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AUTOMATED VEHICLES: LIABILITY CRASH COURSE MCITY—AFFILIATE LAW RESEARCH PROGRAM March 2018 Brian Westenberg Kristin Kolodge Miller Canfield J.D

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AUTOMATED VEHICLES: LIABILITY CRASH COURSE MCITY—AFFILIATE LAW RESEARCH PROGRAM March 2018 Brian Westenberg Kristin Kolodge Miller Canfield J.D AUTOMATED VEHICLES: LIABILITY CRASH COURSE MCITY—AFFILIATE LAW RESEARCH PROGRAM March 2018 Brian Westenberg Kristin Kolodge Miller Canfield J.D. Power Troy, MI Troy, MI [email protected] [email protected] Tina Georgieva Lisa Boor Miller Canfield J.D. Power Troy, MI Troy, MI [email protected] [email protected] Copyright © 2018 by J.D. Power and Miller Canfield. All Rights Reserved. Reproduction Prohibited. The information contained herein has been obtained by J.D. Power and Miller Canfield from sources believed to be reliable. However, because of the possibility of human or mechanical error by our sources, J.D. Power and Miller Canfield does not guarantee the accuracy, adequacy, or completeness of any information and is not responsible for any errors or omissions or for the results obtained from use of such information. This material is the property of J.D. Power and Miller Canfield or is licensed to J.D. Power and Miller Canfield. This material may only be reproduced, transmitted, excerpted, distributed or commingled with other information, with the express written permission of J.D. Power and Miller Canfield. The user of this material shall not edit, modify, or alter any portion. Advertising claims cannot be based on information published in this special report. ii Copyright © 2018 by J.D. Power and Miller Canfield. All Rights Reserved. AUTOMATED VEHICLES: LIABILITY CRASH COURSE TABLE OF CONTENTS I. EXECUTIVE SUMMARY 4 II. INTRODUCTION 6 III. WHY IS IN RE TOYOTA MOTOR CORP. UNINTENDED ACCELERATION IMPORTANT? 8 IV. THE BASELINE ON LIABILITY: A PRIMER ON U.S. PRODUCT LIABILITY LAW 14 A. Tort Reform and Caps on Damages 19 B. The Discovery Process 26 C. Expert Witnesses and Junk Science 27 D. The Role of Accident Reconstruction Experts in Product Liability Litigation 28 V. THE HUMAN FACTOR 30 A. The Current State of Consumer Attitudes toward ADS 30 B. J.D. Power Research—Introduction 32 1. Survey Procedure 33 2. Definitions 33 C. Legal Practitioners Survey Results and Takeaways 34 1. Theory of Liability 34 2. Discovery 35 3. Experts 35 4. Preemption 36 5. Final Thoughts 37 6. Takeaways 38 D. Consumer Survey Results 40 1. Consumer Survey—Automated Vehicle Acceptance 40 2. Consumer Survey—Vehicle Data 44 3. Consumer Survey—Dispute Resolution Litigation Options 46 Copyright © 2018 by J.D. Power and Miller Canfield. All Rights Reserved. 1 TABLE OF CONTENTS VI. DATA NEEDED IN ADS CRASHES 50 X. APPENDICES 72 A. Aviation Data 51 A. Cost of Discovery 72 B. Maritime Data 52 1. Overview of Discovery in American C. NHTSA Crash Data: A Closer Look at Civil Litigation 72 FARS Pedestrian Fatalities 53 2. The New Challenges of Electronic Discovery (e-Discovery) 73 3. Conclusion 75 VII. NEXT STEPS: THE INDUSTRY AS B. Data Recording in Maritime and THE DRIVER OF CHANGE 54 Aviation Crashes 76 A. The Voice of the Consumer: Adapting in 1. Aviation Data 76 Order to Increase Acceptance 54 2. Maritime Data 79 1. Industry Messaging to Consumers: C. FDA Premarket Approval 81 Setting Expectations 56 1. Premarket Approval Process 2. Consumer Education: Taking a Requirements and Timing 84 Proactive Approach 56 2. Case Law Regarding Scope of B. Coming to Terms with Reality: Preemption § 360k Preemption 86 and Tort Reform Unlikely 57 D. Preemption under the Federal Motor C. Medical Device Premarket Approval Vehicle Act 88 under the Food and Drug Administration 58 1. Basics of Federal Preemption 88 D. Federal Preemption under the Motor 2. Federal Preemption and the Motor Vehicle Safety Act 60 Vehicle Safety Act 90 E. Creating Partnerships: Working Together 3. Geier and Federal Preemption as an Industry to Establish Codes of Involving Motor Vehicles 91 Conduct and Best Practices 62 4. Post-Geier Federal Circuit F. Looking Inward: Implementing Internal Court Decisions 93 Early Resolution Programs 63 5. Williamson As a Clarification of Geier 95 1. Prevention: Implementing an 6. Preemption in the Context of ADS 95 Analytical Warranty System 63 E. Lessons from Abroad 97 2. Mitigation: Implementing an Early Belgium 97 Resolution and/or Settlement Denmark 97 Program 63 Finland 97 G. Lessons from Abroad: A Market Survey France 97 of Non-U.S. ADS Laws and Regulations 64 Germany 97 H. Advocating for Change: The Importance Italy 97 of Data and the Need for Lawmakers to Poland 98 Establish Necessary Safeguards 66 Spain 98 The United Kingdom 98 China 98 VII. CONCLUSION 68 Japan 98 South Korea 98 IX. ACKNOWLEDGEMENTS 70 Singapore 99 Russia 99 United Arab Emirates 99 Australia 99 Canada 100 2 Copyright © 2018 by J.D. Power and Miller Canfield. All Rights Reserved. Copyright © 2018 by J.D. Power and Miller Canfield. All Rights Reserved. 3 I. EXECUTIVE SUMMARY In re Toyota Motor Corp. Unintended Acceleration—or commonly known as “the Toyota Unintended Acceleration Litigation” (Toyota UA litigation)1 demonstrates that product liability litigation costs can be enormous and could bankrupt even well-established players in the industry, or, at a minimum, cause a major, multi-billion-dollar loss to a company. The product liability industry in the United States should not be underestimated, as automobiles are among the most-litigated products. More importantly, from a technological complexity point of view, the Toyota case is a microcosm of what could transpire in a typical product liability claim against an automated driving system (ADS), and it can be used as a benchmark to conclude that the costs of litigating such a case would be extreme. The product liability industry in the United States should not be underestimated, as automobiles are among the most-litigated products. For this reason, it is necessary to evaluate whether the traditional approach of handling product liability claims against automobiles is suitable for handling product liability claims in the context of ADS and determine how the product liability framework may be reworked in order to adapt to these technological advancements. Analysis of specific potential federal and state regulatory standards, although relevant, is beyond the scope of this paper. Rather than merely hypothesizing about the potential alternative legal frameworks that could be adopted in the handling of product liability claims, we believe the best approach is to examine the human element. The most important element of a product liability case—the claimant—determines the path of the product liability claim: whether to retain an attorney; whether to seek an early, out-of-court settlement of 4 Copyright © 2018 by J.D. Power and Miller Canfield. All Rights Reserved. EXECUTIVE SUMMARY the claim; whether to pursue a lawsuit; whether to settle the lawsuit prior to trial; or whether to have the case tried before a jury of their peers. More than 1,500 owners of personal-use vehicles (model years 2013- 2018) were surveyed in order to gain a better understanding of their perspectives regarding ADS and their willingness to participate in alternative dispute resolution programs. Additionally, top product liability litigators from across the country were surveyed regarding their viewpoints for the direction of product liability litigation involving ADS. The data gathered by these two surveys has been supplemented with an analysis of historical crash data maintained by the National Highway Traffic Safety Administration (NHTSA). In the final step, the data was combined with knowledge and experience of the product liability litigation process along with the importance of integrating the Voice of the Consumer into the product development process to devise potential solutions and next steps for the industry. The findings suggest that consumers have an overwhelming appetite to resolve product liability claims involving ADS in an out-of-court setting. The findings suggest that consumers have an overwhelming appetite to resolve product liability claims involving ADS in an out-of-court setting. This will necessitate integral changes to the way data generated by ADS is owned, harvested, and shared. The results of this groundbreaking project, facilitated via the Mcity partnership, provide a multidisciplinary approach, which will help drive actionable industry resolutions and motivate change regarding the future of mobility. Copyright © 2018 by J.D. Power and Miller Canfield. All Rights Reserved. 5 II. INTRODUCTION THE AUTOMOTIVE INDUSTRY IS UNDERGOING THE BIGGEST CHANGE IN ITS 130-YEAR HISTORY. For the first time, thanks to technological in this new environment. This includes legislators and the automotive industry, but no less important, the legal industry advancements, the one constant, necessary must adapt to these “changing times” by shifting away from player in the “consumer automobile equation”— traditional litigation practices toward a dispute resolution the human driver—will become obsolete. model that would be better suited to address developments in the technology. This means that it will no longer be necessary for the successful There is, however, currently no federal or state legislation operation of an automobile that a human driver be actively governing safety standards for ADS. Moreover, Federal present in monitoring and controlling its speed and direction. Motor Vehicle Safety Standards (FMVSS) currently in place Those who are currently not able to operate a motor vehicle will be in conflict and/or obsolete with the introduction of will gain the freedom to operate an automobile with as little ADS technologies. as a command. Nevertheless, the potential legal implications should not be seen This is the magic of automated driving systems (ADS), which as a negative. There is a real opportunity for the automotive are transforming the automotive industry like no other industry to grow closer to its customers. Our invaluable innovation in its history. inquiry into the mindset of the American consumer shows What this also means, however, is that every aspect of the one clear theme: even if consumers are initially distrustful of automotive industry will have to undergo a radical change: the technology, they are open to change and even willing, to from government regulations, to industry practices, to the a degree, to accept the risk associated with associated with civil industry.
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