The Munich Higher Regional Court recently reviewed an appeal of a case involving a teacher who sued a Sekt (German sparkling wine) bottle manufacturer based on an incident that occurred on July 30 2004.(1)
The defendants in the case were the end-producer and bottle filler, and the bottle manufacturer. On the date in question a school headmaster presented the plaintiff with a small (200 millilitre) bottle of Sekt as a congratulatory gesture during a school honour ceremony. As the headmaster handed over the bottle to the plaintiff, it exploded in her hand. The plaintiff was injured when a shard of glass from the exploding bottle flew into her right eye.
The court of first instance ruled in favour of the plaintiff. The defendant manufacturers filed a timely appeal. On January 11 2011 the Munich Higher Regional Court upheld the court of first instance's ruling. Since permission for a further appeal by the defendant to the Supreme Court was denied, the decision will remain binding and final.
The Munich Higher Regional Court confirmed the existence of a product defect. It also held that the defendant had not successfully produced exculpatory evidence pursuant to Section 1(2) of the Product Liability Act.
The court held that surface damage was responsible for the explosion of the bottle in question. According to the court, this surface damage constituted a product defect according to Section 3 of the act. The court relied on the assessment of a court expert, who concluded that the pressurised bottle exploded on account of damage to its surface. Such surface damage might occur in several ways (eg, during the manufacturing process, packaging, transportation or the unpacking of bottles at the factory or dealership or by the end consumer). Micro-fractures can develop as a result of surface damage to a bottle. These micro-fractures occur at the atomic level and are not identifiable, even with the use of a microscope. Such micro-fractures can spread at an unpredictable speed and without warning.
Definition of 'defective product'
According to Section 3 of the act, a product is 'defective' if it fails to offer the safety standards that can reasonably be expected, taking into account all factors, especially the product's presentation, its reasonably expected use, and the date on which it was placed on the market. According to the court, where glass bottles are concerned, the consumer expects the bottles to be free from damage – including any hairline or micro-fractures – that could lead to an explosion.
This expectation is not precluded by the fact that micro-fractures cannot be detected – that is, they are technically non-discoverable and consequently not 100% preventable. Despite this, if such a crack is present, it constitutes a manufacturing defect (a so-called 'outlier'). The liability for such non-preventable outliers does not mean that the manufacturer is liable for bad behaviour (ie, fault-based liability); rather, according to the concept of the act, the manufacturer is responsible for the danger presented by its product (ie, strict liability).
No development risk
Pursuant to Section 1(2)(5) of the act, the manufacturer is not liable if the defect is not detectable according to the scientific and technical state of the art at the time that the product was placed on the market. Liability for so-called 'development risks' should be excluded if the product's risks were not knowable at the time that it was put on the market. The court held that the elements of this defence were not fulfilled in this case. According to the court, the risks posed by carbonated beverage-filled glass bottles are widely known. The fact that the single glass bottle could not have been identified, regardless of whether it was an outlier, made no difference to the analysis. The court concluded that, in line with the assessment of the court-appointed expert, at the very least the danger presented by an exploding glass bottle is known and also generally preventable. The court expert opined that applying a special coating to the glass bottle (with a resultant increase in its production cost) would prevent the potentially serious consequences of bottle explosions.
Defect existing when product was placed on market
The court considered the defence set forth in Section 1(2)(2) of the act. According to that section, the manufacturer is not liable if the facts demonstrate that the damage-causing defect was not present in the product at the time that it was placed on the market. The burden of pleading and of proof that the product was without defect at the time that it was placed on the market lies with the manufacturer as per Section 1(4)(2) of the act. The court found that the defendant had failed to provide exculpatory evidence in the instant case.
The court rejected the defendant's argument that the bottle could have been damaged by the retailer or the headmaster. The court stated in this regard that the wording of the act requires a lesser evidentiary threshold than that of fully convincing the court, as set forth in Section 286 of the Code of Civil Procedure. Accordingly, it is enough to establish a sequence of events that, according to general life experience, appears to be plausible to determine the time at which a defect arose. In this case, the defendant did not provide evidence to establish such a plausible sequence of events. The mere possibility that the defect arose after the product was placed on the market was insufficient to exclude manufacturer liability.
Furthermore, the court pointed out that the defendants had appealed, without success, in respect of the quality assurance measures, quality controls and back-up measures which were in place during the production process. Even if it is proven that the manufacturer carried out production and control procedures – which were created, among other reasons, to prevent manufacturing defects – this does not place the manufacturer in the empirical position that the harm-causing manufacturing defect arose only after the product was placed on the market. According to the court expert, the meticulous design of the production process is not enough to exclude the possibility of an outlier (and thus exclude the manufacturer's liability). According to the court expert, micro-faults cannot be identified even with the assistance of meticulous production controls.
The court issued a clear ruling regarding two points. In order to rely successfully on exculpatory evidence, the manufacturer must present evidence of a sequence of events that indicates as plausible, in line with general life experience, a scenario whereby damage occurred to the product after it was been placed on the market. The court was clear that mere theoretical possibility will not be enough. Furthermore, a production quality control process that is based on the prevention of production defects has no specific evidentiary significance to oppose the existence of a production outlier.
For further information on this topic please contact Daniel Schulz or Michael B Hixson at Carroll Burdick & McDonough by telephone (+49 7031 439 9600), fax (+49 7031 439 9602) or email ([email protected] or [email protected]).
(1) Case 5 U 3158/10.