Strict Liability and Product Liability

Chapter 7

Chapter 7 STRICT LIABILITY AND PRODUCT LIABILITY

Who is responsible for injury from a defective product?

I. Overview

When an individual is hurt because of a defective product, the first thought is usually to compensation and its source. Traditionally the theories of liability have centered around either contract law or tort law. In contract warranties provide a mechanism for potential litigation based on either express or implied promises unless disclaimed. Tort law typically has involved the application of negligence theory to the situation. Traditional negligence doctrines have failed to adequately protect consumers hurt by defective products. Courts led the way to newer avenues of recourse by way of the doctrine of strict liability. A sampling of arguments from the two sides of the public policy debate surrounding this doctrine is set out below. The actual mechanics of the doctrine are found in the Restatement (Second) of Torts at Section 402A. On the side of product users, the following points are worth considering: 1. Traditional tort law doctrines based on fault and defenses related thereto have not always adequately served the injured person. The evolution of strict liability doctrines is a logical consequence of having this deficiency in the law. 2. Contract law, both common and UCC, has also failed to provide adequate assurance to the victims of product harm. Consumers traditionally have had less real bargaining power in contracting when it comes to attaching responsibility for harm created by a product. 3. Various legislative enactments at both local and national levels designed to protect consumers tend to be reactive rather than proactive. Bans on products are enacted only after so many injuries have occurred that the product’s continued existence in the marketplace can no longer be tolerated. For example, consider how long it took to get three-wheel all-terrain vehicles and lawn darts off the market. Or do semiautomatic "street sweepers" really serve any legitimate societal purpose? 4. As a practical matter, protections against defects in products are best provided by the manufacturers of those products. Compared to the consumer, they have the resources to research, develop, and test against harm. Can you as a buyer of an automobile really test the airbag before you buy the car? 5. The sanctions imposed by law for defective products should act as a deterrent to further introduction of faulty products into the marketplace. If the sellers of goods know this, they will try harder to make products safer in the first place. 6. Manufacturers and other members of the chain of distribution have traditionally had the "deep pockets" to fight off the "little guy" by using so-called "hard ball" tactics in fighting all claims regardless of the equities of the individual claims. 7. There is an extreme inconsistency among the states regarding the rules of evidence and the like that make, or otherwise legitimate, a "crap shoot" when going after nationally based business organizations who can seek out the more "business friendly" forum.

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As persuasive as some of these arguments may be, the other side of the coin has its own convincing points. Some key arguments for the seller against the current products liability laws are as follows: 1. The cost of the present system has simply run amok and is a model of inefficiency. For every dollar that is spent on paying for the cost of the harm done by defective products, nearly fifty percent is spent on the transfer cost without reaching the victim. 2. Technology never has been and cannot be expected to be one hundred percent precise. The potential harm created by products is dependent on the state of the art at the time, and to require more is to impose 20/20 retroactive hindsight. 3. The present day procedural rules have allowed a deep pocket mentality to set in. Rules like joint and several liability of cotortfeasors allow an entity with only a small percentage of responsibility to be liable out of proportion to that level of responsibility based only on its financial resources. 4. Many socially beneficial products are kept out of the U.S. marketplace because of fears raised by our product liability system in the eyes of potential importers. Conversely, the enhanced costs of U.S. products based on built-in liability insurance costs makes U.S. products less competitive overseas. This diminished participation in the worldwide marketplace hurts all of us. The rules of product liability in the U.S. compared to those of Japan illustrate this point. 5. There is a prevailing lottery mentality as a result of large damage awards from product liability cases. The harm done may be minimal, but the pain and suffering losses coupled with potential punitive damages have inspired too many consumers (and their attorneys) to go on a treasure hunt in the courts. 6. Some products, by definition, are involved in high risk and must be assured of some legal protections in order to be financially viable in the marketplace. Consider, for example, such hi-tech medicinal devices such as heart pacemakers. Recent testimony before Congress by the manufactures of such devices indicated the distinct possibility that lawsuits may eventually drive such products off the market entirely. This creates a "lose-lose" scenario for all concerned. The steps used in attaching liability for harm done by products are set out in the key question checklist. One unfortunate aspect of having all these protections has been the creation of a false comfort. That mind-set says: "If there is harm, the blame falls on everyone but me!" The law is there to be used by the innocent, good faith victim of harm. If, however, a person harmed suffers from legal myopia, a tendency to see only what he wants to see, he should not be surprised if the law does not protect him in all events. Just as it was wrong to expect the buyer to find his own way in caveat emptor, it is also wrong to expect the UCC, the government, and its courts to cover buyers in all instances. Buyer beware may be outdated in the legal sense, but it makes just as much sense as ever in reality that all product liability claims can somehow be expected to be a sure bet. Yet when you consider real cases like the one used in the hypothetical multi-issue essay question, you can see why the law must act to restrain reckless and callous design, manufacture, and sale of truly harmful products.

II. Hypothetical Multi-Issue Essay Question:

Clint Wayne and his fiancée, Molly Oakley, of Boulder, were as infatuated with their guns as they were with each other. They collected all sorts of new and antique weaponry and were NRA certified expert marksmen. One of Clint's prized possessions is his 1953 Big Bang Long Barrel (a.k.a. the tumescent tool that won the West!). This model was a deliberate copy of the 1873 Colt Peacemaker. The Long Barrel was manufactured by the Big Bang Company from 1953 to 1973, when it was replaced by its current snub-nosed model, the Saturday Night Bobbitt. Current gross sales are better than ever at over $90 million per year with a net profit of $22 million. The owner of the Big Bang Company is Mr. I.M.A. Big-Bang IV.

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One of the reasons for the replacement of the original Long Barrel model in 1973 was a pesky little problem of the gun going off when it was accidentally bumped. When the gun was fully loaded and uncocked, the hammer rested against the end of the firing pin, which in turn was in contact with the bullet. Thus, even a slight contact with the hammer could set off a chain reaction that fired the gun. To avoid this possibility, the Big Bang Company instruction manual specifically advised owners to keep the chamber under the hammer empty by loading only five bullets. The company has refused, however, to formally recall the gun and could not be forced to do so under current gun control laws. On a fateful day last month, Clint was picking up Molly to go to the shooting range. He had his Big Bang Long Barrel on the front seat of his pickup truck and pushed it aside to clear the seat for Molly. The gun fell to the floor, discharged, and killed Molly instantly. Assume your court has jurisdiction over all the parties and issues presented in this controversy. What are consequences of this accident to Clint, Molly's estate, the Big Bang Company, and Mr. I.M.A. Big- Bang IV?

III. Outline

Products Liability The liability of manufacturers, sellers, and others for the injuries caused by defective products

PRODUCT LIABILITY Warranty Negligence Strict Liability ↓ ↓ ↓ Express/Implied Duty Breach, Injury, Causation Danger, No Fault

WARRANTY SUMMARY Warranty When Relevant Manner of Disclaimer Express: anytime given N/A -description -statement -model

Implied: -merchantability sale by a merchant mention merchant -if in writing, conspicuous -'as-is' with all faults -examination -course of dealing -fitness for a particular purpose sale by anyone if: -in writing and conspicuous -seller knows of purpose -buyer relies on seller to select goods

Tort Liability Based on Fault Negligence A tort related to defective products where the defendant has breached a duty of due care and caused harm to the plaintiff

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Misrepresentation When a seller or lessor fraudulently misrepresents the quality of a product and a buyer is injured thereby

Strict Liability Strict liability is imposed irrespective of fault All parties in the chain of distribution of a defective product are strictly liable for injuries caused by that product Privity of contract between plaintiff and defendant is not required The doctrine applies even if the injured party had no contractual relations with the defendant

Damages Recoverable – usually personal injuries, property damage (often not economic loss) and punitive (punishment) damage with either intent or reckless disregard for safety.

Defects in Manufacture Manufacturer fails to properly assemble a product Manufacturer fails to properly test a product Manufacturer fails to adequately check the quality of a product Defects in Design Defects that occur when a product is improperly designed

Crashworthiness Doctrine Automobile manufacturers are under a duty to design automobiles so they take into account the possibility of harm from a person’s body striking something inside the automobile in the case of a car accident

Defect in Packaging Occurs when a product has been placed in packaging that is insufficiently tamperproof

Failure to Warn A defect that occurs when a manufacturer does not place a warning on the packaging of products that could cause injury if the danger is unknown

Other Product Defects Failure to provide adequate instructions Inadequate testing of products Inadequate selection of component parts or materials Improper certification of the safety of a product

Defenses to Product Liability Supervening or intervening event—not foreseeable Generally known dangers—known to the general population Government contractor defense—government control Assumption of risk—knowledge and voluntary Misuse of the product—unforeseeable misuse Statutes of limitation and statutes of repose—from time of injury or from date of sale Contributory negligence—no recovery if partially at fault Comparative negligence—apportionment of damages

Manufacturer of defective product must notify purchasers and correct the defect.

IV. Objective Questions:

Terms:

1. A statute that limits the sellers' liability to a certain number of years from the date when the products was first sold is a statute of ______.

2. A defect that occurs when a manufacturer does not place a warning on the packaging of products that could cause injury if unknown is called a ______defect.

3. The defense to a product liability action in which the defendant must prove that (1) the plaintiff knew and appreciated the risk, (2) the plaintiff voluntarily assumed the risk, and (3) the plaintiff's undertaking of the risk was unreasonable is known as the ______defense.

4. The liability defense that says the plaintiff abused the product that in ordinary amounts would not be dangerous is called ______.

5. The ______arises automatically upon the sale of a product by a merchant stating that the product is fit for normal use.

6. The doctrine of ______applies to sellers and lessors of products who are engaged in the business of selling and leasing products.

7. When a manufacturer fails to properly assemble, test, or check the quality of its product, this is mostly to be defined as a ______.

8. A defense to a product liability action that says that some necessary products are unavoidably dangerous but serve a valuable social function is called the ______defense.

9. Warranties may be either ______or ______.

10. If a consumer is injured because of a foreign dangerous substance found in a bottle of soda , there is obviously a defect in ______.

True/False:

1. ____ Compliance with federal or state safety standards for product design automatically absolves a defendant from product liability.

2. ____ In the case of a supervening event, only the party who caused the defendant harm and all sellers after him are liable, but prior sellers are absolved from strict liability.

3. ____ Manufacturers are liable for damages caused by both foreseeable and unforeseeable misuse of products.

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4. ____ Generally, to receive punitive damages, the plaintiff must prove the defendant intentionally injured him or acted with reckless disregard.

5. ____ Strict liability, like negligence, requires the injured person to prove the defendant breached a duty of care.

6. ____ Only persons who are injured because they relied on a misrepresentation may recover against a seller for the tort of intentional misrepresentation.

7. ____ Negligence per se automatically establishes that (1) the defendant breached his duty of care, (2) there was an injury to the plaintiff, and (3) there was causation.

8. ____ The doctrine of strict liability applies only to sellers who are engaged in the business of selling products.

9. ____ Express warranties automatically arise if a model is referred to and is a basis for the bargain.

10. ____ All parties in the chain of distribution of a defective product are strictly liable for injuries caused by that product even though they did not personally cause the defect.

Multiple Choice:

1. Pharmaceutical Company of America (PCA) produces and packages aspirin for sale to stores including Smith's Corner Store. Patsy Prepared buys a bottle of PCA aspirin at Smith's. Two weeks later Patsy's friend, Sarah Sickly takes two aspirin for a headache while she is at Patsy's house. Within minutes, Sarah is deathly ill and is rushed to the hospital. Sarah suffered extensive injuries from a toxic substance in the aspirin. Which of the following is correct? A. Sarah cannot sue PCA or Smith's because she did not buy the aspirin and is therefore not in privity with PCA. B. Sarah cannot sue PCA or Smith's because they are protected by the defense of unavoidably dangerous products. C. Sarah cannot sue PCA or Smith's because she assumed the risk of taking the aspirin. D. Sarah can sue PCA or Smith's even though she did not buy the aspirin and is not in privity. . 2. Neighbor Nel sells her lawn mower to Homebody Homer because she is moving away. Homer is injured by a defective part in the lawn mower. Which of the following is correct? A. Nel is strictly liable for the defect in the mower since she was in the chain of distribution. B. Nel is strictly liable for failing to provide adequate instructions. C. Nel is strictly liable because she is not a merchant and this was a casual sale. D. Nel is not strictly liable because only manufacturers can be held liable.

3. Pedestrian Pat is injured while standing on the corner of an intersection when Biker Becky's new motorcycle speeds out of control because of a defective part. Which of the following is correct? A. In most jurisdictions, Pat can sue the motorcycle manufacturer even though he was only a bystander. B. In most jurisdictions, Pat cannot sue the motorcycle manufacturer since he was only a bystander. C. Biker Becky is strictly liable for the defect. D. None of the above.

4. Wilfred takes a medication for his heart condition. Seven different pharmaceutical companies produce the medication. Unfortunately, Wilfred experiences seriously damaging side effects about which he was not warned by any of the pharmaceutical companies. Wilfred wants to sue the medication manufacturer. However, the medication is fungible, and Wilfred cannot identify the pharmaceutical company responsible for the drug he took. Assume Wilfred is in a state that allows suits based on market share liability. Which of the following is correct? A. Each of the seven defendant pharmaceutical companies must prove they did not make the medication Wilfred took. B. Wilfred must sue each company based on the number of units of the medication they produce. C. Wilfred cannot sue unless he identifies the pharmaceutical company most likely to have made the medication he took. D. None of the above.

5. Which of the following is correct? To recover for strict liability, the injured party must show: A. That the product was defective. B. That the product was the cause of the injury. C. Who caused the product to become defective. D. All of the above must be shown to recover for strict liability.

6. The crashworthiness doctrine is a duty imposed on automobile manufacturers to: A. Design cars to reduce the possibility of accidents. This includes such things as high quality brakes and bumpers. B. Design cars to take into account the possibility of people's bodies striking something in their own car. C. Give specific instructions as to how a car is to be operated. D. Post conspicuous signs on the car.

7. Snack Foods Inc. (SFI) is a manufacturer of snack foods that sells its products to several stores including Shore Stop Stores (SSS). Because of defective packaging by SFI, Consumer Chris is injured when he eats a bag of popcorn he bought at SSS. Which of the following is correct? A. Chris can sue SFI for defective packaging, but not SSS, since only the manufacturer can be held strictly liable for defective packaging. B. Chris can sue SFI for fraud, but not SSS. C. Chris can sue both SFI and SSS since SFI produced the defective packaging and SSS is in the chain of distribution. D. None of the above.

8. Which of the following is incorrect? To establish a defense of assumption of risk, the defendant must prove: A. The plaintiff knew and appreciated the risk. B. The plaintiff voluntarily assumed the risk. C. The plaintiff's undertaking of the risk was unreasonable. D. All of the above must be shown to establish a defense of assumption of risk.

9. Drug Manufacturer Inc. (DMI) produces a very effective but strong drug, XIT. Unfortunately, XIT has several side effects. DMI takes every measure to warn users of the possible side effects. However, Patient Paul takes XIT and suffers the side effects of hair loss, weight gain, and irritability--all warned against side effects. Which of the following is correct?

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A. DMI is strictly liable for the defect in design. B. DMI is strictly liable for the failure to warn. C. DMI is strictly liable because this was a generally known danger. D. DMI is not strictly liable because the drug is an unavoidably dangerous product.

10. Gardener Glen buys a lawn mower from Hank's Hardware Supplies. Glen in injured when he tries to trim his hedges with the lawn mower. If Glen sues HHS under a theory of strict liability, what is HHS's best defense? A. Supervening event. B. Misuse of a product. C. Unavoidably dangerous product. D. Generally known dangers.

V. Answers to Objective Questions

Terms:

1. Repose. These statutes remain controversial because the harm done by certain products may be a long time in coming as illustrated by some cancer-causing toxins found in the food chain. 2. Failure to warn. Because certain products are inherently dangerous, manufacturers and sellers of such products have a duty to warn users about those dangers. Failure to warn about these inherent dangers can support a product liability action. 3. Assumption of risk. We all assume numerous risks in everyday activities, such as driving, that cannot always be avoided. This defense works best where the seller or lessor can show that the plaintiff's undertaking of the risk was unreasonable under all the circumstances involved in the particular case. 4. Abnormal misuse. Some commentators have criticized this defense for being too narrow. Note that it only protects the seller or lessor against abnormal misuse. One must guard against normal misuse. Critics would argue that any misuse is improper and should be allowed as a defense. 5. Warranty of merchantability. Arises automatically under these circumstances but may be disclaimed. 6. Strict liability. This doctrine evolved out of the frustrations raised by traditional tort law defenses used in product liability cases. 7. Defect in manufacturer. This is one of several categories of defect defined in Section 402A of the Restatement 2d of Torts. Others include design, packaging, warnings, instructions, testing, component selection, and safety certifications. 8. Unavoidably dangerous. This is a reality-based concept which holds that the law can only go so far in protecting against certain risks and that the social benefits derived from these products outweigh the risks. Note, fair warnings are still required. 9. Express or Implied. Express are outwardly stated or indicated and implied arise from the situation unless disclaimed. 10. Packaging. Product was not sufficiently tamperproof.

True/False:

1. False. While noncompliance with federal or state safety standards for product design is prima facie evidence of a defect in design, compliance alone does not necessarily absolve a defendant from product liability. 2. True. The supervening event breaks the chain of liability tracing.

3. False. Manufacturers are liable for damages caused by foreseeable misuse of a product, but not unforeseeable misuse. 4. True. Note these damages are commonly used in product liability cases in order to send a signal to the manufacturer. 5. False. Under strict liability, the injured person does not have to prove the defendant breached the duty of care. 6. True. This tort is also commonly known as fraud, and it may incur criminal liability to the perpetrator as well. 7. False. Negligence per se automatically established that the defendant breached his duty of care. However, the plaintiff must still prove that he suffered and that the defendant's product was the cause of injury. 8. True. If a hybrid transaction is involved, look at the dominant element of the transaction to see if the doctrine applies. 9. True. A model becomes part of the express warranty where relied upon. 10. True. This is another controversial element of strict liability doctrine. The assumption is that this rule will force the parties to get good insurance.

Multiple Choice:

1. D. Sarah does not have to be in privity with the manufacturer or retailer of the aspirin since strict liability is a tort doctrine. Under strict liability, sellers are liable to the ultimate user or consumer. A is incorrect because Sarah does not have to be in privity. B is incorrect because aspirin is not an unavoidably dangerous product. C is incorrect because taking aspirin is not generally considered an unreasonable risk. 2. C. Nonmerchants who are involved in casual sales cannot be held strictly liable. A is incorrect because this was a casual sale, and Nel is not a merchant regularly involved in the sale of lawn mowers. B is incorrect because this was a casual sale, and she was not responsible for giving instructions on the use of the lawn mower. D is incorrect because wholesalers and retailers in the line of distribution can also be held strictly liable. 3. A. Most jurisdictions provide protection for people who are injured even if they are only bystanders. B is incorrect for the reason stated above. C is incorrect because Becky is a consumer and not strictly liable for a defect which is the fault of the manufacturer. 4. A. In a suit based on market share liability, the plaintiff sues all manufacturers and they, in turn, must prove they did not produce the product that caused injury. B is incorrect because Wilfred must sue all seven manufacturers. Whether and how much each manufacturer is liable is dependent on whether they can prove they did not produce the medication. C is incorrect because under market share liability, Wilfred need not first identify the pharmaceutical company most likely to have produced the medication he took. 5. C. Under strict liability, the injured party does not have to prove who caused the product to become defective. However, that party must show that the product was defective and that the product was the cause of injury. A is required. B is required. D is incorrect because the injured party does not have to show who caused the defect. 6. B. It is unrealistic to expect cars not to crash, and when they do, it is scientifically provable that secondary crashes will take place inside the car. Thus, the crashworthiness doctrine forces the manufacturers to take that reality into account when they are designing a car. 7. C. The manufacturer and all other merchants in the chain of distribution can be held liable for defective packaging. A is incorrect because SSS, as a retailer, is also strictly liable for defective packaging. B is incorrect because there is no evidence of fraud here. 8. D. A, B, and C are all elements of the traditional doctrine of assumption of risk. In practice, the courts narrowly apply the defense.

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9. D. Although this drug is unsafe in certain ways, it apparently serves a valuable social function. In addition, DMI adequately warned all of the side effects Paul experienced. Therefore, under the principle of unavoidably dangerous products, DMI is not liable. B is incorrect because DMI did warn of all the side effects. C is incorrect because such a drug would not be classified as a generally known danger, but an avoidably dangerous product. 10. B. Trimming hedges is an obvious misuse of the lawnmower. In addition, this is arguably an unforeseeable misuse. Therefore, HHI would not be liable. A is incorrect because there was no supervening event which caused a defect in the lawn mower. C is incorrect because lawnmowers are a frequently used product and not considered unavoidably dangerous. D is incorrect because under the circumstances, misuse of the product is a more applicable defense.

VI. Answers to Essay Question:

This case involves the sale of a product that is classified as a good under the UCC. Some services may be incidentally involved by way of repairs and the like, but the dominant purpose of the transaction is the sale of a good. The user of the product here was the buyer-owner, Mr. Clint Wayne, and the injured party was a user-bystander, Ms. Molly Oakley. Of the possible theories listed under the traditional law of tort, abnormally dangerous activities is most likely to be raised and will most likely fail. As dangerous as guns are, their use is far from unusual in our society. There are over 200 million weapons in the U.S., most of them legally owned. The harm created by these weapons is well documented on the news every night. Thus the harm done by them is a "normal" element of every day life in the U.S., like it or not. There is no question that a theory of strict liability can be applied based on defects in design, manufacture, instruction, inadequate selection of component parts, and more under Section 402A of the Restatement 2d of Torts. It can be reasonably assumed that any weapon should have built into it reasonable safety mechanisms to guard against unintended misfires from a mere incidental contact with the gun. Guns can and do bump against other objects or fall and should not go off like a loaded hand grenade when they do. To design a gun with a hammer resting against the firing pin creates a definite danger to both the user and the bystanders. To assume that the user will keep the gun only partially loaded is myopic at best and callous to the reality of how guns are actually used. Giving warnings or instructions to only partially load is akin to telling drivers not to go over an unreasonably slow speed limit because the car my not be able to stop. The defendants may argue that the gun falling off the seat was an intervening event and that there is an assumption of risk in using a generally known dangerous product like a gun. In addition, our current gun laws exempt this product from the Consumer Product Safety Commission's power to recall. These defenses should not be allowed to bar recovery. Other gun manufacturers made comparable products with adequate safety mechanisms at the same time as this one, so the state of the art defense should not be allowed. As for risk assumption, the risks associated here are with gun safety, not hand grenade-like attributes of a gun. There was no apparent willful misuse of the product by Mr. Wayne. In related cases, over 40 people have been killed by this product including baggage handlers who were handling bags containing these weapons. As for the statute of limitations, guns have an unusually long life span of use because they do not wear out. Witness the large trade in antique and collectable firearms in this country. There has been some recent activity on the part of Congress to stem some of the harm done by all these weapons. Consider the Brady Bill and the ban on certain assault weapons. But as a practical matter, annual gun deaths of all sorts will soon outnumber the death toll of auto-related deaths in this country and for those people (as well as Ms. Oakley); it is all too little too late. Because this product is not fungible but unique to the Big Bang Company, only those persons and entities in the chain of distribution should be held liable. As for damages, actual and punitive damages could be allowed.