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Product Liability

PRODUCT LIABILITY

The responsibility of a manufacturer or vendor of goods to compensate for injury caused by defective merchandise that it has provided for sale.

When individuals are harmed by an unsafe product, they may have a cause of action against the persons who designed, manufactured, sold, or furnished that product. In the United States, some consumers have hailed the rapid growth of product liability litigation as an effective tool for consumer protection. The law has changed from caveat emptor ("let the buyer beware") to strict liability for manufacturing defects that make a product unreasonably dangerous. Manufacturers and others who distribute and sell goods argue that product liability verdicts have enriched plaintiffs' attorneys and added to the cost of goods sold. Businesses have sought tort reform from state legislatures and Congress in hopes of reducing damage awards that sometimes reach millions of dollars.

Theories of Liability

In most jurisdictions, a plaintiff's cause of action may be based on one or more of four different theories: negligence, breach of warranty, misrepresentation, and strict tort liability.

Negligence refers to the absence of, or failure to exercise, proper or ordinary care. It means that an individual who had a legal obligation either omitted to do what should have been done or did something that should not have been done.

A manufacturer can be held liable for negligence if lack of reasonable care in the production, design, or assembly of the manufacturer's product caused harm. For example, a manufacturing company might be found negligent if its employees did not perform their work properly or if management sanctioned improper procedures and an unsafe product was made.

Breach of warranty refers to the failure of a seller to fulfill the terms of a promise, claim, or representation made concerning the quality or type of the product. The law assumes that a seller gives certain warranties concerning goods that are sold and that he or she must stand behind these assertions.

Misrepresentation in the advertising and sales promotion of a product refers to the process of giving consumers false security about the safety of a particular product, ordinarily by drawing attention away from the hazards of its use. An action lies in the intentional concealment of potential hazards or in negligent misrepresentation. The key to recovery on the basis of misrepresentation is the plaintiff's ability to prove that he relied upon the representations that were made. Misrepresentation can be argued under a theory of breach of express warranty or a theory of strict tort liability.

Strict liability involves extending the responsibility of the vendor or manufacturer to all individuals who might be injured by the product, even in the absence of fault. Injured guests, bystanders, or others with no direct relationship to the product may sue for damages caused by the product. An injured party must prove that the item was defective, the defect proximately caused the injury, and the defect rendered the product unreasonably dangerous.

Historical Development

The history of the law of product liability is largely a history of the erosion of the doctrine of privity, which states that an injured person can sue the negligent person only if he or she was a party to the transaction with the injured person. In other words, a defendant's duty of reasonable care arose only from the contract, and only a party to that contract could sue for its breach. This meant that a negligent manufacturer who sold a product to a retailer, who in turn sold it to the plaintiff, was effectively insulated from liability. The plaintiff was usually without a remedy in tort because it was the manufacturer and not the retailer whose negligence caused the harm.

The privity doctrine dominated nineteenth-century law, yet courts created exceptions to avoid denying an injured plaintiff a remedy. Soon privity of contract was not required where the seller fraudulently concealed the defect or where the products were inherently or imminently dangerous to human life or health, such as poisons or guns. The decisions then began to expand these exceptions. Some courts dropped the fraud requirement. A concealed defect coupled with some sort of "invitation" by the defendant to use the product was enough. In a few cases, the term imminently dangerous was construed to mean especially dangerous by reason of the defect itself and not necessarily dangerous per se. For example, products intended for human consumption, a defective scaffold, and a coffee urn that exploded would be considered imminently dangerous.

The seminal case of macpherson v. buick motor co., 217 N.Y. 382, 111 N.E. 1050 (N.Y. 1916), broadened the category of "inherently" or "imminently" dangerous products so as to effectively abolish the privity requirement in negligence cases. It held that lack of privity is not a defense if it is foreseeable that the product, if negligently made, is likely to cause injury to a class of persons that includes the plaintiff. Because this is essentially the test for negligence, the exception swallowed the rule. The MacPherson case quickly became a leading authority, and the privity rule in negligence cases soon was ignored. Increasing public sympathy for victims of industrial negligence also contributed to the demise of the rule.

In warranty, a similar privity limitation was imposed, in part because warranties were thought to be an integral part of the sales contract. Beginning in the early twentieth century, an exception to the privity rule developed for cases involving products intended for human consumption (food, beverages, drugs) and eventually also for products intended for "intimate bodily use" (e.g., cosmetics) so that the warranty in these cases extended to the ultimate consumer. In the case of express warranties, which could be said to be made to the public generally, the privity requirement was abandoned during the 1930s. For example, a manufacturer's statement in literature distributed with an automobile that the windshield was "shatterproof" constituted an express warranty to the purchaser that the windshield would not break (Baxter v. Ford Motor Co., 168 Wash. 456, 12 P.2d 409 [Wash. 1932]).

But with respect to implied warranties, exception to the privity rule did not extend beyond food, drink, and similar products untilHenningsen v. Bloomfield Motors, Inc., 32 N.J. 358, 161 A.2d 69 (1960). In this case, the New Jersey Supreme Court abolished the privity limitation generally and held that the implied warranties run to the foreseeable ultimate user or consumer of the product. The Henningsen decision, which also invalidated the manufacturer's attempted disclaimer of implied warranty liability, has been followed in almost all jurisdictions.

From 1930 to 1960, various legal writers and a few judges discussed the creation of strict liability in tort for defective products. The best-known judicial exposition of this view was California Supreme Court Justice Roger John Traynor's concurring opinion in Escola v. Coca Cola Bottling Co. of Fresno, 24 Cal. 2d 453, 150 P.2d 436 (1944). A number of justifications have been advanced for strict liability: negligence is often too difficult to prove; strict liability can be accomplished through a series of actions for breach of warranty; strict liability provides needed safety incentives; the manufacturer is in the best position to either prevent the harm or insure or spread the cost of the risk; and the manufacturer of a product induces consumer reliance on the expectation of the product's safety and should be made to stand behind the product.

Finally, in 1963, in Greenman v. Yuba Power Products, Inc., 59 Cal. 2d 57, 377 P.2d 897, the California Supreme Court adopted strict tort liability for defective products. Within a short time, strict liability swept the country and was, as of 2003, the law in all but a few states.

Negligence

The duty to guard against negligence and supply a safe product applies to everyone in the chain of distribution, including a manufacturer who carelessly makes a defective product, the company that uses the product to assemble something else without discovering an obvious defect, and the vendor who should exercise greater care in offering products for sale. These individuals owe a duty of care to anyone who is likely to be injured by such a product if it is defective, including the initial buyer, that person's family members, any bystanders, and persons who lease the item or hold it for the purchaser.

Additionally, the duty to exercise care involves all phases of getting a product to the consumers or users. The product must be designed in such a way that it is safe for its intended use. It must be inspected and tested at different stages, made from the appropriate materials, and assembled carefully. The product's container or packaging must be adequate. The manufacturer must also furnish adequate warnings and directions for use with the product. The seller is proscribed from misrepresenting the safety or character of the product and must disclose all defects.

Breach of Warranty

Warranties are certain kinds of express or implied representations of fact that the law will enforce against the warrantor. Product liability law is concerned with three types of warranties involving the product's quality or fitness for use: express warranty, implied warranty of merchantability, and implied warranty of fitness for a particular purpose. These and other warranties are codified in the uniform commercial code (UCC), which every state has adopted, at least in part.

An express warranty can be created in one of three ways: through an affirmation of fact made by the vendor of the goods to the purchaser relating to the goods, which becomes part of the bargain; by way of a description of the goods, which is made part of the basis of the bargain; and through a sample or model, which is made part of the basis of the bargain (U.C.C. § 2-313).

An express warranty can be words spoken during negotiations or written into a sales contract, a sample, an earlier purchase of the same kind of product, or claims made in publicity or on tags attached to the product. An express warranty is created when a salesperson states that the product is guaranteed to be free from defects for one year from the date of the purchase.

Implied warranties are those created and imposed by law, and accompany the transfer of title to goods unless expressly and clearly limited or excluded by the contract. However, with respect to damages for personal injury, the UCC states that any such contractual limitations or exclusions are "prima facie unconscionable" and cannot be enforced (U.C.C. § 2-719 (3)).

The implied warranty of merchantability requires that the product and its container meet certain minimum standards of quality, chiefly that the product be fit for the ordinary purposes for which such goods are sold (U.C.C. § 2-314). This requirement includes a standard of reasonable safety.

The implied warranty of fitness for a particular purpose imposes a similar requirement in cases in which the seller knows or has reason to know of a particular purpose for which the goods are required and in which the buyer is relying on the seller to select or furnish suitable goods. The seller then warrants that the goods are fit for that particular purpose (U.C.C. § 2-315). For example, assume that the buyer tells the seller, a computer supplier, that he needs a high-speed computer to manage inventory and payroll functions for his business. Once the seller recommends a particular computer to handle these requirements, the seller is making an implied warranty of fitness. If the computer cannot adequately process the inventory and payroll, the buyer may file suit.

The action for breach of one of these warranties has aspects of both tort and contract law. Its greatest value to the injured product user lies in the fact that liability for breach is strict. No negligence or other fault need be shown. However, in addition to the privity limitation, certain contract-related defenses have impaired the remedy's usefulness. These include the requirement that the seller receive reasonably prompt notice of the breach as a condition to his or her liability, the requirement that the buyer has relied upon the warranty, and the ability of the seller to limit or disclaim entirely the implied warranties. These defenses are most appropriate in cases in which a product's failure causes economic loss. The trend has been away from strict enforcement of these defenses in personal injury cases in which the action is closer to a tort action.

Strict Liability

The rule of strict liability applied in product liability suits makes a seller responsible for all defective items that unreasonably threaten the personal safety of a consumer or the consumer's property. The vendor is liable if he or she regularly engaged in the business of selling such products, which reach the consumer without any substantial changes having been made in their condition. The vendor is liable even if he or she exercised care in handling the product and if the consumer bought the product somewhere else and had no direct dealings with the vendor.

Defects

A critical issue in a product liability lawsuit is whether the product contains a defect, which is an imperfection that renders a product unsafe for its intended use. Design defects exist when a whole class of products is inadequately planned in such a way as to pose unreasonable hazards to consumers. For example, an automobile manufacturer's design of a vehicle with the fuel tank placed in such a position that it will explode upon low-speed impact can be classified as defective. In that case, products manufactured in conformity with the intended design would be defective. A production defect arises when a product is improperly assembled. For example, frames of automobiles that are improperly welded to the body at the assembly plant would be classified as a production defect.

In addition, something other than the product itself can cause it to be defective. For example, caustic chemicals should be packaged in appropriate containers. Improper labeling, instructions, or warnings on a product or its container also make a product defective. Dangerous products should carry warning labels that explain how they should be used, under what circumstances they are likely to cause harm, and what steps can be taken in an emergency involving the product.

The principle of proper labeling includes claims made in sales brochures, product displays, and public advertising. It extends beyond warranty or negligence law, because a seller is strictly liable to users or purchasers of the product who are not in privity with the seller.

A manufacturer who creates the demand for goods through print and broadcast media has the responsibility to determine that the product has the qualities represented to the general public. Some courts allow injured consumers to sue even if they have not read a certain label or advertisement. The standard is that if the advertisement is directed toward the public at large and makes claims that a normal consumer would take into consideration when deciding to make a purchase, then the manufacturer must stand behind that claim for every member of the public.

Cause of Injuries

The issue of causation of injuries can be complicated, particularly if the product involved is only an indirect or remote cause, or one of a number of causes. Regardless of the theory of liability, the plaintiff must prove that the product was defective when it left the hands of the defendant and that the defect was the cause of injury. These issues are ordinarily questions of fact to be decided by the jury.

When the evidence indicates that an injury might have been precipitated by several causes, the question becomes whether the cause for which the defendant is liable was a substantial factor in bringing about the injury. A defendant is not necessarily liable if he is responsible for the last cause or the immediate cause of the injury. For example, a person who was injured by a cooking pot that fell apart when the person removed it from the stove might not have to show that a defect in the pot handle was the only possible explanation for the accident. The jury could still properly consider whether a defect was a concurring cause of the accident, even if they found that the plaintiff misused the pot by handling it too roughly.

Risks

A manufacturer has the duty to make the product as safe as possible. If the manufacturer cannot do so, he has the obligation to adequately warn users and buyers of the dangers that exist. The concept of a reasonably safe product extends to all dangers likely to arise when the product is being used normally or in a way that can be anticipated, even if it is not the purpose for which it was sold. For example, a manufacturer might foresee that someone is likely to stand on a table and might be required either to make it sufficiently strong and stable for people to do so without sustaining injury or to warn customers not to stand on it.

No liability is extended to a manufacturer if a plaintiff was disappointed because he or she had unreasonable hopes for a particular product. Frequently, however, a consumer's expectations are clearly reasonable but are not met. For example, no one expects to find defective brakes in a new automobile.

In some instances, a defect might not be inherent in the product, but a consumer should be aware that care is needed. An average adult need not be warned that knives cut, that dynamite explodes, or that electrical appliances should not be used in the shower. A consumer who ignores hazards will not succeed in an action alleging product liability. However, many manufacturers print warnings about common-sense hazards to provide added protection from a lawsuit.

Traditionally, an individual must be at least as careful as a reasonably careful person. Increasing recognition has been given, however, to a more realistic standard—the occasionally careless consumer. Courts are now less interested in how obvious a danger is and more concerned with discovering how serious the risk is and how readily it could have been avoided.

A consumer who clearly misuses a product cannot recover if an injury results. For example, a person who disregards a printed warning that nail polish remover is for external use only cannot blame the manufacturer for making an imperfect product if he or she ingests it. In addition, the consumer is precluded from recovery if he or she continues to use a product that is obviously dangerous. The theory is that the consumer has assumed the risk. This rule applies, however, only to obvious defects and does not establish a duty for consumers to scrutinize every product they purchase.

Whether a consumer has assumed responsibility for using an obviously dangerous product or misused a relatively safe product depends on who the user is likely to be. The classic example is children's clothing, which generally must be at least somewhat flame-resistant, because children are less able to appreciate the danger of accidental fires.

Unavoidable Dangers

Although manufacturers and sellers have a duty to take precautions and provide adequate warnings and instructions, the public can still obtain products that are unavoidably unsafe. A seller is not held strictly liable for providing the public with a product that is needed and wanted in spite of the potential risk of danger. Prescription drugs illustrate this principle because all of them have the potential to cause serious harm if used unreasonably.

The duty to warn consumers of unavoidable dangers presents special problems if certain individuals are likely to suffer allergic reactions. The law considers an allergy to be a reaction suffered by a minority of people that is triggered by exposure to some substance. Courts used to reject claims based on allergic reactions, reasoning that the product was reasonably safe and that the injury was caused by a defect peculiar to the individual. That approach has been abandoned, with manufacturers providing careful instructions on use and clear warnings about possible symptoms that suggest an allergic reaction.

Multiparty Litigation

Since the 1970s, groups of plaintiffs have filed consolidated lawsuits against the manufacturers of certain products. The makers of contraceptive devices, silicone breast implants, asbestos, and tobacco products have encountered this type of multiparty litigation. In many states, one judge is appointed to handle all cases involving claims against such a manufacturer. The litigation process can prove costly for defendants because they may have to defend themselves in many different states. The resulting verdicts or negotiated settlements can also be very expensive to companies.

Product Liability Reform

Businesses have sought relief from state legislatures and Congress regarding product liability, contending that the shifting legal standards make them vulnerable to even the most suspect claim. Some states have passed laws that provide manufacturers with the right to defend themselves by showing that their product met generally acceptable safety standards when made. This assertion is known as the state-of-the-art defense, which relieves manufacturers of the task of attempting to make a perfect product. An injured consumer cannot recover on the theory that the product would have been safe had the manufacturer incorporated safety features that were developed after the product was made. Consumer advocates have opposed such laws because they allow manufacturers to avoid liability. The advocates argue that these laws discourage innovation because higher safety standards are set as improvements are made.

Businesses have also attempted to set maximum amounts that persons can recover for punitive damages. Some states have capped awards for punitive damages. In 1996, President bill clinton vetoed a bill that would have limited punitive damage awards to $250,000, or two times the economic and non-economic damages, whichever amount was greater, stating that it would deprive U.S. families of the ability to fully recover for injuries caused by defective products.

In the same year, the Supreme Court imposed its own version of product liability reform with BMW v. Gore, 517 U.S. 559, 116 S. Ct. 1589, 134 L. Ed. 2d 809 (1996). The case involved an automobile purchaser who brought action against a foreign automobile manufacturer, American distributor, and dealer based on the distributor's failure to disclose that the automobile had been repainted after being damaged prior to delivery. An Alabama circuit court entered a judgment in the case of compensatory damages of $4,000 and punitive damages of $2,000,000. The Supreme Court ruled unanimously the punitive damages award was excessive. In this case, the Court devised three factors to assist trial judges in determining whether a jury's punitive damages award were excessive: (1) the degree of reprehensibility of the defendant's conduct; (2) the disparity between the harm or potential harm suffered by the plaintiff and the punitive damages award; and (3) the difference between the punitive damages award and the civil or criminal penalties authorized or imposed in comparable cases. The BMW case showed that there were limits under the Constitution to the amount of punitive damages that could be imposed.

Federal Preemption of State Product Liability Law

For the most part, product liability law is governed by state law. Occasionally, the federal government will move to preempt an entire area of product liability law from state control in order to protect a certain group of manufacturers. An example of this is the Federal Biomaterials Access Assurance Act (21 U.S.C.A. §§ 1601-1606), a 1998 law that protects suppliers of materials for implantable medical devices from "unwarranted" suits by laying out the permissible basis of biomaterials supplier liability. Under the act, a biomaterials supplier may only be held liable in three situations: (1) when the supplier is a manufacturer of medical implants under the act; (2) when the supplier is a seller of medical implants; or (3) when the supplier sold materials that did not meet contractual specifications of the manufacturer.

More problematically, a court will have to decide whether an area of product liability is affected by a federal law that does not expressly preempt product liability suits but may indicate the federal government wished such suits to be preempted. For implied preemption, the Supreme Court has recognized two subcategories: field pre-emption and conflict pre-emption. Under field pre-emption, a state statute is superceded when a federal statute wholly occupies a particular field and takes away state power to supplement it. Conflict pre-emption occurs when compliance with both the federal and state statute is impossible, and the state law stands as an obstacle to the legislative objectives of Congress.

An example of conflict preemption was Geier v. American Honda Motor, Inc., 529 U.S. 861, 120 S. Ct. 1913, 146 L. Ed. 2d 914, (2000), in which the Court ruled against an injured motorist who brought a defective design action against the automobile manufacturer under District of Columbia tort law, contending that the manufacturer was negligent in failing to equip the automobile with a driver's side airbag. The Court ruled the law suit was preempted in that it actually conflicted with department of transportation (DOT) standard, promulgated under National Traffic and Motor Vehicle Safety Act, requiring manufacturers to place driver's side airbags in some but not all 1987 automobiles. The Court noted the rule of state law imposing duty to install airbag would have presented an obstacle to variety and mix of safety devices and gradual passive restraint phase-in sought by the DOT standard.

further readings

Gasaway, Robert R. 2002. "The Problem of Tort Reform: Federalism and the Regulation of Lawyers." Harvard Journal of Law and Public Policy 25.

Kinzie, Mark A. 2002. Product Liability Litigation. Albany, N.Y.: West/Thomson Learning.

Moore, Michael J. 2001. Product Liability Entering The Twenty-First Century: The U.S. Perspective. Washington, D.C.: AEI-Brookings Joint Center for Regulatory Studies.

Mulherin, Joseph. 2001. "Geier v. American Honda Motor Company, Inc.: Has the Supreme Court Extended the Pre-Emption Doctrine Too Far?" Journal of the National Association of Administrative Law Judges 21.

cross-references

Automobiles: Unsafe at Any Speed; Consumer Product Safety Commission; Consumer Protection; Merchantable; Nader, Ralph; Proximate Cause; Sales Law; Tort Law.

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Product Liability

Product Liability

Product liability comprises a number of laws and court rulings that apply to any business that makes or sells a product. Businesses that make or sell products are responsible for ensuring that those products are safe and do not pose a hazard to the public. Such businesses can be held liable for any damage or harm their products might cause.

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

Because of their limited resources, small businesses must be particularly aware of their responsibilities under product liability laws. In addition to making safe products, this responsibility extends to prominently displaying warnings of any potential hazards on products and packaging. Experts recommend that small business owners consult with legal counsel experienced in the product liability field. An attorney can help the small business owner sift through the numerous federal and state laws that apply to different types of products. Small businesses are also encouraged to purchase product liability insurance. Unfortunately, the increasing number of lawsuits and large damage awards in this area have made such insurance very expensive and reduced the amount of coverage available. In fact, the expense of insuring against product liability has prevented small manufacturers from competing in certain product areas.

DEVELOPMENT OF PRODUCT LIABILITY LAWS

Product liability began to have meaning in the mid-1800s, when the American courts increasingly found that sellers of goods had a "duty" to use reasonable care in the production of those goods. Sellers were held liable to third parties for negligence in the manufacture or sale of goods "inherently dangerous" (the danger of injury arises from the product itself, rather than from a defect in the product) to human safety, ranging from food and beverages to drugs, firearms, and explosives. In the early 1960s, tort principles were first applied to product liability. During this time, the concept of "inherently dangerous" goods was still held to be significant, but there was a shift to negligence (tort) principles that held that producers of goods were required to apply "due care" in the marketing of goods to users.

Since that time, businesses have operated under an understanding that because they knowingly market products which affect the interests of consumers, they owe a legal duty of caution and prudence to consumers. Since 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. These principles are now accepted throughout the country and followed by all American courts. Eventually, the concept of "inherently dangerous" products fell into disuse and the concept of negligence was expanded beyond production to include labeling, installation, inspection, and design.

Relief for Small Business?

From time to time Congress has attempted to pass legislation to protect small business from heavy exposure to product liability suits and to ease their costs of product liability insurance. The most recent such attempt was The Small Business Liability Reform Act of 2001 sponsored by Representatives Asa Hutchinson (R-AR) and Tim Holden (D-PA) and Senators Mitch McConnel (R-KY) and Joseph Lieberman (D-CT). As reported by Refrigerated Transporter magazine, the legislation sought "to limit punitive damages against small business, to ensure that small business owners are only held liable for damages in proportion to their actual fault, and to reform the current product liability system to improve protection of companies that sell or lease products, but do not manufacture them." The legislation had not passed as of Spring 2006. Earlier attempts in this direction were the Product Liability Fairness Act of 1991 and the Product Liability Reform Act of 1998. No changes, however, have been enacted.

ELEMENTS OF PRODUCT LIABILITY

Four elements must be present for a product liability case to be considered under the negligent tort principles:

  • The particular defendant owes a duty to the particular plaintiff to act as a reasonably prudent person under the same or similar circumstances.
  • There is a breach of such a duty by the defendantthat is, a failure to act reasonably.
  • There is an injury, including personal injury or property damage.
  • There is a causal link between 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. This encompasses everything from product design, the inspection and testing of materials, and the manufacture and assembly of the product to the packaging, the accompanying instructions and warnings, and the inspection and testing of the final product are all susceptible to negligence. Negligence can result from omission as well as commissionfailure to discover a flaw is as negligent as creating one. Similarly, failing to provide adequate warnings about potential dangers in the use of a product is a violation of duty.

Still, it is often 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.

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:

  • They fail to warn users about recognized risk
  • The warning is too vague to be adequate
  • 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. The obligation to warn consumers of potential dangers 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 a product's instructions may be judged inadequate; in other situations, a warning sticker on the product itself may be considered sufficient.

STRICT PRODUCT LIABILITY

The most recent evolution in tort law, strict liability, has transformed the very nature of product liability because it eliminates the entire question of negligence. Strict liability only requires a plaintiff to demonstrate 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: have the greatest control over the quality of their products; can distribute their costs by raising prices; and 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. 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. Instead, it relies on what has become known as the "consumer-expectation" test: one who sells any product in a defective condition unreasonably dangerous to the user is subject to liability for physical harm caused to the user 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 without substantial change in the condition in which it is used. "Unreasonably dangerous" is defined as dangerous beyond the expectations of the ordinary consumer who purchases it. Despite its great influence, this definition has not been universally accepted.

Tort law does recognize that some products beneficial to society cannot be made entirely safe. Prescription drugs and vaccines are notorious examples. Such products are not considered defective simply because of their inevitable hazards; something else must be wrong with them as well. Therefore, drug companies are not held 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 interpreting this defense concerns the variation of knowledge and its applications across the country.

BIBLIOGRAPHY

"APSA Supports Liability Reform Legislation." Refrigerated Transporter. 1 July 2001.

Greenberg, Lisa. "FederalPunitive Damages." Automotive Body Repair News. August 2001.

Hart, Christine, and Mark Kinzie. Product Liability for the Professional. Thomson Leaning, 2002.

Miller, Roger LeRoy, and Gaylord A. Jentz. Fundamentals of Business Law. Thomson South-Western, 2005.

                               Hillstrom, Northern Lights

                                updated by Magee, ECDI

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product liability

product liability: see liability.

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Product Liability

Product Liability

Sections within this essay:

Background
Basis for Liability
Negligence
Tortious Misrepresentation
Warranty
Strict Liability

Defects in Products
Defects in Manufacturing
Defects in Design
Defects in Warnings

Liability for Used Products
Defenses
Statutes of Limitations in Products Liability Cases
Additional Resources
Organizations
Association of Trial Lawyers of America
National Association of Personal Injury Lawyers
American Bar Association

Background

A plaintiff in a products liability case asserts that the manufacturer of a product should be liable for personal injury or property damage that results from a defect in a product or from false representations made by the manufacturer of the product. A defendant often tries to disprove the plaintiff's case by showing that the product was not defective or that the plaintiff's misuse of the product was what caused harm to the plaintiff.

Products liability law consists of a mixture of tort law and contract law. Aspects of this area of law related to tort include strict liability, negligence, and deceit. Aspects that relate to contract law relate mostly to the laws governing warranties. Because this area of law is really hybrid in nature, a plaintiff may assert a number of possible claims, such as negligence, breach of implied warranty of fitness, breach of express warranty, or fraud.

The basis for products liability law developed over several centuries. English courts developed the doctrine of caveat emptor, meaning "let the buyer beware." Under this doctrine, a buyer was expected to protect himself against both obvious and hidden defects in a product and could not recover from the manufacturer for damages caused by these defects. Over time, however, English courts began to recognize a rule that a seller implied warrants that a product does not contain a hidden defect. On the other hand, American courts continued to employ the caveat emptor rule for most of the nineteenth century.

When courts in the United States began to impose implied warranties of merchantability in the late 1800s, the rule required that the plaintiff have privity of contract with the defendant. This meant that the buyer must have purchased a product directly from the manufacturer in order to recover from the manufacturer. During that time, manufacturers had begun to rely more heavily on retailers to sell products. Since many buyers did not actually purchase the products directly from the manufacturers, though, those buyers could not recover for breach of implied warranty from the manufacturers due to a lack of privity of contract.

Courts opened the doors to modern products liability cases in the 1950s and 1960s by allowing remote plaintiffs to recover against the manufacturers of defective products. The American Law Institute (ALI) included rules pertaining to products liability in the Restatement (Second) of Torts, which was official promulgated in 1965. Since the 1960s, the law of products liability has continued to expand and develop. The ALI recognized this development by approving the Restatement (Third) of Torts: Products Liability, in 1998.

Basis for Liability

A plaintiff may rely on one or more of several theories upon which to base his or her argument for recovery in a products liability case. The primary theories for recovery include the following: negligence, tortious misrepresentation, breach of warranty, and strict liability in tort.

Negligence

The tort of negligence remains a central part of the law of products liability. In order to recover under a theory of negligence, a plaintiff must prove five basic elements, including the following: (1) the manufacturer owed a duty to the plaintiff; (2) the manufacturer breached a duty to the plaintiff; (3) the breach of duty was the actual cause of the plaintiff's injury; (4) the breach of duty was also the proximate cause of the injury; and (5) the plaintiff suffered actual damages as a result of the negligent act.

In a products liability case, the law requires that a manufacturer exercise a standard of care that is reasonable for those who are experts in manufacturing similar products. However, even if a plaintiff can prove that a manufacturer has failed to exercise the proper standard of care, the plaintiff cannot recover without proving two aspects of causation. The plaintiff must first show that but for the manufacturer's negligence, the plaintiff's would not have been injured. The plaintiff must also show that the defendant could have foreseen the risks and uses of the product at the time of manufacturing.

Tortious Misrepresentation

A claim in a products liability suit may be based on false or misleading information that is conveyed by the manufacturer of a product. A person who relies on the information conveyed by the seller and who is harmed by such reliance may recover for the mis-representation. This basis for recovery does not depend on a defect in the product, but rather depends on the false communication.

Tortious misrepresentation may appear in one of three basic forms. First, a person may commit fraudulent misrepresentation, or deceit, in which the person knows that a statement is false and intends to mislead the plaintiff by making the statement. Second, a person may commit negligent misrepresentation, where the person was negligent in ascertaining whether a statement was true. Third, some jurisdictions allow for strict liability in instances where a manufacturer makes a public statement about the safety of a product.

Warranty

A warranty is a type of guarantee that a seller gives regarding the quality of a product. A warranty may be express, meaning that the seller makes certain representations regarding the quality of a product. If the product's quality is less than the representation, the seller could be liable for breach of express warranty. Some warranties may also be implied due to the nature of the sale.

The Uniform Commercial Code (U.C.C.), which has been adopted in part by every state, provides the basis for warranties in the United States. The U.C.C. recognizes express warranties and two types of implied warranties: the implied warranty of merchantability and the implied warranty of fitness for a particular purpose. An implied warranty of merchantability is a promise that a product sold is in good working order and will do what it is supposed to do. An implied warranty of fitness for a particular purpose is a promise that a seller's advice on how to use a product will be correct.

Strict Liability

Section 402A of the Restatement (Second) of Torts included a provision that created strict liability on the part of a manufacturer. Under this section, a manufacturer is liable for product defects that occur during the manufacturing process, notwithstanding the level of care employed by the manufacturer. Courts later extended the strict liability principles to include cases that did not involve errors in manufacturing, such as cases involving a failure of a manufacturer to provide ample warnings.

The Restatement (Third) of Torts: Products Liability applies strict liability rules to cases involving errors in manufacturing, but applies negligence rules to other types of products liability cases. Nevertheless, many states continue to apply the strict liability rules that were developed in older cases.

Defects in Products

In order to recover for harm caused by a product, a plaintiff in a products liability suit must prove that a product possessed some sort of defect or hazard. This is true irrespective of the theory or theories of recovery that the plaintiff attempts to prove. The vast majority of states recognize three types of defects that may give rise to a products liability suit. These include defects in manufacturing, design, and warnings.

Defects in Manufacturing

A defect in manufacturing is one that the manufacturer did not intend. A manufacturing defect is the clearest instance in which strict liability applies. Under the Restatement (Third) of Torts: Products Liability, a product "contains a manufacturing defect when the product departs from its intended design even though all possible care was exercised in the preparation and marketing of the product."

An example of a manufacturing defect would be a car's braking system that does not work properly and causes a plaintiff to have an accident. Even though the manufacturer of the car did not intend for the brakes to malfunction, and even though the manufacturer was not negligent in the design of the brakes, the strict liability doctrine in products liability law could render the manufacturer liable.

A plaintiff may have difficulty proving that a product caused the plaintiff's injuries. For example, even if a car had some defect in the braking system, the driver's poor reaction to driving conditions may have been the actual cause of an accident. Additionally, in some circumstances, it may be difficult for a plaintiff to prove that a defect caused an accident due to the damage to the product. A car may be so heavily damaged in an accident, for instance, that it is impossible to prove what caused the accident to occur.

In some instances, a plaintiff can rely on the "malfunction doctrine" to prove causation. Under this doctrine, if the circumstances of an accident indicate that a defect caused the accident, and the plaintiff can produce evidence that removes other possible causes, then the plaintiff can prove causation even if the product is damaged or destroyed. This doctrine is similar in application to res ipsa loquitur in the law of negligence.

Defects in Design

A defect in a products liability suit may be based on the product's design. The Restatement (Third) provides that a design defect occurs "when the fore-seeable risks of harm posed by the product could have been reduced or avoided by the adoption of a reasonable alternative design by the seller or other distributor, or a predecessor in the commercial chain of distribution, and the omission of the alternative design renders the product not reasonably safe."

Cases involving design defects generally focus on the manufacturer's decisions in making a product, especially with respect to decisions regarding a product's safety. Unlike manufacturing defect cases, which focus on errors that a manufacturer made while actually making the product, design defect cases focus on the manufacturer's plans in producing the product.

Modern courts employ a cost-benefit analysis in resolving design defect cases, as captured in the Restatement (Third). A plaintiff must identify an alternative design that could have made a product safer in order to prove a case based on a design defect. If a plaintiff can demonstrate that a practicable alternative to the design employed by the manufacturer could have prevented the plaintiff's harm, then the court will determine whether the alternative was cost-efficient.

For example, assume that a metal fan was covered by a guard, but the openings in the guard were three-quarters of an inch wide. In using the fan, the plaintiff's hand slips between the gaps in the guard, and the plaintiff is injured by the blades of the fan. The plaintiff may base a product liability suit on the design of the fan, arguing that if the guard's openings were a half-inch or less, the plaintiff's hand would not have been injured.

Defects in Warnings

The last type of defect focuses on the warnings that a manufacturer fails to give regarding the dangerousness of a product. Under the Restatement (Third), a product may be defective "because of inadequate instructions or warnings when the foreseeable risks of harm posed by the product could have been reduced or avoided by the provision of reasonable instructions or warnings by the seller or other distributor,… and the omission of the instructions or warnings renders the product not reasonably safe."

A manufacturer is under two related duties. First, the manufacturer is required to warn users of hidden dangers that may be present in a product. Second, the manufacturer must instruct users how to use a product so that the users can avoid any dangers and use the product safely. An example could involve a fan that is prone to overheating if operated for more than three hours continuously. After three hours, the fan could present a fire risk. If the manufacturer fails to provide a warning about the potential danger of the product, then a plaintiff who is injured in a fire started by the product could recover not only for a defect in the design of the fan, but also for the inadequate warnings regarding the danger posed by the fan.

A warning generally must be clear and specific. It should also be conspicuous and placed in a location that the user can easily find. Many manufacturers now provide warnings in foreign languages and by using symbols so that children and non-English speaking users are aware of dangers associated with a product.

Liability for Used Products

Different rules have developed in products liability law for those who sell or repair used products. In most instances, a person who repairs, rebuilds, or reconditions a product is liable if the person is negligent in treating the product, but the person is not subject to strict liability for defects. In some instances, however, a person who remanufactures a product may be subject to the same products liability rules as the original manufacturer.

States are split regarding the bases of liability of sellers of used products. Some states expressly exclude sales of used products from products liability rules. In other states, the general products liability rules apply.

Defenses

A defendant in a products liability suit may employ one of several defenses to liability. One of the more common defenses is that the plaintiff misused the product in a manner that was not reasonably foreseeable to the manufacturer. For instance, assume that a plaintiff wanted to sweep a number of rocks in his driveway back into a bed of rocks. The plaintiff decides to use his lawnmower to shoot the rocks back into the rock bed. One of the rocks strikes and injures the plaintiff. The defendant could argue that using the lawnmower to move the rocks off of the driveway was not a reasonably foreseeable use of the product.

Other defenses may be based on the plaintiff's own negligence in using a product or on the plaintiff's assumption of the risk associated with the product. Similar defenses apply in breach of warranty claims. In a tortious misrepresentation claim, the primary defense centers on whether a plaintiff's reliance on a seller's statement is justifiable. If a plaintiff's reliance is not justified, then the lack of reliance defeats an essential element of the plaintiff's claim.

Statutes of Limitations in Products Liability Cases

A plaintiff in each state must bring an action within a certain period of time prescribed in the state's statute of limitations. In most states, the time period begins when the plaintiff discovered or should have discovered his or her injury, under what is known as the discovery rule. A few states begin this time period when the injury actually occurred. Some states have also enacted statutes of repose, which bar actions that are not brought within a specified period of time after some event has occurred, such as the initial sale of a product.

ALABAMA: An action must be brought within one year from the time when the injury is or should have been discovered.

ALASKA: An action must be brought within two years from the time when the injury is or should have been discovered.

ARIZONA: An action must be brought within two years from the time when the injury is or should have been discovered. The state has enacted a 12-year statute of repose that begins to run once the product is first sold. The statute of repose does not apply to actions based on negligence or breach of warranty.

ARKANSAS: An action must be brought within three years from the time when the injury is or should have been discovered.

CALIFORNIA: An action must be brought within two years from the time when the injury is or should have been discovered.

COLORADO: An action must be brought within two years from the time when the injury is or should have been discovered.

CONNECTICUT: An action must be brought within two years from the time when the injury is or should have been discovered. The state has enacted a 10-year statute of repose that begins to run once the manufacturer or seller has last parted with the product.

DELAWARE: An action must be brought within two years from the time when the injury is or should have been discovered.

DISTRICT OF COLUMBIA: An action must be brought within three years from the time when the injury is or should have been discovered.

FLORIDA: An action must be brought within two years from the time when the injury is or should have been discovered. The state has enacted a 12-year statute of repose, subject to various exceptions.

GEORGIA: An action must be brought within two years from the time when the injury is or should have been discovered or one year from the date in which death has occurred. The state has enacted a 10-year statute of repose, subject to various exceptions.

HAWAII: An action must be brought within two years from the time when the injury is or should have been discovered.

IDAHO: An action must be brought within two years from the date in which the occurrence of the injury took place. The state has enacted a 10-year statute of repose, subject to various exceptions.

ILLINOIS: An action must be brought within two years from the date in which the occurrence of the injury took place. The state has enacted a 12-year statute of repose that begins to run once the product is sold and a 10-year statute of repose that begins to run once the product is delivered to the first owner.

INDIANA: An action must be brought within two years from the date in which the occurrence of the injury took place. The state has enacted a 10-year statute of repose.

IOWA: An action must be brought within two years from the date in which the occurrence of the injury took place.

KANSAS: An action must be brought within two years from the date in which the occurrence of the injury took place.

KENTUCKY: An action must be brought within one year from the date in which the occurrence of the injury took place. If injury, death, or property damage does not occur within eight years of the product's use, then this creates a rebuttable presumption that the product does not contain a defect.

LOUISIANA: An action must be brought within one year from the date in which the occurrence of the injury took place. This statute does not apply to minors.

MAINE: An action must be brought within six years from the date in which the occurrence of the injury took place.

MARYLAND: An action must be brought within three years from the date in which the occurrence of the injury took place.

MASSACHUSETTS: An action must be brought within three years from the date in which the occurrence of the injury took place.

MICHIGAN: An action must be brought within two years from the date in which the occurrence of the injury took place. If a product is in use for more than 10 years, then liability cannot be based on strict liability.

MINNESOTA: An action must be brought within four years from the date in which the occurrence of the injury took place.

MISSISSIPPI: An action must be brought within two years from the date in which the occurrence of the injury took place.

MISSOURI: An action must be brought within five years from the date in which the occurrence of the injury took place.

MONTANA: An action must be brought within three years from the date in which the occurrence of the injury took place.

NEBRASKA: An action must be brought within four years from the date in which the occurrence of the injury took place. The state has enacted a 10-year statute of repose, which begins to run from the date in which a product is first sold.

NEVADA: An action must be brought within four years from the date in which the occurrence of the injury took place.

NEW HAMPSHIRE: An action must be brought within three years from the date in which the occurrence of the injury took place, except where a legal duty has been imposed by the government, in which case the action must be brought within six years. The state has enacted a 12-year statute of repose, which begins to run once the product is manufactured and sold.

NEW JERSEY: An action must be brought within two years from the date in which the occurrence of the injury took place.

NEW MEXICO: An action must be brought within three years from the date in which the occurrence of the injury took place.

NEW YORK: An action must be brought within three years from the date in which the occurrence of the injury took place.

NORTH CAROLINA: An action must be brought within six years from the date of the initial purchase.

NORTH DAKOTA: An action must be brought within 10 years from the date of the initial purchase or within 11 years of the date of manufacture.

OHIO: An action must be brought within two years from the date in which the occurrence of the injury took place.

OKLAHOMA: An action must be brought within two years from the date in which the occurrence of the injury took place.

OREGON: An action must be brought within two years from the date in which the occurrence of the injury took place. The state has enacted an eight-year statute of repose.

PENNSYLVANIA: An action must be brought within two years from the date in which the occurrence of the injury took place.

RHODE ISLAND: An action must be brought within three years from the date in which the occurrence of the injury took place.

SOUTH CAROLINA: An action must be brought within three years from the date in which the occurrence of the injury took place.

SOUTH DAKOTA: An action must be brought within three years from the date in which the occurrence of the injury took place. The state has enacted a six-year statute of repose, which begins to run after purchase.

TENNESSEE: An action must be brought within four years from the date in which the occurrence of the injury took place. The state has enacted a statute of repose that runs six years after an injury and 10 years after the initial purchase of a product.

TEXAS: An action must be brought within two years from the date in which the occurrence of the injury took place.

UTAH: An action must be brought within two years from the date in which the occurrence of the injury took place.

VERMONT: An action must be brought within three years from the date in which the occurrence of the injury took place.

VIRGINIA: An action must be brought within two years from the date in which the occurrence of the injury took place.

WASHINGTON: An action must be brought within two years from the date in which the occurrence of the injury took place. The state has enacted a 12-year statute of repose.

WEST VIRGINIA: An action must be brought within two years from the date in which the occurrence of the injury took place.

WISCONSIN: An action must be brought within three years from the date in which the occurrence of the injury took place.

WYOMING: An action must be brought within four years from the date in which the occurrence of the injury took place.

Additional Resources

Personal Injury Statutes of Limitations: A Legal Guide. Parker & Waichman, LLP. Available at http://www.statutes-of-limitations.com.

Products Liability in a Nutshell. 7th Edition. Owen, David G. and Jerry J. Phillips, Thomson/West, 2005.

Products Liability Law. Owen, David G., Thomson/West, 2005.

Restatement of the Law Third: Torts: Products Liability. American Law Institute, 1998.

Organizations

Association of Trial Lawyers of America

1050 31st Street, NW
Washington, DC 20007 USA
Phone: (800) 424-2725
URL: http://www.atla.org/

National Association of Personal Injury Lawyers

23945 Calabasas Rd. Suite 106
Calabasas, CA 91302 USA
URL: http://www.napil.com/

American Bar Association

321 North Clark Street
Chicago, IL 60610 USA
Phone: (312) 988-5000
URL: http://www.abanet.org

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Product Liability

Product Liability

What It Means

Product liability” refers to a group of laws and legal rulings that apply to anyone involved in the manufacturing or sale of a product. Though product liability laws in the United States are established at the state rather than the federal level, all states enforce the basic notion that if you are responsible for any part of the manufacturing or sale of a defective product, you may have to pay damages to anyone injured because of the defect(s) in that product.

This was not always the case. Prior to the twentieth century the burden was on the consumer to exercise caution about the products he or she purchased. Increasingly the burden has shifted to all people and organizations along the manufacturing, distribution, and sales chain of any product.

When Did It Begin

In the nineteenth century the doctrine of “privity” generally applied to situations in which a person was injured by some manufactured good. The doctrine of privity said that an injured party had the right to sue the responsible party only if the two of them had signed a contract. Practically speaking, this meant that if a consumer bought a defective product from a retail store, he or she had no right to sue the manufacturer, because the manufacturer and consumer had not entered into any contract with one another. Likewise, product defects were not the fault of the retailer, so the consumer could not sue the retailer.

Exceptions began to be made to the privity doctrine on a state by state basis. The first examples of these exceptions applied to situations where a manufacturer concealed dangerous defects about which he was aware before selling a product to a retailer. Later, some states expanded this form of exception to include all dangerous defects, whether or not the manufacturer had knowingly concealed them. A 1916 court case in New York (MacPherson v. Buick Motor Co. ) essentially broadened the exceptions to the privity requirement so much that courts began ignoring the requirement. These and other precedents, coupled with increasing public sympathy for the victims of negligent companies, set the stage for modern product liability laws.

More Detailed Information

Those parties who might be held accountable for a product’s defect include the manufacturers of individual parts of the product, the manufacturer who puts all the parts together, the wholesaler of the product, and the retailer of the product. If an individual sues any or all of these people and organizations, he or she must be prepared to prove that the product has a defect. A defect is usually defined as any imperfection that makes the product unreasonably dangerous. Unreasonably dangerous is different from simply dangerous. For example, automobiles by their very nature are dangerous. Car companies are not responsible, however, for the damage inflicted by ordinary car accidents. If, on the other hand, a car accident occurs because of a defect in an automobile, that automobile might be considered, by law, unreasonably dangerous.

There are three basic kinds of product defects: design defects, manufacturing defects, and marketing defects. Design defects are problems in the initial conception of the product. These predate the manufacturing and therefore usually occur in most or all versions of the product sold. A car whose design places the gas tank in a position that makes it likely to explode in the event of an accident might be found to have a design defect. In this case every car of that model may well be affected.

Manufacturing defects, meanwhile, stem from improper construction or assembly. These defects are usually much more limited in scope, occurring in only isolated examples of the product. If a light fixture is, because of a worker’s carelessness, wired differently than its designer intended, causing a fire in the residence of a single family unlucky enough to have purchased that fixture, the homeowners might claim damages resulting from a manufacturing defect.

Marketing defects are those having to do with faulty instructions or misinformation about a product. When companies fail to warn consumers about possible dangers of products, either through packaging or advertising of any kind, they might be held liable for injuries that result from those unmentioned dangers. In order to avoid this type of lawsuit, for example, drug companies list all possible side effects of their products in their packaging and marketing, even if the effects are only experienced in rare cases.

Product liability cases today are often judged according to the standards of strict liability. This means that if the product is judged defective by the court, it does not matter how careful the defendant was in trying to make the product safe. Strict liability benefits consumers, who often have no way of knowing what companies did or did not do at the various stages from manufacturing to selling a product. Strict liability is an alternative to proving that a company was negligent. A claim of negligence requires being more detailed about what the defendant did and did not do to render the product dangerous.

Under the standards of strict liability, plaintiffs who have been injured or lost property due to a product defect generally have to prove that the product was defective, that the defect caused the injury or damage specified, and that the defect made the product dangerous to an unreasonable degree.

Recent Trends

Since the 1960s those involved with making and selling products have frequently been held to the standards of strict liability in the United States, meaning that they are responsible for compensating victims of defective problems no matter how much care is taken to warn consumers and no matter how careless the victims are in their use of the products. This has made strict liability and related issues a topic of debate.

Those in favor of strict liability argue, among other things, that by placing the burden on manufacturers, distributors, and sellers of products, society forces those parties to be aware of the risks of their products before bringing them to market. If a product’s potential to harm people is so great that a company will not be able to profit from it (because the company will have to pay out excessive amounts of money to people who are injured by it), then that product perhaps should not be sold. Strict liability thus becomes a way of promoting the good of society.

People who oppose strict liability often blame the policy for needlessly higher prices resulting from frivolous lawsuits. Critics also point to the wasted energy used to defend against potential lawsuits. For instance, we have strict liability standards to thank for shampoo bottles instructing people on the proper use of shampoo and for coffee cups warning the consumer that the coffee therein is hot. The time, money, and energy expended to warn people about such minor dangers suggests, to some, that product liability laws are a drag on the economy.

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Product Liability

PRODUCT LIABILITY

The responsibility of a manufacturer or vendor of goods to compensate for injury caused by a defective good that it has provided for sale.

FDA Issues Warnings About Botox and Myobloc

The Food AND Drug Administration (FDA) in February 2008 issued a warning about potential dangers associated with the use of the popular anti-wrinkle drug Botox, as well as the Botox competitor, Myobloc. The warning came after a consumer group issued a petition to the FDA asking the agency to increase its warnings about the drugs. The FDA's actions stopped short of what the group asked in the petition.

Botulinus toxin is a poisonous substance that can cause paralysis or even death. Researchers in the 1890s discovered that this bacteria is connected with a form of spore-forming bacteria. Near this same time, additional research revealed that the botulinum toxin consists of seven strains, lettered A through G. At least four of them, including A, B, E, and F, can cause illness in human beings.

Although some research in during WORLD WAR II focused on means to use botulinus toxin as a biological weapon, by the 1950s, some scientists had also discovered that the toxins could have beneficial uses. A physiologist named Vernon Brooks in 1953 found that a small amount of the toxin injected into a hyperactive muscle could cause temporary relaxation of that muscle. Later studies showed that the muscle-relaxing effects of the drug could help those who have crossed eyes.

Research on botulinum toxin continued in the 1970s, when Dr. Alan B. Scott received FDA approval to inject small amounts of the toxin into human volunteers. Early in the 1980s, he published a paper where he concluded that the botulinum toxin appeared to be safe for treatment of strabismus (cross-eye). Additional research showed that this treatment could also be effective for those suffering from various types of spasms. Drug manufacturer Allergan received FDA approval in 1988 to distribute type A of the botulinum toxin for treatment of several conditions. Shortly after receiving this permission, Allergan changed the name of the drug to Botox.

More uses of this drug emerged in the 1990s. An ophthalmologist named Jean Carruthers discovered that patients using the drug for spasms temporarily lost their frown lines. She and her husband published a paper in 1992 concluding that use of the toxin was a “simple, safe” procedure for treating brow lines. Use of Botox for this purpose became popular in the late 1990s and finally obtained official government approval in 2002. In 2003, USA Today dubbed the drug the “little neurotoxin that could,” and Botox sales reached more than $1 billion by 2006. The competitor to Botox is Myobloc, a Type B strain of botulinum toxin that is produced by Solstice Neurosciences.

Not all of the reports about the safety of Botox or Myobloc have been favorable. The European Medicines Agency (EMEA), which is the counterpart to the FDA, posted information about adverse effects that the toxins could have. In March 2005, EMEA indicated that of 552 reported cases of adverse events related to Botox or Myobloc, more than 30 percent were serious. As of November 2005, in fact, 17 deaths had resulted from use of the drugs, including six due to aspiration pneumonia. Information posted on March 2007 indicated that “[d]istant reactions, including muscle weakness, dysphagia, and aspiration represent a significant portion of all reported serious events associated with the use of botulinum toxin containing products … fatal cases have been reported.” The FDA has not issued warnings to patients or doctors about the use of these drugs.

The public interest group Public Citizens researched FDA data about use of Botox and Myobloc during a nine-year period. According to their studies, there were 658 reported cases of people suffering adverse effects from use of the drugs. Of these, 180 patients had fluid in their lungs (aspiration) or difficulty swallowing (dysphagia). Dysphagia could have led to food or liquid entering the respiratory tract and lungs, which could cause aspiration pneumonia. The study of the FDA data only included information voluntarily given, which accounts for only about 10 percent of the actual cases.

Public Citizens recommended that the FDA issue a warning letter to all doctors, indicating the health risks associated with Botox and Myobloc. The group also suggested that the FDA label the drugs with a “black box” warning, which is the strongest warning that the agency can give. “These significantly improved warnings to doctors and patients would increase the likelihood of earlier medical intervention when symptoms of adverse reactions to botulinum toxin first appear and could prevent more serious complications, including death,” said Sidney Wolfe, director of the Public Citizen's Health Research Group. “Nobody should be dying from injected botulinum toxin. Educating physicians and patients about what adverse symptoms to look for and when to seek immediate medical attention will save lives.”

The FDA responded to Public Citizens' petition by issuing an early communication regarding the drugs. “FDA has received reports of systemic adverse reactions including respiratory compromise and death following the use of botulinum toxins types A and B for both FDA-approved and unapproved uses,” the FDA report said. “The reactions reported are suggestive of botulism, which occurs when botulinum toxin spreads in the body beyond the site where it was injected. The most serious cases had outcomes that included hospitalization and death, and occurred mostly in children treated for cerebral palsy-associated limb spasticity.”

Though the FDA only announced that it would begin an inquiry, the announcement caused Allergan's stock to drop by six percent in one day. The company responded to the concerns by stressing that the reported incidents of problems associated with Botox occurred when patients used the drug as part of an aggressive and high-dosage treatment for certain conditions. Analysts suggest that while the FDA may require revisions to the packaging of Botox and Myobloc, the action will not affect sales of the drugs.

Contamination Leads to Massive Pet Food Recall

During March 2007, contamination in certain brands of pet food led to illness and death in potentially thousands of household pets. This led to a massive recall of nearly 100 brands of pet foods, followed by an investigation by the Food

AND Drug Administration (FDA). The investigation led to the indictment of several individuals who may have been responsible for the contamination. More than year after the recall, however, few procedures have been adopted that would prevent a recurrence of such an event.

The FDA, operating primarily through the Center for Veterinary Medicine (CVM), regulates the manufacture and distribution of pet food, in addition to feeds, feed ingredients, and animal drugs. According to the CVM's website, “One of CVM's highest priorities is assuring the safety of the food supply. And, because of the Center's work and the cooperative efforts of all FDA employees, the American food supply is among the safest in the world.”

The first signs of the pet food contamination in 2007 came when scores of pets began to suffer kidney failure, and initial reports indicated that at least 16 pets had died. By mid-March, nearly 100 brands of the “cuts and gravy” style of pet food were recalled by Menu Foods of Canada, the largest producer of pet foods in North America. Pet owners reported that their animals showed certain symptoms, such as vomiting, lethargy, and extreme thirst. For several weeks, neither the company nor other researchers could determine the cause of the illnesses, although some suspected that contaminated wheat gluten could be the cause.

The FDA first learned of the possible contamination when it received the news of the recall by Menu Foods. One day after this recall was announced, the FDA sent investigators to Menu Foods' plant in Emporia. From there, government officials reportedly worked with the company to identify the contaminated products and to ensure that these products were removed from store shelves. The FDA also began to receive calls from veterinarians and pet owners about the illnesses. Within four weeks, the FDA received more than 14,000 calls about these illnesses, representing more than twice the total number of complaints that the agency usually receives in a year about pet foods.

FDA inspectors gathered samples from the contaminated pet food to send to the FDA labs. Analysis of these samples ruled out several known causes of kidney failure, including vitamin D and ethylene glycol (antifreeze). The tests also revealed no evidence of toxic metals that are sometimes known to cause kidney problems in pets. Although at least one laboratory found the presence of aminopterin, a former of rat poison, additional tests could not confirm this as the cause for the animal deaths.

The FDA discovered that a possible cause of the contamination was the presence of melamine, which is a molecule that has a number of industrial uses, such as the manufacture of cooking utensils. Melamine is also used as a fertilizer in some countries, though this is not permitted in North America. The FDA's Forensic Chemistry Center discovered melamine in both the pet foods as well as wheat gluten, which is used as an ingredient in the gravy of many of the varieties of the contaminated pet foods. Scientists at Cornell University found traces of melamine in the urine and kidneys of cats that were used as part of a taste-testing study by Menu Foods.

Despite the evidence of melamine in the contaminated foods, little research had been done regarding melamine's effect on dogs and cats. “While the levels we've found to date in both the finished pet food product and the wheat gluten are below what would be considered toxic in rodents, there is extremely little data in the scientific literature on melamine exposure in dogs and cats,” said Stephen F. Sundlof, director of the CVM. “Regardless, the association between melamine in the kidneys of cats that died and melamine in the food they consumed is undeniable.”

The FDA was able to trace the contaminated wheat gluten back to ChemNutra, a distributor in Las Vegas, Nevada. Through its work with ChemNutra, the FDA determined that the source of the contamination was a Chinese supplier. Federal inspectors at that point began to sample 100 percent of wheat gluten shipped for import from China. Of 400 samples taken from Chinese imports within a month of the initial recall, 21 tested positive for melamine.

By this time, several other companies had recalled certain pet products, including those produced by Del Monte Pet Products, Hill's Pet Nutrition, Nestle Purina PetCare Company, P&G Pet Care, and Sunshine Mills.

In April 2007, the FDA announced that it had found a contaminant in a second pet food ingredient. Inspectors found melamine in an imported shipment of rice protein that had had been imported by Wilbur-Ellis, a San Francisco-based distributor of agricultural products. The shipment was traced back to Binzhou Futian Biological Technology of China. Wilbur-Ellis immediately initiated a recall of rice protein concentrate that could have contained melamine.

The discovery of the sources of the contamination led the FDA's Office of Criminal Investigations to pursue criminal charges against the companies responsible for the melamine being added to the products. In February 2008, a federal grand jury in Kansas City, Missouri handed down an indictment against three companies, including Xuzhou Anying Biologic Technology Development Co., Ltd. (XAC), Suzhou Textiles, Silk, Light Industrial Products, Arts and Crafts I/E Co., Ltd. (SSC), and ChemNutra. The president of SSC, Chen Zhen Hao, was also indicated along with Sally Qing Miller and Stephen Miller of ChemNutra.

According to the indictment, the companies added melamine to wheat gluten to make the protein content of the wheat gluten appear to be higher. SSC allegedly made false declarations to the Chinese government that the shipments of the contaminated wheat gluten were not subject to mandatory inspection by the Chinese government prior to exporting the products. A total of more than 800 tons of potentially contaminated wheat gluten was imported between November 2006 and February 2007.

The FDA never released an estimate of the total number of animal deaths that resulted from these contaminations. According to the indictment, though, as many as 1,950 cats and 2,200 dogs died after consuming the tainted food. Veterinarians have said that they believe tens of thousands of pets were affected by the products.

Warner-Lambert Co. v. Kent

During its 2007 term, the U.S. Supreme Court agreed to review a case to clarify the scope of one of its prior cases regarding federal preemption of certain state products liability laws. However, Chief Justice John Roberts was forced to recuse himself from the decision because he owns stock in one of the litigants. Without his vote, the Court remained tied 4–4, which allowed a Second Circuit Court of Appeals decision to stand.

In Buckman Co. v. Plaintiffs' Legal Comm., 531 U.S. 341, 121 S. Ct. 1012, 148 L. Ed. 2d 854 (2001), the Court addressed the relationship between two federal statutes—the Food, Drug, and Cosmetic Act (FDCA), 21 U.S.C. 301 et seq. and the Medical Device Act (MDA), 21 U.S.C. §§ 360e(b)(1)(A)-(B)—and state products liability laws. In Buckman, the plaintiffs had alleged that the manufacturer of orthopedic bone screws had obtained approval from the Food and Drug Administration (FDA) by making fraudulent representations to the agency. The plaintiffs sought to recover damages under California state law, arguing that but for the fraudulent representations, the FDA would not have approved the medical device.

By a 9–0 vote, the Court ruled against the original plaintiffs. In an opinion by the late Chief Justice William Rehnquist, the Court noted that “[p]olicing fraud against federal agencies is hardly a field which the States have traditionally occupied.” Although the Court has established a general presumption against preemption when state laws govern matters of health and safety, the case did not present a simple matter of such a state law. Instead, the state law in question stood in contrast to a federal law governing a federal agency and an entity that the agency regulates.

Without a presumption against preemption, the Court determined that federal law impliedly preempted the state law in that situation. The Court noted, “The conflict stems from the fact that the federal statutory scheme amply empowers the FDA to punish and deter fraud against the [FDA], and that this authority is used by the [FDA] to achieve a somewhat delicate balance of statutory objectives.” The Court determined that the state law in question did not predate the requirements of the federal statutes, but instead plaintiffs bringing an action under the California law would have to prove “fraud-on-the-FDA” as an element of their case. Given the conflict between state and federal law, the Court held that the FDCA and MDA preempted the federal law.

The case that came before the Court during the 2007 term arose when several Michigan residents allegedly suffered liver damage as a result of taking the drug Rezulin, which was manufactured by Warner-Lambert Co. and was used as a treatment for Type-2 diabetes. The FDA originally approved the drug in 1997 and then subsequently authorized label changes on four different occasions between 1997 and 1999. In 2000, Warner-Lambert removed the drug from the market. The plaintiffs originally brought the case in state courts in Michigan and California, but these claims were removed to federal court, and all of the claims were eventually transferred to Judge Lewis A. Kaplan of the Southern District of New York.

Prior to 1995, the Michigan products liability statute allowed a party to introduce evidence showing that a product complied with governmental or industry standards in a products liability action to prove that a certain standard of care had been met. In 1995, Michigan amended the statute by adding the following provision:

In a product liability action against a manufacturer or seller, a product that is a drug is not defective or unreasonably dangerous, and the manufacturer or seller is not liable, if the drug was approved for safety and efficacy by the United States food and drug administration, and the drug and its labeling were in compliance with the United States food and drug administration's approval at the time the drug left the control of the manufacturer or seller.

The 1995 legislation also added an exception to this immunity provision. Under this exception, the immunity does not apply if a manufacturer does the following:

Intentionally withholds from or misrepresents to the United States food and drug administration information concerning the drug that is required to be submitted under the federal food, drug, and cosmetic act and the drug would not have been approved, or the United States food and drug administration would have withdrawn approval for the drug if the information were accurately submitted.

The district court concluded that federal law preempted the exception to immunity provided under Michigan law. In support of his conclusion, Judge Kaplan cited both Buckman and the Sixth Circuit's decision in Garcia v. Wyeth-Ayerst Labs., 385 F.3d 961 (6th Cir. 2004), the latter of which held that Buckman preempted the Michigan law.

On appeal, the Second Circuit Court of Appeals reversed the district court. The Second Circuit viewed the case as presenting a “very different set of circumstances” from those found in Buckman. The court concluded that case was based on long-standing common law claims, rather than a claim where fraud-on-the-FDA was an essential element of the plaintiff's claim. Accordingly, the Court determined that the presumption against preemption applied and ruled in favor of the original plaintiffs.

The manufacturer sought a review by the U.S. Supreme Court, and the Court agreed to hear the case. The Bush administration supported the manufacturers in the dispute, noting in a brief that “permitting lay juries to second-guess” the adequacy of a drug application would interfere with the agency's “exercise of its expert judgment.” Commentators noted that Kent offered something of a preview for the broader preemption issues presented in Wyeth v. Levine (06-1249), which the Court will decide during its next term.

Chief Justice John Roberts has reported that he owns between $5,001 and $50,000 in stock in Pfizer Inc, the parent company of Warner Lambert. He therefore had to recuse himself from the case. In his absence, the Court found itself in a 4–4 deadlock. In such an instance, the Court must allow the lower court's decision to stand. The Court thus issued a per curiam decision affirming the Second Circuit's ruling. Warner-Lambert Co. v. Kent, ___ U. S. ____, 128 S. Ct. 1168, 170 L. Ed. 2d 51 (2008).

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Product Liability

PRODUCT LIABILITY

The responsibility of a manufacturer or vendor of goods to compensate for injury caused by a defective good that it has provided for sale.

FDA Revisits Safety Issues for Popular Painkillers

Drug risks that were considered acceptable when weighed against their benefits became unacceptable in 2004, when the Food and Drug Administration (FDA) fell under intense scrutiny for being slow to respond to evidence of dangerous side effects from several FDA-approved anti-inflammatory drugs.

Merck & Co. voluntarily recalled its pain-relieving drug, Vioxx (rofecoxib), from the market in September 2004 after new research revealed that it was associated with an increased risk for heart attacks and stroke. This action spawned a flurry of activity at the FDA as the agency came under increased scrutiny from federal legislators, who accused the FDA of responding too slowly when details of the potential problems associated with medications began to emerge.

After the withdrawal, Merck was flooded with lawsuits. In February 2005, all Vioxx product liability lawsuits were consolidated into a multidistrict litigation in order to coordinate pre-trial proceedings. The product liability cases involving personal injury and economic losses will be handled in the United States District Court in Eastern Louisiana.

In addition, Merck faces lawsuits from its stockholders and from Merck employees who hold stock in 401(k) plans. These suits were filed after the company announced the Vioxx withdrawal. The status of those lawsuits was pending as of early 2005.

On November 18, 2004, the FDA announced a five-part plan to strengthen its drug-safety program, described by Sandra Kweder, M.D., Deputy Director of the Center for Drug Evaluation and Research, in a statement to the United States Senate Committee on Finance. The plan included a call for a study of the FDA's drug-safety system by the Institute of Medicine, implementation of a program to allow differences of professional medical opinions regarding drugs, and a series of workshops and Advisory Committee meetings to discuss drug safety and risk management. Such meetings provide the FDA with input from experts on whether certain safety concerns impact the risk/benefit ratio of a drug, whether a particular type of study would address the issue, whether a labeling change is needed, and strategies for educating the public about proper use of medications.

In February 2005, the FDA convened a joint meeting of its Arthritis Advisory Committee and

Drug Safety and Risk Management Advisory Committee to review the safety data on Non-Steroidal Anti-Inflammatory Drugs (NSAIDs). The panel members on the committees recommended that the FDA allow the continued sales of Vioxx, Celebrex (celecoxib), and Bextra (valdecoxib), stating that the drugs' benefits for pain relief in consumers who need it outweigh the risks, which include heart problems and gastrointestinal bleeding. Panelists commented that the three drugs could cause cardiovascular problems if given in extremely high doses, but that these doses are higher than the amounts prescribed for the vast majority of patients. The FDA generally follows the recommendations of its Advisory Committees, although it is not required to do so.

In April 2005, the FDA announced several changes to the marketing of NSAIDs. It requested Pfizer, Inc., to withdraw Bextra from the market, due to concerns about increased risk for heart attacks, stroke, and a life-threatening skin condition. The FDA said in a statement that the potential risks of the product outweighed potential benefits, based in part on the relatively small amount of safety data available for the drug. Pfizer may continue to sell its other popular pain reliever, Celebrex.

The FDA has asked all manufacturers of prescription NSAIDs to revise the package inserts for their products to include a "black box," a boxed warning prominently displayed on the package insert that highlights the potential for increased risk of cardiovascular problems and life-threatening gastrointestinal bleeding associated with long-term NSAID use. In addition, each NSAID prescription will come with a Medication Guide to better educate patients about the nature of the potential risks.

The FDA has also asked all manufacturers of non-prescription (i.e., over-the-counter) pain relievers such as Motrin, Aleve, and Advil, to include more detailed and specific information about potential cardiovascular and gastrointestinal risks associated with their specific products and to emphasize the limits on recommended dosage and duration of use. The FDA does support the continued use of aspirin, which will not be subjected to the new labeling requirements. Although aspirin is an NSAID, it can also prevent blood clots and has been shown to reduce the incidence of cardiovascular events.

In an April press release to investors, Pfizer stated that they would add a "black box warning" to the label on its popular drug Celebrex to call more attention to the risks associated with use of the drug.

Although Celebrex might increase one's risk for cardiovascular and gastrointestinal problems, its ability to relieve severe pain with fewer side-effects than Vioxx or Bextra prompted the FDA to permit its continued use, on the condition that the company commit to conducting a long-term study to assess safety concerns and compare the product to other drugs. In addition, the FDA said that it will consider a proposal from Merck to resume the sale of Vioxx, provided that the company adheres to the safety-labeling criteria.

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