Anne Needham, Cross-Appellant v. White Laboratories, Inc., Cross-Appellee

847 F.2d 355, 1988 WL 50135

• Court: Court of Appeals for the Seventh Circuit
• Decided: June 16, 1988
• Docket: 87-1379, 87-1842 and 87-1872
• Status: Published

Opinions

POSNER, Circuit Judge.

Anne Needham brought this products liability suit against White Laboratories, basing federal jurisdiction on diversity of citizenship, and after a jury trial obtained a judgment for $800,000. White Laboratories appeals from the judgment. Needham cross-appeals, seeking a new trial on damages or, alternatively, additional interest on the judgment.

In 1952 Anne Needham’s mother, while pregnant with her, used a prescription drug manufactured by White Laboratories — dien-estrol — to prevent a miscarriage. Dienes-trol is a synthetic estrogen similar to the better-known DES (diethylstilbestrol). In 1974 Anne Needham developed clear-cell adenocarcinoma, a vaginal cancer that is substantially more common among women whose mothers received estrogen treatments during pregnancy than among other women. See Melnick et al., Rates and Risks of Dietkylstilbestrol-Related Clear-Cell Adenocarcinoma of the Vagina and Cervix, 316 New EngJ.Medicine 514 (1987). Anne Needham brought this suit in 1976, and in 1979 won a judgment for $800,000 which this court reversed because of error in the admission of evidence. 639 F.2d 394 (7th Cir.1981). On May 12, 1982, the district court decided that the new trial we had ordered would be limited to liability, and that if Needham won again her damages would be the same $800,000 that she had been awarded at the end of the first trial. She did win again, she was duly awarded $800,000, and the present appeal and cross-appeal followed.

According to White Laboratories, the critical issue in the second trial was whether it should have known back in 1952 that dienestrol might pass through the placenta and induce cancer in the fetus. If so, White Laboratories admits it would be found liable either for negligence, or for the form of strict liability (perhaps misnamed, see Flaminio v. Honda Motor Co., 733 F.2d 463, 466 (7th Cir.1984)) that consists of selling without a warning a product which the seller should know is unreasonably dangerous (see Woodill v. Parke, Davis & Co., 79 Ill.2d 26, 37 Ill.Dec. 304, 402 N.E.2d 194 (1980)) — provided that the issue of causation was also resolved in Anne Needham’s favor: the Melnick study indicates that clear-cell adenocarcinoma is not always caused by estrogen therapy, so there is some chance that she would have developed the condition even if her mother had never taken dienestrol. On this appeal, however, White Laboratories does not question the sufficiency of the evidence that White should have known of the danger and also that Anne Needham would not have developed adenocarcinoma but for her mother’s taking dienestrol.

It had long been known that estrogen treatments could cause cancer in the women receiving the treatments, and that many substances could pass through the placental barrier. A study conducted in 1940 and known to White Laboratories had found abnormalities in the sexual organs of both male and female offspring of rats who had been injected with estrogen during pregnancy. See Greene, Burrill & Ivy, Experimental Intersexuality: The Effects of Es-trogens on the Antenatal Sexual Development of the Rat, 67 Am.J.Anatomy 305 (1940). But no studies had shown that estrogen would cause cancer in the fetus (contrary to the confident statement in Bichler v. Eli Lilly & Co., 55 N.Y.2d 571, 586, 436 N.E.2d 182, 189 (1982), based on a concession by the defendant in that case); and only one study had found that any cancer could be induced in a fetus by migration of a carcinogen across the placenta, see Larsen, Weed & Rhoads, Pulmonary-Tumor Induction by Transplacental Exposure to Urethane, 8 J.Nat’l Cancer Inst. 63 (1947) (urethane, causing lung cancer in offspring of pregnant mice) — let alone the long-delayed estrogen-induced cancer that struck Anne Needham when she was an adult.

This may be rather tenuous footing for an inference that before marketing a new drug to pregnant women back in the early 1950s White Laboratories should have conducted tests on pregnant animals (which it did not do) and that if it had done so it would have discovered that estrogen therapy might cause cancer in fetuses, in which event it would surely have had to tell physicians, including Mrs. Needham’s physician, to warn their patients of the danger. On the other hand, White Laboratories is almost certainly mistaken in suggesting that the jury would have had to draw this inference in order to impose liability. It would have been quite enough — might indeed have been more than enough, as we shall see later — that White Laboratories should have known that estrogen could cause some harm to the fetus, and immaterial whether the harm took the form of cancer, let alone a specific cancer such as clear-cell adenocarcinoma. McMahon v. Eli Lilly & Co., 774 F.2d 830, 835-36 (7th Cir.1985) (applying Illinois law in a DES case).

At all events, White Laboratories does not question the jury’s right to draw an inference of negligence or unreasonable (implying reasonably foreseeable) danger. It does complain about the jury instructions, however, and about the action of the plaintiff's counsel in harping to the jury on the dangers of dienestrol to Anne Need-ham’s mother, even though she was not a plaintiff and, so far as appears, had not been injured by the estrogen treatments that she took while pregnant. The complaints are related; the alleged error in the instructions consists of language that, White Laboratories argues, authorized the jury to award judgment to Anne on the basis of the dangers of dienestrol to her mother.

The attack on the instructions assumes, what is by no means certain but is also unnecessary to decide, that if the harm to Anne Needham was unforeseeable she cannot recover damages merely because the defendant was negligent toward her mother and the negligence caused the daughter’s injury. Against the assumption it can be argued that while unforeseeable plaintiffs are sometimes barred (the most famous example being Palsgraf v. Long Island R.R., 248 N.Y. 399, 162 N.E. 99 (1928)), this is by no means always true. In Renslow v. Mennonite Hospital, 67 Ill.2d 348, 10 Ill.Dec. 484, 367 N.E.2d 1250 (1977), a child who had not been conceived at the time the hospital’s employees committed negligent acts against her was allowed to recover the harm to herself caused by those acts. The present case is thus an even stronger case for what the Supreme Court of Illinois later described as the “limited area of transferred negligence” (corresponding to transferred intent in the law of intentional torts) recognized in Renslow. Kirk v. Michael Reese Hospital & Medical Center, 117 Ill.2d 507, 528, 111 Ill.Dec. 944, 954, 513 N.E.2d 387, 397 (1987). See also Horak v. Biris, 130 Ill.App.3d 140, 85 Ill.Dec. 599, 474 N.E.2d 13 (1985).

Even if the injury to Anne Needham would have had to be foreseeable for White Laboratories to be held liable, its attack on the instructions must fail — and this though the instructions are redundant, disorganized, and full of legal jargon. White Laboratories does not complain about the instructions en masse; and although the result of the judge’s picking and choosing among the instructions tendered by the parties leaves much to be desired as a specimen of English prose designed for persons with no legal training, we do not set aside a jury verdict on the ground of lack of clarity, or even outright error in some of the instructions, unless — having due regard for the unrealism of assuming that isolated passages in a long set of instructions are likely to have made the difference — we are convinced that the instructions, taken as a whole (see United States v. Machi, 811 F.2d 991, 995 (7th Cir.1987)), are likely to have impaired substantially the jury’s ability to understand the case. See W.T. Rogers Co. v. Keene, 778 F.2d 334, 341-42 (7th Cir.1985); Wilk v. American Medical Ass’n, 719 F.2d 207, 218-29 (7th Cir.1983); Binks Mfg. Co. v. National Presto Industries, Inc., 709 F.2d 1109, 1117-18 (7th Cir.1983).

White Laboratories focuses on the instruction that allowed the jury to find negligence if “the defendant failed to warn the medical profession ... about the reasonably foreseeable potential development of cancer to users and their offspring exposed to the effects of the drug,” or “failed to reasonably test for potential harmful effects to users and their offspring.” There was much evidence that White Laboratories should have warned the medical profession about the danger that dienestrol would cause cancer in the users of the drug, such as Anne Needham’s mother. This evidence was admissible and admitted, even though Mrs. Needham was not a plaintiff, because the more carcinogenic a drug is, the greater the duty of the manufacturer to explore the full scope of its potential danger. This is an application of the basic tort principle (itself a corollary of the even more basic principle that negligence is the failure to take a level of precautions commensurate with the likelihood and magnitude of the risk created by the defendant’s conduct, see, e.g., McCarty v. Pheasant Run, Inc., 826 F.2d 1554, 1556-57 (7th Cir.1987); Kirk v. Michael Reese Hospital & Medical Center, supra, 117 Ill.2d at 526, 111 Ill.Dec. at 953, 513 N.E.2d at 396) that the greater the benefits of precaution, the more precautions must be taken. See, e.g., German v. Illinois Power Co., 115 Ill.App.3d 977, 984-85, 71 Ill.Dec. 749, 754-55, 451 N.E.2d 903, 908-09 (1983); Nelson by Tatum v. Commonwealth Edison Co., 124 Ill.App.3d 655, 665, 80 Ill.Dec. 401, 409, 465 N.E.2d 513, 521 (1984); Prosser and Keeton on the Law of Torts 208 (5th ed. 1984). Investigation of the dangers of a product is a form of (or step toward) precaution against those dangers; so the greater the potential dangers, the greater the duty of inquiry. In the case of a drug given to pregnant women, the potential danger includes harm to the fetus, since many substances pass the placental barrier — and this was known in 1952. But because no one in 1952 knew that estrogen therapy could cause cancer in the fetus, the plaintiffs counsel naturally placed heavy emphasis on the studies that showed it might cause cancer in the mother, as those studies helped bridge the gap between the single study that had shown that estrogen might harm the fetus and the conclusion he wanted the jury to draw (perhaps unnecessarily) that White Laboratories should have realized there was a risk that estrogen might cause cancer in the fetus. White Laboratories argues that this heavy emphasis, combined with the instruction quoted above, invited the jury to award Anne Needham damages for White Laboratories’ failure to warn the medical profession about the danger of dienestrol to the user, not the danger to the fetus.

This argument (an artifact of White Laboratories’ own insistence that Anne Need-ham prove that the danger of cancer to the fetus must be foreseeable, but we shall pass this point by for the moment) is not rebutted by pointing out that the phrase “users and their offspring” (emphasis added) logically required the jury to find that the potential for the development of cancer in offspring as well as users was reasonably foreseeable. That is pushing logic too hard, since “and” is frequently used dis-junctively (as one when says, “I don’t have any aches and pains” today). Nevertheless, White Laboratories’ argument must fail. Shortly after the quoted passage, the instructions tell the jury: “It was the duty of the defendant, before and at the time of Mary Needham’s ingestion of dienestrol, to use ordinary care for the safety of the plaintiff.” The only plaintiff was Anne Needham. Later the judge said, “If you [the jury] find that the defendant White Laboratories knew or should have known by way of proper testing or inquiry into the scientific literature that the drug dienestrol was capable of causing harm to Anne Needham, and that the defendant White Laboratories did not convey this information to the medical profession, those facts would constitute negligence.” This is the clearest passage in the instructions, and it should have dispelled the ambiguity created by the “users and their offspring” passages. The instructions on strict liability are explicitly limited to danger to offspring, and White Laboratories does not complain about them.

No doubt the plaintiff’s counsel was trying to strengthen his case that the defendant should have investigated and discovered the danger to the fetus, by directing the jury’s attention to dramatic evidence that the defendant had been distressingly insouciant about the danger that dienestrol would cause cancer in the user of the drug, i.e., the mother. Unless the district judge was prepared to rule that foreseeability of the danger to the mother was enough, which he was not prepared to do, it would have been better if he had made clear to the jury that this evidence was relevant only insofar as it showed that a responsible firm would have conducted tests on pregnant animals before making the drug available to human beings, or at least would have warned the medical profession about the danger so that doctors could advise their patients on the tradeoffs between, on the one hand, the destruction of the fetus by miscarriage and, on the other, the danger of cancer to the mother and the possible danger of cancer or other illness or deformity to the fetus. But the instructions read as a whole put the issue correctly to the jury, if less clearly than could be desired. And copies of the instructions were given the jury to take with them into the jury room; they were not forced to rely on their memories.

We do not pretend to know a great deal about the mental processes of jurors. Since jurors are not required to explain their reasoning, since their deliberations are confidential, and since their lack of legal training and experience makes it difficult for a judge to think his way into their minds, the attempt by judges to evaluate the impact of specific instructions on a jury’s verdict is speculative and quite likely to be mistaken. This is a reason to proceed cautiously when asked to set aside a jury’s verdict, and order a new trial bound to consume substantial judicial resources, on the ground that the instructions contained erroneous or confusing passages. This cautious approach is especially appropriate for an appellate court asked to set aside the verdict of a jury that, necessarily, it never saw. The instructions here were inelegant and somewhat ambiguous, but that is not a good enough reason to put the parties and the district court through the ordeal of another trial.

White Laboratories’ second ground of appeal — that Needham’s lawyer was allowed to make too much of the evidence of the danger to users of the drug, both in his opening and closing statements and in his questions to witnesses — requires little discussion. The balancing of the probative value of relevant evidence against its inflammatory or otherwise prejudicial or confusing effect (see Fed.R.Evid. 403) is a matter committed to the judgment and good sense of the district judge, and we will rarely try to second-guess the balance struck. Certainly not here, for White Laboratories must shoulder a substantial share of the blame for what it contends was an excessive harping on the undoubted danger of its drug to the users. Its lawyer failed to object to most of this evidence, and, when he did object, failed to state the ground of the objection clearly. Had he done so, Judge Kocoras might have curtailed the scope of the inquiry and refocused the trial.

We move to the cross-appeal, where the plaintiff is asking for a new trial on the ground that if $800,000 was a correct assessment of her damages in 1979 (which no one questions), it must be too little today. Stressing the considerable inflation that has occurred since then, she submitted an affidavit to the district court showing that an award of at least $1,212,-000 in November 1986 (shortly before the second trial) would be necessary to confer the same purchasing power that $800,000 had conferred in 1979. The inflation may have been anticipated and provided for in the earlier award, but that would not affect the argument; that award was premised on the assumption that she would receive the award at once and invest it in order to earn interest that would offset (in part anyway) the inflation. Even without any inflation, the same award seven years later would probably be too little. An award of tort damages compensates not only for future losses but also for past losses up to the date of trial. If a judgment is delayed by seven years, the plaintiff will be entitled to seven more years of past losses and seven fewer years of future losses, and since future losses are discounted to present value they will be weighted less heavily in the award. However, courts do not discount future losses due to disfigurement or pain and suffering, as distinct from loss of earnings and medical expenses, see, e.g., Fenolio v. Smith, 802 F.2d 256, 258 (7th Cir.1986); Exchange Nat’l Bank v. Air Illinois, Inc., 167 Ill.App.3d 1081, 118 Ill.Dec. 691, 522 N.E.2d 146, (1988); Dobbs, Handbook on the Law of Remedies 574 (1973), and it is likely that most of Anne Need-ham’s damages are of the former sort, although the award may include some allowance for future medical expense.

Although the plaintiff’s argument that the damages award is too low might have been a powerful one if the issue of damages had been litigated in the second trial and if the jury had decided that since a previous jury had awarded $800,000 in 1979 it should award the same amount notwithstanding the decline in the purchasing power of the dollar or the possible asymmetry of past and future losses, there was no second trial on damages. The plaintiff could of course challenge the second judgment on the ground that the district court’s order in May 1982 determining that there would be no second trial on damages was erroneous, but she makes no complaint in this court about that order and she has therefore waived any objection to the amount of the damages.

The last issue is whether the plaintiff is entitled to prejudgment interest. The plaintiff tries to convert the issue into one of postjudgment interest, citing the Illinois postjudgment interest statute, Ill. Rev.Stat. ch. 110, 112-1303. In fact, as we noted recently, postjudgment interest in federal diversity cases is governed by federal rather than state law. See 28 U.S.C. § 1961(a); Travelers Ins. Co. v. Transport Ins. Co., 846 F.2d 1048, 1053-54 (7th Cir.1988). But as neither party has cited the federal postjudgment interest statute, any argument based on it is waived — and in any event Needham would not be entitled to postjudgment interest under cases interpreting the Illinois statute. She points out that a judgment for $800,000 in damages was entered in 1979 and that the effect of the district court’s second judgment was to reinstate the original one, and concludes that she is entitled to interest at the statutory rate since 1979. Although Illinois courts award postjudgment interest from the date of a judgment that was reinstated after having been set aside by the trial judge or reversed by an intermediate appellate court, see, e.g., Proctor Community Hospital v. Industrial Comm’n, 50 Ill.2d 7, 276 N.E.2d 342 (1971); Wirth v. Industrial Comm’n, 63 Ill.2d 237, 347 N.E.2d 136 (1976), that is not what happened here. The 1979 judgment was never reinstated. It was set aside, the case was retried, and a new judgment was entered, albeit one identical in amount to the old judgment.

But this leaves the question, also raised by the plaintiff, whether pre judgment interest might be awarded. Originally, prejudgment interest was awarded only in suits for a sum certain, for example a suit to collect a promissory note. Whether from a sharper awareness (perhaps inflation-induced) that prejudgment interest is necessary to compensate plaintiffs fully and discourage defendants from stalling, or whether from increased sympathy for plaintiffs, or for both or other reasons, courts in Illinois and elsewhere have become more liberal in their allowance of prejudgment interest and will nowadays award it in contract cases whenever the defendant’s liability can be readily computed, so that it can protect itself from having to pay interest by tendering the amount of its liability to the court, to be returned to it of course if it wins the case. See our recent discussion in Empire Gas Corp. v. American Bakeries Co., 840 F.2d 1333, 1342 (7th Cir.1988) (applying Illinois law).

Ordinarily in a tort suit the amount of the defendant’s liability cannot be computed with the required precision until judgment is entered, so there is no question of awarding prejudgment interest. This was the situation here until May 12, 1982, when the district court decided that if the plaintiff won the second trial she would receive the same amount of damages — $800,000— that the first jury had awarded. On that day it became certain — as certain as if this had been a suit on a promissory note for $800,000 — that White Laboratories, if it lost again, would owe Needham $800,000. It could have deposited that amount in the district court with complete certainty that this was what it would owe the plaintiff if she won.

This reasoning would be decisive if prejudgment interest in Illinois were a matter of common law; for we would predict that, faced by a case such as this, the courts of Illinois would consider the award of prejudgment interest to be entirely reasonable. In some states issues of prejudgment interest are common law issues. See, e.g., Afram Export Corp. v. Metallurgiki Halyps, S.A., 772 F.2d 1358, 1370-71 (7th Cir.1985) (applying Wisconsin law). Unfortunately for Anne Needham, the award of prejudgment interest in Illinois is governed by a statute that awards such interest only on “all moneys after they become due on any ... instrument of writing,” on loans, on money due on the settlement of accounts, on money “received to the use of another and retained without the owner’s knowledge,” and on “money withheld by an unreasonable and vexatious delay of payment.” Ill.Rev.Stat. ch. 17, ¶ 6402. None of these conditions could possibly be satisfied by Needham’s products liability suit against the manufacturer of the drug ingested by her mother, unless White Laboratories’ refusal to pay up after losing the first time could be considered fraudulent, cf. Singer Co. v. Skil Corp., 803 F.2d 336, 340-41 (7th Cir.1986), or otherwise unreasonable and vexatious, which it could not be; White Laboratories had a valid ground for believing that judgment to be invalid. Cf. Shulz v. Rockwell Mfg. Co., 108 Ill.App.3d 113, 122-23, 63 Ill.Dec. 867, 876-77, 438 N.E.2d 1230, 1236 (1982); Trotter v. Moore, 113 Ill.App.3d 1011, 1017-18, 69 Ill.Dec. 653, 658, 447 N.E.2d 1340, 1345 (1983), rev’d on other grounds, 101 Ill.2d 551, 82 Ill.Dec. 456, 468 N.E.2d 1236 (1984).

The only Illinois case that Needham cites on prejudgment interest is a contract case, Emmenegger Construction Co. v. King, 103 Ill.App.3d 423, 59 Ill.Dec. 237, 431 N.E. 2d 738 (1982). She cites no authority for the proposition that Illinois courts would recognize a common law right to prejudgment interest in cases not covered by the statute; our decision in In re Air Crash Disaster Near Chicago, 644 F.2d 633, 638 (7th Cir.1981) (applying Illinois law), is some evidence they would not. Our own research has discovered several cases in which Illinois courts have asserted a power to award prejudgment interest on equitable rather than statutory grounds, but the power is asserted hesitantly, and there is no indication that it could reach as far as the present case. Alguire v. Walker, 154 Ill.App.3d 438, 448, 107 Ill.Dec. 279, 286-87, 506 N.E.2d 1334, 1341-42 (1987), mentioned the power but refused to invoke it, holding that just because the defendant had had the use of what was ultimately determined to be the plaintiff’s money for the three years while the lawsuit was pending he was not entitled to prejudgment interest; otherwise every winning plaintiff would be. Richman v. Chicago Bears Football Club, Inc., 127 Ill.App.3d 75, 82 Ill.Dec. 225, 468 N.E.2d 487 (1984), refused to award prejudgment interest on equitable grounds but referred to several cases that had done so. None of these cases is pertinent: Shell Oil Co. v. Department of Revenue, 95 Ill.2d 541, 70 Ill.Dec. 191, 449 N.E.2d 65 (1983), involved a claim by taxpayers for interest actually earned by the State Treasurer on money unlawfully collected from them, while City of Springfield v. Allphin, 82 Ill.2d 571, 45 Ill.Dec. 916, 413 N.E.2d 394 (1980), a similar case, actually disavowed any broad equitable power to award prejudgment interest, see id. at 579, 45 Ill.Dec. at 920, 413 N.E.2d at 398. Finally, Steward v. Yoder, 86 Ill.App.3d 223, 226, 41 Ill.Dec. 709, 711, 408 N.E.2d 55, 57 (1980), holds that there can be no equitable award of prejudgment interest in the absence of proof of “bad conduct.” (This was repeated in Richman, see 127 Ill.App.3d at 78, 82 Ill.Dec. at 228, 468 N.E.2d at 490.) There was none in this case beyond the conduct giving rise to the suit; if that “bad conduct” were enough, every successful tort plaintiff would recover prejudgment interest.

Although the rationale for prejudgment interest is applicable to this case, we are given no grounds for believing that the Illinois courts would embrace it in the face of a narrowly drawn and detailed statute apparently governing the matter, and an excruciatingly small judge-made “equitable” safety valve which has never been opened in a case remotely similar to this case. We hesitate to undertake creative forays in matters of state law — especially when not urged to do so. For Needham does not argue that Illinois courts might recognize a duty apart from the statute; she fails to cite the statute, let alone discuss its limitations.

Affirmed.