Date: 12-25-2017

Case Style:

Case Number: S233898

Judge: Cuellar

Court: Supreme Court State of California

Plaintiff's Attorney: Kevin Quinn, Ben Siminou and Leslie A. Brueckner

Defendant's Attorney: Eric G. Lasker, Erin McCalmon Bosman, Julie Yongsun Park and Katharine R. Latimer

Description: Under California law, a brand-name drug manufacturer has a duty to warn
of known or reasonably knowable adverse effects arising from an individual’s use
of its drug. (See Stevens v. Parke, Davis & Co. (1973) 9 Cal.3d 51, 65.) In this
case, we examine whether — and if so, under what circumstances — a brandname
drug manufacturer may be sued under a theory of “warning label” liability
when the warning label for its drug was alleged to be deficient, but the plaintiffs
were injured by exposure to a generic bioequivalent drug bearing the brand-name
drug’s warning label.
Plaintiffs’ mother, J.H., was prescribed terbutaline, a generic form of the
brand-name drug Brethine, to suppress premature labor during her pregnancy.
Plaintiffs T.H. and C.H. were born full term, but were diagnosed with
developmental delays at three years of age and autism by the time they turned five.
Through their father as guardian ad litem, the minors allege that those responsible
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for the terbutaline label knew or should have known — based on studies of the
drug’s effects in rats and in humans — that the drug posed a serious risk to fetal
brain development. They further allege that the drug’s label unreasonably failed
to include a warning about this risk.
Federal law explicitly conveys to the brand-name manufacturer — and only
that manufacturer — the responsibility to provide an adequate warning label for
both generic terbutaline and its brand-name equivalent, Brethine. As explained in
more detail below, only the brand-name drug manufacturer has unilateral authority
to modify the drug’s label by adding to or strengthening a warning. Generic drug
manufacturers are required to follow the brand-name manufacturer’s label to the
letter. Accordingly, the manufacturer of Brethine controlled both the form and
content of the terbutaline warning label.
Plaintiffs brought suit against defendant Novartis Pharmaceuticals
Corporation (Novartis), which manufactured Brethine until December 2001, and
aaiPharma Inc. (aaiPharma), which purchased the rights to and manufactured
Brethine thereafter — using the same label Novartis had used — when plaintiffs’
mother was prescribed the generic bioequivalent in 2007. Plaintiffs claim that
Novartis knew or should have known that its warning label failed to alert pregnant
women or their physicians to the risk Brethine posed to fetal brain development;
that manufacturers of terbutaline were compelled by federal law to include
Brethine’s deficient label on their own products; that it was foreseeable Novartis’s
successor (aaiPharma) would not change or update Brethine’s deficient label; and
that in reliance on the deficient warning label, plaintiffs’ mother was prescribed
terbutaline, which adversely affected plaintiffs’ developing brains in utero. What
Novartis asserts in response is that its duty to provide a safe and adequate warning
label for Brethine did not encompass those who were prescribed terbutaline in
reliance on the Brethine label. Novartis further contends that any such duty should
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not extend to those who were exposed to terbutaline after Novartis ceased
manufacturing Brethine and sold its rights in the drug to aaiPharma.
Such contentions, and the case in which they arise, reach us at a very early
stage in the litigation. In reviewing a demurrer, we ask only whether the plaintiff
has alleged — or could allege — sufficient facts to state a cause of action against
the defendant. (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.)
In our view, plaintiffs have indeed shown that they could allege a cause of action
against Novartis for warning label liability. Because the same warning label must
appear on the brand-name drug as well as its generic bioequivalent, a brand-name
drug manufacturer owes a duty of reasonable care in ensuring that the label
includes appropriate warnings, regardless of whether the end user has been
dispensed the brand-name drug or its generic bioequivalent. If the person exposed
to the generic drug can reasonably allege that the brand-name drug manufacturer’s
failure to update its warning label foreseeably and proximately caused physical
injury, then the brand-name manufacturer’s liability for its own negligence does
not automatically terminate merely because the brand-name manufacturer
transferred its rights in the brand-name drug to a successor manufacturer. We
therefore affirm the Court of Appeal, which had directed the trial court to enter an
order sustaining Novartis’s demurrer with leave to amend plaintiffs’ negligence
and negligent misrepresentation causes of action.
I. BACKGROUND
From a certain perspective, the claim underlying this lawsuit is quite
straightforward. Plaintiffs T.H and C.H., who are fraternal twins, sued defendant
Novartis for negligence and negligent misrepresentation arising from Novartis’s
failure to warn of the risks of Brethine, an asthma drug sometimes prescribed
“off label” to stop or slow preterm labor. Plaintiffs allege that Novartis knew or
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should have known that Brethine carried a substantial risk of causing
developmental and neurological damage to the fetus, yet failed to warn of this risk.
What removes this case from the realm of the ordinary is that plaintiffs’
mother was never prescribed Brethine. Rather, she — like many pregnant women
experiencing premature labor — was prescribed terbutaline sulfate (terbutaline),
the generic bioequivalent drug. Moreover, Novartis stopped manufacturing
Brethine and sold all rights to the drug in 2001, six years before plaintiffs’ injury.
During the period it was the brand-name manufacturer, however, Novartis had the
legal duty to disclose Brethine’s known and reasonably knowable risks in the
drug’s warning label. All generic manufacturers, in turn, had a specific legal
responsibility regarding the label: to ensure the terbutaline label was identical to
the Brethine label. We therefore examine plaintiffs’ allegations against the
backdrop of the distinctive legal framework governing labeling for brand-name
and generic pharmaceuticals.
On review of a demurrer, we accept as true all properly pleaded facts.
(Shirk v. Vista Unified School Dist. (2007) 42 Cal.4th 201, 205.) Where particular
facts are set out below, they are those alleged in plaintiffs’ first amended
complaint.
A. Federal Regulation of Drug Labeling

The Food, Drug, and Cosmetic Act (FDCA; 21 U.S.C. § 301 et seq.)
prohibits the marketing of a new brand-name drug unless the manufacturer has
submitted a new drug application (NDA) and the Food and Drug Administration
(FDA) has approved the drug as safe and effective for its intended use. (21 U.S.C.
§ 355(a).) The NDA must include an exemplar of the drug’s proposed label (21
U.S.C. § 355(b)(1)(F)) describing the drug’s indications and usage,
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contraindications, warnings and precautions, and adverse reactions. (21 C.F.R.
§ 201.56(e)(1).)

In 1984, Congress enacted the Hatch-Waxman Act. (98 Stat. 1585, 1585-
1597, codified as amended at 21 U.S.C. § 355.) This statute allows a prospective
generic drug manufacturer to file an abbreviated new drug application (ANDA)
asserting the generic drug’s bioequivalence to an existing listed drug that has
already been approved by the FDA. (PLIVA, Inc. v. Mensing (2011) 564 U.S. 604,
612 (PLIVA), citing 21 U.S.C. § 355(j).) Such an application is typically filed as
the brand-name drug’s patent is about to expire. The streamlined application
relieves the generic manufacturer of the need to duplicate the clinical trials
previously submitted for the equivalent brand-name drug. (Ibid.) The generic
manufacturer must nonetheless “show that the labeling proposed for the new drug
is the same as the labeling approved for the listed drug.” (21 U.S.C.
§ 355(j)(2)(A)(v).)

So under the federal scheme, “brand-name and generic drug manufacturers
have different federal drug labeling duties.” (PLIVA, supra, 564 U.S. at p. 613.)
It is the brand-name manufacturer that bears responsibility for the accuracy and
adequacy of its label “as long as the drug is on the market.” (Wyeth v. Levine
(2009) 555 U.S. 555, 570-571 (Wyeth).) The generic manufacturer, on the other
hand, is responsible only for “an ongoing federal duty of ‘sameness’ ” — that is,
ensuring that its warning label is the same as the brand-name manufacturer’s.
(PLIVA, at p. 613.)

FDA regulations require the brand-name drug manufacturer to update the
warning label “as soon as there is reasonable evidence of an association of a
serious hazard with a drug; a causal relationship need not have been proved.” (21
C.F.R. § 201.80(e); cf. id., § 314.80(b) [NDA holder “must promptly review all
adverse drug experience information obtained or otherwise received by the
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applicant from any source”].) A specific warning is required if the drug is
commonly prescribed for a disease or condition, even when the drug has not yet
been approved for that use, where “such usage is associated with serious risk or
hazard.” (Id., § 201.80(e).) Any manufacturer of the drug at issue may request a
change in the label by submitting a “prior approval supplement” to the FDA,
which decides whether to approve the requested change in the warning label. (21
C.F.R. § 314.70(b)(2)(v); FDA, Abbreviated New Drug Application Regulations,
57 Fed.Reg. 17950, 17961 (Apr. 28, 1992).) But a brand-name drug
manufacturer, unlike a generic manufacturer, may unilaterally update a label,
without waiting for FDA preapproval, “[t]o add or strengthen a contraindication,
warning, precaution, or adverse reaction” under the “changes being effected”
(CBE-0) regulation. (21 C.F.R. § 314.70(c)(6)(iii)(A); see Wyeth, supra, 555 U.S.
at p. 568.) By contrast, a generic manufacturer may use the CBE-0 regulation
only to conform its label to an updated brand-name label. (PLIVA, supra, 564
U.S. at p. 614.)

Because federal regulations preclude generic manufacturers from
unilaterally altering the warning labels on their drugs (PLIVA, supra, 564 U.S. at
p. 617), federal law preempts state tort claims against generic manufacturers for
failure to provide adequate warnings. (Id. at p. 609.) State tort claims against a
brand-name manufacturer based on a failure to warn, however, are not preempted.
(Id. at p. 625.)

B. Terbutaline, Brethine, and Novartis
Terbutaline is a beta-adrenergic agonist, acting upon the beta2 receptors in
smooth muscle tissue and causing muscles to relax. The drug was originally
developed by Draco, a Swedish company, and released for use as a bronchodilator
to treat asthma. In 1974, the FDA approved terbutaline as a treatment for asthma
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in the United States. Astra AB (and later, AstraZeneca LP) licensed the right to
manufacture and market terbutaline in its oral form to Ciba-Geigy (a predecessor
to Novartis) under the brand name Brethine. Novartis owned the NDA for
Brethine until 2001.
In 1976, a Swedish physician with ties to Draco published the results of a
small study indicating that terbutaline was safe and effective as a tocolytic — a
drug to suppress premature labor in pregnant women — on the theory that the drug
could relax uterine smooth muscle tissue. Terbutaline subsequently gained wide
acceptance as a tocolytic, but neither Novartis nor any other manufacturer sought
FDA approval for this off-label use.1 Later studies cast doubt on the safety and
efficacy of terbutaline as a tocolytic.
In 1978, a study published in the British Journal of Obstetrics and
Gynaecology questioned the validity and conclusions of the original Swedish
report. According to plaintiffs’ complaint, the British study warned that the
benefits of this class of drugs on preterm labor was “ ‘not yet established,’ ” that
the evidence was “ ‘too scanty to make conclusions about side effects possible,’ ”
and that other data suggested “ ‘that labor inhibitors are potentially dangerous.’ ”
A year later, a study published in the American Journal of Obstetrics and
Gynecology reported adverse effects in both the pregnant mother and in the fetus
following terbutaline exposure.
A team of American clinical investigators in 1982 sought to replicate the
results of the 1976 Swedish study. They could not. In fact, the investigators were

1 Physicians may, in their professional judgment, prescribe a drug for a
purpose other than that for which it has been approved by the FDA. (Buckman
Co. v. Plaintiffs’ Leg. Com. (2001) 531 U.S. 341, 351, fn. 5 [“ ‘Off-label use is
widespread in the medical community’ ”].)
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unable to find any benefit among the pregnant mothers who had been prescribed
terbutaline as compared to those who received a placebo. A 1984 study published
in the Journal of Reproductive Medicine similarly failed to confirm any benefits.
In 1985, Dr. Theodore Slotkin and a team of Duke University Medical
Center researchers found that a single dose of terbutaline given to pregnant rats
interfered with an enzyme necessary for neuronal development in the fetal brain.
Dr. Slotkin’s study showed that terbutaline can cross the placenta and fetal brain
barrier in sufficient quantities to affect brain development. Other studies in the
1980s revealed that children born to mothers who had received a different betaadrenergic
agonist had poorer academic achievement and were more likely to have
impairments in vision and language development than children born to mothers
who did not receive such treatment.
In 1989 and 1990, Dr. Slotkin published studies showing that terbutaline
may interfere with the fetus’s neurobehavioral development, presumably through
its effects on receptors in the fetal cerebellum. Shortly thereafter, in 1992,
scientists from the University of Texas undertook a comprehensive and critical
evaluation of the literature relating to terbutaline and concluded, in a study
published in the American Journal of Obstetrics and Gynecology, that the drug
had not been shown to arrest preterm labor and that chronic exposure may
adversely affect the fetus. A 1995 meta-analysis by researchers from the
University of Pennsylvania likewise concluded that the relevant literature did not
support the claimed benefit from maintenance tocolytic therapy. The American
College of Obstetricians and Gynecologists (ACOG) subsequently issued a
“Technical Bulletin on Preterm Labor” to its more than 40,000 members, which
noted the asserted benefit from maintenance tocolytic therapy lacked any
evidentiary basis and warned that the potential risks of such therapy, to both the
mother and the fetus, were well documented. ACOG’s bulletin stated that the risk
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associated with beta-mimetic agents (such as terbutaline) appeared greater than
that associated with other tocolytic agents. In 1997, the FDA’s Associate
Commissioner for Health Affairs issued a “Dear Colleague” letter, which endorsed
ACOG’s assessment of the benefits and dangers of long-term tocolytic therapy.
In 2001, the German Central Institute of Mental Health issued a report
concluding that children whose mothers had received beta-agonist tocolysis had a
significantly higher rate of psychiatric disorders and psychopathology, and that
such children scored lower on psychometric tests of cognitive development. Dr.
Slotkin’s Duke team released another study in October 2001, which revealed that
beta2 receptors in the fetal brain, unlike those in mature brains, do not desensitize
when exposed to continuous doses of terbutaline. Instead, the fetal receptors
intensify their sensitivity to terbutaline and thus increase their response to the drug
as the dosage increases (and the brain develops).
Over the years, researchers developed –– and companies brought to market
–– newer and more effective bronchodilators and other asthma treatments.
Novartis continued to manufacture and distribute Brethine with the intention that it
be used as a tocolytic. By 2001, nearly half of all prescriptions for terbutaline
were for tocolysis, even though the drug was never approved by the FDA for that
purpose. In December 2001, Novartis transferred the NDA for Brethine to
NeoSan Pharmaceuticals Inc., a wholly owned subsidiary of aaiPharma.
C. The Facts Underlying This Lawsuit
On September 5, 2007, plaintiffs’ mother, J.H., was hospitalized because of
concerns about premature labor. She was prescribed terbutaline, to be
administered every six hours, and was discharged on September 25, 2007. While
in the hospital, J.H. received a generic version that was manufactured by Lehigh
Valley Technologies, Inc.; after discharge, she received a generic version that was
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manufactured by Global Pharmaceuticals. J.H. continued taking terbutaline as
directed until plaintiffs were born on October 9, 2007. Plaintiffs appeared to be
normal until their pediatrician, during a routine checkup in December 2010,
reported that the twins may have developmental delays. Despite specialized
treatment for both children, a pediatric neurologist diagnosed them with autism in
August 2012.
Plaintiffs’ first amended complaint alleges that terbutaline passed through
the placenta and the blood-brain barrier. As a result, plaintiffs contend, terbutaline
caused them to suffer severe and permanent neurologic injuries, including an
inability to speak and significant limitations and abnormalities in their motor
skills. Plaintiffs further allege that Novartis knew or should have known that
terbutaline was of questionable efficacy as a tocolytic agent, that terbutaline
carried serious risks of side effects for newborns whose mothers received the drug
during pregnancy, and that federal law required Novartis to report this information
to the FDA and to update the warning label — something Novartis could have
done unilaterally. (See 21 C.F.R. § 314.70(c)(6)(iii)(A).) Instead, Novartis falsely
represented that terbutaline was safe and effective and would not cause serious
side effects in newborns, and it intended for pregnant mothers and their physicians
to rely on these representations. The complaint asserted causes of action for
negligence and negligent misrepresentation, as well as strict liability, intentional
misrepresentation, concealment, and medical negligence.
To support and place in factual context their negligence cause of action,
plaintiffs made a variety of specific allegations regarding Novartis. They alleged
that Novartis had a duty to update the label to warn of the drug’s effects on fetal
development, that Novartis knew or should have known of these effects, that
J.H.’s physicians prescribed her terbutaline because of their erroneous belief that
terbutaline was safe to use as a tocolytic, that plaintiffs suffered neurological
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damage as a result of their exposure to terbutaline in utero, and that plaintiffs’
injuries were foreseeable. Meanwhile, plaintiffs’ negligent misrepresentation
cause of action alleged that Novartis falsely represented that terbutaline was safe
to use as a tocolytic, that Novartis had no reasonable basis for believing terbutaline
was safe to use as a tocolytic, that Novartis intended for pregnant mothers and
their physicians to rely on their false representations concerning the drug’s safety
as a tocolytic agent, that J.H. and her physicians relied on Novartis’s
representations, that plaintiffs suffered neurological damage as a result of their
exposure to terbutaline in utero, and that plaintiffs’ injuries were foreseeable.
Novartis’s core assertion in its demurrer was that it had no duty to
plaintiffs. To justify its position, the company offered two overarching rationales:
It did not manufacture the terbutaline ingested by their mother; and it had
transferred the Brethine NDA to another company in December 2001, nearly six
years before plaintiffs’ mother was prescribed terbutaline. In addition, Novartis
argued that plaintiffs had failed to identify with specificity any misrepresentation
by Novartis or allege that plaintiffs had relied on any such misrepresentation. In
opposition to the demurrer, plaintiffs responded that Novartis had a duty to warn
about the drug’s effects on fetal development during the period it owned the NDA
and manufactured Brethine; that the six-year gap between Novartis’s divestiture of
the NDA and plaintiffs’ in utero exposure is relevant to causation (and not the
existence of the duty); and that the first amended complaint adequately pleaded the
misrepresentations with specificity, given that the specific misrepresentations are
more likely to be within Novartis’s knowledge, and adequately pleaded reliance on
those misrepresentations.
The trial court sustained the demurrer without leave to amend. It concluded
that Novartis owed plaintiffs no duty as a matter of law relating to claims arising
from terbutaline exposure in 2007. Agreeing with Novartis, the court also found
12
that the fraud-based claims suffered from a lack of specificity and that this defect
could not be remedied by allegations about Novartis’s conduct prior to the 2001
NDA divestiture.
The Court of Appeal reversed and directed that the order sustaining the
demurrer be modified to grant plaintiffs leave to amend their causes of action for
negligence and negligent misrepresentation. The appellate court reasoned that if
plaintiffs could allege that Novartis failed to warn about fetal risks it knew or
should have known were associated with terbutaline when used as a maintenance
tocolytic prior to its divestiture of the brand-name drug in 2001, that the warning
would have remained on the label in 2007 had Novartis added a suitable warning
to the label before divestiture in 2001, and that their mother’s physician would not
have prescribed terbutaline as a maintenance tocolytic had the drug been properly
labeled, then their claims for negligence and negligent misrepresentation can
survive demurrer.
We granted Novartis’s petition for review to decide the existence and scope
of warning label liability for brand-name drug manufacturers under California law.
II. DISCUSSION
The sole issue before us is whether the demurrer should have been
sustained with respect to the negligence and negligent misrepresentation claims on
the ground that Novartis owed no duty of care to plaintiffs. In reviewing an order
sustaining a demurrer, we examine the operative complaint de novo to determine
whether it alleges facts sufficient to state a cause of action under any legal theory.
(Lee v. Hanley (2015) 61 Cal.4th 1225, 1230.) Where the demurrer was sustained
without leave to amend, we consider whether the plaintiff could cure the defect by
an amendment. The plaintiff bears the burden of proving an amendment could
cure the defect. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)
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The gist of plaintiffs’ warning label liability claim is that Novartis
negligently failed to warn about the drug’s risk to fetal brain development. They
contend that the deficient label foreseeably and proximately caused harm not only
to the children of women who were prescribed Brethine, but also to the children of
women who were prescribed its generic bioequivalent, which was legally required
to — and did — bear the same deficient label. Among other things, plaintiffs rely
on section 311 of the Restatement Second of Torts (section 311), which addresses
negligent misrepresentation involving physical harm. Under section 311(1),
“[o]ne who negligently gives false information to another is subject to liability for
physical harm caused by action taken by the other in reasonable reliance upon
such information, where such harm results [¶] . . . [¶] to such third persons as the
actor should expect to be put in peril by the action taken.”
Section 311’s theory of liability is intended to be “somewhat broader” than
that for mere pecuniary loss. (Rest.2d Torts, § 311, com. a.) It “finds particular
application where it is a part of the actor’s business or profession to give
information upon which the safety of the recipient or a third person depends.”
(Id., § 311, com. b; see also Prosser, Misrepresentation and Third Persons (1966)
19 Vand. L.Rev. 231, 254 [explaining that one has a duty not to make a false
representation to “[t]hose to whom a public duty is found to have been created by
statute, or pursuant to a statute . . . [and to] [t]hose members of a group or class
whom he has special reason to expect to be influenced by the representation”].)
This court applied and followed section 311 in Randi W. v. Muroc Joint Unified
School Dist. (1997) 14 Cal.4th 1066 (Randi W.). There, we concluded that a
school district’s negligent misrepresentations about a former employee in a letter
of recommendation could render the school district liable for the employee’s
molestation of a third person — a student at the employee’s new school — even
though the student had no special relationship with the former school district and
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never received the misleading information. (Id. at p. 1081.) In accordance with
the Restatement, we held “that the writer of a letter of recommendation owes to
third persons a duty not to misrepresent the facts in describing the qualifications
and character of a former employee, if making these misrepresentations would
present a substantial, foreseeable risk of physical injury to the third persons.”
(Ibid.) Plaintiffs urge us to hold, in similar fashion, that a brand-name drug
manufacturer owes a duty to third persons not to misrepresent the safety of its
drug, if making those misrepresentations would present a substantial, foreseeable
risk of physical injury to those third persons.
Duty is indeed the cornerstone of every negligence claim. In California, the
general rule governing duty is codified in Civil Code section 1714, subdivision
(a): “Everyone is responsible . . . for an injury occasioned to another by his or her
want of ordinary care or skill in the management of his or her property or person
. . . .” Thus, “each person has a duty to use ordinary care and ‘is liable for injuries
caused by his failure to exercise reasonable care in the circumstances . . . .’ ”
(Parsons v. Crown Disposal Co. (1997) 15 Cal.4th 456, 472.) Whether a party has
a duty of care in a particular case is a question of law for the court, which we
review independently on appeal. (Kesner v. Superior Court (2016) 1 Cal.5th
1132, 1142 (Kesner).)
The conclusion that a duty exists in a particular case “ ‘is not sacrosanct in
itself, but only an expression of the sum total of those considerations of policy
which lead the law to say that the particular plaintiff is entitled to protection.’ ”
(Dillon v. Legg (1968) 68 Cal.2d 728, 734, quoting Prosser, Law of Torts (3d ed.
1964) pp. 332-333.) We invoke the concept of duty to limit “ ‘ “ ‘the otherwise
potentially infinite liability which would follow from every negligent act,’ ” ’ ” yet
we do so only where public policy clearly supports (or a statutory provision
establishes) an exception to the general rule of Civil Code section 1714. (Kesner,
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supra, 1 Cal.5th at p. 1143.) When considering whether to depart from the general
rule, we balance a number of considerations, including “the foreseeability of harm
to the plaintiff, the degree of certainty that the plaintiff suffered injury, the
closeness of the connection between the defendant’s conduct and the injury
suffered, the moral blame attached to the defendant’s conduct, the policy of
preventing future harm, the extent of the burden to the defendant and
consequences to the community of imposing a duty to exercise care with resulting
liability for breach, and the availability, cost, and prevalence of insurance for the
risk involved.” (Rowland v. Christian (1968) 69 Cal.2d 108, 113 (Rowland).)
In the context of prescription drugs, a manufacturer’s duty is to warn
physicians about the risks known or reasonably known to the manufacturer.
(Carlin v. Superior Court (1996) 13 Cal.4th 1104, 1112 (Carlin); see generally
Finn v. G.D. Searle & Co. (1984) 35 Cal.3d 691, 699-700.) The manufacturer has
no duty to warn of risks that are “merely speculative or conjectural, or so remote
and insignificant as to be negligible.” (Carlin, at p. 1116.) If the manufacturer
provides an adequate warning to the prescribing physician, the manufacturer need
not communicate a warning directly to the patient who uses the drug. (Ibid.)
In this case, plaintiffs allege that the terbutaline label failed to warn about
the risks to fetal brain development and falsely represented that the drug was safe
for use by pregnant women. They further claim that Novartis’s control over the
Brethine label rendered it responsible for any deficiencies in the terbutaline label,
given that generic drug manufacturers are legally obligated to use the label crafted
by the brand-name drug manufacturer. Novartis contends that it owed no duty to
plaintiffs to update or maintain an accurate label because (1) it did not
manufacture the terbutaline that caused plaintiffs’ injuries; and (2) it had divested
ownership of Brethine, the name-brand drug, several years before plaintiffs’
mother was prescribed terbutaline.
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To determine whether to create an exception to a brand-name drug
manufacturer’s duty to warn, we balance the constellation of factors set out in
Rowland, supra, 69 Cal.2d at page 113. Three of those factors — foreseeability,
the certainty of the injury, and the closeness of the connection between the
plaintiff and the defendant — address the foreseeability of the relevant injury.
(Kesner, supra, 1 Cal.5th at p. 1145.) The remaining four — moral blame, the
policy of preventing future harm, the burden on the defendant and the general
public, and the availability of insurance — focus on the public policy justifications
for or against carving out an exception to the general duty in this category of
cases. (Ibid.) Our task is to determine whether a brand-name manufacturer owes
a duty of ordinary care to those who may be injured by deficiencies in its warning
label, not whether Novartis acted reasonably under the particular circumstances
here. (See Cabral v. Ralphs Grocery Co. (2011) 51 Cal.4th 764, 772-774
(Cabral).)
A. Whether Plaintiffs Exposed to the Generic Bioequivalent Drug Can
Assert Warning Label Liability Against Novartis, the Brand-name Drug
Manufacturer
The first case to recognize warning label liability was Conte v. Wyeth, Inc.
(2008) 168 Cal.App.4th 89 (Conte). In Conte the court concluded that a brandname
drug manufacturer’s common law duty of care when warning of the dangers
of its drug extended not only to consumers of the brand-name drug, “but also to
those whose doctors foreseeably rely on the name-brand manufacturer’s product
information when prescribing a medication, even if the prescription is filled with
the generic version of the prescribed drug.” (Id. at p. 94.) The Court of Appeal’s
holding predated by more than two years the United States Supreme Court’s ruling
that federal law requires generic drug manufacturers to conform their warning
label to the label used by the brand-name manufacturer (PLIVA, supra, 564 U.S. at
17
p. 613), and its analysis referenced some — but not all — of the Rowland factors.
(Conte, at pp. 105-107.)
Only a handful of courts have followed Conte. (See, e.g., Dolin v.
SmithKline Beecham Corp. (N.D.Ill. 2014) 62 F.Supp.3d 705; Chatman v. Pfizer,
Inc. (S.D.Miss. 2013) 960 F.Supp.2d 641, 654; Kellogg v. Wyeth, Inc. (D.Vt.
2010) 762 F.Supp.2d 694, 704; Wyeth, Inc. v. Weeks (Ala. 2014) 159 So.3d 649
(Weeks).) But our careful review of the federal regulatory scheme and analysis of
all the Rowland factors persuades us that a brand-name drug manufacturer has the
duty under California law to warn of the risks about which it knew or reasonably
should have known, regardless of whether the consumer is prescribed the brandname
drug or its generic “bioequivalent.” (See 21 U.S.C. § 355(j)(2)(A)(iv).)
1. Foreseeability and related factors
In determining whether to create an exception to the general statutory duty
of care, the “major” (Cabral, supra, 51 Cal.4th at p. 771, fn. 2), and ultimately
“most important” (Kesner, supra, 1 Cal.5th at p. 1145), consideration under
California law is the foreseeability of physical harm. Novartis could reasonably
have foreseen that deficiencies in its Brethine label could mislead physicians about
the safety of terbutaline, Brethine’s generic bioequivalent, which was legally
required to bear an identical label.
A brand-name pharmaceutical manufacturer has a duty under federal law to
draft, update, and maintain the warning label so that it provides adequate warning
of the drug’s potentially dangerous effects. (21 U.S.C. § 352(f)(2).) The FDA, as
part of its premarket review process, must approve the text of the proposed label.
(21 U.S.C. § 355; Wyeth, supra, 555 U.S. at p. 568.) Although the brand-name
manufacturer generally must obtain FDA approval before making any change to
the label, this category of manufacturers may use the “changes being effected”
18
(CBE-0) regulation (21 C.F.R. § 314.70(c)(3)) to “add or strengthen a
contraindication, warning, precaution, or adverse reaction” immediately upon
filing a supplemental application, without waiting for FDA approval. (Id.,
§ 314.70(c)(6)(iii)(A).)
The duty for a manufacturer of generic drugs, on the other hand, is to
ensure that its warning label is identical to the label of the brand-name drug.
(PLIVA, supra, 564 U.S. at p. 613.) In other words, generic manufacturers “have
an ongoing federal duty of ‘sameness.’ ” (Ibid.) A generic manufacturer may use
the CBE-0 regulation to change its label only to match a revised brand-name label
or otherwise comply with FDA instructions. (Id. at p. 614.)
What a brand-name manufacturer thus knows to a legal certainty is that any
deficiencies in the label for its drug will be perpetuated in the label for its generic
bioequivalent. A brand-name manufacturer will also be aware that although the
warnings communicated in its drug label are designed for physicians — and are
intended to influence a physician’s decision whether to prescribe the drug (see
Stevens v. Parke, Davis & Co., supra, 9 Cal.3d at pp. 64-65) — it is often the
pharmacist who actually decides whether the patient receives the brand-name drug
or its generic bioequivalent. (Bus. & Prof. Code, § 4073.) Moreover, many
insurance companies require the substitution of a generic drug for the brand-name
drug as a matter of course, unless the physician justifies use of the branded drug.
(PLIVA, supra, 564 U.S. at p. 628, fn. 2 (dis. opn. of Sotomayor, J.).)
Accordingly, it is entirely foreseeable that the warnings included (or not included)
on the brand-name drug label would influence the dispensing of the generic drug,
either because the generic is substituted by the pharmacist or the insurance
company after the physician has prescribed the brand-name drug, or because the
warning label on the generic drug is legally required to be identical to the label on
19
the brand-name drug. (Conte, supra, 168 Cal.App.4th at p. 105; accord, Weeks,
supra, 159 So.3d at p. 670.)
Under the second Rowland factor, we assess the degree of certainty that the
plaintiff suffered injury. This factor, too, strengthens the case for finding a duty of
care in these circumstances. Plaintiffs allege that they suffer from global
neurological impairment, including autism and pervasive developmental delays.
These are indisputably injuries and are compensable under the law. (See Kesner,
supra, 1 Cal.5th at p. 1148.)
The third Rowland factor implicates the closeness of the connection
between the defendant’s conduct and the plaintiff’s injury. The label for a generic
drug is (and must be) the same as the label for the brand-name drug, so any
deficiency in the brand-name label will be reflected in the generic label. Plaintiffs
allege that the deficient Brethine label led their mother’s physician to prescribe
terbutaline, which caused their neurological injuries. This scenario describes a
close connection between Novartis’s allegedly negligent conduct and plaintiffs’
injuries.
Novartis, meanwhile, relies on O’Neil v. Crane Co. (2012) 53 Cal.4th 335
(O’Neil). This is a case we can distinguish. There, a naval seaman developed
mesothelioma caused by asbestos exposure. Following his death, his family filed
a wrongful death action asserting strict liability and negligence claims against
several defendants, including the manufacturers of valves and pumps that were
used in warships. (Id. at p. 346.) At the close of evidence, the defendant
manufacturers moved for nonsuit, pointing out the plaintiffs’ failure to show that
the decedent had been exposed to asbestos from any of their products. Plaintiffs
responded that even if the decedent was never exposed to asbestos from the
defendants’ products themselves, it was foreseeable that the defendants’ valves
and pumps would need to be replaced with new asbestos-containing components,
20
and that asbestos could be released into the air during the repair and replacement
process. (Ibid.) In reinstating the trial court’s judgment of nonsuit, we invoked
the Rowland factors and noted, in particular, that the connection between the
defendant manufacturers’ conduct and the decedent’s injury was “extremely
remote” (id. at p. 365): Although component parts of the defendants’ valves and
pumps had been replaced “during routine maintenance” (id. at p. 344), the
decedent did not begin to work in the vicinity of these valves and pumps until
more than 20 years after they were installed — and did not suffer an injury for
another 40 years. In addition, the defendant manufacturers did not produce, sell,
or supply any of the asbestos-containing products that could have caused his
mesothelioma. Because the defendants’ asserted misconduct, according to the
plaintiffs, was simply that they failed to warn about the potential dangers in
replacement parts sold by other manufacturers — and there was “no reason to
think a product manufacturer [would] be able to exert any control over the safety
of replacement parts or companion products made by other companies” — we
found that the connection between the alleged misconduct and the injury was too
“attenuate[d]” to warrant imposition of a duty of care. (Id. at p. 365.)
Here, by contrast, federal regulations granted the brand-name drug
manufacturer — and no other manufacturer — control over the active ingredients
in the generic drug and the content of the warnings included in the generic’s
label.2 In addition, the temporal connection between Novartis’s allegedly

2 The FDA has been considering for some time a rule that would effectively
abrogate PLIVA and enable generic drug manufacturers to update a drug’s warning
label unilaterally, even if the brand-name manufacturer had not yet done so. (See
FDA, Supplemental Applications Proposing Labeling Changes for Approved
Drugs and Biological Products, 78 Fed.Reg. 67985 (Nov. 13, 2013); see Dept. of
Health and Human Services, Regulatory Agenda, 82 Fed.Reg. 40277, 40279 (Aug.
24, 2017).) If adopted, the new rule “would create parity between NDA holders
21
negligent conduct, on the one hand, and plaintiffs’ exposure to harm and
subsequent injury, on the other, is much closer than was the case in O’Neil.
2. Considerations of public policy
Foreseeability alone, however, is not sufficient to justify a duty of care in
every instance. (Erlich v. Menezes (1999) 21 Cal.4th 543, 552.) We will not
recognize a duty of care even as to foreseeable injuries “where the social utility of
the activity concerned is so great, and avoidance of the injuries so burdensome to
society, as to outweigh the compensatory and cost-internalization values of
negligence liability.” (Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 502.)
Novartis contends that the circumstances here present such an exceptional case.
We disagree.
Time and again we have recognized how “ ‘[t]he overall policy of
preventing future harm is ordinarily served, in tort law, by imposing the costs of
negligent conduct upon those responsible.’ ” (Kesner, supra, 1 Cal.5th at p. 1150,
quoting Cabral, supra, 51 Cal.4th at p. 781.) A brand-name drug manufacturer is
not only in the best position to warn of a drug’s harmful effects (Sindell v. Abbott
Laboratories (1980) 26 Cal.3d 588, 611): It is also the only manufacturer with the
unilateral authority under federal law to issue such a warning for the brand-name
drug or its generic bioequivalent. Although federal regulations impose a
continuing duty on the brand-name manufacturer to update and maintain an

and ANDA holders with respect to submission of CBE-0 supplements for safetyrelated
labeling changes based on newly acquired information” (78 Fed.Reg.,
supra, at p. 67989) and may conceivably justify reweighing of the Rowland factors
and some reconsideration of the brand-name manufacturer’s duty in this category
of cases.
22
adequate warning label (see 21 C.F.R. § 201.80(e)), a brand-name manufacturer’s
incentive to comply with that duty declines once the patent expires and generic
manufacturers enter the market, since the market share for the brand-name drug at
that point “may drop substantially.” (78 Fed.Reg., supra, at p. 67988 [“Among
drugs for which a generic version is available, approximately 94 percent are
dispensed as a generic”].) The possibility that any consumer injured by a deficient
drug label, including those who were dispensed the generic bioequivalent drug,
could assert a claim of warning label liability restores the brand-name
manufacturer’s incentive to update the warning label with the latest safety
information, even as the brand-name drug’s market share declines.
If the policy of preventing harm has special relevance to any particular
endeavor, surely prescription drug labeling is one. (Sindell v. Abbott
Laboratories, supra, 26 Cal.3d at p. 611.) A substantial body of state law serves
to protect California consumers from the dangers posed by false, misleading, and
inadequate labeling of prescription medications. (See, e.g., Bus. & Prof. Code,
§§ 4070-4078.) The United States Supreme Court, too, has recognized the pivotal
role of state tort actions “as a complementary form of drug regulation” with
respect to drug labeling. (Wyeth, supra, 555 U.S. at p. 578; see id. at p. 579
[“State tort suits uncover unknown drug hazards and provide incentives for drug
manufacturers to disclose safety risks promptly. They also serve a distinct
compensatory function that may motivate injured persons to come forward with
information. Failure-to-warn actions, in particular, lend force to the FDCA’s
premise that manufacturers, not the FDA, bear primary responsibility for their
drug labeling at all times”]; accord, Stevens v. Parke, Davis & Co., supra, 9 Cal.3d
at p. 65 [recognizing that federal warning-label regulations alone may be
insufficient to protect patient safety].)
23
The brand-name drug manufacturer is the only entity with the unilateral
ability to strengthen the warning label. So a duty of care on behalf of all those
who consume the brand-name drug or its bioequivalent ensures that the brandname
manufacturer has sufficient incentive to prevent a known or reasonably
knowable harm. In O’Neil, by contrast, we found “no reason” to believe that the
defendant valve and pump manufacturers would have any control over the safety
of other companies’ replacement parts or companion products (or even the Navy’s
purchasing choices or specifications). (O’Neil, supra, 53 Cal.4th at p. 365.) Our
no-duty conclusion also rested explicitly on the fact that the replacement parts’
“dangerous feature” — i.e., the asbestos — “was not integral to the product’s
design.” (Id. at p. 343.) Here, on the other hand, the brand-name drug
manufacturer exercised complete control over the contents of the generic drug
label at the time of its alleged negligence, and the generic drug was legally
required to be the brand-name drug’s bioequivalent. We therefore conclude that
warning label liability is likely to be effective in reducing the risk of harm to those
who are prescribed (or are exposed to) the brand-name drug or its generic
bioequivalent.
Against the public interest in preventing harm, we must balance the
defendant’s burden and the consequences to the community of imposing a duty of
care. The burden that matters, though, is not the cost of compensating individuals
for injuries that the defendant has actually and foreseeably caused. As we recently
explained in Kesner, “shielding tortfeasors from the full magnitude of their
liability for past wrongs is not a proper consideration in determining the existence
of a duty. Rather, our duty analysis is forward-looking, and the most relevant
burden is the cost to the defendants of upholding, not violating, the duty of
ordinary care.” (Kesner, supra, 1 Cal.5th at p. 1152.)
24
Strictly speaking, then, the burden on brand-name drug manufacturers of
satisfying a common law duty of care to those who are prescribed the generic
version of the drug is zero. Brand-name manufacturers already have a continuing
duty to warn of potential risks “as soon as there is reasonable evidence of an
association of a serious hazard with a drug; a causal relationship need not have
been proved.” (21 C.F.R. § 201.80(e).) A brand-name manufacturer’s burden to
maintain an adequate warning label persists without regard to the happenstance
that a given prescription for a brand-name drug may — because of insurance
company cost-savings rules (Meijer, Inc. v. Warner Chilcott Holdings Co. III Ltd.
(D.D.C. 2007) 246 F.R.D. 293, 297), or a pharmacist’s discretion (Bus. & Prof.
Code, § 4073, subd. (c)) — be filled with a generic bioequivalent. And where the
brand-name manufacturer provides an adequate label, then it necessarily has also
fulfilled its duty with respect to the generic bioequivalent.
Novartis complains that unless the ordinary duty of care is narrowed, the
brand-name drug manufacturer would end up an insurer for the entire market.
This would occur, Novartis contends, even though the brand-name manufacturer
may hold only a small fraction of the combined sales of the brand-name drug and
its generic bioequivalent. We disagree. A brand-name drug manufacturer would
not be liable where, for example, the injury arose from a defect in the
manufacturing process of the generic drug (see, e.g., Fisher v. Pelstring (D.S.C.
2012) 817 F.Supp.2d 791, 818), the generic manufacturer failed to conform its
label to the brand-name drug’s label (Fulgenzi v. PLIVA, Inc. (6th Cir. 2013) 711
F.3d 578, 582, 584; Huck v. Wyeth, Inc. (Iowa 2014) 850 N.W.2d 353, 356 (plur.
opn. of Waterman, J.)), or the generic manufacturer was promoting a use that was
inconsistent with the FDA-approved label (Arters v. Sandoz, Inc. (S.D. Ohio 2013)
921 F.Supp.2d 813, 819-820). Under warning label liability, the brand-name drug
manufacturer is liable only in a narrow circumstance — when deficiencies in its
25
own label foreseeably and proximately caused injury. If instead tort law simply
carved out those who were given the generic bioequivalent from obtaining
otherwise available compensation for injuries attributable to the brand-name drug
manufacturer’s defective warning label, then consumers would insist on the brandname
drug over the cheaper bioequivalent, inflating health costs with no
corresponding increase in safety and in contradiction to the stated federal policy of
making low-cost generic drugs more available. (See H.R.Rep. No. 98-857, 2d
Sess., p. 14 (1984), reprinted in 1984 U.S. Code Cong. & Admin. News, p. 2647.)
Novartis nonetheless predicts that unless we carve out an exception for
those taking generic drugs, warning label liability will lead to overwarning — i.e.,
inclusion of a slew of speculative risks in the warning label — which would dilute
the effectiveness of any individual warning. But why this would occur is far from
clear. To recognize that the duty of care includes all those who would foreseeably
be affected by a deficient brand-name drug label merely preserves the brand-name
manufacturer’s duty as it existed when its patent excluded all competitors from the
market. Nor has Novartis identified any surge in overwarning since 2008, when
Conte recognized warning label liability. (Cf. Carlin, supra, 13 Cal.4th at p. 1116,
fn. 6 [“[T]here is no evidence that any such [overwarning] problem has emerged
or that patients have suffered any detriment, despite the fact that strict liability has
long been the rule in California”].) Plaintiffs further suggest that the
consequences of overwarning on physicians’ prescription decisions is uncertain
(Steven Garber, RAND Institute for Civil Justice, Economic Effects of Product
Liability and Other Litigation Involving the Safety and Effectiveness of
Pharmaceuticals (2013) p. xiv [“That claim is controversial within the medical
community, and there is no direct empirical evidence about it”]) and, in any event,
can be solved through the FDA’s power to reject a labeling change it deems
unnecessary or counterproductive. (See Wyeth, supra, 555 U.S. at p. 571.)
26
Novartis cautions that warning label liability could perversely incentivize a
brand-name manufacturer to withdraw its drug from the market, rather than expose
itself to the risk of suit by those who — in reliance on the brand-name
manufacturer’s label — were prescribed the generic bioequivalent and suffered
injury. Yet Novartis fails to explain why brand-name manufacturers would find it
economically advantageous to withdraw drugs from the market rather than simply
modify the warning labels to include the newly discovered risks. Nor does it offer
any evidence that brand-name manufacturers have accelerated their withdrawal
from the market in the nine years since Conte was decided. Moreover, a brandname
drug manufacturer cannot avoid its duty to update and maintain its warning
label simply by unilaterally exiting the market. Under FDA regulations, a brandname
drug manufacturer’s duty to update and maintain the warning label
continues, even if the brand-name drug has been withdrawn from the market, until
the FDA (having assured itself that the drug is safe, effective, and correctly
labeled) withdraws approval of the NDA. (21 C.F.R. § 314.150(a)(2), (b)(3) &
(c); FDA, supra, 78 Fed.Reg. at p. 67993.) A brand-name manufacturer that
sought to exit the market but was unsure whether the FDA would determine that
the drug was withdrawn “for reasons other than effectiveness or safety” thus
would presumably go ahead and update the label. (Lasker et al., Taking the
“Product” Out of Product Liability: Litigation Risks and Business Implications
of Innovator and Co-promoter Liability (July 2015) 82 Def. Counsel J. 295, 306.)
Novartis complains next that it is unfair to subject a brand-name drug
manufacturer to liability for harm caused by a competitor’s product — a product
from which the brand-name manufacturer derives no revenues or profit. But the
plaintiffs’ claim here is not that terbutaline is defectively designed or inherently
dangerous. It is that terbutaline’s warning label failed to mention the risk to fetal
brain development, and that Novartis was responsible for the deficient label. So
27
the alleged fault here lies with Novartis, not with its generic competitors. The
brand-name drug manufacturer’s burden to adequately label its drug as a means of
ensuring adequate warnings for the generic bioequivalent is more than offset by
the substantial benefits federal law confers on the brand-name manufacturer: a
monopoly over the market for the life of the patent, which can be extended for the
time consumed by FDA review of the NDA (see 35 U.S.C. §§ 154, 156(a), (c)); an
additional five-year exclusivity period if the brand-name drug contains a new
chemical entity or an additional three years for a new use of a previously approved
drug (see 21 U.S.C. § 355(c)(3)(E); 21 C.F.R. § 314.108(b)(2), (4), (5)); and the
higher prices the brand-name drug can continue to command even after the
exclusivity period expires. (See Conte, supra, 168 Cal.App.4th at p. 110.)
Because federal law bundles –– and indeed, only makes available –– those
benefits along with the responsibility to maintain an adequate warning label, it is
as logical as it is reasonable for state common law to ensure the brand-name
manufacturer holds up its end of the deal. (See Wyeth, supra, 555 U.S. at pp. 578-
579; see generally Struve, The FDA and the Tort System: Postmarketing
Surveillance, Compensation, and the Role of Litigation (2005) 5 Yale J. Health
Pol’y L. & Ethics 587, 605-606 [“The problem of insufficient resources persists,
as does the [structural] concern that the FDA may be loath to move swiftly to
address emerging safety issues”].) The public interest in adequate drug warnings,
in short, is just as acute when the brand-name drug manufacturer has an effective
monopoly over the warning label as it was when the brand-name manufacturer
had a monopoly over the entire market for the drug. (See Wyeth, supra, 555 U.S.
at p. 571 [noting that federal regulations “plac[e] responsibility for postmarketing
surveillance on the manufacturer”].)
We are equally unpersuaded by Novartis’s contention that warning label
liability would stifle innovation by substantially raising drug costs and chilling the
28
development and marketing of new drugs. The logic buttressing this argument is
far from self-evident. Warnings about a product’s efficacy or danger may indeed
risk diminishing its value to the manufacturer. Less obvious is the manufacturer’s
response to this predicament. One might just as easily assert that a drug company,
after adding a new warning, will be incentivized to develop new and safer
alternatives to the drug so that it can recapture the market for treatment of that
disease. (See Carlin, supra, 13 Cal.4th at p. 1117.)
Indeed, the pharmaceutical industry raised a similar objection in Carlin to
the imposition of strict liability for the failure to warn about the known or
reasonably scientifically knowable dangers of a drug. We found “no clear or
sufficient basis for concluding that research and development will inevitably
decrease” as a consequence of imposing liability for failure to warn of known or
knowable risks (Carlin, supra, 13 Cal.4th at p. 1117) — nor has Novartis offered
any evidence that drug innovation has declined in the 21 years since Carlin was
decided. Carlin therefore saw “no reason to depart from our conclusion . . . that
the manufacturer should bear the costs, in terms of preventable injury or death, of
its own failure to provide adequate warnings of known or reasonably scientifically
knowable risks.” (Ibid.)
The same is true here. When it comes to choosing whether the cost of an
injury involving prescription medication should be borne by an innocent plaintiff
or a negligent defendant, our case law has routinely held that the latter should bear
the cost. (Sindell v. Abbott Laboratories, supra, 26 Cal.3d at pp. 610-611.) A
brand-name drug manufacturer is in the best position to discover and cure
deficiencies in its warning label, to bear the cost of injury resulting from its failure
to update and maintain the warning label, to insure against the risk of liability, and
to spread any increased cost widely among the public. (Id. at p. 611.) After all,
the fault (if any) for a deficient label lies with the brand-name manufacturer alone.
29
(Cf. Groll v. Shell Oil Co. (1983) 148 Cal.App.3d 444, 449 [manufacturer of bulk
fuel owed no duty to the ultimate consumer where the manufacturer provided
adequate warnings to the distributor, “who subsequently packages, labels and
markets the product,” and the manufacturer thus “did not have the ability to
prepare the warning”].) The balance of preventing harm and avoiding an undue
burden on drug manufacturers and the public generally thus tips in favor of
warning label liability.
Neither of the two remaining Rowland factors weighs in favor of an
exception to the general duty of care. To wit: Significant moral blame attaches
where a brand-name drug manufacturer fails to warn about the unsafe effects of its
drug, when those effects are known or reasonably should have been known to the
manufacturer. (See Peterson v. San Francisco Community College Dist. (1984) 36
Cal.3d 799, 814.) Blameworthiness would not depend on whether the pregnant
woman, in reliance on the brand-name drug manufacturer’s label, was dispensed
the brand-name drug or its generic bioequivalent. Even those women who were
prescribed the brand-name drug may nonetheless have received the generic
version, either because the insurance company required it or because the
pharmacist chose it. Moreover, both the pregnant woman and her physician would
have relied on the brand-name drug manufacturer to warn of any serious hazards
that were “associated” with the drug. (21 C.F.R. § 201.80(e).) Indeed, under
federal law, no other manufacturer could have advised them of the drug’s risks. In
these circumstances, potential plaintiffs — the unborn — would be “particularly
powerless,” while the defendant brand-name drug manufacturer would have the
best information about the drug’s risks. (Kesner, supra, 1 Cal.5th at p. 1151.)
Although we declared in O’Neil that “little moral blame can attach to a
failure to warn about dangerous aspects of other manufacturers’ products and
replacement parts” (O’Neil, supra, 53 Cal.4th at p. 365), the context of that
30
statement was a situation in which the valve and pump manufacturers had no
control or influence over the design, manufacturing, or safety of those parts; the
warning attached to them; or the consumer’s decision whether to purchase such
products. (Ibid.) Here, by contrast, the brand-name manufacturer legally
controlled the label on the generic bioequivalent drug, and thus had significant
influence on the decision whether to prescribe it.
Finally, Novartis offers no reason why a brand-name drug manufacturer
would be unable to insure against the risk of warning label liability. Presumably, a
brand-name manufacturer already insures against the risk of liability arising from
a deficient warning label when a drug is introduced and the manufacturer has a
monopoly over that market. It is far from clear why the brand-name drug
manufacturer’s exposure would become fatally uncertain merely because the
brand-name manufacturer is sharing the market with generic manufacturers. (Cf.
O’Neil, supra, 53 Cal.4th at p. 365 [“it is doubtful that manufacturers could insure
against the ‘unknowable risks and hazards’ lurking in every product that could
possibly be used with or in the manufacturer’s product”].)
3. Out-of-state authorities
Novartis (and its amici curiae) rely in substantial part on what they call the
“overwhelming” majority of courts that have declined to recognize warning label
liability owed to those who were prescribed a generic version of the drug in
reliance on the brand-name drug label. Although the decisions of our sister states
and the lower federal courts may be instructive to the extent we find their analysis
persuasive, they are neither binding nor controlling on matters of state law.
(People v. Gonzales and Soliz (2011) 52 Cal.4th 254, 296.) We have respectfully
considered the authorities cited by Novartis. We do not find them persuasive in
analyzing California law.
31
The “ ‘leading case’ ” (Strayhorn v. Wyeth Pharms., Inc. (6th Cir. 2013)
737 F.3d 378, 401) for the proposition that a brand-name drug manufacturer owes
no duty to warn patients who were dispensed the generic bioequivalent is Foster v.
American Home Products Corp. (4th Cir. 1994) 29 F.3d 165 (Foster) — so we
examine that case in some detail. In Foster, the decedent’s pediatrician prescribed
Phenergan, a brand-name antihistamine manufactured by the defendant which was
sometimes used to treat colic. The pharmacist substituted promethazine, a generic
bioequivalent. After being given promethazine several times over the next few
days, six-week-old Brandy was found dead in her crib. A pediatrician specializing
in sudden infant death syndrome at the University of Maryland opined that
Brandy’s death was caused by promethazine. (Id. at pp. 167-168.) The district
court found the plaintiffs (Brandy’s parents) had stated a claim for negligent
misrepresentation, despite the fact that the defendant had not manufactured the
drug ingested by Brandy, but subsequently granted summary judgment because of
the plaintiffs’ failure to demonstrate that their pediatrician had relied on the
defendant’s representations. When the plaintiffs appealed the grant of summary
judgment and the defendant cross-appealed the district court’s initial
determination that a negligent misrepresentation claim could lie against the brandname
manufacturer for harm arising from the generic drug, the Fourth Circuit
sustained the cross-appeal. (Ibid.)
Foster reasoned first that the negligent misrepresentation cause of action
was in essence a claim of product liability, but “without meeting the requirements
[Maryland] law imposes in products liability actions” — i.e., “that the defendant
manufactured the product at issue.” (Foster, supra, 29 F.3d at p. 168.) The court
next addressed the peculiarities of the regulated pharmaceutical market, under
which “any representations [the defendant] makes when advertising Phenergan
also apply to generic promethazine”; a warning “will simply not be made” if the
32
brand-name manufacturer does not issue one; and a patient who is prescribed
Phenergan “may actually receive generic promethazine.” (Id. at p. 169.) In
rejecting liability nonetheless, the Foster court assumed that although generic
manufacturers “must include the same labeling information as the equivalent name
brand drug, they are also permitted to add or strengthen warnings and delete
misleading statements on labels, even without prior FDA approval. . . .
Manufacturers of generic drugs, like all other manufacturers, are responsible for
the representations they make regarding their products.” (Id. at p. 170.) The court
also concluded that “to impose a duty in the circumstances of this case would be to
stretch the concept of foreseeability too far” under Maryland law, which had
recognized the tort of negligent misrepresentation only where “ ‘one party has the
right to rely for information upon the other, and the other giving the information
owes a duty to give it with care.’ ” (Id. at p. 171.) In the court’s view, no such
relationship could ever exist because Brandy “was injured by a product that [the
defendant] did not manufacture.” (Ibid.)
At the core of the Foster court’s analysis is an erroneous assumption: that
generic drug manufacturers may “add or strengthen warnings and delete
misleading statements on labels, even without prior FDA approval,” and that they
can be sued for their failure to do so. (Foster, supra, 29 F.3d at p. 170.) In reality,
generic drug manufacturers are legally obligated to conform their drug label to the
brand-name manufacturer’s label (PLIVA, supra, 564 U.S. at p. 613) and, so long
as they fulfill their “duty of ‘sameness’ ” (ibid.), cannot be sued in tort for
deficiencies in the label. (See id. at p. 624.) Fortunately, the Fourth Circuit has
since recognized its error. Despite its categorical rejection of any duty in Foster,
the court recently certified to the Supreme Court of Appeals of West Virginia the
question “Whether West Virginia law permits a claim of failure to warn and
negligent misrepresentation against a branded drug manufacturer when the drug
33
ingested was produced by a generic manufacturer.” (McNair v. Johnson &
Johnson Corp. (4th Cir. May 30, 2017, No. 15-1806) 2017 WL 2333843, *1.)3
Even on its own terms, though, Foster’s reasoning proves unhelpful in
construing California law, and finds no support in it. First, California law does not
conflate negligent misrepresentation and strict liability in the manner Foster
believed was true of Maryland law. (Conte, supra, 168 Cal.App.4th at p. 108.)
Under our state’s law, there is no per se requirement in negligent
misrepresentation actions that the misrepresentation be made by the product
manufacturer. Consider Hanberry v. Hearst Corp. (1969) 276 Cal.App.2d 680,
where the plaintiff alleged that defective shoes caused her injuries. (Id. at p. 682.)
The Court of Appeal allowed the negligent misrepresentation claims to go forward
against a nonmanufacturer — the publisher of Good Housekeeping magazine,

3 There is a sad coda to Foster. The Fourth Circuit’s ruling relieved the
brand-name manufacturer of any duty to warn of known or knowable risks of the
drug when a plaintiff had been given the generic equivalent — and (contrary to
Foster’s key assumption) the generic manufacturer had no ability to deviate from
the brand-name manufacturer’s label. As a result, it took until 2000 –– six years
after Foster was decided –– for the FDA to modify the warning to recommend that
promethazine not be given to children younger than two years old. (Starke et al.,
Boxed Warning Added to Promethazine Labeling for Pediatric Use (2005) 352
New Eng. J. Med. 2653, 2653.) Four years thereafter, following further review of
all adverse events that had been reported, the FDA added a boxed warning — the
strongest type of warning (21 C.F.R. § 201.57(c)(1)) — stating that the drug
should not be given to children younger than two years old because of the
potential for fatal respiratory depression. (Starke et al., supra, at p. 2653; Rostron,
Prescription for Fairness: A New Approach to Tort Liability of Brand-name and
Generic Drug Manufacturers (2011) 60 Duke L.J. 1123, 1146-1147.) This
example underscores the reality that the FDA depends heavily on the brand-name
drug manufacturer exercising its own unilateral ability to strengthen its warning
label. (Wyeth, supra, 555 U.S. at p. 579; see generally Weeks, supra, 159 So.3d at
p. 676 [“The FDA has limited resources to monitor the approximately 11,000
drugs on the market”].) Yet Foster’s rule seriously undermines the brand-name
manufacturer’s incentive to do so.
34
which had given the shoes its renowned seal of approval. (Id. at p. 683.) This seal
appeared not only in the pages of its own magazine, but was used by the shoe
manufacturer in its advertising as well as on the product and its packaging. (Ibid.)
The court acknowledged that the defendant publisher was neither the seller nor the
manufacturer of the shoes, but nonetheless recognized a duty of care because of
the allegations that the publisher “held itself out as a disinterested third party
which had examined the shoes, found them satisfactory, and gave its
endorsement”; and the plaintiff reasonably relied on the endorsement and
“purchased the shoes because of [it].” (Id. at pp. 686, 683.) As to the plaintiff’s
claim under strict liability, however, the court affirmed the trial court’s dismissal
— declining to extend strict liability “to a general endorser who makes no
representation it has examined or tested each item marketed.” (Id. at p. 688; see
also Conte, supra, 168 Cal.App.4th at pp. 101-102 [similarly distinguishing
between strict liability and negligent misrepresentation theories].)4

4 Novartis suggests that we recently conflated strict liability and negligence
in Webb v. Special Electric Co., Inc. (2016) 63 Cal.4th 167 when we observed that
“ ‘there is little functional difference between the two theories in the failure to
warn context.’ ” (Id. at p. 187.) Not so. Webb’s observation was merely that the
sophisticated user and sophisticated intermediary defenses applied to both theories
of liability. (Ibid.) We did not categorically alter our longstanding recognition
that “California law recognizes the differences between negligence and strict
liability causes of action.” (Johnson v. American Standard , Inc. (2008) 43 Cal.4th
56, 71; see Saller v. Crown Cork & Seal Co., Inc. (2010) 187 Cal.App.4th 1220,
1239 [“ ‘Negligence and strict products liability are separate and distinct bases for
liability that do not automatically collapse into each other because the plaintiff
might allege both when a product warning contributes to her injury’ ”].)
O’Neil did not erase the distinction between strict liability and negligence,
either. Far from conflating the two theories, we said simply that “[t]he same
policy considerations that militate against imposing strict liability in this situation
apply with equal force in the context of negligence.” (O’Neil, supra, 53 Cal.4th at
p. 366, italics added.) As we have demonstrated above, O’Neil is soundly
distinguishable from the situation here.
35
Second, California law places greater weight on the element of
foreseeability in the duty analysis than does Maryland law. Indeed, this state
treats foreseeability as “[t]he most important factor” (Kesner, supra, 1 Cal.5th at
p. 1145), and we do not narrowly circumscribe the kinds of relationships that must
exist between the plaintiff and the defendant as a predicate to imposing a duty on
the defendant to prevent injuries arising from its own conduct. (Id. at p. 1163; see
Randi W., supra, 14 Cal.4th at p. 1077 [one who negligently provides false
information to another can owe a duty of care to a third person “who did not
receive the information and who has no special relationship with the provider”].)5
By contrast, Foster found that a “duty . . . arises” under Maryland law only “when
there is ‘such a relation that one party has the right to rely for information upon the
other, and the other giving the information owes a duty to give it with care.’ ”
(Foster, supra, 29 F.3d at p. 171, quoting Weisman v. Connors (Md. 1988) 540
A.2d 783, 790.) Foster then summarily concluded that “[t]here is no such
relationship between the parties to this case, as Brandy Foster was injured by a
product that [defendant] did not manufacture.” (Foster, at p. 171.) Even this
explanation, though, seems to overlook the fact that there is never a direct
relationship between a prescription drug manufacturer and the ultimate consumer.
A consumer may obtain a prescription medication only through the physician as a

5 We therefore do not find persuasive those out-of-state cases discounting the
role of foreseeability (see, e.g., Huck v. Wyeth, Inc., supra, 850 N.W.2d at p. 376
(plur. opn. of Waterman, J.) [“ ‘foreseeability should not enter into the duty
calculus’ ”]) or requiring the existence of a specific type of relationship between
the plaintiff and the defendant (see, e.g., Moretti v. Wyeth, Inc. (9th Cir. 2014) 579
Fed. Appx. 563, 564 [construing negligent misrepresentation, under Nevada law,
to “ ‘require[], at a minimum, some form of relationship between the parties’ ”];
Schrock v. Wyeth, Inc. (10th Cir. 2013) 727 F.3d 1273, 1282 [“Oklahoma courts
have also required a relationship between the defendant company and the product
at issue for other theories of liability, including negligence”]).
36
learned intermediary. (See Carlin, supra, 13 Cal.4th at pp. 1116, 1126.) A
physician, in turn, typically relies on the drug’s warning label, the contents of
which (regardless of whether the medication ultimately dispensed is the brandname
or generic bioequivalent) are controlled by the brand-name manufacturer. It
is difficult to understand why the relationship between the brand-name
manufacturer and the physician must be deemed to evaporate simply because an
insurance company or pharmacist subsequently decides to dispense a generic
version of the drug that bears the warning label crafted by the brand-name
manufacturer.
Third, in one crucial respect, Foster is like the vast majority of the out-ofstate
cases on which Novartis relies: it arose in federal court under diversity
jurisdiction. Federal courts sitting in diversity are “extremely cautious” about
recognizing innovative theories under state law (Combs v. Int’l Ins. Co. (6th Cir.
2004) 354 F.3d 568, 578) and are bound to “apply the applicable state law as it
now exists.” (Foster, supra, 29 F.3d at p. 171; see generally Gluck, Intersystemic
Statutory Interpretation: Methodology as “Law” and the Erie Doctrine (2011)
120 Yale L.J. 1898, 1939 [federal courts “pick the narrowest possible answer,
usually the one that does the least to change the status quo, regardless of its
predictions of what the state court would do”].) Because only a handful of
jurisdictions have adopted the duty recognized in Conte, supra, and followed by
the Court of Appeal here, it is not surprising that federal courts have been reluctant
to interpret the law of various states to embrace it. But the task of this court is not
to “ ‘opt for the interpretation that restricts liability, rather than expands it’ ” until
someone else tells us otherwise. (Travelers Indem. Co. v. Dammann & Co., Inc.
(3d Cir. 2010) 594 F.3d 238, 253; see also Germain v. Teva Pharmaceuticals,
USA, Inc. (In re Darvocet, Darvon, & Propoxyphene Products Litigation) (6th Cir.
2014) 756 F.3d 917, 937 [“federal courts must be cautious”].) It is instead
37
emphatically the province of this court to declare what the law is. By contrast,
Novartis’s collection of federal decisions merely attempt to predict the law of
other states, while operating under a presumption against expanding liability. (See
Schrock v. Wyeth, Inc., supra, 727 F.3d at p. 1290 [“As a federal court . . . we have
limited authority to correct this potential injustice. It is for the state courts, rather
than this panel, to engage in the delicate policy considerations predicate to the
expansion of the scope of state tort law”].) They are of little use in discharging
our task.
We likewise discount decisions from those jurisdictions that differ from
California by categorically excluding from liability certain defendants (see, e.g.,
Huck v. Wyeth, Inc., supra, 850 N.W.2d at p. 371 (plur. opn. of Waterman, J.)
[“the tort of negligent misrepresentation does not apply to sellers of products but
rather is limited to those in the business or profession of supplying information for
the guidance of others”]) or certain injuries (see, e.g., Flynn v. American Home
Products Corp. (Minn.Ct.App. 2001) 627 N.W.2d 342, 351 [“the Minnesota
Supreme Court has recognized negligent misrepresentation involving damages
only for pecuniary loss, and has expressly declined to recognize the tort of
negligent misrepresentation involving the risk of physical harm”]) from the tort of
negligent misrepresentation. And we find unhelpful the views of those
jurisdictions that (federal courts predict) will recharacterize under their product
liability act or similar rule all claims against a product manufacturer, no matter the
theory, as product liability actions, which can be asserted only against the
manufacturer of the product. (See, e.g., Germain, supra, 756 F.3d at pp. 941-954
[construing the laws of Arkansas, Connecticut, Florida, Georgia, Illinois,
Kentucky, Louisiana, Maryland, Mississippi, Nebraska, New York, North
Carolina, Ohio, Texas, Washington, and West Virginia]; Phelps v. Wyeth, Inc.
(D.Or. 2012) 857 F.Supp.2d 1114, 1121 [Oregon law]; Stanley v. Wyeth, Inc.
38
(La.Ct.App. 2008) 991 So.2d 31, 33-34 [noting the “numerous cases where the
negligent misrepresentation claims were . . . preempted by . . . a state’s enactment
of products liability law”].)
At core, what Novartis seems to want is more than just an exception to the
general duty of care applicable in California — an exception constructed to avoid
liability where a biologically equivalent product is sold and the warning label used
is required by federal law to be the label that the brand-name manufacturer
controls. Perhaps because there is no logical basis to justify such an exception,
Novartis instead seeks a more categorical result, though one no easier to justify —
i.e., an unequivocal declaration that California law relieves a manufacturer of any
failure-to-warn liability relating to another manufacturer’s products. True: An
exception to California’s general duty of care is ordinarily applicable to relieve a
manufacturer of the duty to warn consumers about a product’s risks where the
product is that of another manufacturer. (O’Neil, supra, 53 Cal.4th at pp. 364-
366.) For good reason: A product manufacturer ordinarily will have no control
over the design or safety of another manufacturer’s product, the other
manufacturer’s use of dangerous materials, or any warnings the other
manufacturer might place on the product. (Id. at pp. 350, 365.) Nor would there
be any reason to think that a manufacturer has the ability to influence a customer’s
decision to buy another manufacturer’s product. (Id. at p. 365.) Without such
predicate connections between one manufacturer and another, it would be difficult,
if not impossible, for a manufacturer to foresee the dangers lurking in the
seemingly limitless number of other products that might be used with or in its
product. (Ibid.) But prescription drug markets are different. They present the
unusual situation where one entity’s misrepresentations about its own product
foreseeably and legally “contributed substantially to the harm” caused by another
entity’s product (i.e., the generic drug bearing the warning label drafted by the
39
brand-name manufacturer). (O’Neil, at p. 362.) That key circumstance
distinguishes the situation here from those involving the general run of products.
The negligence causes of action are potentially viable because of the
allegedly deficient representations in Novartis’s warning label. Novartis is not
being sued for dangers inherent in the generic terbutaline manufactured by some
other entity. Nor do plaintiffs claim that any product manufactured by Novartis
caused them harm. They claim instead that allegedly deficient representations and
omissions in Novartis’s warning label caused them harm. The fact that Novartis
also manufactured a product is extrinsic to the analysis and does not insulate it
from liability for its alleged misrepresentations. (See Conte, supra, 168
Cal.App.4th at pp. 109-110; accord, Weeks, supra, 159 So.3d at p. 672 [“the [tort]
claims are not based on the manufacturing of the product but instead allege that
the label — drafted by the brand-name manufacturer and required by federal law
to be replicated verbatim on the generic version of the medication — failed to
warn”].)
B. Whether Warning Label Liability Was Extinguished as a Matter of Law
When Novartis Divested Ownership of Brethine
We have determined that Novartis owed a duty of care to those who were
prescribed Brethine or its generic bioequivalent in reliance on Novartis’s warning
label. Novartis claims that the demurrer should nonetheless be sustained without
leave to amend on the ground that it sold the Brethine NDA to aaiPharma in 2001
and no longer had control over its warning label in 2007, when plaintiffs’ mother
was prescribed terbutaline. So we now consider whether Novartis should be
relieved of all liability for its allegedly negligent failure to update the label as a
matter of law, despite the fact that aaiPharma continued using the label Novartis
had crafted.
40
Plaintiffs fault Novartis. But they do not claim the company was
responsible for any negligent acts or omissions after the transfer of ownership.
After all, under FDA regulations, only the current NDA holder has the authority to
unilaterally modify the drug’s warning label. Plaintiffs claim instead that they
were harmed by Novartis’s failure to update the label prior to transferring the
NDA to aaiPharma, in that aaiPharma continued to use the same warning label
until at least 2007, when their mother was prescribed terbutaline. In effect,
plaintiffs claim that the Brethine warning label was deficient at the time Novartis
transferred the NDA –– and it was reasonably foreseeable that it would remain
deficient, given the incentives facing any successor manufacturer.
To address this aspect of plaintiffs’ claim, we must determine whether to
recognize an exception to a brand-name manufacturer’s duty to warn. Is a brandname
drug manufacturer’s duty to warn extinguished simply because the
deficiency in the label caused the injured plaintiff to be exposed to the drug after
the manufacturer had transferred the NDA to a successor? Foreseeablity of harm
is the touchstone of our duty analysis. (Kesner, supra, 1 Cal.5th at p. 1148.)
Plaintiffs allege (or claim they can allege) that Novartis negligently provided
inaccurate and incomplete warnings about the safety of its drug, that it was
foreseeable the new NDA holder (aaiPharma) would continue to use Novartis’s
warning label without modification, that their mother’s physician relied on the
deficient warning label drafted by Novartis and reiterated by aaiPharma in
prescribing terbutaline, and that they were harmed in utero by the terbutaline
ingested by their pregnant mother. Whether aaiPharma would also be liable for
any deficiencies in its warning label should not, in plaintiffs’ view, automatically
negate Novartis’s culpability.
41
1. Foreseeability and related factors
We explained above why it was foreseeable that Novartis’s failure to
update the Brethine warning label could affect fetuses exposed to the generic
version of the drug in utero. And there is no dispute that plaintiffs have alleged
injury. Although Novartis was no longer responsible for updating the warning
label at the time plaintiffs’ mother was prescribed the drug, aaiPharma was using
the same label it had inherited from Novartis. According to plaintiffs, neither
NDA holder had sufficient financial incentive to update the label: Nearly half of
all prescriptions for Brethine or its generic equivalent were to slow preterm labor.
Under the circumstances, it was certainly foreseeable that aaiPharma would be no
more conscientious about updating the warning label than Novartis allegedly had
been.
Novartis contends the connection between its alleged negligence and
plaintiffs’ injury was extremely remote, as it had ceased producing the drug six
years before the injury. But it is not clear why liability should turn on Novartis’s
role in the manufacturing process. What warning label liability stems from is
Novartis’s failure to warn about a drug’s risks, not its production of a defective
drug. The complaint alleges that Novartis and aaiPharma were concurrent
tortfeasors whose liability stemmed from failure to warn, because each negligently
failed to update the warning label.
We agree that Novartis’s failure to update the warning label could
foreseeably cause harm to plaintiffs. Under the circumstances arising from the
federal regulatory regime for prescription drugs, a successor manufacturer’s
negligent failure to update the warning label is foreseeable. According to federal
regulatory rules, a successor brand-name drug manufacturer has no choice but to
use the former manufacturer’s warning label — or a warning label at least as
strong as the one used by the previous brand-name manufacturer — unless
42
directed otherwise by the FDA. (Wyeth, supra, 555 U.S. at p. 568 [“Generally
speaking, a manufacturer may only change a drug label after the FDA approves a
supplemental application”]; see 21 C.F.R. §§ 314.70(b)(2)(v), (c)(6)(iii),
314.72(b).) Unlike other product manufacturers (cf. conc. & dis. opn., post, at pp.
2-3), a brand-name drug manufacturer knows that, without FDA action, a
successor manufacturer will produce a drug identical to the original in ingredients
and design, and bearing an identical warning label (or a label that is at least as
strong as the one used by the former manufacturer). (Cf. Cadlo v. Owens-Illinois,
Inc. (2004) 125 Cal.App.4th 513, 516 [affirming summary judgment in favor of a
former asbestos insulation manufacturer where there was no evidence the
manufacturer “had an actual connection with the design, manufacture or
distribution” of the product causing harm]; id. at p. 520 [distinguishing cases
where “the maker of the misrepresentation reasonably foresaw that the
intermediary would repeat the misrepresentation to another person”].)6 Because
nearly half of all terbutaline prescriptions at the time of sale were written to
prevent premature labor, it was also reasonably foreseeable that aaiPharma would
be reluctant to add warnings about the risks to fetal brain development. In sum, a
successor drug manufacturer’s negligent conduct can be “ ‘derivative of [the
brand-name drug manufacturer’s] allegedly negligent conduct’ ” and thus
foreseeable. (Kesner, supra, 1 Cal.5th at p. 1148.)

6 Nor can the concurring and dissenting opinion derive any support from the
scattering of federal district court cases involving a challenge to the adequacy of a
medical device label. Federal law preempts state tort actions based on deficient
warnings for medical devices. (Riegel v. Medtronic, Inc. (2008) 552 U.S. 312,
329; cf. Wyeth, supra, 555 U.S. at p. 574 [“despite its 1976 enactment of an
express pre-emption provision for medical devices, [citation], Congress has not
enacted such a provision for prescription drugs”].)
43
Novartis highlights the six years that elapsed between its surrender of the
NDA for the drug at issue in this case and the decision to prescribe terbutaline to
plaintiffs’ mother. Yet the gap between the transfer of this particular NDA and the
time at which plaintiffs’ mother was prescribed terbutaline does not bear on the
question of duty, “which must be addressed at a higher level of generality.”
(Kesner, supra, 1 Cal.5th at p. 1158.) In determining whether to create an
exception to a brand-name drug manufacturer’s duty of care, we do not evaluate
“ ‘whether a particular plaintiff’s injury was reasonably foreseeable in light of a
particular defendant’s conduct,’ ” but “ ‘whether the category of negligent
conduct at issue is sufficiently likely to result in the kind of harm experienced that
liability may appropriately be imposed . . . .’ ” (Cabral, supra, 51 Cal.4th at p.
772.) So the relevant inquiry is whether a successor drug manufacturer is
sufficiently likely to continue using the warning label it inherited from the prior
brand-name manufacturer, even when that label was deficient at the time the NDA
was transferred.
It is true enough that a successor drug manufacturer has an obligation,
under state as well as federal law, to ensure adequacy of the warning label. But
the scenario at issue here implicates whether a successor drug manufacturer is
sufficiently likely –– as a matter of law –– to modify the warning label when the
brand-name manufacturer, which labored under an identical obligation,
negligently failed to do so. In such circumstances, it is at least plausible that a
successor manufacturer may choose to undertake only a cursory investigation of
the medical literature, on the assumption that the prior manufacturer must have
done a more thorough inquiry during the period that it was responsible for
maintaining the warning label. This option will seem especially attractive when
the prior manufacturer has greater resources or expertise than its successor. A
successor manufacturer may also undertake an adequate inquiry but make no
44
changes to the label in close cases, partially or entirely trusting the judgment of the
prior manufacturer. Or a successor manufacturer, like the prior manufacturer, may
fear an adequate warning would damage the market share for the drug and balance
its lost revenue and potential exposure in the same way as the prior manufacturer.
Indeed, plaintiffs claim that neither NDA holder wanted to jeopardize Brethine’s
use as a tocolytic, which accounted for almost half of the drug’s market share.
Any or all of these factors could explain why a drug’s warning label may prove
“stickier” than what is optimal to protect public safety at a reasonable cost, and
why a successor drug manufacturer would not be categorically distinguishable
from the prior manufacturer in its likelihood of being conscientious about its
obligations to disclose relevant risks.
Under the “general” rule, “ ‘ “every person has a right to presume that
every other person will perform his duty and obey the law.” ’ ” (Webb v. Special
Electric Co., Inc., supra, 63 Cal.4th at p. 191.) But we have never allowed a
defendant to excuse its own negligence as a matter of law simply by asserting that
someone else should have picked up the slack and discharged the duty at issue.
(See Stewart v. Cox (1961) 55 Cal.2d 857, 864 [“The fact that a third person does
not perform his duty to protect the plaintiff from harm, either because he makes no
effort or through his negligence does not succeed, is not a superseding cause”].)
Nor have we permitted a negligent actor to evade liability simply because another
party may also be liable for a similar tort. (See, e.g., Beacon Residential
Community Assn. v. Skidmore, Owings & Merrill LLP (2014) 59 Cal.4th 568, 583
(Beacon); accord, Humble Oil & Refining Co. v. Martin (Tex. 1949) 222 S.W.2d
995, 1001 [“there is a distinction between the general axiom that a person is not
bound to anticipate the negligence of others and the idea that one may always
discharge a duty of due care to the public by relying on performance by another of
the same duty owed by the latter”].) So while “ ‘[a] person who, himself, is
45
exercising ordinary care, has a right to assume that others, too, will perform their
duty under the law’ ” — and thus may not be negligent in failing to anticipate
injury that results “ ‘ only from a violation of law or duty by another’ ” — the
general rule does not apply when “ ‘it is reasonably apparent to one, or in the
exercise of ordinary care would be apparent to him, that another is not going to
perform his duty.’ ” (Stickel v. San Diego Elec. Ry. Co. (1948) 32 Cal.2d 157,
166, first and second italics added; see id. at pp. 166-167 [“It is but a statement as
to that common type of negligence, the unreasonable failure to observe what is
going on about one, including the negligence of others. ‘One may not continue to
assume that the law is being observed after knowing or having an opportunity, by
the use of reasonable care, to know that it is not being observed’ ”]; Harris v.
Johnson (1916) 174 Cal. 55, 58 [“ ‘The general rule . . . that every person has a
right to presume that every person will perform his duty’ ” applies only “ ‘in the
absence of reasonable ground to think otherwise’ ”].) Few if any entities would be
in a position to know better that the law “ ‘is not being observed’ ” (Stickel, at p.
167) than a brand-name drug manufacturer that itself had negligently failed to
update the label. So the assumption underlying the brand-name drug
manufacturer’s duty is not at all “that successor corporations will routinely ignore
th[eir] duty.” (Conc. & dis. opn., post, at p. 5, italics added.) It’s that when a
brand-name drug manufacturer has ignored its own duty, there is a risk that the
successor manufacturer will adopt the same strategy. Under these circumstances,
categorically justifying a manufacturer’s neglect of that risk requires heroic, and
ultimately unreasonable, assumptions distinguishing an original brand-name
manufacturer’s behavior from that of its successors. For these reasons, we find it
reasonably foreseeable that a successor drug manufacturer could continue to use
the same label it inherited, even when the label was deficient.
46
2. Considerations of public policy
According to Novartis, the policy of preventing future harm would not be
advanced by subjecting the brand-name drug manufacturer to liability after it has
already divested itself of the drug and no longer has control over the warning
label. But in examining the prevention of future harm, we undertake the duty
analysis “look[ing] to the time when the duty was assertedly owed.” (Kesner,
supra, 1 Cal.5th at p. 1150.) It is during the time Novartis owned the drug that
both its legal duty and its power to discharge that duty converge. At that point,
Novartis did have control over the warning label and could have modified it,
without waiting for FDA approval, to warn of the risks to fetal brain development.
Recognizing a brand-name drug manufacturer’s potential responsibility for
injuries proximately caused by deficiencies in its warning label –– regardless of
whether the injury occurred before or after divestment — provides a further
incentive to the brand-name manufacturer to update the label as soon as it knows
(or should have known) of the unwarned risks. Consider, on the other hand, the
implications of allowing the brand-name manufacturer to shield itself from
liability as soon as it transfers ownership to another manufacturer, as Novartis
proposes. What such a rule would do is encourage an economically rational
brand-name manufacturer to transfer the NDA, rather than add a warning to the
label, since an updated label would diminish the utility (and thus the value) of the
drug.7 Such a scenario obviously poses greater risks to consumer safety relative to
the alternative.

7 This case does not present the question, and we do not decide, whether a
brand-name manufacturer would remain liable for deficiencies in its warning label
when the FDA has formally withdrawn its approval of the NDA and has
determined “that the drug was voluntarily withdrawn from sale for reasons other
than effectiveness or safety.” (Lasker, supra, 82 Def. Counsel J. at p. 306; see 21
C.F.R. § 314.150; 78 Fed.Reg., supra, at p. 67993.)
47
Novartis counters with a different scenario. It claims that under plaintiffs’
regime, a successor brand-name drug manufacturer would have an incentive to
maintain the identical label without change so that the former brand-name
manufacturer would be forced to share in any liability. We are skeptical. When it
is economically rational for the manufacturer to update the label, it will update the
label –– regardless of the prospect that a prior manufacturer might share in the
liability for its own negligent failure to update the label. Even in a marginal case,
though, it does not seem especially likely that a successor drug manufacturer
which knows or should know of an unwarned risk would choose to leave a
warning label unchanged simply to preserve the possibility that –– if the label
remained the same as under the former manufacturer –– the former manufacturer
could be a codefendant in a future tort action. It seems implausible that a
successor manufacturer would take that gamble if its proportional share of fault
would be ever increasing as medical research became more confident about the
link between the drug and some adverse effect. After all, the successor
manufacturer could avoid liability altogether by updating the label to warn about
the risk.
The more substantial danger is that neither manufacturer will have
sufficient incentive to update the label. Unless there is warning label liability, it
will be economically rational in some circumstances for a brand-name
manufacturer to offload the drug to a successor rather than update the warning
label. And if the brand-name manufacturer fails to update the label to disclose a
known or knowable risk, economic interests and simple inertia may lead the
successor manufacturer to the same strategy. (See ante, at pp. 44-45.) The better
rule is to provide appropriate incentives for the brand-name manufacturer to
update the warning label at the earliest possible time, given that the successor
manufacturer cannot remove any aspect of the warning without FDA approval.
48
To determine how best to incentivize a drug manufacturer to provide
prompt warnings, we turn to the very factors on which Novartis trains its attention:
the extent of the duty’s burden on the defendant and the consequences to the
community. Novartis complains first that plaintiffs’ proposed rule would lead to
immeasurable and perpetual liability for brand-name drug manufacturers. This
appears to be an overstatement. Only during the time it holds the NDA does the
brand-name drug manufacturer have a duty of care. Although a breach of that
duty can have enduring effects — effects that do not magically disappear merely
because the brand-name manufacturer no longer holds the NDA — a plaintiff
would still need to prove that the injury was foreseeable at the time the brandname
manufacturer held the NDA, that the brand-name manufacturer’s deficient
label proximately caused the injury, and that the prescribing physician relied on
the brand-name manufacturer’s misrepresentations or omissions. The passage of
time would naturally tend to undermine a plaintiff’s ability to prove that an injury
was foreseeable at that earlier stage,8 that the physician actually relied on the
defendant’s warning label, or that the defendant’s negligence proximately caused
injury. (See Beacon, supra, 59 Cal.4th at p. 583.) An extended period of time
also presupposes a lengthy latency period before an injury (or its connection to the
drug) manifested itself, further complicating the showing of foreseeability,
reliance, or causation. (Cf. PLIVA, supra, 564 U.S. at p. 625, fn. 9 [“the FDA

8 Indeed, approximately half of the studies cited in the first amended
complaint to demonstrate a link between terbutaline exposure in pregnancy and
fetal brain development postdated Novartis’s sale to aaiPharma. To avoid the
distortion caused by hindsight bias, trial courts should be careful to protect the jury
from needlessly being exposed to or considering scientific studies connecting a
drug to some harm where those studies postdate transfer of the NDA.
49
informs us that ‘[a]s a practical matter, genuinely new information about drugs in
long use . . . appears infrequently’ ”].)
Yet the question before us involves neither causation nor these other
elements of negligence. What role the six-year gap between Novartis’s transfer of
the NDA to aaiPharma and plaintiffs’ exposure to terbutaline might play in
plaintiffs’ ability to prove these remaining elements is beyond the scope of this
proceeding. We granted review to decide only the threshold question of a brandname
drug manufacturer’s duty of care and therefore have no occasion to address
other arguments Novartis might advance to defeat liability. (See Kesner, supra, 1
Cal.5th at p. 1157.)9 But we reject Novartis’s contention that a finding of duty
will result in perpetual liability for brand-name drug manufacturers as well as the
burden of a trial to address every claim of harm. Time’s effect on causation, while

9 Recognizing a brand-name drug manufacturer’s duty of care in these
circumstances does not prevent the manufacturer from arguing in a given case that
it did not breach its duty given the scientific knowledge at the time; that its label
could not have proximately caused the harm given the passage of time between the
transfer of the NDA and the plaintiff’s exposure to the drug, as well as the
successor’s exclusive responsibility for promoting the assertedly dangerous offlabel
use of the drug (see Lyman v. Pfizer, Inc. (D.Vt. July 20, 2012, No. 2:09-CV-
262) 2012 WL 2970627, *17); or that its disclosure of the unwarned risks to the
successor manufacturer severed any link between its own label and the harm. But
our task here is not to decide whether there should be “an exception to the general
duty of reasonable care on the facts of the particular case before us, but whether
carving out an entire category of cases from that general duty rule is justified by
clear considerations of policy.” (Cabral, supra, 51 Cal.4th at p. 772.)
The concurring and dissenting opinion finds “perhaps most troubling” the
court’s unwillingness to “predict” when the gap between transfer of the NDA and
exposure to the drug will be so remote as to preclude a finding of proximate cause.
(Conc. & dis. opn., post, at p. 9.) But neither party has briefed the issue of
proximate cause, nor is proximate cause fairly encompassed within the issue
presented –– indeed, the issue presented involves exclusively the tort law element
of duty. Novartis remains free to contest the existence of proximate cause — as
well as any of the other elements of negligence and negligent misrepresentation.
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ordinarily a question of fact, becomes a question of law “ ‘where the facts are such
that the only reasonable conclusion is an absence of causation.’ ” (State Dept. of
State Hospitals v. Superior Court (2015) 61 Cal.4th 339, 353; see id. at p. 357
[sustaining demurrer where the theory of causation was “conjectural, depending
on a long series of determinations”]; accord, Lyman v. Pfizer, Inc., supra, 2012
WL 2970627 at p. *17 [affirming grant of summary judgment to a former brandname
drug manufacturer on causation grounds].) Similarly, the question of breach
can be decided as a matter of law where “no reasonable jury could find the
defendant failed to act with reasonable prudence under the circumstances.”
(Cabral, supra, 51 Cal.4th at p. 773.) The burden of a potential trial on a brandname
drug manufacturer that, under the facts presented, acted unreasonably in
failing to update the warning label before transferring the NDA — and whose
negligence proximately caused harm to those exposed to the drug — is not a
compelling justification for carving out an entire category of cases from the
general duty of reasonable care. (See id. at p. 772.)
Moreover, the greater the gap between transfer of the NDA and the
plaintiffs’ exposure to the drug, the greater the likelihood that the NDA would
have been transferred to yet another manufacturer, which would multiply the
number of potential defendants available to share responsibility for damages.
Because a defendant’s liability for noneconomic damages is not joint but several
(Civ. Code, § 1431.2, subd. (a)), a negligent brand-name manufacturer would be
liable for noneconomic damages only in an amount that was directly proportional
to its percentage of fault. (Ibid.)
Indeed, a brand-name manufacturer could entirely avoid the prospect of
extended exposure by including an indemnification provision when it transferred
ownership of the NDA. (See, e.g., Conte, supra, 168 Cal.App.4th at p. 95, fn. 1.)
This might lower the sales price of the brand-name drug in the transaction, but not
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in any way that fails to reflect the true costs and benefits of being the NDA holder
or that is unfair to the seller. Meanwhile, an indemnification provision may have
the salutary effect of focusing both the seller and the purchaser, at a critical time,
on the existence of any known or knowable risks not reflected in the warning
label. And, as before, Novartis identifies no reason why it could not insure against
the effects of any negligence related to the warning label for its drug. (See
Vasilenko v. Grace Family Church (2017) 3 Cal.5th 1077, 1091.) Commercial
general liability insurance policies cover injuries that accrue from multiple
occurrences over a period of years (see Montrose Chemical Corp. v. Admiral Ins.
Co. (1995) 10 Cal.4th 645), and tail coverage is available for injuries caused by
the insured that did not manifest themselves until well after the manufacturer
either sold the product or shut down its operations. (See State of California v.
Continental Ins. Co. (2012) 55 Cal.4th 186, 195-196.)
A somewhat analogous situation lay at the heart of a case the court
addressed recently. In Centinela Freeman Emergency Medical Associates v.
Health Net of California, Inc. (2016) 1 Cal.5th 994 (Centinela Freeman), we
considered the circumstances under which a health care service plan could transfer
its financial responsibility to pay for its enrollees’ emergency medical services to
its contracting medical providers. Under state and federal law, licensed hospitals
are required to provide emergency medical care to anyone, regardless of the
patient’s ability to pay. A health care service plan, in turn, is required to
reimburse a noncontracting emergency service provider for necessary services, but
may delegate this responsibility to another entity, such as an individual practice
association (IPA). (Id. at pp. 1000-1001.) The health care service plans in
Centinela Freeman delegated their financial responsibility for emergency services
to their contracting IPAs, which were (or became) financially insolvent and
eventually went out of business. (Id. at p. 1001.) When the IPAs failed to
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reimburse the plaintiff emergency service providers for the care they had provided
to enrollees of the defendant health care services plans, the plaintiffs sued the
health plans for payment. (Ibid.)
The defendant health care service plans made an argument that echoed what
Novartis argues here: that they had lawfully transferred their legal responsibilities
to another entity and had therefore terminated any duty of care. We unanimously
rejected the argument that the delegation of financial responsibility to an IPA
necessarily relieved the health care service plans of any obligation to pay for its
enrollees’ covered emergency care. (Centinela Freeman, supra, 1 Cal.5th at p.
1001-1002.) What we held instead was that a health care service plan owes
certain duties to noncontracting emergency service providers: first, a duty at the
outset not to delegate its financial responsibility to an IPA “that it knew or should
have known would not be able to pay for emergency service and care provided to
the health plan’s enrollees” (id. at p. 1002); and second, a duty not to continue or
renew a delegation to an IPA “when it knows or should know that there can be no
reasonable expectation that its delegate will be able to reimburse noncontracting
emergency service providers for their covered claims.” (Ibid.)
Centinela Freeman tends to undermine Novartis’s absolutist position that a
lawful transfer of its duty to another entity necessarily terminated its liability for
its own negligence. Under our ruling in Centinela Freeman, a health care service
plan remains responsible for the costs of its enrollees’ emergency medical care,
despite a lawful delegation of that financial responsibility, if the plan knows or
should know the IPA would be unable to fulfill that financial responsibility.
(Centinela Freeman, supra, 1 Cal.5th at pp. 1001-1002.) Here, we find that a
brand-name drug manufacturer can be liable for the effects of its deficient warning
label, despite transferring the NDA to a successor, if the harm is reasonably
foreseeable and is proximately caused by the label.
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Novartis’s argument echoes the position we rejected in Centinela Freeman.
Although some differences exist between these two scenarios, they do not
undermine our conclusion that a brand-name drug manufacturer owes a duty to all
those who may foreseeably and proximately be harmed by its deficient warning
label. Unlike the duty we recognized in Centinela Freeman, warning label
liability does not constitute a continuing duty of care. (See Centinela Freeman,
supra, 1 Cal.5th at p. 1019 [“We agree that a health care service plan has a
continuing duty of care to noncontracting emergency service providers”].) The
conduct giving rise to a brand-name drug manufacturer’s liability can occur only
during the period that it holds the NDA. Negligent conduct during that period
may have effects that extend beyond the transfer of the NDA, but a brand-name
manufacturer is not subject to liability for any of its actions that occur after
transfer of the NDA. Moreover, in this case, unlike in Centinela Freeman, we are
analyzing a duty to prevent physical harm. Such a duty is broader than the duty to
prevent pecuniary loss. (Rest.2d Torts § 311, com. a.)
Novartis renews its claim that warning label liability would severely chill
both the innovation and marketing of new drugs if imposed after the brand-name
manufacturer exits the market. Yet once again, it offers neither evidence nor a
persuasive rationale to support its contention –– and no reason for us to prefer
some unknown increment of drug development over the urgent need to
compensate a victim whose injury was foreseeably and proximately caused by a
brand-name manufacturer’s negligence. (See Carlin, supra, 13 Cal.4th at p. 1117
[“Upjohn offers no clear or sufficient basis for concluding that research and
development will inevitably decrease” because of failure-to-warn claims]; id. at p.
1116, fn. 6 [discounting the risk of overwarning because of the lack of evidence];
cf. Kesner, supra, 1 Cal.5th at p. 1156 [noting the defendants “cite no evidence to
suggest such [preventive] measures would have been unreasonably costly”].)
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After all, the duty imposed here merely reinforces the brand-name drug
manufacturer’s existing duty to update and maintain the warning label. It does not
require a brand-name drug manufacturer to do anything new.
We explained earlier why significant moral blame attaches to the failure to
warn about a drug’s risks when the brand-name drug manufacturer knew or should
have known about those risks. The fact that the brand-name manufacturer has
since exited the market does not alter the calculus. Under plaintiffs’ theory, the
actionable conduct occurred while the manufacturer still had control over the
warning label. Had Novartis updated the warning label before surrendering the
NDA, the federal regulations make it very likely that the warning would have
remained on the label in 2007. (See Wyeth, supra, 555 U.S. at p. 568.) Although
it can be difficult to assess the full extent of moral blame before a factual record
has been developed (Kesner, supra, 1 Cal.5th at p. 1151), concealment of a drug’s
effects on the fetal brain for the purpose of preserving the drug’s share of the
premature labor drug market and thus inflating the sales price of the NDA would
be especially objectionable. So Novartis fails to show how “ ‘clear considerations
of policy’ ” justify a categorical exception to the duty of care. (Kesner, supra, 1
Cal.5th at p. 1144.) What the Rowland factors support instead is the conclusion
that Novartis had a duty to warn about the potential risks of its drug, regardless of
whether the consumer received the brand-name or generic bioequivalent, and that
liability for the asserted breach of that duty did not end as a matter of law at the
moment Novartis sold its rights to aaiPharma, an allegedly concurrent tortfeasor.
A contrary rule would convey to Novartis and to similarly situated drug
manufacturers the unjustified benefit of an exception to the general duty of care,
incentivizing brand-name drug manufacturers that know or should know of
unwarned risks to unload a problematic drug on another entity instead of
modifying the drug’s warning label to include those hazards.
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The concurring and dissenting opinion makes much of the fact that no other
jurisdiction has yet recognized a brand-name drug manufacturer’s duty to maintain
a warning label in these circumstances. The legal landscape was just as bare when
the Court of Appeal recognized a brand-name drug manufacturer’s duty to
consumers of the generic bioequivalent drug (see Conte, supra, 168 Cal.App.4th at
p. 101) — a duty we unanimously affirm here. Rarely, if ever, do jurisdictions
face precisely the same jurisprudential questions at the same time, nor is our
system premised on the idea that law congeals across jurisdictions. To the
contrary, the common law incorporates the possibility of change as a foundational
premise: “[t]he law of torts is anything but static, and the limits of its
development are never set. When it becomes clear that the plaintiff’s interests are
entitled to legal protection against the conduct of the defendant, the mere fact that
the claim is novel will not of itself operate as a bar to the remedy.” (Prosser &
Keeton, Torts (5th ed. 1984) § 1, p. 4.) Indeed, even if we acknowledge the value
of reducing uncertainty where possible, what is critical in common law
adjudication is not that all jurisdictions rapidly converge on a particular
understanding of tort liability. Instead a court must carefully weigh whether an
existing rule should apply in a particular context under current conditions.
Applying the Rowland factors to address that context, we conclude that brandname
drug manufacturers owe a duty to those whose injuries are foreseeably and
proximately caused by the manufacturer’s deficient warning label.

Outcome: We do not doubt the wisdom of crowds in some settings. But the value of
an idea conveyed by or through a crowd depends not on how loudly it is
proclaimed or how often it is repeated, but on its underlying merit relative to the specific issue at hand. Despite the impressive case authority Novartis has
collected on its behalf, none of it purports to interpret California law. Yet it is California law that we must construe and apply in this case.
In doing so, we find that brand-name drug manufacturers have a duty to use
ordinary care in warning about the safety risks of their drugs, regardless of
whether the injured party (in reliance on the brand-name manufacturer’s warning)
was dispensed the brand-name or generic version of the drug. We also conclude
that a brand-name manufacturer’s sale of the rights to a drug does not, as a matter of law, terminate its liability for injuries foreseeably and proximately caused by deficiencies present in the warning label prior to the sale. We therefore affirm the Court of Appeal.

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