Judge Nominated for Vacant State Supreme Court Slot

For our readers with litigation in Pennsylvania:

Pennsylvania Governor Tom Corbett announced last week that he will nominate state Superior Court (appeals) Judge Correale F. Stevens to fill the vacancy on the Pennsylvania Supreme Court created by the resignation of former Justice Orie Melvin.

Judge Stevens is a graduate of Dickinson Law School and has been President Judge of the Superior Court since 2011. If confirmed by the state Senate, he would serve on the Supreme Court until January 2016, with an election to fill the vacancy taking place in November 2015.

Currently, the Supreme Court is split 3-3 between Republican and Democratic justices.  There are a number of important issues before the Court, including the possible adoption of the Third Restatement of Torts in the Tincher case.

 

Appeals Court Vacates Asbestos Plaintiff Jury Verdict

The Florida court of appeals recently reversed a $6.6 million judgment for the plaintiff in an asbestos case raising interesting issues of the law applicable to design and warning defects. See Union Carbide Corp. v. Aubin,  No. 3D10-1982 (3d DCA 6/20/12).

Plaintiff Aubin worked construction and alleged he routinely handled and was otherwise exposed to joint compounds and ceiling textures that contained asbestos. He contracted mesothelioma and sued.  At trial, plaintiff presented studies purportedly linking defendant's product to a higher degree of danger with respect to the development of asbestosis than other types of asbestos, but he failed to introduce any evidence suggesting it was more dangerous than other asbestos fibers with respect to the contraction of cancer or peritoneal mesothelioma. Also at trial, the parties offered contrasting evidence as to whether Union Carbide adequately informed intermediary manufacturers about the dangers of asbestos. Defense representatives testified that along with an OSHA-mandated warning label, Union Carbide regularly updated its clients regarding the dangers of asbestos as such dangers came to light. Conversely, plaintiff claimed that because there were no warnings on the end product, he was unaware of the dangers associated with the liberation of asbestos fibers into the air, and, therefore, allegedly did not wear any respiratory masks or protective gear while working around the asbestos.

Relying on the component parts doctrine recognized by the Restatement (Third) of Torts: Products Liability § 5 (1997), adopted by the 3d DCA in Kohler Co. v. Marcotte, 907 So. 2d 596, 598-99 (Fla. 3d DCA 2005), defendant moved for a directed verdict on plaintiff's strict liability and negligence claims. That motion was denied. At the charge conference, Union Carbide also requested jury instructions regarding the Third Restatement’s component parts doctrine, The trial court denied Union Carbide’s requests, choosing instead to deliver the special instructions that were requested by plaintiff. The key instruction read: “An asbestos manufacturer, such as Union Carbide Corporation, has a duty to warn end users of an unreasonable danger in the contemplated use of its products.”  The requested context was not provided.

The court of appeals concluded that the trial court erred, first, in determining that Aubin’s claims were governed by the Second Restatement rather than the Third Restatement and, as a result, erred in denying Union Carbide’s motion for a directed verdict with respect to Aubin’s design defect claim. Second, the trial court erred in instructing the jury that Union Carbide had a duty to warn end-users without also instructing the jury that a defendant could have discharged this duty by adequately warning the intermediary manufacturers, and reasonably relying on them to warn end-users. Accordingly, the court remanded for a new trial as to the warning defect claim.

Specifically, the trial court erred as a matter of law in determining that Aubin’s claims were governed by Sections 388 and 402 of the Second Restatement.  In Kohler, the court had adopted the component parts doctrine articulated in Section 5 of the Third Restatement as the governing law for products liability claims arising out of a defendant’s sale of a component part to a manufacturer who then incorporates the component into its own products. Kohler, 907 So. 2d at 598-99. This Appeals Court’s adoption of the Third Restatement was later reaffirmed and extended in Agrofollajes, S.A. v. E.I. Du Pont De Nemours & Co., 48 So. 3d 976, 997 (Fla. 3d DCA 2010), which rejected the Second Restatement’s “consumer expectations” test as an independent basis for finding a design defect, determining instead that, after Kohler, the appropriate standard is the “risk-utility/risk-benefit” test articulated in Section 2 of the Third Restatement.

Regarding the warnings claim instructions, reversible error exists where the trial court delivers an instruction that reasonably might have misled the jury.   Plaintiff Aubin had requested, and the trial court granted, the special instruction: “An asbestos manufacturer, such as Union Carbide Corporation, has a duty to warn end-users of an unreasonable danger in the contemplated use of its products.” While this requested special instruction was "technically accurate," it was, standing alone, misleading because Florida law provides that this duty may be discharged by reasonable reliance on an intermediary. Recognizing that Aubin’s requested instruction was misleading, Union Carbide requested that Aubin’s special instruction be supplemented with an explanation of how the duty to warn could have been discharged by Union Carbide. The trial court rejected Union Carbide’s request, and delivered Aubin’s instruction without further explanation. This was also error.

The court of appeals explained that under both the Third Restatement and the Second Restatement, the determination as to whether a manufacturer like Union Carbide may rely on intermediaries to warn end-users is to be analyzed by the trier of fact, and the standard to be  employed is one of “reasonableness.” The Third Restatement provides several factors to guide the analysis, and these factors are substantially the same as those set forth in the Section 388 of the Second Restatement under comment n.  The trial court, however, did not instruct the jury on any of these factors. 

Because the trial court’s instruction communicated to the jury that Union Carbide had a duty to warn end-users, but did not inform the jury that Union Carbide could have discharged its duty by adequately warning the intermediary manufacturers and reasonably relying on them to warn end-users, the court of appeals concluded that the instruction given was misleading and entitled defendant to a new trial.

Raw Material Suppliers Not Liable for Worker Injuries

A California appeals court ruled last week that several raw material suppliers could not be held liable for injuries allegedly sustained by a worker as a result of using their raw materials. See John Maxton v. Western States Metals, et al., No. B227000 (Cal. Ct. App., 2d Dist., 2/1/12).

Plaintiff alleged he sustained personal injuries as a result of working with metal products manufactured by defendants and supplied to Maxton‘s employer. The metal products were essentially raw materials that could be used in innumerable ways. The products at issue consisted of steel and aluminum ingots, sheets, rolls, tubes and the like. Plaintiff alleged he
worked with and around each of these metal products in cutting, grinding, sandblasting, welding, brazing, and other activities. This allegedly resulted in the generation and release of toxicologically significant amounts of toxic airborne fumes and dusts. As a direct result of this exposure, Maxton claimed he developed lung disease. 

Generally, suppliers of raw materials to manufacturers cannot be liable for negligence, or under a strict products liability theory, to the manufacturers‘ employees who sustain personal injuries as a result of using the raw materials in the manufacturing process. Only in extraordinary circumstances —such as when the raw materials are contaminated, the supplier exercises substantial control of the manufacturing process, or the supplier provides inherently dangerous raw materials— can suppliers be held liable. So the first issue was whether such circumstances existed here.

A few courts have imposed liability on suppliers of raw asbestos materials under negligence and strict liability causes of action.  The second issue was whether asbestos is unique in that it is inherently dangerous, and thus whether the holdings of those asbestos cases would be extended here.

Defendants mounted two kinds of challenges to the complaint. Some defendants filed demurrers; others filed motions for judgment on the pleadings. The trial court sustained the demurrers and granted the motions.  Plaintiff appealed.

The court of appeals noted that the component parts doctrine is set forth in section 5 of the Restatement Third of Torts, Products Liability, which provides:
―One engaged in the business of selling or otherwise distributing product components who sells or distributes a component is subject to liability for harm to persons or property caused by a product into which the component is integrated if:
―(a) the component is defective in itself, and the defect causes the harm; or
―(b)(1) the seller or distributor of the component substantially participates in the integration of the component into the design of the product; and (2) the integration of the component causes the product to be defective, and  (3) the defect in the product causes harm.

Product components include raw materials, bulk products, and other constituent products sold for integration into other products. The metal products at issue here were clearly raw materials because they could be used in innumerable ways, and they were not sold directly to consumers in the market place. Rather, they were sold to plaintiff‘s employer for the purpose of using them to manufacture other products. The metal products in this case were closer to raw materials like kerosene than they were to more developed components of finished products, such as airbags in cars, because they can be used in innumerable ways.

Under California law, component and raw material suppliers are not liable to ultimate consumers when the goods or material they supply are not inherently dangerous, they sell goods or material in bulk to a sophisticated buyer, the material is substantially changed during the manufacturing process, and the supplier has a limited role in developing and designing the end product. When these factors exist, the social cost of imposing a duty to the ultimate consumers far exceeds any additional protection provided to consumers. The rationale for not imposing liability on a supplier of product components is a matter of equity and public policy. Such suppliers ordinarily do not participate in developing the product components into finished products for consumers. Imposing liability on suppliers of product components would force them to scrutinize the buyer-manufacturer‘s manufacturing process and end-products in order reduce their exposure to lawsuits. This would require many suppliers to retain experts in a huge variety of areas, especially if the product components are versatile raw materials. Courts generally do not impose this onerous burden on suppliers of product components because the buyer- manufacturer is in a better position to ensure safety.

Although the complaint stated the legal conclusion that the metal products were inherently hazardous, the facts alleged indicated otherwise. Maxton was not injured by simply handling the metal itself, or even the final product containing the metal. Instead, Maxton was injured as a result of the manufacturing process, which altered the form and risks of the products. 

As for the contention that the metal products involved here were analogous to asbestos, the court disagreed. Asbestos itself is dangerous when handled in any form even if it is unchanged by the manufacturer. Indeed, asbestos is dangerous when it leaves the supplier‘s control. By contrast, the metal products in this case were not dangerous when they left defendants‘ control. They only became allegedly dangerous because of the manufacturing process controlled by the employer. (Nothing in the complaint indicated that defendants played any role whatsoever in developing or designing the end products.) 

The court of appeals declined to impose the social cost, meaning the practical burdens that liability would place on defendants as suppliers of the ubiquitous metal products involved in this case. Defendants would be required to assess the risks of using their metal products to manufacture other products. In order to make such assessments, defendants would need to retain experts on the countless ways their customers used their metal products. Defendants would also be placed in the untenable position of second-guessing their customers whenever they received information regarding potential safety problems. Courts generally do not impose this onerous burden on suppliers of product components because the buyer-manufacturers are in a better position to guarantee the safety of the manufacturing process and the end product.

Dismissal affirmed. 

 

Choice of Law Defeats Another Proposed Nationwide Consumer Fraud Class

A federal court recently ruled that a suit over alleged defects in an MP3 player's display screen could not proceed as a nationwide class action. See Maloney et al. v. Microsoft Corp., No. 3:09-cv-02047 (D.N.J.).

This dispute arose out of the sale of portable MP3 players, the 30 gb model Zune. Plaintiffs alleged that the 30gb-model Zune was defective because of alleged cracks on the liquid crystal display (LCD) screen. (News flash: if you drop an electronic device, it may crack.)

Plaintiffs moved for class certification, pursuant to Fed. R. Civ. P. 23(b)(3), of a national class of purchasers. The court concluded that each state‘s common law and consumer protection laws would apply, and therefore a nation-wide class could not properly be certified.

Attempts to structure and certify nation-wide classes involving plaintiffs in all fifty states often turn on whether the law of a single state or multiple states should be applied.  If all 50 states‘ laws apply to a class-action claim, the moving party must provide an extensive analysis of state law variances showing that class certification does not present insuperable obstacles. Plaintiffs bear this burden at the class certification stage, and rarely (we'd say never) can meet it.  Many courts have recognized that state implied warranty laws differ in significant and material ways. For example, states differ on: (1) application of the parole evidence rule; (2) burdens of proof; (3) statute of limitations; (4) whether plaintiffs must demonstrate reliance; (5) whether plaintiffs must provide notice of breach; (6) whether there must be privity of contract; (7) whether plaintiffs can recover for unmanifested defects; (8) whether merchantability may be presumed; and (9) whether warranty protections extend to used goods.

New Jersey courts have adopted the most significant relationship test of the Restatement (Second) of Conflicts of Law. Before applying the Restatement test, plaintiffs here contended that a choice-of-law clause contained in the limited warranty accompanying the product should apply to all of the claims. However, the court determined that the choice-of-law provision did not apply to any of plaintiffs‘ claims. First, the implied warranty claims asserted by the plaintiffs were not governed by the choice-of-law provision in the express warranty. As a plain reading of the text of the express warranty made clear, the choice-of-law provision applies only to the limited warranty, i.e., the express warranty.

To evade this plain reading of the express warranty, plaintiffs then attempted to shoehorn their implied warranty claims into the choice-of-law clause by conflating their implied warranty and Magnoson-Moss (MMWA) claims. Plaintiffs‘ argument was untenable because ultimately plaintiffs‘ MMWA claims rely on their implied-warranty claims, not violations of federal law. State warranty law lies at the base of all warranty claims under Magnuson-Moss. Plaintiffs wrongfully confused substantive MMWA violations and the right to recover under the MMWA.

Although federal substantive law—and not state law—prevents a seller from disclaiming implied warranties, plaintiffs‘ ultimate right to recover on their MMWA claims still depended on state law. When a defendant improperly disclaims an implied warranty, the MMWA provides a statutory remedy: such disclaimer would be void and plaintiffs would be able to proceed against defendant on breach of implied warranties claims, under state law.  Similarly, the choice-of-law provision contained in the limited warranty did not apply to plaintiffs‘ consumer-fraud claims.

Having determined that the choice-of-law provision in the limited warranty did not apply to any of the plaintiffs‘ claims, the court then applied  the choice-of-law rules of the State of New Jersey.  Considering all of the Restatement factors, the court concluded that the state with the most significant relationship to the implied warranty claims was each class member‘s home state.
First, the place of contracting occurred wherever each class member purchased their 30gb Zune, which was presumably in their home state. Second, there was no negotiation of the implied warranties. Third, the place of performance also occurred wherever each class member purchased their 30gb Zune. Fourth, the location of the subject matter of the implied warranties is wherever the Zune was physically located, also presumably in each class member‘s home state. Finally, the domicile of the plaintiffs varies between each class member. Weighing these considerations, the state with the most significant relationship to the implied warranty claims—and consequently, the MMWA claims— was each class members‘ home state.

Plaintiffs‘ consumer-fraud claims would also be governed by the laws of each class member‘s home state.  In this case, the place, or places, where the plaintiff acted in reliance upon the defendant‘s supposed representations; the place where the plaintiff received the alleged representations; the place where a tangible thing which is the subject of the transaction between the parties was situated at the time; and the place where the plaintiff is to render performance under a contract which he has been induced to enter by the alleged false representations of the defendant—all weighed in favor of applying the consumer fraud laws of each class member‘s home state.

In light of the court‘s determination that the laws of all 50 states apply to the claims, and because plaintiffs suggested no workable means by which to conduct a manageable trial—let alone the extensive analysis required of them—class certification was denied on a nation-wide basis. (The court reserved decision as to whether or not a New Jersey-wide class might be certified, subject to further briefing by the parties; clearly additional individual issues will predominate in that context as well, we predict at MassTortDefense.)


 

ALI Annual Meeting Continues

Another report from the annual meeting of the American Law Institute. (Readers likely know that ALI is the leading independent organization in the United States producing scholarly work to clarify, modernize, and otherwise improve the law. It publishes the Restatements and other works, including, notably for our readers, the Principles of the Law of Aggregate Litigation.)

Day 2 highlights included an address by the still-new Chief Justice of the California Supreme Court, the Honorable Tani Cantil-Sakayue.  Her remarks focused on the issues of access to justice in these challenging economic times.  She talked about the looming issues in her first 5 months as Chief Justice, presiding over a judicial branch with 2000 judges, 21,000 employees, and 500 facilities.

She noted how over the past 14 years the California judicial system has evolved from a loose confederation to a more unitary system, having more control over where the courts will be situated. The use of court fees is a primary mechanism funding 60 major construction projects to bring the California judicial system into the 21st century.

Another interesting session concerned the recently completed Restatement Third of Restitution and Unjust Enrichment.  Starting about a generation ago, many law schools stopped having courses on these doctrines, which had been a staple of law school curricula. For the younger ALI members, the Reporter, Prof. Kull noted that restitution is like in the game of Monopoly;  you land on Community Chest and get a card "Bank error in your favor, collect $20", and then the next day the bank wants that money back.

But even if the classes have, the claims have not vanished -- ask Mets fans about the Madoff-related litigation. Indeed, along with torts, contracts, equity, and statutory claims, restitution provides one of the fundamental sources of economic harm claims.  Restitution is a distinct form of liability, not necessarily based on a tort or a contract, and its remedies can be distinct as well.

The First Restatement from the 30's and the leading treatises from the early 70's had been outdated and out paced -- hence this project.  The new restatement strives for plain English, and does not rely on arcane pleading doctrines. It attempts to fit the cases into a set of General Principles, and then discusses the rules governing liability, remedies, and defenses. Publication is expected by summer 2011.

 

ALI Annual Meeting This Week

Your humble blogger is a member of the American Law Institute, attending the annual ALI meeting in San Francisco this week.  Readers likely know that ALI is the leading independent organization in the United States producing scholarly work to clarify, modernize, and otherwise improve the law.  It publishes the Restatements and other works, including, notably for our readers, the Principles of the Law of Aggregate Litigation.

Highlights of Day 1 included an address by Steve Zack, President of the ABA.  We have been privileged to know and work with this excellent lawyer for about 15 years.  His tenure as head of the ABA has been marked by a number of important initiatives, and at ALI he spoke of assaults on the important principle of equal justice under law.  The down economy, falling tax revenues, etc. have severely impacted access to justice, including to the degree that civil jury trials are indefinitely postponed or excessively delayed in some jurisdictions. Courts are closed, judicial staff let go.  Steve closed with a moving story about his grandparents fleeing from the communists in Cuba, heartened by the freedoms and rule of law in the U.S., and noting that they would never be refugees again because if the U.S. legal system collapsed, there would really be no place else to go.

Mush of the afternoon was devoted to the final chapter of the Restatement Third of Torts. Volume 1 of the Restatement was published in 2009, and covers the most basic topics of the law of torts: liability for intentional physical harm and for negligence causing physical harm, duty, strict liability, factual cause, and scope of liability (traditionally called proximate cause).  A second volume, dealing with affirmative duties, emotional harm, landowner liability, and liability of actors who retain independent contractors, will complete this work and is expected to be published in 2011.  Yesterday's session dealt with the final chapter, the liability of actors who retain independent contractors.

Professor Pryor of SMU was the leader for this final chapter, which deals both with direct liability of those who hire, and vicarious liability for the contractor's tortious conduct.  Students of the Restatements may recall that Dean Prosser himself once said that this topic was "the worst mess of any chapter" in the Restatement.  But Prof. Pryor has done great work to improve that situation.

A number of tweaks were suggested by the membership, including by my colleague Jim Beck, who noted that an illustration regarding the asbestos context would be helpful, given the search for new defendants that is a constant feature of that mass tort, and a clarification of the Reporter's sense that the references to public nuisance in the section referred to traditionally land-based public nuisance claims, and were not expressing any opinion on the recent attempts to apply the doctrine to non-traditional settings, such as climate change.

ALI Annual Meeting

Next week I will be on the road attending the Annual Meeting in Washington, D.C., of the American Law Institute (ALI).  I was pleased to be elected earlier this year to membership in this organization.

As readers may know, the American Law Institute is one of the leading independent organizations in the United States producing scholarly work seeking to clarify, modernize, and otherwise improve the law. The Institute (made up of leading lawyers, judges, and law professors) drafts, discusses, revises, and publishes Restatements of the Law, model statutes, and principles of law that are enormously influential in the courts and legislatures, as well as in legal scholarship and education. ALI has long been influential internationally and, in recent years, more of its work has become international in scope.

By participating in the Institute's work, its members have the opportunity to influence the development of the law in both existing and emerging areas, to work with other lawyers, judges, and academics, to give back to a profession to which they are deeply dedicated, and to contribute to the public good. 

Among the projects of interest to readers are the Restatement (Third) of the law of restitution and unjust enrichment, and the just-published Principles of the Law of Aggregate Litigation.

State Court Reaffirms Economic Loss Doctrine

The Pennsylvania Supreme Court last week issued an interesting little opinion on the economic loss doctrine. Excavation Technologies, Inc. v. Columbia Gas Company Of Pennsylvania, No. 32 WAP 2008 (Pa. S.Ct. Dec. 29, 2009).

In the context of products liability actions, economic loss generally refers to damages that occur through the loss of the value or use of the goods sold or the cost of repair, when there has been no claim of personal injury or damage to property other than the product. The economic loss doctrine has held that such damages, a product injuring itself in essence, is a claim about a breach of the commercial relationship, and thus must be brought in contract/warranty, and not a tort claim sounding in negligence or strict liability. As the Pennsylvania court put it, the economic loss doctrine provides, “no cause of action exists for negligence that results solely in economic damages unaccompanied by physical injury or property damage.” Adams v. Copper Beach Townhomes Communities, 816 A.2d 301, 305 (Pa. Super. 2003).

The theory is that tort policy concerns with safety are less present when a product damages only itself; damage to only the product really means that the product has not met customer expectations, a natural warranty claim; that warrant y law is best suited to deal with disagreements over product quality, as the parties can negotiate the terms, within limits, of warranty scope, remedies, etc.; and warranty law with its built-in limits on privity and the requirement of forseeability of consequential damages better reflects society’s traditional concern with the fulfillment of reasonable economic expectations. Tort law, on the other hand, protects a product consumer’s interest in being free of injury regardless of the existence of any direct agreement with the product maker.

Most states have adopted some form of the economic loss rule, although with some variation in detail. Some carve out exceptions for sudden calamitous events (that feel like a tort?), or where there is a “special relationship” (isn’t that special?) between the parties, or in a post-sale duty to warn tort claim. This case involved another possible exception. Appellant sued appellee on a theory of negligent misrepresentation under § 552 of the Restatement (Second) of Torts, which generally holds that one who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information. The state Supreme Court granted an appeal to determine whether § 552 imposes tort liability for economic losses to a contractor caused when a gas utility company fails to mark or improperly marks the location of gas lines.

The Court acknowledged that some lower courts had noted an exception for claims of negligent misrepresentation under § 552, which allows such claims to evade dismissal even if they assert purely economic losses. Bilt-Rite Contractors, Inc. v. Architectural Studio, 866 A.2d 270 (Pa. 2005) (finding negligent misrepresentation claim against architect for economic loss viable under § 552). But the economic loss doctrine is well-established in tort law, said the court. See Aikens v. Baltimore and Ohio Railroad Company, 501 A.2d 277, 278-79 (Pa. Super. 1985) (roots of economic loss doctrine first recognized in Robins Dry Dock and Repair Company v. Flint, 275 U.S. 303 (1927)).  The court distinguished Bilt-Rite as a case involving someone who is in the business of giving information for pecuniary gain, and rejected tort liability for anyone not a professional information provider, including one who is under a public duty to give the information (thus rejecting Section 3 of § 552).

This will help prevent plaintiffs from dressing up warranty claims against typical product sellers as negligent misrepresentation claims evading the doctrine of economic loss.  Readers of MassTortDefense know that it does often matter whether a plaintiff can proceed in tort:  warranty claims may involve defenses like privity and puffing and reliance; there may be limitations on remedies, disclaimers on warranties; a different statute of limitations and accrual date. 
 

State Supreme Court Issues Design Defect Ruling On Intrinsic Characteristics

The Wisconsin Supreme Court has affirmed a lower court's dismissal of strict liability and negligence claims against white lead carbonate pigment manufacturers, ruling that a product's characteristic ingredient cannot  constitute a design defect. See Ruben Baez Godoy v. E.I. du Pont Nemours and Co. et al., No. 2006AP2670 (Wisc. S.Ct.).

The court affirmed a circuit court's ruling that the complaint had failed to allege a design feature that rendered defective the design of white carbonate lead pigment, which can be found in white paint.
Plaintiff alleged lead poisoning from white lead carbonate pigment in the paint in his Milwaukee apartment, and sued DuPont, Armstrong Containers, Sherwin-Williams and American Cyanamid.
He asserted that despite alleged knowledge that lead is hazardous to human health, the manufacturers promoted the use of the pigment and marketed it as safe.

The lower court dismissed the design defect claims, finding  that lead is an inherent  characteristic of white lead carbonate, and thus the product cannot be designed without lead. The court of
appeals found that a product cannot be said to be defectively designed when that design is inherent in the nature of the product so that an alternative design would make the product something else.  This is the long-standing, but often misunderstood notion, that an alternative product is not an alternative design.  In those states in which a plaintiff must prove the existence of a feasible alternative design that would have avoided the injury, or in which the defendant may show the absence of any feasible alternative design, it is not enough for a plaintiff to point to a different product that might serve the same use. 

The state Supreme Court affirmed, noting that a claim for defective design cannot be maintained where the presence of lead is the alleged defect in design, and its very presence is a characteristic of the product itself.  Without lead, there can be no white lead carbonate pigment.  The court offered an analogy:  Foil for your kitchen use can be made using ingredients other than aluminum (gold, for example), but aluminum foil cannot be made without aluminum. The presence of aluminum is characteristic of aluminum foil. If the mere presence of aluminum posed a danger, a manufacturer might be liable based on the failure to adequately warn or other claims. However, the manufacturer
would not be liable based on the "design" of aluminum foil for including aluminum.

Interestingly, the court reaffirmed that Wisconsin strict products liability law does not require a
plaintiff to prove the feasibility of an alternative design.  However, the feasibility of an alternative design can be considered when evaluating a design defect claim. While plaintiff argued that it is inconsistent to reject a reasonable alternative design requirement and still maintain that characteristic ingredients of the product cannot support a claim for defective design, the court clarified that it was not requiring that a plaintiff affirmatively prove, through expert testimony, that an alternative design was commercially viable. The court was simply acknowledging that some ingredients cannot be eliminated from a design without eliminating the product itself. When the ingredient cannot be designed out of the product, the Restatement (Second) instructs that although other claims may be theoretically asserted, the proper claim is not design defect.  

That rationale would seem to apply to design defect claims in drug cases, where the characteristics of a chemical constituting an FDA-approved drug are challenged. The "design" of a typical drug cannot be changed without creating a different molecular structure, and hence  a different product, one which would require a second FDA approval.

State Supreme Court Postpones Third Restatement Issue

The Pennsylvania Supreme Court reversed field and recently dismissed the appeal of a closely watched failure-to-warn case alleging harmful asbestos exposure.  Bugosh v. I.U. North America, et al., No. 7 WAP 2008 (S.Ct. Pa. June 16, 2009).

One of the key issues presented by the case was whether Pennsylvania product liability law would change from its current unique form of somewhat extreme strict liability to the more mainstream Third Restatement approach to the issue of liability for  product sellers.

The divided ruling  by the Court involved the claim of a deceased mesothelioma patient, Edward Bugosh, whose widow had been awarded $1.4 million in damages by a jury in the trial court.  I.U.  North America was a non-manufacturer distributor named in the wrongful death suit, based solely on its predecessor’s sale of a small amount of asbestos-containing products.

Traditional products liability law in the state is based on Section 402A of the Restatement (Second) of Torts, and finds that every party in the distribution chain is strictly liable for any product defect in the product they sold. The Third Restatement treats intermediate sellers differently than manufacturers. Specifically, while under current law, liability can be imposed on manufacturers, retailers and distributors for injuries caused by products with manufacturing, design, or informational defects, regardless of whether a defendant acted reasonably in the preparation and sale of the product at issue, the appeal sought to persuade the state Supreme Court to adopt the approach of Section 2 of the new Restatement, which would require plaintiffs to prove that a defendant acted unreasonably. 

The dismissal order finds review was improvidently granted, but gives no further reason.  Speculation centers on this status of the defendant as an intermediate seller, rather than as an actual manufacturer.  The Court may have felt that this was not the best context to consider a major change in the law.

The case drew tremendous interest, with amici on the appellant’s side to include the Pennsylvania Defense Institute, the Product Liability Advisory Council, Inc., Pennsylvania Chamber of Business and Industry, Coalition for Litigation Justice, Inc., Chamber of Commerce of the United States of
America, National Association of Manufacturers, NFIB Small Business Legal Center, National Association of Wholesaler-Distributors, American Tort Reform Association, American Insurance Association, Property and Casualty Insurers Association of America, National Association of Mutual Insurance Companies, American Chemistry Council, and the Washington Legal Foundation.

This result arguably leaves Pennsylvania law very much muddled, as recently the Third Circuit predicted that Pennsylvania would adopt the Third Restatement. See Berrier v. Simplicity Manufacturing, Inc., 563 F.3d 38 (3d Cir. 2009).  In state court, the traditional Pennsylvania version (based on Azzarello v. Black Brothers Co., 391 A.2d 1020 (Pa. 1978)) of strict liability prevails, while the federal courts may be following Berrier to apply the Third Restatement in diversity cases based upon Pennsylvania law.

Plaintiff had argued that a return to a fault-based system would unfairly increase the plaintiffs’ burden of proof, and adoption of the Third Restatement would reduce the incentive to product manufacturers and suppliers to distribute safer products. 

In a sharply worded dissent to the dismissal, two justices called the current law severely
deficient, particularly when measured against developed understanding and experience, and argued that necessary adjustments are long overdue. The current distinctions that Pennsylvania law makes between negligence and strict liability have no place in any scheme purporting to recognize that manufacturers and distributors are not outright insurers for all harm involving their products.

Third Circuit Predicts Pennsylvania Would Adopt 3rd Restatement

The Third Circuit has predicted that the Pennsylvania Supreme Court would abandon Pennsylvania’s peculiar rule of strict liability and join several other states in adopting the form of product liability espoused in the Third Restatement of Torts. Berrier v. Simplicity Manufacturing, Inc., 2009 WL 1054684 (3d Cir. April 21, 2009). My colleague Jim Beck was on the amicus brief for the defense side, and a law school classmate argued for the plaintiffs. But our interest at MassTortDefense was far more than personal: Pennsylvania product liability law has been regarded as including an antiquated and somewhat unnaturally strict version of strict liability, which, in its attempt to distinguish between negligence and 402A strict liability, seemingly precludes any reference to “foreseeability” or “reasonableness” or other negligence-sounding notions. See Lewis v. Coffing Hoist Division, Duff-Norton Co., 528 A.2d 590 (Pa. 1987); Azzarello v. Black Brothers Co., 391 A.2d 1020 (Pa. 1978).


That notion impacted mass tort and products defendants adversely in a number of ways. There is typically no balancing of risks and utility of alternative designs permitted; there is no consideration of comparative fault in strict liability that would reduce a verdict where the plaintiff’s conduct is clearly relevant; only when the plaintiff’s conduct is the “sole cause” of his or her injuries does it become relevant. Similarly, evidence of industry standards was arguably inadmissible in Pennsylvania on strict liability claims as it goes to a defendant’s reasonable care. Some state courts have held that compliance with mandatory government regulations would likewise be inadmissible in strict liability. Accordingly, plaintiffs in cases where Pennsylvania law would apply were not bashful about dismissing their negligence count before trial and relying on this version of strict liability.

In Berrier, the primary issue on appeal was whether Pennsylvania’s strict products liability law extends to a child who was injured when her grandfather backed over her foot while using a riding mower that lacked “back-over” protection. The Pennsylvania Supreme Court has never expressly determined if one who is merely a bystander and not a user of a product can bring a products liability claim against a manufacturer to recover for injuries that occur while an intended user is using the manufacturer’s product. So here was a case in which the exclusion of any notion of forseeability (because it smacks of negligence) hits the plaintiff: not being a user and being a “foreseeable plaintiff” or being injured by “foreseeable misuse” shouldn’t be enough under traditional Pennsylvania strict liability law. And that’s what the district court held. Berrier v. Simplicity Corp., 413 F. Supp.2d 431, 442 (E.D. Pa. 2005).

Originally, when faced with the issue, the Third Circuit certified the Third Restatement question to the Pennsylvania Supreme Court. Berrier v. Simplicity Manufacturing, Inc., 2008 WL 538912 (3d Cir. Jan. 17, 2008). The Pennsylvania Supreme Court, however, declined to accept the certified question. Berrier v. Simplicity Manufacturing, Inc., 959 A.2d 900 (Pa. 2008).

Faced with having to decide, the Third Circuit predicted that the Pennsylvania Supreme Court would overturn the 1977 Azzarello case in which it adopted its version of strict liability, and instead adopt the negligence-based standard of the Third Restatement of Torts. If an accurate prediction (and there is a products case before the state Supreme Court at this time, Bugosh v. I.U. North America, Inc., 942 A.2d 897 (Pa. 2008) (question is whether "this Court should apply § 2 of the Restatement (Third) of Torts in place of § 402A of the Restatement (Second) of Torts.”)), this would seem to afford certain bystanders a cause of action in strict liability under the circumstances here; but it arguably would create a much more balanced version of strict liability, as well.

The Restatement (Third) of Torts: Products Liability, § 2, recognizes a design defect claim when the foreseeable risks of harm posed by the product could have been reduced or avoided by the adoption of a reasonable alternative design by the seller or other distributor, or a predecessor in the commercial chain of distribution, and the omission of the alternative design renders the product not reasonably safe. It recognizes a claim for inadequate instructions or warnings when the foreseeable risks of harm posed by the product could have been reduced or avoided by the provision of reasonable instructions or warnings by the seller or other distributor, or a predecessor in the commercial chain of distribution, and the omission of the instructions or warnings renders the product not reasonably safe.

The court recognized that the Third Restatement therefore eliminates much of the confusion that has resulted from attempting to quarantine negligence concepts and insulate them from strict liability claims. Slip opin. at 40. The Third Circuit relied heavily on the analysis of Justice Saylor in his concurring opinion in Phillips v. Cricket Lighters, 841 A.2d 1000 (Pa. 2003). “We therefore conclude, as Justice Saylor proclaimed in Phillips, that ‘the time has come for this Court . . . to expressly recognize the essential role of risk-utility balancing, a concept derived from negligence doctrine, in design defect litigation.’ 841 A.2d at 1015-16 (Saylor, J., concurring).”  And the federal court relied on the conclusion that the Third Restatement is more consistent with the modern trend of law, as well as the evolving policy considerations that led to the adoption in Pennsylvania of Section 402A in the first place.