H. (T.) v. NOVARTIS PHARMACEUTICALS CORPORATIONAmicus Curiae Brief of International Association of Defense Counsel and Federation of Defense & Corporate CounselCal.December 15, 2016SUPREME COURT COPY S233898 IN THE SUPREME COURT OF THE STATE OF CALIFORNIA T.H., A MINOR,ETC., ET AL., . . - T Plaintiffs and Appellants, SUPREME COUR FILED v. DEC 15 2016NOVARTIS PHARMACEUTICALS CORPORATION, Clerk Defendant and Respondent. Jorge Navarrete Deputy Fourth District Court of Appeal, Division One Case No. D067889 San Diego County Superior Court, Case No. 37-2013-00070440-CU-MM-CTL, Judge Joan M.Lewis APPLICATION FOR LEAVE TO FILE AMICI CURIAE BRIEF AND AMICI CURIAE BRIEF OF INTERNATIONAL ASSOCIATION OF DEFENSE COUNSEL AND FEDERATIONOF DEFENSE & CORPORATE COUNSEL IN SUPPORT OF DEFENDANT AND RESPONDENT *Mary-Christine Sungaila (#156795) Polly Fohn (pro hacvice) HAYNES AND BOONE, LLP HAYNES AND BOONE, LUP 600 Anton Boulevard, Suite 700 1221 McKinney St., Suite 2100 Costa Mesa, California 92626 Houston, Texas 77010 Tel: 949-202-3000 Tel: 713-547-2570 Fax: 949-202-3001 Fax: 713-236-5554 me.sungaila@haynesboone.com pollyfohn@haynesboone.com Attorneys for Amici Curiae International Association of Defer.se Counsel and Federation of Defense & Corporate Counsel RECEIVED UEC 08 2016 n n CLERK SUPREME COURT S233898 IN THE SUPREME COURT OF THE STATE OF CALIFORNIA T.H., A MINOR, ETC., ET AL., Plaintiffs and Appellants, Vv. NOVARTIS PHARMACEUTICALS CORPORATION, Defendant and Respondent. Fourth District Court of Appeal, Division One Case No. D067839 San Diego County Superior Court, Case No. 37-2013-00070440-CU-MM-CTL, Judge Joan M. Lewis APPLICATION FOR LEAVE TO FILE AMICI CURIAE BRIEF AND AMICI CURIAE BRIEF OF INTERNATIONAL ASSOCIATION OF DEFENSE COUNSEL AND FEDERATION OF DEFENSE & CORPORATE COUNSEL IN SUPPORT OF DEFENDANT AND RESPONDENT *Mary-Christine Sungaila #156795) ‘Polly Fohn (pro hacvice) HAYNES AND BOONE, LLP HAYNES AND BOONE, LLP 600 Anton Boulevard, Suite 700 1221 McKinneySt., Suite 2100 Costa Mesa, California 92626 Houston, Texas 77010 Tel: 949-202-3000 Tel: 718-547-2570 Fax: 949-202-3001 Fax: 713-236-5554 mc.sungaila@haynesboone.com polly.fohn@haynesboone.com Attorneys for Amict Curiae International Association of Defense Counsel and Federation of Defense & Corporate Counsel TABLE OF CONTENTS TABLE OF CONTENTS.|...........ccccsscccsssssesscssssreassssessccscesssscensaseseenes 1 TABLE OF AUTHORITIES10.0.0... ccc ceesssessescsesssssseesscsssccenteeseeees ii APPLICATION FOR LEAVE TO FILE AMICI CURIAE BRIEP..........cccccccccssscececsssecescesssseceuscecssesssseverseesA-1 Interest ofAmici Curiae; How the Amici Curiae Brief Will Assist the Court ...........cccccccccsessssssssesssssssessreeseesenesA-2 No Party or Counsel for a Party Authored or Contributed to This Brief ..........cccccccccessscssssssccscescussersssesesssneesA-4 Conclusion ........cccscccssseeceeesssseeerecessnesesersceccersesseeeusueuseseesseseossensA-5 AMICI CURIAE BRIEF.............cccccsesseccessseeeeessesseceesaeseeevssssssseneenes 1 INTRODUCTION.........ccccssssssecesesssscessnsesceceessrseessnssssecsneeteceerens 1 BACKGROUND 1... cccccccccessesenssceesensneessseecusueerssssteccesesevenss 3 LEGAL DISCUSSION.............iccecsesssscessssessssscessseessscssecseseesenes 4 A. There is no common law duty to protect against injuries caused by another manufacturer’s product........ 4 1. There is only a remote connection between a former manufacturer and a current consume?........ 5 2. There is little moral blamefor failing to warn about another manufacturer’s product.........cccceee 7 3. Imposing liability on former manufacturersis unlikely to prevent future harm to consumet......... 8 4, Innovator and former manufacturer liability would impose significant burdens on Aefendants.........cececcsssccessssseceesscseceessseseceeceseeeseeseteseeees 9 5. Bringing new drugs to market is more beneficial to consumers than increased tort Liability. 22... ceecccccccsseccceesesssseeceececeseneeeeeeceseesetsrecsenes 10 B. Innovator liability could destroy the culture of collaboration that created Silicon Valley..........cccee. 12 CONCLUSION....... cc cccccccsssccsesssscesssesescsecesssecesseceeeeeesesesestsssneasess 16 CERTIFICATE OF WORD COUNT uu... .cicceccccccccecessseeesseccssteneees 17 PROOF OF SERVICE .o.......cccccescessccessssecesseceeeesesssssssssseusecesssesesess 18 TABLE OF AUTHORITIES Page(s) Cases Kesner v. Pneumo Abex, LLC (2016) No. S219534, 2016 WL 7010174... cecceececccecsessccccecececees 5 Kim v. Toyota Motor Corporation, California Supreme Court Case No. $232754..........ccscsseeseseesA-2 O’Neil v. Crane Co. (2012) 53 Cal4th 885...........cccccccscsssssssssssssssccesvessossssnteeseeespassim Ramos v. Brenntag Specialties, Inc., et al., California Supreme Court Case No. S218176 ....... ec ceceeseceeeA-2 Rowland v. Christian (1968) 69 Cal.2d 108.0... ccccccccssscccesessesescesesecesecensesssceseeseerenss 5 Tincher v. Omega Flex, Inc., Pennsylvania Supreme Court Case No. 17 MAP QOLS oe cecccccsssscssssseceeceeeecceescessvecesecesseeesesesseuessseueseusessvesessauuuersA-3 Statutes and Rules 21 U.S.C. § 852D)vccecessecscessssescsssscscsssscevscsssevsessessesetseesaceesaesaseres 6 21 C.FLR. § LOO. UA)(L) wo. cceessessecesseecscsssssseesessscscecusssestsrstaaeeeess6 California Rule of Court, rule 8.5208) .......ccccccccccceseeeeeesesenes A-1, A-4 Secondary Sources Frank R. Lichtenberg, Are the Benefits of Newer Drugs Worth Their Costs? (2001) 20 HEALTH AFFAIRS 241........ccccccssccsccecccsecssccevseecesscvscsesecceeeevsesessusnnsnsersveesercs 11 Gideon Parchomovsky and Alex Stein, Torts and Innovation (2008) 7 Mich. L. Rev. 285.0... ceeesecsesseeeeee 1, 11, 12 James M. Anderson,et al., Autonomous Vehicle Technology (2016) The Rand Corporation ............cccccessseeseeneee 14 ii Maryann Feldman and Richard Florida, The Geographic Sources of Innovation: Technological Infrastructure and Product Innovationin the United States (1994) 84 Annals of the Ass’n of Am. Geographers 210 oo... ccecscssssssssesssecsssnsssnnssnccseeeueesnseeesevecesseseana 1 NBC News, Promising Drugs Stoke Talk of Cancer “Cures” (Jume 2016) ......ccecccccccccccccesevecsceveeeseccceeseseecescessrsseneneenes 12 Ronald Gilson, The Legal Infrastructure of High Technology Industrial Districts (1999) 74 NYU L. REV. 575. eceescssseseesesesecessensenseneesenenenenseseesenensecsecneesesseeseneenes 12, 13 ii 5233898 IN THE SUPREME COURT OF THE STATE OF CALIFORNIA T.H., A MINOR, ETC., ET AL., Plaintiffs and Appellants, v. NOVARTIS PHARMACEUTICALS CORPORATION, Defendant and Respondent. Fourth District Court of Appeal, Division One Case No. D067839 San Diego County Superior Court, Case No. 37-2013-00070440-CU-MM-CTL, | Judge Joan M. Lewis APPLICATION FOR LEAVE TO FILE AMICI CURIAE BRIEF TO THE HONORABLE CHIEF JUSTICE: Under California Rule of Court 8.520(f), the International Association of Defense Counsel (L[ADC) and Federation of Defense & Corporate Counsel (FDCC) request permission to file the attached Amici Curiae Brief in support of Defendant and Respondent Novartis Pharmaceuticals Corporation. A-1 Interest of Amici Curiae; How the Amici Curiae BriefWill Assist the Court The IADCis an association of corporate and insurance attorneys from the United States and around the globe whose practice is concentrated on the defenseof civil lawsuits. The IADCis dedicated to the just and efficient administration of civil justice and continual improvementof the civil justice system. The IADC supports a justice system in which plaintiffs are fairly compensated for genuine injuries, responsible defendants are held liable for appropriate damages, and non-responsible defendants are exonerated without unreasonablecost. The IADC maintains an abiding interest in the fair and efficient administration of product liability actions. The IADC’s Product Liability Committee consists of more than 900 members, publishes regular newsletters and journal articles, and presents education seminars both internally and to the legal community at large. The IADChasalso participated as amici curiae in several cases involving productliability issues, including Kim v. Toyota Motor Corporation, California Supreme Court Case No. S232754; Ramos v. Brenntag Specialties, Inc., et al., California Supreme A-2 Court Case No. 8218176; and Tincher v. Omega Flex, Inc., Pennsylvania Supreme Court Case No. 17 MAP 2018. The FDCC, formed in 1936, has an international membership of over 1400 attorneys. The FDCC is composed of attorneys in private practice, general counsel, and insurance claims executives. Membershipis available solely by nomination, andis limited to those attorneys who have been judged by their peers to have achieved professional distinction and demonstrated leadership in their areas of expertise. The FDCC is committed to promoting knowledge, professionalism, and high ethical standards among its members. | In this case, the Court has agreed to determine whether a brand name manufacturer of a pharmaceutical drug that divested all ownership interest in the drug may be heldliable for injuries caused years later by another manufacturer’s generic version of that drug. The answer, under this Court’s precedent andin light of soundpolicy, should be categorically “no.” In O’Neil v. Crane Co. (2012) 53 Cal.4th 335, 363-66 this Court held that a manufacturer has no duty to prevent injuries from another manufacturer’s product. As explained in the accompanyingbrief, each of the factors that drove this Court’s A-3 decision in O’Neil apply with equal force to the pharmaceutical industry. Adopting any theoryof “innovator” or “former manufacturer” liability would run afoul of the principles espoused in O’Neil by making a drug manufacturerliable for injuries allegedly caused by drugs it neither manufactured nor sold. The argumentsthe IADC and FDCCpresentare complementary to, but not duplicative of, the briefing submitted by Novartis. In particular, while the parties focus on the nuances of the pharmaceutical industry, we view the O’Neil analysis through a broaderpolicy lens and explain the far-reaching impact that a rule of “innovator” or “former manufacturer”liability could have on a wide rangeofindustries, including the high-tech world. No Party or Counselfor a Party Authored or Contributed to This Brief The IADC and FDCCprovide the following disclosures required by rule 8.520(f)(4) of the California Rules of Court: (1) no party or counsel for a party in this appeal authored or contributed to the fundingof this brief, and (2) no one other than amici curiae or its counsel in this case made a monetary contribution intended to fund the preparation or submission of this brief. Conclusion For the foregoing reasons, the IADC and FDCC request that the Court permit the filing of the attached amici curiae brief in support of Novartis. DATED:. December 7, 2016 A-5 Respectfully submitted, HAYNES AND BOONE, LLP Mary-Christine Sungaila Polly Fohn By:MailadduWacf Mary-Christine Sungaitsa Attorneys for Amict Curiae International Association of Defense Counsel and Federation of Defense & Corporate Counsel S233898 IN THE SUPREME COURT OF THE STATE OF CALIFORNIA T.H., A MINOR, ETC., ET AL., Plaintiffs and Appellants, v. NOVARTIS PHARMACEUTICALS CORPORATION, Defendant and Respondent. Fourth District Court of Appeal, Division One Case No. D067839 San Diego County Superior Court, Case No. 37-2013-00070440-CU-MM-CTL, Judge Joan M. Lewis AMICI CURIAE BRIEF OF INTERNATIONAL ASSOCIATION OF DEFENSE COUNSEL AND FEDERATION OF DEFENSE & CORPORATE COUNSEL IN SUPPORT OF DEFENDANT AND RESPONDENT INTRODUCTION “The social value of innovation is virtually limitless.” --Torts and Innovation! 1 (Gideon Parchomovsky and Alex Stein, Torts and Innovation (2008) 7 MICH. L. REV. 285, 288; see also Maryann Feldman and Richard Florida, The Geographic Sources of Innovation: Technological Infrastructure and Product Innovation in the United States (1994) 84 Annals of the Ass’n of Am. Geographers 210, 210.) 1 In this appeal, Plaintiffs ask this Court to radically expand tort liability to reach former manufacturers and innovators of prescription drugs. Their request runs contrary to this Court’s holding in O’Neil v. Crane Co. (2012) 53 Cal.4th 335 that a manufacturer has no duty to prevent injuries from another manufacturer’s product. If innovators are subject to perpetual liability, fewer beneficial new drugs and other types of technologies will make it to market—-quashing innovation. Plaintiffs contend that Novartis’s bright-line rule against innovator and former manufacturer liability “is only good for one segment of the community: Big Pharma.” (ABOM at 68.) Not so. The unprecedented expansion of tort liability sought by Plaintiffs will harm consumersby creating a duty so broad that it could stifle innovation in a rangeof industries across California, including discouraging companiesin Silicon Valley from sharing new technologies with each other. This Court should not adopt a rule of product liability that has already been rejected by 35 states, particularly given its potential adverse, widespread impact on California’s economy. (OBOMat 32-33.) BACKGROUND Plaintiffs Teagan and Carwell Hamilton allege that their autism was caused by their mother’s 2007 use of generic terbutaline drugs to prevent pre-term labor. (1AA1.) They claimed failure to warn. Although the 2007 drug productlabels included warnings against use of terbutaline to prevent pre-term labor, they did not mention harm to the fetus. (1AA46-49.) Plaintiffs sued a number of manufacturers, including Novartis, which formerly owned the name-brand terbutaline drug, Brethine. (1AA3-5.) Novartis sold the Brethine product line in 2001, six years before Plaintiffs were exposed to the generic terbutaline drug that allegedly caused their autism. (1AA68-71.) Nonetheless, Plaintiffs allege that Novartis’s failure to include an adequate warning on its 2001 product label contributed to later failures to warn. (1AA78-81, 98.) The trial court sustained Novartis’s demurrer on the ground that Novartis owed Plaintiffs no duty as a matterof law for claims that arose from prescribing terbutaline in 2007,after Novartis had sold its Brethine line. (1AA101.) The Courtof Appealreversed, holding that Novartis had a duty to consumers of a subsequent manufacturer’s drug. This Court granted review on a single issue: May the brand name manufacturerof a pharmaceutical drug that divested all ownership interest in the drug be held liable for injuries caused years later by another manufacturer’s generic version of that drug? LEGAL DISCUSSION A. There is no common law duty to protect against injuries caused by another manufacturer’s product. In O’Neil v. Crane Co. (2012) 53 Cal.4th 335, 363-66, this Court categorically held that a defendant has no duty to prevent injuries from another manufacturer’s product. Plaintiffs offer no compelling reason to depart from this well-settled law. In O’Neil, the defendants manufactured valves and pumps used in Navy warships. (/d. at p. 342.) The plaintiffs sued for wrongful death allegedly caused by asbestos exposure released from insulation and packing that was manufactured by third parties and later added to the pumpsandvalves. (Jbid.) They argued that the defendants were negligent in failing to warn of the foreseeable risks of using such packing with their products. This Court beganits analysis with the threshold elementof every negligence claim—the existence of a duty. (/d. at p. 363.) After carefully walking through each of the factors set forth in Rowland v. Christian (1968) 69 Cal.2d 108, 113, this Court summarized its holding in a bold and italicized headingstating: “No Duty of Care to Prevent Injuries from Another Manufacturer's Product.” (O’Neil, supra, 53 Cal.4th at p. 363.) This Court reasoned that the “expansion of the duty of care... would impose an obligation to compensate those whose products caused the plaintiff no harm,” (id. at pp. 363-65), and that “[t]o do so would exceed the boundaries established over decadesof productliability law,” (bid.); see also Kesner v. Pheumo Abex, LLC (2016) No. $2195384, 2016 WL 7010174, at *6 [“Foreseeability alone is not sufficient to create an independent tort duty.”].) Each of the factors considered in O’Neil applies with equal—and stronger—forceto this case. 1. There is only a remote connection between a former manufacturer and a current consumer. First, O’Neil noted that the connection between the parties was “extremely remote” because the defendant “did not manufacture, sell, or supply” the product that injured the plaintiff. (O’Netl, supra, 53 Cal.4th at p. 365.) Likewise here, Novartis did not manufacture, sell, or supply the drugs that allegedly injured Plaintiffs. (OBOM at 11-12; AOB at 12, 32.) Plaintiffs try to distinguish O’Neil by urging that there is a closer connection between manufacturers and remote consumers in the pharmaceutical industry because the FDA requires generic drugs to bear the same labels as their brand-name counterparts. (ABOMat 37.) But former brand-name manufacturers, such as Novartis, are barred by FDA regulations from communicating any warnings about their former drugsto current consumers.(21 U.S.C. § 352(n); 21 C.F.R. § 100.1(d)(1); OBOM at 15.) If liability were to attach here, where Novartis was prohibited from issuing warnings about another manufacturer’s drug, it would open the door to an explosion of tort liability between manufacturers and remote consumers. Productsliability law has drawntheline at imposing liability based on such a remote connection. “Social policy must at some point intervene to delimit liability even for foreseeable injury.” (O’Netl, supra, 53 Cal.4th at p. 365-66.) Deviating from that policy now would radically expand products liability in California. 2. Thereis little moral blame for failing to warn about another manufacturer’s product. Second, the O’Neil opinion concluded that “little moral blame can attach to a failure to warn about dangerous aspects of other manufacturers’ products.” (O'Neil, supra, 53 Cal.4th at p. 365.) Again, that rationale is strengthened where, as here, a former manufactureris prohibited from warning consumers about dangerous aspects of a current manufacturer's drug. Plaintiffs contend that unless former manufacturers are held liable they will be able to engage in morally blameworthy conduct by selling off dangerous product lines to avoid liability. (ABOMat 62.) But as Novartis explained in its merits briefing (RBOMat 28-24), there are many safeguards against such abuse. A drug company considering the purchase of a new product line will investigate the drug to ensure that it is purchasing a safe and profitable product—nota liability. (RBOM at 23.) And if the seller misrepresents the safety of its product, it can be held liable for breach of contract or fraud. (RBOMat 24.) The federal governmentalso independently monitors drug safety through its Adverse Event Reporting System, which enables consumers and health care professionals to report suspected adverse drugeffects to the FDA.? Thus, there is no need to radically expand tort law just to police the sale of allegedly dangerous product lines. 3. Imposing liability on former manufacturersis unlikely to prevent future harm to consumers. Third, O’Neil held that imposing a duty of care would be unlikely to prevent future harm because there is “no reason to think a product manufacturerwill be able to exert any control over the safety of replacement parts or companion products made by other companies.” (O’Neil, supra, 53 Cal.4th at p. 365.) Once again, that rationale is strengthened here, where Novartis cannot control current drug labeling practices. Plaintiffs contend that imposingtort liability on former manufacturers will prevent future harm to consumers by eliminating any incentive for manufacturers “to delay the adoption of necessary warnings and then profit from their misconduct by selling” their drug lines. (ABOM at 63-64.) There is no reason to think that imposingliability on former manufacturers will increase consumersafety. To the contrary, as Novartis observed, imposing liability on former manufacturers could have the perverse effect of encouraging current 2 (See http://www.fda.gov/Drugs/GuidanceComplianceRegulatoryInformation/Surveill ance/AdverseDrugiffects/ (last visited December 6, 2016).) 8 manufacturers to avoid strengthening their warning labels thereby ensuring that former manufacturers with deep pockets stay on the hook for liability. (RBOM at 22-24.) Accordingly, adopting “innovator” or “former manufacturer” liability will not deter morally blameworthy conduct. 4, Innovator and former manufacturerliability would impose significant burdens on defendants. Fourth, O’Neil noted that “recognizing a duty of care would clearly impose a significant burden on defendants andall other companies that could potentially be held liable for injuries caused by products they neither madenorsold.” (O’Neil, supra, 58 Cal.4th at p. 365.) Here too, recognizing a duty of care would impose a “significant burden” on Novartis who neither manufactured norsold the drugs that injured Plaintiffs. (Ibid.) Plaintiffs claim that as long as drug companies draft perfect product warnings they will not face any additional burdens from the expansion of liability to remote consumers. (ABOMat 41, 67.) That argument is wildly overbroad. It would support an argumentfor unlimited liability on the theory that a company that has done no wronghas noreasonto fear tort liability. Moreover, it is at best a naive view. Even unmeritorious claims can consume enormoustime and resources until they are disposed on summary judgmentor rejected attrial. Plaintiffs also argue that a manufacturer whosells its product line can avoid the uncertainty of perpetual liability by requiring the buyer to indemnify it for any liability arising after the date of sale. (ABOM at 67.) To begin, Plaintiffs’ reasoning is circular. It is only necessary to obtain indemnity if a defendant has an underlying liability and, under the current state of California law in O’Neil, a former manufacturer has no duty to prevent injuries from another manufacturer’s product. (See O'Neil, supra, 53 Cal.4th at p. 363.) Regardless, an indemnity provision is only as strong as the company that providesit. Ifa buyer goes out of business, it provides no protection to the former manufacturer. In short, indemnity is not a viable solution to the type of perpetual liability championed byPlaintiffs. 5. Bringing new drugs to market is more beneficial to consumers thanincreasedtortliability. Finally, O’Neil noted that consumers could “suffer harm from the broad expansion of liability plaintiffs seek.” (O’Neil, supra, 53 Cal.4th at p. 365.) Here too, the expansion oftort liability could harm consumersbystifling innovation. 10 There can belittle doubt that imposing innovator and former manufacturerliability would increase the costs of developing new drugs andothertechnologies. “[T]he heightened risk of liability puts a drag on innovation and diverts its path.” (Gideon Parchomovsky and Alex Stein, Torts and Innovation (2008) 7 MICH. L. REV. 285, 288.) Moreover, the greater the investment in research and development needed to produce a certain innovation, the more likely it is that increased tort liability will stop a new drug or technology from ever reaching the market. (Ibid.) Thecost of bringing new drugs to market has more than doubled in the last 10 years, now reachingclose to $2.5 billion. (See Scientific American, “Cost to Develop New Pharmaceutical Drug Now Exceeds $2.5 Billion). Accordingly, innovation in the pharmaceutical industry is particularly susceptible to deterrence from increasing tort liability. Yet, the development of new drugs has enormousbenefits for consumers. New medicines decrease mortality and health spending. (See Frank R. Lichtenberg, Are the Benefits ofNewer 3 (Available at https://www.scientificamerican.com/article/cost-to-develop-new- pharmaceutical-drug-now-exceeds-2-5b/ (last visited December6, 2016).) 11 Drugs Worth Their Costs? (2001) 20 HEALTH AFFAIRS 241.) To give one example, new immunotherapy drugs are now extending the lives of cancer patients with previously untreatable conditions by two to three years. (See, e.g., NBC News, Promising Drugs Stoke Talk of Cancer “Cures” (June 2016).)4 In short, each factor that drove this Court in O’Neil to reject any duty to prevent harm from injuries caused by another manufacturer’s product applies with equal force in this case. B. Innovatorliability could destroy the culture of collaboration that created Silicon Valley. Innovator liability could be particularly devastating in California, which has long been considered a center of high-tech innovation. This Court should not adopt such a rule without considering the full impact it could have on all industries. There is no question that legal rules impact innovation and with it the development of high-tech havens. (See Ronald Gilson, The Legal Infrastructure of High Technology Industrial Districts (1999) 74 NYU L. REV.575, 575; Parchomovsky, supra, at p. 288.) For example, Silicon Valley’s success has been attributed in part to California’s refusal to enforce standard non-compete 4 (Available at http://www.nbcnews.com/health/cancer/promising-drugs-stoke-talk- cancer-cures-n585256 (last visited December6, 2016).) 12 agreements. (See Gilson, supra, at pp. 589-91.) As a result, Silicon Valley has developed a unique culture where engineers movefrequently and fluidly between companies andinto start- ups. bid.) That environment creates the opportunity for a remarkable amountof collaboration and “knowledgespillover,” which hasled to extraordinary innovation. (Ibid.) Adopting innovator liability could suppress that culture by increasing a company’s liability if it shares a new technology, and even expose a high-tech companytoliability if a competitor imitates its new technology or even counterfeits its devices. The rationale would be the same as that embraced by Plaintiffs: if the high-tech company had warnedof the dangersof its own device, it might have prevented injury to the consumerof an imitation device. If liability is imposed in these circumstances, then Silicon Valley employers will have an incentive to clamp down on the current cultureof collaboration—stifling innovation. Conversely, even if a companyis able to unlock a competitor’s innovative new technology, such asfor self-driving cars for example, a company would have little incentive to improve upon its competitor’s technology.If a family were injured in one of the company’s self-driving cars, a jury could allocate 13 somefault to its competitor for creating the technology that contributed to the accident. (ABOM at 69.) Thus, adoptingits competitor’s technology wholesale, rather than improving on the technology to make it safer, would decrease the company’s cost of doing business. Thecost to society, however, would be great. The pace of innovation would slow, as would the developmentof newerand safer technologies, (See generally, James M. Anderson, et al., Autonomous Vehicle Technology (2016) The Rand Corporation at pp. 118-127 [discussing the need to develop tort rules that facilitate the adoption and improvementof socially beneficially technologies such as self-driving cars].)® Even moretroubling, imposing innovator and former manufacturer duties could stop a beneficial new technology from ever being developed. The principal problem with both duties is that they imposeliability on a company that no longer has any control over a product. For example, a former manufacturer would have no say over the company culture or management practices of a current manufacturer, including such fundamental decisions as whetherto continue to produce and market a 5 (Available at http://www.rand.org/content/dam/rand/pubs/research reports/RR400/ RR443-2/RAND_ RR443-2.pdf (ast visited December 6, 2016).) 14 particular product in light of new research or information about its dangerous propensities. Yet, under the expansion of tort duty championed by Plaintiffs, the former manufacturer would remain on the hook for injuries to remote consumers. Sucha legal rule would create enormous uncertainty for companies developing new technologies because they would be unable to control future liability. The result would be decreased innovation. In short, holding innovators and former manufacturers liable for injuries caused by products they neither sold nor manufactured will not deter future harm to consumers.It will deter innovation of new and safer technologies. 15 CONCLUSION For the foregoing reasons, and those expressed by Novartis in its merits briefing, this Court should reverse the decision of the Court of Appeal and remandthis causeto the trial court with directions to enter a judgment for Novartis. Dated: December 7, 2016 Respectfully submitted, HAYNES AND BOONE, LLP py:Mideplbinpoi] Mary-Christine Sungaila/ Attorneys for Amici Curiae International Association of Defense Counsel and Federation of Defense & Corporate Counsel 16 CERTIFICATE OF WORD COUNT The undersignedcertifies that, pursuant to the word count feature of the word processing program usedto preparethis brief, it contains 2,640 words, exclusive of the matters that may be omitted under rule 8.520(c)(8). DATED: December7, 2016 Respectfully submitted, HAYNES AND BOONE, LLP Mary-Christine Sungaila Polly Fohn pyMMiilhsMie. Mary-Christine Sungaila Attorneys for Amici Curtae International Association of Defense Counsel and Federation of Defense & Corporate Counsel 17 PROOF OF SERVICE (CCP § 1013(a) and 2015.5) I, the undersigned, am employed in the County of Orange, State of California. I am over the age of 18 and not a party to the within action. I am employed with the law offices of Haynes and Boone, LLP and my business address is 600 Anton Blvd., Suite 700, Costa Mesa, California 92626. On December 7, 2016, I served the foregoing document entitled APPLICATION FOR LEAVE TO FILE AMICI CURIAE BRIEF AND AMICI CURIAE BRIEF OF INTERNATIONAL ASSOCIATION OF DEFENSE COUNSEL AND FEDERATION OF DEFENSE & CORPORATE COUNSEL IN SUPPORT OF DEFENDANT AND RESPONDENTonall appearing and/or interested parties in this action by placing a true copy thereof enclosed in a sealed envelope, addressed as follows and in the mannersoindicated: Attorneys for Defendant Attorneys for Plaintiffs and Respondent: and Appellants: Erin M. Bosman, Esq. Benjamin I. Siminou Julie Y. Park, Esq. Kevin F, Quinn Morrison & Foerster LLP Thorsnes, Bartolotta, McGuire LLP 12531 High Bluff Drive 2550 Fifth Avenue, 11th Floor San Diego, CA 92130-2040 San Diego, CA 92103 ebosman@mofo.com juliepark@mofo.com Leslie A. Brueckner Public Justice PC Eric G. Lasker, Esq. 555 12th Street, Suite 1230 Joe G. Hollingsworth, Esq. Oakland, CA 94607 Katharine R. Latimer, Esq. T: (610) 622-8150 Hollingsworth LLP F: (5 10) 622-8155 1350 I Street NW Washington, D.C, 20005 elasker@hollingsworthllp.com Courts; Clerk of the Court San Diego County Superior Court 220 West Broadway San Diego, CA 92101 ATTN: Hon. Joan M. Lewis 18 Clerk of the Court COURT OF APPEAL, Fourth District, - Division I 750 B Street, Suite 300 San Diego, CA 92101 X] [BY MAIL] Iam readily familiar with the firm’s practice of collection and processing correspondence for mailing. Under that practice it would be deposited with the U.S. Postal Service on that same day with postage thereon fully prepaid at Costa Mesa, California in the ordinary course of business. I am aware that on motion of the party served, service is presumed invalid if postage cancellation date or postage meter date is more than one day after date of deposit for mailing this affidavit. I declare under penalty of perjury under the lawsof the State of California that the foregoing is true and correct. Executed on December 7, 2016, at Costa Mesa, California. Vrton lander Breean Cordova 19
