Brown v. GlaxoSmithKline, LLC ( 2022 )

214
Argued and submitted October 13, 2021, reversed and remanded
December 14, 2022
Thomas BROWN
and Maria Del Carmen Espindola Gomez,
individually and as parents and
natural guardians of M. B., a minor,
Plaintiffs-Appellants,
v.
GLAXOSMITHKLINE, LLC,
Defendant,
and
PROVIDENCE HEALTH SYSTEM - OREGON,
d/b/a Providence Newberg Medical Center,
f/k/a Providence Newberg Hospital,
Defendant-Respondent.
Multnomah County Circuit Court
15CV23066; A169544
523 P3d 132
Plaintiffs brought a strict product liability claim against defendant
Providence Health System - Oregon alleging that a pharmaceutical drug that
Providence emergency medical staff administered to plaintiff Gomez while she
was pregnant caused her child to be born with irreparable heart defects. The
trial court granted defendant’s motion for summary judgment, concluding that
Providence is not subject to strict product liability because it was not a “seller * * *
engaged in the business of selling” the drug under ORS 30.920. Plaintiffs appeal
from the resulting judgment, assigning error to that ruling. Held: Based on the
text, context, and legislative history of ORS 30.920, a “seller” of a product is one
who transfers ownership of the product to another in exchange for valuable con-
sideration and a seller is “engaged in the business of selling” a product when sell-
ing the product comprises some part of the seller’s ongoing commercial activity.
Plaintiffs presented sufficient evidence to create a genuine issue of material fact
as to whether Providence was a “seller * * * engaged in the business of selling” the
drug within the meaning of ORS 30.920.
Reversed and remanded.
Gregory F. Silver, Judge.
Travis Eiva argued the cause and filed the briefs for
appellants.
Michael T. Stone argued the cause and filed the brief for
respondent.
Cite as 323 Or App 214 (2022) 215
Before Ortega, Presiding Judge, and Shorr, Judge, and
Powers, Judge.
POWERS, J.
Reversed and remanded.
216 Brown v. GlaxoSmithKline, LLC
POWERS, J.
This case requires us to decide whether a hospi-
tal that charges for a pharmaceutical drug administered
to a patient in its emergency department is a “seller * * *
engaged in the business of selling” the drug subject to strict
product liability under ORS 30.920. Plaintiffs Thomas
Brown and Maria Del Carmen Espindola Gomez, individ-
ually and as guardians ad litem for their minor child, M,
brought a strict product liability claim against defendant
Providence Health System - Oregon alleging that the phar-
maceutical drug Zofran, which Providence emergency med-
ical staff prescribed and administered to Gomez while she
was pregnant, caused M to be born with irreparable heart
defects. The trial court granted defendant’s motion for sum-
mary judgment, concluding that Providence is not subject
to strict product liability under ORS 30.920 because it was
not a “seller * * * engaged in the business of selling” Zofran
within the meaning of that statute, and the trial court
entered a judgment dismissing plaintiffs’ claim. Plaintiffs
appeal, assigning error to that ruling.
Based on the text, context, and legislative history
of ORS 30.920, we conclude that a “seller” of a product is
one who transfers ownership of the product to another in
exchange for valuable consideration. We further conclude
that a seller is “engaged in the business of selling” a product
when selling the product comprises some part of the seller’s
ongoing commercial activity. As we will explain, one can be
a “seller * * * engaged in the business of selling” a product
subject to strict liability under ORS 30.920 even if the seller
also or primarily provides a service and the sale of the prod-
uct is incidental to that service. Finally, because we con-
clude that plaintiffs presented sufficient evidence to create
a genuine issue of material fact as to whether Providence
was a “seller * * * engaged in the business of selling” Zofran
within the meaning of ORS 30.920, the trial court erred in
granting summary judgment.
FACTS AND PROCEDURAL HISTORY
We review a trial court’s grant of summary judg-
ment to determine whether there is “no genuine issue as
to any material fact” and whether the moving party was
Cite as 323 Or App 214 (2022) 217
“entitled to prevail as a matter of law.” ORCP 47 C. We view
all facts, and all reasonable inferences that may be drawn
from those facts, in the light most favorable to the adverse
parties, here, plaintiffs. Id. We state the facts consistently
with that standard.
In 2006, when she was seven weeks pregnant
with M, Gomez went to a Providence hospital emergency
department complaining of nausea and vomiting, among
other symptoms. A physician in the emergency department
evaluated Gomez and prescribed 4 mg of injectable Zofran,
which a nurse administered. Gomez signed a “Conditions
of Service” agreement in which she agreed “to pay for the
services or products provided by Providence” within 30
days of invoice. Providence billed Gomez and her insurer for
the treatment that she received, which included a specific
charge for Zofran.
The hospital was licensed by the state of Oregon,
which required the hospital to provide emergency medi-
cal services to patients. The hospital’s licensed in-house
pharmacy maintained a stock of medications, including
injectable Zofran. A Providence physician could order, and
Providence staff would dispense, a specific medication for
administration to a patient at the hospital. For patients in
the emergency department, the attending physician would
order a specific medication and dose for the patient, and the
medication would be dispensed, either through a locked cab-
inet in the emergency department or through the in-house
pharmacy, and administered to the patient by licensed staff.
State and federal law prohibited the hospital’s in-house
pharmacy from selling medications to patients after dis-
charge. The hospital did not advertise Zofran injectable or
other medications for sale to patients or the general public.
A member of the general public could not purchase Zofran
injectable from the hospital.
In addition to claims brought against the manufac-
turer of Zofran, GlaxoSmithKline, LLC, who is not a party
to this appeal, plaintiffs’ operative complaint alleged claims
for strict product liability and negligent misrepresenta-
tion against Providence.1 As pertinent here, the amended
1
Plaintiffs later withdrew the negligent misrepresentation claim.
218 Brown v. GlaxoSmithKline, LLC
complaint’s strict product liability claim against Providence
alleged that it was a “seller * * * of Zofran, engaged in the
business of selling Zofran[.]”
Providence moved for summary judgment and
argued that there was no issue of material fact that it was
not a “seller * * * engaged in the business of selling” Zofran
for purposes of ORS 30.920, because “[c]ommon sense tells
us that hospitals are not sellers of products” but rather
“quintessential service providers,” and therefore are not sub-
ject to strict liability. Providence advanced four arguments
in support of its construction of ORS 30.920 and summary
judgment motion. First, Providence argued that its hospital
cannot be a “seller” of Zofran as a matter of law because
the hospital did not “market Zofran or other such medica-
tions for use or consumption.” Second, Providence argued
that Oregon law considers hospitals to be “engaged in the
business of providing health services,” including in-house
pharmacy services, not sellers of pharmaceuticals. Third,
Providence argued that federal price discrimination law rec-
ognizes that “a hospital purchases medications for its own
use as part of the provision of medical services, and does not
make a separate sale to a patient when it administers such
drugs.” Finally, Providence argued that Oregon should fol-
low “the majority of other jurisdictions” that have “routinely
concluded that hospitals are not appropriate defendants in
strict product liability actions because hospitals are not in
the business of selling products such as drugs or medical
devices.”
The trial court granted Providence’s motion for
summary judgment. The court concluded that, “under the
specific facts of this case,” Providence was not “engaged in
the business of selling Zofran.” The court reasoned that
the hospital’s in-house pharmacy was authorized under
Oregon law to store drugs to be administered to patients
in the course of treatment, but not to sell pharmaceutical
drugs to a consumer for use off site. Thus, the court rea-
soned, Providence was not engaged in the business of selling
any drug provided by its hospital’s in-house pharmacy that
could only be administered on site. Accordingly, the court
concluded that Providence was not “engaged in the business
of selling Zofran” because its hospital’s in-house pharmacy
Cite as 323 Or App 214 (2022) 219
dispensed injectable Zofran to Gomez to be administered in
the course of treatment at the hospital.
On appeal, plaintiffs raise a single assignment of
error challenging the trial court’s summary judgment rul-
ing. Plaintiffs contend that nothing in the text or context
of ORS 30.920 indicates that a hospital that sells pharma-
ceuticals from its in-house pharmacy is exempt from strict
product liability. Providence asks this court to affirm the
judgment dismissing plaintiffs’ strict liability claim and
reprises the arguments that it made before the trial court in
support of its summary judgment motion.
LEGAL BACKGROUND
Before we begin the task of construing the dis-
puted terms of ORS 30.920, we begin with a brief overview
of Oregon’s product liability statutory framework generally
and of strict product liability in particular.
ORS 30.900 defines a “product liability civil action”
as:
“[A] civil action brought against a manufacturer, distrib-
utor, seller or lessor of a product for damages for personal
injury, death or property damage arising out of:
“(1) Any design, inspection, testing, manufacturing or
other defect in a product;
“(2) Any failure to warn regarding a product; or
“(3) Any failure to properly instruct in the use of a
product.”
A “product liability civil action” defined in ORS 30.900
“embraces all theories a plaintiff can claim in an action
based on a product defect,” including negligence and strict
liability claims. Kambury v. DaimlerChrysler Corp., 185 Or
App 635, 639, 60 P3d 1103 (2003). The statutory frame-
work governing product liability civil actions consists of an
exception for certain products provided by physicians (ORS
30.902), general and specific limitations on the time to com-
mence an action (ORS 30.905, ORS 30.907, ORS 30.908,
and ORS 30.928), an evidentiary presumption (ORS 30.910),
defenses (ORS 30.915), a cause of action for strict product
220 Brown v. GlaxoSmithKline, LLC
liability (ORS 30.920), and recoverable punitive damages
(ORS 30.925 and ORS 30.927).
ORS 30.920 sets out the elements of a strict product
liability claim:
“(1) One who sells or leases any product in a defective
condition unreasonably dangerous to the user or consumer
or to the property of the user or consumer is subject to lia-
bility for physical harm or damage to property caused by
that condition, if:
“(a) The seller or lessor is engaged in the business of
selling or leasing such a product; and
“(b) The product is expected to and does reach the user
or consumer without substantial change in the condition in
which it is sold or leased.
“(2) The rule stated in subsection (1) of this section
shall apply, even though:
“(a) The seller or lessor has exercised all possible care
in the preparation and sale or lease of the product; and
“(b) The user, consumer or injured party has not pur-
chased or leased the product from or entered into any con-
tractual relations with the seller or lessor.
“(3) It is the intent of the Legislative Assembly that the
rule stated in subsections (1) and (2) of this section shall be
construed in accordance with the Restatement (Second) of
Torts sec. 402A, Comments a to m (1965). All references in
these comments to sale, sell, selling or seller shall be con-
strued to include lease, leases, leasing and lessor.
“(4) Nothing in this section shall be construed to limit
the rights and liabilities of sellers and lessors under prin-
ciples of common law negligence or under ORS chapter 72
[(Uniform Commercial Code-Sales)].”
Before the legislature enacted ORS 30.920, strict pro-
duct liability was governed by the common law. McCathern
v. Toyota Motor Corp., 332 Or 59, 72, 23 P3d 320 (2001). In
1967, the Oregon Supreme Court adopted section 402A of
the Restatement (Second) of Torts (1965) as the common law
standard for strict product liability claims.2 Id. (citing Heaton
2
All references to section 402A in this opinion are to the Restatement
(Second) of Torts (1965).
Cite as 323 Or App 214 (2022) 221
v. Ford Motor Co., 248 Or 467, 470, 435 P2d 806 (1967)). At
that time, strict liability in tort was still “at the infant stage”
and liability “for injuries caused by defective products was
based on concepts relating to contractual warranties.” Royer
v. Miles Laboratory, Inc., 107 Or App 112, 115, 811 P2d 644(1991). In Heaton, the court noted that the definition of strict
product liability in section 402A was “conceptually related
to the traditional warranty of merchantable quality in the
law of sales.” Heaton, 248 Or at 471. Practitioners did not
immediately recognize strict liability as a distinct theory
and could plead a strict liability claim by alleging a breach
of an implied warranty as late as 1971. Royer, 107 Or App at115-16 (citing Markle v. Mulholland’s, Inc., 265 Or 259, 509
P2d 529 (1973)).
As the common law developed, the Supreme Court
indicated that it could exercise considerable discretion in
applying section 402A because it did not have the force of
statute. McCathern, 332 Or at 74 (citing Allen v. The Heil
Company, 285 Or 109, 119 n 5, 589 P2d 1120 (1979)). The
impetus for codifying product liability arose from concerns
about rising costs of liability insurance, which business
groups attributed to “the unpredictability of potential expo-
sure in what was then a rapidly evolving branch of the law.”
Ewen v. McLean Trucking Co., 300 Or 24, 28, 706 P2d 929(1985) (citing Dominick Vetri, Legislative Codification of
Strict Products Liability Law in Oregon, 59 Or L Rev 363
(1981)). Specifically, the “sense of uncertainty concerned
cases decided in other states which [the Oregon Supreme
Court] might or might not follow.” Ewen, 300 Or at 28.
The 1979 legislature sought to address the concerns
of business groups and their insurers, who wanted to “stabi-
lize the rules of liability,” but at the same time “not reduce
the financial protections under existing Oregon law for per-
sons injured by dangerous products.” Id. The legislature
ultimately enacted ORS 30.920, which codified section 402A
with some important modifications—all of which broadened
the scope of liability beyond the text of section 402A. Ewen,
300 Or at 28-29. First, ORS 30.920 applies strict liability
to product leasing transactions, even though section 402A
does not. Second, ORS 30.920 protects “the user, consumer,
or injured party,” whereas section 402A protects the user
222 Brown v. GlaxoSmithKline, LLC
or consumer only and “expresses no opinion as to whether
the rule in this Section may not apply to harm to persons
other than users or consumers.” Third, ORS 30.920 omits
the three caveats in section 402A (i.e., taking no position
on liability to bystanders, liability of component part man-
ufacturers, or liability of original manufacturers where the
product will be processed or substantially changed before it
reaches the user or consumer) and comment n (concerning
contributory negligence and assumption of risk).
Since 1979, product liability claims in Oregon have
been governed exclusively by the statutory framework, not
the common law. Griffith v. Blatt, 334 Or 456, 466, 51 P3d
1256 (2002) (declining to adopt the learned intermediary
doctrine into Oregon strict liability law because “Oregon
statutes, not the common law, govern” strict liability claims
and defenses, and explaining that the analysis “begins and
ends with our construction of the pertinent product liability
statutes”). Thus, the text of ORS 30.920, read in accordance
with section 402A, comments a to m, has been the lodestar
for determining who constitutes a “seller” “engaged in the
business of selling.” See, e.g., Lancaster v. Hartzell, 54 Or
App 886, 891 n 3, 637 P2d 150 (1981), rev den, 292 Or 722(1982) (relying on section 402A and comment f while noting
that the case was tried before section 402A was codified in
ORS 30.920).
ANALYSIS
With that legal background in mind, we turn to the
specific question presented in this case, which is ultimately
one of statutory interpretation. In construing a statute, we
examine the text of the statute in context, considering any
relevant legislative history, and, if necessary, applying max-
ims of statutory construction. State v. Gaines, 346 Or 160,
171-72, 206 P3d 1042 (2009); PGE v. Bureau of Labor and
Industries, 317 Or 606, 610-12, 859 P2d 1143 (1993). Our
duty when interpreting a statute is “simply to ascertain and
declare what is, in terms or in substance, contained therein,”
ORS 174.010, and to “pursue the intention of the legislature
if possible,” ORS 174.020.
We begin with the statutory text and its context,
which are the “best indications of the legislature’s intent.”
Cite as 323 Or App 214 (2022) 223
State v. Walker, 356 Or 4, 13, 333 P3d 322 (2014). ORS 30.920
applies strict liability to “one who sells * * * a product” if they
are a “seller * * * engaged in the business of selling * * * such
a product.”
We typically give “words of common usage” their
“plain, natural, and ordinary meaning.” PGE, 317 Or at 611;
cf. Mason v. Mt. St. Joseph, Inc., 226 Or App 392, 399-400,
203 P3d 329, rev dismissed, 347 Or 349 (2009) (construing
“distributor” and “manufacturer” in ORS 30.900 as words
of common usage). “Sell”—the root to “sells,” “seller,” and
“selling”—means “to give up (property) to another for money
or other valuable consideration : hand over or transfer title
to (as goods or real estate) for a price” and “to offer for sale
: deal in as an article of sale.” Webster’s Third New Int’l
Dictionary 2061 (unabridged ed 2002); see also id. at 2062
(defining “seller” as “one that offers for sale”); id. at 2003
(defining “sale” as “the act of selling : a contract transfer-
ring the absolute or general ownership of property from one
person or corporate body to another for a price (as a sum
of money or any other consideration)); id. at 2062 (defining
“selling” as “the act or occupation of one who sells” and “the
act, process, or art of offering goods for sale”). Thus, under
the ordinary meaning of those terms, one “sells” a product
when one transfers ownership of the product to another in
exchange for valuable consideration; a “seller” is one who
carries out such a transfer; and “selling” is the act or pro-
cess of such a transfer.
“Engaged” as an intransitive verb means “to begin
and carry on an enterprise, esp. a business or profession,”
“to employ or involve oneself,” and “to take part : partici-
pate.” Webster’s at 751. “Business” means “a usu. commercial
or mercantile activity customarily engaged in as a means
of livelihood and typically involving some independence of
judgment and power of decision.” Id. at 302. And the prep-
osition “of” is used in the sense “as a function word to indi-
cate the material, parts, or elements composing something
or the contents held by something.” Id. at 1565. Thus, under
the ordinary meaning of those terms, a seller is “engaged
in the business of selling” a product if the seller carries on
commercial activity composed in part of the act of selling
the product, viz., transferring ownership of the product to
224 Brown v. GlaxoSmithKline, LLC
another in exchange for valuable consideration.3 Contrary to
defendant’s argument before the trial court and on appeal,
nothing in the text of ORS 30.920 indicates that the seller
must be solely or primarily in the business of selling the
product.4
ORS 30.920(3) expresses a “legislative mandate” to
“construe the substantive formulas codified in subsections
(1) and (2) ‘in accordance with the Restatement (Second) of
Torts sec. 402A, Comments a to m (1965).’ ” McCathern, 332
Or at 75. Comment f specifically addresses the “business of
selling,” and it is consistent with the ordinary meaning of
that phrase that we have identified. Specifically, comment f
explains that the rule “applies to any person engaged in the
business of selling products for use or consumption” and
that “[i]t is not necessary that the seller be engaged solely in
the business of selling such products.” Id. In explaining that
the rule does not apply to the occasional seller “who is not
engaged in that activity as part of [the seller’s] business,”
comment f provides:
“f. Business of selling. The rule stated in this Section
applies to any person engaged in the business of selling
products for use or consumption. It therefore applies to any
manufacturer of such a product, to any wholesale or retail
dealer or distributor, and to the operator of a restaurant.
It is not necessary that the seller be engaged solely in the
3
The ordinary meaning of “seller * * * engaged in the business of selling”
that we have identified is consistent with our case law construing those terms in
other factual contexts. See, e.g., Mason, 226 Or App at 400 (holding that “occa-
sional and noncommercial actions” are not sales in the usual course of business
subject to strict product liability); Watts v. Rubber Tree, Inc., 118 Or App 557,
562-63, 848 P2d 1210, opinion adh’d to as modified on recons, 121 Or App 21, 853
P2d 1365, rev den, 317 Or 272 (1993) (holding that the installation of a defective
product is not a sale of a product subject to strict liability); Two Two v. Fujitec
Am., Inc., 256 Or App 784, 797, 305 P3d 132 (2013), aff’d in part and rev’d in part,
355 Or 319, 325 P3d 707 (2014) (explaining that “ORS 30.920 does not apply to
simple service transactions” that do not involve the sale of a product).
4
The ordinary meaning of “engaged in the business of selling” that we have
identified is also consistent with Vierra v. Clackamas County, 309 Or 243, 785
P2d 757 (1990). In that case, which was decided before PGE and Gaines, the
Oregon Supreme Court construed the phrase “business engaged in the applica-
tion of pesticides upon property of another” in ORS 634.006 to mean that com-
mercial pesticide application “must at least be a part, no matter how small, of the
business in which the defendant is ‘engaged.’ ” 309 Or at 247. The court explained
that “[o]ne engages in the business of applying pesticides to the land or property
of another if part of the earnings of one’s business comes from that source.” Id.Cite as 323 Or App 214 (2022) 225
business of selling such products. Thus the rule applies to
the owner of a motion picture theatre who sells popcorn
or ice cream, either for consumption on the premises or in
packages to be taken home.
“The rule does not, however, apply to the occasional
seller of food or other such products who is not engaged
in that activity as a part of his business. Thus it does not
apply to the [homemaker] who, on one occasion, sells to her
neighbor a jar of jam or a pound of sugar. Nor does it apply
to the owner of an automobile who, on one occasion, sells it
to his neighbor, or even sells it to a dealer in used cars, and
this even though he is fully aware that the dealer plans to
resell it. The basis for the rule is the ancient one of the spe-
cial responsibility for the safety of the public undertaken
by one who enters into the business of supplying human
beings with products which may endanger the safety of
their persons and property, and the forced reliance upon
that undertaking on the part of those who purchase such
goods. This basis is lacking in the case of the ordinary indi-
vidual who makes the isolated sale, and he is not liable to
a third person, or even to his buyer, in the absence of his
negligence. An analogy may be found in the provision of the
Uniform Sales Act, § 15, which limits the implied warranty
of merchantable quality to sellers who deal in such goods;
and in the similar limitation of the Uniform Commercial
Code, § 2-314, to a seller who is a merchant. This Section is
also not intended to apply to sales of the stock of merchants
out of the usual course of business, such as execution sales,
bankruptcy sales, bulk sales, and the like.”
Restatement § 402A comment f.
The first paragraph of comment f explains who falls
within the scope of a seller “engaged in the business of sell-
ing” a product, while the second paragraph explains who
does not. Consistent with the ordinary meaning of “engaged
in the business of selling,” the first paragraph of comment f
expressly provides that a seller need not be “engaged solely”
in the business of selling a product to be held strictly liable.
And the example of the movie theater owner selling conces-
sions indicates that the rule applies to the sale of a prod-
uct that is incidental to providing a service and that is con-
sumed on the premises. The second paragraph of comment f
explains the limits to the rule: The seller must sell the prod-
uct in the usual course of business, and the particular sale
226 Brown v. GlaxoSmithKline, LLC
at issue must be in the usual course of business. Comment f
explains the rule’s rationale as the “special responsibility”
for public safety that a seller undertakes by engaging in the
business of supplying products to the general public and the
general public’s corresponding “forced reliance” on such sup-
pliers in contemporary consumer society. That rationale is
present only for a seller who sells a product in the usual
course of a commercial enterprise.
Providence first argues that comments c and f, as
we interpreted and applied them in Mason, place two addi-
tional limits on who is a “seller * * * engaged in the business
of selling”: that the seller must (1) “advertise, promote, or
package the product” for use and consumption and (2) be
either a “wholesaler or retail dealer.”
We reject that argument. Mason held that the “sol-
itary and noncommercial reuse” of products that allegedly
caused harm did not render the defendant in that case a
type of “seller” of those products under ORS 30.920 and clar-
ified that the defendant was not a “seller” simply because
it sold similar products to others. Id. at 400-02. In reach-
ing that conclusion, Mason cited comment c, which restates
the rationale underlying strict liability—that “by marketing
[the] product for use and consumption,” the seller has under-
taken the aforementioned “special responsibility”—and
comment f, which explains that strict liability applies “to
any wholesale or retail dealer or distributor.” 226 Or App at
400-01. We read comment c, as we did in Mason, to use the
word “market” simply as a synonym for “sell.” See Webster’s
at 1383 (defining the transitive verb “market” as “to expose
for sale in a market : traffic in : sell in a market” and “sell”).
And comment f provides that strict liability applies “to any
wholesale or retail dealer or distributor” as part of a nonex-
clusive list of types of “sellers.” In any event, we understand
the reference to a “retail dealer” in comment f as simply one
who sells in small quantities to the consumer, as opposed to
the colloquial sense of a brick-and-mortar shop that offers
goods for sale to the general public. See Webster’s at 1938
(defining the adjective “retail” as “of, relating to, or engaged
in the sale of commodities at retail,” and the noun “retail”
as “the sale of commodities or goods in small quantities to
Cite as 323 Or App 214 (2022) 227
ultimate consumers—opposed to wholesale”). Accordingly,
we conclude that Mason and its discussion of comments c
and f do not support defendant’s argument.
The ordinary meaning of a “seller * * * engaged in
the business of selling” a product, in accordance with section
402A, comment f, is one who carries on commercial activ-
ity composed in some part of transferring ownership of the
product to another in exchange for valuable consideration.
Although the seller must sell the product in the usual course
of business, the seller need not solely or primarily engage in
the business of selling the product. And comment f strongly
suggests that strict liability applies to the sale of products
that are incidental to a service transaction and to products
that are consumed on site.
Providence next argues that it cannot be a “seller”
for purposes of ORS 30.920 because Oregon and federal law
recognize that hospitals are service providers that do not
sell pharmaceuticals to patients but rather “use,” “dispense,”
and “administer” them in the course of treatment. In sup-
port of that argument, Providence points to various Oregon
statutes regulating hospitals and the professional practice
of pharmacy, as well as a case decided by the Supreme Court
of the United States interpreting a federal price discrimina-
tion statute.
We do not find those authorities persuasive for
interpreting the text of ORS 30.920 because they are not
sufficiently related to the subject matter of product liabil-
ity. See State v. Delaurent, 320 Or App 191, 196, 514 P3d
113, rev den, 370 Or 303 (2022) (noting that the context
of the statute “includes other provisions of the same stat-
ute as well as other related statutes”). That ORS 442.015
(15)(a)(D) defines a “hospital” for purposes of ORS chapter
442 as a facility that provides pharmacy “health services”
does not preclude as a matter of law or fact that a hospi-
tal may also “sell” pharmaceutical drugs or be a “seller”
“engaged in the business of selling” a drug within the mean-
ing of ORS 30.920. The same is true for a hospital that “dis-
penses” or “administers” pharmaceutical drugs out of its
“institutional drug outlet” licensed for purposes of the pro-
fessional practice of pharmacy, see ORS 689.005(1), (9), and
228 Brown v. GlaxoSmithKline, LLC
(15), and for a nonprofit hospital that purchases supplies for
its “own use” for purposes of an exemption to a federal price
discrimination statute, see Abbott Laboratories v. Portland
Retail Druggists Ass’n, Inc., 425 US 1, 8-11, 96 S Ct 1305, 47
L Ed 2d 537 (1976). Those statutes define terms of art that
apply to their respective statutory contexts, and there is no
indication that they have any bearing on the meaning of
ORS 30.920.
That conclusion is further bolstered by the exis-
tence of Oregon statutes that expressly exclude certain
products and sellers from strict liability. For instance, one
statute excludes products provided by physicians in certain
circumstances:
“A physician licensed pursuant to ORS chapter 677 is
not a manufacturer, distributor, seller or lessor of a product
for the purposes of ORS 30.900 to 30.920 if the product is
provided by the physician to a patient as part of a medical
procedure and the physician was not involved in the design
or manufacture of the product.”
ORS 30.902. Another statute excludes health care facilities
that provide breast implants under certain circumstances:
“A health care facility licensed under ORS chapter
441 is not a manufacturer, distributor, seller or lessor of a
breast implant for the purposes of ORS 30.900 to 30.920 if
the implant is provided by the facility to a patient as part
of a medical implant procedure.”
ORS 30.908(5).
Although both ORS 30.902 and ORS 30.908 were
enacted much later than ORS 30.920 and are, therefore,
not indicative of the legislature’s intent on the meaning of
the terms used in ORS 30.920, construing ORS 30.920 to
exclude those who sell products in the provision of services
would render both ORS 30.902 and ORS 30.908(5) super-
fluous. See ORS 174.010 (specifying that, “where there are
several provisions or particulars such construction is, if
possible, to be adopted as will give effect to all”); State v.
Rusen, 369 Or 677, 699, 509 P3d 628 (2022) (explaining that
“when multiple statutory provisions potentially conflict, if
the court can give full effect to both statutes, it will do so”
(internal quotation marks and citation omitted)). Moreover,
Cite as 323 Or App 214 (2022) 229
ORS 30.902 and ORS 30.908(5) demonstrate that the legis-
lature knows how to expressly exclude certain sellers and
products from strict liability. The legislature could have—
but did not—expressly exclude a hospital licensed under
ORS chapter 442 or pharmaceutical drugs dispensed or
administered under ORS chapter 677 from strict liability.5
A third statute, former ORS 97.300 (1991), renum-
bered as ORS 97.968 (1995) and renumbered as ORS 97.985
(2007), precludes strict liability under ORS 30.920 by declar-
ing that transactions in certain products do not constitute
sales. Royer, 107 Or App at 117.6 The plaintiff in Royer was
a hemophiliac who alleged that he had been infected with
hepatitis and AIDS by a blood product. Id. at 114. The trial
5
Indeed, the 2009 legislature declined to expressly exclude hospitals from
strict liability. The exception that now exists in ORS 30.902 was originally
enacted in 1993 and was limited to physicians that provided breast implants to
patients as part of a medical implant procedure. Or Laws 1993, ch 259, § 5 (codi-
fied as ORS 30.908(5) (1993)). The same bill created the nearly identical exception
for health care facilities that now exists in ORS 30.908(5). Or Laws 1993, ch 259,
§ 5 (codified as ORS 30.908(6) (1993)).
In 2009, the legislature amended ORS 30.908 by removing the exception for
physicians in subsection (5) and renumbering the health care facilities exception
as subsection (5). Or Laws 2009, ch 485, § 10. In the same bill, the legislature
reformulated and broadened the exception for physicians and made it part of the
product liability statutory framework. Or Laws 2009, ch 485, §§ 8, 9 (codified as
ORS 30.902). The legislature did not adopt a proposed amendment to that bill
that would have added hospitals to the reformulated exception for physicians now
codified as ORS 30.902. See Exhibit 1 (Proposed Amendments to B-Engrossed
Senate Bill 284), House Rules Committee, SB 284, June 2, 2009 (“SECTION 9.
A physician licensed pursuant to ORS chapter 677, or a hospital as defined by
ORS 442.015, is not a manufacturer, distributor, seller or lessor of a product for
the purposes of ORS 30.900 to 30.920 if the product is provided by the physician
or hospital to a patient as part of a medical procedure and the physician or hos-
pital was not involved in the design or manufacture of the product.” (Emphases
added.)). Thus, although it is true that legislative inaction is not a good indicator
to discern legislative intent—especially when considering a potential amend-
ment that the legislature took up long after ORS 30.920 was enacted—it is at
least noteworthy that the legislature had an opportunity to enact the interpre-
tation defendant’s argument advances and declined to do so. Compare State v.
Rainoldi, 351 Or 486, 492, 268 P3d 568 (2011) (explaining that, because of the
possibility of competing inferences, “statutory silence alone is not a sufficiently
clear indication of legislative intent”) with State v. Partain, 349 Or 10, 20, 239
P3d 232 (2010) (concluding that the “history of the amendment confirms that
general sense of the legislature’s intentions,” even though there was nothing in
the legislative history that established a legislative intent).
6
Former ORS 97.300 (1991), which was first enacted in 1969, see Or Laws
1969, ch 271, § 1, was not amended until 1995, when it was also renumbered, see
Or Laws 1995, ch 717, § 11. Accordingly, we omit the year in all remaining refer-
ences to former ORS 97.300 in this opinion.
230 Brown v. GlaxoSmithKline, LLC
court dismissed the plaintiff’s strict liability claims against
the product’s manufacturer and the seller,7 after concluding
that former ORS 97.300 precluded liability under the cir-
cumstances. Former ORS 97.300 provided:
“(1) The procuring, processing, furnishing, distribut-
ing, administering or using of any part of a human body for
the purpose of injecting, transfusing or transplanting that
part into a human body is not a sales transaction covered
by an implied warranty under the Uniform Commercial
Code or otherwise.
“(2) As used in this section, ‘part’ means organs, tis-
sues, eyes, bones, arteries, blood, other fluids and any other
portions of a human body.”
We first examined the context of former ORS 97.300
and noted that it was enacted when strict product liability
was still emerging as a conceptually related but not com-
pletely distinct theory to traditional contractual warran-
ties. Royer, 107 Or App at 115-16. We then examined the
legislative history of former ORS 97.300 and explained that
the legislature enacted it in response to a Florida case that
had held that blood suppliers could be held liable without
fault. Id. at 116. In the Florida case, the plaintiff sued a
blood bank claiming breach of implied warranties after she
contracted hepatitis from a blood transfusion. Id. (citing
Russell v. Community Blood Bank, Inc., 185 So 2d 749, 750
(Fla App 1966), aff’d in part, 196 So 2d 115 (Fla 1967)). We
explained:
“The [Russell] court recognized that courts in other
states that had considered the issue had declared the fur-
nishing of blood to be a service, not a sale. However, the
court noted:
“ ‘It seems to us a distortion to take what is, at least
arguably, a sale, twist it into the shape of a service, and
then employ this transformed material in erecting the
framework of a major policy decision.’
“The [Russell] court held that a sale had occurred, thus
making the blood bank susceptible to liability without
fault.”
7
The State of Oregon, through Oregon Health Sciences Hemophilia Center,
did not dispute that it had sold the blood product to the plaintiff. Id.Cite as 323 Or App 214 (2022) 231
Royer, 107 Or App at 116 (internal citation omitted). We then
pointed to several statements by legislators that the intent
of former ORS 97.300 was to create an exemption to strict
liability by excluding such products from sales transactions
as a matter of law. Id. at 116-17. We concluded that “[t]he
main focus of [former] ORS 97.300 is on declaring that the
transactions do not constitute sales. Because strict liability
cannot arise without there having been a sale, defendants
could not be strictly liable.” Id. at 117.
Thus, in addition to the express exceptions that
exist within the product liability statutory framework, the
legislature may also express the intent to exclude certain
products or sellers from strict liability by declaring that
transactions in such products do not constitute sales, as it
did in former ORS 97.300. None of the statutes Providence
cites affirmatively exclude hospitals or pharmacies from
sales transactions, and Providence has cited no legislative
history that evinces an intent to so exclude them.
Providence’s final argument urges this court to
follow the “vast majority of courts who have construed the
same or similar language as that contained in ORS 30.920
[and] held that hospitals are not ‘sellers’ who are ‘in the busi-
ness of selling’ products.” Providence cites two cases that
had been decided by the time the legislature enacted ORS
30.920 and could arguably be relevant context. See Lindell
v. Kalugin, 353 Or 338, 349, 297 P3d 1266 (2013) (“Case law
existing at the time of the adoption” of the rule or statute
“forms a part of the context.”). The first, Perlmutter v. Beth
David Hospital, 308 NY 100, 108, 123 NE2d 792 (1954), held
that a blood transfusion supplied by a hospital for a price did
not constitute a “sale” and therefore could not give rise to a
strict product liability claim on a theory of breach of implied
warranty. The other, Magrine v. Krasnica, 94 NJ Super
228, 242, 227 A2d 539 (Co 1967), aff’d sub nom Magrine v.
Spector, 53 NJ 259, 250 A2d 129 (1969), declined to extend
strict liability to a dentist for personal injuries caused by a
hypodermic needle that broke in the plaintiff patient’s jaw
during an injection procedure.
We do not find those cases to be persuasive context
for interpreting ORS 30.920. Both cases were decided under
232 Brown v. GlaxoSmithKline, LLC
the common law of their respective states and predate sec-
tion 402A. Moreover, even assuming that the legislature was
aware of those cases when it enacted ORS 30.920, there is
no indication that the legislature incorporated the holdings
into the statute’s text. Indeed, if the legislature responded
to the holding in Perlmutter at all, it was to exclude certain
products from liability in former ORS 97.300, not to exclude
all sale-service hybrid transactions. And the holding of
Magrine, if not its reasoning, is consistent with the ordinary
meaning of “seller * * * engaged in the business of selling”
and with comment f.
To summarize, the ordinary meaning of a “seller
* * * engaged in the business of selling” a product, in accor-
dance with section 402A, comment f, is one who transfers
ownership of the product to another in exchange for valu-
able consideration and whose ongoing commercial activity
consists in some part of selling the product. One can be a
“seller * * * engaged in the business of selling” a product sub-
ject to strict liability under ORS 30.920 even if the seller
also or primarily provides a service, the sale of the product
is incidental to that service, and the product is immediately
consumed on site. The relevant context and legislative his-
tory confirm that interpretation.
APPLICATION
With the proper construction of ORS 30.920, we
return to the facts of this case. Here, we conclude that plain-
tiffs presented sufficient evidence to create a genuine issue
of material fact as to whether Providence was a “seller * * *
engaged in the business of selling” Zofran within the mean-
ing of ORS 30.920. Viewed in the light most favorable to
plaintiffs as the adverse parties, the summary judgment
record shows that Providence transferred Zofran to Gomez
for valuable consideration when Providence administered
the drug to her in its emergency department and later
charged her for the drug as part of the services rendered. The
summary judgment record further shows that Providence’s
ongoing commercial activity consisted in some part of selling
Zofran because it maintained a stock of injectable Zofran to
administer to patients in the hospital, and it is reasonable
to infer that Providence would charge patients for the drug
Cite as 323 Or App 214 (2022) 233
as part of medical services it provided. Accordingly, the trial
court erred in granting summary judgment for defendant.
Reversed and remanded.