"MILKING THE DOW": COMPENSATING THE VICTIMS OF SILICONE GEL BREAST IMPLANTS AT THE EXPENSE OF THE PARENT CORPORATION [n.*] 

"Punitive damages flowing forth from the unprincipled, uncontrolled jury may be likened to an infection in the law that introduces a systemic disease in the American society and economy." [n.1] 

When women try to explain why breast implant surgery is "necessary" they comment, almost universally, that they perceive it will boost their self esteem, "a pop psychology term vague enough to mean just about anything." [n.2] The reality is that a new, improved bust line is a cure-all for the inadequacies that women feel due to social change and other pressures. [n.3] 

The augmentations could ease a woman's retreat from the pressures of feminism, signifying a return to more-conventional notions of womanhood ("My husband loves "em!"). Or they could represent a working woman's growing power, including control over her own sexuality ("I love "em!"). Or they could simply make the breaks available to naturally busty women--better service in restaurants, free upgrades on crowded airplanes--available to everyone. [n.4] 

Indeed, the side effects, like breast hardening and decreased sensitivity are apparently not a concern for these women. [n.5] After all, aren-t women used to suffering for beauty? [n.6] 

This Note examines the silicone-gel breast implant line of cases concerning the liability of Dow Chemical Inc. for the alleged negligence of Dow Corning, Inc., America's largest silicone breast implant manufacturer. The Note considers Dow Corning's status in Chapter 11 bankruptcy and how the thousands of claims pending against the company are being resolved. The Note is concerned with the possibility that a controversial Nevada verdict and subsequent federal decisions under Judge Sam Pointer, Jr. were motivated by a desire to compensate victims of the faulty breast implants by allowing them to file suit against a parent corporation (and collect, as in the Nevada verdict) with "deep pockets%, rather than by proper tort law concepts. In Part I of the Note, the corporate history and formation of Dow Corning, as a combination of Corning and Dow Chemical, will be considered. Part II considers the "traditional" line of cases which disposed of direct and vicarious liability claims against Dow Chemical. Part III examines the Nevada jury verdict and the subsequent decisions of Judge Pointer in the context of corporate and tort law. Part IV explores the inconsistencies of the federal decisions and the controversial Nevada jury verdict, and concludes that they were each a misapplication of the law where the plaintiffs were allowed to "pierce the corporate veil" to reach Dow Chemical. Finally, Part V speculates on the effects Judge Pointer's decision and the Nevada jury verdict will have on future medical implant cases against the parent companies involving silicone, as well as future cases against scientists for technological research and development. 

In 1942, Corning and Dow Chemical ("the parent companies") entered into an agreement to create a subsidiary corporation, Dow Corning, of which each parent would be a 50% shareholder. [n.7] Corning provided the silicone technology, while Dow Chemical supplied "chemical processing and manufacturing know-how." [n.8] Since the February 1943 incorporation of Dow Corning, Dow Chemical and Corning have each remained 50% shareholders. [n.9] 

The initial testing of silicone matter was performed in 1948, and the results were published in a report later that same year. [n.10] The report proclaimed the relatively harmless nature of the silicone chemical itself. [n.11] The 1948 article addressed some potential dangers posed by various silicone compounds. [n.12] Over the next 40 years, both Dow Chemical and Dow Corning continued to perform further toxicological tests on silicone. [n.13] On many separate occasions, the potential hazards of silicone were revealed in studies commissioned by Dow Corning and/or Dow Chemical, or co-operated by Dow Chemical and/or Dow Corning. [n.14] 

In 1964, Dow Corning established its Medical Products Division for the purpose of marketing silicone breast implant products. [n.15] Tests conducted before and after the introduction of breast implants in 1964 by both Dow Chemical and Dow Corning revealed that some of the silicones used in the breast implants "had some biologically active properties" and "could affect the immune system." [n.16] In 1975, Dow Chemical and Dow Corning entered into a trademark agreement whereby Dow Corning was given permission to continue using Dow Chemical's corporate name as part of its own name. [n.17] 

Litigation in the area of silicone breast implants began slowly. In 1977, Dow Corning lost its first suit, with a verdict against the company for $170,000. [n.18] Until 1989, only six breast implant cases had gone to trial. [n.19] During this time, consumer safety groups began to demand investigation of the safety of silicone implants. [n.20] This prompted the Food and Drug Administration (FDA) to convene an outside panel of experts in November 1991 to investigate the issue of breast implant safety. [n.21] The panel opined that there was "an appalling lack of information" about the safety of the implants, but recommended that they nevertheless remain on the market. [n.22] 

Two events in the early 1990's caused a dramatic increase in the volume of mass tort litigation in silicone breast implant cases. [n.23] First, in December 1991, a California federal jury awarded a $7.34 million verdict against Dow Corning to a woman who claimed that her breast implants had ruptured and caused an immune system disease. [n.24] Then, in December 1992, the FDA imposed a moratorium on the use of silicone breast implants, expressing concerns about their safety. [n.25] Immediately after the moratorium was issued, the number of breast implant cases escalated. [n.26] By the spring of 1993, more than 1,000 breast implant cases had been filed in federal court alone. [n.27] 

In an effort to determine an appropriate forum and procedure for consolidating [n.28] the cases, the federal Judicial Panel on Multidistrict Litigation held that the actions would be transferred to the Northern District of Alabama where they would be presided over by Judge Sam Pointer, Jr., an experienced class action judge. [n.29] In April of 1994, Judge Pointer approved a global settlement proposal negotiated by the class action plaintiffs and Dow Corning in Lindsey v. Dow Corning Corp. [n.30] 

Overwhelmed by the thousands of personal injury cases pending against it, Dow Corning filed for Chapter 11 bankruptcy protection in a federal court on May 15, 1995. [n.31] The practical effect of Chapter 11 protection is a stay of all creditors claims pending against the petitioner/debtor. [n.32] In Dow Corning's case, a by-product of the bankruptcy petition was the destruction of the global settlement agreement established in Lindsey v. Dow Corning Corp. [n.33] Another result was that plaintiffs who could no longer bring suit against Dow Corning "ha[d] settled on a new target--Dow Chemical." [n.34] 

Piercing the Corporate Veil: Dow Chemical's Liability for the Alleged Negligence of Dow Corning. 

Plaintiffs have alleged that Dow Chemical should be found liable for Dow Corning's alleged torts based on two broad theories. First, plaintiffs allege that the parent company should be liable because of its 50 percent stock ownership in Dow Corning. [n.35] Second, plaintiffs claim that the parent company should be liable "by virtue of alleged "direct participation" by the Company or its agents in Dow Corning's breast implant business." [n.36] 

A. Case Law Adhering to the Traditional Approach: Disposal of Claims of Direct and Vicarious Liability Against the Parent Company. 

With several key exceptions, [n.37] most courts have followed the "traditional view," granting summary judgment in favor of the parent companies on the issues of direct and vicarious liability. [n.38] In doing so, these courts have generally acknowledged the corporate identities of the parent companies by refusing to allow plaintiffs to pierce Dow Corning's corporate veil. [n.39] These courts have cited a tenuous relationship between the parent companies and the subsidiary, and an even more tenuous relationship between Dow Chemical and the alleged breast implant victims. [n.40] 

True to this form is the case of In re Silicone Gel Breast Implants Products Liability Litigation (Silicone Gel I). [n.41] In Silicone Gel I, plaintiffs advanced three corporate control claims against Dow Chemical and Corning: piercing the corporate veil, joint venture, and negligent or otherwise improper supervision. [n.42] On the first issue, piercing the corporate veil, the court noted that in order for plaintiffs to succeed, they must offer "evidence of undue control, manipulation, or other improper action by [the parent companies] that could justify piercing the corporate veil." [n.43] Having failed to meet their burden, the court correctly found that the evidence presented was insufficient to pierce Dow Corning's corporate veil. [n.44] 

Plaintiffs next argued that Dow Corning was a joint venture of the parent corporations. [n.45] On this issue, plaintiffs emphasized the parent companies" ownership and control of Dow Corning, as well as their intention to share in the profits of the subsidiary. [n.46] In rejecting the plaintiffs" joint venture theory, the court held that the parent companies "ha[d] not agreed to share, or indeed even to be individually liable for Dow Corning's debts and losses." [n.47] 

Lastly, plaintiffs claimed that the parent companies were liable to them for inadequate supervision of Dow Corning. [n.48] Plaintiffs attempted to expand the Restatement (Second) of Torts §315 to impose a duty on corporate shareholders to supervise activities of the subsidiary company that are foreseeably injurious to third parties. [n.49] On this issue, the court held that the Restatement has never been expanded to include such a duty either in Alabama, or in any other jurisdiction. [n.50] 

In addition to the corporate control claims, plaintiffs in Silicone Gel I, also asserted direct liability claims against the parent companies. The crux of the claims was that the parent companies were allegedly liable under theories of fraud, conspiracy, concert of action, aiding and abetting, or collective liability for their part in the testing, production, and distribution of the silicone implants. [n.51] The court correctly recognized that the parent company owes no duty of disclosure to buyers of a subsidiary's products. [n.52] More importantly, the court conceded that there was a lack of evidence to form a solid link between the parent companies and Dow Corning during any stages of the silicone research, production, or marketing process. [n.53] 

In In re New York State Silicone Breast Implant Litigation (hereinafter "New York State"), the New York court disposed of plaintiffs" negligent undertaking claim against Dow Chemical. [n.54] The court properly recognized that Dow Chemical was very detached from the overall beginning-to-end process of breast implant production and sale. [n.55] Yet, plaintiffs attempted to establish that Dow Chemical should nevertheless be found directly liable for negligent testing and research concerning the toxicity, biological activity, and safety of the implants. [n.56] In dismissing plaintiffs" claims, the court reasoned that, although there was a possibility that Dow Chemical had a duty to the consumers of its research product (Dow Corning), "that liability does not extend ad infinitum to any potential ultimate user of a product which contains a silicone component." [n.57] 

One of the factors employed by the court in New York State, in determining the scope of Dow Chemical's duty to plaintiffs, was the degree of control that Dow Chemical had over the ultimate injuries allegedly incurred by the plaintiffs. [n.58] The court concluded: 

Dow Chemical has no control over the usage that silicone has or will be put to in the future based on its initial testing and studies of silicone. To impose liability on Dow Chemical for injuries incurred by ultimate consumers of all products that contain silicone, when Dow Chemical has no control over who manufactures silicone or who purchases silicone, flies in the face of well established tort principles. It would also impose virtually limitless liability on Dow Chemical for actions and activities which are not in its control. [n.59] 

On appeal, the court affirmed the holding, adding that the mere fact that Dow Chemical gave advice to the manufacturer of consumer goods (Dow Corning), does not suggest that Dow Chemical owes a duty to then-unknown subsequent purchasers of Dow Corning's goods. [n.60] 

In another case adhering to the "traditional view," In re TMJ Implants Products Liability Litigation, plaintiffs sought recovery against Dow Corning for damages which were allegedly caused by temporomandibular joint (TMJ) implants. [n.61] Although plaintiffs did not assert that the parent companies ever actually sold the TMJ implants, they did allege liability against the parent companies on claims of corporate control and direct liability. [n.62] In disposing of plaintiffs" corporate control claims, the court held that plaintiffs could not, under the facts, pierce the corporate veil to reach the parent companies. [n.63] The court next considered plaintiffs" claims of direct liability against the parent companies. [n.64] On the theory of fraudulent concealment and misrepresentation, the plaintiffs attempted to show that Dow Chemical had a duty to disclose its alleged knowledge of the dangers of using silicone in the human body. [n.65] The court rejected this assertion, once again citing the tenuous link between Dow Chemical and the ultimate consumer. [n.66] 

For their aiding and abetting claim, plaintiffs relied upon section 876(b) of the Restatement (Second) of Torts. [n.67] However, Dow Chemical did not "knowingly provide substantial assistance to Dow Corning" and therefore the plaintiffs" aiding and abetting claim was rejected. [n.68] As to plaintiffs" co-conspiracy charge, the court remarked that "there are no facts indicating that Dow Chemical knew which silicones were used in the implants, much less that Dow Chemical agreed with Dow Corning on any aspects of its TMJ business." [n.69] Ultimately, Chief Judge Magnuson, speaking for the court added: "the court is convinced that fundamental flaws in Plaintiff's claims would prevent liability in every state." [n.70] 

In a 1994 Connecticut breast implant "Master File" [n.71] of 160 individual cases filed against Corning, plaintiffs proceeded primarily on a "joint venture" theory, alleging "that Dow Corning is "a joint venture of and wholly owned by" Dow Chemical and Corning." [n.72] While the Court acknowledged that several key facts on the record reflected that the corporate histories of Corning and Dow Corning were closely intertwined, [n.73] it nevertheless held that those facts did not create liability on Corning's part for the actions of Dow Corning, "a separately incorporated entity." [n.74] Yet, plaintiffs contended that Dow Corning is a joint venture of Corning and Dow Chemical despite the fact that Dow Corning is separately incorporated. [n.75] In rejecting this assertion, the court held that, although Dow Chemical and Corning may be viewed as sharing a partnership relation with each other, in their dealings with third parties, their "corporate form is to be respected." [n.76] 

In 1995, several landmark decisions changed the face of the silicone breast implant litigation field. First, in April of 1995, Chief Judge Pointer handed down the decision of In re Silicone Gel Breast Implants Products Liability Litigation (Silicone Gel II), [n.77] which, for the first time, allowed for actions to be brought directly against Dow Chemical. [n.78] Then, in October 1995, a Nevada jury handed down a $14 million verdict against Dow Chemical in favor of a woman who claimed her health problems were a result of leaky silicone gel breast implants. [n.79] Each decision deviated substantially from the "traditional view" previously discussed, which rejected theories of direct and vicarious liability against the parent companies. Each decision will be considered in turn. 

Following Silicone Gel II, plaintiffs moved to vacate the interlocutory order granting summary judgment in favor of Dow Chemical and Corning before Judge Pointer two years earlier. [n.80] Judge Pointer affirmed the motion for summary judgment as to Corning; however, the interlocutory order granting summary judgment for Dow Chemical was affirmed as to all causes of action against Dow Chemical except plaintiff's direct liability claims. [n.81] As to the viability of these claims, Judge Pointer cited new evidence which plaintiffs had unearthed in 1994 (subsequent to the 1993 In re Silicone Gel case), that tended to show that Dow Chemical "was significantly involved with Dow Corning's breast implants." [n.82] Judge Pointer noted that, in other jurisdictions, only one court considering the new evidence granted summary judgment for Dow Chemical on each of plaintiffs" direct liability theories. [n.83] 

In 1985, Charlotte Mahlum of Elko, Nevada, underwent a double mastectomy surgery to remove cancerous cells in her breasts. [n.84] Following the surgery that year, she received silicone breast implants, which were manufactured by Dow Corning. [n.85] In 1990, Mahlum started to experience muscle pain, chronic fatigue, and nerve disorders. [n.86] After being diagnosed with immune system and neurological disorders in 1993, doctors removed her breast implants only to discover that the implants had burst, and leaked into other organs. [n.87] That same year, Mahlum filed suit in Nevada District Court, [n.88] alleging that both Dow Corning and Dow Chemical were responsible for producing the breast implants that had caused her health problems. [n.89] 

However, Dow Corning filed for bankruptcy in May, 1995 and only Dow Chemical (who had no hand in the manufacturing of the implants) was left as the remaining defendant. [n.90] Still, Mahlum contended that "[e]ven though Dow Chemical had not technically manufactured the implants, it was as responsible for their negative side effects as Dow Corning because it had performed studies on silicone for Dow Corning." [n.91] The jury agreed with Mahlum's claims against Dow Chemical, and awarded her $10 million in punitive damages along with $3.9 million in compensatory damages. [n.92] Her husband was awarded $200,000 for loss of consortium. [n.93] 

The Nevada jury verdict sparked a deluge of national media attention. [n.94] One commentator characterized the verdict as "evidence of how wildly civil justice has spun out of control." [n.95] Dow Chemical moved for a judgment nothwithstanding the verdict and a new trial, which was denied by Judge Steinheimer. [n.96] Thereafter, Dow Chemical wasted little time in moving for an appeal of the verdict, [n.97] where it argued that the case was erroneously submitted to the jury because Mahlum's claims were "based on the unsupported proposition that it had a duty to disclose bits of information from occasional tests of silicone compounds." [n.98] In response, Mahlum argued that the evidence presented at trial was clearly sufficient to sustain the jury's assessment of liability against Dow Chemical under section 324A of the Restatement of Torts (Second). [n.99] 

Two factors help explain why Judge Pointer deviated from the "traditional view" and why the Nevada verdict was allowed to stand. However, neither explanation is firmly rooted in proper application of tort law. First, it will be helpful to understand the stratagem for Dow Corning's declaration of bankruptcy in the midst of the thousands of personal injury suits pending against it. 

In general, large corporate defendants involved in mass tort litigation (like Dow Corning) "have both the incentive and the financial resources to wear down plaintiffs through obstructionism." [n.100] However, in Dow Corning's case, the claim projection turned out to be vastly underestimated, resulting in many more claims than were originally anticipated. [n.101] Simply put, Dow Corning chose bankruptcy in order to reorganize and resolve its mass tort liabilities. [n.102] Yet, Dow Corning's incentives for choosing bankruptcy appear somewhat unconventional: 

Unlike corporations that have opted for bankruptcy when faced with a mass tort class action, Dow Corning seemed intent on preserving the mass tort class action settlement; indeed, its tactical aim seems in part to have been to lock claimants within it by eliminating any incentive to opt out. Because the filing of a bankruptcy petition automatically stays tort litigation against the debtor, opting out gains a claimant little and costs the claimant the right to participate in the settlement (if it remains intact). Once claimants were frozen into the class action, benefits could then be reduced without triggering a major increase in opt-outs and hence individual litigation against it. [n.103] 

Individuals who had already opted out from the settlement will eventually receive compensation under the Chapter 11 bankruptcy reorganization plan. [n.104] By not declaring bankruptcy, Dow Corning was exposed to dual evils: a massive class settlement in addition to separate opt-out lawsuits by an uncertain number of claimants. [n.105] By declaring bankruptcy, however, Dow Corning was no longer amenable to suits from opt-outs, and could frustrate attempts for contributions to the settlement fund. [n.106] 

This tactical approach--declaring bankruptcy as a means of protecting company assets and further liability--would have been an ideal solution for Dow Corning for the reasons mentioned, were it not for Judge Pointer's Silicone Gel II decision and the ensuing Nevada verdict allowing for suits directly against the parent companies. Accordingly, it remains to be resolved why the plaintiffs in the silicone gel implant litigation were allowed to pierce Dow Corning's corporate veil and file suit directly against the parent companies. 

One possibility is that, since Dow Corning is in bankruptcy protection (and therefore temporarily immune from suit), there is a feeling of sympathy engendered by the need to compensate the alleged victims of breast implant injuries. When examined in this vein, Judge Pointer's decision could be explained simply as a matter of looking past Dow Corning, to Dow Chemical--a large corporation with "deep pockets" [n.107] --to help provide immediate money damages for the victims of faulty breast implants. [n.108] 

If Judge Pointer were to have decided in favor of Dow Chemical by refusing to allow the claims, the prospects for current and potential breast implant victims would be substantially less agreeable. Potentially, a ruling in favor of Dow Chemical would have two key repercussions. First, for the victims who had already filed suit against Dow Chemical, they would be forced to wait until the stay of bankruptcy was lifted before any action could be taken on their claims by Dow Corning. [n.109] Second, due to the bankruptcy discharge, there would not be as many funds to go to all creditors. 

Generally, the Chapter 11 reorganization plan [n.110] contemplates an "orderly liquidation of the assets and . . . distribution of [the debtor's] proceeds." [n.111] Upon confirmation, [n.112] the debtor is then discharged so that its pre-petition obligations vanish, and are replaced by the new responsibilities assumed under the plan. [n.113] In Dow Corning's case, the reorganization plan featured a myriad of negotiations and an exhaustive drafting process. [n.114] Acceptance of the Dow Corning Chapter 11 reorganization plan meant that an automatic stay was imposed upon the claimants in the class action suit. [n.115] Once the stay is lifted, the assets can then be distributed in accordance with the plan. [n.116] 

However, this is not the route that Judge Pointer took. Instead, he chose to allow suits against the parent companies to proceed despite the bankruptcy filing. [n.117] Perhaps the decision to allow Dow Corning's corporate veil to be pierced can be explained best by Judge Pointer's apparent desire to adequately compensate the victims quickly and efficiently with substantial money damages. In this regard, one commentator has stated that: 

The result has been a distortion of the tort system into a vehicle for dispensing pity. Certainly, everyone who files a lawsuit considers himself to be a "victim" who is owed money by a wrongdoer on the other side. But the conventional tort suit involves an assessment of moral responsibility . . . . Without any clear standards for proving a causal connection between an injury and someone's wrongdoing--or even whether there was any wrong done--a breast implant suit can be merely an effort to force society to pay with insurance premiums for the slings and arrows of life. [n.118] 

Although this observation concerns the admissibility of certain medical evidence linking Dow Corning to the parent companies, it is relevant to a discussion of corporate veil piercing. A similar "distortion of the tort system" has occurred as a result of Judge Pointer's decision in Silicone Gel II. 

Judge Pointer's decision in Silicone Gel II rests upon the premise that Dow Chemical could be found liable [n.119] under Restatement (Second) of Torts section 324A for negligent undertaking. [n.120] This holding is a curious reversal of his earlier opinion in Silicone Gel I, which granted summary judgment (but did not certify as a final order) in favor of Dow Chemical on all charges of direct liability. [n.121] As a basis for his decision, Judge Pointer acknowledged that "new" evidence had arisen in 1994, which "demonstrates that Dow Chemical was significantly involved with Dow Corning's breast implants." [n.122] 

What makes the Silicone Gel II decision so peculiar is that its factual setting was practically the same as in TMJ Implants, a case where Chief Judge Magnuson granted summary judgment for Dow Chemical on the same "new" evidence presented before Judge Pointer in Silicone Gel II. [n.123] Why, then, the disparity in holdings? Was it simply a "different interpretation" of the same evidence? In TMJ Implants, plaintiffs asserted the same argument as plaintiffs in Silicone Gel II; namely, that Dow Chemical should be found liable for the negligent performance of an undertaking under Restatement (Second) of Torts section 324A. [n.124] However, in concluding that section 324A did not apply, Judge Magnuson noted that there was insufficient evidence to show that the parent companies "undertook to "render services to another" [under section 324A] through its trademark agreements or through any other means." [n.125] 

While Judge Pointer correctly recognized that the mere existence of a trademark agreement alone does not give rise to an affirmative duty to inspect which could result in liability for Dow Chemical, [n.126] he stopped curiously short of dismissing plaintiff's trademark claim altogether, as was properly done in TMJ Implants. [n.127] Judge Pointer's result is inapposite as well to the holding of New York State, which was decided after Silicone Gel II and the surfacing of the "new medical evidence" upon which Silicone Gel II was based. 

In New York State, Justice Lobis explicitly stated that "despite the subsequent ruling of Judge Pointer [in Silicone Gel II] . . . there is no valid direct liability claim against Dow Chemical." [n.128] New York State was a case decided properly under New York State law, which does not apply the law of Restatement (Second) of Torts section 324A to the direct liability claim of negligent undertaking. [n.129] Instead, the court applied the traditional tort law of New York State, which directs a defendant to be held liable on a negligence claim if he owes the plaintiff a duty of care. [n.130] Based upon this standard, the court correctly refused to impose a duty of care on the parent company, finding that it never undertook to provide the end-users of Dow Corning silicone breast implants with any services, information, or products whatsoever. [n.131] Moreover, the court noted that the end-users of Dow Corning's implants never acted in reliance upon the parent company in forming the decision to purchase the implants. [n.132] 

Without some form of privity [n.133] --conduct linking defendant to knowledge of plaintiff's reliance--the class of potential plaintiffs would balloon. [n.134] Indeed, the hazards of adopting this view of the law of negligence would, according to Justice Lobis, wrongfully impose "virtually limitless liability" upon Dow Chemical where it had "no control over . . . the acts of the primary wrongdoer." [n.135] 

Considering the sound logic in cases like New York State and TMJ Implants, what Judge Pointer's decision in Silicone Gel II amounts to then, is a misapplication of well-established tort law principles. [n.136] One of the essential elements of the tort law system is the relationship between causation and claims in negligence and strict liability. [n.137] A by-product of the lack of medical evidence concerning the hazards of silicone gel breast implants is the resulting uncertainty about causation in general. [n.138] As a result, "[s]trong uncertainty about general causation [in mass exposure litigation] is . . . threatening to the traditional objectives of tort law." [n.139] 

At least in the context of the resulting Mahlum verdict, it appears as though the jury in that case was permitted to weigh in their sympathy "for the implant recipient and their possible hostility toward the large corporate manufacturers of the implant or its gel." [n.140] Customarily, punitive damages [n.141] are awarded in a wide variety of cases. [n.142] However, there is one general over-arching rationale that supports the allowance of punitive damage awards in every case: Punitive damages are not awarded as additional compensation for the plaintiff. [n.143] Rather, punitive damages "serve to punish the wrongdoer and deter that wrongdoer and others from engaging in similar conduct in the future." [n.144] 

One of the most striking features of the Mahlum verdict is that it did not properly serve the goals of the punitive damages system. How might the "wrongdoer" (Dow Chemical) be deterred from similar conduct in the future? [n.145] Additionally, Mahlum sends a message to other manufacturers of silicone medical implants. Namely, if punitive damages are meant to deter future similar conduct, what quantum of connection between the laboratory/manufacturer and end-user is required? [n.146] Arguably, the award of punitive damages in Mahlum will have the undesirable impact of stifling scientific growth by dissuading manufacturers and scientists alike by the threat of increased liability exposure. [n.147] 

As a result of Judge Pointer's decision in Silicone Gel II, and the resulting jury verdict in Mahlum, it seems clear that Dow Chemical is now exposed to potential liability for other types of silicone medical implants. Indeed, since various types of silicone are also used in other types of medical implants, Dow Chemical could conceivably be named as a defendant in many more lawsuits. As Justice Lobis noted in New York State, that liability would be both "indeterminate and infinite." [n.148] The key issue in these cases should involve an inquiry into "the extent of control that the defendant has over the ultimate injuries incurred by plaintiff." [n.149] Now, by limiting the scope of Dow Chemical's duty under section 324A, "a laboratory that tests a component for the express purpose of advising a manufacturer as to its suitability for use in a particular product" might be exposed to liability if it negligently performed those tests or provided advice to the manufacturer. [n.150] 

Similarly, it also appears that other manufacturers and scientists who research and develop compound medical implants will share potential liability in connection with their work product for the negligence of others who use a form of that compound in production of their own products. [n.151] As Chief Judge Magnuson properly noted in TMJ Implants: 

Dow Chemical correctly points out that to adopt Plaintiff's position would impose a heavy burden on scientists. Research that lays the basic groundwork in any scientific field is nearly always refined with time by subsequent discoveries. Many hypotheses are later determined to be inaccurate. This is the natural evolution of science. The law does not require a scientist who has published research to monitor all subsequent developments in the field and then to publish corrections when the conclusions from the original research prove to be wrong or incomplete. [n.152] 

True to this premise, fear of liability arising from the production and distribution of silicone-related liability has, in reality, forced many suppliers of silicone and other polymers to withdraw the medical implant business. [n.153] In fact, "many of the large suppliers of silicone and other related compounds . . . have decided to stop making plastics for medical implants because of the breast implant litigation." [n.154] Invariably, the threat of additional lawsuits means more punitive damages claims against the manufacturers of medical devices, and in turn, less profit on the devices because of the liability they must recompense to claimants. [n.155] 

Solving the quandary Dow Chemical now presently finds itself in will require some modicum of cooperation from the creditors of Dow Corning. The law of bankruptcy affords the plaintiff-victims in the silicone breast implant litigation a proper remedy. [n.156] Nonetheless, it is perhaps not a remedy which would produce either instant satisfaction on their claims or access to the "deep pockets" of a large corporation. [n.157] Professor John Coffee has noted that "[b]oth substantively and procedurally, bankruptcy reorganization has comparative advantages over a mass tort class action as a means of achieving equitable resolution of mass tort liabilities that is fair to tort creditors." [n.158] Under a chapter 11 bankruptcy reorganization plan, [n.159] Dow Corning will survive under protection of the court, and will eventually be able to pay its share of the settlement. [n.160] 

Dow Corning's latest proposal includes a $2.4 billion settlement offer to settle all implant claims world-wide. [n.161] For breast implant victims who reject the latest settlement proposal, they may still eventually file suit against Dow Corning, with any verdict being docked from the $1.4 billion fund. [n.162] Under the reorganization plan, Dow Corning has also proposed to construct a $1 billion fund to compensate creditors not associated with the implant lawsuits. [n.163] For their part, plaintiffs" lawyers countered with a proposed plan where Dow Corning would be required to set up a trust fund for distribution of payments to creditors. [n.164] 

While it is clear under bankruptcy law that the plaintiffs will not yet be able to raise their proposal in court, [n.165] this is just the sort of leverage that plaintiffs should eventually be using. Thus, rather than focusing their immediate attentions on the deep pocket defendant, Dow Chemical, plaintiffs should focus their attention on the true defendant in these cases, Dow Corning. Once the period of exclusivity is raised, plaintiffs then will be able to make a timely proposal of their plan in court. [n.166] 

Notwithstanding the status of Dow Corning in Chapter 11 bankruptcy reorganization, Dow Chemical must still contend with the existing jury verdict in Mahlum, as well as Judge Pointer's refusal to certify summary judgment in Silicone Gel II. [n.167] To this extent, it seems beneficial for Dow Chemical to have Mahlum%s award of damages thrown out or else fight the decision on appeal. [n.168] However, this task will not be as easily accomplished as it was in New York or California jury trials. On appeal, [n.169] the Mahlums argue that "new evidence" came to light in December, 1996--during the federal multidistrict litigation--which conflicts with earlier testimony that Dow Chemical never tested silicone materials or implants for Dow Corning. [n.170] Dow Chemical argues that Charlotte Mahlum's fraud claims were based on "the unsupported proposition that it had a duty to disclose bits of information it obtained from occasional tests of silicone compounds." [n.171] 

What will it take for Dow Chemical to convince the Nevada Supreme Court to overturn the Mahlum verdict? Several major organizations have joined in Dow Chemical's defense by submitting amicus curiae briefs which highlight the Company's key legal arguments. [n.172] One of the most convincing arguments submitted on behalf of Dow Chemical characterized the jury verdict as "an unprincipled expansion of tort law in Nevada." [n.173] Another amicus brief noted that the trial court took part in "a "disturbing trend" among some courts to abandon proximate cause principles and permit juries to effectuate various theories of "deep pocket" liability." [n.174] Two other amicus briefs took issue with the outrageous extent of the punitive damages exacted upon Dow Chemical. [n.175] Ultimately, these briefs frame the issues on appeal quite properly and persuasively. Hopefully, the Nevada Supreme Court will correct the trial court's error by properly ruling on these issues, and tossing out the Mahlum jury verdict. 

Competing interests have resulted in diverse legal consequences for Dow Chemical in the silicone gel breast implant litigation cases. On the one hand is Dow Corning, a subsidiary company immune from suit due to its status in chapter 11 bankruptcy. On the other hand are tens of thousands of breast implant victims with auto-immune disorders and other health-related consequences, who can no longer seek legal recourse against the proper defendant. These competing interests have resulted in the victims" settling on Dow Chemical as a deep-pocket defendant with both the assets and resources to handle such suits, even though evidence clearly suggests a tenuous causal link between Dow Chemical's involvement in both the design of silicone gel and the production and marketing of the breast implants. 

Traditionally, these suits against Dow Chemical were properly disposed of and the corporate veil of Dow Corning respected. However, Judge Pointer's decision in Silicone Gel II and the resulting jury verdict in Mahlum have had unfortunate repercussions for Dow Corning and Dow Chemical, quite apart from the apparent disrespect of their corporate form. What these cases illustrate is a distortion of the tort law system, where plaintiffs were allowed to pursue a deep-pocket defendant. As a result, it now seems unclear to what extent Dow Chemical and other corporations similarly-situated will bear the brunt of potential lawsuits. It also remains to be resolved what Mahlum and Silicone Gel II will mean for inventors who have no direct participation in the production or manufacture of a medical device aside from the initial process of fabrication. 

Evan Caplan 

-------------------------------------------------------------------------

Notes

* The author would like to thank Jacob Sitman for his valuable contributions to this piece.

1 . David Partlett, Punitive Damages: Legal Hot Zones, 56 La. L. Rev. 781 (1996). 

2 . Mimi Swartz, Silicone City: The Rise and Fall of the Implant, or How Houston Went From an Oil-Based Economy to a Breast-Based Economy, Texas Monthly, Aug. 1, 1995, v.23, n.8, § 1 at 6-7. 

3 . Id. 

4 . Id. 

5 . Id. 

6 . Id. 

7 . In re Silicone Gel Breast Implants Products Liability Litigation, 887 F. Supp. 1455, 1457 (N.D. Ala. 1995). 

8 . Id. 

9 . Thomas Gilroy and Patrick M. Creaven, Drafting the Form 10-K, PLI Corp. Law and Practice Course Handbook Series No. 917 at 397 (1996) [hereinafter Gilroy and Creaven]. 

10 . 887 F. Supp. at 1457. 

11 . The article stated that "silicones . . . as a class are very low in toxicity" and that "finished silicone resins are physiologically inert and present no hazards." Id. ("The article has been cited as spawning an interest in the use of silicones in medical products.") 

12 . Artiglio v. Corning, Inc., 56 Cal. Rptr. 2d 877, 880 (Ct. App. 1996) ("[T]he report stated that some types of silicones caused irritation, inflammation, edema and necrosis, that vapors of volatile silicones caused death in a saturated atmosphere and that exposure to low vapor concentrations resulted in slowed growth in guinea pigs and slight increase in the weight of their liver and their kidneys.") 

13 . Id. 

14 . Id. A 1954 toxicity study of a certain type of silica dust being generated by Dow Corning for possible applications to the cosmetic industry "concluded that exposing rats to high levels of the silica dust severely damaged their pulmonary systems." Id. A 1956 study of a silicone compound which would later be used in breast implants found that the compound was susceptible to migration through mammals" bodies, and could be absorbed through the skin to reach a rabbit's adrenal glands and kidneys. Id. A 1959 study performed by Dow Chemical revealed that silicone caused eye irritation. Id. at 881. 

15 . Id. at 851. At that time, silicone gel breast implant products accounted for a mere 1% of Dow Corning's revenues. Harvey L. Pitt & Karl A. Groskaufmanis, When Bad Things Happen to Good Companies: A Crisis Management Primer, 15 Cardozo L. Rev. 951, 954 (1994). 

16 . 887 F. Supp. at 1458. Despite these findings Dow Chemical scientists maintained that the hazards "were due to other forces and that no further testing needed to be conducted." Id. 

17 . Id. The agreement contemplated that Dow Corning's products using Dow Chemical's name must be "of a nature and quality that is acceptable to Dow Company and shall not damage or reflect adversely on the reputation or goodwill associated with the name," and that Dow Corning, upon request, submit specimens of its products to Dow Chemical for quality control inspection. Id. at 1458-59 (citing Trade Name and Trademark Agreement between Dow Chemical and Dow Corning.) 

18 . WLN Breast Implant Pathfinder, West's Legal News, Jan. 16, 1997, available in 1997 WL 12523 at *3. 

19 . Id. Of these, only a handful resulted in jury verdicts against the breast implant manufacturer. See, e.g., Stern v. Dow Corning Corp., No. C 83-2348 MHP (M.D. Cal. Nov. 15, 1984) cited in Snyder, infra note 42, at 165 n.164; Marks v. Minnesota Mining & Mfg. Co., 232 Cal. Rptr. 594 (Ct. App. 1987). 

20 . WLN Breast Implant Pathfinder, West's Legal News, Jan. 16, 1997, available in 1997 WL 12523, at *3. 

21 . Id. 

22 . Id. 

23 . In the context of silicone gel breast implant cases, almost no major manufacturer is immune from suit. Among the major companies that have been targeted with lawsuits in connection with silicone gel breast implants are Bristol-Myers Squibb, Baxter Healthcare, 3M, and Dow Corning. Plaintiffs in these cases have proceeded with varying levels of success against all of the key manufacturers and producers of implant products in many jurisdictions, based upon a variety of legal theories and doctrines. See Toole v. McClintock, 999 F.2d 1430 (11th Cir. 1993) (inadequate manufacturer's warning claim); Holdridge v. Heyer-Schulte Corp., 440 F. Supp. 1088 (N.D.N.Y. 1977) (continuous tort theory); Rosburg v. Minnesota Min. & Mfg. Co., 226 Cal. Rptr. 299 (Ct. App. 1986) (failure to warn charge); Craft v. Peebles, 893 P.2d 138 (Haw. 1995) ("learned intermediate" rule). 

Not surprisingly, the Federal Register has responded by publishing periodic announcements regarding breast implants and product safety. See 57 Fed. Reg. 10702-01 (1992) (proposed Mar. 27, 1992) (to be codified at 21 C.F.R. pt. 821) (requiring an agency to track medical devices which have silicone gel as the primary component, and are intended to remain in the body for 30 days or longer); 58 Fed. Reg. 3436-01 (1993) (proposed Jan. 8, 1993) (FDA proposal to require the filing of a specified approval form prior to receiving a silicone inflatable breast prosthesis); 60 Fed. Reg. 33608-01 (1995) (to be codified at 21 C.F.R. pt. 878) (explaining how to receive a copy of a patient risk information statement assembled by the FDA entitled Information for Women Considering Saline-filled Breast Implants). 

24 . Woman Wins Implant Suit, N.Y. Times, Dec. 17, 1991, at A5. The jury found Dow Corning liable under breach of warranty and fraud claims. Id. See Hopkins v. Dow Corning Corp., No. 92-16132, 1992 WL 176560 (N.D. Cal., May 27, 1992), aff-d, 33 F.3d 1116 (9th Cir. 1994). 

25 . Philip J. Hilts, F.D.A. Seeks Halt in Breast Implants Made of Silicone, N.Y. Times, Jan. 7, 1992, at A1. To date, there is still a great deal of uncertainty among some medical and legal scholars regarding the safety of silicone gel breast implants. See Charlotte Allen, Jurisprudence of Breasts, 5 Stan. L. & Pol-y Rev. 83, 85 (1994) ("[A] small minority of immunologists and other scientists are convinced of such a causal connection based on their own experience with patients."); Heidi Li Feldman, Science and Uncertainty in Mass Exposure Litigation, 74 Tex. L. Rev. 1, 23 (1995) ("Research addressing the effects of silicone breast implants on the human body is tentative. Some research indicates that silicone breast implants may cause harmful effects, and some research suggests that implants cause no harmful effects."); Ray Chao, Study Says Breast Implants Not the Source of Disease, 7 Loy. Consumer L. Rep. 124 (1995) ("A new study by the Harvard Medical School found no link between silicon[e] breast implants and connective tissue diseases."); see also Aaron M. Levine, Fundamental Issues in Litigating Breast Implant Cases, 451 Litigation at 15, 87 (PLI Litig. & Admin. Practice Course & Series Handbook No. 451 1992) (offering a breast-implant plaintiff attorney's guide to "the most important published studies supporting a relationship between silicone and adjuvant toxicity"). 

It seems clear, however, that the vast majority of legal and medical scholars agree that there is absolutely no link between silicone gel breast implants and systemic diseases. Silicone Breast Implants Not Linked to Tissue Disease, Long-Term Study Finds, The Balt. Sun, June 22, 1995, at 3A. This postulate has recently found its way into the courts. See Hall v. Baxter Healthcare Corp., 947 F. Supp. 1387 (D. Or. 1996) (expert testimony that silicone gel breast implants cause atypical connective tissue disease, systemic illness, or autoimmune disorder not permitted on the grounds that it is too speculative). 

26 . Plaintiffs sought damages for cancer, ruptured implants, and immune system disorders. Tamar Lewin, As Silicone Issue Grows, Women Take Agony and Anger to Court, N.Y. Times, Jan. 19, 1992, at A1. By this time, concerns that Dow Corning had sacrificed women's health in the name of profit-margin were widespread. See Rebecca Weisman, Reforms in Medical Device Regulation: An Examination of the Silicone Gel Breast Implant Debacle, 23 Golden Gate U. L. Rev. 973, 988 (1993), asserting that Dow Corning, through suppression of medical studies and concealment of the dangers of silicone gel implants, had given "a false sense of security to the medical community . . . that breast implant surgery was a low-risk procedure." 

Low risk or not, an estimated one to two million women had undergone silicone gel breast implant surgery between 1964 and 1992. Thomas Koenig & Michael Rustad, His and Her Tort Reform: Gender Injustice in Disguise, 70 Wash. L. Rev. 1 (1995) [hereinafter Koenig & Rustad]. Eight out of every ten of these women augmented otherwise healthy breasts. Id. at 42-43. 

27 . WLN Breast Implant Pathfinder, West's Legal News, Jan. 16, 1997, available in 1997 WL 12523, at *6. Today, silicone breast implant litigation has risen to become the largest class action in history. Max Boot, Rule of Law: Tort Lawyers Gear Up for More Silicone Silliness, Wall St. J., Oct. 4, 1995, at A15. The producers of breast implants are not the only defendants who have had lawsuits filed against them in connection with the class action. Healthcare providers, including hospitals and surgeons, have also been party defendants in multiple lawsuits involving faulty breast implants. WLN Breast Implant Pathfinder, West's Legal News, Jan. 16, 1997, available in 1997 WL 12523, at *3. 

Generally, the claims in these cases are based on theories that the medical providers misrepresented the risks of breast implants to the alleged victims. Id. See, e.g., Korman v. Mallin, 858 P.2d 1145 (Alaska 1993) (presenting a factual issue as to whether a hospital surgeon failed to adequately disclose the risk of painful and unsightly scarring on recipient of breast implants). However, healthcare providers have also been sued by plaintiffs who had proceeded upon various other legal theories. See Whiddon v. Elliott, 594 So. 2d 449 (La. Ct. App. 1991) (negligent malpractice); McMahon v. Brown, 371 N.W.2d 414 (Wis. Ct. App. 1985) (breach of contract); Toppino v. Herhahn, 673 P.2d 1318 (N.M. Ct. App. 1983), aff-d in part and rev-d in part on other grounds, 673 P.2d 1297 (N.M. 1983) (breach of warranty). 

28 . See Richard A. Nagareda, Turning From Tort to Administration, 94 Mich. L. Rev. 899, 916-17 (1996) ("Consolidation techniques . . . [seek] to gather mass tort claims in a single forum."). 

29 . In re Silicone Gel Breast Implants Products Liability Litigation, 793 F. Supp. 1098 (1992). 

30 . No. CV 92-P-10000-S, No. Civ. A. 94-P-11558-S, 1994 WL 578353 (N.D. Ala. Sept. 1, 1994). Implant manufacturers, including Dow Corning and Baxter Healthcare, contributed over $4.25 billion to the relief fund, "rendering it the largest medical product liability settlement in history." Feldman, supra note 25 at 21. 

31 . Barnaby J. Feder, Dow Corning in Bankruptcy Over Lawsuits, N.Y. Times, May 16, 1995, at A1. One week later, Dow Corning requested a stay in federal court on all litigation against its parent companies, Dow Chemical Co. and Corning, Inc. Dow Corning Seeks Halt to Suits Against its Parents, N.Y. Times, May 24, 1995, at D1. This request was promptly refused by the federal bankruptcy judge. In re Dow Corning Corp., 198 B.R. 214 (E.D. Mich. 1996); Judge Bars a Freeze on Implant Lawsuits, N.Y. Times, May 27, 1995, at A5. 

32 . 11 U.S.C. § 362(a) (1994). Section 362(a)(1) restrains "the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case . . . or to recover a claim against the debtor that arose before the commencement of the case." Id. See generally, Richard I. Aaron, Bankruptcy Law Fundamentals § 1.04 (1993). As a general rule, a corporate entity which petitions for chapter 11 protection "is protected from creditors" lawsuits while it works out a plan to pay debt." Martin J. Bienenstock, Bankruptcy Reorganization (Practicing Law Inst. No. 97, 1987). Filing of the petition automatically invokes the stay, which prevents all entities from either commencing or continuing actions against the debtor. Id. The automatic stay is not a permanent feature of Chapter 11 protection. Id. at 7. As long as the debtor can show "a realistic prospect of reorganization", the stay will not be terminated by the court. Id. 

33 . WLN Breast Implant Pathfinder, West's Legal News, Jan. 16, 1997, available in 1997 WL 12523. 

34 . Id. Some lawyers came to regard Dow Chemical "almost as a potential savior for the underfunded global [settlement] agreement." Mark Curriden, Implant Global Settlement in Jeopardy, 81 A.B.A. J. August 1995, at 34-35 [hereinafter Curriden]. Even though Dow Chemical was not an "official player in the negotiations it was perceived by many analysts to be sitting at the table as a silent partner." Id. at 35. Thus, after Dow Corning's bankruptcy filing, Dow Chemical became a "prime target for plaintiffs." George Flynn, Dow Corning Removed from Implant Trials, Hous. Chron., May 17, 1995, at A21. 

35 . Gilroy and Creaven, supra note 9, at 402. 

36 . Id. 

37 . See infra, notes 77-99 and accompanying text. 

38 . See In re New York State Silicone Breast Implant Litig., 632 N.Y.S.2d 953 (Sup. Ct. 1995), aff-d, 642 N.Y.S.2d 681 (N.Y. App. Div. 1996) [hereinafter New York State]; In re Conn. Breast Implant Litig., 1994 WL 668032 (Conn. Super. Ct. 1994); In re TMJ Implants Products Liability Litig., 880 F. Supp. 1311 (D. Minn. 1995), aff-d, 113 F.3d 1484 (8th Cir. 1997). See also, Artiglio v. Corning Inc., 56 Cal. Rptr. 2d 877 (Ct. App. 1996) (dismissing Dow Chemical and Corning from California state court breast implant claims). 

39 . The concept of "piercing the corporate veil of limited liability" is alternatively known as "holding the corporation liable for acts of its alter ego," and has been held to be a "dominant characteristic of American corporation law." Baker v. Raymond Int-l, Inc., 656 F.2d 173, 179 n.5 (5th Cir. 1981). Under the doctrine of limited liability, a creditor generally has recourse only against the corporate entity whose acts gave rise to the liability, not the parent corporations or stockholders. Id. at 179. However, there are "exceptional circumstances" where the courts will "exercise their equitable power to hold the controlling parties liable for the obligations of their instrumentality." Id. See, e.g., Krivo Indus. Supply Co. v. Nat-l Distillers & Chem. Corp., 483 F.2d 1098, 1102-07 (5th Cir. 1973), modified per curiam, 490 F.2d 916 (5th Cir. 1974). See also, Hon. Barry Russell, Bankruptcy Evidence Manual § 301.91 (1995) (citing H. Henn & J. Alexander, Laws of Corporations § 148, at 355-56 (3d ed. 1983)). 

There appears to be no uniform bright line rule for determining when the parent corporation will be held liable for the acts of the subsidiary. Baker, 656 F.2d at 179. See also, DeWitt Truck Brokers, Inc. v. W. Ray Flemming Fruit Co., 540 F.2d 681 (4th Cir. 1976) (whether an entity is the alter ego of another is a very fact-sensitive inquiry not easily broken down into a simple legal formula). However, the courts will generally pierce the corporate veil "when 1) the corporation is the alter ego of its owners or shareholders, 2) the corporation is used for illegal purposes, and 3) the corporation is used as a sham to perpetuate a fraud." Villara v. Crowley Maritime Corp., 990 F.2d 1489, 1496 (5th Cir. 1993), cited in In re Guyana Dev. Corp., 168 B.R. 892 (S.D. Tex. 1994). In situations where the creditor seeks to hold a shareholder directly liable for the debts of the subsidiary, the creditor carries the burden of proving the basis for piercing the corporate veil. In re Multiponics, Inc., 622 F.2d 709 (5th Cir. 1980). 

40 . See New York State, 632 N.Y.S.2d at 956 (recognizing that "there is only a tenuous connection between Dow Chemical and the ultimate purchasers of breast implants"). 

41 . 837 F. Supp. 1128 (N.D. Ala. 1993). 

42 . Id. at 1132. In general, plaintiffs involved in suits against the manufacturers of silicone gel breast implants will presumably be able to raise numerous causes of action. These include, but are not limited to, negligence per se, misrepresentation, fraud by concealment, false advertising, violation of state law or state consumer protection statutes, res ipsa loquitur, conspiracy, loss of consortium, intergenerational injuries, medical monitoring, and intentional or negligent infliction of emotional distress. See Jack W. Snyder, Silicone Breast Implants: Can Emerging Medical, Legal, and Scientific Concepts Be Reconciled?, 18 J. Legal Med. 133, 187-93 (1997) [hereinafter Snyder]. 

43 . Silicone Gel I, 837 F.Supp. at 1134. 

44 . Id. at 1138. On the corporate veil issue, the court reasoned: 

There is no evidence of intermingling or commingling of funds or of any improper loans between the parents and the subsidiary . . . . There is no evidence that [the parent companies] drained Dow Corning of its assets, even after they had knowledge of the potential liability for silicone gel breast implants . . . . Although Dow and Corning have had significant contacts with their subsidiary, these contacts do not . . . rise to the level of manipulation and control that would support a piercing of the corporate veil . . . . The various business dealings between the three companies appear to have been carried out with due regard for the separate existence and interests of each, with all necessary corporate formalities being observed. 

Id. The court also found a lack of evidence that Dow Corning was undercapitalized by the parent companies.

Id.45 . Id. Generally, joint venture is a form of business organization which is more similar to a partnership and less like corporation. Id. at 1139. The term itself is difficult to define precisely, but several characteristics help distinguish it from other sorts of corporate arrangements. Under a joint venture each parent corporation "must make a substantial contribution to the joint venture, and the parents must themselves not be under related control." Joseph F. Brodley, Joint Ventures and Antitrust Policy, 95 Harv. L. Rev. 1521, 1526 (1982). A joint venture also results in the creation of a joint enterprise which exists wholly independent from the parent companies. Id. at 1525. In addition, the new enterprise enjoys productive and/or marketing capabilities. Id. The joint venture gives the new enterprise the advantage of economic control and stability, particularly where the business involves high risk or new technology. Id. at 1528-29. 

However, there are relative disadvantages to a joint venture. Often, the joint venture is a "cumbersome organization" with divided control among the parent corporations. Id. at 1529. For Dow Corning in particular, the effect of being classified as a joint venture is that the parent companies would then become jointly and severally liable for Dow Corning's responsibilities. Silicone Gel I, 837 F. Supp. at 1138. See, e.g., Tehran-Berkeley Civil & Envtl. Eng-rs v. Tippetts-Abbett-McCarthy-Stratton, 888 F.2d 239 (2d Cir. 1989). 

46 . Silicone Gel I, 837 F. Supp at 1138-39. Plaintiffs attempted to bolster their argument by proving that the profit-sharing objectives of the parent companies was evidenced by certain financial arrangements, loans from the parents to the subsidiary, and additional insurance coverage. Id. 

47 . Id. 

48 . Id. at 1140. 

49 . Id. Section 315 provides: "There is a no duty so to control the conduct of a third person as to prevent him from causing physical harm to another unless . . . a special relationship exists between the actor and the third person which imposes a duty upon the actor to control the third person's conduct." Restatement (Second) of Torts § 315 (1965). 

50 . Silicone Gel I, 837 F. Supp at 1140. 

51 . Id. The fraud and conspiracy actions are premised on the notion that the parent companies, along with Dow Corning, knew about the hazards of silicone gel implants and either concealed or suppressed these facts. Id. The remaining claims are based on the parent companies" alleged participation in the development and funding of the implants, as well as their hand in supplying and manufacturing the materials. Id. 

52 . Id. 

53 . Id. The court properly found that: 

[t]here is no evidence that [the parent companies] had any special knowledge of the alleged harmfulness of Dow Corning's implants, that either company manufactured or supplied raw materials which have contributed to any defect or hazardous condition of breast implants, or that their participation and funding was anything other than the proper activities of corporate stockholders. 

Id. In one noteworthy class action suit, Dow Chemical even filed a crossclaim against Dow Corning for contribution and indemnification. See Spitzfaden v. Dow Corning Corp., No. Civ. A. 95-2578, 1995 WL 662663, at *1 (E.D. La. 1995).

54 . 632 N.Y.S.2d 953. The court also held that plaintiff's claim for market share liability was inapplicable to breast implants since manufacturers are generally ascertainable, and not all manufacturers" products are identical. See also Dana Shannon, Departure from Established Tort Theories Inappropriate for Breast Implant Litigation, 8 Loy. Consumer L. Rep. 71 (1996). 

55 . Specifically, the court noted that "[t]he undisputed facts establish that Dow Chemical never designed breast implants, manufactured breast implants, sold breast implants, tested breast implants for safety or opined about the safety of breast implants." New York State, 632 N.Y.S.2d at 954. 

56 . Id. at 955. Plaintiffs alleged that Dow Chemical breached its duty to use reasonable care in the research and testing of the silicone product. Id. For a summary of toxicity studies, see supra notes 10-17 and accompanying text. 

57 . New York State, 632 N.Y.S.2d at 956. 

58 . Id. at 957. 

59 . Id. 

60 . In re New York State Silicone Breast Implant Litig., 642 N.Y.S.2d 681, 682 (App. Div. 1996). 

61 . 880 F. Supp. 1311 (D. Minn. 1995), aff-d, 113 F.3d 1484 (8th Cir. 1997). Doctors recommended the TMJ implants primarily to relieve pain associated with improper function of plaintiffs" temporomandibular joints. Id. at 1314. Plaintiffs in this suit alleged that the implants (which contained either teflon or silicone) disintegrated, causing serious injuries to the jaw bone and surrounding tissue. Id. at 1314-15. 

62 . Id. at 1315. 

63 . Id. In reaching this conclusion, the court noted that Michigan law requires a corporation's separate identity to be respected unless the subsidiary "has become a mere instrumentality of its . . . parents." Id. at 1315-16. The court found that, because all corporate formalities between the parent companies and Dow Corning had been observed since the subsidiary's inception, "there are no facts that would demonstrate that Dow Corning is a mere instrumentality of [the parent companies]." Id. at 1316. Likewise, plaintiffs" joint venture claim was rejected. Citing Silicone Gel I, the court observed that, since the parties had not agreed to share in both profits and losses but had "elected to do business together via the corporate form", summary judgment for defendants was appropriate on the issue of joint venture. Id. 

64 . The direct liability claims were based on allegations of fraudulent concealment and misrepresentation, aiding and abetting, and coconspiracy. Id. at 1316-20. 

65 . Id. at 1317. Plaintiffs also alleged that Dow Chemical had a "duty to correct" information it had released about the safety of silicones in connection with human implants. Id.; see supra note 11 and accompanying text. To this extent, plaintiffs relied on section 551(2)(c) of the Restatement (Second) of Torts, which provides that one party to a business transaction has a duty to disclose when "subsequently acquired information that he knows will make untrue or misleading a previous representation that when made was true or believed to be so." Restatement (Second) of Torts § 551(2)(c) (1975). Holding that there was no fiduciary relationship between the plaintiffs and Dow Chemical (and hence no business relationship), the court held that section 551(2)(c) was inapplicable. TMJ Implants, 880 F. Supp at 1317. 

66 . "Plaintiffs have introduced no evidence that the alleged misrepresentations by Dow Chemical were made in an attempt to induce Plaintiffs to purchase TMJ implants." Id. at 1318. 

67 . Section 876(b) provides that one party can be held liable for the torts of another if he "knows that the other's conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other so to conduct himself." Restatement (Second) of Torts § 876(b) (1977). The court noted that, although there was some interaction between researchers at Dow Corning and scientists at Dow Chemical, there was insufficient evidence to show that the subsidiary was "heavily dependent" upon Dow Chemical for help in the manufacturing of TMJ implants. TMJ Implants, 880 F.Supp at 1319. 

68 . Id. at 1320. 

69 . Id. The court rejected similar arguments proffered by plaintiffs based upon trademark licensor theories as well as negligent performance of an undertaking. Id. at 1321-22. 

70 . Id. at 1316 n.3. In at least one case, plaintiffs attempted to establish direct liability on the parent companies via the Restatement (Second) Torts section 324A, rather than proceeding on theories that Dow Chemical is the alter ego of Dow Corning, that the corporate veil of Dow Corning may be pierced, or that the parent companies had a duty to supervise the manufacturing and marketing of the subsidiary's products. Artiglio v. Corning, Inc., 56 Cal. Rptr. 2d 877, 882 (Ct. App. 1996). A successful claim under section 324A imposes liability upon those who provide services which are designed to protect a third party from harm. See infra, note 120 and accompanying text. 

71 . In re Connecticut Breast Implant Litig., No. CV93-0999999S, 1994 WL 668032, at *1 (Conn. Super. Ct. Nov. 21, 1994). 

72 . Id. at *4. 

73 . Id. The Court granted that Dow Chemical and Corning have shared equally in the profits of Dow Corning, and that both parent companies have, on occasion, "referred to Dow Corning as their "joint venture.%" Id. 

74 . Id. 

75 . Id. at *5. The court's decision whether a business entity is a joint venture turns on whether or not the parties involved have "failed to articulate the nature of their business relationship." Id. 

76 . Id. at *6. 

77 . 887 F. Supp. 1455 (N.D. Ala. 1995). 

78 . Id. at 1462. Judge Pointer also denied a similar motion for summary judgment by Bristol Myers on the same day. See In re Silicone Gel Breast Implants Products Liability Litig., 887 F. Supp. 1447 (N.D. Ala. 1995). While conceding that Bristol Myers never participated in the manufacture or distribution of breast implants, Pointer nevertheless held that genuine issues of material fact remained on the issues of corporate control and direct liability. 887 F. Supp. at 1455. 

79 . Mahlum v. American Heyer-Schulte Corp., No. CV93-05941 (Nev. Dist. Ct. Oct. 30, 1995) (Judge Connie Steinheimer) (Case filed 1993, punitive verdict rendered October 31, 1995). Cited in Snyder, supra note 42, at 174 n.207. See also, Michael Lasalandra, $10M Award in Breast Implant Suit, Boston Herald, Oct. 31, 1995. 

80 . 887 F. Supp. 1455 (N.D. Ala. 1995). 

81 . Id. at 1456. Plaintiffs alleged that Dow Chemical should be found directly liable for negligence, strict liability, corporate conspiracy, concert of action, aiding and abetting, fraud, and fraudulent concealment. Id. at 1459. 

82 . Id. at 1456. This "new evidence" allegedly revealed that Dow Chemical was involved in all stages of silicone gel testing from the 1940's until the 1970's and that Dow Chemical was involved in the selling of the implants via its foreign subsidiary, Lepetit. Id. 

83 . Id. at 1459. See TMJ Implants, 880 F. Supp 1311 (D. Minn. 1995). In the context of a toe implant case, after consideration of the new 1994 evidence, Dow Chemical's motion for summary judgment on direct liability claims was denied. Emert v. Dow Corning Corp., No. 91-127-061-NP (Cir. Ct. Mich. Mar. 31, 1995), cited in Silicone Gel II, 887 F. Supp. at 1459. A similar result was initially reached in a Texas jury verdict against Dow Chemical in 1995. Laas v. Dow Corning Corp., No. 92-16550 (Tex. Dist. Ct., Harris Cty., 157th Dist. Feb. 15, 1995), cited in Snyder, supra note 42, at 174 n.205. The jury in that case found Dow Chemical jointly and severally liable with Dow Corning in the amount of $5.23 million for having encouraged or assisted Dow Corning with the marketing of untested breast implants. Gilroy and Creaven, supra note 9, at 403. 

Specifically, Dow Chemical was assessed 20% liability and Dow Corning 80% liability for Laas's injuries. Dow Chemical's liability was premised on the jury panel's finding that Dow Chemical "knowingly gave substantial encouragement or assistance in marketing silicone breast implants using materials that had not been adequately tested." Snyder, supra note 42, at 174. However, Dow Chemical was later successful in having Judge Schneider "disregard as a matter of law" the sole jury count against the parent company, one count of aiding and abetting. Plaintiffs in Laas/Ladner Seek Severance of Dow Chemical Claims, 3 No. 13 Mealey's Litig. Rep: Breast Implants 4 (May 11, 1995). 

84 . J. Stratton Shartel, Litigator Uses Early Studies Against Dow Chemical, 9 No. 12 Inside Litig. 1 (1995). 

85 . Id. 

86 . Id. at 2. 

87 . Id. 

88 . Mahlum v. American Heyer-Schulte Corp., No. CV93-05941 (Nev. Dist. Ct. Oct. 30, 1995) (Judge Connie Steinheimer) (Case filed 1993, punitive verdict returned October 31, 1995), cited in Snyder, supra note 42, at 174 n.207. 

89 . See Shartel, supra note 84, at 2. 

90 . Id. On Dow Corning's petition for Chapter 11 bankruptcy protection, see supra notes 31-32 and accompanying text. 

91 . See Shartel, supra note 84, at 2. Mahlum also argued that scientists at Dow Chemical were aware of the potential hazards of silicone. Id. She proceeded on theories of negligent performance of an undertaking, fraudulent concealment, aiding and abetting and concert of action. Ample Evidence Presented to Support Dow Chemical Liability, Mahlum Argues, 4 No. 24 Mealey's Litig. Rep.: Breast Implants 12 (Oct. 24, 1996) [hereinafter Mahlum Argues]. At trial, Dow Chemical argued that there was no medical or scientific evidence to support a causal link between breast implants and Mahlum's alleged injuries. See Shartel, supra note 84, at 2. Further, Dow Chemical insisted that it should not be held liable for Mahlum's injuries because it was not even in the silicone business. Id. 

92 . Mahlum Argues, supra note 91, at 12. Specifically, "[t]he jury found that Dow Chemical had fraudulently concealed the dangers of liquid silicone and had aided and abetted Dow Corning, which had fraudulently misrepresented the safety of silicone breast implants" and that Dow Chemical had "exhibited a conscious disregard for safety." Shartel, supra note 84, at 4. This verdict marked the first time in history that claims against Dow Chemical for liability in connection with breast implants were redressed. Steve Wilson, Different Standards of Proof Blur Breast-Imlant Verdict, Ariz. Republic, Nov. 3, 1995, at A2. 

93 . Mahlum Argues, supra note 91, at 12. 

94 . See, e.g., Wilson, supra note 92, at A2; Ann G. Sjoerdsma, Emotion Defeats Reason in Verdict on Breast Implants, Virginian-Pilot, Nov. 5, 1995, at E1; Barry Meier, Dow Chemical Held Liable in Implant Case, N.Y. Times, Oct. 30, 1995, at A14; Michael Lasalandra, $10M Award in Breast Implant Suit, Boston Herald, Oct. 31, 1995, at 4; Jay Mathews, Jury Targets Dow Chemical For Breast Implant Damages, Wash. Post, Oct. 31, 1995, at D1. 

95 . Wilson, supra, note 92, at A2. 

96 . Mahlum Argues, supra note 91, at 12. Judge Steinheimer also denied Dow Chemical's request for a remittitur of the $10 million punitive damages award. Snyder, supra note 42, at 175. 

97 . Dow Chemical Co. v. Mahlum, No. 28600 (Nev. S. Ct.) (filed Sept. 30, 1996). 

98 . Mahlum Argues, supra note 91, at 12. "The chemical company adds that there is no special relationship between it and Mahlum and there is no general duty to warn even in cases where a defendant had actual knowledge of some potential danger." Id. Further, Dow Chemical asserts that there was insufficient proof offered by Mahlum to support her negligent performance of an undertaking because she could not show that her ailments were directly caused by her breast implants. Id.

Dow Chemical contended that the trial court should have relied upon the law of either Michigan or Minnesota, rather than Nevada law, and should have granted its Daubert motion to prevent plaintiff's expert's causation testimony. Snyder, supra note 42, at 175. Lastly, Dow Chemical asserted that its preparation for the trial was prejudiced by Dow Corning's Chapter 11 petition, which left the parent company as the sole defendant several months prior to trial. Id. 

99 . Id. 

100 . Nagareda, supra note 28, at 914. 

101 . Nagareda, supra note 28, at 955. In fact, Judge Pointer originally reported that "no one has reliable data" on the number of existing or potential claims, and that he would not "even hazard a guess" as to the correct amount. Id. (quoting Lindsey, 1994 WL 578353, at *21-22). 

102 . John C. Coffee, Jr., Class Wars: The Dilemma of the Mass Tort Class Action, 95 Colum. L. Rev. 1343, 1409 (1995). Dow Corning, as of May, 1995, was "[f]acing a future of seemingly endless, repetitive, and expensive individual cases." Id. at 1386-87. The Chapter 11 reorganization petition was viewed as "a quick fix that would resolve all . . . liabilities in one proceeding." Id. 

103 . Id. at 1409. The filing of bankruptcy as a tactic to stay present and future litigation worked to the benefit of Johns-Manville in asbestos litigation and A.H. Robins Co. in the Dalkon Shield actions. Curriden, supra note 34, at 34. In those cases, payments to the victims were postponed for years, and in some cases, dramatically reduced. Id. 

104 . See Coffee, supra note 102, at 1409. 

105 . Id. at 1410. 

106 . Id. Coffee notes that: 

[B]y combining a class action with a bankruptcy filing, Dow Corning's management achieved objectives that would be impossible under either technique alone. Standing alone, bankruptcy could enable Dow Corning's management to achieve a complete global resolution of its liabilities, but at the possible cost of its management losing control of the company . . . . Standing alone, a class action could enable Dow Corning to achieve a cheaper settlement . . . , but at the cost of remaining vulnerable to opt-outs . . . . 

Id. Used together, however, the combination of the class action and the petition for Chapter 11 protection afforded Dow Corning the ability to change "a standard Rule 23(b)(3) opt out class action into a de facto mandatory class action." Id.

107 . "Private litigants look for the deep pocket; when an injured plaintiff searches for a source of compensation, "whoever can afford it" suffices." Peter H. Turza & Mark Snyderman, In Search of Deep Pockets, 146 N.J.L.J. Nov. 25, 1996 at 33. See also, Paul A. Williams, Removing Hands from "Deep Pockets": Restrictions on Punitive Damage Recovery in Strict Products Liability, 62 U.M.K.C. L. Rev. 619, 620 (1994) (discussing the use of punitive damages by plaintiffs "as a mechanism to reach into "deep pockets" of healthy businesses and abuse the justice system by achieving a redistribution of wealth"). 

Indeed, "the gamble by plaintiffs" lawyers [in the Dow Chemical cases] is that a few significant [trial] wins and mounting lawyers" fees will push implant makers back to the negotiating table, where they will ante up more money." Mark Curriden, Lawyers Advise Implant Clients to Reject Offer, 82 A.B.A. J., Jan. 1996 at 18. The upshot of this is that plaintiffs" lawyers will have "a chance to hold a deep-pocket Dow Chemical responsible." Id. Certainly, the Mahlum decision holding Dow Chemical responsible for a $14 million verdict is powerful evidence of this theory. 

108 . This theory, of course, suggests that Judge Pointer's decision appealed more to a sense of sympathy towards victims of faulty breast implants than to a proper application of tort law concepts. See infra notes 136-37 and accompanying text. 

109 . See Coffee, supra note 102, at 1409. 

110 . "The debtor may file a plan with a petition commencing a voluntary case, or at any time in a voluntary case or an involuntary case." 11 U.S.C. § 1121(a) (1994). 

111 . Bienenstock, supra note 32, at 573. The Bankruptcy Code itself reflects a general leniency toward the debtor who is constructing a reorganization plan. For example, the debtor-corporation's Chapter 11 plan may include, among other items, the following: retention by the debtor of certain property from the estate, sale of certain parts of the estate which may be subject to liens, curing or waiving of any defaults, and extension of maturity dates, or a change in interest rate of outstanding securities. 11 U.S.C. § 1123(a)(5) (1994). See also Bienenstock, supra note 32, at 679. 

112 . 11 U.S.C. § 1141(a) states that "the provisions of a confirmed plan bind the debtor . . . and any creditor . . . whether or not . . . such creditor . . . has accepted the plan." (1994). Under § 1141(b), once the plan is confirmed, all property of the estate is vested in the debtor. 11 U.S.C. § 1141(b) (1994). 

113 . 11 U.S.C. § 1141(d) (1994). One of the key differences between Chapter 11 and Chapter 13 is that the former does not prescribe time limits for the execution of the plan. These specifics are determined by the plan itself. 11 U.S.C. § 1332 (1994). Corporations are not entitled to shield any assets from prepetition claimants, whether liquidating or reorganizing. Thomas H. Jackson, The Logic and Limits of Bankruptcy Law 191 (1986). 

114 . WLN Breast Implant Pathfinder, West's Legal News, Jan. 16, 1997, available in 1997 WL 12523. 

115 . A plan may be modified at any time, as long as the proponent does the modifying. See Bienenstock, supra note 32, at 700. 

116 . The standard procedure in mass tort bankruptcy proceedings is to initiate a settlement trust, whereby plaintiffs" tort claims are then settled for stock in the company. See Coffee, supra note 102, at 1408 n.264. In Dow Corning's case, it was imperative that control of the company remained in the hands of the parent companies. Id. 

117 . Warren Bates, Implant Suit Nets $10 Million, Las Vegas Rev.-J., Oct. 31, 1995, at 1A. 

118 . See Allen, supra note 25, at 86. 

119 . This indicates only that there was sufficient evidence to withstand Dow Chemical's motion for summary judgment. 

120 . Silicone Gel II, 887 F. Supp. at 1460-61. The Restatement (Second) of Torts section 324A addresses negligent performance of an undertaking, and it provides: 

One who undertakes, gratuitously or for consideration, to render services to another which he should recognize as necessary for the protection of a third person or his things, is subject to liability to the third person for physical harm resulting from his failure to exercise reasonable care to protect his undertakings, if, 

(a) his failure to exercise reasonable care increases the risk of such harm, or 

(b) he has undertaken to perform a duty owed by the other to the third person, or 

(c) the harm is suffered because of reliance of the other or the third person upon the undertaking. 

Restatement (Second) of Torts § 324A (1965).

121 . Silicone Gel I, 837 F. Supp. at 1142. 

122 . Silicone Gel II, 887 F. Supp. at 1456. 

123 . Id. at 1459. 

124 . TMJ Implants, 880 F. Supp. at 1321. Specifically, plaintiffs in TMJ Implants alleged that "Dow Chemical undertook to render services to plaintiffs when it entered into agreements with Dow Corning with respect to the use of Dow Chemical's trademarks." Id. at 1322. 

125 . Id. On this issue, plaintiffs did not even cite to case law in which a trademark licensing agreement served as the basis for liability under section 324A. Id. Judge Ferguson noted that the trademark agreement functioned only to protect Dow Chemical's intellectual property rights. Id. It did not, as plaintiffs contended, attempt to assure all end-users of the products that those products would be risk-free. Id. 

126 . Silicone Gel II, 887 F. Supp at 1461. 

127 . Instead, Judge Pointer stated that "[a] trademark agreement [which] evidenc[es] more control than standard protection . . . could constitute at least part of the evidence demonstrating an affirmative undertaking." Id. at 1461. This statement contrasts the approach taken by Judge Magnuson in TMJ Implants, who "refuse[d] to place this strained interpretation on the [trade] agreements." TMJ Implants, 880 F. Supp. at 1322. 

128 . New York State, 632 N.Y.S.2d at 954. 

129 . As Justice Lobis remarked, "under New York law, the mere fact of foreseeability is not sufficient by itself to create a duty to exercise reasonable care." Id. at 955. 

130 . Id. In this respect, the creation or existence of a duty of care is not dependant upon the foreseeability of an injury. Eiseman v. New York, 511 N.E.2d 1128 (N.Y. 1987); see also Waters v. N.Y.C. Housing Authority, 505 N.E.2d 922, 923 (N.Y. 1987). Under New York law, a claim for negligent undertaking involves a misrepresentation or failure to disclose information which either misleads the plaintiff or causes the plaintiff to forego action. Eiseman, 511 N.E.2d at 1135. Specifically, in connection with commercial actions for negligent undertaking, "something approaching privity . . . which evinces defendant's understanding of plaintiff's reliance" is generally required. Id. 

131 . New York State, 632 N.Y.S.2d at 956. 

132 . Id. "Thus, plaintiffs cannot establish a sufficient relationship between themselves and Dow Chemical to justify imposing a duty upon Dow Chemical." Id. 

133 . See supra note 130 and accompanying text, discussing the privity requirement. 

134 . New York State, 632 N.Y.S.2d at 956. Justice Lobis correctly noted that to hold Dow Chemical liable would "impose a duty of reasonable care enforceable by any member of an indeterminate class of persons, present and prospective, known and unknown, directly or indirectly injured by any negligence." Id. (citing Eiseman v. New York, 511 N.E.2d 1128, 1135 (N.Y. 1987). 

135 . New York State, 632 N.Y.S.2d at 956. Justice Lobis continued: 

Dow Corning has over the years been in the business of manufacturing silicone related products for thousands of applications. If this court were to hold that Dow Chemical assumed a duty of care based on its silicone related testing and consulting to every potential ultimate consumer of a product which contained silicone, the duty imposed on Dow Chemical would be indeterminate and infinite. 

Id. at 956-57. (emphasis added).

136 . Tort law generally seeks to achieve three primary, interrelated goals: Allocation of resources to plaintiffs who have sustained injuries from harmful products or actions; deterrence of future hazardous products or actions; and compensation for victims by the defendants. Feldman, supra note 25, at 34. 

137 . Id. at 35 

138 . Id. at 38. "When faced with this type of uncertainty, it is not possible to conclude that it is more likely than not that a substance is harmful to humans." Id. Snyder sums up what he terms the "causation hurdle" as follows: 

In breast implant litigation, the plaintiff must prove that the defendant's product was a substantial factor in contributing to her harm. In many cases, however, the evidence of direct causation is difficult to acquire. The "proof of causation" is particularly challenging when the plaintiff alleges her implants caused cancer or autoimmunity because these disorders frequently occur in the absence of implants and because most physicians have not accepted the theory that a correlation exists between implants and systemic illness. 

Snyder, supra note 42, at 193-94 (footnote omitted).

139 . Feldman, supra note 25, at 38. 

140 . See Allen, supra note 25, at 86. 

141 . In Mahlum, these were measured at $10 million. See supra, note 92 and accompanying text. The dispensing of punitive damages as a legal remedy for tortious conduct is a common law doctrine which was first recognized by the Supreme Court in the mid-nineteenth century. Day v. Woodworth, 54 U.S. (13 How.) 363 (1851). One authority has noted that the disbursement of punitive damages in modern America correlates to the social roles played by men and women. Koenig & Rustad, supra note 26, at 9. The authors differentiate between "good" women product liability cases (breast implants for reconstruction) and "bad" women cases (breast implants for cosmetic purposes). Id. at 12. 

142 . Williams, supra note 107, at 621. 

143 . Id. See also John D. Kitch, Proving and Disproving Punitive Damages, 21 Litig., Winter 1995, at 13. 

144 . Williams, supra note 107, at 621. See also Dorsey D. Ellis, Jr., Fairness and Efficiency in the Law of Punitive Damages, 56 S. Cal. L. Rev. 1, 3 (1982) (describing seven principal reasons for imposing punitive damage measures). 

145 . In varying degrees, particular corporations are "targeted" by plaintiffs for reasons stemming beyond their nature as deep-pocket companies. For example, a corporation may be targeted due to the public's perception of the corporation's actions stemming from the line of business the corporation is involved in, or because of negative publicity which the corporation has received. Robert L. Haig & Steven P. Caley, Effectively Representing the "Deep Pocket" or Target Defendant, West's Legal News: WLN 13768, 1996 WL 738085 (Dec. 27, 1996). Professor Snyder observes further difficulties with large punitive damages awards: 

[I]ndividual cases [such as the Mahlum verdict] provide an opportunity for juries to award punitive damages to individual plaintiffs without regard for future claimants or the deterrence value to the defendant in the overall scheme of the litigation. In the aggregate, this may result in inappropriately large punitive damage awards and "overdeterrence" of defendants. Furthermore, they may deplete the defendants" funds, making them unavailable for future plaintiffs" compensatory damage awards. 

Snyder, supra note 42, at 212-13.

146 . In order for an award of punitive damages to be sanctioned, there must be a "condition precedent"--a specific behavior which is "recognized as warranting punishment and necessitating deterrence." Williams, supra note 107, at 622. 

147 . See infra note 154 and accompanying text. In fact, the deterrence aspect of punitive damages will be triggered. However, it is clear that, following Mahlum, deterrence will not serve the purpose envisioned by most legal theorists. See Ellis, supra note 144, at 8 (deterrence should serve to "promote the efficient use of society's resources."). Instead, deterrence will have the unintended side-effect of discouraging and hindering future scientific involvement in new medical product research. This is due primarily to uncertain and unknown boundaries of a scientist's involvement with a product. 

148 . New York State, 632 N.Y.S.2d 953, 957 (1995). Dow Chemical "has no control over the usage that silicone has or will be put to in the future based on its initial testing and studies of silicone." Id. 

149 . Id. The theoretical problem posed by Silicone Gel II (and Mahlum) can be framed as follows: What quantum of connection or involvement is required between inventor "A%, manufacturer "B%, and, eventually, end-user "C%? The inference to be drawn--especially after Mahlum--is that the clearest answer lies in the ultimate extent of the injuries suffered to "C%, regardless of the true causal connection between "A" and "B%. The remoteness of involvement between Dow Chemical's actions in originally creating the silicone gel design and the actions of Dow Corning could not have been more extreme. Yet, as the class action lawsuit progresses, and victims" auto-immune disorders grow, it appears that sympathy for the them plays a large role in determining the relative liability of Dow Chemical--irrespective of its true culpability. 

150 . Calif. High Court to Rule on Dow Chemical Liability in State Implant Cases, 2 No. 3 Mealey's Litig. Rep.: Drugs and Med. Devices 22 (Feb. 7, 1997). 

151 . See supra note 147 and accompanying text (discussing deterrent effect of Mahlum). This potential liability may arise simply because the inventor may have foreseen, but did not know that the compound was being used in such a negligent manner. 

152 . 880 F. Supp. at 1317. 

153 . Daniel Q. Posin, Silicone Breast Implant Litigation and My Father-in-Law: A Neo-Coasen Analysis, 70 Tul. L. Rev. 2565, 2571-72 (1996). The types of medical implants featuring silicone as the primary component are numerous: heart pacemakers, mechanical valves, heart-lung oxygenators used during open-heart surgery, chin and cheek implants for accident victims, certain contact lenses, devices used for brain surgery, urological surgery instruments, and prosthetic joints all feature silicone plastics. Id. at 2572 n.30. Indeed, one commentator has noted that "over 500 medical products contain measurable amounts of silicone." Snyder, supra note 42, at 136. 

154 . Posin, supra note 153, at 2572. Aside from Dow Corning and Dow Chemical, Du Pont has also withdrawn from this activity due to fear of potential liability. Id. The threat of mass tort litigation, however, is not a new fear for large corporations. As Hensler and Peterson note, 

The 1980's marked the era of mass personal injury litigation. Hundreds of thousands of people sued scores of corporations for losses due to injuries of diseases that they attributed to catastrophic events, pharmaceutical products, medical devices or toxic substances . . . . As a result of this wave of litigation, some businesses found that products once regarded a significant successes now had the potential to drive them into bankruptcy. The specter of mass liability frightened insurers from some markets, and manufacturers from research and development in some product lines. 

Deborah R. Hensler & Mark A. Peterson, Understanding Mass Personal Injury Litigation: A Socio-Legal Analysis, 59 Brook. L. Rev. 961 (1993) (emphasis added).

155 . Posin, supra note 153, at 2581. This decline signals what Posin sees as an economic limiting factor. Since the manufacturers of medical devices receive less profit on their product (less rate of return), they are forced to turn to other avenues of business production to devote their resources. Id. at 2582. 

156 . The progress of a chapter 11 case is a detailed procedure. Initially, once the voluntary petition is filed, the debtor files its plan for reorganization. Thereafter, the debtor enters a disclosure period where the contents of the plan are made public to the creditors. This is followed by solicitation and voting, where creditors either accept or reject the proposed plan. Next, the debtor proceeds to a hearing of confirmation, whereupon any objections to the plan are heard. Then, if the plan satisfies the requirements of 11 U.S.C. § 1129 the plan is implemented, and the debtor is discharged. This brings about the consummation of the chapter 11 plan. See Jackson, supra note 113, at 190-224. 

157 . A widely-held criticism of chapter 11 is that it provides too much protection for the debtor-corporation. See Lynn M. LoPucki, The Trouble with Chapter 11, 1993 Wis. L. Rev. 729 (1993) ("[c]ritics complain that ailing companies languish under the protection of the bankruptcy court for years while the managers who led them to ruin remain in control and continue to make the decisions"). In this regard, a chapter 11 debtor is perceived to remain in the reorganization period for a lengthy period of time, thereby purposefully delaying its creditors. Id. See also Aaron, supra note 32, at § 1.04 ("A reading of the [chapter 11] statute conveys repeated opportunities for complicated litigation with vague and unknowable standards"). 

158 . Coffee, supra note 102 at 1458. Another commentator has explained, "a complete bankruptcy solution to the mass tort problem will be difficult to achieve, but much of practical value can be done." Mark J. Roe, Bankruptcy and Mass Tort, 84 Colum. L. Rev. 846, 922 (1984). 

159 . Chapter 11 requires a specified amount of the business-debtor's post-petition income to go toward funding the plan. During this time period, the "debtor in possession" (Dow Corning) retains control of the corporation and operates its business in a typical manner. 11 U.S.C. § 1108 (1994). The debtor in possession is placed in the shoes of the trustee for these purposes. 11 U.S.C. § 1107 (1994). 

160 . Implant Firm Seeks Protection, Dallas Morning News, May 16, 1995, at 1A. Critics of the chapter 11 reorganization view Dow Corning's stratagem as a "litigation-driven decision," which is "ethically unattractive," because Dow Corning is not perceived to be in the sort of financial crunch that warrants bankruptcy protection. Curriden, supra note 34, at 34. 

Nevertheless, the bankruptcy code allows Dow Corning some flexibility in devising sources for funding its payments under the plan. See 11 U.S.C. § 1123 (1994). These sources may include, but are not limited to, sale of assets, or payments from future income. Id. 

161 . Dow Corning Raises Offer For Implants, The Financial Post, Aug. 26, 1997, at 1. Under this plan, Dow Corning will set up a settlement trust and a litigation trust, with the funds for both accounts coming from the $2.4 billion settlement figure. Id. Victims who choose the settlement trust may choose from four options, which include an "expedited payment" and a "higher payment for women who can prove a defined medical condition and a degree of disability." Id. The highest award a victim may receive is $200,000, assuming the reorganization plan is approved by 92% of Dow Corning's creditors. Id. 

162 . Id. 

163 . Id. 

164 . Mark Curriden, Implant Case Lawyers Seek Stock Settlement, Dallas Morning News, Dec. 19, 1996, at 1A. Under this plan, the company would be required to deposit $1.75 billion into a trust. Id. Claims of commercial creditors would be given first priority. Id. Secondary priority would be given to a series of 30 selected trials representing individual breast implant injury claims. Id. Dow Corning, under plaintiff's proposal, would be required to pay off contributions to the trust with company stock. Id. The amount of the contribution would vary with the amount of the trial awards--up to 95% of Dow Corning's company stock. Id. As one commentator has noted, "[a]lthough Dow Corning has withdrawn from the breast implant market, the legacy of this crisis will haunt the company for years, as its corporate name is permanently associated with a crisis of draconian proportions." See Pitt and Groskaufmanis, supra note 15, at 955. 

165 . The period following the declaration of a chapter 11 petition is known as the "exclusivity period". During this time, the business debtor has the exclusive right to file a plan. 11 U.S.C. § 1121 (1994). Extensions may be permitted in certain cases. See 11 U.S.C. § 1121(d) (1994). Initially, while the exclusivity period is in place, the debtor's plan is the only proposal which may be confirmed. 

166 . The bankruptcy code provides, "[a]ny party in interest, including . . . a creditors" committee . . . [or] a creditor . . . may file a plan . . . ." 11 U.S.C. § 1121(c) (1994). See also, 11 U.S.C. § 1103 (1994). 

167 . Even a beneficial resolution of the Mahlum case may not signal the end of Dow Chemical's problems. Indeed, approximately 1000 cases involving silicone gel breast implants are currently pending in Southern Nevada, many in the exact same county where Charlotte Mahlum originally brought her suit against Dow Chemical. Silicone Implant Cases Pending in Nevada Courts, Las Vegas Rev.--J., Aug. 19, 1997, at 2A. 

168 . In fact, Dow Chemical requested that Judge Connie Steinheimer reject the entire jury verdict shortly after it was issued. Sandra Chereb, Dow Plea to Throw Out Implant Award Rejected, Austin American-Statesman, Feb. 10, 1996, at C5. Since Judge Steinheimer has refused to issue the J.N.O.V, spokesmen for Dow Chemical have indicated that they will appeal the decision to the Nevada Supreme Court. Id. 

169 . Dow Chemical Co. v. Mahlum, No. 28600 (Nev. S. Ct.) (filed Sept. 30, 1996). 

170 . Saying Evidence Withheld, Mahlums Ask High Court of Nevada to Dismiss Dow Chemical Co. Appeal, 2 No. 4 Mealey's Litig. Rep.: Drugs & Med. Devices 8 (Feb. 21, 1997). 

171 . In Opening Brief, Dow Chemical Seeks Reversal of Mahlum Implant Verdict, 1 No. 16 Mealey's Litig. Rep.: Drugs & Med. Devices 19 (Aug. 28, 1996). 

172 . Product Liability, Tort Reform Groups Among Those Urging Mahlum Reversal, 1 No. 16 Mealey's Litig. Rep.: Drugs & Med. Devices 20 (Aug. 16, 1996). On August 28, 1996, The U.S. Chamber of Commerce, The Product Liability Advisory Council, Inc., The Washington Legal Foundation, The American Tort Reform Association, and The Pharmaceutical Research and Manufacturers of America filed briefs with the Supreme Court of Nevada, asking the court to reverse the Mahlum verdict. Id. 

173 . Id. Specifically, the Product Liability Advisory Council's amicus brief touched on a key argument central to this thesis: that plaintiffs cannot pierce the corporate veil of Dow Corning to reach Dow Chemical because the two corporations are separate entities. Id. See supra note 39 and accompanying text, discussing "piercing the corporate veil". 

174 . Id. This brief, submitted by the Washington Legal Foundation, stressed the remoteness of Dow Chemical's acts in connection with the overall process of silicone gel implant production. Id. In line with the "deep-pockets" theory, the brief asked the court to reject the plaintiff's notion that "somebody must pay" for her alleged harms. Id. See supra note 107 and accompanying text, discussing "deep-pocket" liability. 

175 . Id. The U.S. Chamber of Commerce, in its amicus brief, expressed concern that the damages award "contravenes . . . principles of fair notice, and, if permitted to stand, would impose upon numerous enterprises in this country the specter of punitive liability for conduct that was not foreseeable subject to such liability when the conduct occurred." Id. See supra, note 151 and accompanying text, discussing foreseeability.