Post-Sale Duty to Warn” in This According to Section 388 of the Restate- Enunciation of Product Liability Law

PRODUCT LIABILITY The Most Expansive Theory in Product Post-Sale Liability Duty to Warn

By Kenneth Ross

Post-sale duties have been expanding in the United States by court decision and legislative action. Restatement (Third) of Torts: Products Liability affirms and expands them.

In a significant number of jurisdictions in the United States, manufacturing, designing, and selling safe products does not totally satisfy a product manufacturer’s legal duties. United States courts, starting in 1959, have held

■ Kenneth Ross is Of Counsel to Bowman and Brooke LLP. He is the editor-in-chief of the third edition of the DRI Product Lia- bility Compendium: Warnings, Instructions and Recalls (2018). He wishes to thank Baxter D. Drennon at Wright, Lindsey & Jen- nings for his assistance in the preparation of this article. This article has been adapted from an earlier article that appeared in the Brooklyn Law Review – (Ross and Prince) “Post-sale Duties: The Most Expansive Duty in Products Liability” (2009).

10 ■ For The Defense ■ January 2019 © 2019 DRI. All rights reserved. Restatement (Third) of Torts: Products Lia- common law rules making product manu- bility (Restatement (Third)). In one substan- facturers strictly liable for harms caused tive area, the ALI had to decide whether by defective products. But section 402A enough precedent existed to support a sec- did not contain post-sale duty provisions. tion on the “post-sale duty to warn” in this According to section 388 of the Restate- enunciation of product liability law. ment (Second), warnings were required The law professors who served as the only if a risk associated with a product drafters (reporters) of the Restatement was known or should have been known at (Third), considered all of the cases through the time of sale. The post-sale duty section 1997, and despite a split of authority, they in the Restatement (Third) was truly new felt that there was sufficient support in when it was written, not merely a revision case law and common sense to support a of section 388. It provides as follows: “post-sale duty to warn” in the Restate- §10. Liability of Commercial Product ment (Third). This proposed inclusion Seller or Distributor for Harm Caused resulted in widespread debate. The plain- by Post-Sale Failure to Warn tiff-oriented members of the ALI wanted (a) One engaged in the business of sell- this section included, while some of the ing or otherwise distributing prod- defense-oriented members wanted it omit- ucts is subject to liability for harm ted or severely limited. Post-sale duty to to persons or property caused by the warn was ultimately included in the final seller’s failure to provide a warning Restatement (Third). after the time of sale or distribution TheRestatement (Third) and supporting of a product if a reasonable person case law require manufacturers or product in the seller’s position would provide suppliers, in certain instances, to provide such a warning. post-sale warnings or possibly to recall or (b) A reasonable person in the seller’s repair their products. In analyzing possi- position would provide a warning ble post-sale liability, it is important that after the time of sale if: manufacturers and product suppliers be (1) the seller knows or reasonably aware of the factors that may trigger a should know that the product post-sale duty under the common law. In poses a substantial risk of harm addition, manufacturers and product sup- to persons or property; and pliers need to be familiar with post-sale (2) those to whom a warning might duties imposed on them by U.S. govern- be provided can be identified ment agencies, and if the product is sold and can reasonably be assumed outside the United States, by foreign gov- to be unaware of the risk of ernment agencies. harm; and Armed with this knowledge, they can (3) a warning can be effectively establish procedures to identify and quan- communicated to and acted on tify the existence of the duty and implement by those to whom a warning appropriate post-sale remedial measures to might be provided; and prevent or limit their post-sale exposure. (4) the risk of harm is sufficiently This article will discuss the Restate- great to justify the burden of that manufacturers have a duty to warn ment (Third) sections adopting post-sale providing a warning. product users when they learn of risks in duties and the case law as it has developed The reporters considered post-sale their product after sale, even if the product over the last 20 years. A specific discussion warnings to be the “most expansive area in was not defective when it was sold. Cover of the case law and statutory law, state by the law of products liability” and a “mon- v. Cohen, 461 N.E.2d 864, 871 (N.Y. 1984); state, is not included in this article, which ster duty.” However, the reporters felt that Comstock v. Gen. Motors Corp., 99 N.W.2d is available in the just published third edi- section 10 limited this monster duty by 627, 634 (Mich. 1959). Some courts, on the tion of the DRI Product Liability Compen- requiring a plaintiff to prove all four fac- other hand, held that there was no such dium: Warnings, Instructions and Recalls. tors before the plaintiff would be allowed duty. Williams v. Monarch Mach. Tool Co., to pursue this claim. 26 F.3d 228 (1st Cir. 1994). Restatement (Third): Section 10 does not include a duty to do In the 1990s, the American Law Insti- Sections 10, 11, and 13 anything other than warn. However, since tute (ALI) considered the status of prod- TheRestatement (Second) of Torts: Products there was case law holding that in certain uct liability law in the United States. This Liability (Restatement (Second)) added sec- narrow instances a manufacturer may have culminated in the 1998 publication of the tion 402A in 1965 to adopt newly developed a duty to recall or retrofit a product, the

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ALI decided to also deal with this prece- created by a product sold or distrib- While the Restatement (Third) is gener- dent. Given the great burden of any post- uted by the predecessor if: ally viewed as favorable to product man- sale activities, especially recall, the ALI (1) the successor undertakes or ufacturers and sellers, section 10 clearly included a section severely limiting the agrees to provide services for establishes a cause of action that creates duty to recall a product. Section 11 of the maintenance or repair of the opportunities for plaintiffs to argue for Restatement (Third) provides as follows: product or enters into a similar further discovery of post-sale actions and §11. Liability of Commercial Product relationship with purchasers of greater admissibility of post-sale accidents, Seller or Distributor for Harm Caused the predecessor’s products giv- thereby providing a greater chance of an by Post-Sale Failure to Recall Product ing rise to actual or potential award of punitive damages. This is a real One engaged in the business of selling or economic advantage to the suc- risk: researchers analyzing punitive dam- otherwise distributing products is sub- cessor, and age cases have found almost 75 percent of ject to liability for harm to persons or (2) a reasonable person in the posi- such awards to be based on the failure of property caused by the seller’s failure to tion of the successor would pro- a manufacturer to take appropriate post- recall a product after the time of sale or vide a warning. sale actions. Michael Rustad, In Defense distribution if: Section 13 further states that a rea- of Punitive Damages in Products Liability: (a) (1) a governmental directive issued sonable person in the successor’s position Testing Tort Anecdotes with Empirical Data, pursuant to a statute or admin- would provide such a warning if the four 78 Iowa L. Rev. 1, 66 (1992). istrative regulation specifically conditions in section 10 are met. In addition, by stating that a manu- requires the seller or distributor Case law supported the inclusion of sec- facturer cannot cut off liability no matter to recall the product; or tion 13 into the Restatement (Third)’s post- how effective the post-sale warning pro- (2) the seller or distributor, in the sale duty sections and emphasized the gram, this section almost creates absolute absence of a recall requirement same important factors for finding succes- liability for injuries sustained by a product under Subsection (a)(1), under- sor liability. defect that was known after sale when the takes to recall the product; and manufacturer undertakes a less than rea- (b) the seller or distributor fails to act Distinguishing Post-Sale Duty sonable post-sale warning program. Plain- as a reasonable person in recalling from Time-of-Sale Duty tiffs can now argue that a program that was the product. In examining the case law before publica- not successful in warning them was not Section 11 basically provides that the tion of the Restatement (Third), it became reasonable. And arguably when it comes seller or distributor is not liable for a fail- apparent to the reporters that there to post-sale programs, a manufacturer or ure to recall the product unless the recall was great confusion by juries, judges, product supplier can always do more. is required by statute or regulation or the and scholars. Many of the decisions in seller or distributor voluntarily undertakes the cases reviewed were unclear about A Cause of Action Based on Post- to recall the product and does so negli- whether the jury or judge believed that the Sale Duty Sounds in Negligence gently. The main reason for including sec- product was defective when it was sold or While synthesizing years of judicial consid- tion 11 was to make it clear that section 10 whether the product only became defec- eration of post-sale issues, section 10 still does not include a duty to recall the prod- tive after sale. raises many questions that have been and uct. However, section 11 also included the If it was defective when it was sold, then will be litigated for years. One aspect of sec- so-called “Good Samaritan” doctrine, un- it should have been judged under section tion 10, however, is clear: a cause of action der which liability can attach for a negligent 402A (or now section 2 of the Restatement based on post-sale duties must sound in recall, even if it is voluntary. (Third)). Since the Restatement (Second) negligence since the reasonableness of a The last section pertaining to the post- did not have a post-sale duty section, courts product supplier’s conduct is the focus of sale duty to warn is section 13. This sec- that discussed this new theory of liability the post-sale inquiry. tion, which concerns a successor’s liability simply assumed that the defect became According to section 10(b), a seller can for a failure to issue a post-sale warning, known after sale without considering only be subject to post-sale duties if a “rea- states in part: whether it was defective when it was sold. sonable” person would have supplied such §13. Liability of Successor for Harm The Restatement (Third) makes it clear a warning. The four factors of section 10(b) Caused by Successor’s Own Post-Sale that this post-sale duty is independent of are fact based, making the reasonableness Failure to Warn a time-of-sale defect, and therefore selling of supplying a post-sale warning a key to (a) A successor corporation or other a defective product can result in claims of establishing a post-sale duty. business entity that acquires assets time-of-sale defect as well as post-sale fail- Judging post-sale conduct through the of a predecessor corporation or ure to warn. In addition, the Restatement lens of negligence is consistent with the other business entity, whether or (Third) makes it clear that if the product case law that had developed before the not liable under the rule stated in was defective when it was sold, the manu- Restatement (Third) was adopted. Actual §12, is subject to liability for harm facturer cannot be absolved of liability by or constructive knowledge of a post-sale to persons or property caused by the issuing a post-sale warning for harms that risk is necessary to impose a post-sale successor’s failure to warn of a risk occurred before any warning was issued. duty. Patton v. Hutchinson Wil-Rich Mfg.

12 ■ For The Defense ■ January 2019 Co., 861 P.2d 1299, 1314 (Kan. 1993). Also, The language in section 10 could be used The machines were sold to a limited negligence is the correct legal theory when to argue that the scopes of other manu- market where the manufacturer knew all a manufacturer’s conduct is at issue, and facturers’ and suppliers’ legal duties are the product’s owners. The Wisconsin court as such, the application of a post-sale duty extended by requiring reasonable affir- made it clear, however, that it was not craft- depends on the reasonableness of the man- mative actions to learn of post-sale prod- ing an absolute post-sale duty for all manufacturer’s conduct. Crowston v. Goodyear uct risks. Regardless of the legal duty, ufacturers to warn of safety improvements Tire & Rubber Co., 521 N.W.2d 401, 409 affirmatively trying to learn of post-sale year after year, since many products are (N.D. 1994). Consequently, a product sup- risks is a beneficial activity for enhancing mass produced and tracing users to warn of plier cannot be strictly liable for post-sale product safety and minimizing the risk of safety improvements would place an undue conduct under section 10. future accidents. burden on manufacturers. Similarly, the North Dakota Supreme Acquisition of Post-Sale Knowledge Existence of the Defect: A Court held that it would be difficult to Section 10, by confirming the existence of Question of Timing require the manufacturer of mass-pro- post-sale duties in the law, created an affir- Section 10(a) obviously contemplated that duced tire rims to trace individual users if mative duty for product suppliers to exer- knowledge of a risk or defect acquired by a the rims were not unique or sold to a spe- cise reasonable care to learn of post-sale supplier must be acquired after the sale. The cialized group of customers. Crowston v. problems with their products. Section 10(a) section is less clear about when the defect Goodyear Tire & Rubber Co., 521 N.W.2d bases a post-sale duty, in part, on suppli- must actually come into existence. Com- 401, 408 (N.D. 1994). While recognizing the ers who know or reasonably should know ment a to section 10 explains that a post-sale problem associated with providing individ- that their products pose a substantial risk duty may be imposed “whether or not the ual notice to the original purchasers, this of harm to persons or property. In addi- product is defective at the time of original court nevertheless held that the defendant tion, comment c to section 10 states that the sale….” The ALI acknowledged in comment had a duty to warn foreseeable product general duty of reasonable care may require a that imposing a post-sale duty, even if the users about dangers that were discovered manufacturers to investigate when reason- product was not defective when it was sold, after the product was originally sold. able grounds exist for the seller to suspect was relatively new. It was quick to point out, An interesting question remains: how that a previously unknown risk exists. however, that the requirement that a plain- far must a manufacturer go to identify However, comment c to section 10 also tiff prove section 10’s four factors should its customers? What would a reasonable makes it clear that except for prescription prevent “unbounded” and onerous post- manufacturer concerned about safety do? drugs and medical devices, “constantly sale burdens on product sellers. Establishing a “traceability” system before monitoring product performance in the The position of section 10—that it is a product is sold is the most effective way to field is usually too burdensome” and will immaterial whether the defect existed find customers. However, such systems take not support a post-sale duty. Despite this at the time of sale—conflicts with many planning and considerable effort and have language, plaintiffs have tried to use section decisions in which courts have refused to substantial cost. The question of whether a 10 and comment c to impose a broader duty impose post-sale duties when products particular defendant’s actions are “reason- on product suppliers to establish systems to were not defective when sold. able” will be case specific and decided by a obtain information from the field. The fail- jury. The ALI continually stresses in com- ure of a manufacturer to set up a system to Product Users: Can They ments to section 10 that this duty should gather post-sale information and then claim Be Identified? not be “unbounded” and onerous and that a lack of knowledge may appear unreason- Section 10(b) requires proof that people to courts need to be careful before imposing able to a jury, especially when one could be whom a post-sale warning should be pro- such a duty. set up with little effort and expense. vided can be identified before a post-sale Many courts, however, reflected con- duty is triggered. This case-specific inquiry Duty to Inform of Safety cerns similar to those raised in the Restate- depends on several factors, including the Improvements ment (Third) about imposing too heavy of a type of product, the number of units sold, the Manufacturers should always strive to burden on manufacturers to monitor field number of potential users, the availability of improve the safety of their products. But performance. In Patton v. Hutchinson Wil- records, and the available means of tracing does a manufacturer have a duty to inform Rich Manufacturing Company, 861 P.2d at product users. Comment e makes it clear that previous customers of each safety improve- 1314, the Kansas Supreme Court held that when no records identifying the customers ment made in similar products that are plaintiffs who allege post-sale duty claims are available, a post-sale duty does not arise. manufactured after the sale of the less-safe must prove that manufacturers “acquired These factors formed the basis for the product? Before drafting the Restatement knowledge of a [post-sale] defect.” The case Wisconsin Supreme Court’s holding that (Third), some courts found it reasonable did not, however, impose an affirmative the manufacturer of a sausage-stuffing to impose a duty to inform purchasers of duty on suppliers to take reasonable steps machine had a duty to provide users with safety improvements when to learn of post-sale problems that were not information about a new safety by-pass 1. There is a continuing relation- brought to their attention. This is consis- valve. Kozlowski v. John E. Smith’s Sons Co., ship between the manufacturer and tent with earlier opinions. 275 N.W.2d 915, 923 (Wis. 1979). the purchaser;

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2. The market is limited; and dentiary rules that prevent the introduc- not constitute a post-sale duty under section 3. The cost of providing notice of the safety tion of “remedial measures” evidence. 10. With this doctrine incorporated into the improvement is negligible. A manufacturer must carefully con- Restatement (Third), it is likely, though im- See Bell Helicopter Co. v. Bradshaw, 594 sider whether it is reasonable and pru- possible to prove for certain, that only those S.W.2d 519 (Tex. Civ. App. 1979) (hold- dent to notify previous customers of manufacturers that undertook truly volun- ing a duty to retrofit where manufacturer safety improvements. The manufacturer tary programs were prepared to do so in a assumed duty to notify users of safety should perform the kind of analysis that way that would not be considered negligent. improvements), overruled in part by Tor- is done under section 10 in deciding Hopefully, more manufacturers will “do rington Co. v. Stutzman, 46 S.W.3d 829 whether a duty arises in the first place. the right thing” and try to improve the If the manufacturer’s post-sale improve- safety of their products and try to antici- ment significantly improves safety, and pate what might be considered reasonable. the manufacturer can easily find its cus- Unfortunately, the fact that an accident Any attempt to use the tomers, the manufacturer should consider happened means, by definition, that the informing its prior customers about the post-sale remedial program was arguably improvement as evidence safety improvement. ineffective for the injured party. of a time-of-sale defect will Post-Sale Duty to Recall Development of Post-Sale Section 11 set forth a limited duty to recall a Duty Law After 1998 generally be precluded by defective product. Comment a made it clear As our earlier discussion suggests, the case that this duty is different from the post-sale law before and after 1998 is confusing and evidentiary rules that prevent duty in section 10. This comment also says certainly inconsistent. This trend contin- that improvements in product safety do not ues. Courts have issued opinions with the the introduction of “remedial trigger a duty to recall or retrofit a product following results: because that would discourage manufactur- • Accepted section 10 and maybe other measures” evidence. ers from making safer products. sections of the Restatement (Third) (duty This limited duty is based mostly on a exists even if product is not defective at government directive specifically requiring the time of sale); (Tex. 2000); Kozlowski v. John E. Smith’s the manufacturer to recall an imminently • Rejected the adoption of section 10; Sons Co., 275 N.W.2d 915, 923–24 (Wis. hazardous product. The Michigan Supreme • Accepted a post-sale duty if the product 1979) (holding a duty to inform users of Court declined an invitation to impose a was defective at the time of sale; machine of post-sale safety improvements common law duty to recall or repair in a • Rejected a post-sale duty to warn with- where users were traceable). negligent design claim case when a plain- out reference to section 10; Before 1998, however, most courts found tiff alleged that a manufacturer knew or • Accepted a post-sale duty without refer- that there was no post-sale duty to inform should have known of a defect at the time of ence to the Restatement (Third); and customers of safety improvements when sale. Gregory v. Cincinnati Inc., 538 N.W.2d • Ruled that there is a post-sale duty if the original product had been properly 325, 333–34 (Mich. 1995). While Michi- latent risks exist at time of sale and were designed and manufactured. gan required a warning in such circum- revealed later. Section 10 did not foreclose the impo- stances, the court concluded that “the duty Among the states that issued these deci- sition of a post-sale duty to inform about to repair or recall is more properly a con- sions, a majority have adopted some form safety improvements but made it clear that sideration for administrative agencies and of a post-sale duty, either through the com- the four factors in that section must be the Legislature.” mon law or statutory law. And approxi- met. However, it said that “in most cases However, the Restatement (Third) incor- mately 10 states have not addressed this it will be difficult to establish each of the porated the “Good Samaritan” or “volun- issue in any of their opinions. four section 10 factors that are a necessary teer” rule that one who undertakes a rescue Since 2012, three states (Alabama, Min- predicate for a post-sale duty to warn if the must act reasonably so as not to put the nesota, and New Hampshire) have adopted warning is merely to inform of the avail- rescued party in worse shape than before. section 10 of the Restatement (Third). New ability of a product-safety improvement.” This rule, in the context of product liability, Hampshire also adopted the Restatement Section 10 (Reporter’s Note to comment a). comes from the belief that voluntary recalls (Third) law that there is no duty on behalf It is certain that plaintiffs have tried to are typically undertaken in the anticipa- of a manufacturer to inform users of post- use a manufacturer’s post-sale warning of tion that a government agency will require sale safety improvements on an otherwise a product safety improvement to argue that one anyway. Section 11, comment c. non-defective product. the original product, without the safety This belief by the ALI and some courts However, three states (Connecticut, improvement, was defective at the time may be correct in a general sense. How- Nebraska, and Tennessee) made it clear of sale. However, any attempt to use the ever, there are many voluntary recalls, ret- that there is no post-sale duty to warn for improvement as evidence of a time-of-sale rofits, or even post-sale warning programs manufacturers that have safety issues in defect will generally be precluded by evi- that are done to enhance safety and would their states. Tennessee also ruled that inter-

14 ■ For The Defense ■ January 2019 net sales distributors have no post-sale duty to warn.

Effect on Legal Liability Of course, specific case law is important for cases litigated in a particular state. How- ever, given the inconsistencies and lack of clarity or relevant decisions, a manufacturer cannot rely on the case law to decide what its post-sale duties are. Most manufacturers sell nationwide or at least in as many states as possible. As long as there are a large number of states that have imposed a post-sale duty, a manufacturer must assume that it has the duty nationwide. Of course, they will not know where an accident will occur and therefore where the case will be brought. Unless the manufacturer decides to only sell in a state that does not have a post-sale duty (a ridic- ulous decision), it must just consider that the duty does or could exist wherever the product is sold. Plus, of course, the case law only affects common law duties, and there are still rig- orous regulatory requirements for most products, except industrial products, to report to various government agencies, which then may require manufacturers to recall their products or warn consumers. That law is national and international and would supplement any state’s common law.

Conclusion Post-sale duties have been expanding in the United States by court decision and legislative action. TheRestatement (Third) affirms this expansion, and in some respects, it broadens the common law post-sale responsibilities of manufacturers. Manu- facturers must put into place an appropriate post-sale monitoring system and establish appropriate committees or trained person- nel who can analyze the gathered information to determine whether post-sale actions might be appropriate. A failure to take timely and adequate remedial actions can result in huge liability, including punitive damages, which could eventually result in large numbers of injured people and lead to the demise of a manufacturer.

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