New York Law Review

Tag: market share liability

  • Hamilton v. Beretta U.S.A. Corp., 96 N.Y.2d 222 (2001): No Duty for Gun Manufacturers to Prevent Illegal Gun Sales

    Hamilton v. Beretta U.S.A. Corp., 96 N.Y.2d 222 (2001)

    Gun manufacturers do not have a general duty to exercise reasonable care in the marketing and distribution of handguns to prevent them from falling into the hands of criminals, nor can liability be apportioned on a market share basis in cases involving negligently marketed legal products.

    Summary

    Plaintiffs, relatives of victims of handgun violence, sued gun manufacturers alleging negligent marketing. The case centered on whether manufacturers owed a duty to exercise reasonable care in the marketing and distribution of handguns and whether liability could be apportioned on a market share basis. The New York Court of Appeals held that gun manufacturers do not have a duty to prevent the illegal acquisition and misuse of their handguns by third parties and rejected the application of market share liability due to the non-fungible nature of guns and the varied marketing practices of manufacturers. The court emphasized that imposing such a duty would create indeterminate liability and that the connection between manufacturers and victims was too remote.

    Facts

    Relatives of victims of handgun violence sued 49 handgun manufacturers alleging negligent marketing, design defect, ultra-hazardous activity, and fraud. Stephen Fox, one of the plaintiffs, was permanently disabled after being shot by a friend with a gun obtained from an illegal sale. Plaintiffs argued that the manufacturers’ negligent distribution created an illegal, underground market for handguns, providing weapons to minors and criminals. Only one gun was recovered, and plaintiffs sought to proceed on a market share theory of liability.

    Procedural History

    The United States District Court for the Eastern District of New York dismissed the product liability and fraud claims but retained the negligent marketing claim. After a jury trial, damages were awarded against three defendants based on their share of the national handgun market. The defendants unsuccessfully moved for judgment as a matter of law. The Second Circuit certified the questions of duty and market share liability to the New York Court of Appeals, which accepted certification.

    Issue(s)

    1. Whether the defendant-manufacturers owed plaintiffs a duty to exercise reasonable care in the marketing and distribution of the handguns they manufacture?
    2. Whether liability in this case may be apportioned on a market share basis, and if so, how?

    Holding

    1. No, because gun manufacturers do not have a duty to prevent the illegal acquisition and misuse of their handguns by third parties given the remote connection between the manufacturers, the criminal wrongdoers, and the plaintiffs. Imposing such a duty would create indeterminate liability.
    2. No, because the guns are not identical fungible products, the manufacturers’ marketing techniques were not uniform, and therefore market share is not an accurate reflection of the risk posed.

    Court’s Reasoning

    The court emphasized that foreseeability alone does not define duty; a specific duty to the injured party must exist. It stated, “[W]ithout a duty running directly to the injured person there can be no liability in damages, however careless the conduct or foreseeable the harm” (Lauer v. City of New York, 95 N.Y.2d 95, 100). The court highlighted the absence of a relationship between the manufacturers and the victims that would justify imposing a duty to control the conduct of third parties. The court distinguished this case from products liability cases involving defective products or failure to warn, noting that the handguns themselves were not defective. Addressing the market share liability claim, the court noted guns are not fungible like DES in Hymowitz v. Eli Lilly & Co. (73 N.Y.2d 487), and the manufacturers’ marketing techniques were not uniform. Thus, market share was not an accurate measure of risk. The court concluded that imposing such a duty would create an indeterminate class of plaintiffs and defendants with little connection to the benefits of controlling illegal guns. The court noted the existence of federal statutory and regulatory schemes governing gun sales and expressed caution in imposing novel tort theories in an area of ongoing national policy debate.

  • In re DES Market Share Litigation, 79 N.Y.2d 301 (1992): Right to Jury Trial in Market Share Liability Cases

    In re DES Market Share Litigation, 79 N.Y.2d 301 (1992)

    Plaintiffs in DES (diethylstilbestrol) cases have a constitutional right to a jury trial on the issue of market share liability, as market share is an integral part of the tort cause of action for money damages and not a separate equitable proceeding.

    Summary

    This case addresses whether DES plaintiffs are entitled to a jury trial on the issue of market share, a liability theory adopted in Hymowitz v. Lilly & Co. The New York Court of Appeals held that plaintiffs possess a constitutional right to a jury trial regarding market share. The court reasoned that establishing market share is a factual component of the plaintiffs’ underlying tort claims for money damages, not a separate equitable action. Severing and consolidating the market share issue for trial does not extinguish the right to a jury trial. The court affirmed the Appellate Division’s order, ensuring plaintiffs’ right to a jury trial on the market share issue.

    Facts

    DES, a synthetic estrogen, was prescribed to pregnant women from 1947 to 1971 to prevent miscarriages. It was later found to cause vaginal adenocarcinoma and other health problems in the daughters of women who took DES. Due to the difficulty in identifying the specific manufacturer of the DES ingested by their mothers, many DES plaintiffs were unable to pursue traditional tort claims. In Hymowitz, the Court of Appeals adopted a market share theory, holding manufacturers liable based on their share of the national DES market. Following Hymowitz, the market share issue was severed from individual DES cases and consolidated for a single trial.

    Procedural History

    The Supreme Court, Erie County, denied plaintiffs’ motion for a jury trial on the market share issue, deeming it a newly created remedy and not a cause of action itself. The Appellate Division reversed, holding that Hymowitz modified a pre-existing legal cause of action and that the plaintiffs were thus entitled to a jury trial. The Court of Appeals granted leave to appeal.

    Issue(s)

    Whether DES plaintiffs are constitutionally entitled to a jury trial on the issue of market share liability.

    Holding

    Yes, because market share determination is an integral part of the plaintiffs’ cause of action for money damages and not a separate equitable proceeding.

    Court’s Reasoning

    The Court of Appeals based its decision on Article I, § 2 of the New York Constitution, which guarantees the right to a jury trial in cases where it was traditionally available. CPLR 4101 also codifies this right for actions seeking a judgment for a sum of money only. The court rejected the argument that Hymowitz created a new equitable remedy, stating that Hymowitz merely modified the traditional causation requirement by allowing liability based on market share rather than direct identification of the manufacturer. The court emphasized that determining market share remains a factual issue essential to establishing the defendants’ culpability. The court stated, “[W]hen we used the word ‘equitable’ in Hymowitz, we were not categorizing the market share theory; rather, we were indicating the extent to which our decision was compelled by simple fairness.” The Court further reasoned that the market share inquiry is not a preliminary issue but is directly tied to the ability of the plaintiffs to recover damages. “The market share percentages for each of the 24 years and the concomitant determination of each defendants’ ultimate culpability will dictate the ability of all plaintiffs to recover damages in their main actions.” Severing the issue for trial does not eliminate the right to a jury trial. The Court also dismissed the argument that the complexity of the market share proceeding transforms it into an equitable cause of action. The court concluded that the right to a jury trial remains intact because market share is a legal issue within a tort action for money damages.

  • Hymowitz v. Eli Lilly & Co., 73 N.Y.2d 487 (1989): Market Share Liability for DES Manufacturers

    73 N.Y.2d 487 (1989)

    When plaintiffs cannot identify the manufacturer of a fungible product (DES) that caused their injury, liability is apportioned among manufacturers based on their national market share at the time of exposure, and defendants cannot exculpate themselves by proving they did not manufacture the specific dose ingested by the plaintiff’s mother.

    Summary

    This landmark case addresses liability for injuries caused by diethylstilbestrol (DES), a drug administered to pregnant women. Plaintiffs, unable to identify the specific manufacturer of the DES ingested by their mothers, sued multiple manufacturers. The New York Court of Appeals adopted a “national market share” theory, holding that liability should be apportioned based on each manufacturer’s share of the national DES market at the time of the plaintiff’s mother’s ingestion. Critically, the court rejected the possibility of exculpation; a manufacturer could not escape liability even if it proved it did not produce the specific pills ingested. This decision balances the need to provide redress for injured plaintiffs with the difficulties of proving causation in DES cases.

    Facts

    Multiple plaintiffs brought suit against numerous drug manufacturers, alleging injuries resulting from their mothers’ ingestion of DES during pregnancy. The plaintiffs were unable to identify which specific company manufactured the DES their mothers took, a common problem due to the generic nature of the drug and the passage of time.
    DES was prescribed to pregnant women to prevent miscarriages, but was later found to cause various health problems in their daughters.
    Traditional tort law requires plaintiffs to prove that a specific defendant’s actions caused their injuries. This requirement posed a significant obstacle for DES plaintiffs.
    The plaintiffs sued multiple DES manufacturers, seeking to hold them liable based on theories of concerted action, alternative liability, and market share liability.

    Procedural History

    Several lower court cases involving DES-related injuries were consolidated for appeal.
    The Appellate Division certified questions to the New York Court of Appeals regarding the appropriate theory of liability to apply in DES cases.
    The Court of Appeals granted leave to appeal to address the novel issues presented by the DES litigation.

    Issue(s)

    Whether a DES manufacturer can be held liable for a plaintiff’s injuries even if the plaintiff cannot identify that manufacturer as the specific producer of the DES ingested by the plaintiff’s mother.
    Whether, under a market share theory of liability, a DES manufacturer should be permitted to exculpate itself by proving that it did not manufacture the specific DES ingested by the plaintiff’s mother.
    What constitutes the appropriate market (national vs. local) for determining market share.
    Whether joint and several liability or several liability should apply to DES manufacturers held liable under a market share theory.

    Holding

    Yes, because under a market share theory, liability is apportioned based on a manufacturer’s overall risk contribution to the market, not on proof of direct causation in each individual case.
    No, because exculpation would undermine the goal of providing a remedy for injured plaintiffs and would be inconsistent with the risk-based rationale of market share liability.
    The relevant market is the national market, because focusing on a national market provides a more accurate reflection of the overall risk created by each manufacturer.
    Several liability applies, because joint and several liability would unfairly penalize manufacturers with a small market share.

    Court’s Reasoning

    The court rejected traditional tort principles requiring identification of the specific tortfeasor because it recognized the unique difficulties faced by DES plaintiffs in proving causation. The court stated: “[W]e are presented with aHelp us understand a problem that has caused great suffering, and which has no clear solution under traditional tort law principles.”
    The court adopted a market share theory, reasoning that each manufacturer contributed to the overall risk of injury by marketing DES, and therefore should bear a portion of the responsibility for the resulting harm. The court reasoned that “the wrongdoers are better able to bear the cost of the injury than are the innocent victims”.
    The court explicitly rejected allowing manufacturers to exculpate themselves, finding that such a rule would “frustrate” the goal of providing a remedy. According to the court, this is because “…the ever-present possibility of exoneration would undermine the efficacy of the remedy.”
    By adopting a national market share, the court aimed to achieve a more equitable apportionment of liability, reflecting the overall risk created by each manufacturer’s conduct across the entire country. The court stated that “…over the course of many years, each company’s share of the market will approximate its responsibility for the risk of injury to the population”.
    The court also rejected the imposition of joint and several liability, concluding that it would unfairly burden smaller manufacturers with a disproportionate share of the damages. The court decided that “…each defendant’s liability for injuries would be several only, and would be based on its share of the national market.”
    A dissenting opinion, argued that precluding exculpation was inconsistent with traditional tort principles of causation and fairness.