Apparent producer concept

One of these concepts is that of the apparent producer of a product.

Legislation defines an apparent producer as an economic operator who, without actually being the producer of a product, presents himself to the market as its producer, by putting his name, trade mark or other distinguishing feature on the product.

The apparent producer of a defective product is just as responsible as the producer and, therefore, it is important to clearly define the characteristics to identify it.

To be presented as producer

The judgment analyses the claim made in relation to a prosthesis that was implanted in the claimant.

The claimant filed the lawsuit against a distributor of the product to whom, however, he attributed the status of apparent producer. The claimant did so despite knowing that this company had only acted as a distributor of the product and that the producer was another company within its group of companies.

The Provincial Court dismissed the claimant’s claim and emphasized that merely having a company’s name, brand or distinctive sign on the product packaging is insufficient to establish it as an apparent producer. The company must identify itself as the producer of the product, even if it is not actually the producer.

The mere mention of the company name, trade mark or other distinctive sign on the product, without more, is not sufficient to confer the status of apparent producer.

Reference to the companies’ group trademark

Additionally, the Provincial Court recalls that, if the prosthesis label and packaging indicate that the producer is part of a corporate’ group, this information cannot be used to sue another company of within the same companies’ group which presents itself to the market only as a distributor of the product.

Consequently, the figure of the apparent producer cannot be used to file a claim against the distributor of a product on the grounds that it belongs to the same corporate group indicated on the label and packaging of the product.

La entrada Who is the apparent producer? aparece primero en Faus Moliner.

Purpose of the proposal and main features

The proposal aims to address a number of shortcomings identified by the Commission in the application of the rules that have been in place for the past decades. It seeks to ensure that product liability rules adapt to the nature and risks of products in the digital age and the circular economy.

The system will continue to be based on a strict liability regime, where the burden of proof lies on the claimant to prove the defectiveness of the product, the damage suffered and the causal link between the defect and the damage.

However, the proposal aims to make it easier for the claimant to prove the defect, the damage and the causal link. To this end, it will facilitate access to evidence and introduce presumptions in favour of the claimant.

Let’s explore some of the key changes in the proposal.

A clearer concept of defective product

The test for determining whether a product is defective will remain substantively the same. A product is defective if it does not provide the safety which the public at large is entitled to expect, taking all circumstances into account.

However, in order to clarify the concept, the proposal extends the non-exhaustive list of circumstances  to be considered when assessing defectiveness. These include, for example, (i) the presentation of the product (including its instructions for use); (ii) the reasonably foreseeable use and misuse of the product; (iii) product safety requirements; (iv) any intervention of by a regulatory authority or an economic operator responsible for the safety of the product. As in the previous regulation, the proposal provides that in no case shall a product be considered defective because a better product or an improved or upgraded version of the product is subsequently placed on the market.

In this way, the proposal aims to clarify the concept of a defective product. In the field of medicinal products and medical devices, this greater clarity may be beneficial in order to put an end to unsubstantiated claims relating to off-label use of a product or relating to a risk or adverse effect that is duly warned in the package leaflet or in the SmPC.

Measures to facilitate evidence

In order to make it easier for the claimant to prove the defect and the causal link in complex cases, the proposal presents a new system of access to evidence and presumptions of proof.

a) Disclosure of evidence by the defendant

An injured party who presents facts and evidence sufficient to support the plausibility of their claim for compensation may ask the court to order the defendant to disclose relevant evidence that is at its disposal, or produce it, which may be necessary to support the claim.

b) Presumptions of evidence

The product is presumed to be defective if the defendant refuses to disclose or produce evidence accepted by the court. The product is also presumed to be defective if the claimant proves that the product does not comply with the mandatory safety requirements set out in the applicable regulations; or if the claimant proves that the damage was caused by an obvious malfunction of the product during normal use.

The causal link between the defectiveness of the product and the damage is presumed if it is established that the product is defective and that the damage caused is of a kind typically consistent with the defect in question.

Finally, if a court considers that the claimant faces excessive difficulties , due to technical or scientific complexity, to prove the defectiveness of the product or the causal link, or both; the defectiveness of the product or the causal link, or both, shall be presumed if the injured party has proved the probability that the product is defective or that its defect is a likely cause of the damage, or both.

The defendant will be entitled to contest both the existence of excessive difficulties and the referred likelihood.

The defendant is also entitled to rebut any such presumption by providing evidence of the suitability of the product or the absence of a causal link between the alleged defect and the damage.

The defendant’s defence

The defence in a product liability case is usually based primarily on proving that the product was not defective because it offered the safety that could reasonably be expected, taking all circumstances into account.

The assessment of defectiveness should involve an objective analysis and should relate not to the safety that a particular person is entitled to expect, but rather to the public at large. For this purpose, the intended purpose of the product, its objective characteristics and properties and the specific needs of the target group of users should be assessed. In the case of medicinal products and medical devices, it can be argued that a product offers the safety that can reasonably be expected if the benefits of the product outweigh its risks and it has been authorised (which proves that society is prepared to place such a product on the market despite its risks because of the benefits it offers).

A second possible argument is that the alleged damage was not caused by the alleged defect in the product.

Furthermore, the defendant will not be liable for damage caused by a defective product if it can prove that:

• in the case of a manufacturer or importer, it has neither placed the product on the market nor put it into service;

• in the case of a distributor, it has not commercialised the product;

• that the defect which caused the damage was probably not present when the product was placed on the market or put into service or, in the case of a distributor, when it was commercialised, or that the defect occurred after that date;

• that the defect is due to the fact that the product conforms to mandatory regulations issued by public authorities;

• that the objective scientific and technical state of the art at the time when the product was placed on the market or put into service, or during the period when the product was under the control of the manufacturer, did not allow the discovery of the defect;

• in the case of the manufacturer of a component, that the defectiveness of the product is attributable to the design of the product in which the component is incorporated or to the instructions given by the manufacturer of the product to the manufacturer of the component; or

• in the case of a person who modifies a product, that the defect which caused the damage relates to a part of the product not affected by the modification.

La entrada Something is going on in product liability aparece primero en Faus Moliner.

In today’s globalised world, it is increasingly common to see claims for damages allegedly caused by defective products being filed with little precision. In many cases, the corporate group to which the manufacturing company belongs is sued as a diffuse entity. In other cases, a specific company of the group is sued, despite not being the manufacturing company.

This is clearly not the correct way to proceed. According to the judgment of the Supreme Court of 18 January 2021, these practices are not compliant with the law.

The general rule and its exceptions

The Supreme Court begins by recalling that, in our legal system, the general rule is to respect the concept of separate legal personality of companies, this meaning that:

(i) each company is only liable for the fulfilment of the obligations it assumed as well as those arising from its own actions;

(ii) belonging to a corporate group does not entail that a company may be held liable for acts carried out by other group companies.

Although the doctrine of veil piercing allows the plaintiff to sue a company other than that which performed the acts leading to the alleged damage, this is only possible on an exceptional basis.

In order to apply such veil piercing doctrine, the plaintiff must prove that the company liable for the acts leading to the alleged damage was used abusively by another group company for the very purpose of impeding future claims. In these cases, the other group company may indeed be sued.

In the remaining cases, suing a group company other than the one that performed the acts leading to the alleged damage will pose serious difficulties to the claimants.

Having similar names is not relevant

The Supreme Court further states that partially coincident names between companies belonging to a corporate group is not a sufficient reason to sue a company for the acts carried out by another company of the same group.

La entrada Liability for damages in corporate groups aparece primero en Faus Moliner.

A manufacturer of a hip prosthesis, after becoming aware that the product had to be revised more often than expected, issued a safety notice recommending wearers of the affected prosthesis to follow a specific monitoring and control plan. Several months later, the manufacturer voluntarily withdrew the product from the market. Afterwards, a patient underwent a clinically indicated surgery for the replacement of one of the manufacturer’s prosthesis that had previously been implanted to her. Such patient filed a product liability claim against the manufacturer which was dismissed by the lower Courts because the prosthesis could not be proven as defective.

In this judgement, the Supreme Court reverses the decisions of the lower Courts and provides interesting statements regarding how the concepts “defective product” and “safety which may reasonably be expected”, both very relevant to determine the liability of manufacturers for defective products, should be interpreted. 

Safety which may reasonably be expected

As per the Supreme Court, a manufacturer may be held liable under product liability regulations not only for damages caused by products infringing safety and quality regulations but also for damages caused by products that, despite having undergone safety and quality controls, remain “unsafe”.

The relevant time to determine whether a product is unsafe/defective is the time when the product is put into circulation. According to the Supreme Court, although the voluntary withdrawal of a product from the market does not necessarily mean that the product was defective at the time it was put into circulation, it may indeed constitute an indication that at that time the product did not comply with the safety standards which may reasonably be expected from it.

In the proceeding, the manufacturer alleged that the prosthesis only had minor and punctual failures and that, in the majority of cases, it worked well in accordance with its purpose. Further, the manufacturer alleged that there was no proof that the damages were caused by the prosthesis itself and that the withdrawal of the product from the market had been entirely voluntary.

The Supreme Court does not accept these claims and considers that the fact that the prosthesis had an unexpected high rate of revisions must prevail. As per the Court, this high rate of revisions, which was neither identified nor disclosed by the manufacturer at the time the product was put into circulation (and therefore was not known by the medical community and the relevant notified bodies at that time), shows that the risks posed by the prosthesis were higher than expected. In these circumstances, the Supreme Court concludes that it falls on the manufacturer to prove why it was not possible to identify and disclose the true risks of the device (that ultimately caused the need to withdraw the product from the market) at the time the product was put into circulation.

Loss of the allegedly defective prosthesis

The lower Courts dismissed the claims of the plaintiff because, among other reasons, the allegedly defective prosthesis was lost, and it was therefore impossible to prove that it was defective.

The Supreme Court rejects this argument and considers that the fact that the prosthesis was lost does not prevent the Court to determine that the prosthesis was unsafe to the extent it posed a higher risk than expected. Further, the Court notes that the plaintiff’s need for a prosthesis replacement was related to the reasons why the manufacturer previously withdrew the product from the market.

No causes attributable to the plaintiff

To uphold the product liability claim, the Supreme Court takes into account that the replacement of the prosthesis was not attributable to the plaintiff. Blood values consistent with the wear of the prosthesis and the absence of other reasons explaining the need to replace it are the proven facts that allow the Court to conclude that the replacement of the prothesis was not attributable to the plaintiff. Finally, the Court clarifies that the consequences of the replacement of the prosthesis cannot be deemed as an “unavoidable risk” of the product.

Conclusions

Safety and quality controls performed by manufacturers before putting a medical device into circulation are of utmost importance. If such controls are not adequate to identify a defect of the product, the manufacturer may be liable for such defect. If unexpected risks arise after the product is put into circulation, it falls on the manufacturer to prove why it was not possible to identify and disclose such risks at the time the product was put into circulation. Finally, it will be on the Court to decide on a case-by-case basis whether the allegations of the manufacturer are sufficient to exonerate manufacturer from liability or not.

La entrada The importance of quality and safety controls for medical devices aparece primero en Faus Moliner.

In our Capsulas Newsletter of September 2019 we explained that a supplier may be able to avoid the direct product liability foreseen in Royal Decree 1/2017 if it identifies the producer of the product or if it is notorious that the injured party, before addressing any communication to the supplier, knew who was such producer.

In the present case, the foregoing rationale is used by the Court of First Instance which dismissed the claim presented by an injured party against a distributor on the basis that, according to the available evidence, it was clear and notorious that the plaintiff knew the identity of the producer. However, the Court of Appeal reached a different conclusion.

If the supplier presents himself as the manufacturer/importer, it may be held liable as such

The Court of Appeals partially revoked the judgement of the Court of First Instance because it understood that the distributor presented himself before the injured party not only as a distributor but also as the producer of the product. Among other considerations, the Court pointed out that in the communications exchanged between the distributor (defendant) and the injured party (plaintiff) before the initiation of the judicial procedure, the distributor requested to the injured party very specific information that went far beyond the information usually requested by a distributor. In particular, such information was aimed to allow the distributor to check if the prosthesis was in fact defective, and to determine what was the behavior of such prosthesis once installed in the patient. This information, according to the Court of Appeals, was information that was not relevant for a distributor. Additionally the distributor did not express any intention of sending this information to the manufacturer.

According to the Court of Appeals, the behavior of the distributor made the injured party believe (and this was a reasonable belief according to the Court) that the distributor was, in fact, the manufacturer of the product or, at least, an entity that would respond before him as such. On the basis of the foregoing, the Court of Appeals, unlike the Court of First Instance, understood that the claim was properly filed against the distributor.

Tips for suppliers

If a supplier receives a product liability claim, the first reaction should be to identify the producer which is the one that, according to the applicable law, must bear the corresponding product liability. In the event a supplier is finally sued on the basis that it did not fulfilled its duty to identify the producer, then it will be important that, during the judicial procedure, the supplier provides sufficient evidence to the court in order to prove that the injured party knew or could have easily known, the identity of the producer.

What is not advisable is for suppliers to act before the consumers as if they were the   producers. If a supplier does so, it may be held liable for product liability.

La entrada How a supplier should act upon receiving a product liability claim aparece primero en Faus Moliner.

As we have previously commented in our Capsulas newsletter, the strict liability regime for defective products foreseen in Royal Legislative  Decree 1/2007 (“RLD 2007”) states that the only one responsible for the damages caused by a defective product should be the so-called “producer” of the same. Such “producer” being understood as (i) the manufacturer or the importer of the product in the European Union, or (ii) whomever presents himself as manufacturer or importer by indicating its name, brand or other distinctive sign on the product. If the “producer” cannot be identified, responsibility then falls with the supplier unless, within a period of three months, such supplier indicates to the harmed party the identity of the manufacturer or the provider of the product.

Background

In the present case, a patient who was implanted an allegedly defective hip prothesis sued the distributor of such prothesis under the RLD 2007 strict liability regime.

Previously, the patient addressed an out-of-court complaint to the distributor of the product, which responded by identifying itself as distributor and requesting additional information about the allegedly defective prothesis in order to carry out the appropriate verifications. In the response, the distributor did not identify the manufacturer or the supplier of the product.

On the basis of such lack of identification, the Court considered the distributor as “manufacturer” of the product and ordered it to pay the amount claimed by the patient.

The identification of the manufacturer is not always necessary

The case reached the Court of Appeal of Barcelona which revoked the first instance judgement and acquitted the distributor.

The Court of Appeal, in view of the documents provided with the claim, considered that the patient had the capacity to know who the manufacturer was without the distributor identifying it. For this reason, the Court of Appeal considered that the claim should have not been directed against the distributor.

The Court of Appeal also highlighted that the fact that the distributor showed interest for the incident, requesting additional information about the allegedly defective product, did not imply the assumption of any type of liability. Also, the distributor subsequent refusal to respond was not a violation of the doctrine under which one cannot act contrary to its previous conduct.

La entrada The distributor of a defective product might be exempted from liability without identifying the manufacturer aparece primero en Faus Moliner.

In our previous Capsulas we commented the judgement of the Court of Justice of the European Union of 21 of June and we warned about the uncertainty generated by the judgement as it included the possibility that a judge might consider that a vaccine is defective and that there is a causal link between the defect and the disease based on firm, specific and consistent evidence.

However, we added that such evidence regime could not reverse the burden of proof and that the Directive precludes rules based on presumptions that lead to consider the causal relationship proved, in any case, if certain evidence is presented.

Judgement of the National High Court

The judgement issued by the National High Court (AN) that we are now commenting also resolves a case of liability for damage caused by the administration of a vaccine, which is addressed against the Ministry of Health, Social Services and Equality (MOH) and against the pharmaceutical company that had marketed the product

The judgement of the AN confirms that the burden of proving the defect, the damage and the causal relationship lies with the claimant and, in the absence of evidence from the claimant, it absolves the MOH and the pharmaceutical company of all the wrongdoings attributed to them.

The AN rejects the complaint on the basis that the burden to prove that the competent authorities, based on the state of scientific knowledge, did not act according to the scientific data and evidence available at that moment lies with the claimant. The claimant did not provide any firm and scientific evidence which would lead to the conclusion that such risk-benefit balance was unfavourable and that, therefore, the vaccine should not have been authorised.

The AN rejects the evidence proposed by the claimant consisting of opinions which, the Court states, do not undermine the studies and clinical trials that endorsed the efficacy of the product.

With respect to the alleged lack of informed consent prior to its administration, the AN rejects the complaint because the claimant has not demonstrated that the hypereosinophilic syndrome (eosinophilia) he was diagnosed with was a frequent adverse reaction, and therefore the obligation to inform did not include such risk since it was not known.

Moreover, the AN considers that the causal relationship between the diagnosed disease and the vaccine has not been demonstrated, since the medical history does not associate the ailments and symptoms from which the claimant suffered with the vaccine.

The liability of the pharmaceutical company for defect of information in the Summary of Product Characteristics and the leaflet is also rejected because the claimant has not proved that his disease was caused by the vaccine.

La entrada There is no need to panic: the burden of proof of the defect, the damage and the causal relationship continues to be for the plaintiff aparece primero en Faus Moliner.

The judgment of the European Court that we are discussing in this Capsulas is one example of the complexity of constructing European Community law. Given that accepting that a supranational organization approves and  enforces common rules on some matters is very complicated, it is common that European Community law does not succeed in regulating with full details all those matters which it wishes to address. Therefore there are always gaps that will need to be governed by national rules.

This case refers to product liability of manufacturers in the event that their products have a defect and they cause a damage to the consumer. The European directive which aims to eliminate the discrepancies between national laws in this area establishes that manufacturers are responsible for damages caused by defects of their products; and that the injured person that claims a compensation has to prove the damage and the defect as well as the causal relationship between the defect and the damage. However, the directive does not specify if in order to prove the existence of the defect and the relation of causality, the injured person must provide specific and concrete evidence or if, on the contrary, the judges may consider that these circumstances have been proven on the basis of a set of evidence, the seriousness, specificity and consistency of which allows them to consider, with a sufficient high degree of probability, that such a conclusion corresponds to the reality of the situation. As you see, the matter is highly complex.

Evidence based on presumptions

The Court, in these circumstances, has decided that European law does not preclude a national court to consider, when medical research does not establish nor reject a relationship between the vaccine and the occurrence of a disease, that some facts alleged by the injured person constitute serious specific and consistent evidence enabling the court to conclude that there is a defect in the vaccine and that there is a causal link between that defect and the decease.

On the other hand, the court also rules that judges should ensure that when applying this evidence regime, they do not reverse the burden of the proof. The directive, the court says, precludes rules based on presumptions according to which where medical research neither establishes nor rules out existence of a link between the vaccine and the disease, the existence of a causal link between the defect attributed to the vaccine and the damage suffered by the victim will always be considered to be established if certain predetermined factual evidence is presented.

In Spain, accepting presumptions to prove the causal link between a defect and a damage has been exceptional, and this ruling by the court should not entail substantial changes in the rigorousness that must be applied in connection with evidence in these cases.

La entrada Vaccines and liability for defective products aparece primero en Faus Moliner.

A manufacturer of pacemakers and automatic implantable cardioverter defibrillators realized that a component for the hermetic seal used in the pacemakers could undergo a progressive degradation that might lead to an early battery rundown, resulting in loss of telemetry and/or in loss of output without warning.

He also verified that the proper working of the automatic implantable cardioverter defibrillators could be affected by a defect in one of its components, which could limit its efficacy.

The company communicated both incidences to the physicians who had implanted the products and recommended to replace the pacemakers and deactivate the magnetic switch of the defibrillators. Following these recommendations, the pacemakers or defibrillators that some of the patients had were replaced by others, and the products removed were destroyed without examining their functioning.

The insurance companies claimed from the manufacturer the costs of the implantation of the first pacemakers that were replaced and the reimbursement of the cost of replacing the defibrillator, arguing that the insurance companies were only liable for the costs of replacement of those specific units that were defective. The judgments of the first instance ruled in favour and sentenced the manufacturer to pay such costs.

Proof of the defect and batch unit

When the case reached Bundesgerichtshof, the German Court considered that in order to resolve the litigation an interpretation of the EU product liability Directive was necessary, and thus, it decided to refer to the ECJ for a preliminary ruling two important questions.

The Court of the European Union concludes that in the case of medical devices such as pacemakers and cardioverter defibrillators, considering their purpose and the vulnerability of patients that use them, the security requirements that the patients can expect from such products are particularly high. Under these conditions, as they are products of the same model and production series, after a defect has been detected in a unit, the other units of the same model or batch can be classified as defective without being necessary to prove the existence of the defect in each of the units.

On the other hand, the costs of the surgical operation necessary for the removal of the defective product and its replacement with a new one are damages for which the manufacturer is responsible when surgery is required in order to remove this defective product. According to the Court, the compensation for the damage must include the costs of replacing the defective product because this is the only way to restore the safety level that any person is legally entitled to.

La entrada The defect in a medical device manufactured in series presumes the existence of such defect in all the units from the same series aparece primero en Faus Moliner.

A patient suffered an episode of rejection and intolerance to the medical device ‘Bio-Alkamid’ (reticulated prosthetic polymer of polialkylamide), therefore it was necessary to extract it. The leaflet did not contain sufficient information about the possibilities of extraction.

This patient suffered damages and lodged a complaint against the companies responsible for the marketing of such product in order to obtain compensation for the damages suffered. The Court of First Instance found the defendants guilty.

Leaflet’s insufficient information

Both the Judge of First Instance as well as the  Provincial Court found that the leaflet contained omissions regarding the possibilities of extraction of the product and considered that the information on the leaflet was incomplete. However, neither the Judge nor the Provincial Court qualified the product as defective despite this information gap, as they understood that the product was simply not tolerated or was rejected by the patient.

On this basis the courts decided not to apply the regime provided in Law 22/1994, on Civil Liability for the Damages Caused by Defective Products (LRPD), and they applied the regime provided in Law 26/1984, for the Defense of Consumers and Users (LGDCU).

In our opinion, it is surprising that the Court found the product not defective in spite of recognizing that the information was incomplete, since it is settled case-law of the Supreme Court that products that are not accompanied by due instructions for their correct use are defective.

According to this judgment, with which we do not agree, a door is open to the fact that the mere distributor or seller of a product which causes damages, and the instructions of which are incomplete may be held responsible for the damage even if it is able to identify the manufacturer.

Consequences of applying one or the other law

In the case analyzed in the judgment, the first consequence of applying the LGDCU was that the defendants could not exempt themselves from the responsibility under the mere fact of being simple distributors of the product, which would have been possible applying the LRPD. Under the LRPD, in line with the EU Directive on product liability the distributor could avoid a claim by identifying the manufacturer.

Other consequences of applying the LGDCU instead of the LRPD is that the maximum period to claim responsibility varies as well as the top amount payable, and that claims regarding moral damages are permitted.

La entrada The door is open to holding the distributor responsible for damage caused by a product sold with incomplete instructions for use aparece primero en Faus Moliner.