Chapter 9. Product Liability. 9.1 History of Products Liability

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1 Chapter 9 Product Liability The law has changed over the last 40 years in those instances where the defendant in the lawsuit is a producer of a product that injured the plaintiff. Issues arise such as what defense can the producer use, can the plaintiff obtain evidence held exclusively by the defendant, and must the plaintiff show negligence to prevail. The new and currently-expanding field of products liability answers these questions. 9.1 History of Products Liability A century ago, products liability cases were virtually inconceivable, and even several decades ago, products liability cases and recoveries were rare. Revolutionary changes in the field occurred in the 1960s. In early English history, producers of goods and services were held in high esteem by the public. Their success meant success as a nation. Logic at that time and social philosophy gave rise to the legal defense that if somebody complained about a product, caveat emptor ( let the buyer beware ). This rule was based on the fact that people should examine closely what they are about to receive before they buy it. If a purchaser is so negligent that they buy something that is improper, the purchaser should live with his bad decision. Thus, buyers who were injured by a product were considered to be the ones at fault, and the law would not aid those who were negligent in making their purchases. However, products produced in the early days were somewhat more easily examined than what we buy today. For example, a shovel 121

2 122 CHAPTER 9. PRODUCT LIABILITY or a hammer was much easier to examine to determine its defects than automobiles, tractors, snow plows and the like. Even were a purchaser allowed to dismantle an automobile before buying it, the consumer would probably not learn much as to whether or not the car was properly made. Therefore, should a consumer be held to be negligent when they buy a product on reliance upon those who produced the product? Another traditional defense available to manufacturers was that the consumer usually had not bought the product directly from the manufacturer, having purchased the product usually from a retailer. Thus, there as not privity of contract between the manufacturer and the consumer, and therefore the consumer could not act upon a breach of contract rationale against the manufacturer to recover for an injury. If the consumer brought an action against the wholesaler or retailer, they may have a cause of action, however the wholesaler or retailer may not have sufficient funds or insurance to reimburse the injured party for the damage. Also, an action against the wholesaler or retailer does not seem proper since it was the manufacturer, not the wholesaler or retailer who produced the faulty product. However, such was the law in the past. At the beginning of the 1900s, the law began to change and injured plaintiffs occasionally recovered from producers of faulty products in court. One famous decision is that in McPherson v. Buick Motor Company, a 1916 New York State case written by Judge Cardozo, one of the leading jurists of his time. In that case, a wheel on a new Buick collapsed and the plaintiff was injured. Cardozo found for the plaintiff in spite of the defenses mentioned above, and Cardozos reasoning is virtually a statement of products liability law as it is today. However, after the McPherson case, courts did not entirely rely upon Cardozos logic. Also, during this time the courts developed two legal philosophies that ultimately came to be used successfully in products liability cases: negligence and warranty. Using a negligence theory, the injured party makes a case against the products producer by showing (1) that the producer owed the plaintiff a duty to carefully design and manufacture a product, (2) that this duty was neglected, and (3) that the neglected duty was the proximate cause of plaintiffs injury. Plaintiffs normally had problems in proving negligence in design and manufacture, and a producer could sometimes prove contributory infringement by the plaintiff. However, if the plaintiff could show negligence in design or manufacture, they normally did win. The courts also developed a warranty theory in allowing plaintiffs to pre-

3 9.2. STRICT LIABILITY 123 vail in product liability cases, where when you purchase a product, a promise is made by the manufacturer that the product will work for its intended purpose. This includes a promise that the product will not injure the purchaser while the product is being used as advertised and directed. If injury occurs during the intended use, which is proper use, the injury gives plaintiff a cause of action against the producer of the product. Under this theory, the failure of the product to perform amounts to a breach of contract. However, the only person protected under state laws governing sales was the person who was the purchaser. Under new laws, particularly the Uniform Commercial Code, which is enacted in most states of the country today, the only person protected was the purchaser. Thus, under both the negligence and warranty theories, the injured public found that negligence was often difficult to prove and warranty restricted to parties who might be plaintiff and defendant. In the 1960s, several influential judges and legal scholars believed that those injured by a defective product deserve better. In 1963, the decision, Greenman v. Yuba Power Products, a California state court case, and a change in the Restatement of Torts in 1964, when combined, introduced the concepts of strict liability. The Restatement of Torts is a body of the law propounded by scholars that is normally adapted by judges in deciding cases. 9.2 Strict Liability Section 402A of the Restatement (Second) of Torts sets forth the rule most states generally follow in cases of product liability. The wording of this Restatement Section 402A is important and states as follows: (1) One who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property is subject to liability for physical harm thereby caused to the ultimate use or consumer, or to his property, if (a) the seller is engaged in the business of selling such a product and (b) it is expected to and does reach the user or consumer in the condition in which it is sold. (2) The rule stated in subsection (1) applies although (a) the seller has exercised all possible care in the preparation and sale of his product, and (b) the user or consumer has not bought the product from or entered into any contractual relation with the seller. This statement sets forth the concept of strict liability and although fairly clear, has been subject to different interpretations by different courts. An

4 124 CHAPTER 9. PRODUCT LIABILITY example of how a products liability battle might take place in a courtroom is set forth in the following commentary. 9.3 Plaintiffs Case In products liability litigation, the plaintiff or injured party must show that the product was defective as it left the producers control. Next, the injured party is obligated to prove a causal connection between the products defect and the injury that party suffered. Product liability cases are normally presented to a jury, and engineers are often called upon to testify as expert witnesses for one side or the other as to whether or not the product was defective, and whether or not that defect actually caused the injury Defective Product In instances where it is readily apparent that the product was defective, the injured party relies on the doctrine of res ipsa loquitur (the thing speaks for itself) to establish the defectiveness of the product. Where the defect in the product is not so obvious, expert engineering witnesses are called upon to testify one way and the other to convince the jury to believe their side of the case rather than the other sides expert. Defects can be classified into three basic areas: (1) design defects, (2) manufacturing defects, and (3) marketing defects. From a manufacturers standpoint, the most serious of these problems would be a design defect, which usually involves not just one unit but an entire run or lot of units that are defective and causing problems. The present situation involving Firestone tires is a case in point. In addition, where there is a design defect, many lawsuits may have erupted, and a decision in one against the manufacturer of the product would set a precedent for recovery in subsequent cases. In a 1978 California state case, Barker v. Lull Engineering Co., Inc., the court there was particularly thorough in determining the definition of the design defect. The court there held that for the design to be defective, (1) it must be shown that the product failed to perform as safely as an ordinary consumer would expect when the product is used in its intended or reasonably foreseeable manner, or (2) that the products faulty design proximately caused the injury. Following this, the defendant must fail to establish that the

5 9.3. PLAINTIFFS CASE 125 benefits of the challenged design outweigh the risk of danger inherent in the design. This is known as the risk-benefit or cost-benefit approach. Under this theory, a manufacturer should be able to avoid liability for omitting safety devices that will make products virtually inoperable, and for failing to include production processes that would double or triple the products cost for miniscule safety improvements. The next category of defects are manufacturing defects, that may exist in a properly-designed product. This is a situation where a mistake is introduced in the manufacturing process of the product. An example would be an airplane wing which is properly designed, however flaws were introduced due to an improper joining of components. This would be a manufacturing defect. Some products are inherently dangerous to use and the manufacturer has an obligation to adequately warn users of the nature of the product. A failure to do so constitutes a marketing defect, which is a flaw due to a failure to adequately warn or instruct consumers. For example, advising someone that a compound is flammable when the substance was actually explosive, and injury was caused by the explosion of the material, the plaintiff could prevail by showing the inadequacy of the label warning. As a result, today most products are accompanied by user instructions, installation instructions, maintenance procedures and repair details. The manufacturer also is obligated to indicate for which purposes the particular product is useful, and in some cases to indicate which uses would cause problems for the user. If a product defect is not discovered until a very large number of the products have been distributed, the usual procedure is to conduct a recall of that product by the manufacturer. Also, warnings mailed to purchasers of the product would also possibly protect the manufacturer against massive liability. The sincere effort by the producer to warn people likely to be injured provides a reasonable defense Hidden Defects If a purchaser continues to use an obviously defective product, this sets up a defense available to the producer of contributory negligence on the part of the user. In such situations, the plaintiff must show that the products defect was a hidden one, to prevail in a products liability case. In one case, a plaintiff was injured using a forklift truck, and the court said that it was obviously dangerous to operate a forklift truck in a high-stack area without

6 126 CHAPTER 9. PRODUCT LIABILITY a protective overhead guard, and the manufacturer of the lift truck should not be responsible for injury to the operator. A hidden defect that would give rise to a cause of action by an injured plaintiff would be, for example, the carbon content of steel being high enough to cause the steel to be brittle in normal use, where the steel shattered causing injury to the plaintiff. Since the carbon content was hidden from view, this would be considered a hidden defect. Sometimes the hidden defect may not even be shown for a plaintiff to prevail. As an example, part of a hammer splintered off during normal use after the hammer had been in use for eleven months, and struck the plaintiffs eye. The court found no specific fault in the manufacture or design of the hammer, and there was no proof that a defect existed when the hammer left the defendants control. Yet the plaintiff recovered from the manufacturer of the hammer in this case. Also, assume one is driving a five-month-old car in a reasonable manner and the driveshaft becomes disconnected and drops to the roadway, injuring the plaintiff. Despite an inability to prove a specific defect, the operator of the car recovered damages Discovery The ability to prove a defect in a product may sometimes be difficult where the plaintiff needs information in the defendants hands to prove how the product was manufactured. Therefore, the plaintiff has the ability to obtain quality control records, customer complaints, design factors and design changes, research and product engineering records and design engineering records from the defendant through the discovery power of the court Damages In products liability cases, plaintiffs can usually obtain money from the defendant to compensate for their losses or injuries. Sometimes, in cases of hazardous or careless behavior by a defendant, a court may award punitive or penalty damages against the defendant.

7 9.4. DEFENDANTS CASE User or Consumer Weve talked previously about the rights of an injured purchaser when purchasing a product that is defective. What about injury to an innocent bystander? A California case in 1969 answered this question by holding that the innocent bystander has the same rights of the user or consumer to recover from the producer of the injurious product. 9.4 Defendants Case Suppose that a faulty design or a faulty manufacturing element is readily evident to the defendants expert witness, it is logical to presume that the fault would also be evident to the plaintiffs expert as well. In such a case the best advice the expert can give the client is to settle the case out of court because of a slim chance of prevailing. In contrast, if the defendant believes that it stands a high chance of winning or even of reducing the amount of damages to be paid, the decision as to the best course of action will depend upon what the evidence shows Product Alteration A producer of a product is only held responsible for those products that he or she has produced. Close examination of a component may indicate that it was repaired or altered after manufacture for example, replacement brake linings or rebuilt wheel cylinder, or a change of electronic components. Thus it may no longer be the original manufacturers responsibility. The question becomes who manufactured the product that actually failed. Suppose for example it was the original brake linings that had failed on the car you had purchased from a dealer. However those brake linings have been supplied to the automobile manufacturer by some other manufacturer of specifically brake linings. Shouldnt the component manufacturer be held responsible? The answer through the decision is no. It is the producer of the final product that is sold to the consumer who is responsible for its safe performance. However the producer may be able to pass part or all of the loss and liability along to the supplier, but the producer of the final product has primary responsibility.

8 128 CHAPTER 9. PRODUCT LIABILITY Proximate Cause As discussed previously, if no causal connection exists between the plaintiffs injury and the manufacturers product, the producer should have no liability. Therefore a successful showing by the defendant of the lack of any proximate cause between the product and the injury is generally an effective defense Obviousness A plaintiff will normally have difficulty of winning his case if the defect causing the injury is readily obvious. The same is true where the plaintiff has ignored prominent warning labels attached to the product. There was one case where the warning label indicated that inhaling a propellant from an aerosol product was contraindicated. An individual inhaled it and became brain dead. His lawyer indicated that the warning was not strong enough, it should have said that inhaling would cause death. However, since the warning was on the package, the plaintiff did not prevail in that situation. The coveat is that something that is obvious to a person experienced with the product might not be obvious to a novice and a label written in English may not be much of warning someone who understands only Spanish. Problems such as these are issues of fact for a jury or a judge in a bench trial to decide Abuse Producers must expect their products to be subjected to all sorts of abuses and wild uses as well as the uses for which they were intended. Common things like using a typewriter as a hammer, using a screwdriver as a lever to move heavy objects, would not be considered as uses to which the products are intended. However today even television and newspaper advertisements show product abuse as persuasive proof of the rugged nature of the product, but there is a logical limit to which anticipated abuse may be taken. Thus if the abuse given a product is not foreseeable or reasonable, the jury has to decide the question as to whether or not the injury was caused by someone misusing the particular product.

9 9.4. DEFENDANTS CASE Functional Necessity and State of The Art As society gets more and more complex and moves in much more rapid rates, it is impossible to accomplish certain functions without such risks. Consider for example the 30,000 volts of electricity that are behind your television cathergrade tube. Also consider that a completely safe automobile would not even move. A completely safe knife would not cut. However people need these items so we cannot hold the manufacturer to a standard of complete safety. However the doctrine of being reasonably dangerous is one that has evolved through the law. The standard that is set can be stated as follows: The manufacturer should produce a product as safely as the state of the art will permit. Thus a manufacturer should conduct a survey of other products showing that there is no safer way of accomplishing the particular function and it would be unreasonable to expect more from the producer. Evidence of compliance with the state of the art in some instances may not be a complete defense for a producer if the jury believes that the state of the art should have advanced more rapidly. If the plaintiff can show that the defendant and other manufacturers responded sluggishly to a rash of injuries caused by a certain product defect, the plaintiff could probably win. Also, as technology moves rapidly forward, many products are introduced to the marketplace as a new product without comparable products showing safety. Therefore, these producers take an added risks in that the state of the art regarding the safety of their products has not been fully established. In a situation like that, I estimate that the plaintiff would win for a producer does not have the right to place a product on the market until all foreseeable causes of injury from that product can be determined Standards Over the last 30 years or so the public and the various federal agencies of the government have become concerned more with hazard reduction and safety issues. The creation of OSHA is result of that concern. Thus, government agencies (particularly the military and the purchasing agencies) have set forth minimum standards to be met whatever products are being considered. Therefore one of the questions in product liability case is whether the manufacturer has complied with applicable standards. In one case, consider that if the hazard was so improbable that those who wrote the standards completely missed it, this might suggest that what caused the injury was truly a hidden

10 130 CHAPTER 9. PRODUCT LIABILITY design defect. It is normally held that if a producer fails to comply published standards that the plaintiff has strong evidence against the producer of that product Plaintiffs Negligence Plaintiffs contributory negligence generally will not relieve of its liability. For example if Green proves a hidden defect in Blacks lawn mover that was manufactured by Black, and a causal connection between the hidden defect and the injury Black probably cannot win the case by proving that Green was careless. However, there is advantage in proving that carelessness in court. Even if the claim of contributory negligence fails to win out right dismissal of the case, such a claim is use by courts and juries in minimizing the damages, saying that part of the damages were the fault of the plaintiff and therefore the plaintiff should not recover the full amount of the damages. In cases where the plaintiff was truly reckless, the jury may conclude that the it was the persons conduct and not the defendant that caused the injury, and dismiss the plaintiffs claim altogether Defense Image Normally in strict product liability cases, the character or reputation of the defendant producer has nothing to do with the plaintiffs case. However, such evidence is usually presented in a court to weigh upon the amount of damages to be accessed by the judge or jury. For example if the plaintiff can produce evidence of careless production, sloppy methods in manufacturer, fast and careless product engineering changes, insignificant research and misleading marketing, this may make an impressive case for punitive damages before the jury. On the opposite side of the coin, it the defendant can show great care in design, manufacturer, quality control and attention to customer complaints, damages against that defendant will be held to a minimum. Also the risk of punitive damages would be minimized State Statutes It is clearly obvious that defective products should not have been manufactured in the first place or they should have been removed by the producer once a defect is found. Product recalls today are a normal course of our life.

11 9.4. DEFENDANTS CASE 131 The downside of what we have just discussed, is that the cost of defending products liability lawsuits and paying judgments in out of court settlements is added to the production costs of the product and public pays by way of higher prices. This is a problem that has been recognized by some state legislatures and they have enacted laws to address this problem. These laws usually set out the following standards. 1. that after a certain period of time the producers responsibility for the product ends. If you have had an automobile for 20 years, then the producer may no longer be liable for anything that falls off the car; 2. that the state of the art can be used as a defense; 3. that compliance with recognized standards is a reasonable defense; 4. that alteration and/or abuse by the plaintiff is a defense to liability; and 5. that a failure to warn is a not a component of strict products liability. Today there are advocates urging a federal products liability law that would be uniform in its applicable rather than having 50 separate states apply the law in different ways as today. This would eliminate the problem of a company being concerned with the laws and related risks of every state in the Union.

12 132 CHAPTER 9. PRODUCT LIABILITY 9.5 Assignment Answer each question in one, two or three paragraphs at the most. 1. Explain in one paragraph why there are laws today regarding products liability. 2. Explain, in your own words, what is meant by the term strict liability. 3. Explain the difference between (a) design defects, (b) manufacturing defects, and marketing defects. 4. Why is it important, in defending a products liability case, to attempt to prove that the plaintiff contributed to his or her own injury by being negligent, or by abusing the product.