Maryland Retains Contributory Negligence

In an interesting decision, the Maryland Court of Appeals decided to retain the traditional doctrine of contributory rather than comparative fault.  See Coleman v. Soccer Association of Columbia, No. 9-2012 (Md. July 9, 2013). 

Several decades ago, the court in Harrison v. Montgomery County Bd. of Educ., 295 Md. 442, 444, 456 A.2d 894 (1983), addressed whether the common law doctrine of contributory negligence should be judicially abrogated in Maryland and the doctrine of comparative negligence adopted in its place.  The court declined to abandon the doctrine of contributory negligence in favor of comparative negligence, pointing out that such change “involves fundamental and basic public policy considerations properly to be addressed by the legislature.”

In Coleman, the petitioner presented the same issue that was presented in Harrison, namely whether the court should change the common law and abrogate the defense of contributory negligence in certain types of tort actions. After reviewing the issue again, the court arrived at the same conclusion: that, although the court had the authority to change the common law rule of contributory negligence, it would decline to abrogate Maryland’s long-established common law principle of contributory negligence.

The opinion provides an interesting dialog as to which branch of government should decide such a substantial change to the tort law.  The majority and concurring opinions say that the issue of adoption of comparative fault is really one for the legislature to decide. Note my colleagues filed an amicus brief in the case on behalf of the American Tort Reform Association, Chamber of Commerce of the United States of America, and others, arguing for continued application of the contributory negligence doctrine.

 

Mold Economic Injury Claim Rejected

The issue of mold-related litigation remains of interest to our readers, perhaps even more so in the aftermath of the widespread damage from Sandy.  Recently a federal judge rejected claims alleging that Welk Resort San Diego allowed mold to grow in its rooms causing plaintiffs' "Platinum Points" time share currency to lose value as a result.  See Martinez v. The Welk Group Inc. et al., No. 3:09-cv-02883 (S.D. Cal.).

Plaintiff alleged economic damages stemming from defendants alleged failure to abate and disclose the presence of mold at the Welk Resort San Diego. (Younger readers may not recall, but born in a German speaking town in North Dakota in 1903, Mr. Lawrence Welk didn’t learn to speak English until he was 21. This gave him the accent that marked his signature line: “Wunnerful, wunnerful.”  His Lawrence Welk Show was cheerful and wholesome with bubbles, the music that Welk called “champagne music,” and a parade of smiling dancers, singers and musicians that older audiences loved.)

 Plaintiff purchased "Platinum Points" from Welk Resort Group, Inc. in 2007, which provided him with the opportunity to stay at Welk resorts around the world or at any other time-share resort that accepts such Platinum Points for vacation stays. At some point during the sales process, plaintiff allegedly asked, and the sales agent assured him the Resort was clean, safe, and well maintained. Plaintiff said he purchased his Platinum Points solely for the purpose of staying at the Welk Resort San Diego, which is located in Escondido, California, and has more than 650 units in three subdivisions: the Lawrence Welk Resort Villas, the Villas on the Green, and the Mountain Villas. During a visit to the Resort in 2009, plaintiff notified the front desk that his room smelled musty. Later in a utility closet, he found something that may have been mold, but he could not be certain. A neighbor later told him him that there was mold at the Resort.

Subsequent to his 2009 stay at the Resort, Plaintiff decided he would never use his points again—either at Welk or any other timeshare resort. Additionally, Plaintiff did not attempt, nor was he willing to attempt, to sell his Platinum Points to another individual, as he did not believe it would be "ethical" given his knowledge of the alleged "mold issues" at the Resort. Consequently, plaintiff claimed his Platinum Points have diminished in value.

Plaintiff sued for breach of contract, breach of fiduciary duty, negligence, nuisance, breach of the implied warranty of habitability, and for violations of California’s Unfair Competition Law (“UCL”).  (Earlier plaintiff's motion for class certification was rejected as the court determined that the claims were too individualized; Martinez’s reluctance to use his points was not typical of the  proposed class.)  Defendants then moved for summary judgment, contending that plaintiff could not prove he was injured as a result of defendants’ conduct.

Specifically, defendants contended that plaintiff offered no proof to support his contention that his
Platinum Points had diminished in value. In fact, plaintiff admits that when his Platinum Points “lost
value,” he meant they lost value to him because he was not using them.  In actuality, Welk Resort San Diego has maintained its premier rating since 2006, evidencing that Platinum Point Owners have maintained the same trading power since that time. Under this system, owners of Welk Platinum Points can exchange points for stays at non-Welk properties through a timeshare exchange company.  Therefore, defendants asserted that plaintiff’s damages were either “self-inflicted,”as he was unwilling to use his Platinum Points; or speculative, as he failed to present evidence of diminution of value.  In response, plaintiff alleged that his damages were not self-inflicted because he purchased the points specifically for the purpose of staying at Welk Resorts San Diego, and purchased the points specifically because he wanted to stay at a place that was clean, safe and well maintained.

To satisfy the damages element of a claim, a plaintiff must show appreciable and actual damages, that are clearly ascertainable in both their nature and origin. Here, however, plaintiff offered no evidence to rebut defendants’ proof that his Platinum Points currently have the same value on the exchange market as they did when he first purchased his points.  Additionally, plaintiff failed to address the depositions of other Resort guests, which stated that they enjoy the Resort facilities and believe that the Resort is well maintained.  Indeed, although more than 130,000 guests stay at the Resort each year, defendants were aware of fewer then 15 complaints regarding mold in the last 8 years.  Thus, the only evidence plaintiff produced in support of his claim that his points decreased in value was his own self-serving testimony as to his personal reasons for refusing to stay at the Resort, even though defendants did nothing to prevent plaintiff from using his points.
 

Plaintiff’s negligence claim alleged defendants breached their duty by selling time-share ownership points for dwellings that suffered from dangerous leaks, water intrusion, mold, mildew and/or fungus, and for failing to maintain and repair those units. The negligence claim  sought solely economic damages, so plaintiff was precluded because he sought recovery in tort for purely economic loss, and was thus barred by California’s economic loss doctrine. See KB Home  v. Super. Ct., 112 Cal.App.4th 1076, 1079, 5 Cal.Rptr.3d 587 (2004).  Under California law, the economic loss doctrine bars tort claims based on the same facts and damages as breach of contract  claims. The doctrine precludes recovery for purely economic loss due to disappointed expectations, unless the plaintiff can demonstrate harm above and beyond a broken contractual promise. The rule seeks to prevent the law of contract and the law of tort from dissolving one into the other.  Thus, conduct amounting to a breach of contract becomes tortious only when it also violates a duty independent of the contract arising from principles of tort law and exposes a plaintiff to liability for personal damages independent of the plaintiff's economic loss.

Under the UCL claim, defendants argued plaintiff lacked standing to sue because plaintiff (1) had not suffered “injury in fact” because he had not experienced any physical injuries and the value of his Platinum Points had not diminished in value; (2) had not suffered a legally cognizable injury because he was still able to use his Points; and (3) even if plaintiff had evidence that his Platinum Points had diminished in value, there was no casual connection between the alleged wrongdoing and plaintiff’s speculation as to the value of his Platinum Points.

The court noted that to have standing under the UCL, a plaintiff must establish that he has (1) suffered an injury in fact; and (2) lost money or property as a result of the unfair competition. Walker v. Geico Gen. Ins. Co., 558 F.3d 1025, 1027 (9th Cir.2009). The “as a result of”  language requires the plaintiff to show a causal connection between the defendant’s alleged UCL violation and  plaintiff’s injury. Thus, to plead a UCL claim, a plaintiff must show he has suffered distinct and palpable injury as a result of the alleged unlawful or unfair conduct.  Here, the court found plaintiff’s claim failed as a matter of law because he failed to meet the standing requirement under the  UCL. Although plaintiff alleged that an employee of Welk stated that the Resort was “clean, safe, and well-maintained,” he offered no credible evidence to support the assertion that these statements were in fact false, other than his own self-serving declaration. Plaintiff’s own evidence supported the argument that when Welk was made aware of mold issues at the Resort,
it dealt with such issues in a timely fashion. As plaintiff was not barred from using his Platinum Points at the Resort or any other non-Welk facility, he had not shown that he has “lost money or profits” within the meaning of the statute.

The other claims had the same basic defect.  Motion granted.

 

Product Seller (Still) Has No Duty To Protect From Criminal's Use Of Product

Country music fans among our readers may recall the Garth Brooks' song "Longneck Bottle."  That tune, from his CD "Sevens," reached No. 1 on the country charts in 1997.  In it, the singer pleads for the long neck bottle to stay clear of his hand.  Today's post might be sub-titled, "longneck bottle stay clear of my face."  In Gann v. Anheuser-Busch Inc., No. 11-00017 (Tex. App. 7/26/12), a plaintiff asserted liability against the maker of a longneck glass beer bottle for injuries allegedly suffered when she was struck in the face by a bar patron wielding the bottle as a weapon.

While celebrating a friend’s birthday "at a bar known for its violence," according to the court, Gann was assaulted by a patron wielding a Budweiser “longneck” glass beer bottle. She sued for an alleged design defect in the bottle, with the typical strict liability and negligence counts.  The trial court granted summary judgment to defendants, and plaintiff appealed.

In a strict products liability action in which a claimant alleges a design defect, a Texas claimant must prove by a preponderance of the evidence that: (1) the defect renders the product “unreasonably dangerous;” (2) the defect was a producing cause of the personal injury, property damage, or death for which the claimant seeks recovery; and (3) there was a safer alternative design. TEX.CIV.PRAC.&REM.CODE ANN. § 82.005(a)(West 2011); Timpte Indus., Inc. v. Gish, 286 S.W.3d 306, 311 (Tex. 2009). To determine whether a product was defectively designed so as to render it unreasonably dangerous, the courts apply a risk-utility analysis that requires consideration of the following factors:
(1) the utility of the product to the user and to the public as a whole weighed against the gravity and likelihood of injury from its use;
(2) the availability of a substitute product which would meet the same need and not be unsafe or unreasonably expensive;
(3) the manufacturer’s ability to eliminate the unsafe character of the product without seriously impairing its usefulness or significantly increasing its costs;
(4) the user’s anticipated awareness of the dangers inherent in the product and their avoidability because of general public knowledge of the obvious condition of the product, or of the existence of suitable warnings or instructions; and
(5) the expectations of the ordinary consumer.

Defendant made an interesting threshold, no-duty, argument, that rings true to MassTortDefense. As a matter of law, Anheuser-Busch had no legal duty to design the longneck bottle against purposeful and criminal misuse because it satisfied its one and only legal duty: to design the bottle to ensure that the bottle was safe for its intended and ordinary use – storing beer.
In support of its argument, Anheuser-Busch cited to Venezia v. Miller Brewing Co., 626 F.2d 188 (1st Cir. 1980), a case we used when teaching products liability in law school. In Venezia, the federal appeals court applied Massachusetts law to hold that the plaintiff, who was injured by the broken shards of the beer bottle he deliberately threw against a pole, could not recover from Miller Brewing under a theory of negligent design, because the deliberate misuse of the beer bottle could not be characterized as an intended or ordinary use of the beer bottle. 626 F.2d at 189, 191-92.  The Texas court of appeals felt that it need not address this issue of duty however, given the other fatal flaws in plaintiff's case.

Specifically, plaintiff argued that beer bottles are used commonly in assaults in the local community, that the longneck portion of the bottle is merely cosmetic, and that Anheuser-Busch also can use stubby glass bottles and plastic bottles as suitable containers for beer. However, contrary to her assertion, Gann failed to produce evidence raising a genuine issue of fact that the risk of injury from the longneck bottle outweighed its utility, and therefore that the bottle was defectively designed so as to render it unreasonably dangerous. Specifically, plaintiff failed to adequately address: (1) whether manufacturing a stubby glass bottle or plastic bottle is sufficiently economically feasible; (2) whether eliminating the allegedly unsafe character of a longneck bottle significantly impaired its usefulness or significantly increased its costs; and (3) what the expectations of the ordinary consumer are with regard to this kind of bottle.

Turning to the negligence count, the threshold inquiry in a negligence case is duty. Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex. 1995). Generally, no person has a legal duty to protect another from the criminal acts of a third person. Timberwalk Apartments, Partners, Inc. v. Cain, 972 S.W.2d 749, 756 (Tex. 1998). (One exception to this rule may apply when a person controls the premises where the criminal acts occur.)   Whether a duty exists is a question of law for the court to decide from the facts surrounding the occurrence at issue. (Other courts may analyze this issue as one of causation, with the criminal act of the third-party breaking the chain of causation from defendant's alleged negligence to plaintiff's alleged injury.)

Plaintiff argued that because defendants did not contest that the use of longneck bottles as weapons in bars has happened, and thus was arguably foreseeable (cue "Friends in Low Places"?), the defendants then had a legal duty to protect her from being assaulted in such a situation. Even conceding that it is reasonably foreseeable that a longneck bottle might be used as a weapon, plaintiff failed to show why the general principle that no person has a legal duty to protect another from the criminal acts of a third person was inapplicable in this case. Mere foreseeability that a legal product might be used in a crime does not create a duty that overshadows the intervening criminal act. Summary judgment affirmed. 
 

State Supreme Court to Consider Comparative Negligence Doctrine

Here's a case to watch, especially for those with tort cases in Maryland. Coleman v. Soccer Assoc. of Columbia, et al. (Md., Sept. Term 2012, No. 9). The Court of Appeals of Maryland is considering whether to replace the longstanding contributory negligence doctrine with a comparative fault scheme.

A number of organizations, including the American Tort Reform Association and the Chamber of Commerce, have weighed in with an amicus brief to the Maryland supreme court.  These amici note that such a fundamental change ought to be a decision of the legislature; warn of the ripple effect of such a change on a number of other state statutes that utilize the concept of contributory negligence, and on the many related state common law doctrines such as last clear chance, assumption of the risk, joint and several liability, etc.

State Supreme Court Reverses Dangerous Expansion of Product Liability

The California Supreme Court held last week that the law does not impose liability on manufacturers of equipment used in conjunction with asbestos-containing parts made by others.  See O'Neil v. Crane Co., Cal., No. S177401 (Cal. 1/12/12).
 
Readers may recall that we posted on this case before. The Restatement of Torts (Third): Products Liability says that in the context of a final, finished product that injures a user and which is made up of components from different manufacturers, if a given component is itself defective and the defect causes the harm, then the supplier of that component is of course liable. In addition, the supplier can be liable even if the component by itself is not defective, but only if the seller substantially participates in the integration of the component into the design of the product (and the defect causes the harm). See Restatement 3d, Section 5. In essence, the doctrine holds that an entity supplying a non-defective raw material or a non-defective component part is not strictly liable for defects in the final product over which it had no control. In this respect, the Third Restatement of Torts simply codified the doctrine of various states’ common law.
 
Nevertheless, a split had existed among the lower courts in California about whether to
extend liability for asbestos-related disease beyond the manufacturers of the asbestos insulation, gaskets, and packing to which many ship workers were exposed (and which makers are now bankrupt) to the makers of the products the asbestos was used with (to find a solvent target).  So the state supreme court confronted the limits of a manufacturer’s duty to prevent foreseeable harm related to its product: When is a product manufacturer liable for injuries caused by adjacent products or replacement parts that were made by others and used in conjunction with the defendant’s product?   It held that a product manufacturer may not be held liable in strict liability or negligence for harm caused by another manufacturer’s product unless the defendant’s own product contributed substantially to the harm, or the defendant participated substantially in creating a harmful combined use of the products.
 
Defendants made valves and pumps used in Navy warships. They were sued here for a wrongful death allegedly caused by asbestos released from external insulation and internal gaskets and packing, all of which were made by third parties and added to the pumps and valves post-sale. It is undisputed that defendants never manufactured or sold any of the asbestos-containing materials to which plaintiffs’ decedent was exposed. That is, no evidence was presented that any of the asbestos-containing dust came from a product made by defendants. Neither company manufactured or sold the external insulation or flange gaskets that the repairmen like plaintiff removed. Although the valves and pumps contained internal asbestos-containing gaskets and packing, these original components had been replaced long before plaintiff encountered them years later. There was no evidence that any of these replacement parts were made by defendants.  The Court of Appeal asserted defendants’ products were defectively designed “because they required asbestos packing and insulation.” But this factual assertion was unsupported by the record. The evidence established that the requirement for asbestos derived from military specifications, not from any inherent aspect of defendants’ pump and valve designs

Nevertheless, plaintiff claimed that defendants should be held strictly liable and found negligent because it was foreseeable that workers would be exposed to and harmed by the asbestos in replacement parts and products used in conjunction with their pumps and valves. The Court of Appeals held that the component parts defense applied only to manufacturers of “multi-use or fungible products” designed to be altered and incorporated into another product. It then concluded defendants’ products did not meet these requirements. The Court of Appeal also rejected defendants’ argument that they could not be found strictly liable because they did not manufacture or supply the asbestos-containing products that caused plaintiffs' disease. The lower court announced a broad definition of strict products liability: a manufacturer is liable in strict liability for the dangerous components of its products, and for dangerous products with which its product will necessarily be used. Even though it was replacement gaskets and packing that allegedly caused disease, the lower appeals court concluded these replacement parts were “no different” from the asbestos-containing components originally included in defendants’ products.
 

Plaintiff's claims would represent an unprecedented expansion of strict products liability, which the supreme court declined to do.  California law, like most states, has long provided that manufacturers, distributors, and retailers have a duty to see to the safety of their products, and will be held strictly liable for injuries caused by a defect in their products. Yet, the state has never held that these responsibilities extend to preventing injuries caused by other products that might foreseeably be used in conjunction with a defendant’s product. Nor has the state's high court ever held that manufacturers must warn about potential hazards in replacement parts made by others when, as here, the dangerous feature of these parts was not integral to the product’s design.  From the outset, strict products liability in California has always been premised on harm caused by deficiencies in the defendant’s own product.  The reach of strict liability is not limitless; strict liability does not extend to harm from entirely distinct products that the consumer can be expected to use with, or in, the defendant’s non-defective product. Instead, the courts require proof that the plaintiff suffered injury caused by a defect in the defendant’s own product.
 
In this case, it was undisputed that plaintiff was exposed to no asbestos from a product made by the defendants. Although he was allegedly exposed to potentially high levels of asbestos dust released from insulation the Navy had applied to the exterior of the pumps and valves, defendants did not manufacture or sell this external insulation. They did not mandate or advise that it be used with their products. It is fundamental that the imposition of liability requires a showing that the plaintiff’s injuries were caused by an act of the defendant or an instrumentality under the defendant’s control.
 
Generally speaking, manufacturers have a duty to warn consumers about the hazards inherent in their products. The requirement’s purpose is to inform consumers about a product’s hazards and faults of which they are unaware, so that they can refrain from using the product altogether or evade the danger by careful use. Typically, under California law, manufacturers are strictly liable for injuries caused by their failure to warn of dangers that were known to the scientific community at the time they manufactured and distributed their product. The supreme court has never held that a manufacturer’s duty to warn extends to hazards arising exclusively from other manufacturers’ products. Plaintiff's alleged exposure to asbestos came from replacement gaskets and packing and external insulation added to defendants’ products long after their installation; there was no dispute that these external and replacement products were made by other manufacturers.
 
So the supreme court reaffirmed that a product manufacturer generally may not be held strictly liable for harm caused by another manufacturer’s product. The only exceptions to this rule arise when the defendant bears some direct responsibility for the harm, either because the defendant’s own product contributed substantially to the harm or because the defendant participated substantially in creating a harmful combined use of the products.   Plaintiffs sought to expand these exceptions to make manufacturers strictly liable when it is foreseeable that their products will be used in conjunction with defective products or even replacement parts made or sold by someone else. However, the mere foreseeability of harm, standing alone, is not a sufficient basis for imposing strict liability on the manufacturer of a non-defective product, or one whose arguably defective product does not actually cause harm.
 
The decision was supported by common sense. A manufacturer cannot be expected to exert pressure on other manufacturers to make their products safe and is not able to share the costs of ensuring product safety with these other manufacturers. It would be unfair to require  manufacturers of non-defective products to shoulder a burden of liability when they derived no economic benefit from the sale of the products that injured the plaintiff.  And a contrary rule would require manufacturers to investigate the potential risks of all other products and replacement parts that might foreseeably be used with their own product and warn about all of these risks. Such a duty would impose an excessive and unrealistic burden on manufacturers. Such an expanded duty could also undermine consumer safety by inundating users with excessive warnings. “To warn of all potential dangers would warn of nothing.”
 
 
 
 

 

Two Summary Judgments for Ladder Defendants Affirmed

Ladders and scaffolds are two of the most valuable tools we know.  And as the season for decorating approaches, we know MassTortDefense will soon be utilizing some, with due care of course.

Two federal courts of appeal have separately affirmed the dismissal of claims about personal injuries caused by allegedly defective Louisville Ladder Inc. products, because plaintiffs failed to offer sufficient expert testimony.

In Raymond B. Bielskis v. Louisville Ladder Inc., No. 10-1194 (7th Cir.), the court considered the appeal of a claim resulting from an accident that occurred when a Louisville Ladder mini-scaffold allegedly collapsed while plaintiff on an acoustical ceiling project.  Following the accident that injured his hand and knee, Bielskis filed suit alleging the ladder company had been negligent in failing to properly test and inspect the threaded stud of the caster stem that allegedly caused the collapse and in failing to warn consumers of the alleged manufacturing defect.

The mini-scaffold is approximately four feet long with a hinged side that allows it to collapse for storage. The sides of the scaffold have rungs which are used to place planks where the user may stand. The entire unit is mobile: it has four wheels that may be locked while the user is working and unlocked when moving the unit. Plaintiff alleged that it had collapsed because the caster stem above one of the wheels had broken. Bielskis retained an expert (Mizen) to provide expert testimony at trial as to what caused the caster stem to break. He opined that the fracture was caused by excess tensile stress brought on by over-tightening the threaded stem. Mizen concluded that the brittle fracture could have been avoided by either attaching the wheel with a different
mechanism than the threaded stud or by not tightening the stud “beyond making it simply snug to the leg base.” Louisville Ladder also retained an expert who also concluded that the caster stem had sustained a brittle fracture. Unlike Mizen, however, he determined that the caster stem ultimately failed because it was too loose, not because it was too tight.

Louisville Ladder moved to bar Mizen’s testimony, arguing that it was insufficiently reliable under Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993). In particular, Louisville Ladder faulted Mizen for his failure to utilize any recognized scientific methodology to reach his conclusions. The district court granted Louisville Ladder’s motion, concluding that the methodology underlying
Mizen’s opinion was insufficiently reliable. The primary problem the court identified with Mizen’s opinion was his leap, without data or testing, from the accepted premise that a crack without plastic deformation is a brittle fracture to his ultimate conclusion that the caster was too tight. When questioned as to what scientific methodology he used to reach this conclusion, Mizen replied that he had relied on “basic engineering intelligence” and “solid engineering principles that any other engineer would use.”

After Louisville Ladder moved to exclude his testimony, Mizen supplemented his opinion with several articles that he claimed supported his conclusion. He located the articles by using the Internet search engine Google and typing in the phrase “brittle fracture.”

The court of appeals agreed the district court was within its discretion to conclude that Mizen’s methodology sounded more like the sort of talking off the cuff—without sufficient data or analysis—that courts have repeatedly rejected.

Mizen made no attempt to test his hypothesis. His theory was certainly capable of being tested. He did not take the time to measure the caster stem; he had no idea what alloy was used to construct the caster stem and made no effort to quantify its tensile strength or yield strength. In contrast, Louisville Ladder’s expert used digital calipers to measure the various components, created positive and negative replicas of the fracture surfaces so that the fractographic appearance of the surfaces could be examined in detail and then performed stress analysis calculations with the caster installed in two different configurations in order to assess the stresses present
at the stud site with different degrees of tightness.

Likewise, Mizen’s proposed design alternatives did not survive scrutiny.  When asked if those design alternatives had been tested, Mizen stated, “I don’t have to test it.” Likewise, he dismissed the question of whether any of his proposed design alternatives were used in the marketplace
on scaffolds or had been recommended or required by any industry-wide standards for climbing equipment.  Without more, there is no way to assure that Mizen’s proposed alternatives are “the product of reliable principles and methods.”

Absent expert testimony, summary judgment would follow, but plaintiffs argued res ipsa.  While plaintiff showed a scaffold could be expected not to break and collapse under the weight of a single individual working on it, he failed to prove that the scaffold was defective at the time it left Louisville Ladder’s control. The mini-scaffold was already assembled when Bielskis’s employer gave it to him.   Plaintiff did not present any evidence about who assembled the scaffold and whether it was assembled in conformity with the manufacturer’s warnings or specifications. Plaintiff's expert had neither reviewed the scaffold assembly instructions nor ascertained who had assembled the scaffold.

In Robert Cannioto et al. v. Louisville Ladder Inc., et al., No. 11-12885 (11th Cir.), the court concluded that the district court did not abuse its discretion in excluding the expert testimony
of the plaintiffs’ principal expert witness.  The court rejected plaintiffs "malfunction theory" under Cassisi v. Maytag Company, 396 So.2d 1140 (Fla. 1st DCA 1981).  There, the Florida appellate court held that a legal inference is created that a product was defective at the time of injury or the time of sale when it malfunctions during normal use. The district court correctly concluded that the Cassisi inference was not applicable to this case because the ladder in question still existed and had been inspected by the plaintiffs’ expert. The record also demonstrated that the plaintiff failed to subject the ladder to a normal operation. The ladder was set up at too steep an angle at the time of plaintiff's fall.  The court affirmed the grant of summary judgment in favor of the defendants.

 

Alleged Chemical Release Did Not "Speak for Itself"

Contractors working at a refinery who were allegedly exposed to chemical fumes cannot rely on the venerable res ipsa loquitur theory because their claimed injuries may have had other causes. See Pearson v. BP Products North America Inc., 10-40442 (5th Cir., 11/10/11).

As a precaution due to Hurricane Rita, BP Products North America decided to shut down all of its Texas City Refinery.  before starting up again, BP decided to audit, evaluate, and “turn around” each of the units at the Refinery on an individual basis before resuming production. To complete the turnaround, BP used independent contractors for most of the work.

Plaintiffs were among the 450 contractors working on the turnaround when, one night in 2007, they 
began smelling an odor "unlike those one usually smells in a refinery."  None of the hundreds of monitors and detectors designed to detect the release of any harmful gases was triggered. The
foremen stopped work and allowed any worker to be examined at a local hospital; about one hundred workers went. Upon medical examination, no workers were found to have any exposure injuries that required hospital admission or required them to miss work.

Nevertheless, one hundred plaintiffs filed suit in the Southern District of Texas, claiming injuries from the incident. Ten workers' claims were consolidated for trial. None of these Trial Plaintiffs’ experts could identify the alleged odor’s source or its cause. The closest thing to proof that the Trial
Plaintiffs marshaled was that the gas was carbon disulfide was a mask worn by one of the Trial Plaintiffs was found to have had exposure to carbon disulfide. But, the laboratory technician who tested the mask admitted that the mask had not been appropriately maintained for proper scientific study.

BP moved for judgment as a matter of law, which the district court denied, and the claims were submitted to the jury. As part of the jury’s charge, the district court instructed the jury that it could infer the Appellant’s/BP's negligence through the doctrine of res ipsa loquitur. The jury returned a verdict for the Trial Plaintiffs and awarded approximately $325,000 in compensatory damages
amongst the ten Trial Plaintiffs and also $100 million in punitive damages ($10 million per Trial Plaintiff). The district court entered final judgment for the Trial Plaintiffs but vacated the jury’s award of punitive damages because the Trial Plaintiffs failed to prove gross negligence, as required under Texas law.  Already, red flags should be flying, as clearly the punitives claim should never have gone to the jury, and yet the ability to argue it would have inflamed the emotion of the jury, contaminating the compensatory award.

BP timely appealed. (Seven Trial plaintiffs settled, leaving the three for this opinion to handle.) BP argued that it was improper for the district court to have instructed the jury on res ipsa loquitur and that absent that instruction, Appellees could not show that it was negligent. Under Texas law, res ipsa loquitur, meaning “the thing speaks for itself,” is used in certain limited types of cases when the circumstances surrounding the accident constitute sufficient evidence of the defendant’s
negligence to support such a finding.  Res ipsa loquitur is applicable only when two factors are present: (1) the character of the accident is such that it would not ordinarily occur in the absence of negligence; and (2) the instrumentality causing the injury is shown to have been under the management and control of the defendant.  Res ipsa loquitur is simply a rule of evidence by which negligence may be inferred by the jury; it is not a separate cause of action from negligence.

 Importantly, the Texas Supreme Court had already noted in a chemical release case that a res ipsa instruction was inappropriate because escaping gas in the vicinity of a complex chemical plant could be due to an unexpected and unforeseeable mechanical failure or it could be due to negligence. The instrumentality causing the injury could have been in the control of the owner of the refinery or the contractors turning around the unit.

Here, none f the Appellants’ experts could identify where the odor came from or whether it was even from BP’s property. The Appellees had shown neither that the character of the accident was one that would not usually occur absent negligence nor that the injury-causing instrumentality was in BP’s control. In such circumstances, the district court should not have instructed the jury on res ipsa loquitur. Without a res ipsa instruction, the Appellees could not meet their burden of proof as to negligence. Judgment reversed.

 

Beverage Maker Not Liable for Alleged Failure to Warn

The maker of  a drink containing alcohol and caffeine was not liable to a woman allegedly injured when the driver of the motorcycle on which she was a passenger crashed, after the driver consumed the beverage.  See Cook v. MillerCoors LLC, No. 11-1488 (M.D. Fla., 10/28/11).

The operator of the motorcycle in the accident was killed, and plaintiff Cook, who was a passenger, was injured.  Prior to the crash, the driver allegedly had consumed several “Sparks”
alcoholic beverages containing caffeine and other stimulants, manufactured by defendant.

Cook argued that alcoholic beverages such as Sparks containing stimulants are “uniquely dangerous” because they appeal to younger drinkers and because the addition of caffeine enables one to drink more alcohol without feeling as intoxicated as one normally would. Thus, she alleged, consumers of these beverages are more likely to “engage in dangerous behavior such as driving.”  She asserted the driver did not appear impaired, even though toxicology reports from his autopsy revealed that his blood alcohol level was 0.10 at the time of the crash.

Defendant responded that the risks associated with operating a motor vehicle while under the influence of alcohol are well known; therefore, it could not be held responsible for the operator's choice to consume Sparks then illegally operate his motorcycle. The addition of other ingredients to the beverage did not lessen his responsibility to refrain from operating his motorcycle after having consumed the alcohol, and his actions, not the manufacture of Sparks,
proximately caused Cook’s injuries.  The crux of the defense motion to dismiss thus was that there is no cause of action against a manufacturer of alcoholic beverages for injuries resulting from their consumption because the effects of alcohol consumption are well known. With a response from plaintiff that the legion of such holdings in courts everywhere apply to “conventional” alcoholic beverages, not to an alcoholic beverage mixed with stimulants which allegedly suppress the consumer’s subjective awareness of alcohol’s well-known effects.

Regarding the failure to warn theory, a plaintiff must establish the existence of a duty. A manufacturer’s duty to warn arises when there is a need to inform consumers of dangers of which they are unaware.  The effects of alcohol and the need to not drink and drive are universally known.  While plaintiff argued about the unconventionality of this product, plaintiff did not and could not allege that the driver was unaware that he was drinking alcohol. His alleged subjective awareness of the speed or impact of those effects did not alter the legal reasoning of precedent that holds that there is no duty to warn because of the universal recognition of all potential dangers associated with alcohol. 

Plaintiff also failed to adequately allege how the product was unreasonably dangerous for the design defect claim. The effects of alcohol are universally and objectively well known, irrespective of the operator's alleged subjective awareness of them. The defectiveness of a design is determined based on an objective standard, not from the viewpoint of any specific user, said the court.

Moreover, plaintiff's theories failed as to proximate cause. Plaintiff alleged that the manufacturer's negligence caused the driver to become intoxicated to the point of impairment,
causing the crash and Cook’s injuries. In Florida, however, voluntary drinking of alcohol is the proximate cause of an injury from an intoxicated driver, rather than the manufacture or sale of those intoxicating beverages to that person.  This doomed the negligence claim.

Readers can readily see why the court was reluctant to make an exception to the rule for the "unconventional" beverage.  There are hundreds of alcohol-containing products that are not "conventional" in one way or another, by taste, ingredients, color, manufacturing process, advertising... To shift responsibility from the person who over-consumes one of these and then drives impaired is to send the absolutely wrong policy message.

Courts have typically recognized no duty on the maker, regardless of plaintiff's attempt to differentiate either themselves or the product. See, e.g., Malek v. Miller Brewing Co., 749 S.W.2d 521 (Tex. App. 1988) (finding no duty to warn despite claim that advertising led plaintiff to believe that “Lite” beer was less intoxicating than other beer); Pemberton v. Am. Distilled Spirits Co., 664 S.W.2d 690 (Tenn. 1984); Greif v. Anheuser-Busch Cos., Inc., 114 F. Supp. 2d 100 (D. Conn. 2000)(particular, alleged tolerance of an individual consumer); MaGuire v. Pabst Brewing Co., 387 N.W.2d 565 (Iowa 1986).


 

State Court Finds No Duty to Spouse of Exposed Worker

Delaware's supreme court held last month that an employer owes no duty of care to an employee's spouse, who allegedly contracted asbestos-related disease from exposure to her spouse's work clothes. Price v. E.I. du Pont de Nemours & Co., No. 719, 2009 (Del. 7/11/11).

Bobby Price worked as a maintenance technician in defendant's facility from 1957 until 1991. During his employment, Mr. Price allegedly worked with and around products containing asbestos. Allegedly, Mr. Price transported asbestos fibers home on his clothing, vehicle, and skin. Patricia Price, his wife, alleged that years of living with her husband, and handling and washing his work clothes, exposed her to the fibers. Mrs. Price claimed to suffer from bilateral interstitial fibrosis and bilateral pleural thickening of the lungs. These maladies, she claimed, stemmed directly from her exposure to the asbestos dust and fibers her husband brought home from work.

Plaintiff sued, alleging that the company wrongfully released asbestos from its plant and that she was a reasonably foreseeable victim of its asserted misconduct. 

To prevail on a negligence claim under Delaware law, a plaintiff must prove that a defendant owed her a duty of care, the respondent breached that duty, and the breach proximately caused an injury. Whether a duty exists is a question of law, typically. To determine whether one party owed another a duty of care, Delaware courts look to the Restatement (Second) of Torts for guidance.  Negligent conduct involves either (1) an act which the actor as a reasonable person should recognize as involving an unreasonable risk of causing an invasion of an interest of another (described in some cases as misfeasance), or (2) a failure to do an act which is necessary for the protection or assistance of another and which the actor is under a duty to do (sometimes described as nonfeasance).

Plaintiffs moved to amend the complaint to state a claim based on an asserted theory of misfeasance—that the release of asbestos was carried into a worker's home — rather than a claim of nonfeasance based on a failure to warn. The Delaware court noted that in the case of misfeasance, the party who does an affirmative act owes a general duty to others to exercise reasonable care, but, in the case of nonfeasance, the party who merely omits to act owes no general duty to others unless there is a "special relationship" between the actor and the other which gives rise to the duty.

DuPont contended that as a matter of substance the amended complaint really alleged  nonfeasance—not misfeasance. Again, in order to recover for nonfeasance, a plaintiff must specifically allege a “special relationship” between herself and the defendant. Having not alleged any “special relationship” in this case, DuPont argued, Price’s amendments were futile because they failed to state a claim as a matter of law.

The court noted that Price’s allegations, stripped of all reformatory re-characterization, were that: (1) Mr. Price, an employee of defendant, worked with and around products containing asbestos for 34 years, (2) asbestos fibers settled on his skin, clothing, and vehicle, (3) defendant allegedly did not provide locker rooms, uniforms, or warnings to the Prices regarding the dangers of asbestos, (4) defendant did not prevent Mr. Price from transporting the asbestos fibers home on his skin, clothing, and vehicle, and (5) Mrs. Price, because she lived with Mr. Price and washed his clothes, developed disease. These alleged acts were pure nonfeasance—nothing more. Dupont’s alleged failures to prevent Mr. Price from taking asbestos fibers home or to warn the Prices about the dangers of asbestos did not rise to the level of affirmative misconduct required to allege a claim of misfeasance. No amount of semantics can turn nonfeasance into misfeasance or
vice versa.

Having alleged only nonfeasance, Price needed to allege that a “special relationship” existed between her and DuPont in order for DuPont to owe her a duty of care. But the relationship between Mrs. Price and DuPont did not fit any of the recognized “special relationships”
giving rise to a duty to aid or protect. Just because her husband worked for DuPont for over thirty years, or DuPont provided health insurance to her as Mr. Price’s spouse, or DuPont sponsored company picnics and participated in programs promoting a "family friendly" workplace, a special relationship did not exist. 

The plaintiff's bar has been aggressive in efforts to create new methods of recovery from asbestos exposures -- new defendants, new legal theories, new injuries, new plaintiffs. For once, a court has put the brakes on this seemingly endless expansion. 

 


 

Negligence Ruling in Florida Chinese Drywall Litigation

The judge overseeing one part of the litigation involving Chinese drywall -- the Florida class action -- has issued an important ruling on the negligence claims. Bennett v. Centerline Homes Inc. et al., No. 2009-ca-014458 (Palm Beach County, Fla.)

Defendants moved to dismiss the negligence claims, arguing they had no duty to protect the plaintiffs from the unknown and unforeseeable harm of the drywall.  The court found that there was no duty to inspect or test the drywall for a latent defect, and thus to warn the plaintiffs.  Florida law does not impose a duty to inspect a product for a latent defect, or to warn others about a latent defect, unless the product is inherently dangerous (which drywall is not).

Home builders, installers or suppliers of allegedly defective Chinese drywall could only be held negligent if it is established that the companies were aware that the drywall was defective, through actual or implied notice.  But the issue whether a defendant had notice of a defect must be
determined on an individual, case-by-case basis.  Thus, the court declined to grant the motion on an omnibus basis. 

As we have noted before, according to the allegations of the litigation, a shortage of drywall made in the U.S. caused many builders to use imported Chinese drywall during Florida's construction boom between 2004 and 2006. Much of the drywall was used in construction after Hurricane Katrina.  Lawsuits filed over the drywall issues allege that excessive sulfur levels in the Chinese-made products are causing health effects and problems with air conditioning systems, appliances, internal wiring and other electrical systems. The U.S. Judicial Panel on Multidistrict Litigation consolidated the lawsuits in the U.S. District Court for the Eastern District of Louisiana.  Other defendants, including building supply distributors, general contractors and installers, face  litigation in state courts, like this one.

Alleged Damages in Hurricane Katrina from Dredging Operations Not Forseeable

A court of appeals has affirmed the dismissal of multiple claims alleging that negligent dredging operations before Hurricane Katrina led to the failure of levee systems in Louisiana.  See In Re: In the Matter of the Complaint of Great Lakes Dredge & Dock Co. LLC, No. 08-30738 (5th Cir. Oct. 14, 2010). Claimants were Hurricane Katrina flood victims who filed claims alleging negligence on the part of operators of dredging vessels along the Mississippi River Gulf Outlet. Plaintiffs argued that they suffered damages from the flooding of Orleans and St. Bernard Parishes when several levee systems failed as a result of the erosion of protective wetlands allegedly caused by the defendants’ negligent dredging operations.

The Mississippi River Gulf Outlet  (“MRGO”) is a 76-mile navigational channel that connects the Gulf of Mexico with the Industrial Canal in New Orleans, bisecting the marshy wetlands of St. Bernard Parish and Chandeleur Sound. It was built between 1958 and 1965 by the United States Army Corps of Engineers.  Beginning in 1993, the Corps of Engineers contracted with numerous private dredging companies, including the defendants, to assist the Corps of Engineers in maintenance dredging along the MRGO. From 1999 to 2004, the Corps of Engineers awarded more than 150
contracts to private dredging companies to dredge the length of the MRGO channel.

Plaintiffs, who numbered in the tens of thousands, were individuals, businesses, and other entities who owned property that was damaged due to flooding after Hurricane Katrina made landfall on August 29, 2005. (BTW, for readers, there is a fascinating new exhibit at the Newseum in Washington, DC, on the media coverage of Katrina.)  Plaintiffs contend that the defendants'  maintenance dredging operations caused severe damage to the Louisiana wetlands, which had been providing a natural barrier against tidal surge from storms and hurricanes. This damage to the wetlands allegedly caused an amplification of the storm surge in the New Orleans region
during Hurricane Katrina, which increased the pressure on the levees and flood walls along the MRGO, leading eventually, they alleged, to levee breaches and the subsequent flooding of St. Bernard Parish and Orleans Parish.

These allegations were different from some earlier Katrina claims, adding that their injuries resulted from the erosion to the wetlands caused by the negligent dredging, performed in breach of the standards set out in their Corps of Engineers contracts and various rules and regulations
alleged to apply to their operations, to try to defeat the dredgers’ government contractor immunity defenses, as well as the dredgers’ entitlement to exoneration from or limitation of liability under the Limitation of Liability Act.

Defendants moved to dismiss.  The district court dismissed the claims, and plaintiffs appealed. The 5th Circuit noted that to avoid dismissal, a complaint must contain sufficient factual matter,
accepted as true, to state a claim to relief that is plausible on its face.  Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 554, 570 (2007)). To be plausible, the complaint’s factual allegations must be enough to raise a right to relief above the speculative level. In deciding whether the complaint states a valid claim for relief, we accept all well-pleaded facts as true and construe the complaint in the light most favorable to the plaintiff.

Defendants argued that they could not have foreseen that discrete acts of negligent dredging could have resulted in the absolutely devastating and cataclysmic damages that occurred to St.
Bernard and Orleans Parishes.  Plaintiffs asserted that it is well known, as a matter of general knowledge, that the wetlands provide storm surge mitigation; that the levees protecting cities and towns in the coastal areas were designed with the assumption that the buffering action provided by the wetlands would remain intact; and that dredging activities cause damage to the wetlands.

Duty and forseeability were the key concepts here, and maritime law on this issue mirrored general negligence law.  Determination of the tortfeasor’s duty is a question of law.  A duty may be owed only with respect to the interest that is forseeably jeopardized by the negligent conduct. Thus, if the injuries suffered allegedly as a result of the negligent dredging were not foreseeable, the defendants owed no duty; to show a duty, plaintiffs had to show that each dredger reasonably should have foreseen that the sequence of events leading to their damages—the amplification of the storm surge during Hurricane Katrina, the failure of the levee systems, and the subsequent flooding of Orleans and St. Bernard Parishes—would be a probable result of its negligent acts and the marginal erosion to the wetlands caused thereby.

The 5th Circuit agreed with the trial court that the defendants in this case had no knowledge of an immediate and pending natural disaster that would affect how they conducted their dredging operations. Furthermore, it cannot be said that any dredger could have foreseen that performing its dredging activities negligently—as opposed to in conformity with the Corps of Engineers’ specifications— would probably result in the series of events culminating in the catastrophic damages that occurred during Hurricane Katrina. No reasonable dredger could have anticipated that its negligence would make the difference between the levee systems holding or failing in the event of a hurricane. The damages alleged here were beyond the pale of general harm which reasonably might have been anticipated by negligent dredgers.

The court cautioned that that was not to say that it could never be foreseen that dredging could create conditions that would result in flooding after a hurricane. Rather, it was not foreseeable that the marginal erosion caused by any act of negligence by a defendant here would substantially affect the impact of the hurricane such that the failure of the levee systems and subsequent flooding would be the probable result. The causal sequence alleged in the present case was just far too attenuated.

 

Failure to Warn Claim Survives- But Why?

Sometimes, manufacturers have to wonder, what good does a warning do if the courts won't require people to read and heed the warning given?

Harley Davidson is an iconic American product manufacturer. In 1903, William S. Harley and Arthur Davidson made available to the public the first production Harley-Davidson® motorcycle. The bike was built to be a racer, with a 3-1/8 inch bore and 3-1/2 inch stroke. The factory in which they worked was a 10 x 15-foot wooden shed with the words "Harley-Davidson Motor Company" crudely scrawled on the door.

William and Arthur would likely be scratching their heads over a recent ruling denying the company's summary judgment motion on a failure-to-warn claim in a suit filed after a motorcycle crash. Steven Morris v. Harley-Davidson Motor Co., et al., No. 3:09-cv-74 (M.D. Ga.).

Plaintiff alleged that the rear tire of his motorcycle failed, resulting in a crash that killed plaintiff’s wife and left plaintiff seriously injured. Plaintiff contended that the defendants (including the tire company) failed to provide an adequate warning regarding the dangers of overloading the motorcycle. With a full tank of gas weighing 31 pounds, the plaintiff's Ultra Classic’s Gross Vehicle Weight Rating (GVWR) allowed for an additional 420 pounds of weight capacity for the rider, any passenger, cargo, and accessories. Plaintiff, who weighed 250 pounds, was with his wife, who weighed 204 pounds, riding as a rear passenger. Plaintiff was also pulling a trailer.

When plaintiff purchased the Ultra Classic, he was provided with an owner’s manual, which contained warnings and instructions regarding the Ultra Classic. Specifically, the Owner’s Manual warned against exceeding the GVWR; that exceeding these weight ratings can affect stability and handling, which could result in death or serious injury; explaining that GVWR is the sum of the weight of the motorcycle, accessories, and the maximum weight of the rider, passenger and cargo that can be safely carried.  It tells the owner that the GVWR is shown on the information plate located on the frame steering head.

The court found it significant that the weight of the trailer was not listed in the components of the GVWR, but that was because the Owner’s Manual also warned against pulling a trailer, ever: “Do not pull a trailer with a motorcycle. Pulling a trailer can cause tire overload, reduced braking efficiency and adversely affect stability and handling, which could result in death or serious injury.”  That is exactly what happened, according to plaintiff!

Plaintiff admitted he never read the Owner’s Manual. But in addition to the warnings in the Owner’s Manual, there were also warnings on the Ultra Classic. One warning was located inside the storage compartment on the back end of the Ultra Classic, over the rear wheel, and behind the passenger’s seat, and the Ultra Classic also contained an information plate on the steering head, which listed the Ultra Classic’s GVWR, recommended tire pressures, and other information.  Plaintiff testified that he did not see these warnings either.

Harley-Davidson contended that plaintiff’s failure to warn claim failed as a matter of law because he did not read the warnings in the Owner’s Manual or the warnings on the Ultra Classic.  The court construed  the claim as not relating to the substance of the warning, but the procedure, the method by which the information was communicated.  The court concluded that plaintiff contended that he never read the warnings because Harley-Davidson failed to communicate them adequately. Failure to read a warning does not bar recovery when the plaintiff is challenging the adequacy of the efforts of the manufacturer or seller to communicate the dangers of the product to the buyer or user, found the court.

Failure to communicate an adequate warning involves such procedural questions as location and presentation of the warning. The court found that it was a jury question whether or not the manufacturer was negligent in failing to place a warning in such position, color and size print or to use symbols that would adequately convey the information. Thus, based on the present record, said the court, a reasonable fact-finder could conclude that Harley-Davidson failed to place useful load information regarding the Ultra Classic where a user would likely see it.

But, even accepting the substance/procedure distinction, the only evidence the court focused on concerning the alleged inadequacy of the warnings was plaintiff's self-serving testimony. A plaintiff should not be able to create an issue of fact on the procedural aspects of the warning simply by saying, "I didn't see it, so it must have been inadequate." Where was the genuine issue of fact?  Where was the proof that the vehicle's Owner's Manual is not the right place to put a warning about safe operation of the vehicle.    Bottom line - there can be no genuine issue of fact when an admittedly adequate warning is placed in the Owner's Manual and the owner never opens the manual. Where is the genuine dispute about warnings right on the motorcycle itself? Where was the proof of where else the manufacturer was supposed to put a warning?

 

Florida Supreme Court Decides Right of Fishermen to Sue For Pollution

In a case that may impact some of the litigation rising from the Gulf Oil Spill, the Florida Supreme Court last week ruled in favor of a group of commercial fishermen who alleged damages arising from pollution in the Tamp Bay. See Howard Curd, et al. v. Mosaic Fertilizer LLC, (No. SC08-1920 Fla. 6/17/2010). The issue on appeal -- which the court took as a certified issue of great public importance -- was whether Florida law permits commercial fishermen to recover for economic losses proximately caused by the negligent release of pollutants, despite the fact that the fishermen do not own any property damaged by the pollution.

The defendant owned/operated a phosphogypsum storage area near Archie Creek in Hillsborough County. The storage area included a pond enclosed by dikes, containing waste water from a phosphate plant.  The dike gave way and pollutants were allegedly spilled into Tampa Bay.
The fishermen claimed that the spilled pollutants resulted in a loss of underwater plant life, fish, bait fish, crabs, and other marine life. They did not claim an ownership in the damaged marine and plant life, but claimed that it resulted in damage to the reputation of the fishery products the fishermen were able to catch and sought to sell.

The lower court concluded that the state statute on water pollution did not permit a claim by these fishermen for monetary losses when they did not own any real or personal property damaged by the pollution. After initially permitting the fishermen to proceed on their claims of negligence and strict liability, the lower court ultimately ruled that these claims were not authorized under the economic loss rule. The court reasoned that an action in common law either through strict liability or negligence was not permitted because the fishermen did not sustain bodily injury or property damage. The strict liability and negligence claims sought purely economic damages unrelated to any damage to the fishermen's property. Accordingly, the court further reasoned that Mosaic did not owe the fishermen an independent duty of care to protect their purely economic interests. 

The state supreme court disagreed.  The court pointed to a number of factors on the statutory claim:  it expressly protected public and private interests; it is to be liberally construed to effect the purposes set forth in the state statute and the Federal Water Pollution Control Act.  Moreover, the Florida  Legislature found and declared that escape of pollutants “poses threats of great danger and damage . . . to citizens of the state, and to other interests deriving livelihood from the state.”   Also, under the definition of statutory damages cited above, one can recover for damages to real or personal property and for damages to natural resources, including all living things. Finally, not owning property affected was not a listed defense to the cause of action in the act.

The lower court found that the economic loss rule barred the common law claims, as the fishermen's negligence and strict liability claims sought purely economic damages unrelated to any damage to the fishermen's property. Second, Mosaic did not owe an independent duty of care to protect the fishermen's expectation of profits. The supreme court found instead that neither the contractual nor products liability economic loss rule was applicable to this situation. The parties to this action were not in contractual privity. Moreover, the defendant in this case was not  a manufacturer or distributor of a defective product that has caused damage to itself.  Rather, plaintiffs brought traditional negligence and strict liability claims against a defendant who had allegedly polluted Tampa Bay and allegedly caused them injury.

Turning to the issue whether Mosaic owed an independent duty of care to protect the fishermen's purely economic interests—that is, their expectations of profits from fishing for healthy fish, the court found Mosaic did owe a duty of care to the fishermen, a duty that was not shared by the public as a whole.  The court admitted that as a general principle of common law negligence, some courts have not permitted recovery for purely economic losses when the plaintiff has sustained no bodily injury or property damage. See Union Oil Co. v. Oppen, 501 F.2d 558, 563 (9th Cir. 1974) (noting “the widely recognized principle that no cause of action lies against a defendant whose negligence prevents the plaintiff from obtaining a prospective pecuniary advantage”). The reasoning behind this general rule is that if courts allowed compensation for all losses of economic advantages caused by a defendant's negligence, a defendant would be subject to claims based upon remote and speculative injuries that it could not foresee. Such courts have concluded that the negligent defendant owes no duty to plaintiffs for such losses.

The Florida court concluded that the defendant here did owe a duty of care to these commercial fishermen, and that the commercial fishermen thus had a cause of action sounding in negligence. Under Florida law, the question of whether a duty is owed is linked to the concept of foreseeability. In the present case, the duty owed by Mosaic arose out of the nature of Mosaic's business and the special interest of the commercial fisherman in the use of the public waters. The court concluded that Mosaic's activities created an appreciable zone of risk within which Mosaic was obligated to protect those who were exposed to harm. Mosaic's business involved the storage of pollutants and hazardous contaminants. It was foreseeable, said the court, that were these materials released into the public waters, they would cause damage to marine and plant life as well as to human activity in the water.

Further, the commercial fishermen had a special interest within that zone of risk, an interest not shared by the general community, found the state supreme court.  The fishermen were licensed to conduct commercial activities in the waters of Tampa Bay, and were dependent on those waters to earn their livelihood. Mosaic's activities placed the fishermen's peculiar interests directly within the zone of risk created by the presence of its facility. As a result, Mosaic was obligated to exercise prudent foresight and take sufficient precautions to protect that interest.

As pointed out in the dissent, the majority opinion decided the case for a more narrow class than those bringing the suit -- and more narrowly than the claims they alleged. Although Curd's proposed class consisted of “all fishermen and those persons engaged in the commercial catch and sale of fish,”  the majority's decision did not extend to distributors, seafood restaurants, fisheries, fish brokers, or the like whose incomes may also have been affected by the alleged pollution. Additionally, the majority only addressed economic harm that allegedly resulted from the depletion of marine life and the resulting inability to harvest the commercial fishermen's usual yield—not from harm to reputation as alleged in the complaint. The fishermen presumably must still prove all of the elements of their causes of action, including damages.
 

Component Part Seller Liability At Issue In Asbestos Case

California's high court is preparing to address a split among the state's lower courts on what seems to be a straightforward issue of product liability law governing component parts.

The Restatement of Torts (Third): Products Liability says that in the context of a final, finished product that injures a user and which is made up of components from different manufacturers, if a given component is itself defective and the defect causes the harm, then the supplier of that component is of course liable. In addition, the supplier can be liable even if the component by itself is not defective, but only if the seller substantially participates in the integration of the component into the design of the product (and the defect causes the harm). Restatement 3d, Section 5.

In essence, the doctrine holds that an entity supplying a non-defective raw material or a non-defective component part is not strictly liable for defects in the final product over which it had no control.  In this respect the Third Restatement of Torts simply codified the doctrine of various states’ common law. E.g., TMJ Implants Products Liability Litigation, 872 F. Supp. 1019 (D. Minn. 1995), aff’d, 97 F.3d 1050 (8th Cir. 1996) (applying Minnesota law)); Kealoha v. E.I. Du Pont de Nemours & Co., 844 F. Supp. 590 (D. Hawaii 1994), aff’d, Kealoha v. E.I. Du Pont de Nemours & Co., et al., 82 F.3d 894 (9th Cir. 1996) (applying Hawaii law); Jacobs v. E.I. Du Pont de Nemours & Co., 67 F.3d 1219 (6th Cir. 1995) (applying Ohio law); Apperson v. E.I. Du Pont de Nemours & Co., 41 F.3d 1103 (7th Cir. 1994) (applying Illinois law); Crossfield v. Quality Control Equip. Co., Inc., 1 F.3d 701 (8th Cir. 1993) (applying Missouri law); Childress v. Gresen Mfg. Co., 888 F.2d 45 (6th Cir. 1989) (applying Michigan law); In Re: Silicone Gel Breast Implants Products, 996 F. Supp. 1110 (N.D. Ala. 1997); Travelers Ins. Co. v. Chrysler Corp., 845 F. Supp. 1122 (M.D.N.C. 1994); Sperry v. Bauermeister, 786 F. Supp. 1512 (E.D. Mo.1992); Estate of Carey v. Hy-Temp Mfg., Inc., 702 F. Supp. 666 (N.D. Ill. 1988); Orion Ins. Co., Ltd. v. United Tech. Corp., 502 F. Supp. 173 (E.D. Pa. 1980); Mayberry v. Akron Rubber Machinery Corp., 483 F. Supp. 407 (N.D. Okla. 1979); Artiglio v. General Electric Co., 61 Cal.App.4th 830 (Cal. Ct. App. 1998); Bond v. E.I. Du Pont de Nemours & Co., 868 P.2d 1114 (Colo. Ct. App. 1993); Shaw v. General Motors Corp., 727 P.2d 387 (Colo. Ct. App. 1986); Castaldo v. Pittsburgh-Des Moines Steel Co., Inc., 376 A.2d 88 (Del. 1977); Depre v. Power Climber, Inc., 263 Ill.App.3d 116 (Ill. App. Ct. 1994); Curry v. Louis Allis Co.,
Inc., 100 Ill.App.3d 910 (Ill. App. Ct. 1981); Murray v. Goodrich Eng’g Corp., 30 Mass. App. Ct. 918 (Mass. App. Ct. 1991); Welsh v. Bowling Electric Machinery, Inc., 875 S.W.2d 569 (Mo. Ct. App. 1994); Zaza v. Marquess & Nell, Inc., 144 N.J. 34 (N.J. 1996); Parker v. E.I. Du Pont de Nemours & Co., Inc., 121 N.M. 120 (N.M. Ct. App. 1995); Munger v. Heider Mfg. Corp., 90 A.D.2d 645 (N.Y. App.
Div. 1982); Hoyt v. Vitek, Inc., 134 Ore. App. 271 (Or. Ct. App. 1995); Moor v. Iowa Mfg. Co., 320 N.W.2d 927 (S.D. 1982); Davis v. Dresser Indus., Inc., 800 S.W.2d 369 (Tex. App. 1990); Bennett v. Span Indus., Inc., 628 S.W.2d 470 (Tex. App. 1982); Westphal v. E.I. Du Pont de Nemours & Co., 192 Wis. 2d 347 (Wis. Ct. App. 1995); Noonan v. Texaco, Inc., 713 P.2d 160 (Wyo. 1986).

Sometimes the issue is analyzed as one of no duty on the part of the component seller; other courts view it as an absence if causation.  The policy reasons behind the component parts doctrine are well established. Multi-use component and raw material suppliers should not have to assure the safety of their materials as used in other companies' finished products. That would require suppliers to retain experts in a huge variety of areas in order to determine the possible risks associated with each potential use. And finished product manufacturers know exactly what they intend to do with a component or raw material and therefore are in a better position to guarantee that the component or raw material is suitable for their particular applications.  In the drug and device area, liability is inconsistent with the FDA regulatory scheme because suppliers cannot warn consumers of dangers created by the design of the finished product; the FDA controls who warns and what the warning says.

But when a component manufacturer sufficiently participates in designing a defective and unreasonably dangerous final product, the component manufacturer may be held liable for injuries caused by the final product even though the component itself was not defective or unreasonably  dangerous.  Which raises the question what is ‘‘substantial participation.’’ The Restatement suggests the courts look at whether: (1) the manufacturer or assembler of the integrated product invited the component manufacturer to design a component that would perform specifically as a part of the integrated product;  (2) the component part manufacturer assisted the seller in modifying the design of the integrated product so that it would accept the component part, or (3) the component part manufacturer played a substantial role in deciding which component best serves the requirements of the seller’s integrated product.

A common mass tort battleground for these issues is asbestos.  In O'Neil v. Crane Co., 177 Cal.App.4th 1019, 99 Cal.Rptr.3d 533 (2009)(review granted 12/23/09), the plaintiffs, the widow and children of a naval officer who died of mesothelioma, sued the manufacturers of shipboard pumps and valves, alleging that asbestos insulation used with those components caused the injury.  The trial court dismissed the claims under the component part make doctrine, but last Fall, a panel of the Second Appellate District overturned the trial court's dismissal and said the pump and valve makers could be liable for the officer's death.

The court found that the defendants did not supply a “building block” material, dangerous only when incorporated into a final product over which they had no control. Rather, they sold finished valves and pumps, which needed insulation of some kind. That analysis did not give sufficient attention to the notion that the steam system of the ship ought to be viewed as the finished product, as that term is used in the context of the component parts defense. And it gave insufficient weight to the basic policy underlying the compnent part doctrine.

The panel disagreed with the trial court and with two other appellate decisions going the other way. The state's First Appellate District in Taylor v. Elliott Turbomachinery Co., 171 Cal. App. 4th 564 (2009), found  that pump and valve manufacturers were not liable —as manufacturers of non-defective component parts of a greater whole, and as manufacturers of separate products from those (asbestos) that actually caused the alleged harm. And a different panel of the Second District, Merrill v. Leslie Controls Inc. (Cal. Ct. App., 2d App. Dist., No. B200006, 11/17/09), had also declined to find liability in similar circumstances. See generally Lindstrom v. A-C Product Liability Trust, 424 F.3d 488 (6th Cir.2005)(no liability; causation focus). 

That a component seller knew or should have known that the product maker might use potentially hazardous materials in its design should never be sufficient to impose liability for the design that is the responsibility of the finished product seller.  It makes no sense to have suppliers act as "design police" for every possible item their non-defective part could possibly be combined with in a finished product. 

Under a proper analysis, a warning claim should fare no differently. See Braaten v. Saberhagen Holdings, 198 P.3d 493 (Wash. 2008); Simonetta v. Viad Corp., 197 P.3d 127 (Wash. 2008)(no liability for failure to warn of the hazards of exposure to another manufacturer's asbestos insulation).  The Washington court found the duty to warn under common law negligence was limited to those in the chain of distribution of the hazardous product. Because the defendants did not manufacture, sell, or supply the asbestos insulation, the defendants could not be found liable for breaching a duty to warn. The defendants were not strictly liable because only a product's manufacturer, seller, or marketer is in the position of knowing its dangerous aspects.  To hold a defendant strictly liable for another party's product would be manifestly unfair.

The California Supreme Court has recently agreed to review the issue. O'Neil v. Crane Co., Cal., No. S177401, (petition for review granted 12/23/09).  Here's hoping the doctrine is applied correctly, and this does not become another "asbestos" law exception to common sense rules.

Spyware Claim Does Not Survive Summary Judgment

A federal court has granted a software maker summary judgment in a case arising from the use of "spyware."  The plaintiff failed to convince the court that product liability claims were proper against the company who made the software the plaintiff's former wife allegedly targeted him with.  Hayes v. SpectorSoft Corp., 2009 WL 3713284 (E.D.Tenn. 11/3/09).

Plaintiff alleged that his former wife purchased software, including one called the “Spector Professional Edition for Windows," and installed it on his computer.  Plaintiff contends that following the installation of these software programs, the software recorded all his chat conversations, instant messages, e-mails sent and received, and the websites visited by plaintiff whenever he used his laptop computer, and re-transmitted such electronic communication to her (or a sister). SpectorSoft's software is apparently primarily used by parents and employers to monitor Internet use by children and employees.

The parties disputed whether SpectorSoft knew of the illegal use of the SpectorSoft software to gain access to plaintiff's private laptop communications. Plaintiff alleged that SpectorSoft knew or should have known about such usage. He thus asserted several causes of action (including negligence) against SpectorSoft for its alleged role in allowing his personal computer usage to be captured--  and that defendant  “aided and abetted” in the violation of his rights.

The court concluded first that plaintiff had not created a genuine issue of material fact regarding whether SpectorSoft aided and abetted the alleged invasion of his privacy. There was no evidence that SpectorSoft took an affirmative act that encouraged the women to violate plaintiff's rights. In fact, SpectorSoft attempted to protect the rights of persons like plaintiff by requiring purchasers to accept its licensing terms prior to being allowed to install its software (which prohibited this kind of use). There was similarly no evidence that SpectorSoft knew anything about how the women were using its software. While some retailers marketed SpectorSoft's products to spouses concerned about adultery, SpectorSoft itself did not market its product for such uses, and it provided its users with a licensing agreement that it had reason to believe was valid. Furthermore, said  the court, even a broad-based marketing campaign does not provide the requisite affirmative act of specific encouragement or assistance to the individuals at issue in this case.

Turning to the claim under the state Products Liability Act , a seller of a consumer product may be liable for “injury to a person or property caused by the product” if “the product is determined to be in a defective condition or unreasonably dangerous at the time it left the control of the manufacturer or seller.”  The court did not reach the issue whether software constitutes a “product” under the statute (nor the "misuse" issue which springs to mind), because the  Act defines a “product liability action” as one brought “for or on account of personal injury, death or property damage."  But plaintiff cited to no Tennessee authority suggesting that a products liability claim can be brought for emotional injuries alone, unaccompanied by some sort of physical injury or actual damage to property. Plaintiff did not allege in his Complaint that the alleged invasion of his privacy actually damaged his property, such as his computer or his business.

Similarly, plaintiff failed to provide appropriate legal support for his general negligence claim. Tennessee law does recognize a claim for general emotional distress caused by the negligent actions of another in the form of a negligent infliction of emotional distress claim. See Eskin v. Bartee, 262 S.W.3d 727, 733 (Tenn.Sup.Ct.2008). But the Tennessee Supreme Court has established that where a case is purely one for emotional injury unaccompanied by damages for physical injury or other damages, the plaintiff must present material evidence as to each of the five elements of general negligence --duty, breach of duty, injury or loss, causation in fact, and proximate or legal, cause -- and, in order to guard against trivial or fraudulent actions, the law ought to provide recovery only for “serious” or “severe” emotional injury. 

On the duty element, the general duty of care does not include an affirmative duty to act for the protection of another, unless the defendant stands in some special relationship to either the person who is the source of the danger, or to the person who is foreseeably at risk from the danger.  There is no precedent for the proposition that a manufacturer of spyware software owes a duty to avoid emotional injury to the victim of the misuse of that software in violation of the software's licensing agreement. Plaintiff fails to demonstrate legal support for the proposition that SpectorSoft had a special relationship or that SpectorSoft somehow assumed a duty of care towards plaintiff.

Finally, plaintiff failed to present evidence of his severe or serious emotional distress. Without such evidence of severe emotional distress, plaintiff's negligence claim that asserts only garden variety anxiety and mental distress as damages must be dismissed. 

 

State Supreme Court Clarifies Subsequent Remedial Measure Doctrine

The Iowa Supreme Court last week issued an interesting decision clarifying the subsequent remedial measure doctrine in that jurisdiction, and offering some good general notions. Scott v. Dutton-Lainson Co., 2009 WL 3415937 (Iowa 10/23/09).

A little background.  Readers of MassTort Defense know that despite the nostalgic effort of some courts to try to maintain a bright line between strict liability and negligence claims, it is pure semantics to try to confine certain product defect claims to a "strict" regime.  Specifically, failure to warn claims and design defect claims (as opposed to manufacturing defect claims) have been largely recognized as sounding, at least in part, in negligence.  In the Restatement (Third) of Torts: Products Liability, the standards for design defect and failure-to-warn claims require consideration of reasonableness and therefore incorporate negligence principles.

Beyond the articulation of the causes of action, the classification of the claims has other potential impact in a products liability claim, such as in this case. Plaintiff worked for a boat dealership and suffered an injured foot when the jack on a boat trailer collapsed.  Plaintiff offered a design defect theory, that the jack's pin should have been longer, allowing users to better see whether the pin was engaged. (A competitor allegedly made a longer pin.)  Below, plaintiff sought to introduce three bits of testimony regarding defendant's alleged subsequent changes to the pin tooling, which lengthened it and thus allowed it to reach further into the pin hole.  The first was deposition testimony from a company officer concerning changing the tooling.  Second was a deposition of a witness who reportedly heard a company official say the pin was lengthened as a result of plaintiff's accident. The third was proposed testimony that the redesign allowed the pin to move further into the hole.

As in some states, Iowa Rule of Evidence 5.407 excludes evidence of subsequent remedial measures to prove negligence or culpable conduct, but not in strict liability claims.  Plaintiff, of course, argued that the proposed testimony was for his strict liability claims.  The trial court excluded the evidence at trial, which resulted in a defense verdict.

The state supreme court held that design defect and failure-to-warn claims sound in negligence, rather than strict liability.  Thus, the lower court had been correct to exclude evidence of the subsequent measures at the trial. Evidence of subsequent remedial measures, which a party seeks to introduce in an action based on a design defect claim, a failure to warn claim, or a breach of warranty claim brought under either theory, is not categorically exempt from exclusion under rule 5.407, because these claims are not strict liability claims. Instead, trial courts must analyze the reason a party seeks to admit such evidence. According to rule 5.407, evidence of subsequent remedial measures is not admissible to show negligence or culpable conduct. Such evidence is admissible to show “ownership, control, or feasibility of precautionary measures, if controverted, or impeachment.” Iowa R. Evid. 5.407.

The court found that the exceptions in the rule adequately accommodate a plaintiff's burden to prove a reasonable alternative design.  A plaintiff has the opportunity to introduce evidence of subsequent remedial measures if the defendant disputes the feasibility of a suggested alternative design.

The court found that important policy reasons, including the need to avoid deterring individuals from making improvements or repairs after an accident, supported the exclusion. Plaintiffs, and misguided academics, often assert that manufacturers will choose to make improvements to a product even if those improvements are admissible because the producer would otherwise risk litigation and negative publicity.  But there is a substantial body of criticism of that notion, which overstates the relevance of subsequent remedial measures, appears to have an over-focus on mass product producers (when the rule applies to everyone), and invites confusion of the jury, both by diverting its attention from whether the product was defective at the relevant time to what was done later, and by facilitating, in the minds of jurors, an inappropriate equation between subsequent design modification and an admission of a prior defective design.  This plaintiff's argument premises its conclusions concerning hypothetical manufacturer conduct upon the assumption that the product at issue is in fact defective, overlooking the situation where the product is not defective but could have been, and may be later, improved.

 

Partial Summary Judgment Granted in Genetically Modified Rice MDL

The judge overseeing the federal MDL involving genetically modified rice has granted partial summary judgment to the defendants, dismissing several claims, including a public nuisance allegation. In re: Genetically Modified Rice Litigation, No.4-md-1811 (E.D. Mo. 10/9/2009). 

This multi-district litigation relates to the claims of U.S. long-grain rice producers, and others in the rice business, who allege that certain defendants contaminated the U.S. rice supply with non-approved genetically modified strains of rice. The first of a series of bellwether trials will begin in November; this first trial involves Missouri farmer plaintiffs, and the court's Order rules on only the portions of the motions directed to the claims of the Missouri plaintiffs.

The Missouri plaintiffs are seeking damages under a variety of theories, including negligence,  public and private nuisance, negligence per se, and the North Carolina Unfair Trade Practices Act. The plaintiffs are suing to recover allegedly lost income they claim resulted from the drop in market price for rice; following the announcement of the contamination in 2006, some rice companies around the world banned the importation of U.S. rice, which allegedly caused a dramatic drop in the U.S. market price for rice.

Judge Catherine Perry of the U.S. District Court for the Eastern District of Missouri issued an opinion on a host of summary judgment  issues, most notably granting defendants’ motion for summary judgment on plaintiffs’ claims under the North Carolina Unfair Trade Practices Act and on plaintiffs’ claims for public nuisance and negligence per se.

Defendants asserted first that the economic loss doctrine bars all the common-law claims.  The economic loss doctrine bars recovery of purely pecuniary losses in certain tort cases if there is no personal injury or physical damage to property other than the property at issue in the case – usually an allegedly defective product in a products liability case. A plaintiff suing over damage to a product he contracted for is limited to his contract remedies. Many states have adopted the economic loss doctrine for products liability cases, and some states have applied the doctrine to other torts
as well. Here, however, the court found that the alleged damages were not to any property that was the subject of a contract, and the plaintiffs were not claiming damage to any property that is alleged to be defective. Rather, they claim market losses and damage to other property, including equipment, land, and rice. Because they alleged damage to other property, the doctrine does not
apply, concluded the MDL court.

Defendants fared better with plaintiffs' attempt to rely on the more pro-plaintiff North Carolina statute.  The court noted that plaintiffs are not suing based on contracts with Bayer, and although some of Bayer’s decision-making occurred in North Carolina, the claims of plaintiffs cannot be said to arise mainly from those North Carolina activities.  Although there was some conflicting authority, the court concluded that the better reasoned cases require an in-state injury to a plaintiff’s in-state business operations. In other words, the North Carolina Unfair and Deceptive Trade Practices Act is intended to protect the North Carolina consumer.  Plaintiffs had not shown that their claims here had a sufficient effect on North Carolina business for them to benefit from this act intended to protect North Carolina commerce.

Third, in Missouri, a public nuisance is an offense against the public order and economy of the state that violates the public’s right to life, health, and the use of property, while, at the same time annoys, injures, endangers, renders insecure, interferes with, or obstructs the rights or property of the whole community, or neighborhood, or of any considerable number of persons. Bayer was able to show that, as matter of law, plaintiffs cannot recover for public nuisance. There is no evidence in the record showing the sort of public harm or negative effect on the entire community that public nuisance law was developed to remedy.

A private nuisance, on the other hand, is the unreasonable, unusual, or unnatural use of one’s property so that it substantially impairs the right of another to peacefully enjoy his property.  Plaintiffs’ private nuisance claim survived summary judgment because factual disputes remain regarding whether contamination of plaintiffs’ crops may interfere with their enjoyment of their land. The focus of a private nuisance claim, said the MDL court,  is on defendant’s unreasonable interference with the use and enjoyment of plaintiff’s land.  A genuine issue of fact remains regarding whether plaintiffs can prove a private nuisance.

Defendants were entitled to summary judgment on plaintiffs’ negligence per se claim, to the extent it relied on a violation of federal Animal and Plant Health Inspection Service regulations. This is because they are more in the nature of performance standards that do not provide a standard of
care.  So, for example, if a building code says a stair riser must be six inches tall, that is a precise directive that a builder can follow, and if someone is injured because the riser is taller or shorter, negligence per se might apply.  A building code that says the stair riser should be of a sufficient height not to be dangerous or so that a person will not fall could not provide a basis for a negligence per se claim because the question of what is reasonable was not answered by the building code regulations.

We will keep an eye on the first bellwether case for our readers.

Use of Company Conduct Evidence to Prove Liability or Punitive Damages

As due process considerations have taken their more appropriate place in the law of punitive damages, see BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996), trial courts have struggled with the intersection of traditional product liability law and new rules on evidence necessitated by such due process concerns. 

For example, plaintiffs frequently seek to use evidence of other allegedly similar conduct and allegedly substantially similar accidents, injuries, incidents for liability related issues such as notice and defect.  In Philip Morris USA, Inc. v. Williams, 127 S.Ct. 1057 (2008), however, the Court confirmed a significant constitutional principle limiting punitive damages awards: the Due Process Clause prohibits juries from basing punitive damages awards even in part upon the desire to punish a defendant for harm to persons that are not before the court. 

Williams arose from an Oregon trial wherein a jury awarded $821,000 in compensatory damages and $79.5 million in punitive damages against cigarette manufacturer Philip Morris. At trial, the plaintiff’s attorney had urged the jury to punish Philip Morris for alleged harm to smokers other than the plaintiff by referring to the defendant’s market share and the number of smokers not only in the state of Oregon, but nationwide, who had allegedly contracted a smoking-related illness in the last 40 years. The Supreme Court held that the Due Process Clause forbids a jury from assessing punitive damages to punish a defendant for injury that it inflicts upon non-parties or “strangers” to this litigation. While a jury may consider the actual or potential harm to non-parties in the narrow context of determining “reprehensibility” of the conduct, which in turn is one of the factors relevant to an analysis whether the punitive damages award is excessive or not, it may not punish the defendant for the impact of its alleged misconduct on other people, who may bring lawsuits of their own in which other juries can resolve their claims.

The Supreme Court cautioned state courts that they must make sure that the “jury will ask the right question, not the wrong one.”  That is, evidence regarding alleged injuries of those not before the court must be used solely to judge the reprehensibility of the conduct, not to assess damages for the harm caused to those strangers. While the Court commented on the Oregon court’s refusal to give a jury instruction clarifying this distinction, it noted generally that state courts cannot authorize any procedures that create an unreasonable and necessary risk of any such confusion occurring. When evidence is introduced or argument made that risks this confusion, the state court must take steps to protect against that risk. 

Another such conflict was seen in the recent Montana case involving the trial court's exclusion of a car seat manufacturer's evidence of regulatory compliance.  Malcolm v. Evenflo Co., 2009 WL 2917799 (Mont., September 14, 2009).  The state supreme court ruled that while the evidence should have been excluded from the jury's consideration of liability for compensatory damages, the evidence should have been admitted for purposes of assessing punitive damages.  It let stand the compensatory award, but vacated the punitive damages award.

The case arose from a motor vehicle accident during which plaintiff's decedent  rode in the back of an SUV in the OMW model 207 child seat. A northbound motorist swerved into plaintiff Malcolm's lane and forced Malcolm off the road. The vehicle rolled three times, traveled down a steep incline, and stopped in a ditch.  The left belt hook of the OMW broke off during the rollover. The seat belt slipped out from the open-ended belt hook on the opposite side of the seat. The forces of the accident ejected the OMW from the vehicle, which resulted in death, according to plaintiffs.

The theory at trial was strict liability in tort, design defect theory. The Malcolms claimed that the Evenflo OMW model 207 infant child safety seat constituted a defectively designed product that failed even though they had used the seat in a reasonably anticipated manner. The Malcolms pointed to the OMW's open-ended belt hook design that might have prevented the injury. The Malcolms contended that Evenflo could have manufactured the OMW using an allegedly  feasible superior alternative design that required the vehicle's seatbelt to be routed through an enclosed seat belt tunnel even when the seat was used without the base. The Malcolms also sought punitive damages. The Malcolms alleged that Evenflo “continued selling the defective product in conscious, deliberate and intentional disregard of the danger presented.”

Evenflo contended that the OMW model 207 was not defective in any way. Evenflo argued that the severity of the forces involved in the accident were the sole cause of the death. Evenflo argued that the “tremendous forces” that occurred during the rollover forced open the rear passenger door, which was immediately adjacent to Tyler's child seat. Evenflo posited that Tyler's car seat came into direct contact with the ground as the Suburban rolled. Evenflo argued that the contact caused the seat to detach from the seat belt system and ultimately fly out the open door.

The National Highway Traffic and Safety Administration (NHTSA) requires that all child restraint systems comply with the minimum requirements of Federal Motor Vehicle Safety Standard 213. See 49 C.F.R. § 571.213 (2009). NHTSA required Evenflo to conduct internal testing of the OMW to determine if it complied with the FMVSS 213 standards, which it did. NHTSA and Transport Canada, the Canadian testing agency, conducted random audit FMVSS 213 tests in addition to Evenflo's internal testing.

The first issue was the basic products issue: Evenflo argued that the trial court erred when it excluded any evidence that the OMW model 207 complied with FMVSS 213. Evenflo contended that the fact that the OMW model 207 passed 341 tests performed under FMVSS 213 was highly relevant to the claim that the model 207 was defective and unreasonably dangerous.

Evenflo noted that the standard would be admissible in a negligence case, and  there is no reason why such highly relevant evidence should not be used in strict products liability cases. Thus, Evenflo urged the Court to adopt the Restatement (Third) of Torts: Products Liability § 4 (1998). Section 4 provides that compliance with an applicable regulation is admissible in connection with liability for defective design. Evenflo noted that a majority of jurisdictions hold that compliance with product safety regulation is relevant and admissible on the question of defectiveness, even if it is not necessarily controlling.

The four-justice majority reiterated this court's adherence to “well-settled, decades-old principles of strict liability” that consider irrelevant a manufacturer's reasonableness and level of care. The court declined to adopt the Restatement (Third) of Torts: Products Liability, §4.  Montana thus continues to be one of those few states that cling to the now-discredited "bright line" verbal distinction between cases asserting strict liability in tort and those grounded in negligence theory. (This Court had previously distinguished strict liability from negligence when it rejected the “state of the art” defense, for example, because it raises issues of reasonableness and foreseeability --concepts fundamental to negligence law.)  It still argues that any attempt to inject so-called negligence principles into strict liability law would somehow sever Montana's strict products liability law from the core principles for which it was adopted.  The focus in design defect cases must be on “the condition of the product,” rather than “the manufacturer's conduct or knowledge."  And the way to do this, apparently, is to exclude relevant, material, probative evidence that the product passed regulatory muster.

On the punitive damages issue, Evenflo argued that the trial court's decision to exclude evidence of the OMW model 207's compliance with FMVSS 213 prevented it from introducing evidence bearing on its state of mind. A defendant's state of mind is a “key element” in assessing punitive damages, and the car seat maker should have been able to present evidence of its regulatory compliance. 

The trial court had concluded that the OMW model 207's compliance with FMVSS 213 had “absolutely no bearing at all upon the reprehensibility of the conduct of Evenflo.” But the supreme court could not sustain the verdict on punitives in light of the court's decision to exclude evidence that might show why Evenflo acted as it did, or failed to act, when the jury considered whether to award punitive damages. Evidence of Evenflo's good faith effort to comply with all government regulations, including FMVSS 213, would be evidence of conduct inconsistent with the mental state requisite for punitive damages.

Interestingly, the supreme court noted that while here a new jury here could consider evidence of the OMW model 207's compliance with FMVSS 213 for the purposes of determining whether Evenflo acted with actual fraud or actual malice, generally the Montana system provides for the presentation of evidence regarding liability for compensatory damages and punitive damages to the jury in a single proceeding. Thus, bifurcation is disfavored, and the trial courts must ordinarily trust that the jury will heed the court's instructions as to how to evaluate the evidence presented.

One dissenting justice would have also reversed the compensatory damages. He differed from the majority on how the trial was conducted and saw it as improperly biased against Evenflo. Two other dissenters agreed with the majority on the compensatory damages but would have sustained the punitive award, arguing that Evenflo's inability to present evidence of its compliance with regulations did not prejudice the company.