November 2007

From the editors of Wolters Kluwer Law & Business, this update describes important developments from CCH products liability and safety publications.

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Merck Agrees to $4.85 Billion Vioxx Settlement Plan
On Nov. 9, 2007, Merck & Co., Inc., the maker of the pain drug Vioxx, announced that it had entered an agreement with a group of plaintiffs' law firms to settle the majority of the thousands of U.S. claims filed against the company for a fixed amount of $4.85 billion. Vioxx was voluntary pulled from the market in September 2004 after concerns arose that the drug was linked to an increased risk of heart attack and stroke. By October of 2007, Merck had been named as a defendant in approximately 26,600 U.S. lawsuits, including some 47,000 plaintiff groups. Of the 20 claims that have reached trial, 12 jury verdicts have been in Merck's favor and 5 have been in the plaintiff's favor, with the remaining trials being set aside or resulting in a mistrial. If certain conditions under the agreement are met, the company will establish a $4 billion settlement fund for plaintiffs who suffered a heart attack and an $850 million fund for ischemic stroke claims. To qualify for settlement funds, individual plaintiffs will be required to demonstrate (1) that they suffered a heart attack or stroke, (2) that they can document the receipt of at least 30 Vioxx pills, and (3) that the receipt of the pills supports a presumption that they ingested the pills within 14 days of their injury. The law firms agreed to recommend the settlement process to their clients and 85 percent enrollment in the process must occur by March of 2008 to trigger Merck's obligations under the agreement. Under the agreement, payments to qualifying plaintiffs could occur as early as August of 2008 with an estimated time for final payments by the summer of 2009. Bruce N. Kuhlik, senior vice president and general counsel of Merck, stated that the agreement made sense for the company in light of the $1.9 billion it had set aside with which to defend litigation it anticipated would stretch on for years. In addressing Merck's desire to ascertain the number of potential claims before entering an agreement, Mr. Kuhlik stated that “[r]ecent court rulings confirmed that the window has closed for filing suits in a number of states, consistent with our view that statutes of limitations have expired in almost every state.” “This is the right time for an agreement,” said Mr. Kuhlik. The agreement provides that Merck does not admit causation between Vioxx and plaintiffs injuries or any fault on its part. The company also asserted that it would continue to defend all claims which were not included in the resolution process. (CCH Products Liability Reports, Report No. 1146, November 14, 2007).

Aircraft, Maintenance Manuals Not Found to be a Single Product
A Virginia district court's ruling that found that an aircraft and its maintenance manuals were a single, integrated product was reversed by a federal appeals court. A Virginia regional air carrier, Colgan Air, brought negligence, strict liability, and breach of warranty claims against Raytheon, an aircraft manufacturer which leased the carrier several aircraft. The lawsuit arose after one of the carrier's aircraft crashed off the coast of Massachusetts shortly after takeoff, killing the pilot and co-pilot. Although the crash was caused by the improper installation of an elevator trim tab, the carrier alleged that the improper installation occurred because of defects in the aircraft's maintenance manual used by the aircraft mechanics. The carrier asserted that a diagram in the maintenance manual improperly depicted the trim tab installed in reverse and the electronic version of the manual failed to include a link to an operational check that would have revealed the improper installation. The district court held that the carrier's claims involving defects in the maintenance manual were barred by the warranty executed by the carrier as part of its lease of the aircraft because the aircraft and the manuals constituted a single product. The appeals court, however, disagreed with the district court's determination that the manuals were part of the aircraft. The appeals court noted that prior cases finding an aircraft and its manuals as a single product often involved claims which included a defect warning in the manual and an alleged physical defect in the aircraft. In addition, the appeals court distinguished a flight manual, which would be required to operate an aircraft, from a maintenance manual. Although maintenance manuals are related to the process of obtaining an airworthiness certification, they are not necessary to that process because the FAA allowed for alternative methods of obtaining airworthiness that did not require the use of the maintenance manuals. The appeals court held that the most important factor in determining the relationship of the manuals and the aircraft was the understanding of the parties--an issue on which there was conflicting evidence. The understanding of the parties was a question for the jury and should be remanded, the appeals court concluded (Colgan Air., Inc. v. Raytheon Aircraft Co., 4th Cir., CCH Products Liability Reporter ¶17,848 (ip access user)).

Osteopenia Diagnosis Not a Recoverable Injury in Drug Action
A patient's diagnosis of osteopenia, which indicated low bone density levels, did not constitute a recoverable injury, according to the U.S. District Court for the Northern District of Ohio. The patient developed osteopenia allegedly as a side-effect of Depo-Provera contraceptive injections she had received every three months for approximately seven years. Although a link between bone density loss and Depo-Provera had been known since it was approved for use in the United States by the Food and Drug Administration in 1992, concern over the side-effect eventually led to a strengthened black box warning in 2004. The patient, however, argued that the contraceptive's warnings of the low bone density risk were inadequate, thus constituting a failure to warn. The court, however, found that the patient's claim was not viable because there was insufficient evidence that her osteopenia constituted an actual injury for which she could seek recovery. The court noted that the patient's own physician was unable to determine if the contraceptive had lowered her normal bone density because there was no baseline measurement taken prior to her first injection. The court reasoned that without a baseline measurement, there was no way to confirm that her bone density levels had decreased. In addition, the court noted that other medical testimony that established that while osteopenia is a statistical indicator of low bone density, it fell short of a diagnosis of osteoporosis and did not indicate the presence of an actual disease or injury. The court concluded that low bone density alone was insufficient to establish a recoverable injury, entitling the manufacturer to summary judgment in its favor (Lorenzi v. Pfizer Inc., N.D. Ohio, CCH Products Liability Reporter ¶17,857 (ip access user))

Consumer Product Safety

Interagency Task Force Presents Findings on Imports
By Sarah Borchersen-Keto, CCH News Bureau Staff Writer
A task force created by President Bush to examine and improve the safety of goods imported into the U.S. has recommended that attention and resources should be focused on critical points in the import life cycle where risk is greatest. The Interagency Working Group on Import Safety, established in July, noted that with imports standing at nearly $2 trillion last year, the U.S. “cannot inspect its way to safety.” The value of imports is expected to triple by 2015, making it physically impossible to inspect every imported item, the group said. The group has presented Bush with an action plan containing 14 broad recommendations and 50 action steps to enhance the safety of the increasing volume of imports. The recommendations include: a stronger certification process that would foster increased compliance with U.S. safety standards; the adoption of best practices to improve import safety; Increased transparency, with the names of certified producers and importers of certified products made available to the public; exchanging of product and compliance data by importers, U.S. Customs and Border Protection, and other federal agencies on each import transaction to determine whether to clear or reject import shipments; increased U.S. presence abroad, and more cooperation with foreign governments to ensure compliance with U.S. safety standards; enhanced standards for import safety and inspection agencies, where necessary; and an increase in penalties from the current cap of $1.8 million to $10 million. In conjunction with the import safety measures, the Food and Drug Administration (FDA) will unveil a Food Protection Plan which addresses both imported and domestically produced food. The plan is expected to strengthen the FDA’s ability to coordinate with other federal agencies to protect the food supply. (CCH Consumer Product Safety Guide, No. 902, November 7, 2007)

Senate Clears CPSC Reform Act; Demand Made for Nord’s Resignation
By Sarah Borchersen-Keto, CCH News Bureau Staff Writer
The Senate Commerce, Science and Transportation Committee has approved S. 2045, the Consumer Product Safety Commission (CPSC) Reform Act of 2007, which increases the agency’s enforcement authority and funding levels, and also strengthens consumer protection laws. The bill has been criticized by the acting CPSC chairman Nancy Nord, as well as the White House. Speaker of the House Nancy Pelosi (D-Cal.) said October 30 that Nord’s opposition to the bill was proof that she did not understand the gravity of the situation, and she called on President Bush to ask for Nord’s resignation. The bill includes provisions that would: provide a 58 percent increase for CPSC resources over the next 7 years; restore the CPSC to a 5 member commission; increase CPSC staff to at least 500 employees by 2013; streamline product safety rulemaking procedures; require third party certification of children’s products; ban lead from children’s products; ban the importation of recalled products; enable the assessment of larger penalties and enhance enforcement of CPSC statutes by increasing civil and criminal penalties; and ban the sale of recalled products and require companies to identify their subcontractors in the supply chain. (CCH Consumer Product Safety Guide, No. 902, November 7, 2007)

Proposed Rule Would Aid Development of Fuel Cell Vehicles
Concern that a federal safety standard for electric-powered vehicles could impede development of fuel cell vehicles (FCVs) prompted NHTSA to propose amendments to the standard that would ensure state-of-the-art FCVs are covered by the standard and remain consistent with the interests of safety. Electric vehicles, which can contain high voltage systems, create potential electrical risks not present in conventional petroleum-powered vehicles. The purpose of the standard, which requires electric vehicles to limit electrolyte spillage, retain energy storage devices, and maintain isolation between the vehicle's chassis and high-voltage system during a crash to ensure that the high voltage system does not use the chassis to complete the circuit, is to protect occupants, rescue workers, or others who may come in contact with the vehicle after a crash, from electrical shock hazards by ensuring isolation of the vehicle's high voltage electrical system. FCV designs typically incorporate coolant loops to cool hot fuel cells during operation, and the increased conductivity of the coolant over time can prevent the vehicle from maintaining the electrical isolation currently required under the standard. NHTSA was petitioned to amend the standard so that FCV manufacturers might understand what is required for FCV compliance, and to allow continued development of the alternative fuel vehicles. (CCH Consumer Product Safety Guide ¶40,706 (ip access user)

Crash Protection Phase-In Requirements Changed
The phase-in requirements of a final rule published on August 31, 2006 [CCH Consumer Product Safety Guide ¶41,947], in which NHTSA amended Federal Motor Vehicle Safety Standard (FMVSS) No. 208, Occupant Crash Protection, have been amended to permit manufacturers to earn advance credits for vehicles that are certified in compliance with new requirements one year in advance of the regulatory requirements, beginning on September 1, 2008. The August 2006 final rule amended FMVSS No. 208 to establish the same 56 km/h (35 mph) maximum speed for frontal barrier crash tests using belted 5th percentile adult female test dummies as previously adopted for tests using belted 50th percentile adult male dummies, in order to improve crash protection for small statured occupants. The agency considered the requests of various petitioners, and decided that the additional flexibility is appropriate and the one-year period for earning advance credits is consistent with the phase-in of the requirements. The final rule will be effective January 2, 2008. Petitions for reconsideration must be received by December 17, 2007. (CCH Consumer Product Safety Guide ¶41,971 (ip access user))

Repair Kits for Recalled Simplicity Cribs Now Available
The Consumer Product Safety Commission (CPSC), in cooperation with Simplicity Inc., of Reading, Pennsylvania, announced that a remedy has been made available for parents and caregivers who were impacted by the September 21, 2007, voluntary recall of about 1 million Simplicity and Graco logo cribs with older hardware [CCH Consumer Product Safety Guide ¶56,269]. Simplicity will provide consumers with a repair kit that immobilizes the drop-side. After an intensive effort to develop a repair that would allow safe use of the drop-side, the Commission and Simplicity have determined that the safest repair option is to immobilize the drop-side. The repair program, which is intended to reduce the risk of death or serious injury to infants, will be monitored by the agency. The free repair kit will be sent to crib owners who have pre-registered or who register now on Simplicity’s web site <http://www.simplicityforchildren.com>, or through Simplicity’s hotline at (888) 593-9274. Consumers will be offered a rebate coupon for a future purchase as an incentive to return a reply card indicating that they have successfully installed the repair hardware. Simplicity will also have live operators available at (800) 858-8323 to provide technical assistance to consumers, and will make a video version of the assembly instructions available at the web site. The hazard posed by the recalled crib involves the drop-side, which can detach and create a dangerous gap that can lead to the entrapment and suffocation of infants. The Commission is aware of 3 deaths in Simplicity manufactured cribs with older style hardware, 7 infant entrapments, and 56 related incidents with these cribs. The Simplicity crib models with recalled hardware include: Aspen 3 in 1, Aspen 4 in 1, Nursery-in-a-Box, Crib N Changer Combo, Chelsea and Pooh 4 in 1. The recall also involves the following Simplicity cribs that used the Graco logo: Aspen 3 in 1, Ultra 3 in 1, Ultra 4 in 1, Ultra 5 in 1, Whitney and the Trio. To determine what type of hardware is on their crib, all Simplicity consumers should call the Simplicity hotline or visit the web site. (CPSC News Release, #08-043, October 25, 2007; CCH Consumer Product Safety Guide, No. 903, November 27, 2007)