Market share liability is a legal doctrine wherein companies are held proportionally responsible for the harm caused by a product, even if they did not manufacture the specific item that caused the damage. This principle is a fundamental extension of product liability law and primarily applies in cases involving indistinguishable products from multiple manufacturers.
Origins and Historical Context
Market share liability emerged in the late 20th century, notably in cases involving pharmaceutical companies. The landmark case that established this doctrine was Sindell v. Abbott Laboratories in 1980. This case involved the drug diethylstilbestrol (DES), where plaintiffs could not identify the specific manufacturer due to the passage of time and the generic nature of the drug.
Components of Market Share Liability
- Indistinguishability: The products must be fungible, meaning that products are effectively identical regardless of the manufacturer.
- Inability to Identify Specific Manufacturers: Plaintiffs cannot determine or identify the specific manufacturer of the harmful product.
- Proportional Liability: Liability is distributed according to each defendant’s market share of the product in question.
Legal Considerations and Applications
Pharmaceutical Industry
In the pharmaceutical sector, market share liability often applies because generic drugs can be produced by multiple companies. If a patient suffers adverse effects, and cannot trace the specific product to a manufacturer, liability is divided among all producers based on their market share.
Other Industries
While pharmaceutical cases are the most prominent, market share liability can extend to other industries where identical products are produced by multiple manufacturers, such as chemicals or construction materials.
Example Case
In Sindell v. Abbott Laboratories, the plaintiffs were unable to identify the exact manufacturer of DES that caused harm. The court’s decision to apply market share liability meant that all manufacturers of DES were held liable according to their respective shares in the market at the time of distribution.
Comparisons with Other Liability Concepts
- Joint and Several Liability: In joint and several liability, any one of the liable parties can be pursued for the full amount of the damages, regardless of their actual contribution.
- Strict Liability: Strict liability holds a party responsible for damages without the need for proof of negligence or intention.
Related Terms
- Product Liability: Legal responsibility of manufacturers and sellers for defects in products that cause harm.
- Proportional Liability: Allocation of responsibility among parties based on their contribution to a harm.
- Indistinguishability: Condition where products from different manufacturers are indistinguishable from one another.
FAQs
What is the significance of market share in liability cases?
Market share determines the proportion of responsibility each company assumes based on its presence in the market.
Under what conditions is market share liability typically enforced?
This doctrine is enforced when products are fungible, plaintiffs cannot identify the specific manufacturer, and there is a significant number of manufacturers in the market.
How does market share liability impact businesses?
Businesses may face liability for damages even if they did not directly cause harm, increasing the importance of regulatory compliance and vigilance in product safety.
References
- Sindell v. Abbott Laboratories, 26 Cal. 3d 588 (1980).
- Schwartz, G. T. (1981). “Products Liability and Market Share Liability.” Michigan Law Review.
- Twerski, A. D., Henderson, J. A. (1984). “Market Share Liability: An Ill-Advised Remedy for the Problem of Identification in Product Litigation.” University of California Law Review.
Summary
Market share liability is a crucial legal concept in product liability cases, particularly in situations involving indistinguishable products from multiple manufacturers. This doctrine ensures affected consumers receive compensation even when the specific manufacturer cannot be identified, with liability divided proportionally based on market share. Originating from significant cases like Sindell v. Abbott Laboratories, market share liability continues to shape legal approaches in various industries, emphasizing the principles of fairness and responsibility.
