Duty to Innovate Before The California Supreme Court: The Briefs Are In

Both sides in Gilead v. Superior Court have filed their opening briefs in the California Supreme Court, and the extreme nature of the California Court of Appeal’s opinion extending a manufacturer’s duties has been laid bare.  As expected, the defendant convincingly argued that the California Court of Appeal has imposed potentially unlimited liability on product manufacturers through a duty to develop and commercialize safer alternative products without delay.  The plaintiffs, for their part, did not disavow the breadth of this duty, but asserted that it has existed for more than 100 years, even though no one saw it before they did, and that juries are capable of sorting it all out. We have no idea what the California Supreme Court will do with all this, but we hope and expect that the Court of Appeal’s novel duty to innovate will come under heavy scrutiny. 

As we explained here and here, the plaintiffs in Gilead used HIV drugs known as “TDF.”  But rather than allege that TDF drugs were defective, the plaintiffs asserted that that the defendant was negligent in failing to bring a different, but allegedly safer HIV drug (“TAF”) to market sooner.  The Court of Appeal ruled that a prescription drug manufacturer can owe such a duty, even when the plaintiffs have not alleged any defect in the drug that they actually used.  In an unprecedented ruling, the Court of Appeal found a duty of reasonable care when a manufacturer has invented “what it knows is a safer, and at least equally effective, alternative to a prescription drug that it is currently selling and that is not shown to be defective.”  Gilead Sciences, Inc. v. Superior Court, 98 Cal. App. 5th 911, 922 (2024) (review granted).

The California Supreme Court granted review.

The defendant’s opening brief established the major theme in its opening sentences:  “The Court of Appeal overrode a century of common law to impose on manufacturers a duty that no court anywhere in the county has ever suggested.  Whereas the common law requires manufacturers to product non-defective, reasonably safe products, the Court of Appeal has added a duty to develop and commercialize, without delay, a different product that is safer for some consumers.”  The key here is that the TDF drugs these plaintiffs actually took were not defective, which is an essential element of product liability claims.  As the defendant explained, California’s general negligence statute—which has been on the books since 1872—imposes a duty of care, but that duty is to produce reasonably safe product, i.e., products free of defect in manufacture, design, and warnings. 

The Court of Appeal departed from that standard and enacted in its place a rule that has no meaningful benchmark for a manufacturer’s conduct and transforms every product development decision into a potential lawsuit.  The defendant thus made its pitch in four parts.  First, the defendant laid out in detail the product development cycle that led to the marketing of TDF drugs, which undisputedly saved and extended thousands of lives.  At the time, the TAF drugs that plaintiffs (and the Court of Appeal) touted as “safer” had been subject to a single early trial involving just 20 patients, and the results were mixed.  The central premise behind this new duty—that the defendant “knew” that TAF drugs were “safer and at least equally effective”—is counterfactual and should not have been taken as a foregone conclusion. 

Second, the defendant argued that all product liability claims—whether couched in negligence or in strict product liability—require proof that a defect in the product caused injury.  This is the law in every jurisdiction, and it represents more than 100 years of legal calibration that balances product safety against product access.  This is particularly important in the pharmaceutical context, where all products have risks, yet are essential to protecting life and promoting health.  In sum, “[The Supreme] Court’s repeated pronouncements that a plaintiff claiming injury from a product cannot recover from a manufacturer without proving a defect are grounded in history and sound policy.”  A general negligence claim under California’s general negligence statute does not displace these rules.  It subsumes them. 

Third, the defendant emphasized the “unwarranted, unjustified, and disastrous” nature of the specific duty that the Court of Appeal created.  The new duty essentially requires that every manufacturer develop and commercialize an alternate product that it knows to be safer for some subset of consumers, and to do so without delay.  In other words, “reasonably safe is no longer safe enough.”  The new rule has no identifiable boundaries; it creates a “backdoor to liability” for products that are reasonably safe to begin with; and it is contrary to California Supreme Court precedent rejecting a comparable duty because it would chill the development of beneficial drugs.  The defendant provided multiple provocative examples:  Should an auto manufacturer be liable for injuries caused by speeding if it “knew” of technology that would prevent cars from exceeding the speed limit?  Should a seller of N-95 masks be liable for infections where it “knew” of full-face respirator technology that was marginally more effective?  The Court of Appeal’s legal framework was mistaken because it applied California’s Rowland factors to override the defect requirement without analyzing its history and rationale.  And, when applying the Rowland factors, they weigh clearly against imposing the new duty.

Fourth, at a minimum, any duty to develop and bring a “safer” alternative to market cannot be imposed so early in the product development cycle.  It is neither fair nor legally sustainable to create a duty because a drug manufacturer “knew” of a “safer and at least equally as effective” based on a single early-phase trial involving 20 patients. 

The plaintiffs’ opening brief adopts the theme that drug manufacturers owe a duty of care “when making decisions about commercializing an allegedly safer and equally effective drug” under California’s general negligence rule.  They presented their version of the defendant’s product development; they rejected the idea that the Court of Appeal overrode a century of common law; and they disagreed that the new duty was “boundless.”  For the plaintiffs, they have never been required to prove a product defect to prevail in a product liability claim grounded in negligence, and public policy does not justify an exception to the general rule that a manufacturer owes a legal duty to the users of its products. 

The plaintiffs’ argument therefore was threefold.  First, they argued that California’s general negligence statute creates a “default rule” that each person has a duty to exercise reasonable care for the safety of others, separate and apart from strict product liability.  This is a core part of the plaintiffs’ position—i.e., that strict product liability and negligence are separate things, with the former requiring a defect and the latter not.  They chide the defendant for “misapprehending” this “fundamental distinction,” and they purport to cite cases allowing negligence claims separate and apart from strict liability.  The plaintiffs’ touchstone is always “reasonableness,” and they claim that the “defect requirement” is especially misguided in the pharmaceutical context because of widespread application of federal preemption, the “near blanket immunity pharmaceutical manufacturers enjoy,” and “multiple safe harbors.”  In plaintiffs’ view, negligence is “one of the only avenues” left to challenge drug manufacturers.   

Second, the plaintiffs emphasized that the defendant did not justify an “exception” to the general duty of care.  Here, the plaintiffs discuss California’s Rowland factors, as too did the defendant, but plaintiffs come to the opposite result and argue that foreseeability and public policy factors weigh in favor of imposing this duty.  Plaintiffs particularly emphasize the defendant’s knowledge—i.e., that defendant purportedly knew that TAF drugs would reduce or eliminate side effects and would be at least as effective as TDF.  From that premise, it is no wonder that plaintiffs would conclude that the defendant foresaw harm to others and was “morally blameworthy.”  In so arguing, the plaintiffs accuse the defendant of ignoring “context,” and they dismiss the idea that the duty imposed by the Court of Appeal will adversely impact innovation and result in fewer choices for consumers. 

Third, the plaintiffs reject the argument that a duty to bring a product to market cannot possibly be imposed so early in the development process.  Again they fall back on what the defendant “knew,” despite having conducted just one early-phase trial.  According to the plaintiffs, a pharmaceutical manufacturer should not be allowed to “immunize” itself from liability by delaying Phase III trials. 

This is a thumbnail sketch of the parties’ substantial opening briefs, but you get the gist.  As usual, we have a few observations from our defense-minded point of view. 

First, the plaintiffs stake their case largely on the difference (the “fundamental distinction”) between negligence and strict product liability and how one claim can survive absent the other.  But everyone agrees that California law provides for both negligence and strict liability.  The question here is what a negligence claim under California law should look like.  The defendant has made a convincing case that a negligence claim against a product manufacturer requires proof that there is something wrong with the product—a defect.  The fact that strict product liability is separate and also requires proof of a defect is beside the point. 

Second, the plaintiffs accuse the defendant of ignoring “context,” but the defendant is merely emphasizing just how broadly this new duty will affect manufacturers and consumers throughout California—including in industries other than pharmaceuticals.  Plaintiffs can try to cabin the issue and emphasize how “narrow” the Court of Appeal’s new duty is, but this is California’s highest court.  In interpreting California law, the Supreme Court will see the broader picture.

Third, the plaintiffs doubled down on the defendant’s purported knowledge that TAF was “safer” and at least equally as effective to support the new duty.  They probably had no choice, as the Court of Appeal staked its opinion so firmly on that factor.  We are, however, confused.  If culpable knowledge is required, we still wonder whether this is even a negligence claim.  Moreover, the plaintiffs appear to waffle.  They emphasize actual knowledge in parts of their brief, but in others they refer to constructive knowledge and what a manufacturer “knew or should have known.”  The plaintiff’s Issue Presented does not mention the defendant’s knowledge at all.  Are plaintiffs hedging here, maybe planning to pivot on remand?  We don’t know. 

Fourth, we chuckled (and not in a good way) at plaintiffs’ assertions that pharmaceutical manufacturers enjoy “near blanket immunity” and “multiple safe harbors” in California state court.  That state of affairs will come as a stunning surprise to pharmaceutical companies collectively facing hundreds of thousands of product liability lawsuits in Los Angeles and other large California counties. 

Fifth, the parties have much to say on the Rowland factors.  Parties always do, and like many multi-factor tests, the analysis can be result oriented.  What strikes us is the fundamental dispute over how the Rowland factors should apply—whether a defendant bears the burden of proving an “exception” to the general duty of care or whether a plaintiff bears the burden of proving that a duty arises in the first instance. This issue might strike the Supreme Court as interesting, too. 

Finally, the plaintiffs’ refrain is that “reasonableness” is the standard, which purportedly solves all problems.  We have no issue with reasonableness, but juries decide whether someone has acted reasonably when determine whether a duty has been breached.  The question here is whether that person owes a duty in the first place. 

So that’s our take.  The defendant still has one more brief to go, then it’s on to oral argument.  We continue to believe that the Court of Appeal’s new duty is unwarranted and completely gratuitous.  Pharmaceutical manufacturers do not enjoy “blanket immunity” in California, and product users in California are amply protected by 100+ years of product liability law.  We will keep you posted.