§ 17.01 What Is Products Liability? [299-319]

 

[A] Historical Overview

 

In MacPherson v. Buick Motor Co., 111 N.E. 1050 (N.Y. 1916), New York's highest court held that the manufacturer of any product capable of serious harm if negligently made owed a duty of care in the design, inspection, and fabrication of the product, a duty owed not only to the immediate purchaser but to all persons who might foreseeably come into contact with the product. Modern products liability law is the direct descendant of MacPherson, both in tort and in implied warranty.

 

In the mid 1960s influential proposals arose to eliminate the privity bar and the requirement of showing fault in a products liability claim, with the gravamen of such “strict” products liability being the condition of the product, not the conduct of the seller. [Greenman v. Yuba Power Products, Inc., 377 P.2d 897 (Cal. 1962); Restatement § 402A.]

 

The American Law Institute's Restatement (Third) of Torts: Products Liability (1997) proposes a products liability analysis that is freed of doctrinal designations (negligence, warranty, strict tort liability) and instead evaluates claims “functionally”, i.e., whether the claim alleges a (1) manufacturing defect; (2) design defect; or a (3) defect by reason of inadequate warnings or instructions.

 

A buyer's potential remedy in misrepresentation was advanced in Baxter v. Ford Motor, 12 P.2d 409 (Wash. 1932), holding that a consumer should have a strict liability cause of action, with no need to show negligence or privity, against a seller that represented its products as possessing “qualities which they, in fact, do not possess . . . ,”  and the customer suffers damages as a consequence.  This misrepresentation remedy is reflected today in Restatement § 402B.

 

[B] A Survey

 

The four principal theories that underlie products liability suits are: (1) negligence; (2) breach of one or more warranties; (3) strict products liability; and (4) misrepresentation.  Putting aside misrepresentation, in functional terms, almost all claims in products liability arise from defects in manufacturing, defects in design, and inadequate warnings.

 

[1] Negligence

 

Negligence liability may follow personal injury or property loss due to another's failure to act with due care under the circumstances. In negligence a product seller is liable if he acts or fails to act in such a way as to create an unreasonable risk of harm loss to a foreseeable user using the or affected by the product in a foreseeable manner.

 

In determining breach of his duty of ordinary care, most courts use the formulation of Judge Learned Hand, or a comparable risk-benefit model. The Hand formulation states that an actor is in breach if the burden of taking measures to avoid the harm would be less than the multiple of the likelihood that the harm will occur times the magnitude of the harm should it occur, or B<PL. [United States v. Carroll Towing Co., 159 F.2d 169 (2d Cir. 1947).]

 

[2] Breach of Warranty

 

Breach of warranty is a claim that arises under principles of contract in one of three ways.  The express warranty is made when the seller makes a material representation, such as regards a product's composition, durability, performance, or safety. The seller's representation may be “puffing” and therefore not material, if it pertains merely to subjective matters such as aesthetics. Comments to UCC § 2-313 provide that reliance will be presumed unless the lack of reliance is proved by the seller.

 

The implied warranty of merchantability, UCC § 2-314, provides that any seller impliedly warrants that the product sold is fit for its ordinary purposes, and conveys with the sale of the product irrespective of the seller's statements.  The implied warranty of fitness for a particular purpose, UCC § 2-315, contemplates the buyer's explicit or implicit request that a seller having specialized knowledge recommend a product suitable for the buyer's specialized goal.

 

[a] Parties

 

Under UCC § 2-313 and  § 2-314, defendant must be a commercial seller of such products. UCC § 2-315 has no such requirement. The proper plaintiffs are decided by reference to which Alternative to UCC § 2-318 a jurisdiction has selected. Alternative A confines the class of plaintiffs to members of the buyer's household and guests therein. Alternatives B and C are progressively more inclusive.

 

[b] Disclaimers and Limitations

 

As to implied warranties, the seller may disclaim or limit the remedies. [UCC § 2-316.] The implied warranty of merchantability may be disclaimed if the disclaimer mentions “merchantability” and is conspicuous. A § 2-315 implied warranty may be disclaimed where the disclaiming language is “by a writing and conspicuous.”  Implied warranties may be excluded with language such as “as is” or “with all faults”. 

 

A seller may limit warranty remedies. [UCC § 2-719.]  Limitations as to consequential damages will not be enforced if the suit involves personal physical injuries.

 

[3] Strict Liability in Tort

 

Restatement § 402A provides for strict liability in tort for anyone “who sells a product in a defective condition unreasonably dangerous to the user or consumer or his property.” The defendant must be a seller of such products in the ordinary course, although in many jurisdictions the strict liability cause of action to other businesses, such as lessors.

 

For determining what is “unreasonably dangerous,” comment i to § 402A offers a “consumer expectations” standard: i.e., is the article “dangerous to an extent beyond that which would be contemplated by the ordinary consumer who purchases it, with the ordinary knowledge common to the community as to its characteristics”? More particularized risk/utility evaluations for what constitutes a design defect have been adopted by most courts.  See § 17.04[B][3][b] infra.

 

[4] Misrepresentation

 

The Restatement § 402B remedy of strict liability for misrepresentation, creates a remedy to any person injured due to reliance on the product seller's misrepresentation of a material fact. Its reach is limited to public representations, i.e., advertisements. The plaintiff must prove actual reliance.

 

[B] Defenses

 

[1] Generally

 

At common law, a defendant could defend in negligence by showing that the plaintiff was contributorily negligent, or that plaintiff assumed the risk of injury.  As to both a warranty or a strict products liability claim, the defendant may defend by showing plaintiff's assumption of risk, but not contributory negligence. Misuse of a substantial and non-foreseeable nature may be a defense against any claim.

 

[2] Comparative Fault

 

Under comparative fault, the trier of fact may reduce the plaintiff's recovery by such proportion of the harm that the latter contributed by his own incautious conduct.  Comparative negligence is discussed supra, at § 13.03.

 

§ 17.02 Negligence [319-327]

 

[A] Basis for Liability

 

 The maker of a product that is to be used by others and that is capable of harm if not carefully made is under a duty to make it with care commensurate with the risk of harm.  The manufacturer of a product is presumed to be an expert in his field. Non-manufacturing sellers are also under certain more confined duties.

 

The negligence evaluation or equation is often conveniently described as balancing the magnitude of the risk of the seller's conduct against the likelihood of injury should the challenged act be taken, the severity of any such injury should it occur, and the social value or utility of the actor's conduct. See United States v. Carroll Towing Co., 159 F.2d 169, 173 (2d Cir. 1947) and Conway v. O’Brien, 111 F.2d 611, 612 (2d Cir. 1940), in which Judge Learned Hand proposed that in negligence, an actor would be in breach of duty should the Burden of precautionary measures be less than the multiple of the Probability of the harm occurring times the magnitude of the Liability should the harm occur, or B<PL.

 

[B] Liability as Limited by Foreseeability

 

Liability in negligence is limited to settings in which the product was put to a reasonably foreseeable use, including a reasonably foreseeable misuse. The plaintiff must also be a person who might reasonably be foreseen to use, consume or be affected by the product.  Foreseeability is limited to what was known or knowable at the time of manufacture.

 

[C] The Duty of Non-Manufacturing Sellers

 

Restatement § 401 provides that the non-manufacturing seller has a duty to warn of hazards of which he knows or has reason to know, and of which the buyer is unaware.

 

[D] Proof of Negligence

 

Proof of defect does not, without more, prove negligence.  The plaintiff must show that the seller's conduct fell below that expected of a reasonable man in similar circumstances.

 

[1] The Accident Itself

 

Similarly, the occurrence of the accident itself does not make out plaintiff's prima facie case in negligence. However, circumstantial proof, such as recent purchase and ordinary use, that tends to negate the possibility of alternative causes, may advance the plaintiff's proof of both defects and negligence.

 

[2] Other Accidents or Claims

 

Evidence of other accidents involving defendant's products may be admissible to prove negligence if: (1) the product involved was materially indistinguishable from that at issue in plaintiff's litigation; and (2) the circumstances were similar to those of plaintiff.

 

[3] Subsequent Product Changes

 

The majority of jurisdictions have adopted the rule of evidence that subsequent product changes, or other post-incident remedial measures, cannot be used by plaintiff to prove defect or antecedent negligence. See Fed. R. Evid. 407. 

 

[4] Violation of a Statute, Ordinance or Regulation

 

Defendant's violation of a regulation pertaining to safety may be considered negligence per se.  See discussion supra at §§ 6.01-6.07.

 

[5] Res Ipsa Loquitur

 

Upon the showing that the product was one over which the defendant had complete control, and that the accident resulting in injury was of such a nature that it ordinarily would not occur in the absence of negligence, the doctrine of res ipsa loquitur permits the plaintiff to shift to the defendant the burden of proof on the issue of negligence. In a products liability action the injury will occur after the product left the defendant's possession. Most courts require only that the plaintiff offer evidence of normal storage, transportation and use.  [See also Restatement § 328 comment g.]

 

§ 17.03 Warranties [327-340]

 

[A] Introduction

 

Warranty law provides several remedies for persons who have purchased or been exposed to products that do not satisfy ordinary expectations, do not conform to the seller's promises, are dangerous, or all of the above.

 

[B] Express Warranties

 

Express warranties are seller representations to the buyer of the quality, performance, construction, or durability of a product. Such warranties may be oral, written, or even pictorial.

 

[1] Representations of Fact

 

The seller's representations must be of fact, and more than simply the seller's opinion of the product. For example: (1) a tire manufacturer's advertisement, “If it saves your life once, it's a bargain” where plaintiff's decedent was injured fatally following a tire blowout [Collins v. Uniroyal, Inc., 315 A.2d 16 (N.J. 1974)]; (2) a booklet accompanying a steam vaporizer stating the safety of use at night and featuring a picture of the appliance in use near a baby's crib, where a toddler was badly burned when the device overturned [McCormack v. Hankscraft Co., 154 N.W.2d 488 (Minn. 1967)]; or (3) an instruction book statement that a golf training device was “completely safe - ball will not hit player” and a novice golfer suffered severe head injuries when a mis-hit ball flew back at great speed [Hauter v. Zogarts, 534 P.2d 377 (Cal. 1975).]

 

[2] Basis of the Bargain

 

Under UCC § 2-313(1), a seller's affirmation of fact can become an express warranty if it “becomes a basis of the bargain.” As a general rule, to be considered part of the basis of the bargain of the sale, the seller's statement must precede or accompany the sale. The authority is divided as to the buyer's burden of proof concerning reliance upon the seller's representations. Comment 3 to UCC § 2-313 shifts the burden of proving non-reliance to the seller. Other authority suggests that UCC § 2-313 eliminates the need to show reliance altogether.

 

[C] Implied Warranties

 

[1] Merchantability

 

The implied warranty of merchantability warrants that are fit for their intended purpose. [UCC § 2-314 (2)(c).]

 

[a] Requirement that the Seller be a Merchant

 

Under UCC § 2-314, it is necessary that the seller be a “merchant” of such products in the ordinary course of trade. Consistent with this, for example, the seller of a spoiled confection at a church bake sale would not be a proper party defendant under § 2-314.

 

[b] Fit for the Ordinary Purpose

 

What is or is not “fit for [its] ordinary purpose” within the meaning of UCC § 2-314(2)(a), (c) has proved, in the main, to be an issue of ordinary understanding. For example, shoes will be expected to have their heels firmly attached so as not to disengage in normal use [Vlases v. Montgomery Ward & Co., 377 F.2d 846 (3d Cir. 1967)), and hair lotion should not burn the user's scalp [Hardman v. Helene Curtis Indus., Inc., 198 N.E.2d 681, 691 (Ill. Ct. App. 1964).]

 

As to the potential idiosyncratic reaction of a purchaser to an over-the-counter pharmaceutical, most courts take the position that plaintiff must show that the product “affect[s] at least some significant number of persons[.]” [Griggs v. Combe, Inc., 456 So. 2d 790 (Ala. 1984).]

 

[2] Fitness for a Particular Purpose

 

Under UCC § 2-315, the buyer must prove that he relied upon the seller's skill or judgment to select or furnish suitable goods, and that seller had reason to know of such reliance. Unlike UCC § 2-314 remedies which require the seller to be a merchant of such goods in the ordinary course, UCC § 2-315 states only that the person be a seller.

 

The Code's use of the phrase “particular purpose” is deliberate, and intended to distinguish UCC § 2-314. Comment 2 to UCC § 2-315 makes this clear in stating that “particular purpose envisages a specific use by the buyer which is peculiar to the nature of his business. . . .”   It follows that when goods are purchased for the ordinary purposes for which such goods are used, there arises no implied warranty of fitness for a particular purpose.

 

[D] To Whom Warranties Run

 

Beginning with the 1960 decision in Henningsen v. Bloomfield Motors, 161 A.2d 69 (N.J. 1960), the defense of lack of privity is in continuing retreat. To the extent that a privity question exists, a distinction must be drawn between vertical and horizontal privity. “Vertical privity” pertains to the relationship between parties in the chain of distribution of goods, such as manufacturers, distributors, retail dealers, and purchasers.

 

“Horizontal privity” refers to parties outside of the chain of commercial distribution, such as family members, employees, or bystanders.  Horizontal privity is implemented in most jurisdictions by its selection of one of the three alternatives to UCC § 2-318.  Alternative A extends warranty protection to “any natural person who is in the family or household of his buyer or who is a guest in his home if it is reasonable to expect that such person may use, consume or be affected by the goods and who is injured in person by breach of the warranty.” Alternative B, incrementally more liberal, describes the reach of a warranty to “any natural person who may reasonably be expected to use, consume or be affected by the goods and who is injured in person by breach of the warranty.”  The most liberal provision, Alternative C, provides warranty protection to “any person who may reasonably be expected to use, consume, or be affected by the goods and who is injured by the breach of the warranty.”

 

[E] Warranty Limitations and Disclaimers

 

Article 2 of the Code permits the seller to disclaim warranties and limit the remedies available to the buyer. The seller's ability to disclaim warranties is defined in UCC § 2-316, while the provisions for seller's ability to limit remedies available to the buyer may be found at UCC § 2-719.

 

A disclaimer is an attempt to avoid or eliminate a warranty altogether. As a general rule, under UCC § 2-316(1), once an express warranty has been made it cannot be disclaimed. A limitation of remedies, in contrast, acknowledges the seller's obligations in warranty, but operates to restrict the remedy.  A common limitation might, for example, provide that the buyer's remedy will be confined to repair or replacement, with no seller liability for incidental or consequential damages. 

 

[1] Disclaimer of Implied Warranties

 

Implied warranties of merchantability or fitness for a particular purpose can be disclaimed, provided that the seller carefully follows the disclosure and conspicuousness protocols established in UCC §§ 2-316(2) and (3). Any language purporting to exclude or modify the implied warranty of merchantability “must mention merchantability and in case of a writing must be conspicuous.” The language of subsection (2) continues by stating that for the seller to exclude or modify any implied warranty of fitness the exclusion must be by a writing and conspicuous. Lastly, UCC § 2-316(2) suggests that the seller wishing to exclude all implied warranties of fitness use language that states, for example, that “there are no warranties which extend beyond the description on the face hereof.”

 

[a] Conspicuousness

 

Subsection (2) to UCC § 2-316 requires that disclaimers of any implied warranties be conspicuous. “Conspicuous,” as defined by UCC § 2-201(10), connotes language “so written that a reasonable person against whom it is to operate ought to have noticed it.” That language goes on to state that “A printed heading in capitals . . . is conspicuous” and that “Language in the body of a form is 'conspicuous' if it is in larger or other contrasting type or color.”

 

[b] “As Is” Disclaimers

 

A seller may also effectively disclaim implied warranties of quality by communicating to the buyer that the product must be accepted “as is,” or with all faults. While § 2-316(2) gives guidelines for disclaiming both implied warranties of quality, albeit through application of different recommended language, an “as is” disclaimer under UCC § 2-316(3)(a) properly used permits the seller effectively to disclaim both warranties of merchantability and fitness simultaneously. The language “as they stand” is also noted in comment 7 to that section.

 

[2] Warranty Limitations

 

The Code provides at UCC § 2-719 for the seller's limiting of the buyer's remedies. Comment 1 to UCC § 2-719 states that if, due to circumstances, a facially fair warranty limitation fails in its essential purpose, the limitation will be avoided and the parties' rights will be determined in accordance with general warranty principles. Thus, where under a warranty limitation confining the buyer's remedies to replacement or repairs of defective parts the seller's repeated efforts to remedy the problem fail, the seller will not be relieved of liability.

 

The most prominent restriction upon the seller's ability to limit warranty remedies is set forth in UCC § 2-719(3), which states plainly that limitations on consequential damages will not be given effect where they are unconscionable. That subsection continues by stating that where the consequential damages sought are associated with injury to a person, any limitation upon consequential damages will be considered prima facie unconscionable. [See Collins v. Uniroyal, Inc., 315 A.2d 16 (N.J. 1974).]

 

§ 17.04 Strict Liability In Tort [340-354]

 

[A] The Restatement View

 

Restatement § 402A provides:

 

(1)   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

 

(a)    the seller is engaged in the business of selling such a product, and

(b)   it is expected to and does reach the user or consumer without substantial change in the condition in which it is sold.

 

(2)   The rule stated in Subsection (1) applies although

 

(a)    the seller has exercised all possible care in the preparation and sale of his product, and

(b)   the user or consumer has not bought the product from or entered into any contractual relation with the seller.

 

[1] Necessity of Showing a Sale

 

The plaintiff in strict liability must identify the supplier of the allegedly defective product and establish a causal relationship between the product and plaintiff's injury. In some jurisdictions, strict liability in tort has been expanded to leases and other transactions.  In strict liability the defendant must be a seller in the ordinary course. [See § 17.01[C].]

 

[2] Necessity of Showing a Defect

 

Plaintiff must establish that the product was defective, and that the defect was a substantial factor in bringing about plaintiff's harm. The focus of § 402A is upon the condition of the product, and only tangentially upon the conduct of the seller, as § 402A states plainly, strict tort liability will apply “although the seller has exercised all possible care[.]”  Nonetheless, even under strict tort liability principles, a manufacturer or seller is not an insurer of the safety of the products he sells.

 

Defendant's violation of a safety statute or regulation may, without more, support a finding that the product is defective. [Stanton by Brooks v. Astra Pharmaceutical Products, Inc., 718 F.2d 553 (3d Cir. 1983).]

 

By statute in some jurisdictions a product implicated in an injury, a “statute of repose” imposes a conclusive presumption that the product is non-defective should the accident occur more than a certain number of years following initial sale.

 

[3] The Meaning of Defect

 

[a] The Consumer Expectations Test

 

The authors of § 402A comment g explain that the rule applies “only where the product is, at the time it leaves the seller's hands, in a condition not contemplated by the ultimate consumer, which will be unreasonably dangerous to him.” No consumer can reasonably be held to expect defective brakes in a new automobile, or beetles in beverages. Quare, however, a consumer's expectation that there may be a cherry pit in a cherry pie, or a fish bone in a bowl of fish chowder, or an olive pit in a martini olive? In such cases some courts have applied the “foreign-natural” test to determine defectiveness, and have held that cherry pits are “natural” to cherry pie, and fish bones are “natural” to fish chowder. 

 

The consumer envisioned by the “consumer expectations” test is the ordinary adult consumer. Consider for example, the injuries suffered by a five-year-old child while playing with matches, which ignited his pajamas. Courts have without exception interpreted “expectations” as posing the question as to whether the product was dangerous to an extent beyond that which would be contemplated by the parent purchasing them for a child.

 

The § 402A comment i test imputes to this hypothetical adult consumer “ordinary knowledge common to the community as to [the product's] characteristics.” The special background and experience of an individual plaintiff is of no moment, as the proper evaluation is that of the community familiarity with the risk. Accordingly, the sometimes specialized knowledge of a class of consumers, such as, for example, the particular knowledge members of the farming community might have of agricultural equipment, takes on importance in the evaluation of the seller's duty to warn.

 

It is generally agreed that the seller may defend the claim that a product was defective and unreasonably dangerous due to inadequate warnings with proof that the user was a member of a presumptively sophisticated class of consumers who could be expected to be aware of the risks product and the means of using the product safely.

 

[b] The Risk/Utility Test

 

Under the risk/utility test, the product is defective as designed only where the magnitude of the hazards outweighs the individual utility or broader societal benefits of the product. The risk/utility test posits, in effect, that only reasonably safe products should be marketed, and defines reasonably safe products as those whose utility outweighs the inherent risk, “provided that risk has been reduced to the greatest extent possible consistent with the product's continued utility.”

 

A seven-factor evaluation proposed for a risk/utility analysis in determining the defective condition of a product was advanced initially by Dean John Wade, and has been followed, as adapted, by courts in most jurisdictions. As stated by one court: “In balancing the risks inherent in a product, as designed, against its utility and cost, the jury may consider several factors.. . . Those factors may include the following: (1) the utility of the product to the public as a whole and to the individual user; (2) the nature of the product that is, the likelihood that it will cause injury; (3) the availability of a safer design; (4) the potential for designing and manufacturing the product so that it is safer but remains functional and reasonably priced; (5) the ability of the plaintiff to have avoided injury by careful use of the product; (6) the degree of awareness of the potential danger of the product which reasonably can be attributed to the plaintiff; and (7) the manufacturer's ability to spread any cost related to improving the safety of the design.” [Beshada v. Johns-Manville Products Corp., 447 A.2d 539 (1982).]

 

[c] The Hybrid Barker v. Lull Engineering Test

 

In Barker v. Lull Engineering Co., 573 P.2d 443, 453 (1978), the California Supreme Court commended a hybrid test in which process whereby the: “trial judge instruct[s] the jury that a product is defective in design (1) if the plaintiff demonstrates that the product failed to perform as safely as an ordinary consumer would expect when used in an intended or reasonably foreseeable manner, or (2) if the plaintiff proves that the product's design proximately caused his injury and the defendant fails to prove . . . that on balance the benefits of the challenged design outweighed the risk of danger inherent in such a design.”

 

[4] Necessity of Showing Unreasonable Danger

 

Restatement § 402A comments g and i together establish that for strict liability to attach, the product must be “dangerous to an extent beyond that which would be contemplated by the ordinary consumer who purchases it, with the ordinary knowledge common to the community as to its characteristics.”  The requirement of unreasonable danger has been interpreted to mean that the product must be more dangerous than an ordinary consumer would expect when the product is used in its intended or reasonably foreseeable manner.

 

A manufacturer or seller is not required to warn of every conceivable danger that may result from a use or misuse of his product, however. Comments to the Restatement state that the seller may reasonably assume that those with common allergies, will be aware of them, and the seller is not required to warn about ordinary allergic reactions to ingredients that are properly labeled. 

 

[a] Showing Alternative Feasible Design

 

In a majority of jurisdictions, a plaintiff's proof must include a showing that there was at the time of the original manufacture of the product some technologically feasible, safer alternative to the challenged design.  [E.g., Garst v. General Motors Corp., 484 P.2d 47 (1971).]

 

[5] The Unavoidably Unsafe Product

 

Particularly in the field of drugs, there are some products which, in the present state of human knowledge, are incapable of being made completely safe for their intended and ordinary use. [Restatement § 402A comment j.] Designation of a product as “unavoidably unsafe” is not a complete defense, for the plaintiff may still prove liability in negligence upon showing that the product, usually a pharmaceutical, was marketed without due care.

 

[6] Effect of Changes After Leaving Control of Defendant

 

In strict products liability, the defect must be proved to have existed at the time the product left defendant's control, as § 402A contemplates that the product is “expected to, and does reach the user or consumer without substantial change in the condition in which it is sold.” Where the product is substantially altered after manufacture, the change may defeat a claim based upon strict tort liability, but only if the change was of such a nature as to become itself the change, was the proximate cause of the injury.

 

As the burden is upon the plaintiff to establish that the defect existed at the time the product left the control of the defendant, courts have held that the plaintiff must show that the defect did not arise from improper intermediate handling. It has been held that evidence of reasonable and proper handling of a product after it left the control of the defendant manufacturer or seller and the time of the occurrence of the injury creates an inference that the defect did not come into being in that interim, but existed prior thereto.

 

The plaintiff is not required to eliminate all possible causes of the accident other than a defect existing at the time the product left the control of the defendant. Rather, he has sustained his burden if the evidence indicates that, more probably than not, the defect did not arise from subsequent improper handling or misuse of the product.

 

[7] Strict Liability for Miscellaneous Transactions

 

[a] Leased Property and Bailments

 

By its terms, § 402A imposes liability only upon one who sells a product in a defective condition. However, many courts have held that in some circumstances, a sale may not be essential to the application of strict tort liability, and that the rule can be invoked in the case of leased or bailed goods, provided the defendant is in the business of such transactions.  Naturally, the growing use of leasing, both as a substitute for purchasing and as a matter of temporary convenience, has bolstered the rationale for applying strict tort liability to the lease as to the sales transaction. [Crowe v. Public Bldg. Comm’n of Chicago, 383 N.E.2d 951 (1978).] Bailors and licensors have also been held strictly liable, although the decisions have not been uniform.

 

[b] Services

 

As a general rule, courts have not extended the reach of strict liability to persons providing services. The accepted rationale for not extending strict liability to the ordinary provision of services is that services do not involve “mass production and distribution, nor are there any consumers needing protection from an unknown manufacturer or seller.”  [Kaplan v. C Lazy U Ranch, 615 F. Supp. 234  (D. Colo. 1985).]

 

Those cases that have extended strict tort liability or warranty recovery to services have thus far limited recovery to transactions that were commercial in character, rather than professional, and to cases in which the injury was caused by a defective product, rather than from a defect in the service itself. [E.g., Newmark v. Gimbels, Inc., 258 A.2d 697 (N.J. 1969).]

 

[c] Blood Shield Statutes

 

Practically all states have enacted statutes that make warranty or strict tort liability principles inapplicable to blood transfusions. The ordinary operation of such statutes is to render a hospital, blood bank or medical personnel liable for damages sustained due to contaminated blood only on a negligence basis.

 

[d] Real Estate

 

Departing from the common law rule of caveat emptor, in Carpenter v. Donohoe, 388 P.2d 399 (1964), the Colorado Supreme Court held that the builder of a new house was liable to the initial purchaser on implied warranties that the dwelling conformed to statutory requirements, and that it was built in a workmanlike manner, and fit for habitation.  As to applicability of Restatement § 402A, courts in modern decisions have found little difficulty in finding new homes “products” within that doctrine's reach.

 

[e] Used Products

 

The language of Restatement § 402A does not, by its terms, preclude application to the sale of defective used products. Pursuant to “consumer expectations” standards, however, courts have regularly measured such reasonable expectations in the light of the expected level of acceptable performance that may be reasonably expected of a used product.

 

§ 17.05 The Duty to Warn [354-374]

 

[A] Generally

 

Although a product is unerringly designed, manufactured and assembled, a seller may be liable if the product has a potential for injury that is not readily apparent to the user and carries no warnings of the risk, or it lacks appropriate instructions.  Liability may be under principles of strict liability, negligence, and warranty.

 

[B] Failure to Warn as Negligence

 

In negligence, a seller has a duty to warn of any risk that it, as a reasonable manufacturer, or as a reasonable non-manufacturing seller, should know that, without warnings, would create an unreasonable risk of injury.  For the duty to attach, it is not necessary that the manufacturer appreciate the specific nature of the hazard posed.

 

[C] Failure to Warn as Strict Liability

 

A generally accepted standard is that a dangerously defective article is one “which a reasonable man would not put into the stream of commerce if he had knowledge of its harmful character.” [Phillips v. Kimwood Mach. Co., 525 P.2d 1033 (Or. 1974).] The seller need warn of risks that are known or knowable at the time of sale.

 

[D] Failure to Warn as a Breach of Warranty

 

The absence of adequate warnings or instructions on a product may constitute a breach of UCC § 2-314. [Borel v. Fibreboard Paper Products Corp., 493 F.2d 1076 (5th Cir. 1973).]

 

[E] The Effect of Obviousness of Danger

 

The majority rule is that there exists no duty to warn of obviously hazardous conditions. Authority consistent therewith has involved slingshots, BB guns, darts, chairs on casters, and the activity of diving from a roof into a four-foot-deep swimming pool.

 

[F] The Effect of Unintended or Unforeseeable Use

 

In addition to requiring warnings as to risks in intended uses, a manufacturer may also need to warn of risks arising from reasonably foreseeable misuses. [Restatement § 395.]

 

[G] Causation and Disregard of Warnings

 

The successful plaintiff must show that the failure to warn was the proximate cause of the injury. Two presumptions are often applied   Comment j to Restatement § 402A provides: “[w]here a warning is given, the seller may reasonably assume that it will be read and heeded . . . .”  The reciprocal presumption is that had an adequate warning been given, the plaintiff would have read and heeded it. 

 

[H] The Duty of the Non-Manufacturing Seller

 

The general rule is that the retailer or distributor has a duty to warn only of risks that are known or readily ascertainable.

 

The court in Hall v. E.I. Dupont De Nemours & Co., 345 F. Supp. 353, 375 (E.D.N.Y. 1972), stated that the relevant factors include:

 

(1)   the standard of care - itself a function of the foreseeability and gravity of risk and the capacity of avoiding it;

(2)   the participants’ capabilities of promoting the requisite safety in the risk-creating process;

(3)   the need to protect the consumer, both in terms of ascertaining responsible parties and providing compensation; and

(4)   the participants’ ability to adjust the costs of liability among themselves in a continuing business relationship.

 

Commercial lessors have been found to be within the class of businesses owing a duty to warn of dangerous conditions in the use of their products, by reason of their regular dealing with the product, and superior position to analyze potential hazards.  The repairer or servicer of a product will not generally be found responsible for failure to warn of risks associated with the use of a product.

 

[I] Persons to be Warned

 

Where the seller can reasonably foresee that the warning conveyed to the immediate vendee will not be adequate to reduce the risk of harm to the likely users of the product, the duty to warn has been interpreted to extend beyond the purchaser to persons who foreseeably will be endangered by use of or exposure to the product. Included are members of the public who might be injured as a result of lack of adequate warning.

In some circumstances the class to which the duty is owed and that to which the warning should go are not coextensive. The professional user and the learned intermediary doctrines represent two such situations. The bystander doctrine represents another.

 

The majority of instances in which the seller's product will be used by those other than the immediate vendee are sales to commercial or industrial buyers whose employees will actually use or be exposed to the products. The seller's duty to warn in this setting is influenced by Restatement § 388, which would impose a seller duty to communicate effective cautionary information to these employees or other ultimate users, unless it has reason to believe that those persons exposed will realize its dangerous condition.

 

The bulk seller fulfills its duty to warn if it conveys to the immediate purchaser sufficient information concerning any pertinent product risks.

 

[1] The Allergic or Idiosyncratic User

 

Restatement § 402A comment j provides that the manufacturer should provide a warning when “the product contains an ingredient to which a substantial number of the population are allergic, and the ingredient is one whose danger is not generally known. . . .”

When the consequences of an injury are very grave, the manufacturer may in some circumstances have a duty to warn “those few persons who it knows cannot apply its product without serious injury.” [Wright v. Carter Products, Inc., 1244 F.2d 53 (2d Cir. 1957).]

 

[2] The Professional User

 

As a general rule, there is no duty to give a warning to members of a trade or profession against dangers generally known to that group. [Restatement § 388 subsec. (b).]

 

[J] Adequacy of a Warning

 

Evaluation of the adequacy of a warning requires a balancing of considerations that include at least: (1) the dangerousness of the product; (2) the form in which the product is used; (3) the intensity and form of the warnings given; (4) the burdens to be imposed by requiring warnings; and (5) the likelihood that the particular warning will be adequately communicated to those who will foreseeably use the product.

 

[K] The Continuing Duty to Warn

 

A post-sale duty to warn may attach even if the product was, at the time of manufacture and sale, reasonably safe for use (or arguably so), but through use or operation, has betrayed hazards not earlier known to the seller, or to other sellers of like products.

 

The leading and innovative decision of Comstock v. General Motors Corp., 358 Mich. 163, 99 N.W.2d 627 (1959), involved the alleged failure of the automobile manufacturer to take remedial measures after learning, soon after the model was put on the market, of its propensity to lose its brakes. The court therein adopted a rule that a post-sale duty to warn arises “when a latent defect which makes the product hazardous becomes known to the manufacturer shortly after the product has been put on the market.”  

 

Particularly with regard to manufacturers of ethical pharmaceuticals, the courts have interpreted the duty to warn as extending to a “continuous duty” to remain apprised of new scientific and medical developments and to inform the medical profession of pertinent developments related to treatment and side effects.

 

§ 17.06 Strict Products Liability for Misrepresentation [374-382]

 

[A] Restatement § 402B

 

The modern rule for liability without fault for misrepresentation is stated at Restatement § 402B:

 

One engaged in the business of selling chattels who by advertising, labels, or otherwise, makes to the public a misrepresentation of 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 (a) it is not made fraudulently or negligently, and (b) the consumer has not bought the chattel from or entered into any contractual relation with the seller.

 

One decision having an enormous influence upon this rule is Baxter v. Ford Motor Co., 12 P.2d 409 (Wash. 1932), which involved the manufacturer's claim that its windshield glass “will not fly or shatter under the hardest impact.”

 

Under § 402B the action is perfectly straightforward: The plaintiff proves the representation; his reliance on it; its falsity; and his resulting injury. The seller is liable because whatever he sold was not as he represented it to be. If a product is publicly advertised to be “safe” for use, its seller will be liable even to one whose injury from its use was the result of a rare adverse reaction, the injured consumer being as much entitled as anyone else to rely on the advertised assurance.

 

Comment j to § 402B states a requirement that plaintiff's reliance upon the representation be reasonable.

 

[B] Section 402B and Advertising

 

The reach of § 402B extends to the seller who “by advertising, labels, or otherwise, makes to the public a misrepresentation.”  Advertising in all of its forms was the focus of the provision's concern.  “Puffing” or “sales talk” will not form the basis for an action.

 

§ 17.07 The Restatement (Third) of Torts: Products Liability

 

[A] Introduction

 

The Restatement (Third) rejects the distinction between negligence, warranty and strict products liability, and instead promotes one unitary “products liability” theory based on the type of defect alleged. The Restatement (Third) divides liability rules based on whether the product is deemed to have a “design,” “manufacturing,” or “inadequate instructions or warnings.” The products liability rules in Restatement (Third) applies to commercial sellers in the business of selling or distributing products, including the manufacturer, wholesaler, and retailer.

 

[B] Manufacturing Defects

 

Under Restatement (Third) § 2(a), “[a] product. . .contains a manufacturing defect when the product departs from its intended design even though all possible care was exercised in the preparation and marketing of the product.”

 

In essence, Restatement (Third) adopts a strict liability approach to aberrational individual products that inadvertently failed to conform to the product's intended design. There is no need for the plaintiff to prove negligence or carelessness. Since negligence is not a prerequisite, liability can be imposed against the retailer even if the manufacturer is at fault for the defect.

 

[C] Design Defects

 

Restatement (Third) § 2(b) defines a product as “defective in design when the foreseeable risks of harm posed by the product could have been reduced or avoided by the adoption of a reasonable alternative design. . .and the alternative design renders the product not reasonably safe.”  Thus the Restatement (Third) rejects the Restatement (Second)'s consumer expectation approach for strict liability and utilizes what is effectively a risk versus benefit evaluation of the product's design. The test, as noted above, is intended to replace independent negligence, warranty, and strict liability causes of action. The Restatement (Third)'s design defect test is reminiscent of a negligence risk versus benefit test, but focuses on the product itself, rather than the designers. Once the product is deemed defective and not reasonably safe, all of the commercial sellers in the chain of distribution are liable for injuries caused by the defect.

 

The requirement of an alternative feasible design has generated controversy.

 

[D] Inadequate Instructions or Warnings

 

The Restatement (Third) § 2(b) characterizes a product as “defective because of inadequate instructions or warnings when the foreseeable risk of harm posed by the product could have been reduced or avoided by the provisions of reasonable instructions or warnings[.]”

 

The Restatement (Third) utilizes a standard based on “reasonableness in the circumstances” and considers various factors including “content and comprehensibility, intensity of expression, and the characteristics of the expected user groups.”

 

[E] Prescription Drugs and Medical Devices

 

The Restatement (Third) has special provisions for prescription drugs and medical devices. These provisions provide that these medical products are not defective in design as long as the drugs or devices would be sufficiently therapeutic for “any class of patients” to prompt a reasonable health provider, knowing its foreseeable risks and benefits, to prescribe the drug. Special provisions also recognize that in many instances warning to the prescribing health professional or “learned intermediary” is sufficient unless the manufacturer knows or has reason to know the health provider is not in a position to reduce the risk and reasonable warnings should be directed toward the patient.

 

[F] Defenses

 

The Restatement (Third) endorses the current majority position that plaintiff's recovery for injury caused by a product defect can be reduced when the plaintiff fails to conform to the appropriate standard of conduct. Consequently, comparative negligence is an affirmative defense.