Maryland Eye Bank Keeps Its $606,415.49 Verdict In Contaminated Eyewash Case After Appeal

Eye Bank Keeps Its $606415.49 Verdict: In its published opinion dated February 15, 2023, the United States Court of Appeals for the Fourth Circuit (“Federal Appellate Court”) stated: “In this appeal, we consider whether the district court erred in awarding summary judgment to plaintiff KeraLink International, Inc. (KeraLink), the former operator of a national network of “eye banks,” on its claim against two suppliers of contaminated eyewash used to remove donated eye tissue for future transplant. Upon our review, we hold that the district court properly awarded judgment to KeraLink on its claim of strict products liability. Under the facts presented here, neither supplier was entitled to invoke the sealed container defense, an affirmative defense reserved for only certain types of sellers. Additionally, the economic loss rule barring liability for solely economic losses in a tort claim was inapplicable because KeraLink also sought damages for injury to property, namely, the recovered eye tissue rendered unusable by the contaminated eyewash. We also hold that the district court did not abuse its discretion under Maryland law in awarding the plaintiff prejudgment interest. We therefore affirm the court’s award of final judgment for KeraLink against both defendants, jointly and severally, in the amount of $606,415.49 plus prejudgment interest.”

Underlying Facts

Plaintiff KeraLink is a non-profit corporation with its headquarters in Baltimore, Maryland, and operated a network of eye banks in many states. These eye banks recover corneas and other eye tissue from recently deceased donors for future transplant into patients who suffer from corneal blindness or other ocular diseases. Although prohibited by law from selling recovered tissue, KeraLink collects certain fees for reimbursement of costs related to the removal, processing, and transportation of such tissue.

To facilitate the recovery of eye tissue, KeraLink purchased from third party vendors medical equipment and supplies, including “surgical packs” containing “eyewash” used to irrigate the eye tissue. KeraLink purchased the custom-designed surgical packs at issue from defendant Stradis Healthcare, LLC (Stradis), which has its headquarters in Georgia. KeraLink did not specify any particular brand of eyewash to be included in the surgical packs. Stradis purchased and placed in each pack a bottle of “GeriCare Eye Wash – Sterile Eye Irrigating Solution.” Stradis purchased this eyewash from a third-party wholesaler, which received the eyewash from defendant Geri-Care Pharmaceuticals Corporation (Geri-Care).

Geri-Care had purchased the eyewash from Kareway Products, Inc. (Kareway), after requesting that Kareway supply eyewash similar to “Bausch & Lomb Advanced Eye Care.” Geri-Care further requested that the Geri-Care logo be placed on the eyewash bottles.

Kareway obtained the eyewash from another company that originally manufactured the product in Korea. Upon receipt of the eyewash from Kareway, Geri-Care did not test the eyewash for pathogens but relied on Kareway’s accompanying certification that the contents of each box of bottled eyewash were sterile. Geri-Care registered the eyewash with the United States Food and Drug Administration (the FDA). The label on the eyewash bottle displayed Geri-Care’s logo and stated that the eyewash was “distributed by” Geri-Care, listing its address in New York, and that the eyewash was a “Product of Korea.” There was no other corporate entity or manufacturer identified on the eyewash bottle or on the FDA registration.

When the eyewash bottles arrived in Georgia at Stradis’ facility, each bottle was individually sealed. After ensuring that the plastic seal on the cap of each bottle was secure, Stradis placed the eyewash bottles into surgical packs for KeraLink. Stradis included in each surgical pack an insert listing the pack’s contents, including the term “sterile eye wash.” The insert also included a statement that Stradis had manufactured and distributed the surgical packs.

In October 2017, the Eye Bank Association of America (EBAA) notified KeraLink “about a potentially contaminated” eyewash, namely, a certain lot number of the GeriCare-brand eyewash. The EBAA instructed eye banks to “pull” this eyewash from their inventory. After hiring a third party to test the eyewash, KeraLink confirmed the presence of contaminants in eight of ten bottles tested, and identified certain lot numbers of Stradis surgical packs containing the potentially contaminated eyewash.

In addition, a surgeon informed KeraLink that the corneas in five of his patients who had received transplants of KeraLink corneal tissue had tested positive for cultures closely related to the pathogens identified in the contaminated eyewash. KeraLink confirmed that it had obtained those five tissues from donors in procedures using the contaminated eyewash. Corneal tissue recovered with use of this contaminated eyewash ultimately occurred in numerous states and the District of Columbia.

KeraLink later filed suit against Stradis and Geri-Care (the defendants) in the United States District Court for the District of Maryland under the court’s diversity jurisdiction, 28 U.S.C. § 1332(a)(1). KeraLink alleged claims under Maryland law for strict products liability, breach of implied warranty, and breach of express warranty, seeking damages of more than $600,000.

After discovery, the parties filed cross motions for summary judgment. KeraLink argued that Geri-Care and Stradis were jointly and severally liable for damages totaling $606,415.19, based on: (1) a loss of $589,664 in various “service
fees” that KeraLink could not collect based on the unusable, damaged tissue; (2) a loss of $354.90 for 182 unusable surgical packs that contained potentially contaminated eyewash, and (3) a loss of $16,396.59 for KeraLink’s employees’ time spent addressing contamination issues.

Maryland Strict Liability Law

Under Maryland law, a plaintiff can prove strict products liability by showing that: (1) the product was in a defective condition at the time that it left the possession or control of the seller; (2) the product was unreasonably dangerous to the user or consumer; (3) the defect was a cause of the injuries; and (4) the product was expected to and did reach the consumer without substantial change in its condition.

Sealed Container Defense

Under Maryland law, a seller of a defective product in certain circumstances can assert an affirmative defense known as the sealed container defense to shield itself from liability for damages and injury caused by that product. Md. Code, Cts. & Jud. Proc. § 5-405(b). In the district court, both Geri-Care and Stradis sought to invoke this defense as sellers of the eyewash, and each argued that the other qualified as a liable manufacturer.

The Federal Appellate Court held: “By placing its logo on the eyewash bottle and by registering the eyewash in Geri-Care’s name with the FDA, Geri-Care intended the public to think that Geri-Care manufactured the eyewash. As the district court held, “[t]here was no way for a purchaser of the eyewash to know that Geri-Care was not the manufacturer” … Although Geri-Care identified itself as a “distributor” and not as a “manufacturer,” a jury could not conclude on this record that purchasers of the eyewash reasonably would have known that Geri-Care was not the eyewash manufacturer. We therefore conclude that the district court properly held that Geri-Care, as an apparent manufacturer, was not entitled to assert Maryland’s sealed container defense to avoid strict products liability.”

Maryland Breach Of Express Warranty Law

To establish a breach of express warranty under Maryland law, a plaintiff must show that: 1) a warranty existed; 2) the product did not conform to the warranty; and 3) the breach proximately caused the injury or damage.

The Federal Appellate Court held: “Stradis included on the surgical pack the description “STERILE: Unless Open or damaged” and chose to place a representation on the insert that the pack contained “sterile eye wash.” These descriptions plainly were made by Stradis and were made separately from Geri-Care’s statement on the eyewash bottles that the contents were sterile. Critically, Stradis has not cited, nor have we identified, any authority holding that a party who “passes on” another company’s warranty through its own, separate representation has not made an express warranty. And finally, the record shows that Stradis advertised itself as having “expertise in eye banking and corneal transplantation,” and was aware that KeraLink needed a sterile eyewash for its tissue recovery. Thus, Stradis’ representation that the eyewash was sterile was made with knowledge that this protection was critical to KeraLink’s intended use of the product. See Md. Code, Com. Law § 2-313(1)(b). We therefore hold that the Stradis made an express warranty that the eyewash was sterile. Accordingly, under Maryland Code, Cts. & Jud. Proc. § 5-405(c)(6), which precludes sellers who breach express warranties from relying on the sealed container defense, Stradis was barred from asserting the defense.”

Maryland Economic Loss Rule

Under Maryland law, a plaintiff asserting a strict products liability claim generally may recover damages for three categories of losses: (1) personal injury, (2) physical harm to property other than the defective product, and (3) economic loss suffered because the product fails to meet a buyer’s expectations. Under the “economic loss rule,” however, a plaintiff is barred from recovering in tort when the claimed damages are solely grounded on economic loss.

The purpose of the rule is to preserve the distinction between tort claims, like strict products liability claims, and contract claims. A defendant typically is not held responsible in tort for purely economic losses that more properly are addressed in a contract claim. But a defendant in a tort action may be liable for physical injuries or property damage caused by a defective product based on the defendant’s duty to avoid reasonably foreseeable harm. Thus, in a strict products liability tort claim, the economic loss rule does not bar recovery of economic losses resulting from damage to “other property” caused by the defective product.

The Federal Appellate Court held: “Application of this rule is not intended to delineate the full contours of a party’s
property rights in other contexts, and does not require a conclusion that a party has full ownership rights to the property … Although the [Maryland Revised Uniform Anatomical Gift] Act prohibits parties from selling tissue and prescribes how parties must dispose of donated, unused tissue, these limitations imposed by statute did not eliminate KeraLink’s possessory interests in the tissue and its right to recover, store, and transfer the tissue for transplant. As demonstrated by the record, the contaminated eyewash rendered certain recovered eye tissue unusable. The physical damage to this “tangible thing,” over which KeraLink had dominion and rights of use, formed the basis for KeraLink to recover damages … Because KeraLink had a limited but sufficient property interest in the tissue, the economic loss rule did not bar recovery for the challenged damages sought by KeraLink in its strict products liability claim.”

“Because we agree with the district court’s determination that neither the sealed container defense nor the economic loss rule is applicable in this case, we affirm the district court’s award of summary judgment in favor of KeraLink on its strict products liability claim against Geri-Care and Stradis. Apart from the failed defenses discussed above, neither defendant has argued that KeraLink did not establish the elements of its strict products liability claim. Thus, based on the record before us, we conclude that the court did not err in awarding KeraLink damages of $606,415.49, jointly and severally against both defendants.”

Source KeraLink International, Inc. v. Geri-Care Pharmaceuticals Corporation, No. 21-2357.

If you or a loved one suffered injuries (or worse) as a result of a defective pharmaceutical product in Maryland or in anther U.S. state, you should promptly seek the legal advice of a Maryland medical malpractice lawyer, or a medical malpractice lawyer in your state, who may investigate your pharmaceutical claim for you and represent you in a claim against a pharmaceutical company or other liable party, if appropriate.

Visit our website or call us toll-free in the United States at 800-295-3959 to find pharmaceutical claim lawyers in your state who may assist you.

Turn to us when you don’t know where to turn.