X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
The field of products liability always has inspired lawyers to use old tools in creative new ways. Indeed, strict liability was crafted from warranty and negligence principles. But as new theories develop, they inevitably become limited by required elements and narrowed as equally creative legal defenses become accepted. It is this tension between expanding and narrowing liability that sometimes leads creative plaintiffs’ lawyers to include at the end of their complaints “Hail Mary” causes of action-theories with such a seemingly low likelihood of success that they need divine intervention to succeed. One can never predict, however, whether such theories ultimately will garner precedential support through sheer repetition. One “Hail Mary” claim that appears with some frequency in the products liability context-particularly in cases not involving personal injuries-is unjust enrichment. Class actions for personal injuries have become increasingly difficult to certify. As a result, putative class actions frequently are brought on behalf of people who have none. Often such cases are dismissed because a jurisdiction does not recognize tort liability for “unmanifested defects,” applies the economic loss doctrine to bar such claims or requires an individual showing of reliance on statements made about the product. Some lawyers have begun pleading unjust enrichment as a last-ditch attempt to circumvent such liability-limiting rules. Unjust enrichment, of course, historically has been a restitutionary remedy most closely associated with quasi-contract. Courts typically employ it when no contract in fact exists, but when one party has tendered performance expecting payment, and the party who has knowingly received the benefit of that performance unfairly refuses to pay for it. The cases granting unjust enrichment often have been very fact-driven opinions. Although the common law formulation of the elements of an unjust enrichment claim vary somewhat, they typically include the following: The plaintiff must have conferred a benefit on the defendant with the expectation of remuneration; the defendant must have knowingly received and accepted the benefit; and the circumstances are such that it would be unjust for the defendant to retain the benefit without paying the plaintiff for it. See, e.g., In re Rezulin Prods. Liab. Litig., 392 F. Supp. 2d 597 (S.D.N.Y. 2005). Unjust enrichment claim is too attenuated, rules court In the Rezulin case, the plaintiffs were a putative class of health benefits plans (HBPs) that pay pharmacy benefit managers to administer the HBPs’ prescription drug plans. The HBPs alleged that the defendant, Warner-Lambert Co., had misrepresented to their pharmacy benefit managers the safety and efficacy of Rezulin, a diabetes drug that was withdrawn from the market in March 2000. The plaintiffs’ theory of injury was that the HBPs would have paid for cheaper alternatives to Rezulin but for the alleged safety misrepresentations made to the pharmacy benefit managers. The plaintiffs pleaded causes of action under state consumer protection statutes, as well as breach of warranty and unjust enrichment/equitable restitution. The court granted the defendant summary judgment on the plaintiffs’ unjust enrichment claim, noting that the plaintiffs paid the managers-not the defendant-to provide services in exchange for payment. There was no evidence that the plaintiffs “had any direct contact with [the defendant] at all, much less that [they] conferred a benefit directly on [the defendant] or expected remuneration directly from [the defendant].” The indirect causal chain posited by the plaintiffs-that they paid managers who then paid the defendant-was simply “too attenuated to give rise to a claim for unjust enrichment.” Id. at 620. The Rezulin court had conducted a choice-of-law analysis and determined that it should apply New Jersey’s unjust enrichment law. One of the cases it relied upon was In re Lead Paint Litigation, 2005 WL 1994172 (N.J. App. Div. Aug. 17, 2005). In that case, 26 governmental entities sued a number of lead paint manufacturers and distributors to recover the costs of detecting and removing lead paint, providing medical care to lead-poisoned residents and educating the public about lead paint hazards. The plaintiffs asserted claims based on fraud, public nuisance, civil conspiracy, the duty to indemnify and unjust enrichment. The court affirmed the dismissal of the unjust enrichment count. The defendants had argued that a direct relationship between the parties was necessary to imply a contract in law (as the quasi-contract remedy of unjust enrichment does) because the plaintiff could not “expect remuneration” from the defendant when the relationship is indirect and the benefits conferred are remote. Id. at 14-15. The court effectively agreed, holding that the plaintiffs had failed to plead that the defendants had an independent legal duty to pay the costs that the plaintiffs had assumed, making the unjust enrichment claim unsustainable. The court also noted that because unjust enrichment is an equitable remedy, it is unavailable when the plaintiff has an adequate remedy at law. One of the cases the New Jersey court relied on was another lead paint case: Lewis v. Lead Industries Ass’n Inc., 793 N.E.2d 869 (Ill. App. Ct. 2003). In Lewis, the plaintiffs were a putative class of parents of minors who have undergone or will undergo medical screening for lead poisoning. They sought reimbursement for the cost of these screenings, asserting six causes of action. The defendants were manufacturers, distributors and sellers of lead-based paint and an industry trade association. The court affirmed dismissal of the unjust enrichment cause of action, observing that “the term ‘unjust enrichment’ is not descriptive of conduct which, standing alone, will justify an action for recovery.” Id. at 877. Rather, for unjust enrichment to apply, “there must be some independent basis which establishes a duty on the part of the defendant to act and the defendant must have failed to abide by that duty.” Id. If what the plaintiff seeks to recover is merely an element of damages for a particular tort, that cannot be a separate cause of action for unjust enrichment. The court explained that although the plaintiffs asserted that they paid for screening because of the defendants’ alleged tortious conduct, they could not allege that the defendants were under any independent legal duty to pay for the screening of minors, and thus no cause of action for unjust enrichment could stand independently: “To accept the plaintiffs’ theory of liability would create an action for unjust enrichment in every case where the commission of a tort results in the plaintiff being required to expend funds for which he or she is entitled to recovery. The supreme court has rejected a similar theory . . . and we reject the theory in this case. Absent any allegation that the defendants were under an independent duty to provide medical monitoring for the plaintiffs’ children, count IV failed to state a cause of action for unjust enrichment.” Id. But unjust enrichment claims have survived a motion to dismiss in lead paint litigation. In State v. Lead Industries Ass’n Inc., 2001 WL 345830 (Providence Co., R.I., Super. Ct. April 2, 2001), the state of Rhode Island sued to recover sums spent abating lead, detecting lead poisoning and providing medical care for lead-poisoned residents. It asserted a variety of claims, including strict liability, negligence, negligent misrepresentation, violations of the state unfair trade practices statute, public nuisance and unjust enrichment. The defendants moved to dismiss. The state argued that the defendants were unjustly enriched because they benefited from not having to pay for damages that they had caused. The court refused to dismiss the claim, stating that “[i]t is impossible for the Court to determine at this stage that the State’s lead-related expenditures have not added to the defendants’ . . . advantage or saved them from loss.” Some unjust enrichment decisions in the antitrust context also have allowed remote purchasers to maintain unjust enrichment claims against manufacturers. See, e.g., In re Cardizem CD Antitrust Litigation, 105 F. Supp. 2d 618 (E.D. Mich. 2000). One such claim was denied in a pharmaceutical case A recent pharmaceutical case also demonstrates that unjust enrichment is persistently being pleaded as a Hail Mary cause of action in products liability cases. In Pennsylvania Employee Benefit Trust Fund v. Zeneca Inc., 2005 WL 2993937 (D. Del. Nov. 8, 2005), the plaintiffs brought a putative class action on behalf of “third party payors” who paid for the more expensive heartburn drug Nexium after Prilosec was being sold as a cheaper generic heartburn medication. The plaintiffs alleged that the defendants ” ‘either implicitly or expressly represented’ that Nexium was superior to Prilosec,” which the plaintiffs said was not true. Id. They sued for violations of consumer fraud statutes, negligent misrepresentation and unjust enrichment. The court granted the motion to dismiss the unjust enrichment count, in part, because “[p]laintiffs have not pled a relationship between the [defendants'] alleged enrichment and the [plaintiffs'] alleged impoverishment, as they have not specifically pled that they relied on the defendant’s advertisements in purchasing Nexium.” Id.; see also Albertson v. Wyeth Inc., 2003 WL 21544488 (Philadelphia Co., Pa., Ct. C.P. July 8, 2003). If unjust enrichment continues to be pleaded in products liability claims, one may expect further decisions addressing not only the elements of the cause of action, but defenses against it as well. For example, a party seeking restitution typically must offer to return the product at the time the restitution claim is made. And when the subject of a transaction has been consumed or destroyed, restitution generally is not available. The cases addressing whether these defenses will be carried over to products liability cases remain to be litigated. J. Russell Jackson is a partner in the complex mass torts group at New York’s Skadden, Arps, Slate, Meagher & Flom.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.