What is “market share liability”?

Market share liability is a manner of awarding damages to a plaintiff when there is no way to figure out which defendant is responsible for how much of the plaintiff’s injuries. Instead, the court uses market share liability to make each defendant responsible for the same percentage of the damages as the percentage of market share that defendant has.

For instance, suppose that four drug manufacturers each make a particular drug, which is sold in various pharmacies all over the United States. The drugs are all chemically identical. Years later, a disease caused by the drug appears in hundreds of people. These people sue the four drug manufacturers, claiming that the drugs caused their disease, but they cannot show which drug manufacturer provided the particular pills that each of the people took.

Such a case occurred in California in 1980. Sindell v. Abbot Laboratories involved several women whose mothers had taken diethylstilbestrol, or DES, during their pregnancies. Years later, the women began to develop vaginal tumors caused by the DES their mothers took during pregnancy. However, none of the women could prove which particular drug manufacturer had made the DES that her mother took.

Instead of tackling the impossible task of figuring out which drug manufacturer sold DES to which mother, the California Supreme Court held that each drug manufacturer should pay the percentage of the damages that matched the percentage of the manufacturer’s sales of DES. For instance, if Manufacturer A had sold 20% of the DES on the market, then Manufacturer A was responsible for paying 20% of the women’s damages.

Market share liability applies only in certain types of products liability cases. In order for a court to apply market share liability, four things must be true:

  1. All of the defendant manufacturers in the lawsuit produced the harmful product at the time the damage was done;
  2. The product must be fungible—essentially the same no matter who produced it;
  3. It must be impossible to tell which particular manufacturer made the particular product that harmed a particular plaintiff, and
  4. A “substantial share” of the manufacturers who made the product must be defendants in the lawsuit.

Market share liability is rarely used today, and it has never been used for cases other than those against drug manufacturers. Some plaintiffs have tried to use market share liability against manufacturers of other products, such as guns, but these cases have not succeeded.

Also, market share liability cases do not award punitive damages to plaintiffs, no matter how outrageous the behavior of one or more of the defendants might have been. So far, no court has considered it fair to require manufacturers to pay punitive damages according to their market share. The amount of market share a particular manufacturer has does not say anything about whether that manufacturer misbehaved.

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