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Today is sort of a twofer Tuesday. We have two cases, but only one issue. So, maybe it’s more of a two-for-one deal. There is also one general takeaway – it pays to look at state-specific defenses to state-specific claims. For example, the privity requirements in North Carolina make it extremely difficult to bring a breach of warranty claim in a prescription drug or medical device case. As plaintiffs in Johnson v. Smith & Nephew, Inc., 2022 U.S. Dist. LEXIS 143203 (W.D.N.C. Aug. 11, 2022) and Cruise v. Smith & Nephew, Inc., 2022 U.S. Dist. LEXIS 143190 (W.D.N.C. Aug. 11, 2022) recently found out.

These are not related cases and they were not brought by the same plaintiff’s firm. But both involve medical devices and breach of warranty claims, and both were pending before the same judge. So, not surprisingly, they both had the same result. There is really only one difference between the cases, an immaterial one at that. In Johnson, plaintiff underwent hip replacement surgery and later suffered complications when the implanted device allegedly failed. Johnson, at *1-2. The plaintiff in Cruise likewise had hip surgery, but unbeknownst to her surgeon, part of a drill bit that was used in the surgery broke off and implanted in plaintiff’s hip. Cruise, at *2.

We’ll cite to Johnson for a discussion of breach of warranty law in North Carolina, but you can find the same discussion in Cruise. First and foremost, to bring a breach of warranty claim under North Carolina law, you must have contractual privity with the defendant. Id. at *6. However, keeping with our two-for-one theme, North Carolina’s version of the Uniform Commercial Code (UCC) has two exceptions to the privity rule, and one common law exception. The first exception provides that if the buyer of the product is in privity with the defendant, “any express or implied warranties made to the buyer inure to the benefit of the buyer’s family or household guests.” Id. So, your husband buys electric hedge clippers but you’re the one who is using them when they malfunction causing you injury – you have privity to bring a warranty claim.

Exception number two under the North Carolina UCC provides that the privity requirement is removed when a “buyer” of the product involved brings a product liability action directly against the manufacturer for breach of implied warranty. Id. So, if you bought the clippers but through a distributor, you could bring your implied warranty claim directly against the manufacturer despite the lack of privity.

The courts, likely stemming from exception two, have recognized “an exception for buyers who are not in privity wit the manufacturer when the manufacturer intends its warranties to be conveyed to a buyer through the retailer.” Id. at *7. This time you bought the clippers at your local hardware store and they came with a manual that made representations about the product or Jimmy, your friendly hardware salesman made representations about the clippers based on what the manufacturer told him. In this scenario you also could overcome the privity requirement and bring a warranty claim.

But electric hedge clippers are not prescription medical devices and that changes everything. Neither plaintiff was in privity with the manufacturer, so to bring their warranty claims they had to fit within one of the exceptions. The first exception does not apply because even assuming the doctor or the hospital was the “buyer” of the hip implant or the drill bit, neither plaintiff is a family member or household guest of the hospital or doctor. Id. at *11. The second exception is only available to buyers, which neither plaintiff is. Mr. Johnson did not purchase his hip implant from his surgeon. As appellate courts in North Carolina have held, “medical professionals do not engage in the sale of ‘goods’ when they either issue a prescription for a drug, or [implant a medical device].” Id. Plaintiff Johnson argued that his insurance company paid for the hip implant and because he paid his insurance premiums, he should be considered they buyer. But for plaintiff to be a buyer there must be a sale which involves the passing of title which did not occur. And even if there was a sale of the hip implant, at best the insurance company would be the buyer not plaintiff. Id. at *14. If Mr. Johnson did not fit under the second exception, certainly neither did Ms. Cruise. She did not buy the drill bit from her doctor or contract to buy the drill bit, so she was not a buyer under the UCC. Cruise at *17.

As for the common law exception, it too fails. It is premised on the passing of representations made by the manufacturer through a retailer to the purchaser. But in both cases plaintiffs do not allege that the manufacturer made any representations “aimed at” plaintiffs or relied upon by plaintiffs in deciding to undergo surgery. Johnson, at *10. The court here recognized that some other North Carolina district courts have found that a manufacturer’s representations to a doctor can inure to the benefit of the patient through an agency relationship. The court deciding Johnson and Cruise, however, found such a conclusion “stretches the narrow privity exception and does not address the ‘buyer’ issue.” Id. at *15. See Cruise at *18 (the agency analysis “is outside the current legal framework, and the Court declines to stretch the narrow privity exceptions”).

Without a privity exception, plaintiffs breach of warranty claims were dismissed. That means both plaintiffs are left with only negligence claims because North Carolina does not recognize strict liability. Two plaintiffs, two medical devices, but now only one claim.

This article was written by Michelle Yeary  of Dechert LLP.

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