No, it's not some hypothetical offered by critics of lawsuits against gun manufacturers; it's a real case. From Ashley County v. Pfizer, Inc., decided today by the U.S. Court of Appeals for the Eight Circuit (some paragraph breaks added):
The Defendants are manufacturers and distributors of over-the-counter cold and allergy medications containing either ephedrine or pseudoephedrine. None of the Defendants are retailers, nor do they sell the medications directly to the public. The Counties allege that the Defendants marketed and sold their products in Arkansas knowing that the products were being used illegally to manufacture methamphetamine. [Footnote: In their briefs to this court, the Counties allege that the Defendants intentionally targeted methamphetamine cooks by printing "pseudoephedrine" on the outside packaging of their cold medicines. These allegations were not included in the complaint, by which we are constrained in reviewing this dismissal on the pleadings. In any event, the Counties do not dispute that the packaging complied with the federal Food and Drug Administration regulations.]
The Counties allege that the Defendants knew that their products were being used illegally at least as early as 1986 when the federal Drug Enforcement Administration (DEA) began pushing for controls over the sale of products containing ephedrine or pseudoephedrine. During two different time periods, in 1995-1996 and in 1998-1999, the DEA placed restrictions on the importation of bulk ephedrine and tracked the sales of ephedrine and pseudoephedrine outside of "blister packs." According to the Counties, methamphetamine use and abuse declined dramatically during these time periods, but the Defendants allegedly fought to create loopholes in the regulations to continue reaping large profits in the sale of their products. In time, the Counties say, methamphetamine cooks learned how to exploit the loopholes, and methamphetamine use rose again.
The Counties claim that the Defendants knew of measures they could have voluntarily taken to reduce the availability of their products to methamphetamine cooks but consciously chose not to, fighting regulatory efforts in order to continue reaping large profits. The actions that the Defendants (who are manufacturers and wholesalers) allegedly should have voluntarily taken included directing the retailers to place the products behind the counter of retail stores; requiring the retailers to make retail purchasers sign for products when purchased from the retailer; educating the retailers and their employees about suspicious behavior by persons seeking to purchase the products for illegal use; requiring the retailers to lock the products in display cases; and requiring the retailers to limit the amount of product that could be purchased at retail by an individual during a specified period of time. These measures were eventually included in DEA regulations issued in 2005. The Counties also alleged that two of the Defendants, Warner Lambert and Pfizer, developed effective alternative cold medications that did not contain ephedrine or pseudoephedrine and that could not be used to produce methamphetamine, but that neither of them brought the alternative products to market.
The Counties assert that the Defendants knew they were selling far more than the legitimate market for their products consumed as evidenced by the fact that the revenues of one of the Defendants, Perrigo, declined rapidly from $182 million to $30 million once regulations were passed in 2005 limiting access to the Defendants' products. The Counties also allege that the DEA sent letters to some of the Defendants warning them that their products were being used to make methamphetamine and that an executive from Pfizer admitted that the pharmaceutical industry was responsible for a portion of the methamphetamine problem in the United States. The Counties do not allege, however, that any of the Defendants violated any federal or state regulation governing the manufacture, distribution, packaging, or sale of their products. Nor do the Counties dispute that the sale of products containing ephedrine and pseudoephedrine is heavily regulated by both state and federal agencies.
Fortunately, the court rejected the claim, finding that manufacturers of lawful products couldn't be held responsible because criminals misused those products -- and extensively relying on the gun cases that rejected similar liability arguments. (The court noted that a few cases did accept similar arguments in the gun cases, before Congress preempted most such lawsuits. But the court concluded that Arkansas law, the law applicable in this lawsuit, would likely follow the majority view.)
The fact is that many products -- cars, guns, medical supplies, knives, alcohol, and more -- have many lawful uses, but are also misused by criminals. Manufacturers may well be aware of this; surely any alcohol manufacturer must know that many of its sales (and especially many of its sales in college towns) end up coming from minors. And manufacturers might indeed be able to pressure retailers into imposing various restrictions that might or might not help avoid these crimes.
But these restrictions often involve considerable costs for consumers: privacy costs ("requiring the retailers to make retail purchasers sign for products"), convenience costs ("requiring the retailers to limit the amount of product that could be purchased at retail by an individual during a specified period of time"), risks of discrimination based on supposedly "suspicious behavior" ("educating the retailers and their employees about suspicious behavior by persons seeking to purchase the products for illegal use"), information costs (discouraging manufacturers from accurately labeling the contents of the products, for fear that this will be seen as "intentional target[ing]" for criminal use), and the like. More broadly, these restrictions change the consumer-seller relationship from one where the seller generally focuses on satisfying the consumer to one where the consumer is scrutinized by the seller, and must satisfy the seller about the consumer's bona fides.
Perhaps under certain unusual circumstances it is proper to impose such costs, and to change the consumer-seller relationship this way. But that should be done through legislatures setting up clear and narrow rules before the fact, and not by judges and juries making after-the-fact decisions based on vague standards of what sorts of consumer sacrifices a reasonable manufacturer should have indirectly imposed. This is especially so given that judges and juries in a few cases in a few states can affect behavior throughout the country, even when the great majority of all decisions on the subject come out against liability.
Here are two examples I offered five years ago, in the context of gun manufacturer liability.
1. Imagine that there was no drinking age for alcohol. A 20-year-old buys alcohol in a bar; he drives home; he hits another driver and kills him. The dead driver's relatives sue the bar, on the theory that it's "negligent distribution" for the bar owner to sell to 20-year-olds. The court says, "Yes, that's right; we're going to conclude that it's unreasonable -- at least presumptively so -- for bar owners to sell to 20-year-olds." The court has just essentially decided that the drinking age in the jurisdiction will be 21 (since bar owners know that by selling to 20-year-olds they risk ruinous liability, including punitive damages), applying its view of "negligent distribution."
Is this good? I don't think so. I think here we have a situation where judges (and juries) aren't just weighing financial costs and benefits, or even financial benefits against financial evaluations of lives or injuries saved. They also have to make basic decisions about equality, liberty, and privacy. Should under-21-year-olds be in some measure second-class citizens (or, if you prefer, not fully adults)? Should their social lives be restrained this way? Should you need to show your identification in order to buy alcohol? The answers to these questions may well be "yes"; our legislatures have generally answered them "yes." But I don't think judges should make these decisions under tort law (unless the Constitution somehow requires them to make such decisions, as in, for instance, First or Fourth Amendment cases, but that doesn't apply here). I don't think that four out of seven state Supreme Court judges should draw this sort of line.
2. Car manufacturers could make cars much harder for people to drive recklessly (if not today, then within a few years). They could put a transmitter in each car that alerts a police station whenever the car owner is speeding or even driving erratically (so if you have to speed to get your pregnant wife to the hospital, you can do it, but you'd have to explain yourself to the police). They might put in special devices into which the driver must breathe every so often in order to confirm that he's not driving drunk (I'm sure they have their weaknesses, but imagine that they're perfected). They could constantly transmit the car's position to some central database, so if the car is used by a criminal to commit a crime, the police can more easily catch the criminal and prevent him from victimizing more people. The list could go on. Assume that these features become very cheap soon.
Someone is killed by a drunk driver who's been driving erratically at 80 miles per hour for 15 minutes (enough time that the police might have stopped him had they known). Moreover, the driver had been in a hit-and-run several days before, and if his location had only been tracked, he wouldn't have been on the loose to kill again. The victim's family sues the car company, for negligent design: The car company could have decreased the chance that the car could be used by criminals to kill people, but it didn't do so. The court says, "Yes, that's right; making cars without these features is negligent, because adding these features could save many lives at little cost." Car manufacturers now know that if they want to avoid billions of dollars in aggregate liability, they have to add the features.
Is that good? Again, I don't think so. Perhaps one day we'll decide that we have to sacrifice our privacy this way. But that privacy/safety tradeoff should be made through the democratic process, and not by judges.
My claim, then, is that there's a substantial set of decisions that judges shouldn't be making, even applying negligence standards under the tort law. I think that category includes deciding that manufacturers should (on pain of vast liability) cut off distributors -- potentially destroying the distributors' businesses -- for conduct that might have been entirely outside the distributors' control, for conduct that the distributors were never convicted, tried, criminally accused, or even held civilly liable, and in ways that deprive a neighborhood's residents of convenient access to devices that in most states they are constitutionally entitled to own. If legislatures want to impose such a rule, I can understand. But judges ought not.
I realize that common-law judges have often does this sort of thing, at least in some situations -- though, as my examples show, I think even advocates of a vibrant common law would say that some tradeoffs should be left to the people or their representatives. But I don't think they should be doing it now. And while the line between permissible application of negligence standards and impermissible ones (such as the judge-imposed driving age, or the judge-imposed requirements that cars have various self-reporting features) may not be clear, the theory that the Arkansas counties were making in the Ashley County case is on the improper side of the line. That has been my argument about guns, alcohol, and cars, and I think it applies equally to pharmaceuticals.