Transcript Product Liability

Regulatory due care standard
 Statutory due care standard
 Common law due care standard
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 Reasonable man
 Custom
 Hand rule
A [health care provider/doctor] is required to use the same degree of learning, care,
and skill ordinarily used by other qualified [providers/doctors] in good standing
practicing in the same [specialty/field]. This is known as the “standard of care.” The
failure to follow the standard of care is a form of fault known as “medical
malpractice.”
To establish medical malpractice, [name of plaintiff] has the burden of proving three
things:
(1) first, what the standard of care is;
(2) second, that the [provider/doctor] failed to follow this standard of care; and
(3) third, that this failure to follow the standard of care was a cause of [name of
plaintiff]’s harm.
In this action, [name of plaintiff] alleges that [name of defendant] failed to follow
the standard of care in the following respects:
(1)
(2)
(3)
If you find that the [name of defendant] breached the standard of care in any of
these respects, then you must determine whether that failure was a cause of [name
of plaintiff]’s harm.

Regulation is ex ante enforcement by administrators, and
liability is ex post enforcement by victims
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Bankrupt firms may escape liability
Litigation may be expensive
Administrators may set standards better than courts, so the
court may use a safety regulation as the standard of care
for determining liability
Courts may disregard regulatory standard when assigning
damages
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A trial provides judges with better information about the harm caused
by an accident than administrators can obtain
Courts often have fewer political motives than administrators
A court to distrust the legal standard imposed by a safety regulation
Defect in design
 Defect in manufacture
 Defect in warning

Third Restatement of Torts
 "A product is 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 omission of the alternative
design renders the product not reasonably
safe."
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In most cases the defects with respect to
design and manufacturing are unilateral
 The producer is also the one most likely to be
aware of special dangers
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Benefits and Costs Relating to Fuel Leakage
Associated with the Static Rollover Test Portion of
FMVSS208
From Ford Motor Company internal
memorandum: "Fatalities Associated with
Crash-Induced Fuel Leakage and Fires."
Damages (1960s)
 Accidents
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180 burn deaths
180 serious burn injuries
2,100 burned vehicles
Related accident costs
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$200,000 per death
$67,000 per injury
$700 per vehicle ($2,000 new vehicle)
From Ford Motor Company internal
memorandum: "Fatalities Associated with
Crash-Induced Fuel Leakage and Fires."
Total Benefits from eliminating
problem
 180 x ($200,00) +
 180 x ($67,000) +
 2,100 x ($700) = $49.7 million
From Ford Motor Company internal
memorandum: "Fatalities Associated with
Crash-Induced Fuel Leakage and Fires."
Cost of eliminating problem
 Sales: 11 million cars, 1.5 million trucks
 Unit cost: $11 per car, $11 per truck
 Total cost:
 11 million x ($11) +
 1.5 million x ($11) = $137 million
 Result:
 Costs ($137) exceed benefits ($49.5)
The Ford Pinto Case
Benefits equal cost when the
value of a statistical life is
$685,900
In February of 1978, a California
jury created a nationwide
sensation when it awarded the
record-breaking sum of $128
million in a lawsuit stemming
from a Pinto accident
NHTSA Estimate of the Value of Life
Component
1971 Cost
Future Productivity Losses
Direct
$132,000
Indirect
41,300
Medical Costs
Hospital
700
other
425
Property damage
1,500
Insurance Admin.
4,700
Legal and Court
3,000
Employer losses
1,000
Pain and Suffering
10,000
Funeral
900
Assets (lost consumption)
5,000
Miscellaneous accident cost
200
The Value of Life
$200,725
Defects in manufacturing are unilateral.
 While placing bottles of Coca Cola in the refrigerator,
a bottle explodes in the hand of a grocer store clerk,
seriously injuring her hand.
 There is no evidence that the bottle was mishandled
and there is evidence that other bottles have exploded
spontaneously.
 The court concludes that the bottle was defective.
Given that the bottle was defective is that sufficient
proof that Coca Cola was negligent?
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res ipsa loquitur
(rayz ip-sah loh-quit-her) n. Latin for "the thing
speaks for itself,"
 Does the defect prove negligence?
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 (1) defendant had exclusive control of the thing causing
the injury and
 (2) the accident is of such a nature that it ordinarily
would not occur in the absence of negligence by the
defendant.
“…the evidence appears sufficient to support a
reasonable inference that the bottle here involved was
not damaged by any extraneous force after delivery to
the restaurant by defendant. It follows, therefore, that
the bottle was in some manner defective at the time
defendant relinquished control, because sound and
properly prepared bottles of carbonated liquids do not
ordinarily explode when carefully handled.”
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Suppose there was no way of producing
bottles that were 100 percent safe?
 How would we know this without examining
production standards and the cost of
production?
 Would the courts have enough information to
establish a due care standard in Coca Cola?
 What about medical tests or vacines?
 Is precaution unilateral?
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Behavior
Production
costs
P(x)
A
P(x)A
Full cost
Use
bottles
40 cents
1/100,000
$10,000
10 cents
50 cents
Use cans
43 cents
1/200,000
$4,000
2 cents
45 cents
• Imperfectly informed customers may not choose the most
efficient product under no liability
• The choice between no liability and strict liability is actually a
choice between victims’ insurance against accidents and
injurers’ insurance against liability
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Transfers risk from the insured party to the
insurance company
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Externalizes risk
Moral hazard problems may be reduced by
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Deductibles and co-payments
Experience ratings
Subrogation
Not appropriate for punitive damages
 Insurance does not provide perfect compensation
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Some are most likely bilateral in nature.
 Will the warning be heeded?
 Suppose the manufacturer could not avoid
liability for customer misuse?
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 All customers would pay a higher price
 Careful customers would subsidize careless customers
 The implicit cost of insurance is tied to the price of the
product
 Careful customers may be denied products that produce
a consumer surplus
Swix v Daisy Manufacturing,
US District Court 2004
373 F.3d 678
Cooter and Ulen on product liability
 The most efficient rule may be strict liability
with defense of contributory negligence
After losing the use of his eye, Aaron, a minor, and his
parents brought a product liability action against the
manufacturer of the air rifle that his 11-year-old friend used to
shoot him. The case claimed that the air rifle was defectively
designed.
 The lower court dismissed the claim a gun is a “simple tool”
under Michigan law and the dangers of pointing it at another
person are “open and obvious.”
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 There is no need to warn of a danger where the danger is obvious
 The product itself telegraphs the precise warnings the plaintiffs claim
is lacking
The appeals court found that a gun was a simple tool.
However, the lower court failed to apply the reasonable child
standard.
 A manufacturer who bypasses adults, upon whom the law
ordinarily places responsibility, and markets a simple, but
dangerous, tool directly to children may not avoid liability on
the ground that the child should have known better
 The fact that Daisy intended that its air rifle be used under
the direct supervision of an adult and that Swix’s grandfather
had the same rule does not alter the “reasonable child
standard”
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In a related Pennsylvania case the company settled for $18 million
• Liability costs may be passed on to consumers in
higher product price
• Reduction in quantity demanded due to higher price
• Price premium may function like insurance. All pay
more for few who are harmed
• Premium may subsidize the most careless among
us
• Product may be withdrawn from market denying
product to consumer who would willingly accept risk.
• With no liability consumers may make inefficient
decisions because they cannot accurately assess
risks.
Consider accidents involving power tools. One might suppose that
precaution in such cases is bilateral: there is something that both the
consumer and the producer can do to reduce the probability and severity of
an accident. As a result, the economic theory would suggest that some
form of the negligence rule should be used to induce efficient precaution by
both consumers and producers. However, suppose that there was strong
evidence that consumers could not accurately assess the risks associated
with the use of power tools. They might presume that the tools are so safe
that they need not take any particular care in how they are used. In short,
consumers might mistakenly assume that the probability of an accident is
zero and take very little precaution. That fact would make this a situation of
unilateral, rather than bilateral, precaution: only manufacturers could
realistically be expected to take steps to reduce the probability and severity
of an accident.3 In these circumstances, manufacturers might be held liable
for failing to design a product that would prevent foreseeable misuse by
consumers.
Firefighter rule
 Good Samaritan protection
 Public policy rule
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Precludes a firefighter from recovering from one
whose negligence causes or contributes to a fire that
in turn causes injury or death to the firefighter
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 There is an assumption of risk
 May be limited to premises liability and ordinary negligence
 Gross negligence and intentional harm is not ordinarily
protected
An owner or occupier of private property can be liable to a fire
fighter or police officer who enters the premises and is injured
in the performance of his or her official job duties if
(1) the injury was caused by the owner's or occupier's willful
or wanton misconduct or affirmative act of negligence;
(2) the injury was a result of a hidden trap on the premises;
(3) the injury was caused by the owner's or occupier's
violation of a duty imposed by statue or ordinance enacted
for the benefit of fire fighters, or police officers; or
(4) the owner or occupier was aware of the fire fighter's or
police officer's presence on the premises, but failed to
warn them of any known, hidden danger thereon.
Provides protection from ordinary negligence when
providing emergency assistance
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 Medical professionals are not ordinarily protected
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There may be no general duty to render assistance
No person shall be liable in civil damages for administering
emergency care or treatment at the scene of an emergency outside
of a hospital, doctor’s office, or other place having proper medical
equipment, for acts performed at the scene of such emergency,
unless such acts constitute willful or wanton misconduct.

Nothing in this section applies to the administering of such care or
treatment where the same is rendered for remuneration, or with the
expectation of remuneration, from the recipient of such care or
treatment or someone on his behalf. The administering of such care
or treatment by one as a part of his duties as a paid member of any
organization of law enforcement officers or fire fighters does not
cause such to be a rendering for remuneration or expectation of
remuneration.
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Damages would run counter to public policy goals
 A victim should not benefit from their own criminal
behavior
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 A bomb maker sued those who sold him the gunpowder
 A suit by a burglar against the homeowner for faulty stairs
An injured person can sue those who contributed to
the injurer’s intoxication
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 Dram shop laws
 Social host laws
There was a special duty of care because the injurer
was invited to drink
 Findlaw: Ohio Social Host Law
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