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unit_3_torts.pptxLS311: Business Law Week 3 - Strict Liability, Product Liability and ALTERNATIVE DISPUTE RESOLUTION
Torts & Cybertorts
Negligence
A person injured by a defective product may sue by alleging and proving:
The defendant breached a duty of due care to the plaintiff that caused the plaintiff’s injuries.
In a negligence lawsuit, only a party who was actually negligent is liable to the plaintiff.
Negligence
Consumers can recover damages from the manufacturer of the product even though (s)he was only in privity of contract with the retailer
Tort Liability - Misrepresentation
Failure to exercise due care includes:
Failing to assemble the product carefully.
Negligent product design.
Negligent inspection or testing of the product.
Negligent packaging.
Failure to warn of the dangerous propensities of the product.
Seller or lessor fraudulently misrepresents the quality of a product, or conceals a defect in it
Recovery limited to persons injured because they relied on the misrepresentation.
Strict Liability
Defendant’s liability is without regard to:
Fault.
Foreseeability.
Standard of Care.
Causation.
Liability is based on creation of extraordinary risk.
Defendants will be held strictly liable for an “abnormally dangerous activity” if:
Activity involves serious potential harm;
Activity involves high degree of risk that cannot be made safe; and
Activity is not commonly performed in the community or area.
Abnormally Dangerous Activities
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Wild Animals
Persons who keep wild animals are strictly liable for injuries caused by the creatures.
Persons who keep domestic animals are liable if the owner knew or should have known that animal was dangerous.
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Product Liability
Product Liability is not a new tort.
Liability can be based on:
Negligence;
Misrepresentation; or
Strict Liability;
Warranty Theory.
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Product Liability (Negligence)
Negligence-based product liability is based on a manufacturer’s breach of the reasonable standard of care and failing to make a product safe.
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Product Liability (Negligence)
Manufacturer must exercise “due care” in:
Designing products;
Manufacturing and Assembling Products;
Inspecting and Testing Products; and
Placing adequate warning labels.
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Product Liability (Negligence)
Manufacturers who violate state or federal law in the manufacture or labeling of a product, may be negligent per se.
No privity of contract required between Plaintiff and Manufacturer.
Liability extends to any person’s injuries caused by a negligently made (defective) product.
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Product Liability (Misrepresentation)
Occurs when fraud committed against consumer or user of product.
Fraud must have been made knowingly or with reckless disregard for safety.
Plaintiff does not have to show product was defective.
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Strict Product Liability
Manufacturers liable without regard to fault based on public policy:
Consumers must be protected from unsafe products;
Manufacturers should be liable to any user of the product;
Manufacturers, sellers and distributors can bear the costs of injuries.
Strict Product Liability
Requirements for strict liability:
Product is unreasonably dangerous when sold Defendant sells the product;
Plaintiff injured by use or consumption of product and defective condition is the proximate cause of injury.
Greenman v.Yuba Power Products (1962).
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Strict Product Liability Requirements
Plaintiff must show product was so “defective” it was “unreasonably dangerous”:
Product must be in defective condition when sold.
Defendant is in the business of selling the product.
Product must be unreasonably dangerous.
Plaintiff must be physically harmed
Defective condition must be proximate cause of injury.
Goods are in substantially same condition.
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Market Share Liability
Theory of liability when multiple Defendants contributed to manufacture of defective product.
Liability of each Defendant is proportionate to the share of the market held by each respective Defendant.
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Liability of Suppliers
Suppliers of Component Parts may be liable if:
Component is defective at the time of sale/distribution;
Supplier “substantially participates” in the design and integration of defective product.
Liability of Suppliers
Manufacturers, distributors, suppliers, sellers liable to an injured bystander who did not purchase, use or consumer the product.
Injuries to bystanders from defective products are reasonably foreseeable.
Strict Liability— Restatement (3rd) of Torts
The terms “unreasonably dangerous” and “defective” are used interchangeably and subject to differing definitions by different courts.
Restatement defines three different types of defects: manufacturing, design and warning defects.
Three types of product defects:
Manufacturing defects.
Design defects.
Warning Defects
To recover under strict liability, the injured party must first show that the product that caused the injury was somehow defective.
Plaintiffs can allege multiple product defects in one lawsuit.
Product Defects
Defect that occurs when the manufacturer fails to:
Properly assemble a product
Properly test a product, or
Adequately check the quality of a product
Occurs when a product “departs from its intended design even though all possible care was exercised in the preparation and marketing of the product.”
Manufacturing Defects
Defect that occurs when a product is improperly designed.
Design defects include:
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.
Occurs when the “foreseeable risks of harm posed by the product could have been reduced or avoided by the adoption of a reasonable alternative . . . and the omission of the alternative design renders the product not reasonably safe.”
Design Defects
Defect in Design: 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
E.g.: automobile manufacturers are under a duty to design automobiles taking into account the possibility of harm from a person’s body striking something inside the automobile in the case of a car accident.
A product may be defective because of inadequate warnings or instructions.
Liability based on foreseeability that proper instructions/labels would have made the product safe to use.
Proper and conspicuous warning insulates all in chain of distribution
Liriano v. Hobart Co. (1999).
whether a manufacturer can be liable under a failure-to-warn theory in a case in which the substantial modification defense would preclude liability under a design defect theory
Warning Defects
There is no duty to warn about obvious or commonly known risks.
Seller must also warn about injury due to product misuse. Key is whether misuse was foreseeable.
Warning Defects
Packaging Defect
Defect occurs when a product has been placed in packaging that is insufficiently tamperproof.
Manufacturers owe a duty to design and provide safe packages for their products.
Failure to meet this duty subjects the manufacturer and others in the chain of distribution of the product to strict liability.
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
Assumption of Risk.
Product Misuse (Plaintiff does not know the product is dangerous for a particular use).
Contributory/Comparative Negligence.
Commonly known dangers.
Statutes of Limitation.
Supervening event.
Defenses to Product Liability
Defenses: Generally Known Dangers
Certain products are inherently dangerous
Products are known to the general population to be so
Sellers are not strictly liable for failing to warn of generally known dangers.
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
Assumption of Risk
Defendant must prove plaintiff knew and appreciated the risk
the plaintiff voluntarily assumed the risk
Product Misuse
Relieves the seller of product liability if the user abnormally misused the product.
Products must be designed to protect against foreseeable misuse.
Product Defect Correction
Manufacturer must notify purchasers and users
Must correct defect
Usually achieved through recall and repair or replacement
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
Statute of Limitations
Statute that requires an injured person to bring an 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
Chapter 7.72 RCW PRODUCT LIABILITY ACTIONS
| 7.72.010 | Definitions. |
| 7.72.020 | Scope. |
| 7.72.030 | Liability of manufacturer. |
| 7.72.040 | Liability of product seller other than manufacturer -- Exception. |
| 7.72.050 | Relevance of industry custom, technological feasibility, and nongovernmental, legislative or administrative regulatory standards. |
| 7.72.060 | Length of time product sellers are subject to liability. |
| 7.72.070 | Food and beverage consumption. |
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
| 4.16.180 | Statute tolled by absence from state, concealment, etc. |
| 4.16.190 | Statute tolled by personal disability. |
| 4.16.200 | Statute tolled by death. |
| 4.16.210 | Statute tolled -- By war as to enemy alien. |
| 4.16.220 | Statute tolled -- As to person in military service of United States. |
| 4.16.230 | Statute tolled by judicial proceedings. |
Contributory Negligence
Person who is injured by a defective product
Injured party has been negligent
contributed to his or her own injuries
Cannot recover from the defendant.
Comparative Negligence
Plaintiff is contributorily negligent for his or her injuries
Responsible for a proportional share of the damages
Damages proportioned between plaintiff and defendant
FACTS:
A piece of wood flew out of the lathe attachment of a Shopsmith (a consumer power tool) while Greenman was using it, causing serious injuries.
Greenman sued the retailer and the manufacturer for breach of warranties and negligence.
The jury ruled in favor of Greenman, and the Defendants appealed.
Greenman v. Yuba Power Products (Strict Product Liability)
HELD: AFFIRMED. FOR GREENMAN.
Greenman proved that the design and construction of the Shopsmith were defective and that his injuries were caused by the defects.
“A manufacturer is strictly liable in tort when an article he places on the market, knowing that it is to be used without inspection for defects, proves to have a defect that causes injury to a human being.”
Purpose of liability is for manufacturers to bear the costs.
Greenman v. Yuba Power Products
FACTS:
Embs was buying groceries at Stamper’s Cash Market.
A carton of 7-Up was sitting on the floor at the edge of the produce counter about one foot from where she was standing.
Several of the 7-Up bottles exploded severely injuring Embs.
Embs sued Pepsi but the court ruled against her and dismissed her case.
Embs appealed.
Embs v. Pepsi-Cola (Strict Product Liability)
HELD: REVERSED. FOR EMBS.
The appellate court extended the protection of the Restatement (Second) of Torts, Section 402A “to bystanders whose injury from the defect is reasonably foreseeable.”
The court based this extension on the policy that “the loss for injuries resulting from defective products should be placed on those members of the marketing chain best able to pay the loss, who can then distribute such risk among themselves by means of insurance and indemnity agreements.”
FACTS:
Super Associated store bought a Hobart Corp. meat grinder that had no warning that it should be operated only with the safety guard.
Liriano, a SA employee, removed the guard and was severely injured when his hand was caught in the grinder. (Liriano was seventeen years old, a recent immigrant, and on the job only a week. He had not been told how to operate the grinder.)
He sued Hobart claiming that the lack of a warning about the safety guard was negligence. The jury returned a verdict for Liriano.
Hobart appealed, arguing that the danger was so obvious no warning was needed.
Liriano v. Hobart Co. (Warning Defects)
HELD: AFFIRMED. FOR LIRIANO.
A manufacturer can be liable for failing to warn about alterations, such as the removal of a safety guard, that would make its product unsafe.
It doesn’t matter how obvious the danger is.
“Even if most ordinary users may * * * know of the risk of using a guardless meat grinder, it does not follow that a sufficient number of them will . . ..”
Liriano v. Hobart Co.
Smith v. Ingersoll-Rand (Comparative Negligence)
FACTS: Smith injured attempting to start a diesel engine for Ingersoll-Rand Company compressor.
Smith, a mechanic, not wearing hard hat when he was dispatched to start engine. Door had to be propped open.
Smith started engine and door fell from open position and hit his head causing severe injury. Smith sued.
Ingersoll-Rand defended that Smith’s failure to wear a hard hat and his propping the door open in an unsafe manner constituted contributory negligence.
Smith v. Ingersoll-Rand
HELD: FOR INGERSOLL.
The court recognized that under a “system of comparative fault . . . , a plaintiff would still be able to recover if he was comparatively at fault for his injuries, but his recovery would be reduced in proportion to his percentage of fault.”
© 2006 Prentice Hall, Business Law, sixth edition, Henry R. Cheeseman
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
Doctrines of Negligence and Strict Liability Compared
