write an one page reflection

Law & Social Issues in Business

Week 6 – Strict Liability and Class Actions

Spring 2018

Prof. Lou Moffa

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Product Liability

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

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Strict Liability

• In Greenmun v. Yuba Power Products, Inc., California adopted doctrine of strict liability in tort as a basis for product liability actions.
• Most states now recognize this doctrine.

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Strict Liability (continued)

• Liability Without Fault
• Unlike negligence, strict liability does not require the injured person to prove that the defendant breached a duty of care.
• May be liable even though exercised all possible care.

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Strict Liability Defendants

• Sellers and lessors engaged in business of selling or leasing products.
• All parties in the chain of distribution
• All manufacturers, distributors, wholesalers, retailers, lessors, and subcomponent manufacturers
• NOT for non-merchants
• E.g., selling to neighbor at garage sale

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Strict Liability Plaintiffs

• Any injured party.
• Privity of contract not required.
• Consumer who purchased the product and any user of the product.
• Recovery possible even if the injured party had no contractual relations with the defendant.
• E.g., injured bystander

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Strict Liability Damages

• Compensatory damages for personal injuries available in all jurisdictions.
• Property damage recoverable in most jurisdictions
• Economic loss in few jurisdictions

• Punitive damages allowed only if:
• willful, wanton, malicious conduct; or
• gross negligence; or
• acting with reckless disregard for plaintiff’s safety.

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Defective product causes injury

Negligence

lawsuit

lawsuit

Strict liability

Consumer

Retailer

Distributor

Manufacturer (negligent)

Defective product

Defendant

Defendant

Defendant

Defendant

All in the chain of distribution are liable

Negligent party is liable

Negligence, Strict Liability Compared

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Defective Product

• To recover for strict liability in tort, the injured party must first show that the product that caused the injury was somehow defective.
• The injured party does not have to prove who caused the product to become defective.
• Plaintiff can allege multiple product defects in one lawsuit.
• Something wrong, inadequate or improper in the manufacture, design, packaging, warning or instructions about a product.

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Defective Product (continued)

The most common types of defects:

Manufacture

Design

Packaging

Failure to Warn

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Defect in Manufacture

• Defect that occurs when manufacturer fails to:

Properly assemble a product

Properly test a product, or

Adequately check the quality of a product.

E.g., screw in ladder not inserted as usual, or mouse found in soft drink bottle.

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Defect in Design

• Defect that occurs when a product is improperly designed.
• E.g.,

Toys designed with removable parts that could be swallowed by children.

Machines and appliances designed without proper safeguards.

Trucks designed without a backup warning device.

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Defect in Design (continued)

• In evaluating the adequacy of a product’s design, courts apply a risk-utility analysis
• Gravity of the danger posed by the design
• Likelihood that injury will occur
• Availability and cost of producing a safer design
• Social utility of the product
• Consumer Expectation Test – showing that product is more dangerous than the ordinary consumer would expect.

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Defect in Design (cont.)

• Crashworthiness doctrine
• Automobile manufacturers have duty to design automobiles taking into account the possibility of a second collision
• Possibility of harm by the body striking something inside the vehicle in an accident

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Failure to Warn

• Defect that occurs when a manufacturer does not place a warning on the packaging of products that could cause injury if the danger is unknown.
• Proper and conspicuous warning insulates all in chain of distribution.

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WARNING!

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Warning Labels

Mattress
Warning: Do not attempt to swallow
Matches
Caution: Contents may catch fire.

Pepper Spray
Caution: Never aim spray at your own eyes.
Auto-Shade Windshield Visor
Warning: Do not drive with sunshade in place. Remove from windshield before starting ignition.
Pine Mountain Fire Logs
Caution: Risk of fire
Home Depot Treated Lumber
Do not consume
Hair Dryer
Warning: Do not use while sleeping.
Road Sign
Caution: water on road during rain.
Children's Superman Costume
Caution: Wearing of this garment does not enable you to fly.

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Defect in Packaging

Manufacturers owe a duty to design and provide safe packages for their products.

E.g., make package sufficiently tamperproof; clearly indicate when container tampered with

Failure to meet this duty subjects all in chain of distribution of the product to strict liability.

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Other Product Defects

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

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Generally Known Dangers

Supervening Event

Assumption of the Risk

Misuse of the Product

Statute of Limitations

Government Contractor Defense

Contributory & Comparative Negligence

Defenses to Product Liability

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Defenses to Product Liability (continued)

• Generally Known Dangers
• Certain products are inherently dangerous.
• E.g., guns, knives
• Products known to the general population to be so.
• Sellers are not strictly liable for failing to warn of generally known dangers.

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Defenses to Product Liability (continued)

• Government Contractor Defense
• Contractor who was provided specifications by the government is not liable for any defect in the product that occurs as a result of those specifications.
• Product must conform to specifications.
• Contractor must have warned of known defects or dangers.

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Defenses to Product Liability (continued)

• Assumption of Risk
• Defendant must prove that plaintiff knew and appreciated the risk, and
• Plaintiff voluntarily assumed the risk.
• Narrowly applied in strict liability cases.

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Defenses to Product Liability (continued)

• Misuse of the Product
• Relieves the seller of product liability if the user abnormally misused the product.
• Unforeseeable misuse.
• Products must be designed to protect against foreseeable misuse.
• E.g., toy manufacturers must foresee that babies will put small items in their mouths, which could cause choking.

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Defenses to Product Liability (continued)

• Supervening Event
• Alteration or modification of a product by a party that absolves seller from strict liability.
• Modification must be made after it leaves seller’s possession.
• Alteration must cause injury.

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Statute of Limitations

• Plaintiff must bring action within a certain number of years from the time that he or she was injured by the defective product.
• Limitation period set by each state.
• Defendant relieved of liability if action not brought within limitation period.

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Statute of Repose

• Limits the seller’s liability to a certain number of years from the date when the product was first sold.
• Varies from state to state.

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Contributory Negligence

• Plaintiff who contributed to own injuries cannot recover from the defendant in negligence
• Typically not a bar to recovery in strict liability in tort.

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Comparative Negligence

• Plaintiff is partially responsible for own injuries.
• Damages apportioned between plaintiff and defendant based on degree of fault.
• May apply in strict liability and negligence.

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What is a CLASS ACTION?

• A class action or a representative action is a form of lawsuit where one or a few plaintiffs bring claims on behalf of a large group of people collectively in one case. This form of collective lawsuit originated in the United States and is still predominantly a U.S. phenomenon.

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CLASS ACTION – Elements

• Numerosity
• Commonality
• Typicality
• Adequacy of Representation
• Predominance of common issues
• Class action is superior to individual cases

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TOYOTA CASE

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TOYOTA COMPLAINT

• RICO
• Negligence/Negligence per se
• Fraud
• Breach of Express Warranty
• Breach of Implied Warranty
• Breach of Contract/Lease
• Strict Product Liability