Products liability theories

Introduction

In Silivanch, what theories of liability do Celebrity and the Passenger Plaintiffs assert against the Essef Defendants? Can you identify some of the key differences among these theories? For example, how do the culpability thresholds for negligence and warranty claims compare? And why does the express warranty claim fail when the implied warranty claim succeeds?

In a broad sense, products liability encompasses, in the context of products, theories of strict products liability, negligence, fraud, negligent misrepresentation, strict liability for misrepresentation, express warranty, implied warranty of merchantability, implied warranty of fitness for a particular purpose, public nuisance, and statutory liability under consumer protection law. Some of these theories will be familiar to you from your study of tort law and contract law. You may not encounter others—such as the specific causes of action available under one state’s consumer protection statutes—until you undertake an actual products liability case.

In practice, you will also find that not every state recognizes every theory of liability. North Carolina, for example, has never adopted strict products liability. Smith v. Fiber Controls Corp., 300 N.C. 669, 678, 268 S.E.2d 504, 510 (1980). Florida has abolished implied warranty claims “where the remedy of strict [products] liability is appropriate.” Kramer v. Piper Aircraft Corp., 520 So. 2d 37, 39 (Fla. 1988).

Of these various theories, this course focuses primarily on strict products liability. Courts in the middle of the 20th Century developed this theory in response to modern American consumerism. Even if “the basis of liability is purely one of tort,” Restatement (Second) of Torts § 402A (1965) cmt. m, strict products liability is clearly a child of both contract law and tort law. And it has changed more dramatically than either of its parents in the decades since its birth.

At that time, the implied warranty of merchantability (which is generally covered in Contracts) and negligence (which you have studied in Torts) were the two principal theories of recovery for physical and emotional harms caused by product deficiencies. Based on what you know, consider why courts concluded that the implied warranty of merchantability, negligence, and the other common law theories are—or at least were—insufficient to address product injuries.

Warranty

The common law recognized, and the Uniform Commercial Code (UCC) now describes, three warranties that sellers may make about their goods.

First, under the implied warranty of merchantability, a seller warrants as a matter of law that its goods are “merchantable.” U.C.C. § 2-314. Among other requirements, merchantable goods must be “fit for the ordinary purposes for which such goods are used.” U.C.C. § 2-314(2)(c). In many jurisdictions unmerchantability under implied warranty is equivalent to defectiveness under strict products liability. See, e.g., Gumbs v. International Harvester, Inc., 718 F.2d 88 (3d Cir. 1983).

Second, the implied warranty of fitness for a particular purpose applies where “the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller’s skill or judgment to select or furnish suitable goods.” U.C.C. § 2-315.

Third, a seller may make an express warranty through explicit contractual terms as well as through product literature, advertising, or another “description of the goods which is made part of the basis of the bargain,” U.C.C. § 2-313.

Because these warranties come from contract law, sellers of unfit products are strictly liable for resulting injuries. However, contractual disclaimers, privity requirements, and procedural conditions can limit a plaintiff’s ability to recover. The contours of implied warranty depend on state law—both its UCC implementation and any special consumer protection laws—as well as the federal Magnuson-Moss Warranty Act, 15 U.S.C. § 2301 et seq.

For example, states take a variety of positions on who may sue under warranty (known as horizontal privity), see U.C.C. § 2-318, and on who may be sued under warranty (known as vertical privity), see Silivanch, supra. And Magnuson-Moss explains why many products are marketed with “limited warranties,” 15 U.S.C. §§ 2303-4.

Negligence

A company that negligently designs, makes, or markets a product is liable to foreseeable victims of that negligence. See MacPherson v. Buick Motor Co., 111 N.E. 1050 (N.Y. 1916), supra. Whereas strict products liability is concerned with the reasonableness of the defendant’s product, negligence is concerned with the reasonableness of the defendant’s conduct. Even if these claims have special labels (such as “negligent failure to warn” or “negligent design”), they generally follow the ordinary rules of negligence that you have studied (and which you should carefully review). For decades, however, discovery limitations and defenses such as contributory negligence often precluded recovery. Even today, the affirmative defenses available under negligence may differ from those available under strict products liability.

Misrepresentation

Under some circumstances, a false statement can give rise to a warranty claim, a negligence claim, and even a strict products liability claim. Misrepresentation also encompasses at least three distinct torts with different culpability thresholds.

As we saw in Silivanch, intentional misrepresentation is fraud-—and, like reckless and some grossly negligent conduct, can give rise to punitive damages. See also Restatement (Second) of Torts § 525.

In some commercial contexts, the theory of negligent misrepresentation may permit recovery of pure economic damages even when general negligence and strict products liability do not. See, e.g., Giles v. Gen. Motors Acceptance Corp., 494 F.3d 865, 874-77 (9th Cir. 2007). If these harms are individually small but collectively large, a class action may make recovery more practical.

Finally, in some states a commercial seller may be strictly liable for physical injury caused by a consumer’s “justifiable reliance” on a “misrepresentation of a material fact concerning the character or quality of” the seller’s product. Restatement (Second) of Torts § 402B. When we turn to the more prominent and influential § 402A, consider how these two provisions compare.

Public nuisance

A public nuisance involves a substantial and unreasonable interference in a public right. See supra § 9.02[C]. In response to public health crises involving tobacco-, asbestos-, and lead-containing products, firearms, and opioids, some governments have pursued public nuisance claims against sellers of these products. As one court explained in the context of lead:

"A public nuisance cause of action is not premised on a defect in a product or a failure to warn but on affirmative conduct that assisted in the creation of a hazardous condition. Here, the alleged basis for defendants’ liability for the public nuisance created by lead paint is their affirmative promotion of lead paint for interior use, not their mere manufacture and distribution of lead paint or their failure to warn of its hazards.

"In contrast, a products liability action may be brought only by one who has already suffered a physical injury to his or her person or property, and the plaintiff in a products liability action is limited to recovering damages for such ... injuries. A products liability action does not provide an avenue to prevent future harm from a hazardous condition, and it cannot allow a public entity to act on behalf of a community that has been subjected to a widespread public health hazard."

Cty. of Santa Clara v. Atl. Richfield Co., 137 Cal. App. 4th 292, 309-10 (2006). In general, public nuisance claims against sellers of other “mass tort” products have likewise focused on how those sellers promoted and marketed their products. How would you frame potential public nuisance claims for the other products noted above? Many of these claims have failed or have not been fully tested. Regardless, public nuisance remains a live theory that may appear alongside or in lieu of other theories discussed in this section.

Statutory consumer protection law

States and the federal government have a variety of statutory regimes intended to protect consumers, some of which provide private rights of action. Although these laws are beyond the scope of this chapter, they also play important roles in regulating product sellers and compensating injured consumers. For example:

• The federal Magnuson-Moss Warranty Act provides procedural and substantive rights that might otherwise be abrogated by contract.
• State lemon laws may compel automakers to buy back chronically deficient vehicles.
• Unfair and Deceptive Acts and Practices (UDAP) laws may allow individuals to recover from sellers for unreasonable conduct even when no physical injury has yet occurred.

An effective products liability attorney should also be familiar with the Federal Trade Commission (FTC) and each state’s office of the attorney general. These actors (among others) can help to establish critical legal and factual foundations for private litigation.

Strict products liability

We will focus on the theory of strict products liability for much of this course. What do you know so far?

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