Product Liability: A Review

1
Product LiabilityA Review

• TECH-435
• Legal Aspects of Safety
• Dr. E. Hansen, CIE, CHCM
• Northern Illinois University
• Department of Technology

2
Introduction

• The manufacturer of a product must exercise
  reasonable care to prevent injury to consumers
  and others who may come in contact with their
  product. This reasonable care includes insuring
  that the product is fit for its intended purpose.
  Product liability or negligence may also extend
  to dealers, sellers, suppliers, repairers and
  others within the product chain.

3
Brief History

• While the product liability cases today stem from
  the Consumer Product Safety Act (CPSA) of 1972
  ("CPSA," 1972) prior historical cases and events
  fueled the debate and subsequent passage of the
  act.
• Prior to the turn of the century the general
  attitude was that of caveat emptor, or buyer
  beware based on common law.
• The logic was simple people should examine what
  they are to receive before they buy it. The
  origins for caveat emptor stem from early
  English social and legal philosophy reflected
  in the manufacturing nature of the economy
  (Vaughn, 1999).
• Two differing views on the first case of
  product liability
• McPherson v. Buick Motor Company (Vaughn, 1999)
• Donaghue v. Stevenson (Vogt, 2000).

4
Brief History First Case 1

• In his book, Legal Aspects of Engineering,
  Richard Vaughn claims the origin of product
  liability stems from the McPherson v. Buick Motor
  Company case in 1916.
• The plaintiff in the case suffered injuries when
  the wheel on his new Buick collapsed.
• The judge ruled in favor of the plaintiff despite
  the use of the historical defenses of caveat
  emptor and privity of contract (an individual can
  not recover damages from the manufacturer, only
  the middlemen).
• The judges reasoning is virtually a statement
  of products liability law as it evolved years
  later. It was also during this time that the
  philosophies of negligence and warranty were
  developed.
• (Vaughn, 1999)

5
Brief History First Case 2

• According to Susan Vogt, in her article Warning
  Product liability law is extremely hot!, the
  first product liability lawsuit was Donaghue
  versus Stevenson decided the British House of
  Lords in 1932.
• This case was about a snail that was almost
  swallowed by a woman who discovered it in a
  bottle of ginger beer.
• Its importance lies in the fact that the
  manufacturer was held liable, despite the absence
  of a contractual relationship, because the
  damages suffered were a foreseeable result of the
  manufacturer's negligence. (Vogt, 2000)

6
Theories of Product Liability
7
Theories of Product Liability (continued)

• In most areas of the country the plaintiffs
  cause of action may be based on one or more of
  three different theories (Kionka, 1999)
• Negligence
• Breach of Warranty
• Express warranties
• Implied warranties
• Merchantability and fitness for a particular use
  
• Strict Liability

8
Negligence

• is the committing of an act, which a person
  exercising ordinary care would not do under
  similar circumstances - or the failure to do what
  a person exercising ordinary care would do under
  similar circumstances. (legal-definitions.com)

9
Negligence ? Case Example

• Richelman v Kewanee Machinery And Conveyor
  Company
• Suit based upon negligence and strict liability
  was brought against manufacturer designer as
  result of two-year nine-month-old child having
  suffered a traumatic amputation of his right leg
  when he became entangled in a grain auger located
  in his grandfather's farmyard.
• The Circuit Court, St. Clair County, William P.
  Fleming, J., entered judgment, based on jury's
  findings, against manufacturer designer.
  Manufacturer designer appealed.
• The Appellate Court, Moran, J., held that whether
  child's injuries upon inadvertently tripping or
  falling into open hopper was foreseeable was
  question for jury, inasmuch as defendant could
  "objectively expect" that if an adult with a
  smaller than 45/8 shoe width were to trip or fall
  near auger he could be injured because of
  inadequate safety guard.
• ("Richelman v. Kewanee Machinery And Conveyor
  Company," 1978)

10
Breach of Warranty

• a warranty is an express or implied undertaking
  by a seller guaranteeing that the thing being
  sold is as promised (legal-definitions.com).
• The primary breach of a warranty is the fitness
  of use of the product.
• Product liability law is primarily concerned
  with three of these warranties (Kionka, 1999)
• Express warranties
• Implied warranties
• Merchantability and fitness for a particular use

11
Express Warranties

• The representations or promises relating to the
  material facts about the products, as described
  in salespersons statements, in pictures or
  writing on product or product packaging, and in
  advertisements persuaded the consumer to buy
  product.
• A breach occurs when these representations are
  not true.
• In other words an express warranty is a
  promissory assertion of fact about the product
  which the seller made as a part of the sales
  transaction and which was a basis of the
  bargain.
• (Kionka, 1999)

12
Implied Warranties

• those warranties created and imposed by law,
  and accompany the transfer of title to goods
  unless expressly and clearly limited or excluded
  by the contract. (Kionka, 1999)
• These warranties are not dependent on whether the
  manufacturer has made any actual statements or
  representations about its product.
• The implied warranty extends to both uses and
  that are reasonably foreseeable. An implied
  warranty extends to all persons who the
  manufacturer, seller, lessor, or supplier might
  reasonable have expected to use, consume or be
  affected by the goods. (Bonsignore, 2003)

13
Express/Implied Warranties ? Case Example

• Cipollone v. Liggett Group, Inc.
• Cipollone is particularly notable for its legacy
  of preemption in interpreting the 1965 and 1969
  Acts. Because merchants must properly package and
  label goods in order for them to be merchantable,
  the Supreme Courts interpretation of the 1965
  and 1969 Acts is crucial to an analysis of the
  implied warranty of merchantability. (Crawford,
  2002)
• If plaintiffs cannot bypass the preemption issues
  posed by Cipollone, then juries will never
  evaluate the merits of their claims and those
  causes of action will fail. (Crawford, 2002)

14
Express/Implied Warranties ? Case Example
(continued)

• Rose Cipollone, a smoker for forty-two years,
  contracted lung cancer and filed suit against the
  Liggett Group, Inc., which had manufactured the
  cigarettes she had smoked. After Cipollone died
  from lung cancer in 1984, her husband, Antonio,
  continued the action as the executor of his
  wifes estate. (Crawford, 2002)
• The Cipollones complaint alleged many claims,
  including strict liability, negligence, breach of
  warranty, and intentional tort. After an
  interlocutory appeal and a 400,000 verdict for
  the Cipollones, the Third Circuit heard the case
  for the final time and affirmed the district
  courts finding of a broad preemptive effect for
  the 1969 Act. (Crawford, 2002)

15
Express/Implied Warranties ? Case Example
(continued)

• The Court of Appeals found that the 1969 Act
  preempts state law damage actions that
  challenge . . . the propriety of a partys
  actions with respect to the advertising and
  promotion of cigarettes. Therefore, the
  plaintiffs post-1965 failure to warn, express
  warranty, and intentional tort claims were
  preempted because they were based on the
  advertising and promotion of cigarettes. The
  Supreme Court subsequently granted certiorari for
  review. (Crawford, 2002)

16
Express/Implied Warranties ? Case Example
(continued)

• Justice Stevens produced the most important
  opinion of the case, although it did not garner a
  majority of the Court. Stevens found that the
  preemptive effect of the 1969 Act barred
  requirements or prohibitions imposed by
  state law relating to advertising and promotion
  of cigarettes, and therefore the 1969 Act would
  preempt most claims arising under state statutes
  and the common law.
• The key question in the analysis is whether the
  legal duty that is the predicate of the
  common-law damages action constitutes a
  requirement or prohibition based on smoking and
  health . . . imposed under State law with respect
  to . . . advertising or promotion.
• Justice Stevens concluded that the Cipollones
  claims for failure to warn, breach of express
  warranty, and fraudulent misrepresentation were
  preempted however, the state law conspiracy
  claim remained. Despite the fractured nature of
  the Cipollone decision, most circuits have
  adopted Justice Stevenss plurality opinion.
  (Crawford, 2002)

17
Merchantability and fitness for a particular use

• Merchantability and fitness for a particular use
  requires that the product (and its container)
  meet certain minimum standards of quality,
  chiefly that it be fit for the ordinary purposes
  for which the goods are sold. This includes a
  standard of reasonable safety.
• This is furthered with fitness for a particular
  purpose where the seller knows or has reason to
  know what specific purpose the goods sold will
  be used for and the purchaser of these goods is
  relying on the supplier to provide suitable
  goods.
• (Kionka, 1999)

18
Merchantability ? Case Example

• SKAGGS V. CHAMPION INTERNATIONAL
• Tim Skaggs, born on March 5, 1950 died on
  October 17, 1991 from acute lymphoblastic
  leukemia. Tim worked for Simpson Lumber Company
  at its Arcata mill starting at age 21. His
  initial employment as a night shift laborer
  resulted in his working at various jobs,
  including assignments to the paint line
  department where he handled and sawed lumber
  treated with Woodlife, a wood preservative
  manufactured and sold to Simpson by Champion.
• Although this action sought to hold Champion
  liable for negligence in not warning about the
  hazards of this product, which Champion knew was
  being handled improperly by its customers, and
  for breach of warranty, the primary legal basis
  for this action was for selling a defective
  product. (Alexander, 1998a)

19
Merchantability ? Case Example (continued)

• In the Skaggs case the plaintiffs claimed that
  Defendant Champion International was negligent in
  the production, retailing and distribution of
  Woodlife Clear RTU contaminated with dioxins and
  furans, was strictly liable for producing and
  distributing a defective chemical product and
  additionally liable for breaching an implied
  warranty that Woodlife with pentachlorophenal was
  of good and merchantable quality, safe and fit
  for its intended use.
• It was also claimed that the Defendants knew this
  product was hazardous, misrepresented that it was
  safe to use and concealed from Simpson that many
  people inadvertently and routinely handled it in
  a dangerous manner. (Alexander, 1998a)

20
Merchantability ? Case Example (continued)

• The Skaggs case settled before Judge Michael
  Brown, following the denial of Champion's motion
  for summary judgment and after the completion of
  expert depositions before the scheduled trial.
  While denying liability, the Defendant paid
  550,000 in settlement of all claims, a
  substantial recovery in Humboldt County where the
  primary industries are logging and fishing and
  average income is in the lowest twenty percent of
  California counties.
• (Alexander, 1998a)

21
Strict Liability

• Under a strict liability standard, once the
  plaintiff establishes that a product is
  defective, liability results from that fact alone
  no matter how much care was applied during
  design, manufacture, marketing, distribution and
  sale (Larson, 2003).
• The term strict, in this situation, refers to
  the fact that the injured product user need not
  show negligence or fault. Commonly most states
  follow the rule of products liability as set
  forth in section 402A of the Restatement of
  Torts.

22
Strict Liability ? Case Example

• Toole v. Richardson
• Toole v. Richardson (1967) Cal.App.2d 689, 710,
  60 Cal.Rptr. 398 involves the infamous MER/29. In
  affirming a jury verdict for the plaintiffs eye
  damage as a result of inadequate warnings given
  with this prescription drug, Justice Salsman
  found there was substantial evidence to support
  the jury¹s verdict and award of punitive damages.
  On the strict liability question the court
  stated
• The possibility of eye injury and age was known
  to appellant before product was placed on the
  market yet no warning of this danger was given
  until the weight of accumulating evidence and the
  insistence of the FDA compelled it. Thus strict
  liability justified on the ground that the
  product was marketed without proper warning of
  its known dangerous effect. (Id., p.710.)
  
  (Alexander, 1998b)

23
Restatements

• Restatements are highly regarded distillations of
  common law prepared by the American Law Institute
  (ALI).
• The goal is to distill the "black letter law"
  from cases, to indicate a trend in common law,
  and, occasionally, to recommend what a rule of
  law should be.
• In essence, they "restate" existing common law
  into a series of principles or rules.
• Restatements are not primary law, however they
  are considered persuasive authority by many
  courts.
• Numerous Restatement sections have become primary
  law when a court or legislature has adopted its
  language (Harvard, 2003).

24
Restatements (continued)

• In 1998 the third edition of Restatements was
  published.
• There have been debates and challenges to this
  edition.
• Many states have adhered more closely with the
  second edition of the Restatements that was
  published in 1965.
• The wording of section 402 and 403 of this
  Restatement is important

25
Restatements s 402A

• Special Liability Of Seller Of Product For
  Physical Harm To User Or Consumer
• One who sells any product in a defective
  condition unreasonably dangerous to the user or
  consumer or to his property is subject to
  liability for physical harm thereby caused to the
  ultimate user or consumer, or to his property, if
• the seller is engaged in the business of selling
  such a product, and
• it is expected to and does reach the user or
  consumer without substantial change in the
  condition in which it is sold.
• The rule stated in Subsection (1) applies
  although
• the seller has exercised all possible care in the
  preparation and sale of his product, and
• the user or consumer has not bought the product
  from or entered into any contractual relation
  with the seller
• (Restatement of Torts, 1965).

26
Restatements s 402B

• Misrepresentation By Seller Of Chattels To
  Consumer
• One engaged in the business of selling chattels
  who, by advertising, labels, or otherwise, makes
  to the public a misrepresentation of a material
  fact concerning the character or quality of a
  chattel sold by him is subject to liability for
  physical harm to a consumer of the chattel caused
  by justifiable reliance upon the
  misrepresentation, even though
• it is not made fraudulently or negligently, and
• the consumer has not bought the chattel from or
  entered into any contractual relation with the
  seller
• (Restatement of Torts, 1965).

27
Basis for Product Liability
28
Basis for Product Liability

• While the laws applicable to defective product
  cases varies from state to state, there are three
  legal theories common to all jurisdictions which
  may form the basis of a successful product
  liability case
• Manufacturing defect
• Design defect
• Failure to warn, or "inadequate warning

29
Manufacturing Defect

• In such cases the injury was caused as a result
  of defect in the manufacturing of the product.
  These cases are the hardest to prove, as evidence
  the example below is of a case that was lost.
• Case example
• Meli v. General Motors Corp.

30
Meli v. General Motors Corp.

• The plaintiff blamed an accident on a broken
  accelerator spring, but could not isolate a
  possible manufacturing defect that would have
  caused the accident, the Court found that the
  trial court properly granted a directed verdict
  to the defendant.
• In addition to having been driven for over 32,000
  miles, the vehicle had been serviced numerous
  times.
• Because the accelerator spring had been exposed
  during service, there was no reason to conclude
  that a defect in manufacture was any more likely
  than negligent service to have been the cause of
  the accident. ("Sundberg v. Keller Ladder," 2002)

31
Design Defect

• In these cases the injury was caused by a poor
  design despite the fact that there may be no
  defect in the individual product itself.
• This design defect is not limited to the product
  itself. Improper packaging resulting in safety
  related damage during shipping and handling may
  also be considered.
• Case Example
• Babcock v. General Motors Corporation

32
Babcock v. General Motors Corporation

• The United States Court of Appeals case arose
  from an accident on February 21, 1998, when a
  General Motors pickup truck driven by Paul A.
  Babcock, III, went off the road and struck a
  tree. The accident rendered Babcock a paraplegic.
  On June 15, 1999, Babcock died as a result of
  complications from his injuries
•  Plaintiff brought suit alleging negligence and
  strict liability against the defendant.
• ("Babcock v. General Motors Corp., 299 F.3d 60
  (1st Cir. 2002)," 2002)

33
Babcock v. General Motors Corporation(continued)

• The jury returned a verdict finding GM liable on
  the negligence count and not liable on the strict
  liability count. It is undisputed that when
  Babcock was first seen after the accident his
  seat belt was not fastened around him.
• The complaint alleged that Babcock was wearing
  his seat belt prior to the accident, but that the
  belt unbuckled as soon as pressure was exerted on
  it and the buckle released due to a condition
  known as "false latching." The main focus of the
  trial was on this claim of false latching.
• ("Babcock v. General Motors Corp., 299 F.3d 60
  (1st Cir. 2002)," 2002)

34
Babcock v. General Motors Corporation(continued)

• The original case was proven by the plaintiff and
  awarded unspecified amount. This case was won
  largely in part of expert testimony.
• The expert determined crash speed by methodology
  generally accepted in accident reconstruction
  field and approved by National Highway Traffic
  Safety Administration (NHTSA) (Nordberg, 2003) .
  His opinion was that the seatbelt would have
  restrained passenger at that speed if
  nondefective and in use, and concluded from
  inspection of seatbelt that it had indeed been in
  use just prior to impact (Nordberg, 2003) . He
  also showed an alternative design from Volvo that
  helps prevent false latching.
• This case was affirmed and the court further
  awarded the plaintiff legal and court fees
  incurred during the appeals process.

35
Failure to Warn / Inadequate Warning

• These cases refer to injuries caused as a result
  of a product known to be potentially dangerous
  which was sold without warning labels or having
  inadequate labeling to properly warn the
  consumer. Including inadequate or no
  instructions for proper setup, use or
  maintenance.
• Example of failure to warn Gall v. Union Ice Co
• Example of inadequate warning Laramendy v. Myers

36
Gall v. Union Ice Co

• (1952) 108 Cal.App. 303, 230 P.2d 48
• Involved the absence of sufficient warning labels
  on drums of sulfuric acid that exploded.
• Affirming verdicts for the plaintiffs, the court
  held that the question of defendants chemical
  companies' negligence in failing to place proper
  warning labels on sulfuric acid drums were for
  the jury (Alexander, 1998b).

37
Laramendy v. Myers

• (1954) 126 Cal.App.2d 636, 272 P.2d 824. A
  theatrical smoke-producing device set fire to a
  child's dress.
• "The written directions which were with the
  device when it was received, warned to hold the
  device away from the face while filling the hole
  with powder and to stand back without making
  contact (when the device is on the floor) so that
  'puff' will not strike face."
• Notwithstanding these warnings the court found
  the warning was incomplete, affirmed a verdict
  for plaintiff, and held that the "defendants
  neglected to reasonably warn of the dangerous
  propensities of the device. There was no
  warning of danger from fire." Id., at p.639.
• (Alexander, 1998b).

38
Legal Stages
39
Product Liability Good Questionable Results

• Product liability cases have undoubtedly changed
  the way products reach consumers.
• Product liability cases are on the rise.
• The upside to these cases is consumers should be
  more confident in the products they buy.
• Products should be safer and if a dangerous
  product causes an injury there have been
  precedents set to rectify the situation.
• The downside, however is that with the increase
  in legitimate cases there has also been a rise in
  cases with little or no merit, individuals and
  ethically questionable attorneys out for an easy
  financial gain.

40
Positive product liability cases
Source http//www.atla.org/secrecy/data/differ.as
px (ATLA, 2001)
41
Positive product liability cases (continued)
Source http//www.atla.org/secrecy/data/differ.as
px (ATLA, 2001)
42
Questionable Results

• Product liability cases have encouraged
  manufacturers to design, manufacture and
  distribute safer products. However, with the
  potential for, and increasing numbers of,
  frivolous lawsuits something should be done to
  regulate the current system. This is not to say
  that society should return to the days buyer
  beware, but rather the system needs to move away
  from the current trend of seller beware.
• Two cases with questionable results
• The McDonalds Coffee Case
• Carrying a Full Fish Tank Full of Water

43
The McDonalds Coffee Case

• In February of 1992 a New Mexico senior citizen,
  Stella Liebeck, was a passenger in her grandson's
  car when she suffered third-degree burns from
  McDonald's coffee.
• After receiving the coffee from the drive-through
  window, the grandson pulled over to allow his
  grandmother to add cream and sugar to her coffee.
  In attempting to remove the plastic lid, the
  coffee spilled into her lap causing severe burns
  to her upper thigh area.
• She was hospitalized for eight days, during which
  time she underwent numerous skin grafts. When
  McDonalds's refused to settle the case for
  20,000, the grandmother retained an attorney to
  file charges against McDonald's.
• During discovery, documents obtained from
  McDonald¹s showed more than 700 claims by people
  burned by its coffee between 1982 and 1992,
  proving that McDonald's had knowledge of the
  dangers of their product.

44
The McDonalds Coffee Case (continued)

• Other facts in the case
• McDonald's quality assurance manager testified
  that the company actively enforces a requirement
  that coffee be held in the pot at 185 degrees,
  plus or minus five degrees
• Plaintiff's expert testified that liquids, at 180
  degrees, will cause a full thickness burn to
  human skin in two to seven seconds.
• McDonald's asserted that customers buy coffee on
  their way to work or home, intending to consume
  it there.
• The jury awarded Liebeck 200,000 in compensatory
  damages. This amount was reduced to 160,000
  because the jury found Liebeck 20 percent at
  fault in the spill. The jury also awarded Liebeck
  2.7 million in punitive damages.
• The trial court subsequently reduced the punitive
  award to 480,000.
• The judge called McDonald's conduct reckless,
  callous and willful.
• Source Consumer Attorneys Association of Los
  Angeles (CAALA)

45
The McDonalds Coffee Case (continued)

• The questionably positive result is that now
  McDonalds places the following warning on their
  coffee cups
• Warning Contents Hot.
• In this authors opinion this case was completely
  frivolous with no benefit to safety whatsoever
• Most people, except the very young or the
  mentally disadvantaged, would expect that hot
  coffee would be hot. But our courts and our
  judges seem to have retreated from the reasonable
  person standard in holding companies liable for
  product misuse.
• (Smith, 1997)

46
Carrying a Full Fish Tank Full of Water Source
Mealey's Litigation Reports (mealeys.com, 2003)

• SALEM, Ore. -- A plaintiff who won a jury verdict
  after she was seriously injured by a shattering
  fishbowl has less than four weeks to decide
  whether to accept remittitur of her punitive
  damages award or face a new trial to set the
  proper amount
• (Arleen E. Waddill v. Anchor Hocking, Inc., No.
  A91012, Ore. App.).
• The case was back before the Oregon Court of
  Appeals after the U.S. Supreme Court, citing
  State Farm v. Campbell (538 U.S. __, 123 S. Ct.
  1513 2003), vacated the 1 million award based
  on compensatory damages one-tenth the size.

47
Carrying a Full Fish Tank Full of
Water(continued)

• Arleen E. Waddill was carrying a fishbowl
  containing water in her arms when the glass bowl
  shattered, slicing the ulnar artery, ulnar nerve
  and a tendon in her left arm and lacerating the
  index finger and an artery and nerve on her right
  hand.
• Waddill suffered lingering pain, numbness and
  weakness in her arms that her physician told her
  would be permanent.
• Waddill sued Anchor Hocking Inc., which made the
  fishbowl, complaining that the company failed to
  attach a warning to the fishbowl against carrying
  it when loaded with water.
• Source Mealey's Litigation Reports (mealeys.com,
  2003)

48
Carrying a Full Fish Tank Full of
Water(continued)

• Anchor Hocking knew of three other incidents in
  which customers were injured in similar
  circumstances but did nothing to improve the
  product's safety and in fact destroyed records
  pertaining to those incidents, she alleged.
• A Multnomah County Circuit Court jury found that
  Anchor Hocking was negligent and that the
  fishbowl was dangerously defective because of the
  company's failure to affix an appropriate
  warning.
• It assessed actual damages of 132,472, reduced
  to 100,854 by the jury's finding that Waddill
  was 25 percent at fault, and awarded 1 million
  in punitive damages.
• Source Mealey's Litigation Reports (mealeys.com,
  2003)

49
Carrying a Full Fish Tank Full of
Water(continued)

• A panel of the Oregon Court of Appeals affirmed
  the judgment in its entirety, finding that the
  jury's decision to award punitive damages
  complied with both state and federal law,
  including the U.S. Constitution's 14th Amendment.
• The U.S. Supreme Court, however, granted
  certiorari to Anchor Hocking, vacated the award
  and remanded to the appellate court for further
  consideration in light of State Farm.
• The panel concluded that the maximum
  constitutionally permissible award in the instant
  case was four times the compensatory damages, or
  403,416.
• However, it offered Waddill the choice of
  accepting the reduced amount or consenting to a
  new trial to establish a more appropriate level
  of punitive damages.
• Source Mealey's Litigation Reports (mealeys.com,
  2003)

50
Carrying a Full Fish Tank Full of
Water(continued)

• The questionably positive result is not yet
  known, as the new trial has not yet been set.
• Undoubtedly, Anchor Hocking will have to place a
  warning label so that people know not to carry a
  full fish tank full of water.
• Sympathy is felt for the individual and resulting
  injuries, but should Anchor Hocking have to pay
  for her lapse in judgment?
• Humanity will not be better served if a warning
  label is affixed to every fish tank that says
• Warning Full Fish Tanks May Cause Injuries If
  Carried When Full Of Liquid.

51
Warning Label Overkill

• Many people question the validity of warning
  labels on products.
• The litigious nature of our society has
  manufacturers affixing labels to protect
  themselves from these rising court costs and
  people out to make easy money.
• The following slide contains a few warning labels
  that are obviously due to product liability laws
  and generous courts.

52
Warning Label Overkill (continued)

• The Consumer Alert website provides the following
  eight real warning labels as examples of warning
  overkill
• Box of staples "Caution Staples have sharp
  points for easy penetration so handle with care."
• Car sun shield "Do not drive with sun shield in
  place."
• Sled "This product does not have brakes."
• Marbles "Choking hazard - This toy is a marble.
• Ladder "Do not overreach."
• Child's play helmet "This is a toy."
• Hair dryer "Do not use while sleeping."
• Roller blading "Learn how to control your speed,
  brake and stop.
• (Smith, 1997)

53
What Does Tort Liability Cost?

• According to statisticians at the U.S. Department
  of Justice
• Juries in the 75 largest counties disposed of
  12,000 tort, contract, and real property rights
  cases during a 12-month period ending June 30,
  1992.
• Jury cases were 2 of the 762,000 tort, contract,
  and real property cases disposed by State courts
  of general jurisdiction in the Nation's most
  populous counties.
• Thirty-three percent of cases decided by juries
  were automobile accident suits.
• (DeFrances et al.)

54
What Does Tort Liability Cost?(continued)

• 11 were medical malpractice
• 5 were product liability and toxic substance
  cases.
• In half of all jury cases, the jury found in
  favor of the plaintiff and in the 12-month period
  awarded an estimated 2.7 billion in compensatory
  and punitive damages.
• The median total award for a plaintiff was
  52,000.
• Punitive damages were awarded in 6 of the jury
  cases with a plaintiff winner.
• Median punitive award was 50,000 average time
  from complaint filing to jury verdict was 2.5
  years.
• (DeFrances et al.)

55
What Does Tort Liability Cost?(continued)

• Claimants and plaintiffs are paid for economic
  losses sustained.
• Additionally they are paid for non-economic
  losses, such as pain, suffering, claimants
  attorneys fees and administrative costs.
• A reflection of the cost of the tort system is
  the price of liability insurance in defense of
  these claims
• (III, 2003b).

56
What Does Tort Liability Cost?(continued)
57
Conclusion

• Product liability cases have encouraged
  manufacturers to design, manufacture and
  distribute safer products. Furthermore, product
  liability cases have rightfully forced these same
  manufacturers to properly warn consumers of the
  potential dangers with their products. However,
  with the potential for, and increasing numbers
  of, frivolous lawsuits something should be done
  to regulate the current system. This is not to
  say that society should return to the days of
  caveat emptor, or buyer beware, but rather the
  system needs to move away from the current trend
  of seller beware.

58
Conclusion (continued)

• In 1992, on the campaign trail, the first
  President Bush (George H. Bush) summed it up best
  when he made the following remarks
• Product liability laws vary from State to State,
  and the rules have encouraged these crazy
  lawsuits and outrageous awards. And the cost of
  insurance keeps going right out through the roof,
  keeps skyrocketing. Big deal, right? So companies
  have to pay extra for a few lawyers. But it's not
  just companies who foot the bill we all pay
  higher prices for everything from medicine to
  stepladders. We never get to see a lot of good
  products because companies are afraid of
  excessive lawsuits (Bush, 1992).

59
Conclusion (continued)

• In 1985 Senator Robert Kasten of Wisconsin
  introduced legislation that would replace the
  current open-ended system with uniform rules
  (Hansen, 2003). This legislation was in
  response to the fact that almost half of all the
  money paid out in these kinds of cases goes not
  to the injured party, but to the lawyers (Bush,
  1992). Senator Kasten led the charge for reform
  but lost his senatorial seat in 1992.
• Since then various reform measures have been
  proposed. One of the reforms suggested was to
  limit punitive damages to the first successful
  claimant in suits involving a single product and
  a single manufacturer. Another reform suggested
  was to cap non-economic damages at 100,000 or
  250,000. (III, 2003a)

60
Conclusion (continued)

• There is evidence of a changing attitude towards
  excessive claims. In 2001, the U.S. Supreme
  Court said that appellate courts must carefully
  analyze the evidence used to determine the amount
  of an award for punitive damages, rather than
  rely on the judgment of the trial court, to
  ensure that the rights of both individuals and
  corporations are protected. (III, 2003a)
• The federal government should impose limits and
  pass some level of tort reform because without
  clear limits there can be dramatic and
  excessively costly deviations from realistic
  damages.

61
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