California Supreme Court Review: October 2023

This month’s installment of the California Supreme Court Review explores two cases that the Court will be considering in a future term: one involving a question of the proper standard for causation in failure-to-warn claims for prescription products, and the other involving waiver of a right to compel arbitration by engaging in litigation.

Failure-to-Warn

In June 2022, the California Supreme Court granted certification of a question sent by the Ninth Circuit Court of Appeals in Himes v. Somatics, LLC, asking whether under California law, in a claim against a manufacturer of a medical product for failure to warn of the risks in using the product, the plaintiff must show that a stronger risk warning from the manufacturer would have altered the physician’s decision to prescribe the product, or, if the causation standard is met by showing that the physician would have communicated the stronger risk warnings to the patient, and a prudent person in the patient’s position would have declined the treatment. This matter has been fully briefed but oral argument has not yet been scheduled.

Himes poses an interesting and important question in the context of a doctor-patient relationship. If there is no evidence that stronger warnings would have impacted a physician’s prescribing conduct, then a failure-to-warn plaintiff cannot prove that an inadequacy of warnings caused her injury. But what if the stronger warnings did not influence the physician not to prescribe the product, but rather, the physician informed the patient about the risks, and the patient then decided, based on those warnings, not to consent to using the product? The Ninth Circuit grappled with that very question in Himes, concluding that the disposition of this plaintiff’s claims “hinges on the resolution of the causation standard” – if a prudent person in plaintiff’s position would have declined the treatment after receiving the stronger warning, her claims survive summary judgment. Himes v. Somatics, LLC, 29 F.4th 1125, 1127 (9th Cir. 2022).

What does this mean for medical product manufacturers, and how would this inform their risk management? This is still unclear. Under California law, in failure-to-warn cases – i.e. where plaintiffs allege that manufacturers’ warnings are insufficient – the learned intermediary doctrine provides that the manufacturer’s duty to warn patients of product risks runs to the physician (the learned intermediary), and not the patient. But, conceivably, if a plaintiff could establish causation by simply showing that she would not have consented to treatment had her physician communicated the risk warnings to her, any plaintiff could, in hindsight, declare this to be true. The California Supreme Court has an opportunity here to provide further guidance on what a “prudent person in the patient’s position” with the benefit of stronger warnings means, and how that potentially impacts the learned intermediary doctrine.

Right to Arbitration

In August 2022, the California Supreme Court granted review of Quach v. California Commerce Club, Inc., which presented the question of whether California’s test for determining whether a party has waived its right to compel arbitration by engaging in litigation remains valid after the United States Supreme Court decision in Morgan v. Sundance, Inc., 596 U.S. 411 (2022).

In Quach, an employer required all of its employees, including the plaintiff, to sign an arbitration policy as a condition of continued employment. After the plaintiff was terminated, he filed suit for wrongful termination, among other claims. Litigation proceeded, during which time the employer propounded discovery, posted jury fees, responded to plaintiff’s discovery requests, took plaintiff’s deposition, and participated in months of meet and confers. Quach v. California Commerce Club, Inc., 78 Cal.App.5th 470, 475 (2022). Eleven months after plaintiff filed his lawsuit, the employer located the complete arbitration agreement plaintiff had signed – purportedly only finding it when reviewing plaintiff’s employment file in responding to discovery requests – and subsequently moved to compel arbitration. The Court of Appeal reversed the trial court’s ruling that the employer had waived its right to arbitration. Although no single factor or test controls whether waiver occurred, prejudice to plaintiff was critical to the Court of Appeal’s determination in Quach.

As this case was unfolding, the United States Supreme Court granted certiorari to resolve a circuit split regarding waiver of arbitration rights, ultimately holding that prejudice is not a condition of determining whether a party, by litigating too long, waives its right to stay litigation or compel arbitration under the Federal Arbitration Act. Morgan, 596 U.S. at 419.

The Morgan Court threw out the prejudice requirement, which means that any waiver inquiry now focuses instead on the employer’s conduct – in other words, did the employer “knowingly relinquish the right to arbitrate by acting inconsistently with that right?” Morgan, 596 U.S. at 419. Quach never reached that question, though the dissent stressed that a plaintiff should not be required to identify an employer’s motive for delaying arbitration. The California Supreme Court’s upcoming decision will likely clarify where litigation and arbitration intersect, and where they diverge so substantially that no reasonable inference can be drawn that a party had no intent to arbitrate.