Product Liability

1. Product Liability

2. Independent Government Agencies Regulating Product Safety • Food and Drug Administration (FDA) • National Highway Transportation Safety Agency (NHTSA) • Consumer Product Safety Commission (CPSC) • EPA and others

3. FDA • Requires companies to prove that: • food and the food supply • drugs • cosmetics • therapeutic devices • dietary supplements • blood prodcuts • products that emit radiation (cell phones) • Tobacco (monitoring of manufacture and advertising) • are safe before they can be marketed. • Problem: Underfunded and understaffed

4. CPSC • Consumer Product Safety Commission • To protect consumers from unreasonable risk of injury, illness or death from unsafe products. • The Consumer Product Safety Improvement Act (CPSIA) of 2008 expanded the powers of the CPSC • Greater recall authority • More obligations on manufacturers, importers and retailers. • Set safety standards for children’s products • Expanded civil penalties • Started a website called SafeProducts.gov • Problem: Underfunded and understaffed

5. NHTSA • National Highway Traffic Safety Administration • To reduce deaths, injuries, and economic losses resulting from motor vehicle crashes • Sets and enforces safety standards • Investigates defects • Conducts research • Educates the public • Problem: Underfunded and understaffed • Problem: No way to track problems so has to wait until the industry notifies them of a problem. Carmakers are required to notify within 5 days of learning about a problem.

6. Key Terms: Product Liability, Tort, etc • Product Liability-the liability or responsibility of the manufacturer or seller for injuries that are caused by a defective product. • At first, it was “buyer beware”-sellers/manufacturers made no promises regarding their products • Then, in the mid 1950s, users could sue sellers/manufacturers and hold them responsible. • Today we have the FDA, the Consumer Product Safety Commission (CPSC), and the National Highway Transportation Safety Agency (NHTSA) to set safety standards. • These standards are in tort law. (see definition in back of book). • Unfortunately the cases in tort law can be very confusing and conflicting.

7. Restatement of Tort Law • Restatement of the Law of Torts • Because these cases are confusing and conflicting, the American Law Institute has put publications together to guide the interpretation of cases and application of the laws (they “restate” the legal rules that make up common law.) • So when the book shows “Restatement (2nd) of Torts, it means it is the 2nd series of the restatements relating to tort law that have been developed by the American Law Institute. • Each statement reflects the law as it is generally interpreted and applied by court. • Restatements do not replace tort law; only help to provide a recognized authority on application and interpretation of the law.

8. Tort Law • Tort Law – tort is the french word for “WRONG”. So, tort law protects a variety of “wrongs”. • There are three categories of torts: Intentional, unintentional (NEGLIGENCE) and strict liability. • With tort law we see individuals who have been wronged, seeking to make it right through compensation. • The individual has to seek the action – no prosecutor like in criminal law. • If we are wronged through a product, we can seek to “right” it by claiming negligence or strict liability.

9. Negligence • There is no intention to harm but harm happened. • If the harm was a foreseeable consequence of this action or inaction (fault) then it is negligence. • Manufacturers have a duty to care by making safe products and doing product safety tests, by crash testing the cars, by ensuring that the paint on the toys does not contain lead paint. • Consumers also have a duty of care to drive cars carefully and use products as directed and with care. • Negligence in product liability is showing that there is an element of fault because the manufacturer or seller breached their duty to care.

10. Negligence (contd) • To win a negligence case, • the plaintiff has to prove a duty to care existed, • that the duty of care was breached, • that there was actual harm done, • and it was caused by the negligence. • Example: McDonald’s coffee…..Too hot!

11. Strict Liability • Applies to a defective product only • The injured person doesn’t have to prove that the defendant breached a duty to care. • Anyone in the chain of distribution from the manufacturer to the distributer to the retailer can be held liable.

12. Strict Liability (contd) • To win a strict liability case it comes down to if there is a DEFECTIVE product or not. • The defect can be in the manufacturing, design, packaging and/or failure to warn. • Example: Wyeth v Levine on pg 283

13. Strict Liability Example • A ladder was designed and manufactured by American Ladder Co. which sold the ladder to Weingard Wholesale Distributors. Weingard sells the ladder to Reynolds Retail Store where you purchase the ladder to paint your house. • Because the manufacturer failed to put a screw in, the ladder breaks and you are injured when you fall. • Under strict liability--American Ladder, Weingard Wholesale and Reynolds are liable to you.

14. Some products can’t be made to be 100% safe! • The Restatement of Torts recognizes that some products beneficial to society cannot be made entirely safe. • Prescription drugs and vaccines are notorious examples. • Such a product is not held defective simply because of its inevitable hazards; something else must be wrong with it also. • Therefore, the Restatement does not hold drug companies strictly liable for a properly manufactured product accompanied by appropriate directions and warnings.

15. Punitive Damages • “Punitive” means punishment. • Juries can award an injured plantiff: • Compensation for damaged property • Compensation for out-of-pocket medical expenses • Compensation for pain and suffering • Compensation to “punish” the defendant so that it won’t happen again! (Punitive Damages) • Some states limit the amount of punitive damages, some don’t.

16. Break into Teams: Grimshaw v Ford • What happened? • What did Lee Iaccoca envision with the Pinto? • Was this a design defect or a manufacturing defect? • Was the Pinto tested for safety before being marketed? • Who won the case? • Was compensation awarded? • Were punitive damages awarded?

17. 5 Requirements to Meet Class Action • Numerosity-how many? Should be in the millions. • Commonality-common questions of law and fact predominate over individual ones. • Typicality-all plaintiffs must have the same things in common. • Adequacy-case is brought in order to assert and protect the class. • Superiority-the class action is better than all other available legal methods.

18. Weimer v Toyota • The case is a “class action” case. • The case against Toyota was based on: • Breach of Implied Warranty • Negligence • Product Liability • The plaintiffs ask for “remedy.”

19. Breach of Implied Warranty • Warranty between Toyota and class members was breached (violated) because: • A warranty existed which stated that the vehicles were of a certain quality • Toyota falsely marketed that the vehicles were safe and without defect, specifically the accelerator pedal • Vehicles were unsafe and unfit for the use they were intended • Class members would not have purchased the vehicles had they known about the defect • Damages arose when the products were used as intended • Because warranty was breached, class members are entitled to compensation

20. Uniform Commercial Code (UCC) • Written in 1952 and adopted by all states • States that every merchant who sells a product automatically promises that it is fit for its ordinary purpose. • Buyers and sellers enter into a “contract”. Buyer pays for the product, seller makes the promise above. • If this contract is breached, buyer can sue retailers, wholesalers, and manufacturers. • Idea behind the UCC is to encourage business in the US by assuring that the law will protect consumers if contract is breached. Buyers can seek a remedy. • Remedy is decided when the contract is agreed to, not later.

21. Denny v Ford • What was the Ford Bronco II’s intended use? • For what use did Ford market the Bronco II? • Was the vehicle safe for its intended use? • Was this a case of breach of implied warranty or a case of a defective product (strict liability)? • What could Ford have done differently?