More Market Liab.

Market Liability Further Explained:

"Market Liability" is the most important feature of the Model Drug Dealer Liability Act.


The market liability concept developed through case law involving the pharmaceutical drug DES. Courts in many states developed it and the related concept of "Alternative Liability" as a means of imposing liability where the source of the product could not be determined but those in the market of the product could be identified.

The DDLA limits liability based on intentional participation in the drug market in a community and a geographic and time period relationship between the user and the participant. In addition, the Act requires that participation in the drug market be shown by clear and convincing evidence. Section 13(a). This higher standard of proof balances the “market liability” provisions, which are based on cases that modified in special circumstances the traditional burden of proving causation under traditional tort law.

This approach is not novel. At its essence, the Act follows the lead set by the cases imposing “market-share liability” and its closely related cousin “alternative liability.” Market-share liability and alternative liability is a judicially created remedy for a group of plaintiffs who could not identify the defendant who had harmed them.

The now-famous Sindell case, which first imposed market-share liability over twenty years ago. Sindell v. Abbott Laboratories, 163 Cal. Rptr. 132, 607 P.2d 924 (1980). Sindell and its progeny arose out of unusual circumstances. Thousands of women whose mothers had taken the drug DES during pregnancy twenty or more years before were being diagnosed with cancerous and pre-cancerous growths. Id. at 607 P.2d at 925-27. A number of companies had manufactured and marketed an identical, generic product. Any particular pharmacy might have stocked the product of any number of these manufacturers at different times. The daughters who brought actions could demonstrate that their mother had taken the drug and that the drug had caused their harm. But whose drug was it? Proof was nearly, if not entirely, impossible.

The court recognized that "[s]hould we require that plaintiff identify the manufacturer which supplied the DES used by her mother . . ., she would effectively be precluded from any recovery." Id. at 936. Instead of denying recovery, Sindell and later cases modified the burden of proof with respect to causation. Once the plaintiff proved her injury and the tortious conduct of the defendants, the burden would shift to each defendant to prove that it did not cause the harm.

The mechanism the Sindell court fashioned to effectuate recovery was the "market-share theory." A plaintiff could recover if she joined a substantial percentage of the manufacturers of DES, who would then be severally liable only to the extent of their own market share of the product. Defendants could exculpate themselves by proving they did not manufacture or distribute the product at the time or place in question. Id. at 937. In other words, the court narrowed liability exposure through time and geographic limitations.

The market-share approach has been justifiably criticized for its destructive impact on legitimate industries. Unchecked, judicially expanded products liability can have a chilling effect on the development of socially desirable, needed products and services and may drive certain businesses out of the market.

This is precisely the reason to apply the market-share theory to the illegal drug market. The Act imposes both market-share and products liability on the illegal drug market. If market-share and expansive products liability is destructive of legitimate markets that we want to encourage, then shouldn't we use such liability against an illegal market which we want to destroy?

One of the justifiable criticisms of Sindell market share liability is that it was judicially created and therefore did not take into consideration all competing interests, since many interests were not represented in the particular litigation before the court. This, of course, is a fundamental general criticism of judicial activism. The Act, however, places the matter squarely into the hands of the appropriate policy makers, state legislatures, to establish carefully crafted civil liability for those who intentionally participate in the illegal drug market. It uses a form of market liability against the illegal drug market and provides for recovery by those who have been directly harmed by that market.

The Summers court held that because both were negligent the burden should shift to the defendants to prove that their pellet did not cause the injury. Specifically the Court said: "Ordinarily defendants are in a better position to offer evidence to determine which one caused the injury," but, "[i]f the defendants are independent tortfeasors and thus each liable for the damage caused by him alone, and, at least, where the matter of apportionment is incapable of proof, the innocent wronged party should not be deprived of his right to redress." (emphasis supplied).

Similarly, the Model Drug Dealer Liability Act leaves it to those who are proved to be dealers of the same type of drug, during the same period of time, in the same community to work out among themselves any apportionment of damages. This is done by expressly allowing each defendant to in turn sue every other drug dealer he knows in the same community. If he chooses not to do so, then he bears all of the liability. But, as between an innocent drug baby, for example, and one who intentionally joins the illegal drug market in a community, who should suffer the consequences of that choice?

Through the Act, a legislature can add a level of consequences to augment existing governmental enforcement. Furthermore, it would impose consequences, and therefore potentially deter, in those parts of the retail market which are now not significantly addressed by the criminal justice system.

The Act takes an analogous approach to that used in market-share and alternative liability by imposing liability in a market where the determination of which drug dealer’s drugs in the chain of distribution ultimately were used by the person who inflicted the injury on the plaintiff. It limits the liability, however, by establishing time and geographic limitations through the "illegal drug market target community" concept. The expanding definition of "illegal drug market target community" as the volume that a dealer is proved to have distributed is based on the assumption that the greater the volume of drugs a person is dealing, the greater the greater the injury to the plaintiff or others like him or her, the greater the area of impact and the larger the number of people affected. Using cocaine as an example, a gram dealer may only affect a few neighborhoods; a pound dealer may affect large areas of a city; a multi-kilogram dealer may affect an entire state. Each of these types of dealers, therefore, should be held liable for the injuries to an increasing number of people based on their position in the market, i.e., the scale of their trafficking activity.

The market liability provision is central to the Drug Dealer Liability Act because without it a plaintiff at best would be able to identify and therefore sue only the lowest level dealer who sold directly to the user who caused the plaintiff’s injury. Even assuming a wholesale dealer is prosecuted and therefore identified, without evidence of those in the chain of distribution down to the user who injured the plaintiff, there would be no liability without the market liability provisions of the Act. Such evidence, from records or participants willing to testify about their illegal dealings, is notably absent from the illegal drug market. The Model Act and its market liability provisions are simply recognition of the clandestine nature of the market, and the protection it would otherwise provide dealers, if the market liability provisions were not part of a state’s act. An act imposing civil liability on drug dealers without the market liability provisions is simply giving a “free pass” from civil liability to the largest dealers in a community.

For a full explanation see the Article on the Model Drug Dealer Liability Act by the author of the Model Act.