellants subjected these experts to extensive cross-examination about their critiques of the Yale Study. Through their cross-examination, appellants addressed each of the criticisms the experts had about the study, including the claim that cases were misclassified. (For example, appellants inquired whether the experts had looked at all the cases in the controls, as well as the exposed cases. The experts admitted they had not.)

In their case-in-chief, appellants presented testimony by one of the coauthors of the Yale Study, Dr. Edward Feldmann. He testified that the PPA manufacturers were involved in every aspect of the design, all along, in the decision to perform the study in aspects of the study design, certainly representatives of the pharmaceutical industry were at all the meetings and they watched us conduct the study as we did the entire thing. Asked whether there was any oversight for the conduct of the study, Dr. Feldmann explained that the FDA watched the entire study being conducted, and there also was a group of scientists called the Scientific Advisory Group that was responsible for supervising the conduct of the trial. The purpose of the advisory group was to oversee the trial to make sure that its design and execution were consistent with the goals of the trial and that it was proceeding as planned. Dr. Feldmann explicitly addressed the bases on which stroke patients were included or excluded from the study: Not everybody that reported use of P.P.A. was included in the analysis because wethe study made an effort to rigorously define the use of the drug and not count everybody who just mentioned and proved exposure to P.P.A. And so there are a number of both cases and controls who dont appear in the analysis, despite the fact that they said that they used P.P.A. And thats perhaps the timing of P.P.A. use, just didnt meet the definitions that we had to include them into the trial.

Appellants were given a full opportunity to put before the jury the strength and legitimacy of the methodology used in the Yale Study and to rebut the defense experts criticisms of the study. There was neither error nor undue prejudice in the admission of this evidence.

TO BE CONTINUED AS PART II.

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^[1] Defendant Novartis Consumer Health (Novartis) was formed in 1997 by the merger of two companies (Ciba and Sandoz), which manufactured the PPA-containing products at issue in this action.

^[2] PPA also was used in over-the-counter appetite suppressants.

^[3] Novartis sought summary judgment on the design defect cause of action, asserting that over-the-counter pharmaceuticals are not subject to strict liability based on design defect. This was an attempt to expand the holding in Brown v. Superior Court (1988) 44 Cal.3d 1049 precluding design defect claims for prescription drugs to preclude liability on that theory for nonprescription drugs. The trial court denied summary judgment on that claim.

^[4] There were two major issues in McLaughlinthe availability of a design defect defense to a manufacturer following an owners specifications, and the availability of immunity to a government contractor. The United States Supreme Court has since severely limited liability of military contractors for design defects where the product was prepared in accordance with the governments precise specifications. (See Boyle v. United Technologies Corp. (1988) 487 U.S. 500, 511-512.)

^[5] A drug manufacturer may be found strictly liable for failure to warn if it failed to give adequate warning of dangers that were known or knowable in light of the generally recognized and prevailing best scientific and medical knowledge available at the time of manufacture and distribution. (Anderson v. Owens-Corning Fiberglas Corp. (1991) 53 Cal.3d 987, 1002, fn. omitted.)

^[6] In their motion in limine seeking to exclude this evidence, appellants argued: Looking for errors only among the subset or cell of cases classified as exposed to PPA prior to the stroke has been labeled by epidemiologists as hacking at the A cell: looking for errors only in the one group (or cell) that is irritating. . . . Here, an exposed case (the A cell) irritates the defendants, because if PPA exposure in the A cell is greater than PPA exposure in the control group, it produces an elevated odds ratio or relative risk. There are other case and control cells that would have to be examined for misclassification error for the review to be scientifically valid. . . . However, none of the defense experts reviewed all or even a random sampling of the various cells. Instead they (or some defense lawyer) just hacked at the A cell, where, if they found an error, it would help them. Accordingly, even if a misclassification were identified, it would not be scientifically meaningful absent a review of all cells in an even-handed way.

^[7] California has not adopted the standards for admissibility of scientific evidence established by the United States Supreme Court in Daubert v. Merrell Dow Pharmaceuticals, Inc. (1993) 509 U.S. 579. (People v. Leahy (1994) 8 Cal.4th 587, 593-604.) Daubert v. Merrell Dow Pharmaceuticals, Inc. (9th Cir. 1995) 43 F.3d 1311, in which the Ninth Circuit addressed the procedure federal judges should follow in ruling on the admissibility of expert scientific testimony following the Supreme Courts Daubert decision, is not helpful. Nor is it binding on this court. (See People v. Williams (1997) 16 Cal.4th 153, 190.)

^[8] Appellants do not claim these witnesses were unqualified to testify as experts.

^[9] Of the total number of women in the study, 383 had a hemorrhagic stroke, with 750 in the control group. Only seven of the 383 stroke patients and only four of the 750 controls were categorized as first use of PPA.

^[10] Focal time was described as the time when the stroke first started.