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Rowe v. Hoffman-La Roche

March 29, 2007

ROBERT ROWE, PLAINTIFF-RESPONDENT,
v.
HOFFMAN-LA ROCHE, INC., AND ROCHE LABORATORIES, A MEMBER OF THE ROCHE GROUP, DEFENDANTS-APPELLANTS, AND ABC CORPORATION (SAID NAME BEING FICTITIOUS) AND DRS. JOHN DOE 1-10, DEFENDANTS.



On appeal from the Superior Court, Appellate Division, whose opinion is reported at 383 N.J. Super. 442 (2006).

SYLLABUS BY THE COURT

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

Plaintiff Robert Rowe, a Michigan resident, filed a complaint in New Jersey against two New Jersey pharmaceutical manufacturers, Hoffman-Law Roche, Inc. and Roche Laboratories, Inc. Rowe alleged the defendants failed to warn adequately about the health risks associated with Accutane, a drug manufactured by defendants and approved in 1982 by the United States Food and Drug Administration (FDA) to treat acne. Most of defendants' Accutane-related manufacturing and sales activities and FDA communications took place in or emanated from New Jersey.

Rowe has lived in Michigan his entire life. In February 1997, a Michigan physician prescribed him Accutane. The prescription was filled in Michigan. Rowe used the Accutane in Michigan for three months. About three months after he discontinued his use of Accutane, Rowe became depressed and contemplated suicide. In September 1997, he crashed a car into a house during an apparent suicide attempt. Thereafter, he sought psychiatric treatment in Michigan and Ohio. In 2001, Rowe sued defendants in New Jersey, alleging that Accutane caused him to become severely depressed and suicidal and that defendants failed to warn him adequately about these risks. He also claimed that defendants did not adequately test Accutane and were aware of its potential adverse psychological effects, but failed to advise the FDA.

Defendants moved for summary judgment, seeking dismissal of the lawsuit on the ground that Michigan law applied. Under Michigan law, the FDA approval results in a conclusive determination that the health risk warnings issued by defendants were adequate. Under New Jersey law, FDA approval creates only a rebuttable presumption of adequacy. The trial court dismissed Rowe's complaint, concluding that as between Michigan and New Jersey, Michigan had the strongest governmental interest in applying its statute to the failure-to-warn issue.

A divided panel of the Appellate Division reversed, finding that New Jersey had the strongest interest in applying its law, as the alleged conduct of defendants with respect to the Accutane warning had occurred largely in New Jersey; New Jersey has a strong interest in deterring the manufacture of unsafe products within its borders; and Michigan's purpose in enacting its statute may have been to protect only Michigan businesses, an interest not implicated here. Rowe v. Hoffman La Roche, Inc., 383 N.J. Super. 442 (App. Div. 2006). Judge Wefing dissented, noting that Michigan's interests also include concern about the effect of litigation on the availability and cost of prescription medications for its citizens; New Jersey had no interest in compensating an out-of-state resident; and by applying New Jersey law, our courts would become a haven for out-of-state litigants who reside in states that protect pharmaceutical manufacturers.

The matter comes before the Court as an appeal as of right based on the dissent in the Appellate Division.

HELD: Michigan law applies to the failure-to-warn claim brought by a Michigan resident alleging injuries in Michigan involving an FDA-approved prescription drug prescribed and used in Michigan. Michigan's interest in promoting the availability of affordable prescription medications to its citizens outweighs New Jersey's interest in deterring New Jersey corporations from providing inadequate warnings.

1. The flexible, two-step governmental-interest analysis is applied to determine the choice of law question in tort suits filed in New Jersey. The first step requires a determination of whether a conflict exists between the laws of the interested states. If there is no conflict, the forum state applies its own law. If there is a conflict, the second step requires a determination of which state has the greatest interest in governing the issue. The Court must identify the governmental policies underlying the law of each state and determine whether those polices are affected by each state's contacts to the litigation and to the parties. (pp. 7-8)

2. The Michigan statute, Mich. Comp. Laws § 600.2946(5), creates a conclusive presumption that a drug is not defective if the drug and its labeling were approved by the FDA. New Jersey's statute, N.J.S.A. 2A:58C-4, provides that FDA approval creates only a rebuttable presumption that a drug warning is adequate. Thus, an actual conflict exists. The Court must determine whether the policies underlying the statutes are affected by the states' contacts to the litigation and the parties. If a state's contacts do not align with the policies related to the disputed issue, then that state generally will not be found to have the greatest interest in governing the issue. (pp. 9-11)

3. The New Jersey statute was enacted to balance the interest of the public and the individual, with a view towards economic reality. It was also intended, at least in part, to establish clear rules with respect to specific matters where uncertainty had been created by New Jersey court decisions. (pp. 11-12)

4. In this case, New Jersey's interest in allowing Rowe's suit is not as strong as its interest was in Gantes v. Kason Corp., 145 N.J. 478 (1996), where the Court held that New Jersey's statute of limitation, not Georgia's statute of repose, applied to a products liability dispute. In Gantes, New Jersey's interest in discouraging the manufacture and sale of unsafe products was furthered because the plaintiff's suit was timely. Georgia's interest was not frustrated because its statute of repose was designed to stabilize Georgia's insurance industry and to keep stale claims out of its courts. (p. 13).

5. The New Jersey statute at issue in this case impliedly accepts that FDA regulations and labeling requirements are sufficient, at least in part, to deter pharmaceutical companies from manufacturing unsafe drugs. The law's purpose is not to encourage tort recoveries by plaintiffs. It is to reduce the burden placed on manufacturers of FDA-approved products by product liability litigation. The Legislature carefully balanced the need to protect individuals against the need to protect an industry with a significant relationship to our economy and public health. New Jersey's interest in applying its law to Rowe's failure-to-warn issue is thus congruent with Michigan's interest. (pp. 13-15)

6. The Michigan statute was adopted with the express purpose of immunizing pharmaceutical companies that market FDA-approved prescription drugs from liability in products liability suits. Its purposes is also to make prescription drugs more affordable and available to Michigan residents, as unlimited liability for drug manufacturers adds substantially to their cost. The statute's purpose was not limited to protecting Michigan pharmaceutical manufacturers. (pp. 15-19).

7. In this case, New Jersey's interest in ensuring that its corporations are deterred from producing unsafe products and providing inadequate warnings in the context of an FDA-approved drug is limited. That interest is outweighed by Michigan's interest in making more prescription drugs available at reasonable cost to its citizens. To allow a lifelong Michigan resident who received an FDA-approved drug in Michigan and alleged injuries sustained in Michigan to bypass his own state's law and obtain compensation for his injuries in this State's courts completely undercuts Michigan's interests, while overvaluing New Jersey's true interest in this litigation. (pp. 19-20).

The judgment of the Appellate Division is REVERSED and the case is REMANDED to the Law Division for reinstatement of the trial court's order dismissing the lawsuit.

JUDGE STERN, P.J.A.D., (temporarily assigned), joined by JUSTICE LONG,has filed a decision CONCURRING IN PART and DISSENTING IN PART, expressing the view that although the governmental-interest analysis controls and there is an actual conflict of interest between the two states' laws, application of that analysis and the principles of Gantes results in the conclusion that New Jersey's interest in deterring its companies from providing inadequate warnings outweighs Michigan's interests.

JUSTICES LaVECCHIA, WALLACE, RIVERA-SOTO and HOENS join in JUDGE LEFELT's opinion. JUDGE STERN, joined by JUSTICE LONG, filed a separate opinion, concurring in part and dissenting in part. CHIEF JUSTICE ZAZZALI and JUSTICE ALBIN did not participate.

The opinion of the court was delivered by: Judge Lefelt (temporarily assigned)

Argued January 3, 2007

Plaintiff Robert Rowe, a Michigan resident, filed a complaint in Essex County against two New Jersey pharmaceutical manufacturers, defendants Hoffmann-La Roche, Inc. and Roche Laboratories, Inc. Rowe alleged that the manufacturers failed to warn adequately about the health risks associated with Accutane, a drug manufactured by defendants and approved in 1982 by the United States Food and Drug Administration (FDA) to treat recalcitrant nodular acne. Under Michigan law, the FDA approval results in a conclusive determination that the health risk warnings issued by defendants regarding the drug were adequate. Mich. Comp. Laws § 600.2946(5)(2006). New Jersey law, however, considers the FDA approval to have created only a rebuttable presumption of adequacy. N.J.S.A. 2A:58C-4. Thus, plaintiff's suit is viable in New Jersey but precluded in Michigan. After comparing Michigan's and this State's governmental interests in resolving the adequacy-to-warn issue, we conclude that Michigan's interest is paramount and its conclusive presumption applies. Consequently, we reverse the contrary Appellate Division decision, Rowe v. Hoffmann-La Roche Inc., 383 N.J. Super. 442 (App. Div. 2006), and reinstate the trial court's decision dismissing Rowe's complaint.

I.

The facts and procedural history pertaining to this dispute are relatively uncomplicated. Hoffmann-La Roche is a New Jersey corporation, and while the record does not reveal Roche Laboratories' state of incorporation, both companies have their principal place of business in Nutley, New Jersey. Hoffman-La Roche manufactures, labels, and packages Accutane in Nutley, and Roche Laboratories markets, sells, and distributes the drug also from Nutley. While some production and marketing efforts occurred outside New Jersey, almost all of the manufacturing and sales activities by the two companies (hereinafter Hoffmann), including Accutane-related communications with the FDA, took place in or emanated from New Jersey.

Robert Rowe has lived in Michigan all of his life. When Rowe was sixteen years old, in February 1997, a Michigan physician prescribed Accutane to treat his recalcitrant acne. A Michigan pharmacist filled Rowe's prescription, and he used the medicine in Michigan for about three months until May 1997. Approximately three months after he discontinued his use of Accutane, in August 1997, Rowe became depressed and contemplated suicide. In September 1997, Rowe was arrested after crashing a car into a house during an apparent suicide attempt. Thereafter, Rowe sought psychiatric treatment in Michigan and Ohio.

In March 2001, Rowe brought suit against Hoffmann in Essex County, New Jersey. He alleged that Accutane caused him to become severely depressed and suicidal and that Hoffmann failed to warn him adequately about these risks. He also claimed Hoffmann did not adequately test Accutane, and that Hoffmann was aware of the drug's potential adverse psychological effects but failed to advise the FDA of those effects.

After denying Rowe's allegations, Hoffmann moved for summary judgment, seeking dismissal of the lawsuit, contending that Michigan law governed. The trial court, relying on the Appellate Division's decision in Deemer v. Silk City Textile Machine Co., 193 N.J. Super. 643 (App. Div. 1984), concluded that between New Jersey and Michigan, Michigan had the strongest governmental interest in applying its statute to the failure-to-warn issue, and ...


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