PRODUCT LIABILITY



Product liability issues have become increasingly important to manufacturers and marketing managers. In the last 20 years the liability of a manufacturer has been greatly expanded as a result of the spread of the doctrine of strict liability and the adoption of new theories that permit recovery in so-called "delayed manifestation" cases. According to Section 102(2) of the Uniform Product Liability Act, product liability includes "all claims or action brought for personal inquiry, death, or property damage caused by the manufacture, design, formula, preparation, assembly, installation, testing, warnings, instructions, marketing, packaging, or labeling of any product."

In the early history of law affecting issues of product liability, responsibility was based in the law of contract, as shown in the British case Winterbottom v. Wright. In 1840, a coachman for the royal mail was injured when the coach overturned due to insecurely bolted axles. The coachman sued the man who had contracted with the postmaster general to keep the coaches in good working condition. The court found that the coachman was not a party to the contract and, therefore, ruled against him.

In time, social policy changed with respect to this strict interpretation of contract law. The courts began to argue that there was a "duty" owed to users by sellers to provide reasonable care in the manufacture of goods. After the mid-I800s, sellers were held liable to third parties for manufacturing or sales negligence of goods inherently dangerous to human safety. Product examples included food, beverages, drugs, firearms, and explosives.

By 1962, the changes in social policy resulted in the application of tort principles to product liability. The landmark case of MacPherson v. Buick Motor Co. (1961) concerned liability of the auto manufacturer to the buyer of a car sold through a dealer. Although the concept of "inherently dangerous" goods was still held to be significant, there was a shift from the analysis to negligence (tort) principles in this case—that is, the producer was required to apply "due care" in the marketing of goods to users. MacPherson v. Buick Motor Co. first applied the theory of negligence to product liability. The opinion, written by Judge Cardozo of the New York Court of Appeals, had an immediate and widespread effect on the state of law. The principles laid down in MacPherson are now accepted throughout the country, followed by all American courts and adopted by the Restatement (Second) of Torts. Eventually, the concept of "inherently dangerous" products fell into disuse and the concept of negligence expanded beyond production to include labeling, installation, inspection, and design.

The MacPherson decision took legal thinking a step beyond previous rulings on inherently dangerous goods. It established that, because manufacturers knowingly market products that affect the interests of consumers, they owe a legal duty of caution and prudence to consumers. Because manufacturers may foresee potentially harmful product effects, they are responsible for attempting to minimize harm. Establishing this legal duty between the manufacturer and the consumer made it possible for plaintiffs to argue the negligent breach of that duty.

A weakness in the negligence approach to product liability results in burdening the plaintiff with having to prove the defendant's negligence. The concept of warranty was developed in an effort to limit this problem. A warranty is an assurance made by the producer to the user regarding safety and soundness of the product. In this case, only the original purchaser of an item could bring an action, and it could be against only the person who sold the product to him. This provided more limitations because most merchandise passes through many hands en route to the consumer.

Again the courts began to find exceptions to the rule. For example, during the early 20th century, the discovery of substandard sanitary conditions resulted in a public hysteria about adulteration and mislabeling of foods. Food marketers had long been held to special responsibilities, but in order to protect the public welfare, food businesses were held to an absolute responsibility to provide unadulterated food products. Soon after, the position was expanded to include drugs, beverages, and cosmetics.

The four elements of a negligent tort as applied to product liability cases are as follows:

  1. A duty owed by the particular defendant to the particular plaintiff to act as a reasonably prudent person under the same or similar circumstance.
  2. A breach of such a duty (by the defendant) that constitutes a failure to act reasonably.
  3. Injury, including personal injury or property damage.
  4. A causal link between the defendant's breach of duty and injuries sustained by the plaintiff.

The concept of negligence is applicable to every activity preceding a product's availability in the market. So everything from product design, the inspection and testing of materials, the manufacture and assembly of the product, the packaging, the accompanying instructions and warnings, through the inspection and testing of the final product are all susceptible to negligence. Negligence can result from omission as well as commission—failure to discover a flaw is as negligent as creating one. Similarly, failure to provide adequate warnings about potential dangers in the use of a product is a violation of duty.

Still it may be difficult to prove negligence in product liability cases. Defendants only must meet the general standards of reasonable behavior as judged against the behavior of a reasonably careful competitor who demonstrates the standard skills and expertise of the industry. In reality, a manufacturer must only show that "ordinary care under the circumstances" was applied to avoid liability for negligence. This is easy compared to the task of consumers showing evidence to the contrary.

Insurance companies are increasing their demand for scientific standards in product liability litigation. They argue that, without a rigorous, scientific analysis, using preordained standards and procedures, litigation would be unfairly biased against defendants, because unreliable information could be introduced, leaving the scientific merit to be judged by the jury. In the case of Kumho v. Carmichael, the 11th Circuit Court of Appeals distinguished between "scientific" evidence, which must meet standards set by the Supreme Court in Daubert v. Merrell Dow, and "engineering" evidence, which need not. "Engineering" refers to technical evaluations offered by expert witnesses, without a systematic examination of the specific materials involved in the case. In the oral argument at the Supreme Court for Kumho, this distinction was rigorously questioned. Though the Supreme Court upheld the Circuit Court's verdict in the case, the arguments furthered the debate over scientific standards and seemed to provide insurers with some ammunition.

Many products, even the most ordinary, pose some level of risk, and the law recognizes that it is often not possible to design a totally safe product. However, manufacturers are legally obligated to warn consumers about known dangers. Manufacturers may be found negligent if:

  1. they fail to warn users about recognized risk,
  2. the warning is too vague to be adequate, or
  3. the warning is not brought to the user's attention.

There is no duty to warn against misuse that is so rare or unusual that it cannot be foreseen. This poses a unique difficulty for manufacturers who must not only provide warnings, but must communicate them such that a reasonable person will find and understand them. In some cases a warning buried in an instruction ID may be judged inadequate; in other situations, a warning sticker on the product may be considered sufficient.

STRICT PRODUCT LIABILITY

The most recent evolution in tort law, strict liability, has transformed the very nature of inquiry because it eliminates the entire question of negligence, i.e., fault. Strict liability requires only demonstrating that a product caused an injury because it was defective; the reason for the defect is irrelevant. The product itself, not the defendant's use, is under investigation.

Under strict liability, the manufacturer is held liable for allowing a defective product to enter the marketplace. The issue is a matter of public policy, not the manufacturer's unreasonable or negligent conduct. The introduction of a defective product into the marketplace brings each member of the product's distribution channel into liability for negligence. The theory of strict liability holds that manufacturers

  1. have the greatest control over the quality of their products;
  2. can distribute their costs by raising prices; and
  3. have special responsibilities in their role as sellers.

The tort of negligence at least provided the responsible person a standard by which to measure negligence, although it imposed the added burden of proving that the defendant was negligent. (According to Section 282 of the Restatement (Second) of Torts, negligence includes any "conduct which falls below the standard established by law for the protection of others against unreasonable risk of harm.") Although strict liability eases those burdens for the plaintiff and improves chances of recovery, it does not provide a universally accepted standard for measuring failure.

Section 402A of the Restatement (Second) of Torts relies on what has become known as the "consumer-expectation" test:

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 user or to consumer, or to his property if

  1. the seller is engaged in the business of selling such a product, and
  2. the product is expected to and does reach the user or consumer without substantial change in the condition in which it is used.

Though the definition is a source of some controversy, some analysts define "unreasonably dangerous" as dangerous beyond the reasonable expectation of the consumer with ordinary knowledge as to the product's characteristics. Despite its great influence, this definition has not been universally accepted. In California, for example, the court has rejected the necessity to prove unreasonable danger, arguing that such an expectation defeats the purpose of strict liability by imposing a negligence-like burden of proof on the plaintiff.

The Restatement (Second) of Torts recognizes that some products beneficial to society cannot be made entirely safe. Prescription drugs and vaccines are notorious examples. Such a product is not held defective simply because of its inevitable hazards; something else must be wrong with it also. Therefore, the Restatement does not hold drug companies strictly liable for a properly manufactured product accompanied by appropriate directions and warnings. In sum, design defects are not the same as manufacturing defects.

One defense manufacturers have employed with controversy is called "state of the art." This means that manufacturers should be held accountable only for information available to them at the time of manufacture. Flaws or defects which arose due to unavailable knowledge are not considered in questions of liability. The problem of interpreting this defense concerns the variation of knowledge and its applications across the country.

The Uniform Commercial Code has provided alternatives for persons injured by products. This code contains warranty provisions. Recall that a warranty is an assurance made to the buyer of a product. Three types are most common: express warranties, implied warranties of merchantability, and implied warranties of fitness for a particular purpose.

Express warranties affirm facts about a product and become part of the sales bargain. They may be written with or without the words "guarantee" or "warranty" or may be implied by samples that demonstrate certain characteristics, such as a genuine leather binding. The implication is that all pieces in the lot purchased will have the same type of leather binding. Express warranties are defined and governed by Section 2-313 of the UCC.

Implied warranties pertain to the applicability of the goods purchased. The implied warranty of merchantability suggests that professional sellers have special skill or knowledge of their goods and sell goods which are "fit for the ordinary purpose for which such goods are used." When the buyer is dependent on the seller's expertise (having indicated specific needs and the need to rely on the seller's advice), the seller is then liable to provide the right product. These warranties were created to serve public policy and did not result from agreement between parties to a sale. The courts construe implied warranties to protect buyers. The warranty of merchantability is governed by Section 2-314 of the UCC and is only applicable to merchants. The warranty of fitness for a particular purpose is governed by Section 2-315.

PRIVITY

Historically, a plaintiff had to have a relationship or connection, called privity, with a defendant in order to legally challenge that defendant. This factor became a defense used by manufacturers to avoid product liability cases of all kinds. The erosion of this defense has been important to the development of product liability, especially implied warranties.

Three types of privity exist. Horizontal privity refers to all persons making use of a product. Vertical privity concerns a product's channel of distribution. Market share privity stems from the notion of collective liability whereby an entire industry is liable for product injury. In this case, the specific manufacturer causing the product defect leading to injury cannot be determined.

[ John Burnett ]

FURTHER READING:

Jasper, Margaret. The Law of Product Liability. Dobbs Ferry, NY: Oceana Publications, 1996.

Owen, David G. Product Liability and Safety: Cases and Materials. Westbury, NY: The Foundation Press, 1996.



User Contributions:

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Wendy
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Aug 1, 2006 @ 10:22 pm
The year of the MacPherson vs Buick Motor company case is incorrect. It should read 1916 not 1961.

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