Products Liability Law Legal Research Blog

No Due Process Violation in Application of Collateral Estoppel

jtaylor@nlrg.com (Jeremy Y. Taylor) — Thu, 13 Dec 2018 17:20:39 GMT

Jeremy Taylor—Senior Attorney, National Legal Research Group

In a decision dated September 5, 2018, the U.S. Court of Appeals for the Eleventh Circuit held that the due process rights of the defendant tobacco manufacturers were not violated by the district court’s application of collateral estoppel based on a jury’s findings in a previous class action against the defendants. See Searcy v. R.J. Reynolds Tobacco Co., 902 F.3d 1342 (11th Cir. 2018). Searcy was an action by the daughter of a cigarette smoker against tobacco companies for negligence, strict liability, concealment, and conspiracy to conceal arising from the death of her mother. The plaintiff alleged that her mother’s illnesses were caused by her addiction to cigarettes manufactured by the defendants. Following trial, the district court entered judgment in favor of the plaintiff for $1 million in compensatory damages and $1.67 million in punitive damages.

On appeal, the defendants argued that their due process rights were violated by giving preclusive effect to the jury’s findings in a previous class action against the tobacco manufacturers in Engle v. Liggett Group, Inc., 945 So. 2d 1246 (Fla. 2006). The court of appeals, however, noted that its precedent foreclosed a due process challenge to the application of the Engle jury’s findings on negligence and strict liability claims. Based on such precedent, the court rejected the manufacturers’ due process challenge to the application of the Engle jury’s findings on such claims.

The court did note, however, that it was an open question as to whether the Engle jury’s findings applied to a claim of intentional concealment against the cigarette manufacturers. The defendant manufacturers argued that an intentional concealment claim depends on a specific statement or omission by a specific defendant, and thus presents a due process issue that does not necessarily arise with a classwide negligence or strict liability claim. The defendants argued that preclusive effect could be given to the Engle jury’s findings only as to a finding that actually decided the matter that is at issue in the second proceeding. The defendants asserted that it was not clear that the Engle jury made a finding regarding intentional concealment that was applicable to the specific concealment claims made by the plaintiff. The court rejected the defendants’ argument in holding that the district court did not violate the defendants’ due process rights in giving preclusive effect to the Engle jury’s findings regarding intentional concealment by the cigarette manufacturers. In so holding, the court observed that binding precedent established that due process was not violated by applying preclusive effect to “categorical” concealment findings in subsequent trials, and the manufacturers had notice and an opportunity to be heard on the claims.

Searcy is thus an interesting analysis of the limits of issue preclusion when a question arguably involving individualized conduct by a defendant was decided by a class action jury. The Searcy court ruled that “categorical” concealment findings by the class action jury may be given preclusive effect in subsequent litigation involving the defendant. It is thus implied that findings regarding the defendant’s specific concealment in respect of an individual plaintiff may not qualify for preclusive effect.

Similar Incident Evidence Admissible in Unintended Acceleration Case

jtaylor@nlrg.com (Jeremy Y. Taylor) — Mon, 18 Dec 2017 15:26:00 GMT

Jeremy Taylor, Senior Attorney, National Legal Research Group

The United States Court of Appeals for the Eighth Circuit recently held that evidence of other incidents involving unintended acceleration of the defendant automobile manufacturer’s vehicles was admissible in a products liability action brought by family members of persons killed in an unintended acceleration event. See Adams v. Toyota Motor Corp., 867 F.3d 903 (8th Cir. 2017).

The driver of a 1996 Toyota Camry alleged that he was unable to stop his vehicle after exiting an interstate highway, despite attempts to apply the brakes. While traveling at approximately 75 miles per hour, his vehicle collided with a car stopped at a red light. There were numerous fatalities and other severe injuries from the incident.

The plaintiffs sought to introduce evidence of other incidents involving unintended acceleration in the defendant’s vehicles. The manufacturer sought to exclude such evidence. The court began by noting that evidence of other similar incidents in a products liability action may be relevant to prove the manufacturer’s notice of the alleged defects, the manufacturer’s ability to correct known defects, the magnitude of the danger, the product’s lack of safety for its intended uses, or causation. The court cautioned that admitting other incident evidence in a products liability case carries the risk of raising extraneous controversial points, leading to a confusion of the issues, and presenting undue prejudice disproportionate to its usefulness.

The court stated that evidence of prior accidents is admissible in a products liability action only if the proponent of the evidence shows that the accidents occurred under circumstances substantially similar to those at issue in the case being adjudicated. The court observed, however, that other similar incidents need not occur in precisely the same manner as the accident at issue in order to qualify as being substantially similar for purposes of admissibility in a products liability action. According to the court, there are no hard and fast rules as to the degree of similarly required to make other similar incidents admissible. The focus must be on all the circumstances surrounding the evidence, and not necessarily on any specific similarity.

Applying these rules, the court concluded that evidence of similar incidents was admissible in the case at hand. The court noted that in each of the three other similar incidents, witnesses testified that they drove the same type of automobile and that their experiences were similar to those of the driver of the allegedly defective vehicle, in that their vehicles either accelerated or maintained their speed when the drivers removed their feet from the gas pedal, that the brakes were either ineffective or of little help in reducing the vehicles’ speed, that the problem occurred spontaneously and unpredictably, and that the witnesses were unable to regain control of their vehicles within 600 feet of first experiencing the acceleration.

Adams provides a useful guide to what is necessary for the admission of evidence of similar incidents in products liability cases. This evidence was important in Adams in providing the jury with a basis, in addition to the expert and lay testimony, for finding that the alleged unintended acceleration actually occurred. Evidence of similar incidents can be a very useful tool for plaintiff’s counsel in a products liability case.

PRODUCTS LIABILITY: Manufacturer Not Strictly Liable for Sale of Product Containing Defective Components

jtaylor@nlrg.com (Jeremy Y. Taylor) — Thu, 18 Aug 2016 14:04:17 GMT

Jeremy Taylor, Senior Attorney, National Legal Research Group

New York's highest court recently addressed the issue of whether an automobile manufacturer could be held strictly liable for a mechanic's malignant mesothelioma allegedly caused by the mechanic's exposure to asbestos while replacing asbestos-containing brakes, clutches, and engine parts in the manufacturer's automobiles. See Finerty v. Abex Corp., 2016 N.Y. slip op. 03411, 2016 WL 1735804 (N.Y. May 3, 2016). The plaintiff claimed that he was exposed to asbestos during the 1970s and 1980s while working on engine parts in tractors and passenger vehicles manufactured by the defendant, Ford Motor Company. The plaintiff was later diagnosed with peritoneal mesothelioma. The plaintiff sued Ford and others alleging strict products liability under theories of defective design and failure to warn.

The New York Court of Appeals concluded that Ford could not be held liable under the plaintiff's theories. At the threshold, the court noted that a manufacturer of defective products which places those products into the stream of commerce may be held strictly liable for injuries caused by its products, since it is the manufacturer alone who (a) can fairly be said to know and to understand when a product is suitably designed and safely made for its intended purpose, and (b) has the practical opportunity to produce safe products. The court observed that product sellers are subject to strict liability with respect to allegedly defective products because they may be said to have assumed a special responsibility to the public, which has come to expect them to stand behind their products.

The court found, however, that Ford was not a party within the chain of distribution of the components used in its vehicles, and did not actually place those components into the stream of commerce, precluding strict products liability. This was so, even though the evidence showed that Ford provided guidance to its foreign subsidiary in the design of certain components when there was no evidence that Ford was, in fact, the manufacturer or seller of the subject components. The court also rejected the plaintiff's theory that Ford was subject to strict products liability based on its purportedly being in the best position to exert pressure on its foreign subsidiary for improved product safety. According to the court, the concept of exerting pressure for safer products was applicable only to sellers, who, through their ongoing relationship with manufacturers and through contribution and indemnification in litigation, combined with their role in placing the product with consumers, were in the best position to pressure for the creation of safer products.

Finerty may thus stand for the proposition that a manufacturer's mere sale of a product containing defective components is insufficient to render the manufacturer strictly liable when the manufacturer did not manufacture or sell the components at issue.

PRODUCTS LIABILITY: What Statute of Limitations Governs Breach-of-Warranty Claims for Personal Injury?

fshackelford@nlrg.com (Alfred C. Shackelford III) — Tue, 23 Feb 2016 22:17:59 GMT

The Lawletter Vol. 41, No. 2

Fred Shackelford, Senior Attorney, National Legal Research Group

The New Mexico Supreme Court has resolved an issue of first impression in that state: When a product causes personal injury and suit is filed for breach of warranty, what statute of limitations applies? In Badilla v. Wal-Mart Stores East, 2015-NMSC-029, 357 P.3d 936, the plaintiff bought a pair of work boots at a Wal-Mart store. More than three years after he was injured while wearing the boots, he filed a personal injury suit, alleging that the soles of the boots became unglued and caused him to trip on debris.

In New Mexico, tort claims are generally subject to a three-year statute of limitations, N.M. Stat. Ann. § 37-1-8, while claims for breach of warranty under the Uniform Commercial Code ("U.C.C.") are generally subject to a four-year statute of limitations, id. § 55-2-725(1). The plaintiff based his claim on breaches of an express warranty and the implied warranties of merchantability and fitness for a particular purpose. The trial court and court of appeals ruled that the claims were time-barred under the three-year statute of limitations.

On appeal, the Badilla court noted that courts in other states have reached different conclusions as to which statute of limitations should apply. The court outlined the two approaches taken by other courts, as follows: To start with, "[t]he majority [approach holds] that the UCC limitations period applies to all actions for breach of warranties, regardless of whether the plaintiff seeks personal injury damages or economic and contractual damages." Id. This approach essentially looks to the nature of the right asserted; if the right is based in contract, it is subject to the UCC. The minority approach "holds that the type of damages sought in an action determines whether the statute of limitations in [UCC] § 2-725 applies," thus, "[a]ctions for personal injury damages or tortious injury to personal property are governed by general, non-[UCC] limitations periods, while actions for economic or breach of contract damages are governed by § 2-725." Davidson Lumber Sales, Inc. v. Bonneville Inv., Inc., 794 P.2d 11, 16 (Utah 1990). The minority approach focuses upon the remedy sought: if the remedy sought is economic damages, the claim is subject to the UCC; if the remedy sought is personal injury damages, the claim is not subject to the UCC.

2015-NMSC-029, ¶ 19, 357 P.3d at 940-41.

The Badilla court concluded that New Mexico's four-year U.C.C. statute of limitations clearly applied because (1) a seller's breach of express or implied warranties creates in the buyer a cause of action; (2) consequential damages, including those for personal injuries, are available pursuant to such cause of action; and (3) the statute of limitations applicable to that cause of action is four years. The four-year deadline for filing suit under the U.C.C. for breach of warranty of goods sold in New Mexico is clearly and unambiguously set forth in the statute. Buttressing its opinion, the court adopted the reasoning of the court in Reid v. Volkswagen of America, Inc., 512 F.2d 1294 (6th Cir. 1975), noting that courts generally favor application of the longer of two statutes of limitations. The Badilla court also agreed with the reasoning of the Kansas Court of Appeals, which rejected the minority approach, in Golden v. Den-Mat Corp., 276 P.3d 773 (Kan. Ct. App. 2012).

PRODUCTS LIABILITY: Strict Liability—Definition of "Product User" Expanded

jtaylor@nlrg.com (Jeremy Y. Taylor) — Wed, 10 Feb 2016 16:44:47 GMT

The Lawletter Vol 41 No 1

Jeremy Taylor, Senior Attorney, National Legal Research Group

The Supreme Court of South Carolina recently addressed the issue of who is a product "user" for purposes of holding the manufacturer liable for injuries under the theory of strict liability. See Lawing v. Univar, USA, Inc., No. 2013-002464, 2015 WL 7756860 (S.C. Dec. 2, 2015) (not yet released for publication). The plaintiff in Lawing was a maintenance mechanic in a factory that refined metals. The plaintiff was injured when some bags of sodium bromate, an oxidizer, caught fire when the plaintiff and other workers were using oxyacetylene torches near the bags. The plaintiff alleged that the manufacturer of the sodium bromate was strictly liable for failing to warn users of the dangers posed by the product. The manufacturer argued that it could not be held strictly liable to the plaintiff, because the plaintiff was not a "user" of the product.

The South Carolina Supreme Court, as a matter of first impression, held that the plaintiff was a "user" of the product, even though he did not actually handle the bags of sodium bromate. The court noted that South Carolina's strict liability statute, S.C. Code Ann. § 15-73-10, has adopted the Official Comments to section 402A of the Restatement (Second) of Torts, from which the statute was derived. Official Comment l to section 402A provides that a "user" includes those who are utilizing a product for purposes of doing work upon it. The court rejected as overbroad the court of appeals' definition of a "user" as anyone who could foreseeably come into contact with the dangerous nature of a product, in that such a definition would allow a mere bystander to recover in strict liability, a proposition that the South Carolina Supreme Court had previously rejected. Rather, according to the court, the determination of who constitutes a user requires a case-by-case analysis.

The court noted that the plaintiff noticed pallets of the chemical within his work area on the day of the fire but failed to request their removal, because he did not see a label indicating their dangerous nature. The court found that the plaintiff relied on the lack of labeling on the bags to evaluate the chemical's safety in the area where he was working. Under such circumstances, the plaintiff was a "user" of the product, and the manufacturer could be held strictly liable for the injuries suffered by the plaintiff.

Lawing thus stands for the principle that for purposes of recovery in strict liability, a product "user" includes more than the traditional consumer of a product and that each case should be evaluated to determine whether the plaintiff can properly be classified as a user of the product at issue.

PRODUCTS LIABILITY: Expert Testimony Based on Unfounded Assumption Inadmissible

jtaylor@nlrg.com (Jeremy Y. Taylor) — Wed, 25 Mar 2015 15:44:00 GMT

The Lawletter Vol 40 No 1

Jeremy Taylor, Senior Attorney, National Legal Research Group

The Virginia Supreme Court recently addressed the issue of the admissibility of expert testimony in a products liability case and ruled such testimony inadmissible under the circumstances presented. See Hyundai Motor Co. v. Duncan, ___ Va. ___, 766 S.E.2d 893 (2015). In Duncan, a driver was severely injured when he lost control of his car and ultimately struck a tree. Although the vehicle was equipped with a side airbag system, the airbag did not deploy. The circuit court entered judgment on a jury verdict for the plaintiff guardian/conservator.

The supreme court overturned the circuit court's judgment, concluding that the trial court had committed reversible error in admitting the testimony of the plaintiff's expert witness. Initially, the court noted that although evidentiary matters are within the discretion of the trial court, the court has no discretion to admit clearly inadmissible evidence. The court explained that expert testimony founded on assumptions that have no basis in fact is not subject to correction merely by cross-examination or by opposing experts but is inadmissible and subject to striking upon motion. According to the court, expert testimony is inadmissible if the expert fails to consider all variables bearing on the inferences to be deduced from the facts observed. The supreme court found the proffered testimony inadmissible specifically because the expert's opinion was premised on the unfounded assumption that the side airbag would have deployed if the sensor had been located on the B-pillar of the vehicle instead of on a cross-member underneath the driver's seat. The court noted that the expert had admitted that the vehicle's crash-sensing system depended on multiple factors and that he had not performed any tests to determine whether a different combination of factors would have caused the airbag to deploy in the crash.

Duncan thus stands for the proposition that an expert witness must test variations of the elements of a complex product which are claimed to render the product defective in design.

PRODUCTS LIABILITY: Nonmanufacturing Seller May Be Liable

gburns@nlrg.com (Gale Burns) — Mon, 01 Dec 2014 18:17:00 GMT

The Lawletter Vol 39 No 9

Jeremy Taylor, Senior Attorney, National Legal Research Group

In a recent decision, the U.S. District Court in Yanez v. Graco, Inc., CIV. 13-2243 JRT/JSM, 2014 WL 4415291 (D. Minn. Sept. 8, 2014), held that both a parent corporation and its subsidiary were manufacturers of the hose and paint system that allegedly caused the plaintiff's injuries. The plaintiff brought a state law strict products liability action against a number of defendants involved in the manufacture and distribution of the product. After removal of the case to federal court, the defendants moved for summary judgment.

The applicable North Dakota law relieves a nonmanufacturing seller of strict liability under circumstances applicable to the case at issue. However, North Dakota law also defines a "manufacturer" to include a seller of a product "who is owned in whole or significant part by the manufacturer." N.D. Cent. Code § 28-01.3-01 subd. 1. Examining the relationship between the manufacturer and the seller of the paint system, the court concluded that the parent corporation, which manufactured the product, and its subsidiary, the nonmanufacturing seller, were both "manufacturers" of the product for purposes of strict liability.

In so holding, the court noted that the parent corporation, either as a corporate entity or through its sole shareholder and board member, owned all of the shares of the subsidiary. The court further explained that the actual percentage of ownership is not dispositive of control giving rise to liability under the products liability statute but is part of a more comprehensive inquiry into the degree of control that an owner exerts over the corporation or the other shareholders.

The lesson of Yanez is that both products liability plaintiffs and defendants should be alert to the corporate relationships between parties in the chain of a product's distribution when a statute purports to relieve one or more of these entities from strict products liability.

PRODUCTS LIABILITY UPDATE: Medical Monitoring for Long Term Smokers Denied

gburns@nlrg.com (Gale Burns) — Mon, 24 Mar 2014 19:26:00 GMT

Jeremy Taylor, Senior Attorney, National Legal Research Group

The New York Court of Appeals recently held that New York law does not recognize an independent, equitable cause of action for medical monitoring for smoking-related diseases, such as lung cancer, brought by current or former smokers who have not been diagnosed with such a disease, and who are not being investigated by a physician for such a suspected disease. Caronia v. Philip Morris, USA, Inc., 998 N.E.2d 1065 (N.Y. 2013). The plaintiffs were all over the age of fifty and had been "pack a day" smokers for at least 20 years.

The court based its holding on the principle that a threat of future harm is not sufficient to impose liability in a tort context, noting that New York law requires physical harm as a prerequisite to tort recovery. According to the court, the physical harm requirement for tort claims provides a basis for verifying worthy claims and eliminating spurious ones by defining the class of persons who actually possess a cause of action, providing a basis for the factfinder to determine whether a litigant actually possesses a claim, and protecting court dockets from being clogged with frivolous and unfounded claims.

The dissent, and several other jurisdictions, do not agree with this holding, and the court's opinion provides a good discussion of both sides of the issue.

PRODUCTS LIABILITY: Reading a Product Warning Constitutes "Use" of the Product

gburns@nlrg.com (Gale Burns) — Tue, 03 Dec 2013 15:56:00 GMT

The Lawletter Vol 38 No 9

Jeremy Taylor, Senior Attorney, National Legal Research Group

The Court of Appeals of South Carolina recently considered whether a worker who was seriously burned when the chemical sodium bromate caught fire at his workplace could recover against the suppliers of the chemical even though the plaintiff was not "doing anything" with the product at the time of the incident. See Lawing v. Trinity Mfg., No. 5166, 2013 WL 4451075 (S.C. Ct. App. Aug. 21, 2013). The trial court granted summary judgment to the defendants on the plaintiff's strict liability cause of action and entered judgment for the defendants on the plaintiff's remaining claims. The trial court ruled that the worker could not recover, because he was not "using" the product at the time it caught fire. The court of appeals reversed.

The appellate court examined several of the official comments to the Restatement (Second) of Torts § 402A (1965), which is the genesis of strict products liability in numerous states, including South Carolina. Considering the comments together, the court concluded that the legislature intended that the term "user" include persons who foreseeably could come into contact with the dangerous nature of a product. Therefore, a person who examines a product for warnings and other safety information is one whom the seller intends to use that information to avoid the dangers associated with the product and is therefore a person who foreseeably could come into contact with such dangers. A person who reads a warning for this purpose is not a casual bystander. Rather, the person "uses" the product by reading the warning.

At the time he was injured, the plaintiff was examining bags of sodium bromate for information warning him that it would not be safe for him to work near them. The court held that in this respect, he used the product exactly as the suppliers intended. Because he was a "user" of the product, he was entitled to recover under the theory of strict liability, and the trial court erred in entering judgment for the suppliers.

Lawing provides yet another example of why it is unwise to make assumptions regarding the possible scope of relief under products liability theories. Although perhaps surprising, it turns out that a person can use a product merely by looking at it.

PRODUCTS LIABILITY UPDATE: The "Other Property" Exception to the Economic Loss Rule in Tort Claims

gburns@nlrg.com (Gale Burns) — Wed, 10 Jul 2013 13:02:00 GMT

July 11, 2013

Jeremy Taylor, Senior Attorney, National Legal Research Group

The Court of Appeals of Wisconsin recently applied the economic loss rule in a products liability action by a homeowner's property insurer against the manufacturer of an allegedly defective water softener that leaked and damaged drywall, flooring, and woodwork in the home. See State Farm Fire & Cas. Co. v. Hague Quality Water, Int'l, 2013 WI App 10, 826 N.W.2d 412. The insurer, State Farm, brought only tort claims against the manufacturer. The manufacturer defended on the basis that Wisconsin's economic loss doctrine precluded recovery under the plaintiff's theories. The trial court granted the manufacturer's motion for summary judgment. The court of appeals rejected the manufacturer's argument, holding that the insurer was entitled to proceed under its tort theories.

At the threshold, the court of appeals noted that the economic loss doctrine bars recovery of purely economic losses through tort remedies when the only damage is to the product purchased by the consumer. Hence, the doctrine does not apply when a defect in the product causes personal injury or damage to "other property." It was the "other property" exception with which the court was concerned in the case at hand.

The court noted that Wisconsin engages in a two-part analysis to determine whether damaged property constitutes "other property," so as to allow the pursuit of tort remedies. First, courts consider whether the defective product and the damaged property are part of an "integrated system." If they are, then the damaged property is considered to be the product itself and is not "other property." If they are not, the court then examines the expected function of the product and asks whether the purchaser should have foreseen that the product could cause the damage at issue. If so, then the damaged property is not "other property." In order to be "other property," the damaged property must survive both tests.

As to the integrated-system test, the court of appeals concluded that the consumer's water softener was not part of an integrated system, because it had a function apart from the drywall, flooring, and woodwork in the home. In other words, in order to come within the economic loss doctrine, a defective product must be part of a larger system, and if it lacks a function apart from its value in such a system, it is not "other property" for damage to which an action will lie in tort. The court noted that property has been deemed to be part of an integrated system precluding a tort recovery when, for example, it consisted of cement that was part of pavers that had been damaged, a replacement gear in a printing press, and windows in a home.

As to the disappointed-expectations test, the court found that such test did not preclude the insurer's recovery under its tort theories. This was so, according to the court, because the water softener was neither expected nor intended to interact with the drywall, flooring, and woodwork in the consumer's home. The alleged failure of the water softener did not have anything to do with the purpose for which it was purchased. The court observed that under the disappointed-expectations test, the economic loss doctrine precludes recovery if prevention of the risk at issue was one of the contractual expectations impelling the purchase of the defective product. Because the water softener was not reasonably expected by the consumers to interact with the drywall, flooring, and woodwork of their home, the damage caused by the product was not merely disappointed expectations, and the economic loss rule did not preclude a tort recovery. In this regard, the court stated that, although foreseeable interaction between the purchased product and the damaged property may be considered as a factor in the disappointed-expectations test, without more it is insufficient to bar a tort recovery.