Products Liability: A Legal Overview

Order Code IB77021 P R O D U C T S LIABILITY: A LEGAL OVERVIEW Updated J u n e 1, 1 9 8 7 by Henry Cohen American Law Division Congressional Research Service CONTENTS SUMMARY ISSUE DEFINITION BACKGROUND AND ANALYSIS Glossary LEG1 SLATION CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS FOR ADDITIONAL READING PRODUCTS LIABILITY: A LEGAL OVERVIEW P r o d u c t s l i a b i l i t y r e f e r s t o t h e l i a b i l i t y of a m a n u f a c t u r e r o r s e l l e r f o r i n j u r y caused by h i s product t o t h e p e r s o n o r p r o p e r t y o f a buyer o r t h i r d p a r t y . Legal developments i n r e c e n t y e a r s , p a r t i c u l a r l y t h e a d o p t i o n of s t r i c t t o r t l i a b i l i t y , have made i t s u b s t a n t i a l l y e a s i e r f o r p e r s o n s i n j u r e d by d e f e c t i v e p r o d u c t s t o r e c o v e r damages. Advocates f o r consumers and p l a i n t i f f s view t h e s e developments a s n e c e s s a r y t o e n s u r e a d e q u a t e compensation f o r i n j u r e d workers and consumers and t o f u r n i s h an i n c e n t i v e f o r t h e manufacture o f s a f e p r o d u c t s . M a n u f a c t u r e r s , on t h e o t h e r hand, contend t h a t many p r o d u c t s l i a b i l i t y judgments a r e u n w a r r a n t e d o r e x c e s s i v e and t h a t n a t i o n a l u n i f o r m i t y i n p r o d u c t s l i a b i l i t y law i s needed. Therefore, they favor replacing t h e f i f t y S t a t e p r o d u c t s l i a b i l i t y laws w i t h one F e d e r a l law. ISSUE DEFINITION P r o d u c t s l i a b i l i t y r e f e r s t o t h e l i a b i l i t y of a m a n u f a c t u r e r o r s e l l e r f o r i n j u r y c a u s e d by h i s p r o d u c t t o t h e p e r s o n o r p r o p e r t y o f a buyer o r t h i r d party. Legal developments i n r e c e n t y e a r s , p a r t i c u l a r l y t h e a d o p t i o n o f s t r i c t t o r t l i a b i l i t y , h a v e made i t s u b s t a n t i a l l y e a s i e r f o r p e r s o n s i n j u r e d by d e f e c t i v e p r o d u c t s t o r e c o v e r damages. Advocates f o r consumers and p l a i n t i f f s view t h e s e d e v e l o p m e n t s a s n e c e s s a r y t o e n s u r e a d e q u a t e c o m p e n s a t i o n f o r i n j u r e d w o r k e r s and consumers and t o f u r n i s h an i n c e n t i v e f o r t h e m a n u f a c t u r e o f s a f e p r o d u c t s . M a n u f a c t u r e r s , on t h e o t h e r h a n d , c o n t e n d t h a t many p r o d u c t s l i a b i l i t y judgments a r e u n w a r r a n t e d o r e x c e s s i v e and t h a t n a t i o n a l u n i f o r m i t y i n p r o d u c t s l i a b i l i t y l a w i s needed. Therefore, they favor replacing t h e f i f t y S t a t e p r o d u c t s l i a b i l i t y l a w s w i t h o n e F e d e r a l law. BACKGROUND AND ANALYSIS P r o d u c t s l i a b i l i t y , which i s p r i m a r i l y a m a t t e r o f S t a t e law, i s g e n e r a l l y p r e d i c a t e d on n e g l i g e n c e , b r e a c h o f w a r r a n t y , o r s t r i c t t o r t liability. To e s t a b l i s h l i a b i l i t y on t h e g r o u n d s of n e g l i g e n c e , a p l a i n t i f f must p r o v e t h a t a d e f e n d a n t b r e a c h e d a d u t y t o him t o e x e r c i s e d u e c a r e , and t h a t s u c h b r e a c h was t h e p r o x i m a t e c a u s e o f h i s i n j u r i e s . To e s t a b l i s h l i a b i l i t y u n d e r t h e b r e a c h of w a r r a n t y o r s t r i c t t o r t l i a b i l i t y t h e o r i e s , a p l a i n t i f f need p r o v e o n l y t h a t t h e d e f e n d a n t s o l d a d e f e c t i v e p r o d u c t and t h a t t h e d e f e c t i v e n e s s was t h e p r o x i m a t e c a u s e o f the plaintiff's injuries. Due c a r e on t h e p a r t o f t h e d e f e n d a n t i s ordinarily inmaterial. Breach o f w a r r a n t y i s an a c t i o n b a s e d on c o n t r a c t , and, i n some S t a t e s , r e c o v e r y i s l i m i t e d by t r a d i t i o n a l c o n t r a c t p r i n c i p l e s s u c h a s t h e l a c k of e i t h e r p r i v i t y of c o n t r a c t o r n o t i c e by t h e injured party. S t r i c t t o r t l i a b i l i t y i s n o t l i m i t e d by t h e s e p r i n c i p l e s ; i t s purpose i s " t o i n s u r e t h a t t h e c o s t s of i n j u r i e s r e s u l t i n g from d e f e c t i v e p r o d u c t s a r e b o r n e by t h e m a n u f a c t u r e r s t h a t p u t s u c h p r o d u c t s on t h e m a r k e t r a t h e r t h a n by t h e i n j u r e d p e r s o n s who a r e p o w e r l e s s t o p r o t e c t t h e m s e l v e s " (Greenman v. Yuba Power P r o d u c t s , I n c . , 377 P.2d 897 (1963)). The F e d e r a l I n t e r a g e n c y Task F o r c e on P r o d u c t s L i a b i l i t y , u n d e r t h e d i r e c t i o n o f t h e Department of Comnerce, i n i t s F i n a l R e p o r t i s s u e d Nov. 1, 1977, c o n c l u d e d t h a t , c o n t r a r y t o c l a i m s made by i n s u r a n c e companies However, and i n d u s t r y , t h e r e i s n o p r o d u c t s l i a b i l i t y i n s u r a n c e c r i s i s . t h e Task F o r c e found t h a t t h e c o s t o f p r o d u c t l i a b i l i t y i n s u r a n c e r o s e d r a m a t i c a l l y s i n c e 1974, making i t more d i f f i c u l t f o r some small f i r m s t o o b t a i n a d e q u a t e i n s u r a n c e c o v e r a g e . The m a j o r c a u s e s of t h e d r a m a t i c r i s e i n r a t e s , t h e Task F o r c e f o u n d , were i r r a t i o n a l premium s e t t i n g p r o c e d u r e s by i n s u r a n c e c o m p a n i e s , t h e m a n u f a c t u r e o f p r o d u c t s t h a t a r e n o t a s s a f e a s c u r r e n t t e c h n o l o g i e s would a l l o w , and u n c e r t a i n t i e s a s t o how p e r s o n a l i n j u r y l i t i g a t i o n i s conducted. On Apr. 6 , 1978, t h e Department o f Cormerce r e l e a s e d a n O p t i o n s P a p e r on P r o d u c t L i a b i l i t y and A c c i d e n t Compensation I s s u e s , 4 3 Fed. Reg. 14612. It i n c l u d e d a model b i l l e n t i t l e d , "Product L i a b i l i t y On S e p t . 11, 1978, t h e Department p u b l i s h e d S e l f - I n s u r a n c e Act o f 1978.'' a summary of o v e r 300 comments s u b m i t t e d t o i t on i t s O p t i o n s P a p e r ( 4 3 Fed. Reg. 40438). H.R. ~ e p a r t m e n t ' smodel b i l l . 1678 of t h e 96th Congress c l o s e l y f o l l o w s t h e On J u l y 2 0 , 1978, t h e C a r t e r A d m i n i s t r a t i o n u n v e i l e d i t s program t o d e a l w i t h p r o d u c t l i a b i l i t y problems. The p r o p o s a l s g e n e r a l l y f o l l o w e d t h o s e s u g g e s t e d by t h e Department of Commerce i n i t s O p t i o n s P a p e r , e x c e p t t h a t a t a x d e d u c t i o n f o r s e t t i n g a s i d e s e l f - i n s u r a n c e f u n d s was n o t among t h e recommendations. I n s t e a d , t h e Government a d o p t e d a recommendation by t h e Department o f t h e T r e a s u r y t o e x t e n d t h e c a r r y b a c k p e r i o d f o r n e t o p e r a t i n g l o s s e s a t t r i b u t a b l e t o p r o d u c t l i a b i l i t y from 3 t o 1 0 y e a r s . The A d m i n i s t r a t i o n a l s o d i r e c t e d t h a t a model u n i f o r m p r o d u c t l i a b i l i t y l a w b e p r e p a r e d t o add s t a b i l i t y t o p r o d u c t s l i a b i l i t y law, which v a r i e s from S t a t e t o S t a t e . L e g i s l a t i o n t o implement t h e ~ d m i n i s t r a t i o n ' s r e c o m n e n d a t i o n t o a l l o w an a d d i t i o n a l c a r r y b a c k was i n t r o d u c e d i n t h e 9 5 t h C o n g r e s s as S. 3489. I t was s u b s t a n t i a l l y e n a c t e d as S e c t i o n 371 o f t h e Revenue Act of 1978 (P.L. 95-6001, which p e r m i t s b u s i n e s s e s t o c a r r y l o s s e s from p r o d u c t l i a b i l i t y back t e n y e a r s i n s t e a d o f t h r e e , a s w e l l a s forward t h e u s u a l seven. I n a d d i t i o n , S e c t i o n 371 a l l o w s b u s i n e s s e s t o s e t a s i d e r e a s o n a b l e amounts of a f t e r - t a x income a s a r e s e r v e a g a i n s t f u t u r e l i a b i , l i t y claims without t r i g g e r i n g a penalty tax. These changes t o o k e f f e c t Oct. 1, 1979. The Department of Commerce s u b s e q u e n t l y p u b l i s h e d a Model Uniform P r o d u c t L i a b i l i t y Act. See 44 Fed. Reg. 2996 ( J a n . 1 2 , 1979) f o r t h e d r a f t v e r s i o n and 44 Fed. Reg. 62714 ( 0 c t . 3 1 , 1979) f o r t h e f i n a l Although i n t e n d e d f o r enactment by t h e S t a t e s , t h e d r a f t v e r s i o n version. was i n t r o d u c e d i n t h e 9 6 t h Congress a s H.R. 1676, and t h e f i n a l v e r s i o n was i n t r o d u c e d a s H.R. 5976 ( b o t h by R e p r e s e n t a t i v e L a F a l c e ) . H e a r i n g s on t h e two v e r s i o n s were h e l d , r e s p e c t i v e l y , by t h e House Small B u s i n e s s Subcommittee on G e n e r a l O v e r s i g h t and M i n o r i t y E n t e r p r i s e on Feb. 27, 1979, and by t h e House Comnerce Subcommittee on Consumer P r o t e c t i o n and F i n a n c e on O c t . 25, 1979. The model a c t i s comprehensive, c o v e r i n g a b r o a d r a n g e of p r o d u c t l i a b i l i t y i s s u e s . On Aug. 1 6 , 1979, t h e Department of Comnerce announced t h e a p p r o v a l by t h e White House of a l e g i s l a t i v e p r o p o s a l t o a l l o w b u s i n e s s g r o u p s t o c r e a t e t h e i r own i n s u r a n c e c o o p e r a t i v e s . E n t i t l e d t h e "product L i a b i l i t y R i s k R e t e n t i o n Act of 1979," t h e d r a f t b i l l would have a l l o w e d g r o u p s of product s e l l e r s g r o u p s of 20 companies o r more t o pool a l l o r a p o r t i o n o f t h e i r p r o d u c t l i a b i l i t y and completed o p e r a t i o n s r i s k e x p o s u r e i n a federally-approved cooperative. A v e r s i o n of i t p a s s e d t h e House a s N.R. 6152, 9 6 t h C o n g r e s s ; t h e S e n a t e f a i l e d t o a c t upon t h e p r o p o s a l . The P r o d u c t L i a b i l i t y R i s k R e t e n t i o n Act of 1981 was, however, e n a c t e d by t h e 9 7 t h C o n g r e s s (P.L. 97-45) and amended by t h e 9 8 t h (P.L. 98-193). It p r e e m p t s S t a t e l a w s which i n t h e p a s t made r i s k r e t e n t i o n g r o u p s impractical. -- -- I n O c t o b e r , 1985, A t t o r n e y G e n e r a l Meese e s t a b l i s h e d t h e T o r t P o l i c y Working Group, which c o n s i s t e d of r e p r e s e n t a t i v e s of t e n F e d e r a l a g e n c i e s and t h e White House. I n F e b r u a r y , 1986, t h e g r o u p i s s u e d i t s r e p o r t : I' R e p o r t of t h e T o r t P o l i c y Working Group on t h e C a u s e s , E x t e n t and P o l i c y I m p l i c a t i o n s of t h e C u r r e n t Crisis of I n s u r a n c e A v a i l a b i l i t y and ~ffordability." The r e p o r t made e i g h t recommendations, i n c l u d i n g t h e e l i m i n a t i o n o f j o i n t and s e v e r a l l i a b i l i t y and of t h e c o l l a t e r a l s o u r c e r u l e , a $100,000 c a p on non-economic damages, and a 25% c a p on t h e f i r s t $100,000 i n l a w y e r ' s c o n t i n g e n t f e e s . I n March, 1987, t h e T o r t P o l i c y Working Group i s s u e d a n o t h e r r e p o r t : "An Update on t h e L i a b i l i t y Crisis." Consumer r e p r e s e n t a t i v e s and p l a i n t i f f s ' a t t o r n e y s a r e g e n e r a l l y opposed t o l i m i t i n g i n j u r e d p a r t i e s ' r i g h t s and r e m e d i e s i n p r o d u c t s l i a b i l i t y s u i t s ; they consider t h e present system necessary t o provide i n c e n t i v e s f o r t h e m a n u f a c t u r e o f s a f e p r o d u c t s and t o e n s u r e a d e q u a t e c o m p e n s a t i o n f o r i n j u r e d w o r k e r s and consumers. I n s u r a n c e companies a n d p r o d u c t m a n u f a c t u r e r s , on t h e o t h e r h a n d , hoping t o r e d u c e t h e amount c u r r e n t l y paid a s t h e r e s u l t of products l i a b i l i t y s u i t s , have suggested a number o f r e f o r m s of t h e t o r t s y s t e m o f r e c o v e r y . These s u g g e s t e d r e f o r m s include provisions t o A l l S t a t e s have s t a t u t e s of Enact s t a t u t e s of repose. l i m i t a t i o n s f o r product l i a b i l i t y a c t i o n s ; t h e s e p r o h i b i t i n j u r e d p a r t i e s from s u i n g more t h a n a s p e c i f i e d number o f years o f t e n two a f t e r an i n j u r y o c c u r s o r i s discovered. I n t h e l a s t s e v e r a l y e a r s o v e r 20 S t a t e s h a v e e n a c t e d s t a t u t e s of repose; t h e s e p r o h i b i t i n j u r e d p a r t i e s from s u i n g more t h a n a s p e c i f i e d number o f y e a r s often ten a f t e r t h e product i s f i r s t sold. Manufacturers f a v o r s t a t u t e s of repose because they p r e c l u d e r e c o v e r y where p r o d u c t s a r e o l d ; consumers oppose them b e c a u s e t h e y r e s u l t i n s u i t s being barred b e f o r e i n j u r i e s even occur. -- -- -- -- Allow c o m p l i a n c e w i t h government s a f e t y s t a n d a r d s t o be a defense f o r manufacturers i n products l i a b i l i t y actions. Under S t a t e law, c o m p l i a n c e w i t h government s a f e t y s t a n d a r d s u s u a l l y i s not a defense because such s t a n d a r d s a r e o n l y minimums and do n o t n e c e s s a r i l y r e f l e c t t h e h i g h e s t s t a t e of t h e a r t . However, u n d e r S t a t e l a w , compliance w i t h government c o n t r a c t s p e c i f i c a t i o n s sometimes i s p e r m i t t e d a s a d e f e n s e . To a l l o w c o m p l i a n c e w i t h government s t a n d a r d s t o b e a d e f e n s e a r g u a b l y would remove an i n c e n t i v e f o r m a n u f a c t u r e r s t o d i s c o v e r s a f e r ways t o d e s i g n t h e i r p r o d u c t s . Allow c o m p l i a n c e w i t h i n d u s t r y s a f e t y s t a n d a r d s t o b e a defense f o r manufacturers i n products l i a b i l i t y actions. Most S t a t e s c u r r e n t l y a l l o w t h e s t a t e of t h e a r t d e f e n s e . T h i s a l l o w s m a n u f a c t u r e r s t o a v o i d l i a b i l i t y when t h e i r products were designed i n accordance w i t h t h e h i g h e s t s t a t e of t h e a r t t h a t was p r a c t i c a l l y and t e c h n o l o g i c a l l y f e a s i b l e a t t h e time of manufacture. M a n u f a c t u r e r s would p r e f e r t o a v o i d l i a b i l i t y when t h e i r p r o d u c t s conform t o i n d u s t r y p r a c t i c e , even i f t h e p r a c t i c e d o e s n o t r e f l e c t t h e h i g h e s t s t a t e of t h e a r t . L i m i t p u n i t i v e damages. P u n i t i v e damages a r e damages t h a t a r e added t o compensatory damages t o p u n i s h m a n u f a c t u r e r s who a c t w i t h r e c k l e s s d i s r e g a r d f o r t h e s a f e t y o f p r o d u c t users. They o c c a s i o n a l l y a r e i n t h e m i l l i o n s of d o l l a r s . S u g g e s t e d l i m i t a t i o n s have been t o a l l o w o n l y t h e f i r s t p l a i n t i f f who s u e s concerning a p a r t i c u l a r d e f e c t i v e p r o d u c t t o r e c o v e r p u n i t i v e damages, o r t o l i m i t a p l a i n t i f f ' s p u n i t i v e damages t o t h e amount of compensatory damages he i s awarded. Another p r o p o s a l , n o t n e c e s s a r i l y f a v o r e d by m a n u f a c t u r e r s , i s t o i n s t i t u t e a n o - f a u l t system, s i m i l a r t o workers' compensation, under which m a n u f a c t u r e r s would be l i a b l e r e g a r d l e s s of whether t h e i r p r o d u c t s were d e f e c t i v e , b u t t h e i r l i a b i l i t y would be l i m i t e d t o a s p e c i f i c amount p e r injury. J e f f r e y O I C o n n e l l , a l e a d i n g proponent of t h i s c o n c e p t , s u g g e s t s t h a t , w i t h o r w i t h o u t e n a b l i n g l e g i s l a t i o n , m a n u f a c t u r e r s be p e r m i t t e d t o c o n t r a c t t o be l i a b l e on a n o - f a u l t b a s i s f o r i n j u r i e s caused by t h e i r p r o d u c t s . Unions r e p r e s e n t i n g employees could a g r e e t o such a c o n t r a c t i n exchange f o r o t h e r b e n e f i t s f o r t h e i r members, and i n d i v i d u a l consumers could a l s o e l e c t t o accept no-fault plans. A f a c t o r t o be c o n s i d e r e d by t h e c o u r t s i n many p r o d u c t s l i a b i l i t y c a s e s i s w o r k e r s ' compensation laws, which e x i s t i n a l l f i f t y S t a t e s and e n t i t l e workers t o a u t o m a t i c payment from t h e i r employers f o r i n j u r i e s s u f f e r e d on t h e job. An employer must pay r e g a r d l e s s of whether h e was a t f a u l t ; i n exchange f o r assuming t h i s burden t h e w o r k e r ' s r e c o v e r y i s l i m i t e d t o s p e c i f i e d amounts and t h e employer i s made immune from s u i t s by t h e employee. Thus, i f a worker i s i n j u r e d by a d e f e c t i v e machine, he may r e c o v e r h i s w o r k e r s ' compensation b e n e f i t s from h i s employer and t h e r e a f t e r may n o t sue h i s employer. Nothing, however, p r e v e n t s him from s u i n g a t h i r d p a r t y , such a s t h e manufacturer of t h e machine; i f he can prove t h a t t h e machine was d e f e c t i v e when s o l d , h e can r e c o v e r damages from t h e m a n u f a c t u r e r . ( I n most S t a t e s , he w i l l have t o r e i m b u r s e h i s employer o u t o f t h e proceeds.) I n most S t a t e s , where a m a n u f a c t u r e r and an employer a r e both p a r t i a l l y a t f a u l t i n c a u s i n g an a c c i d e n t , i f t h e w o r k e r r e c e i v e s h i s w o r k e r s ' compensation b e n e f i t s and s u e s t h e m a n u f a c t u r e r , t h e manufacturer cannot s u e t h e employer t o f o r c e t h e employer t o pay a s h a r e o f t h e damages beyond t h e workers' compensation benefits. To a l l o w such s u i t s would d e s t r o y t h e e s s e n t i a l b a r g a i n behind w o r k e r s ' compensation by making an employer l i a b l e f o r u n l i m i t e d t o r t damages i n a d d i t i o n t o h i s l i m i t e d w o r k e r s ' compensation n o - f a u l t damages. However, n o t t o a l l o w such s u i t s s u b j e c t s a m a n u f a c t u r e r , p a r t i a l l y a t f a u l t , t o f u l l l i a b i l i t y t h a t he would n o t have t o b e a r e x c e p t t h a t t h e o t h e r p a r t i e s happened t o be under a w o r k e r s ' compensation a c t . M a n u f a c t u r e r s g e n e r a l l y would l i k e t h e r i g h t t o sue n e g l i g e n t employers who have p a i d w o r k e r s ' compensation b e n e f i t s t o be made n a t i o n a l . Some F e d e r a l b i l l s have proposed a compromise s o l u t i o n . They would n o t a l l o w m a n u f a c t u r e r s t o s u e employers, but t h e y would reduce m a n u f a c t u r e r s ' l i a b i l i t y by t h e amount of w o r k e r s ' compensation b e n e f i t s (and t h e employee would n o t have t o reimburse h i s employer o u t of t h e damages r e c o v e r e d from t h e m a n u f a c t u r e r ) . Glossary The e x t e n t t o which e a c h o f t h e f o l l o w i n g c o n c e p t s i s a p p l i c a b l e i n p a r t i c u l a r p r o d u c t s l i a b i l i t y l a w s u i t s depends upon t h e r e l e v a n t S t a t e law. A possible contributing cause t o an i n j u r y A l t e r a t i o n of product. t h a t may b e performed by a p l a i n t i f f o r a t h i r d p a r t y , s u c h a s a p l a i n t i f f ' s e m p l o y e r ; i t may r e d u c e o r e l i m i n a t e a d e f e n d a n t ' s l i a b i l i t y . Assumption o f r i s k . A form o f c o n t r i b u t o r y f a u l t by a p l a i n t i f f ; i t may r e d u c e o r e l i m i n a t e a d e f e n d a n t ' s l i a b i l i t y . Breach of warranty. A b a s i s f o r l i a b i l i t y t h a t does not r e q u i r e t h e p l a i n t i f f t o p r o v e t h a t t h e d e f e n d a n t was n e g l i g e n t , b u t d o e s p e r m i t t h e d e f e n d a n t t o r a i s e c e r t a i n c o n t r a c t law d e f e n s e s t o a v o i d l i a b i l i t y . C o l l a t e r a l source rule. The r u l e t h a t a p l a i n t i f f ' s damages w i l l n o t be r e d u c e d by amounts h e r e c o v e r e d from s o u r c e s o t h e r t h a n t h e d e f e n d a n t , such a s h e a l t h insurance benefits. Comparative negligence. The r u l e t h a t lai in tiff ' s r e c o v e r y w i l l be r e d u c e d i n p r o p o r t i o n t o t h e d e g r e e t h a t h i s own n e g l i g e n c e ( o r o t h e r f a u l t ) was r e s p o n s i b l e f o r h i s i n j u r y . I n i t s m o d i f i e d form, r e c o v e r y i s barred i f t h e p l a i n t i f f ' s r e s p o n s i b i l i t y exceeds a s p e c i f i c degree, such a s 50%. Contributory negligence. N e g l i g e n c e ( o r o t h e r f a u l t ) on t h e p a r t of t h e p l a i n t i f f t h a t i s wholly o r p a r t i a l l y r e s p o n s i b l e f o r h i s i n j u r y . I n a few S t a t e s , a n y d e g r e e of c o n t r i b u t o r y n e g l i g e n c e w i l l t o t a l l y b a r recovery. Design d e f e c t . A d e f e c t r e s u l t i n g from a product t h a t , a l t h o u g h m a n u f a c t u r e d a s i t had been d e s i g n e d , was n o t d e s i g n e d a s s a f e l y a s i t s h o u l d h a v e been. Economic damages. Out-of-pocket e x p e n s e s i n c u r r e d by t h e p l a i n t i f f , s u c h a s m e d i c a l b i l l s o r l o s s of income. F a i l u r e t o warn. A d e f e c t c o n s i s t i n g of t h e d e f e n d a n t ' s f a i l u r e t o p r o v i d e a d e q u a t e w a r n i n g s o r i n s t r u c t i o n s r e g a r d i n g t h e u s e of i t s product. A r u l e e n a b l i n g a d e f e n d a n t whose Government c o n t r a c t d e f e n s e . p r o d u c t c o m p l i e d w i t h government c o n t r a c t s p e c i f i c a t i o n s t o a v o i d l i a b i l i t y o r t o e s t a b l i s h a p r e s u m p t i o n t h a t i t s p r o d u c t was n o t defective. Government s t a n d a r d s d e f e n s e . A r u l e i n a few S t a t e s e n a b l i n g a d e f e n d a n t whose p r o d u c t complied w i t h government s a f e t y s t a n d a r d s t o a v o i d l i a b i l i t y o r t o e s t a b l i s h a p r e s u m p t i o n t h a t i t s p r o d u c t was n o t defective. IB77021 CRS- 7 J o i n t and s e v e r a l l i a b i l i t y . contribute t o causing a p l a i n t i f f ' s t o t a l damages. 06-0 1-87 The r u l e t h a t a l l d e f e n d a n t s who i n j u r y may b e h e l d l i a b l e f o r t h e Lawyers' c o n t i n g e n t f e e s . Fees p a y a b l e damages, b a s e d upon a p e r c e n t a g e o f t h e r e c o v e r y . only upon recovery of M a n u f a c t u r i n g d e f e c t . A d e f e c t r e s u l t i n g from a p r o d u c t ' s n o t h a v i n g been m a n u f a c t u r e d a s i t had been d e s i g n e d . Market s h a r e l i a b i l i t y . L i a b i l i t y f o r a p o r t i o n of a p l a i n t i f f ' s damages b a s e d on a d e f e n d a n t ' s market s h a r e of t h e i n j u r y - c a u s i n g p r o d u c t ; a few c a s e s h a v e h e l d market s h a r e l i a b i l i t y a p p l i c a b l e where a p l a i n t i f f cannot prove t h a t a p a r t i c u l a r defendant manufactured t h e injury-causing product. A form of c o n t r i b u t o r y f a u l t by a p l a i n t i f f ; Misuse o f product. may r e d u c e o r e l i m i n a t e a d e f e n d a n t ' s l i a b i l i t y . it Negligence. Breach o f a d u t y t o e x e r c i s e due c a r e ; i t i s t h e t r a d i t i o n a l n o n - i n t e r n a t i o n a l t o r t s t a n d a r d i n c a s e s n o t b a s e d upon s t r i c t liability. No-fault recovery. Recovery p e r m i t t e d i n t h e a b s e n c e of f a u l t ; i f a d o p t e d i n t h e p r o d u c t l i a b i l i t y c o n t e x t i t would p e r m i t r e c o v e r y i n t h e a b s e n c e n o t o n l y o f n e g l i g e n c e b u t i n t h e a b s e n c e of a p r o d u c t d e f e c t . blon-economic damages. Damages p a y a b l e f o r i t e m s o t h e r t h a n o u t - o f p o c k e t e x p e n s e s , s u c h a s p a i n and s u f f e r i n g o r p u n i t i v e damages. Patent danger rule. The r u l e t h a t a m a n u f a c t u r e r i s n o t l i a b l e f o r a n i n j u r y c a u s e d by a d e s i g n d e f e c t i f t h e d a n g e r s h o u l d h a v e been o b v i o u s t o t h e product user. P e r i o d i c payments o f f u t u r e damages. Payments by a d e f e n d a n t f o r a p l a i n t i f f ' s f u t u r e e x p e n s e s on a p e r i o d i c b a s i s r a t h e r t h a n i n a lump sum. P o s t - m a n u f a c t u r i n g improvements. Improvements i n a p r o d u c t ' s d e s i g n t h a t o c c u r a f t e r a n i n j u r y and which p l a i n t i f f s s e e k t o i n t r o d u c e i n c o u r t a s e v i d e n c e t h a t a n i n j u r y - c a u s i n g p r o d u c t was d e f e c t i v e . P u n i t i v e damages. and o t h e r non-economic wanton c o n d u c t . Damages awarded, i n a d d i t i o n t o economic damages damages, t o p u n i s h a d e f e n d a n t f o r w i l l f u l o r A s t a t e m e n t of t o r t law w r i t t e n by R e s t a t e m e n t (Second) o f T o r t s . l e g a l s c h o l a r s ; s e c t i o n 402 A, which p r o v i d e s f o r s t r i c t t o r t l i a b i l i t y f o r i n j u r i e s c a u s e d by d e f e c t i v e p r o d u c t s , h a s been a d o p t e d by most States. The d e f e n s e t h a t p e r m i t s a d e f e n d a n t t o S t a t e of t h e a r t defense. avoid l i a b i l i t y i n a design defect case i f a t t h e time of manufacture t h e r e was no s a f e r d e s i g n a v a i l a b l e , o r i n a f a i l u r e t o warn c a s e i f a t t h e t i m e o f m a n u f a c t u r e t h e r e was no way t h e d e f e n d a n t c o u l d h a v e known o f t h e d a n g e r h e f a i l e d t o warn a g a i n s t . A s t a t u t e s p e c i f y i n g t h e number o f y e a r s Statute of limitations. a f t e r i n j u r y occurs, o r is discovered, o r i t s cause i s discovered, w i t h i n which s u i t must be f i l e d . A s t a t u t e s p e c i f y i n g t h e number o f y e a r s a f t e r a S t a t u t e o f repose. p r o d u c t i s f i r s t s o l d o r d i s t r i b u t e d w i t h i n which s u i t must be f i l e d . Strict tort liability. L i a b i l i t y established i f a p l a i n t i f f proves t h a t a p r o d u c t d e f e c t c a u s e d a n i n j u r y ; t h e p l a i n t i f f need n o t p r o v e t h a t t h e d e f e n d a n t was n e g l i g e n t . Useful l i f e limitation. A p e r i o d o f time set f o r t h by s t a t u t e a f t e r which a p r o d u c t ' s u s e f u l l i f e i s deemed o v e r and s u i t i s b a r r e d o r a p r e s u m p t i o n t h a t t h e p r o d u c t was n o t d e f e c t i v e i s c r e a t e d ; t h i s i s s i m i l a r t o a s t a t u t e of repose. Workers' c o m p e n s a t i o n . S t a t u t e s i n e v e r y S t a t e p r o v i d i n g f o r l i m i t e d n o - f a u l t compensat i o n a g a i n s t & n p l o y e r s by w o r k e r s i n j u r e d on t h e job. R e c e i p t of s u c h c o m p e n s a t i o n o r d i n a r i l y p r e c l u d e s a worker f r o m s u i n g h i s e m p l o y e r ; i t d o e s n o t p r e c l u d e him f r o m u s i n g a p r o d u c t m a n u f a c t u r e r . LEG1 SLATION 1 0 0 t h Congress H.R. 430 (Both, T.) S e t s f o r t h uniform n a t i o n a l standards f o r products l i a b i l i t y c a s e s . Makes n e g l i g e n c e t h e s o l e t e s t f o r a l l d e f e c t i v e d e s i g n a n d failure-to-warn product l i a b i l i t y a c t i o n s . I n t r o d u c e d J a n . 6 , 1987; r e f e r r e d t o more t h a n one c o m n i t t e e . H.R. 635 (Damerneyer) C o n t a i n s p r o v i s i o n s t o r e g u l a t e i n t e r s t a t e comnerce b y p r o v i d i n g f o r a u n i f o r m p r o d u c t l i a b i l i t y law. I n t r o d u c e d J a n . 2 1 , 1987; r e f e r r e d t o more t h a n o n e c o m n i t t e e . H.R. 798 ( L a t t a ) Creates Federal products l i a b i l i t y standards. 1987; r e f e r r e d t o more t h a n o n e c o m n i t t e e . Introduced Jan. 28, H.R. 1115 ( R i c h a r d s o n e t a l . ) Amends t h e Consumer P r o d u c t S a f e t y Act t o e s t a b l i s h F e d e r a l p r o d u c t s l i a b i l i t y standards. I n t r o d u c e d Feb. 1 8 , 1987; r e f e r r e d t o Committee on Energy and Commerce. H.R. 1599 ( H c K i ~ e y ) Creates Federal products l i a b i l i t y standards. I n t r o d u c e d Mar. 1987; r e f e r r e d t o C o m n i t t e e s on J u d i c i a r y , and Energy and Comnerce. 12, H.R. 1936 ( S h u w a y ) Creates Federal products l i a b i l i t y standards. 1987; r e f e r r e d t o more t h a n one c o m n i t t e e . I n t r o d u c e d Apr. S. 426 ( P e l 1 1 P r o v i d e s l i m i t a t i o n s on t o r t a c t i o n s . Introduced Jan. r e f e r r e d t o Comnittee on Commerce, S c i e n c e , and T r a n s p o r t a t i o n . 29, 2, 1987; S. 473 (Kassebaum) C o n t a i n s p r o v i s i o n s t o r e g u l a t e i n t e r s t a t e comnerce by p r o v i d i n g f o r uniform s t a n d a r d s of l i a b i l i t y f o r harm a r i s i n g o u t of g e n e r a l a v i a t i o n accidents. I n t r o d u c e d Feb. 4 , 1987; r e f e r r e d t o Committee on C o m e r c e , S c i e n c e , and T r a n s p o r t a t i o n . S. 539 (Dole et a l . ) , S. 711 ( K a s t e n ) , H.R. 1155 (Michel et al.) I n t r o d u c e d on b e h a l f of t h e A d m i n i s t r a t i o n . These b i l l s a l l i n c l u d e t h e Product L i a b i l i t y Reform Act of 1987. S. 539 i n t r o d u c e d Feb. 1 9 , 1987. S. 711 i n t r o d u c e d Mar. 11, 1987; r e f e r r e d t o Comnittee on Commerce, S c i e n c e , and T r a n s p o r t a t i o n . H.R. 1155 i n t r o d u c e d Feb. 1 9 , 1987; r e f e r r e d t o more t h a n one committee. S. 554 (HcConnell) C o n t a i n s p r o v i s i o n s f o r g r e a t e r c e r t a i n t y i n t h e a v a i l a b i l i t y and c o s t of l i a b i l i t y i n s u r a n c e , e l i m i n a t i o n o f a b u s e s i n t h e t o r t system, and f o r o t h e r purposes. I n t r o d u c e d Feb. 19, 1987; r e f e r r e d t o Committee on the Judiciary. S. 666 (Kasten et a l . ) P r o v i d e s f o r r e g u l a t i o n of i n t e r s t a t e commerce p r o v i d i n g f o r a uniform p r o d u c t l i a b i l i t y law, and f o r o t h e r purposes. I n t r o d u c e d Mar. 6 , 1987; r e f e r r e d t o Comnittee on Commerce, S c i e n c e , and T r a n s p o r t a t i o n . S. 687 ( D a n f o r t h et a l . ) P r o v i d e s f o r r e g u l a t i o n of i n t e r s t a t e commerce by p r o v i d i n g f o r a uniform p r o d u c t l i a b i l i t y law, and f o r o t h e r purposes. I n t r o d u c e d Mar. 6 , 1987; r e f e r r e d t o Comnittee on t h e J u d i c i a r y . S. 688 ( D a n f o r t h ) P r o v i d e s f o r r e g u l a t i o n of i n t e r s t a t e commerce by p r o v i d i n g f o r a uniform product l i a b i l i t y law, and f o r o t h e r purposes. I n t r o d u c e d Mar. 6 , 1987; r e f e r r e d t o Comnittee on t h e J u d i c i a r y . 95th - 9 9 t h Congresses The o n l y law e n a c t e d by t h e 9 5 t h Congress p e r t a i n i n g t o p r o d u c t s l i a b i l i t y was t h e Revenue Act of 1978 (P.L. 95-600), S e c t i o n 371 of which p e r m i t s b u s i n e s s e s t o c a r r y l o s s e s from p r o d u c t s l i a b i l i t y back t e n y e a r s i n s t e a d of t h r e e , a s w e l l a s forward t h e u s u a l seven. S e c t i o n 371 a l s o allows businesses t o s e t l i a b i l i t y claims without t r i g g e r i n g a p e n a l t y No p r o d u c t s l i a b i l i t y tax. These changes took e f f e c t Oct. 1, 1979. l e g i s l a t i o n was e n a c t e d by t h e 96th Congress. The 9 7 t h Congress e n a c t e d P.L. 97-45, t h e P r o d u c t L i a b i l i t y R i s k R e t e n t i o n Act o f 1981. Congress e n a c t e d P.L. 98-193, a c l a r i f i c a t i o n of t h e P r o d u c t R i s k R e t e n t i o n Act of 1981. The 9 8 t h Liability The 9 9 t h Congress e n a c t e d t h e R i s k R e t e n t i o n Amendments o f 1986, P.L. 99-563, which expanded t h e s c o p e of t h e P r o d u c t L i a b i l i t y R i s k R e t e n t i o n Act o f 1 9 8 1 t o e n a b l e r i s k r e t e n t i o n g r o u p s and p u r c h a s i n g g r o u p s t o provide a l l types of l i a b i l i t y insurance, not only products l i a b i l i t y insurance. The 9 9 t h Congress a l s o e n a c t e d t h e Childhood V a c c i n e I n j u r y I t w i l l t a k e e f f e c t o n l y a f t e r Congress e n a c t s Act of 1986, P.L. 99-660. I t w i l l r e q u i r e most p e r s o n s s u f f e r i n g a mechanism t o fund i t . vaccine-related i n j u r i e s , p r i o r t o f i l i n g a t o r t action, t o seek no-fault c o m p e n s a t i o n t h r o u g h a compensation program e s t a b l i s h e d by t h e Act. Under t h e program, c o m p e n s a t i o n f o r p a i n and s u f f e r i n g w i l l be l i m i t e d t o A p a r t y n o t s a t i s f i e d w i t h t h e compensation awarded u n d e r t h e $250,000. program c o u l d f i l e a t o r t a c t i o n u n d e r S t a t e l a w , b u t s u b j e c t t o some limitations. Hearings U.S. Congress. House. Committee on Energy and Commerce. Subcommittee on Comnerce, T r a n s p o r t a t i o n , and Tourism. Product L i a b i l i t y Risk R e t e n t i o n Act. H e a r i n g s , 9 7 t h C o n g r e s s , 1st s e s s i o n , on H.R. 2120. Apr. 9 , 1981. Washington, U.S. Govt. P r i n t . O f f . , 1981. 261 p. U.S. C o n g r e s s . House. Committee on Energy and Commerce. S u b c o m n i t t e e on 1780, H.R. 4777, H.R. H e a l t h and t h e Environme'nt. H e a r i n g on H.R. 5184. 9 9 t h C o n g r e s s , 2d s e s s i o n . J u l y 25, 1986. Washington, U.S. Govt. P r i n t . O f f . , 1987. " S e r i a l no. 99-158" U.S. Congress. House. Committee on I n t e r s t a t e and F o r e i g n Commerce. S u b c o m n i t t e e on Consumer P r o t e c t i o n and F i n a n c e . P r o d u c t l i a b i l i t y : l e g i s l a t i v e hearings. H e a r i n g s , 9 6 t h C o n g r e s s , 1st s e s s i o n , on H.R. 5571 and H.R. 5258 ( i d e n t i c a l b i l l s ) ; H.R. 1061, H.R. 2891, and H.R. 4204 ( i d e n t i c a l b i l l s ) ; and H.R. 1675, H.R. 1676, H.R. 2964, and H.R. 5626 ( i d e n t i c a l b i l l s ) . Oct. 25, 26, Nov. 1 4 , 1 5 , 26, and 27, 1979. Washington, U.S. Govt. P r i n t . O f f . , 1979. 1019 p. ----- Problems a s s o c i a t e d w i t h p r o d u c t l i a b i l i t y . 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