The opinion of the court was delivered by: JACK B. WEINSTEIN
Motions to dismiss for lack of jurisdiction raise the following questions: Do the complaints against the moving defendants state a claim under New York's substantive laws? Are those laws constitutional? Are New York's substantive laws applicable under New York's choice-of-law rules? Are those choice-of-law rules constitutional? Do New York's jurisdictional statutes provide for jurisdiction over a successor corporation licensed to do business in New York for causes of action relating to the activities of its predecessor corporation, which never sold DES in New York and was never present in New York? Does New York's long arm statute provide for jurisdiction over a manufacturing corporation which never sold DES in the New York market and was never present in New York? Are New York's jurisdictional statutes constitutional? In light of the specific characteristics and history of the moving defendants, and of all the parties and the suit, would requiring the defendants to litigate in New York be fair so that jurisdiction is not barred by the Constitution and should not be declined under a prudential theory akin to forum non conveniens? All must be answered "yes."
DES, a synthetic estrogen, was developed in the late 1930s. It was thought to be useful in treating symptoms of certain cancers and menopause, among other things. In 1941, twelve companies formed a committee to oversee submissions in support of a joint New Drug Application for DES to the Food and Drug Administration. On the basis of these submissions, the FDA approved DES for certain uses, not including the prevention of miscarriages.
Researchers were simultaneously discovering that miscarriages were often accompanied by low levels of natural estrogen. In theory, the administration of natural or synthetic estrogen would improve a woman's ability to carry the pregnancy to term. In 1947 and 1948 several of the twelve DES manufacturers sought and were granted permission by the FDA to market DES to prevent miscarriage and fetal death. By 1952 the FDA considered DES proven safe. Hundreds of additional manufacturers then entered the market. Millions of pregnant women ingested DES during the 1950s and 1960s.
In 1971, doctors in Boston concluded that DES was a teratogen responsible for the appearance of adenocarcinoma, a rare form of vaginal cancer, in eight young women who had been exposed to DES in the womb. The FDA soon thereafter disapproved the continued marketing of DES for pregnancy use. There is some evidence that doctors nonetheless continued to prescribe DES through the early 1970s.
Women exposed to DES in utero may develop adenosis, a pre-cancerous cell change which can be treated by cauterization or surgery. DES is said to cause a variety of other more serious disorders, including miscarriage, uterine deformities, ectopic pregnancy, and breast cancer. Male fetuses exposed to DES may be at risk of developing undescended testicles, sterility, and deformities. As persons exposed to DES in utero age, other medical problems may be linked to DES. There is also evidence that DES daughters pass on defects to their own female children. Whether permanent inheritable genetic damage will be spread more widely in future generations is uncertain.
Litigation concerning alleged DES-related injuries has occupied courts around the country since the mid-1970s. In New York state alone, more than 500 DES cases against scores of defendants are pending in state and federal courts. In January of this year, a joint special master/referee was appointed by this court and by New York Supreme Court Justice Ira Gammerman to coordinate settlement negotiations with respect to these cases. See In re DES Cases, F. Supp. , (E.D.N.Y./N.Y. Sup. Ct. Jan. 8, 1992).
In Ashley v. Abbott Laboratories, No. 91-3784, and Silveri v. Abbott Laboratories, No. 91-4986, plaintiffs claim injuries from their exposure (or their spouses' exposure) in utero to DES. Plaintiff Angela Silveri is a New York resident, as are approximately half of the Ashley plaintiffs. The remaining Ashley plaintiffs each reside in another state or a foreign country. All plaintiffs allege causes of action sounding in warranty, negligence and strict liability and seek compensatory and punitive damages. Defendants are companies that manufactured and distributed DES or are successors to such companies. Subject matter jurisdiction in each case is predicated on diversity of citizenship.
Defendant Boehringer Ingelheim Pharmaceuticals, Inc. ("Boehringer") has never produced or sold DES, but it is alleged to be responsible for Stayner Corporation, a company that did. Boehringer was incorporated in 1971. In 1979 Stayner was merged into Boehringer. Between 1949 and 1971 Stayner obtained its supply of DES from chemical companies located in California, Tennessee and Ohio, manufactured DES tablets at a plant in California and sold the tablets in California, Oregon, Washington and Montana; undoubtedly the California, Tennessee and Ohio plants obtained some of their supplies from other states. Available figures for the years 1949-56 indicated that Stayner's DES revenues averaged a little over $ 5,000 per year during that period. Affidavits from senior Stayner employees indicate that the company never was licensed to do business in New York, never maintained an office or agent in New York, never solicited business in New York and never shipped DES to New York. By contrast, Boehringer, a Delaware corporation with its principal place of business in Connecticut, has been authorized to do business in New York since its inception. Boehringer markets its products (which do not include DES) in all states and is licensed to do business in several other states besides New York.
Boyle & Co. ("Boyle") is a closely held California corporation. At oral argument, counsel for Boyle indicated that the company manufactured and sold DES between 1949 and 1960 in California and other states west of the Mississippi River. Sales of DES tablets peaked in 1950, when Boyle sold about 157,000 tablets in packages of 100 and 1,000. Total revenues from all company business reached their highest point in the late 1950s and are now minimal. Boyle claims never to have shipped DES to New York or sold it here. Employee affidavits attest that the company has never been licensed to do business in New York, never maintained an office or agents in New York and never advertised in New York.
Boehringer has moved to dismiss the complaints under Federal Rules of Civil Procedure 12(b)(6) and 12(b)(2) for failure to state a claim and for lack of personal jurisdiction. Boyle joins in the motion to dismiss for lack of personal jurisdiction. With respect to Angela Silveri and the Ashley plaintiffs domiciled in New York, Boehringer's and Boyle's motions must be denied. As applied to the non-New York Ashley plaintiffs, defendants' motions will be addressed in a separate memorandum. Subsequent references to plaintiffs in this memorandum will refer to the New York plaintiffs unless otherwise indicated.
On the theory that a court ought to first determine whether a party is properly present before considering substantive issues, the normal practice is to consider 12(b)(2) motions prior to 12(b)(6) motions. Arrowsmith v. United Press Int'l, 320 F.2d 219, 221 (2d Cir. 1963) (en banc). Where, as here, a party seeking to dismiss for failure to state a claim is found to be properly present, the normal order may be inverted. The jurisdictional problems in these cases cannot be appreciated except against the backdrop of substantive New York DES law. That law is in turn affected by procedural rules -- burdens of proof, statutes of limitations and limits on remedies -- that are quasi-substantive in their effects on the outcome of litigation.
Accordingly, there is set out first in Part III A a brief history of New York personal injury law and the changes made within the last decade to meet the problems of mass torts, which are illustrated by reference to asbestos and DES law. In III B, the present law controlling DES, as developed by the New York Court of Appeals in Hymowitz v. Eli Lilly and Co., 73 N.Y.2d 487, 541 N.Y.S.2d 941, 539 N.E.2d 1069, cert. denied, 493 U.S. 944, 110 S. Ct. 350, 107 L. Ed. 2d 338 (1989), and subsequent cases, is discussed. The constitutionality of the somewhat unique New York approach to DES cases is dealt with briefly in III C.
Part IV addresses choice-of-law issues. In IV A, cases requiring a federal court sitting in diversity to look to the choice-of-law rules of the forum state are cited. IV B describes the various choice-of-law principles applied in New York case law and demonstrates that, at least with respect to New York DES plaintiffs, the New York courts would apply New York law. The constitutionality of that choice is considered in IV C.
Part V confronts the most difficult of the problems raised by the defendants' motions -- personal jurisdiction. In V A, New York Civil Practice Law and Rules (C.P.L.R.) sections 301 and 302 are interpreted in the special context of a mass tort resulting from the national distribution by several hundred defendants of a toxic substance with relatively long periods of latency affecting an indeterminate number of plaintiffs, where some of the defendants were selling or "present" in New York and some were not. The constitutionality of the C.P.L.R. provisions as applied to such a mass tort is discussed in V B. Part V B 1 describes the constitutional law of jurisdiction developed for non-mass tort cases and the difficulty of applying it in an unmodified form to mass torts. Part V B 2 & 3 describes the development of current non-mass tort doctrine, its limitations in cases such as the one before the court, and its capacity to be modified to the needs of the present litigation and mass torts generally. Part V B 4 sets out the constitutional standard applicable to DES cases -- and perhaps other mass torts.
In Part VI A the facts pertaining to the motions of Boehringer are measured against the standards set out in the preceding parts. In VI B, the Boyle facts are analyzed.
III. NEW YORK SUBSTANTIVE LAW AND RULES AFFECTING SUBSTANTIVE RIGHTS
A. History of New York Products Liability Law and Mass Tort Law Generally
The first major doctrinal development following Palsgraf did not occur until the 1970s, when New York's courts overhauled prevailing warranty theories of liability and replaced them with strict liability for defectively manufactured and designed products, as well as for products with inadequate warnings. See Codling v. Paglia, 32 N.Y.2d 330, 345 N.Y.S.2d 461, 298 N.E.2d 622 (1973) (recasting third party causes of action previously sounding in implied warranty as sounding in strict liability); see also Torrogrossa v. Towmotor Co., 44 N.Y.2d 709, 405 N.Y.S.2d 448, 376 N.E.2d 920 (1978) (improper warning); Micallef v. Miehle Co., 39 N.Y.2d 376, 384 N.Y.S.2d 115, 348 N.E.2d 571 (1976) (design defects); Victorson v. Bock Laundry Mach. Co., 37 N.Y.2d 395, 373 N.Y.S.2d 39, 335 N.E.2d 275 (1975) (manufacturing defects). Quasi-substantive laws such as statutes of limitations were adapted concurrently with the transition to strict liability. See, e.g., Victorson, 37 N.Y.2d at 399-400 (applying three-year statute of limitations to strict liability actions; overruling Mendel v. Pittsburgh Plate Glass Co., 25 N.Y.2d 340, 305 N.Y.S.2d 490, 253 N.E.2d 207 (1969)). Changes in common law were also accompanied by legislative action. See C.P.L.R § 214-c(2) (1986) (time for commencing latent personal injury and property damage actions "computed from the date of discovery of the injury . . . or from the date when . . . such injury should have been discovered"); id. § 1411 (1975) (adopting pure comparative negligence); N.Y. General Obligation Law § 15-108(b) (1974) (limiting contribution suits against settling tortfeasors by non-settling, jointly liable tortfeasors); In re E. & S. Dists. Asbestos Litig., 772 F. Supp. 1380, 1391-93 (E. & S.D.N.Y. 1991) (applying statutory changes).
While carving out a doctrine analytically distinct from negligence in a conscious attempt to adapt tort law to the development of an economy of mass marketed, mass produced consumer goods, see Voss v. Black & Decker Mfg. Co., 59 N.Y.2d 102, 107, 463 N.Y.S.2d 398, 450 N.E.2d 204 (1983); Codling, 32 N.Y.2d at 341, modern cases and statutes operate within the parameters marked by Judge Cardozo even as they advance the cause of injured plaintiffs and seek to protect defendants against the unfair imposition of liability. See, e.g., Voss, 59 N.Y.2d at 107-10 (manufacturer responsible only for injuries proximately caused by "unreasonably" dangerous product when used in intended ways). The "new" product liability law was of a piece with the "old" negligence and warranty law in another respect; all grew up in the shadow of the industrial revolution. The cases in which the law was being crafted typically involved individuals suing manufacturers and distributors for injuries sustained in industrial, automobile or household accidents. The courts were mainly concerned with addressing such cases in light of the increased distance between manufacturer and consumer that resulted from mass production and marketing.
The phenomenon of mass torts prompted the next wave of doctrinal innovation, which began in the late 1970s and continues today. Some of these mass torts -- for example, air crash and other disasters -- are really better termed "large torts": they involve an expansion of scale that can be accommodated with little conceptual change. The most difficult litigation issues in these cases pertain to joinder of parties to ensure efficient litigation and particularly whether to employ a federal or state class action device. See generally In re Joint E. & S. Dist. Asbestos Litig., 129 Bankr. 710, 802-11 (E. & S.D.N.Y. 1991) (discussing advantage of class action device in multiple suits). True mass torts, by contrast, raise qualitatively different and more intractable problems. These cases typically involve the torts of a post-industrial age, the so-called mass toxic torts, although not all toxic torts have required doctrinal innovation and some non-toxic torts have. See Hall v. E. I. Du Pont De Nemours & Co., 345 F. Supp. 353 (E.D.N.Y. 1972) (adopting industry-wide liability for manufacturers of blasting caps injuring plaintiffs at different places and times); Snyder v. Hooker Chems. & Plastics Corp., 104 Misc. 2d 735, 429 N.Y.S.2d 153 (Sup. Ct. 1980) (denying class action certification for Love Canal litigation in light of limited number of plaintiffs and localized nature of alleged injuries).
Genuine mass torts possess some or all of the following features: (1) geographically widespread exposure to potentially harmful agents that (2) affects a large or indeterminate number of plaintiffs, (3) possibly over long time periods, even generations, (4) in different ways such that (5) there is difficulty in establishing a general theory of causation and (6) an inability to link a particular defendant's actions to a particular plaintiff's injuries, as well as (7) difficulty in determining the number of potentially responsible defendants and (8) in determining their relative culpability, if any, which often results in (9) multiple litigations that burden the courts and cause huge transactional costs, including heavy legal fees, and (10) which threatens the financial ability of many companies or of whole industries to respond to traditional damage awards.
Experience indicates that these features of mass torts conspire to hinder efficient judicial disposition. While in some instances legislative solutions have been proposed and adopted, see, e.g., 30 U.S.C. §§ 901-45 (1988) (Black Lung Benefits Act); 42 U.S.C. §§ 300aa-10-aa-23 (1988) (National Vaccine Injury Compensation Program); 42 U.S.C. § 2210 (1988) (Price-Anderson Act), our political system has left primary responsibility with courts and state legislatures to establish practicable and just rules for compensating mass tort victims.
The litigation complexities raised by mass torts are legion. The place and manner of exposure to the alleged harm-producing agents are often impossible to determine for purposes of establishing a "locus" state. Very complex questions as to jurisdiction, choice of law, liability, causation and damage apportionment typically result. Often, as here, parallel cases are brought simultaneously in the federal and state courts of many states. There is jockeying among plaintiffs' attorneys for control and fees. Where the compensatory and punitive damages sought are greater than potential defendants' combined assets, a race to the civil and bankruptcy courthouses results. Even where there is no shortage of funds, litigation in multiple fora ultimately produces unfair and inefficient results: similarly situated plaintiffs obtain disparate remedies, state and federal courts across the country are clogged and costs become exceptionally high.
To begin to address these issues, the federal and state courts have bent traditional substantive rules of tort law through doctrinal innovations such as enterprise, concerted action, and market share liability. See, e.g., Hall v. E. I. Du Pont De Nemours & Co., 345 F. Supp. 353 (E.D.N.Y. 1972) (industry-wide liability); Bichler v. Eli Lilly and Co., 55 N.Y.2d 571, 580-84, 450 N.Y.S.2d 776, 436 N.E.2d 182 (1982) (upholding use of concerted action theory in DES case where defendant did not object); Sindell v. Abbott Lab., 26 Cal. 3d 588, 607 P.2d 924, 163 Cal. Rptr. 132 (Cal.) (market share liability), cert. denied, 449 U.S. 912, 101 S. Ct. 285, 66 L. Ed. 2d 140 (1980). Likewise, it has forced them to confront and sometimes rely on new forms of expert testimony and epidemiological evidence. See, e.g., DeLuca v. Merrell Dow Pharmaceuticals, Inc., 911 F.2d 941 (3d Cir. 1990) (discussing use of statistical evidence in Bendectin litigation). On occasion courts have had to establish and supervise non-traditional remedies, such as trusts for future claimants. See, e.g., In re "Agent Orange" Prod. Liab. Litig., 781 F. Supp. 902, 909-11 (E.D.N.Y. 1991) (describing establishment and operation of programs to distribute settlement funds).
Existing procedural law can provide some assistance to courts confronting mass torts. In the federal courts, litigation can be consolidated by means of transfer of venue under 28 U.S.C. sections 1404 and 1406 and by the doctrine of forum non conveniens. Under 28 U.S.C. § 1407, the judicial panel on multidistrict litigation can coordinate such consolidations. Necessary further innovations, however, including the establishment of alternative jurisdictional rules, generally have been slow in developing. While the need to fully and finally resolve interpleader actions has prompted statutory provisions for nationwide jurisdiction in those cases, see 7 C. Wright, A. Miller & M. Kane, Federal Practice and Procedure § 1701, at 487 (2d ed. 1986), similar provisions for mass torts, which raise similar considerations, have not been adopted. See generally Rowe, Jurisdictional and Transfer Proposals for Complex Litigation, 10 Rev. Litig. 325 (1991). For example, the proposed Court Reform and Access to Justice Act of 1988 and the Multiparty, Multiforum Jurisdiction Act of 1989 (the Kastenmeier Bill) would have provided for nationwide service of process in certain large-scale diversity actions. See generally Rowe & Sibley, Beyond Diversity: Federal Multiparty, Multiforum Jurisdiction, 135 U. Pa. L. Rev. 7 (1986); Erichson, Note, Nationwide Personal Jurisdiction in All Federal Question Cases: A New Rule 4, 64 N.Y.U. L. Rev. 1117, 1161-62 (1989) (citing proposals for jurisdiction in mass cases).
The states, because they do not form a unitary system, have more difficulty coordinating the efficient resolution of mass torts. Joint federal-state cooperation that might alleviate some problems is still in its infancy. See, e.g., In re DES Cases, F. Supp. (E.D.N.Y./N.Y. Sup. Ct. Jan. 8, 1992) (joint appointment of special master/referee); American Law Institute, Complex Litigation Project, Tentative Draft No. 2, Chs. 3 & 5 (April 6, 1990) (proposed statute for federal-state and state-federal consolidations). There are to date only proposals for coordinating efforts among the states. See American Law Institute, Complex Litigation Project, Tentative Draft No. 3, Ch. 4 (March 31, 1992) (suggesting procedures for consolidating complex litigation among state courts). Thus, the states generally are required to improvise in order to cope with the realities of modern mass torts.
The New York courts' initial response to mass torts understandably was marked by caution. See, e.g., Steinhardt v. Johns-Manville Corp., 54 N.Y.2d 1008, 446 N.Y.S.2d 244, 430 N.E.2d 1297 (1981) (declining to interpret New York tort statute of limitations as running from time of "discovery" rather than time of "exposure" for latent injuries), cert. denied, 456 U.S. 967, 102 S. Ct. 2226, 72 L. Ed. 2d 840 (1982); Rosenfeld v. A. H. Robins Co., 63 A.D.2d 11, 407 N.Y.S.2d 196 (App. Div. 2d Dep't) (declining to adopt New York class action device in Dalkon Shield litigation), appeal dismissed, 46 N.Y.2d 731, 413 N.Y.S.2d 374, 385 N.E.2d 1301 (1978). In the best tradition of the states as laboratories for experimentation in social and economic policy, however, see New State Ice Co. v. Liebmann, 285 U.S. 262, 311, 76 L. Ed. 747, 52 S. Ct. 371 (1932) (Brandeis, J., dissenting), the state legislature, prompted in part by judicial frustration, has instituted important modifications in quasi-substantive law over the last decade, most notably in the area of statutes of limitations. See C.P.L.R. § 214-b (statute of limitations for actions by veterans for exposure to Agent Orange to run from date of discovery of injury rather than date of exposure); Id. § 214-c(2) and Historical and Revision Notes (establishing "discovery" rule for toxic torts and allowing one-year revival for previously barred claims). This legislation has in turn prompted the courts to take the bolder steps in dealing with DES mass tort litigation described below. Further innovations have been achieved through cooperation between the New York federal and state courts in handling asbestos cases. See In re E. & S. Dists. Asbestos Litig., 772 F. Supp. 1380, 1385-86 (E. & S.D.N.Y. 1991).
In Hymowitz v. Eli Lilly and Co., 73 N.Y.2d 487, 541 N.Y.S.2d 941, 539 N.E.2d 1069, cert. denied, 493 U.S. 944, 110 S. Ct. 350, 107 L. Ed. 2d 338 (1989), the Court of Appeals frontally addressed the problem of apportioning liability. Rather than rely on Bichler, id. at 508, Hymowitz followed the course charted in Sindell v. Abbott Laboratories, 26 Cal. 3d 588, 607 P.2d 924, 163 Cal. Rptr. 132 (Cal.), cert. denied, 449 U.S. 912, 101 S. Ct. 285, 66 L. Ed. 2d 140 (1980), and Brown v. Superior Court, 44 Cal. 3d 1049, 751 P.2d 470, 245 Cal. Rptr. 412 (Cal. 1988). Those cases adopted a scheme under which DES manufacturers are severally liable according to each manufacturer's share of the national market at the time of plaintiff's exposure.
California law provides exculpation, however, to any manufacturer that can prove its product did not injure a plaintiff -- for example, by establishing that its product was not distributed where plaintiff's mother purchased DES or was produced in a color or shape different from that which plaintiff's mother recalls taking. See Sindell, 607 P.2d at 937. The Hymowitz court, while adopting several liability based on national market share, departed from the California approach by not allowing "exculpation of a defendant who, although a member of the market producing DES for pregnancy use, appears not to have caused a particular plaintiff's injury." Hymowitz, 73 N.Y.2d at 512. The court noted: "It is merely a windfall for a producer to escape liability solely because it manufactured a more identifiable pill, or sold only to certain drugstores." Id. Under the Hymowitz rule, only those defendants that can prove that they never participated in the marketing of DES for use by pregnant women are exculpated. Id. This rule apparently is a default rule: one-hundred percent liability will still be assessed against a single manufacturer where it can be shown that its product was the only one taken by the plaintiff's mother. See Rubel v. Eli Lilly and Co., 1991 WL 29895, at *5 (S.D.N.Y. 1991).
The Court of Appeals acknowledged that the Hymowitz rule marked a modification of conventional tort law principles even beyond the innovations of the California cases. It conceded that, unlike the California rule, the New York rule "will likely result in a disproportion between the liability of individual manufacturers and the actual injuries each manufacturer caused in [New York] State," id. at 511-12, and will not "provide a reasonable link between liability and the risk created by a defendant to a particular plaintiff." Id. at 512 (citation omitted). In short, without imposing collective responsibility on each manufacturer for the acts of others, see id. at 508, 512-13 (rejecting concerted action theory and joint and several liability), the Court of Appeals effectively converted the geographically dispersed companies that manufactured DES into a unitary, national industry for purposes of allocating the cost of DES-related injuries. By recognizing that the particular corner of the market within which a given defendant happened to operate is, for purposes of apportioning liability for injuries caused by a nationally marketed generic good, entirely fortuitous and arbitrary, the Court of Appeals struck upon "an equitable way to provide plaintiffs with the relief they deserve, while also rationally distributing the responsibility for plaintiffs' injuries among defendants." Id. at 512.
In recognizing the need to modify substantive and quasi-substantive law in light of the problems of DES mass torts, the New York courts have begun another period of adjustment. Chief Judge Wachtler, writing for a unanimous Court of Appeals, recently noted the parallel between the development of DES law and the adoption of strict liability. Both, the opinion said,
were responses to gaps in traditional tort doctrines that left unprotected an entire class of plaintiffs whose real and substantial injuries were the product of the ever-increasing complexity of modern society.
In re DES Market Share Litig., 1992 WL 60498 (Apr. 1, 1992). The same message was conveyed by the court in Enright v. Eli Lilly and Co., 77 N.Y.2d 377, 568 N.Y.S.2d 550, 570 N.E.2d 198, cert. denied, 116 L. Ed. 2d 157, 112 S. Ct. 197 (1991), which barred DES manufacturers' liability to third generation DES plaintiffs. Under Enright, plaintiffs cannot recover for injuries to granddaughters of women who took DES during pregnancy even if it is proven that the granddaughters were adversely affected. The rationale for the decision was essentially that of Palsgraf : under established notions of proximate cause, defendants cannot be held culpable for unforeseeable classes of harms to unforeseeable classes of plaintiffs. See Holmes v. Securities Investor Protection Corp., 117 L. Ed. 2d 532, U.S. , 60 U.S.L.W. 4225, 4228, 112 S. Ct. 1311 (March 24, 1992) (Proximate cause "labels generically the judicial tools used to limit a person's responsibility for the consequences of that person's own acts. At bottom, the notion of proximate cause reflects 'ideas of what justice demands, or of what is administratively possible and convenient.'") (quoting W. Keeton, et al., Prosser and Keeton on the Law of Torts § 41, at 264 (5th ed. 1984)). Compare Palsgraf v. Long Island R.R., 248 N.Y. 339, 343, 162 N.E. 99 (1928) ("life will have to be made over, and human nature transformed, before prevision so extravagant can be accepted as the norm of conduct") with Enright, 77 N.Y.2d at 387 ("The cause of action plaintiffs ask us to recognize . . . could not be confined without the drawing of artificial and arbitrary boundaries. . . . It is our duty to confine liability within manageable limits.") (citations omitted).
C. Constitutionality of New York DES Law
New York DES common and statutory laws, although innovative, function within traditional tort principles. Legislation concerning traditional tort law that does not affect fundamental rights is subject to minimal constitutional limitation. See, e.g., Duke Power Co. v. Carolina Envtl. Study Group, Inc., 438 U.S. 59, 88, 57 L. Ed. 2d 595, 98 S. Ct. 2620 & n.32 (1978). Quasi-substantive legislation related to tort law is also normally subject to a rational basis test. See Hymowitz, 73 N.Y.2d at 513-16 (legislation reviving time-barred tort actions constitutional because rational). Common law tort rules articulated by a state's highest court are entitled to the same deference. See In re Asbestos Litig., 829 F.2d 1233, 1239-40 (3d Cir. 1987), cert. denied, 485 U.S. 1029, 108 S. Ct. 1586, 99 L. Ed. 2d 901 (1988).
The Supreme Court has declined to entertain constitutional challenges to California and New York DES law. Hymowitz v. Eli Lilly and Co., 73 N.Y.2d 487, 541 N.Y.S.2d 941, 539 N.E.2d 1069, cert. denied, 493 U.S. 944, 110 S. Ct. 350, 107 L. Ed. 2d 338 (1989); Sindell v. Abbott Lab., 26 Cal. 3d 588, 607 P.2d 924, 163 Cal. Rptr. 132 (Cal.), cert. denied, 449 U.S. 912, 101 S. Ct. 285, 66 L. Ed. 2d 140 (1980). The Court also chose not to review the Third Circuit decision upholding the more radical departure from conventional tort principles in Beshada v. Johns-Manville Prods. Corp., 90 N.J. 191, 447 A.2d 539 (N.J. 1982). See In re Asbestos Litig., 829 F.2d at 1240-44. Beshada holds asbestos manufacturers strictly liable for product defects and declares irrelevant claims by defendants that the defects were unknown and unknowable at the time of manufacture. The Third Circuit rejected Due Process and Equal Protection Clause challenges to Beshada in light of the states' near plenary authority over tort law, id. at 1243, and "the extraordinary size" and "unprecedented phenomenon" of asbestos mass torts. Id. Identical considerations confirm the constitutionality of New York's DES laws.
Because Hymowitz 's elimination of a common law defense available in other jurisdictions does not affect a fundamental right, id. at 1239, and because it provides a rational and workable means of protecting New York residents from DES-caused injuries, its rule does not offend the Constitution.
Hymowitz, as indicated above, departs from the law of California and of other states which have developed special rules for DES cases. This suggests potential conflicts of law. The question in this diversity action is whether New York State substantive DES law applies.
Erie Railroad Co. v. Tompkins, 304 U.S. 64, 82 L. Ed. 1188, 58 S. Ct. 817 (1938), requires a New York federal court sitting in diversity to apply New York choice-of-law rules. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 85 L. Ed. 1477, 61 S. Ct. 1020 (1941). Analysis of New York cases indicates that New York substantive law applies to these actions. Application of New York law to suits by New York plaintiffs for torts occurring in New York does not violate the Constitution.
B. New York Choice-of-Law Rules in Mass DES Torts
The New York Court of Appeals has had frequent occasion to consider choice-of-law rules for tort cases. See generally, Korn, The Choice-of-Law Revolution: A Critique, 83 Colum. L. Rev. 772 (1983); In re E. & S. Dist. Asbestos Litig., 129 Bankr. 710, 886-89 (E. & S.D.N.Y. 1991). While mass cases can raise complicated choice-of-law issues, see, e.g., Weintraub, Methods for Resolving Conflict-of-Laws Problems in Mass Tort Litigation, 1989 U. Ill. L. Rev. 129, the cornerstone for analysis in New York tort cases remains Chief Judge Fuld's path-breaking opinion in Babcock v. Jackson, 12 N.Y.2d 473, 240 N.Y.S.2d 743, 191 N.E.2d 279 (1963). In Babcock, the plaintiff passenger was injured when the defendant driver crashed his car on a Canadian road. Both plaintiff and defendant were residents of New York. Ontario law barred a negligence action by a guest passenger against a driver, whereas New York law allowed such an action.
Rejecting the automatic application of the traditional rule of lex locus delicti, Chief Judge Fuld wrote that "controlling effect" ought to be given to
the law of the jurisdiction which, because of its relationship or contact with the occurrence or parties has the greatest concern with the specific issue raised in the litigation.
Id. at 481. In applying this standard to the facts of the case, the opinion then distinguished between laws regulating primary conduct (for example, laws defining what constitutes negligence) and laws distributing losses (for example, rules apportioning liability among defendants already determined to be liable). Id. at 483; see also Schultz v. Boy Scouts of America, Inc., 65 N.Y.2d 189, 198, 491 N.Y.S.2d 90, 480 N.E.2d 679 (1985) (noting Babcock 's distinction between "standards of conduct" and "rules allocating losses"). Babcock maintained that, in the event of a conflict between laws of the former type, the state in which the alleged wrongful conduct occurred normally will have "a predominant, if not exclusive, concern" in having its law apply. Babcock, 12 N.Y.2d at 483. The interest of the locus state is by contrast diminished where the conflict is between loss-distribution rules. Id. Characterizing the Ontario bar on passenger negligence actions as a loss allocation rule, and noting the common domicile of plaintiff and defendant, the court applied New York law.
Although Babcock itself involved a case in which plaintiff and defendant were both New York domiciliaries, its principles were subsequently extended to cases in which there is no common domicile. Neumeier v. Kuehner, 31 N.Y.2d 121, 335 N.Y.S.2d 64, 286 N.E.2d 454 (1972), again involved the issue of whether to apply Ontario or New York law with respect to the liability of automobile drivers to their passengers. Plaintiff was a Canadian citizen domiciled in Ontario which was also the locus of the tort. The defendant was a resident of New York. The court found it appropriate to apply provisions of Ontario law limiting liability of drivers to their guests by requiring proof of gross negligence.
The Court of Appeals enunciated three principles for dealing with conflicts of laws concerning limitations on drivers' liability to their guests, and, by implication, other loss-distribution rules. See Schultz, 65 N.Y.2d at 201 (generalizing Neumeier 's third principle). Relevant to the instant litigation is the second Neumeier principle, which holds in relevant part that, for conflicts between loss-distribution rules in cases where the locus of injury is the plaintiff's domicile and the locus state's law favors the plaintiff, the law of that state should apply absent "special circumstances." Neumeier, 31 N.Y.2d at 128. Practically speaking, the upshot of Babcock, Neumeier and subsequent cases is that New York, as the forum state, applies its own law unless there is a strong reason not to do so. See Korn, The Choice-of-Law Revolution, supra.
The cases now being considered involve New York plaintiffs suing non-New York domiciliaries. The final element of the equation -- the locus of the torts alleged in plaintiffs' complaints -- is also for the most part New York. Although in determining personal jurisdiction the court would usually deem a defendant's alleged tortious acts to have occurred at the place of manufacture, see Feathers v. McLucas, 15 N.Y.2d 443, 261 N.Y.S.2d 8 (1965), the locus of the tort for choice-of-law purposes is "the place where the last event necessary to make the actor liable occurred." Schultz, 65 N.Y.2d at 195 (citations omitted); see also Feathers, 15 N.Y.2d at 463 (distinguishing determination of tort locus in jurisdictional and choice-of-law analyses). The relevant "last event" in these cases was the ingestion of DES by plaintiffs' mothers or the birth of the injured child. Absent any proof to the contrary, the court must assume that the bulk of these critical events occurred in New York.
Given these facts, Babcock and subsequent cases mandate application of New York law in the event of any conflict. Accord Rubel v. Eli Lilly and Co., 681 F. Supp. 151, 153 (S.D.N.Y. 1987). A conflict between another state's DES law allowing defendants to exculpate themselves and the New York rule denying this defense arguably may be viewed as a conflict of rules governing primary conduct. If this is true, then Babcock would require the application of New York law. See Babcock, 12 N.Y.2d at 483; see also Schultz, 65 N.Y.2d at 198. Even if the laws in conflict are treated as loss-distribution rules, New York law would apply. Under Neumeier's second principle, where plaintiff and defendant are not common domiciliaries, the tort occurs in plaintiff's domicile and the domicile's law favors the plaintiff, the presumption in favor of applying the law of the state where the tort "occurred" -- here New York, where the drug was taken and worked its effect -- can be overcome only by a showing of "special circumstances."
If anything, the special circumstances of this case further favor application of New York law. Hymowitz represents a strong policy statement by the highest New York court addressing a national problem. It envisions hundreds of suits by New York plaintiffs against manufacturers located across the country. The Court of Appeals could not have designed a novel set of substantive rules for dealing with such mass litigation only to have them fall into desuetude because choice-of-law principles favor application of the law of defendants' domiciles. A finding that the law of each defendant's state law applies would not merely cripple the New York courts in their attempt to process DES litigation efficiently; it would undermine the very policy that Hymowitz and subsequent cases have developed. Given that the New York Court of Appeals was among the first to depart from prior rigid conflicts rules, see Korn, The Choice-of-Law Revolution, supra, at 776, and given that it did so to ensure the enforcement of New York policy protecting state residents and litigants in the state's courts, it is exceedingly unlikely that the Court of Appeals would apply its choice-of-law rules to undercut the law of Hymowitz and other DES cases.
Such a result also comports with the practicalities of mass tort cases. To the fullest possible extent, such cases should be consolidated for pretrial discovery and motions, settlement discussions and trial; administered by one or a few judges; and tried under one set of substantive and procedural rules applicable to all consolidated cases. It has been suggested that the last of these desiderata can be secured, at least in the federal courts, by the enactment of a federal choice-of-law statute for complex litigations. See American Law Institute, Complex Litigation Project, Council Draft No. 3, Ch. 6 (Nov. 22, 1991). For the time being, Hymowitz, New York conflicts laws and federal procedural law allow for the efficient disposition of these cases under New York substantive law.
C. Constitutionality of New York Choice-of-Law Rules in Mass DES Torts
The Supreme Court has held that the Due Process and Full Faith and Credit Clauses place a "modest" limit on the operation of state choice-of-law rules. Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 818, 86 L. Ed. 2d 628, 105 S. Ct. 2965 (1985). Thus,
in order to ensure that the choice of law is neither arbitrary nor fundamentally unfair, the Court has invalidated the choice of law of a State which has had no significant contact or significant aggregation of contacts, creating state interests, with the parties and the occurrence or transaction.
Allstate Ins. Co. v. Hague, 449 U.S. 302, 308, 66 L. Ed. 2d 521, 101 S. Ct. 633 (1981) (citation omitted).
Shutts represents the Court's most recent word on this subject. The defendant, a corporate domiciliary of Delaware and Oklahoma, was sued in Kansas state court by a class of plaintiffs owning rights to royalty payments on leases under which defendant produced and sold natural gas. The leased land was located in eleven states. The three named plaintiffs resided in Kansas or Oklahoma and owned leases in Texas and Oklahoma. As originally defined, the class included 33,000 persons. Of the 28,100 who received notice and did not opt out, fewer than 1,000 resided in Kansas.
The trial and appellate courts of Kansas applied Kansas law and found the defendant liable. Noting potential conflicts between Kansas, Texas and Oklahoma law, the Supreme Court reversed. It held that application of Kansas law was not supported by a "significant contact or significant aggregation of contacts" between Kansas and the claims of each class member, as required under Allstate. Crucial to this ruling was the fact that 97% of the plaintiff class and 99% of the leases had no connection with Kansas other than the lawsuit. See id. at 815. Since, as a practical matter, inertia keeps most class members from exercising their right to opt out, the vast bulk of the plaintiffs would have been bound by the law of a state with which they had no contact.
The instant cases are worlds away from Shutts. All of the plaintiffs exposed to DES with whom the court is now concerned have been residents in New York since before this litigation began. Their injuries occurred in New York. New York thus has "a significant aggregation of contacts with the parties and the occurrence, creating state interests, such that application of its law is neither arbitrary nor fundamentally unfair." Allstate, 449 U.S. at 320. On these facts, it is arguable that no forum has any greater interest in this ...