Product Liability Laws Evolution


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Dubbed the “birthplace of product liability,” the United States generally operates under a judicially-created scheme of product liability based on “strict liability” that imposes liability without fault.9 Developing from the Industrial Revolution, U.S. product liability law is derived from case law and restatements of law anchored in contract and tort.10 It is based on the belief that consumers need protection from business and that business should bear the costs of harms inflicted on consumers.11

The Early Years of U.S. Product Liability Law

Before the onslaught of the Industrial Revolution, commercial transactions were relatively personal, and products were generally limited to hand-crafted items.12 The customer usually knew the source of a product and whom to blame if there was a problem.13 Under this system, the common law notion of “caveat emptor,” or “buyer beware,” was the controlling doctrine of commercial activity, making it the responsibility of the buyer to inspect goods for defects and potential dangers.14 However, the development of machines, the growing reliance on mass production, and the addition of new players that accompanied the Industrial Revolution created new problems.15 Products became more sophisticated and specialized, making it difficult for the average buyer to perform an adequate inspection.16

As the problems grew, U.S. courts initially attempted to account for them through contract law and the doctrines of expressed warranty of fitness and implied warranty of merchantability.17 The warranty doctrines were restrictive as the only means to recover for de[*PG314]fects in products because they were subject to a privity requirement.18 Privity is a contract requirement allowing only parties directly involved to recover for a breach of contract.19 Privity allowed manufacturers to avoid a multitude of claims because the right to recover was restricted to a limited group.20

Winterbottom v. Wright,21 an English case, set the stage for early U.S. law upholding the privity requirement.22 In that case, a coach company contracted with the Postmaster General to provide coaches for the mail service and to take responsibility for the maintenance of the coaches.23 The plaintiff was hired by the Postmaster General to drive the coach and deliver the mail.24 The driver was subsequently injured when the coach collapsed as a result of poor maintenance.25 The plaintiff sued the coach company, claiming it had failed to properly maintain the coach, thereby causing his injuries.26 The court held that the driver could not recover from the coach company because the plaintiff was not a party to the contract for maintenance between the coach company and the Postmaster General.27 The court believed that elimination of the privity of contract requirement would open manufacturers to claims not only from the people with whom they had direct contact, but also bystanders, passengers, and a horde of other unknown parties.28 The Winterbottom court found that recognizing a new claim extending to those without privity would violate the seller’s expectations and go beyond the scope of the law.29

As the nineteenth century ended, a new remedy for damage resulting from products began to emerge as courts started to impose liability laws in tort where a supplier had knowledge of a defect in its product and placed it on the market anyway.30 Courts also began to recognize liability for “inherently dangerous” products.31 These tort theories were considered exceptions to the privity rule, but privity still remained a bar to recovery for many product-related claims.32

The next shift toward more stringent standards for product manufacturers occurred in 1916, when recovery was allowed under a theory of negligence in MacPherson v. Buick Motor Co.33 The facts of MacPherson are similar to Winterbottom in that the plaintiff was injured and sought to recover from a party with whom he did not have a contractual relationship.34 The defendant had sold a car to a car dealer who subsequently sold the car to the plaintiff.35 The plaintiff was injured when one of the wheels collapsed.36 The court did not find that the defendant had purposely placed a defective product on the market, but rather extended the definition of dangerous product, finding that where a defect could have been discovered upon reasonable inspection, a plaintiff could recover under a theory of negligence.37 By shifting the claim from contract law to tort law and expanding the available tort claims, the court dispensed with the privity requirement because it is not an element of negligence.38 The court reasoned that this approach was appropriate because the defendant was in the best position to discover the danger and knew or should have known that the car would not subsequently be subject to an adequate inspection by the ultimate consumer.39 Therefore, the manufacturer owed a duty to the ultimate purchaser to properly inspect the car.40 This case established the concept of suing up the chain of distribution, allowing a consumer to go past the direct retailer to the manufacturer even though no contract existed between the consumer and the manufacturer or distributor.41

Even though the courts were beginning to recognize a need to protect the general public from dangerous products, the ability to recover for damages remained restricted because decisions still rested [*PG316]on a theory of negligence or contract.42 The standard under negligence is a reasonableness standard that means if a “reasonable” manufacturer would still market the product regardless of the defects, no duty of care is violated.43 This determination is often based on a cost-benefit analysis: if the costs of inspection or change outweigh the benefit—usually economic benefit—the manufacturer is not negligent in placing the defective product on the market.44 If plaintiffs could not prove the manufacturer acted unreasonably, no recovery was available.45 The negligence standard was problematic for most consumers because they did not have the resources or opportunities necessary to prove unreasonable conduct.46

Strict Liability: The Modern U.S. Standard laws

The first inkling of a new standard for manufacturers, distributors, and sellers was espoused by Justice Traynor in a concurring opinion in Escola v. Coca Cola Bottling Co.47 In that case, a waitress was injured when a soda bottle exploded in her hand.48 The case itself was decided on negligence grounds, but Justice Traynor asserted that public policy demanded recovery for the plaintiff even if negligence could not be proven because the manufacturer was in the best position to insure against the damage.49 This position was based on the theory that the consumer does not have the same opportunity to inspect products, the same knowledge to recognize dangers, or the ability to spread the cost of such dangers.50 This idea of liability imposed without fault became known as “strict liability” and was finally accepted by the California Supreme Court in Greenman v. Yuba Power Products, Inc.51

[*PG317] Almost all fifty states have now adopted strict liability in one form or another, and it has been incorporated into the Restatement (Second) of Torts and the Restatement (Third) of Torts: Products Liability that provide decision-making guidance to courts based on case authority and legal literature.52 Section 402A of the Restatement (Second) of Torts, promulgated in 1965, sets out the commonly accepted U.S. standard for a seller’s liability.53 It applies to anyone who is in the business of selling products and sells a product in such a condition as to pose an unreasonable danger of physical harm to the user or consumer, or to his or her property.54 Section 402A applies regardless of privity and even if “the seller has exercised all possible care.”55

The Restatement (Third) of Torts: Products Liability laws expands on § 402A by incorporating principles established through case law since the 1960s.56 In accordance with case law, the Restatement (Third) of Torts identifies three types of product defects: manufacturing defects, design defects, and information defects.57 Manufacturing defects are present when the product is not what the manufacturer intended.58 Examples include damaged, physically flawed, and incorrectly assembled products.59 Products with design defects are those that reach the consumer in the form intended by the manufacturer, but something in the design makes them dangerous, and foreseeable risks could have been avoided with an alternative design.60 Finally, information defects are attributed to products that are unavoidably dangerous yet useful to society; therefore, they are only defective if appropriate, adequate warnings are not attached.61 for product liability laws


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