MGMT 311: Chapter 7

Strict Liability and Product Liability

Strict Liability

• No fault liability (you are liable even if you were careful)

• Focus on the nature of the situation instead of the actor’s actions

What did Rylands v. Fletcher signify for Strict Liability

If we keep something on our land that is likely to cause mischief (harm), you are liable if the mischief happens

Abnormally Dangerous Activities under Strict Liability

1. Involves potential degree of serious harm

2. involves high degree of risk that cannot be completely guarded against with the use of reasonable care; and

3. is not commonly performed in community or area

Examples of abnormally dangers activities

highly explosive activities, fireworks, toxic waste

Other applications of strict liability

1. Keeping wild animals

2. Keeping domestic animals (qualified)

3. Quid Pro Quo Sexual Harassment

Keeping wild animals - Strict Liability

Lions, tigers, bears, can cause mischief on your property

Keeping domestic animals

Most common is a dog, only strictly liable if you know or should know they are dangerous

• bit people before, aggressive

Catch 22 with “Beware of Dog” Sign

• complying with one area of law opens liability in another

• Beware of dog sign depicts an owner being aware of their dog’s dangerousness - this can work against a strict liability case but would help negligence case

Quid Pro Quo Sexual Harassment

• This for that, you can get a raise for this S**xual favor

• Employer has absolute liability

Product Liablity

• Cases involving defective products

• Defendants are manufacturers, wholesaler, distributor, retailers

Product Liability Causes of Action

1. Negligence

2. Fraud

3. Strict Liability

Product Liability based on Negligence

1. If a manufacturer fails to exercise “due care” to make a product safe, a person who is injured by the product may sue the manufacturer for negligence

2. “Privity of contract’” is not required. No need for private agreement or contract - This is Tort law

3. Plaintiff must show defendant’s conduct as the cause in fact and proximate cause of the injuries suffered

Due care required in:

Design, production, processes, assembling, testing, warnings

Product Liability based on misrepresentation/Fraud

• Misrepresentation of a material fact concerning quality, nature or approximate use of the product is made knowingly or with reckless disregard for the truth

• As a result of the fraud, injury occurs; and

• The buyer/plaintiff relied on the misrepresentation

Example of Product Liability based on Misrepresentation

intentional mislabeling of products or concealment of product defects

Strict Product Liability

• aka Defective Products Case

• based on strict liability

• Absolute, without regard to fault, liability

• Defective product caused harm and the maker should be strictly liable for the harm

Why hold a maker strictly liable for a defective product/ Public Policy Justifications

1. Consumers should be protected against unsafe products;

2. Manufacturers should not escape liability for defective products just because not in privity with injured person; and

3. Manufacturers and sellers are in a better position to bear the costs associated with injuries caused by their products

What does the Plaintiff have to prove/ Requirements for Strict Liability

1. Product must be in a defective condition when the defendant sells it

2. Defendant must normally be engaged in the business of selling (or distributing) the product.

3. The product must be unreasonably dangerous to the user or consumer because of a defective condition

4. The plaintiff must incur physical harm to self or property by use of consumption of the product

5. The defective condition must be the proximate cause of injury

6. The goods must not have been substantially changed from the time sold to the time of injury (stops plaintiff from taking product apart)

When it comes to Strict Product Liability focus on…

Defective + Unreasonable danger

How do most states prove a product is reasonably dangerous?

Either:

1. The product was dangerous beyond the expectation of the ordinary consumer; or (Usefulness vs. risk → Utility Risk Test)

2. a less dangerous alternative was economically feasible, but the manufacturer failed to produce it (SAD)

SAD

Safer Alternative Design, can’t be too expensive and technology has to exist

How does Texas prove a product is unreasonably dangerous?

Have to prove both (Utility Risk and Safer Alternative Design)

3 types of Defects a plaintiff can argue

1. Manufacturing defect

2. Design Defect

3. Warning Defect

Manufacturing Defects

a product departs from its intended design even though all possible care was exercised in the preparation and marketing of the product (problem with particular item, not the whole process)

Design Defects

the foreseeable risk of harm posed by the product could have been reduced or avoided by the adoption of a reasonable alternative design

Which type of defect is common in case law?

Design Defect - risk could have been eliminated with a different design

A lot of manufacturers expect to pay _____ damages as a cost of doing business

Compensatory

Grimshaw v. Ford Motor Co.

Gross negligence leads to punitive damages.

Gross negligence requires malice

Warning Defects

the foreseeable risk of harm posed by the product could have been reduced or avoided by reasonable instructions or warnings

Obvious Risks

No duty to warn about risks that are obvious or commonly known

Foreseeable Misuses

Seller Must warn

Defenses in Product Liability

1. Assumption of the Risk

2. Product Misuse

3. Comparative Negligence

4. Commonly Known Dangers

5. Knowledgeable User

6. Statutes of Limitations

7. Statutes of Repose

Assumption of the Risk

1. Plaintiff assumes risk, so manufacturer is not liable

2. Plaintiff does not assume risk, so manufacturer is liable

Boles v. Sun Ergoline

Signing a waiver does not sign away the manufacturer’s strict products liability. A release is different than actual assumption of risk. Made the release void.

• separate assumption of risk from a liability waiver/release

Product Misuse

• product is used in a way not intended by the manufacturer

• If the use is reasonably foreseeable, the manufacturer must warn

Note on Product Misuse

court have limited this defense to when the particular use is NOT foreseeable

Comparative Negligence

Plaintiff was also partly responsible for their own injury, so damages should be reduced according to their % of responsibility

Commonly Known Dangers

no warning necessary, it is obvious

Knowledgeable User

similar to Commonly Known Dangers, more specific use and specific type of user

• Electrician should know more about electrical sockets than a random person

Pelman v. McDonald’s

parents of overweight children sued McDonalds, defense was Knowledgeable user because regular fast food customers know the risks

Statutes of Limitations

time limits on bringing lawsuit, Tort cases are 2 years from discovery of defect or injuries you have

Statutes of Repose

Manufacturers cannot be liable forever as products wear and tear

• time based on date of manufacture

• 10 years usually

Relationship of Statutes of Limitations and Statutes of Repose

Statute of limitations allows a case to go forward but a Repose blocks it

Causes of Action a plaintiff can use in a defective products lawsuit

• Negligence

• Strict Products Liability

If the injured sues for negligence, what must the plaintiff prove?

Duty, breach, factual cause, proximate cause, damages

What defenses could be argued by the defendants

• 15 years old - Statutes of Repose

• If you took a toaster a part, put it back together - Comparative Negligence

If injured plaintiff sues for strict products liability… what must the plaintiff prove?

→ NATURE

6 things: defective when sold, proximate cause, injuries, maker in process of selling