The EU’s ‘Single Market’ allows the free movement of goods within the member States, providing they comply with the relevant EU Standards and Regulations. But, this system of ‘Free Trade’ within Europe is underpinned by the harmonization of standards and the mutual recognition of Approval Bodies.
The familiar CE mark is used to identify products that comply with European Standards, and although producers may be able to ‘self certify’ some of their products, ‘regulated products’ must be certified by an independent Approval Authority or Notified Body.
Although it can be time consuming and expensive to obtain product approval, once a product has been approved it can be sold anywhere in the ‘Single Market’ because all member states have adopted the same technical standards. Access to an ‘enlarged domestic market’ across Europe can also bring significant economies of scale allowing companies to grow – and confidently invest in new products.
But BREXIT undermines this system of Free Trade with Europe, and will inevitably create problems because the political choices made by the UK Government will have consequences in the real world.
You may love or despise the the European Union, but we are leaving.
For the last 47 years we have taken our place among the nations of Europe – helping to shape and form its European Institutions – working together to create the Single Market and Customs Union.
Trading relationships have blossomed as:-
Rules and regulations have been harmonised
Internal tariffs and Customs Declarations have been abolished
Hard borders have been removed
Supply chains have been integrated
Businesses of all shapes and sizes have learnt to trade with Europe, supplying our goods and services – building relationships with our customers and suppliers across Europe.
But we have taken our freedom to trade with Europe for granted – forgetting or perhaps resenting the harmonised rules and regulations that make that a viable choice.
They saw a mirage that was so clear, words of caution were project fear, so they voted to get out of here, now as Brexit draws near, reality will start to interfere, with the vison they held so dear
Phil Stunell 2020
As we come to the end of the ‘transition period’, negotiations with the EU about our future trading relationship are stalled – with ‘No Deal’ now the most likely outcome – UK firms trading with Europe face inevitable disruption.
One problem for UK producers is the way that the EU balances the rights of consumers and producers in the Product Liability Directive, and the General Product Safety Directive. These make producers responsible for the safety of their products, allowing consumers to claim compensation when things go wrong, and requiring producers to work with the regulators to remove unsafe products from circulation.
The practical problem with this approach is that it is impractical for ordinary consumers to sue a producer of imported goods, in for example Taiwan, outside the jurisdiction of the European Legal System.
So the EU directives define the producer as anybody who:-
Produces the product or any of it’s component parts, or
Incorporates the product in their own product, or
Attaches their brand name to the product, or
Imports the product into the European Union
Making all producers involved in the supply of defective products jointly liable for any harm caused by them, ensures that consumers can always seek compensation in Europe, where the the EU Directives apply.
By choosing to leave the EU – opting out of the Single Market and Customs Union – we are also rejecting the authority of the European Courts and leaving the EU’s jurisdiction.
But this creates is a problem for UK producers exporting to Europe. After 31 December this year, – their European clients will no longer just be ‘customers’ or ‘distributors’ – they will become importers into the European Union, and therefore a producer of the product.
This means that their European distributors will:-
In the case of regulated products, responsible for achieving and maintaining compliance with all the relevant regulations.
From a European perspective this ensures that:-
Somebody who is subject the Jurisdiction of the European Courts is held accountable for the safety and compliance of the products supplied in Europe
So, consumers can bring claims for compensation ‘within Europe’.
This is a non-negotiable principle that underpins the free movement of goods within the EU.
So, if you are exporting goods to Europe and have not already agreed who in Europe will be responsible the safety and compliance of your products in January, you are still not ready for BREXIT!
While the UK Government are encouraging us to ‘Check – Change- Go’ – to some unknown destination – the EU have published a series of detailed and practical guides to Brexit explaining what will change and why.
If you are designing, manufacturing or supplying physical products and want to understand more about Product Liability – why join one of our Product Liability Training courses – now available on-line or in-house.
A product is defective when it does not provide the safety which a person is entitled to expect, taking all circumstances into account,
Article 6 (1) of the European Product Liability Directive
The patients’ first claim against Depuy, alleging that the defect was the ‘production of metal wear particles from the bearing surfaces’, is discussed in my previous post.
So now we will turn our attention to the patients’ secondary claim that:-
…”the Pinnacle Ultamet prosthesis had “an abnormal potential for damage, compared with existing established non-MoM total hip replacement prostheses and/or that a large head MoM articulation had an abnormal potential for damage compared to alternative bearing surfaces within the Pinnacle modular system”
Pinnacle Judgement Paragraph 136
The Statistical Evidence
The Judge – Mrs Justice Andrews – established a two stage test for the claimants to satisfy in order to obtain compensation:-
Firstly, they must show that the risk of revision surgery – to repair or replace their hip – within 10 years was significantly increased by the use of a Pinnacle MoM hip, compared with alternative products already accepted in the market place in 2002.
Secondly, individual patients must show that, on the balance of probabilities their revision surgery was the result of the increased risk, associated with the development of ARMD
Discussing how the first test could be satisfied, Mrs Justice Andrews observed that:-
In 2016 the German chemical company Bayer acquired Monsanto – one of the largest global producers of agricultural chemicals – in a $60 Billion take over. The deal gave Bayer access to the US market with an expanded product range, including ROUNDUP – a glyphosate-based herbicide, – developed by Monsanto.
By 2019 Bayer were facing a growing number of product liability claims, from people arguing that their cancers, in particular Non-Hodgkin Lymphoma (NHL), had been caused by their exposure to ROUNDUP – as discussed in my previous article,
The claims being made were particularly serious, because:-
It was alleged that Monsanto’s negligence was wilful and deliberate – allowing claimants to seek punitive damages – designed to punish and deter such reckless behaviour.
The first successful claims, in 2019, made Bayer an attractive target for other lawyers working on a no-win-no-fee basis, with many potential claimants who had been exposed to ROUNDUP
According to Werner Bauman, Bayer’s Chief Executive:-
“First and foremost, the Roundup™ settlement is the right action at the right time for Bayer to bring a long period of uncertainty to an end, It resolves most current claims and puts in place a clear mechanism to manage risks of potential future litigation. It is financially reasonable when viewed against the significant financial risks of continued, multi-year litigation and the related impacts to our reputation and to our business. The decision to resolve the Roundup™ litigation enables us to focus fully on the critical supply of healthcare and food. It will also return the conversation about the safety and utility of glyphosate-based herbicides to the scientific and regulatory arena and to the full body of science.”
The settlement may mitigate the damage to Bayer reputation caused by prolonged legal arguments – and hopefully get compensation to those who have suffered before they die.
So Bayer have agreed that:-
The three cases that have already been decided against Bayer, and are subject to appeal will be ‘decided by the Courts’ in order to establish a precedent and provide legal guidance for the future
Bayer will pay $8.8 billion – $9.6 Billion to settle approximately 125,000 current claims, without admission of liability or wrong doing.
A further $1.25 billion will be made available to resolve future litigation
In addition, Bayer will provide funding of $1.25 billion for a independent Science Panel tasked with determining if exposure to ROUNDUP does in fact increase the risk of Non-Hodgkin Lymphoma.
All parties will be bound to accept the Science Panel’s findings which will be published by Bayer on their website when available.
It is difficult to estimate the total cost of the settlement, but based on the published information the costs will exceed $13 billion – but Bayer’s share price, that had slumped by 50% as investor confidence evaporated, may now start to recover.
The Bayer – Monsanto merger shows how important is to consider Product Liability Risks when valuing an acquisition – and that must include an assessment of the management culture and their risk management systems. For Bayer’s senior management team, underestimating those risks has proved to be a ‘near death experience’ and a disaster for Bayer – and their reputation.
The Product Liability Directive was introduced in 1985, because the European Council recognised that the patch work quilt of legislation across Europe needed to be harmonised to:-
Balance the economic interests of consumers and producers
Enhance consumer protection
Reading the EU Directive, you will find:-
The preamble or Recitals, which explain the European Council’s policy objectives and the purpose of the Directive.
Articles, which define the rules to be implemented in the domestic law of the member states.
Although we may be tempted to fast forward through the Recitals – that is a mistake. The Articles are intended achieve the policy objectives explained in the Recitals – so the Articles must be interpreted in a way that achieves, as far as possible, those policy objectives.
Although most of the patients who received the Pinnacle MoM hip were pleased with them, a significant minority – including Ian Haley – developed an Adverse Reaction the Metal Debris (ARMD), as their immune system reacted to metallic wear particles from the hip’s bearing surfaces.
In 2018 a group of 312 patients, including Ian Haley, sued Depuy in the English High Court for compensation, claiming that they were harmed because the Pinnacle MoM hip was ‘legally defective’. So, what can learn from how they presented their case?
When delivering product liability training we use case studies help develop people’s understanding of the law, showing how it applies in the real world of product design, manufacturing and marketing.
My last post discussed the design and development of Depuy’s range of artificial hips, including the Pinnacle metal on metal (MoM) hip. Introduced to the market in 2000, the Pinnacle MoM hip was designed to be more robust and durable than alternative designs – making it suitable for younger and fitter patients with a more active lifestyle.
Sadly, the Pinnacle MoM hip’s real world performance was worse than predicted in laboratory tests, and it was withdrawn from the market in 2013.
By 2018 Depuy faced 312 claims for compensation from dissatisfied patients in the UK, who had suffered an Adverse Reaction to Metallic Debris (ARMD) – or wear particles – from the hips’s bearing surfaces. Their claims were heard in the High Court under a Group Litigation Order (GLO) by the Honourable Mrs Justice Andrews, and her written judgement reviews the medical history of the six lead claimants- including Mr Ian Haley
The Patients’ Experience
In 2005 when Ian Haley took early retirement from his job as an operations manager, aged 59, he was looking forward to a long and happy retirement on the golf course. He enjoyed playing golf most days, but had some pain and discomfort in his left hip – which got steadily worse. By 2007 the chronic pain in his hip had become unbearable and he was referred an orthopaedic surgeon in Darlington.
Depuy, now owned by Johnson and Johnson, developed the Pinnacle range of artificial hips for patients debilitated by osteoarthritis or traumatic injury. The Pinnacle design is a modular system, allowing surgeons to build the hip joint for each patient, using a selection of different bearing materials and components – rather like a medical Meccano kit
Key features of the design included:-
A CORAIL stem inserted into the the patient’s femur, with cemented and uncemented options
At the top of the stem, a ball and socket joint with a choice of different bearing materials, including a metallic or ceramic ball (femoral head) with a metallic, ceramic or plastic lined socket (antebellum). Allowing surgeons to select from of the following types of bearing;–.
Metal on Metal (MoM)
Metal on Plastic (MoP)
Metal on Ceramic (MoC)
Ceramic on Plastic (CoP)
Ceramic on Ceramic (CoC)
When using a plastic or ceramic lined socket, the surgeon could select a 28 mm or 32 mm diameter ball, but a larger 36 mm diameter ball was used with the thinner metallic liner – giving a larger bearing area.
In some circumstances, the modular design also allowed the artificial hip joint to be repaired, rather than replaced, if it was damaged.
The target market for the Pinnacle MoM hips included patients who were unsuitable candidates for other older or weaker designs of hip, due to their age, life style or weight. From a design point of view these more demanding patients presented particular challenges with:-
Judicial Precedents are examples from the past, showing how Judges have interpreted and applied the law in similar circumstances. To make sure the law is applied consistently, judges are required to consider relevant examples – or precedents – when making their own Judgements.
So lawyers will search the legal archives looking for previous cases, that they can use as examples to persuade the Judge to rule in their client’s favour. The Judge will be asked to consider, and perhaps reconcile, different interpretations of the Law, or technical arguments found in precedents drawn to their attention.
At the end of the Trail, if the case goes that far, the Judge will produce a Written Judgement reviewing the evidence and arguments presented to them, and explaining how they reached their judgement. Their analyse and interpretation the Law will provide a new precedent, or example that other lawyers can use in future.