All questions

Litigation

i Forum

A plaintiff may bring a product liability claim in either state or federal court, although, for various reasons, plaintiffs generally prefer state courts. When a plaintiff files suit in state court, the defendant will sometimes 'remove' the case to federal court, provided the requirements for federal jurisdiction are met. Federal courts have limited jurisdiction and, broadly speaking, will only hear (1) cases that arise under federal law, such as the US Constitution or federal statutes; (2) cases where the parties are 'diverse', that is, where the plaintiffs and defendants reside in different states, or where a plaintiff is suing a foreign country or foreign citizen; and (3) admiralty cases, which include claims for injuries sustained on vessels on navigable waters. Importantly, when a federal court exercises diversity jurisdiction, the court applies federal procedural rules but state substantive law. In both state and federal courts, the plaintiff usually will be entitled to a trial by jury, though he or she may elect to try the case before a judge (also called a 'bench trial').

The structure of court systems in the United States is as follows. In the federal system, each state contains one or more federal trial courts called 'district courts'. The losing party in the district court may appeal as of right to one of 13 federal appellate courts called 'circuit' courts of appeal. A party who loses in the circuit court of appeals may seek review in the US Supreme Court via a petition for a writ of certiorari, although the chances of obtaining review in the Supreme Court are quite low. State court systems vary widely as to their organisation, but most have a structure similar to the federal court system, with trial courts of general jurisdiction, intermediate appellate courts and, at the top of the pyramid, a state supreme court that reviews only a small number of cases.

ii Burden of proof

In most civil cases, including product liability cases, a plaintiff must prove each element of a claim by a preponderance of the evidence. This standard 'directs the fact finder to decide whether the existence of a contested fact is more probable than its nonexistence', and 'where evidence weighs evenly on both sides in a controversy, the fact finder must resolve the question against the party who has the burden of proof'. In contrast, the defendant usually bears the burden to prove an 'affirmative' defence, such as a statute of limitations.

iii DefencesStatutes of limitation and repose

A statute of limitations is a law that establishes a time limit for bringing a lawsuit. The length of time within which a plaintiff must bring suit (if at all) varies from state to state. Usually, it ranges from two to four years and begins to run upon the date the injury occurred or, in a number of states, the date the injury was, or should have been, discovered (the latter is known as the 'discovery rule'). Some states also have statutes of 'repose', which are laws that bar a claim after a specified time period even if the plaintiff has not yet suffered an injury. Statutes of repose are generally longer, more final and less subject to exceptions than statutes of limitation. They usually begin to run from some date unrelated to the injury, such as the date of a product's manufacture. Some states do not apply statutes of limitations and repose to claims against the state or government agencies.

Contributory negligence, assumption of risk and comparative fault

The doctrine of contributory negligence has historically barred a plaintiff from any recovery if the plaintiff's own negligence contributed in any way to the injury. Closely related to this principle is the 'assumption of risk' doctrine, according to which persons who engage in certain dangerous activities, such as sports, are found to have consented – either directly or by implication – to the risks naturally arising from such activities. They therefore cannot recover for consequent injuries. More recently, however, most states have adopted some version of a 'comparative fault' system, either 'pure' or 'modified', in preference to the harsh consequences of the rules of contributory negligence and assumption of risk. Under comparative fault, a plaintiff whose negligence contributed to the injury can still obtain a partial recovery in proportion to his or her own fault. In a 'pure' comparative fault state, a plaintiff can recover damages even if the plaintiff's percentage of fault exceeds that of the defendant. In a 'modified' comparative fault jurisdiction, a plaintiff cannot recover any damages if the plaintiff's fault exceeds that of the defendant.

Federal pre-emption and primary jurisdiction

Under the 'Supremacy Clause' of the US Constitution, federal law on the same subject takes precedence over state law. This rule of federal 'pre-emption' typically applies in three circumstances: (1) when a federal statute specifically provides for pre-emption ('express pre-emption'); (2) when federal law directly conflicts with state law and it is impossible to comply with both ('conflict pre-emption'); and (3) when 'the scope of a federal statute indicates that Congress intended federal law to occupy a field exclusively' ('field pre-emption'). Pre-emption may play a vital role in product liability cases when the defendant's industry is heavily regulated by the federal government, as in the case of the aviation industry or the food and drug industries. For example, an airline may defend against a failure-to-warn claim by arguing that federal law occupies the entire field of aviation safety, thereby pre-empting any state-imposed liability. Or a drug manufacturer may defeat a design defect claim by arguing that federal regulations, which take precedence over conflicting state law, prohibited it from changing the design of its drugs.

Other defencesProduct alteration or misuse

A manufacturer generally will not be liable for injuries caused by a defective product if the plaintiff used the product 'in a manner which the manufacturer did not intend or reasonably anticipate'.

State of the art

A manufacturer may rely on the state-of-the-art defence by presenting evidence that the product, even if defective in hindsight, conformed to the technological standards of the time in which it was made.

Sophisticated user

Under the sophisticated user doctrine, a manufacturer has no duty to warn consumers of dangers associated with a product if the manufacturer reasonably believes that the consumer (an experienced professional, for example) knows, or should know, of such dangers.

Learned intermediary doctrine

According to the learned intermediary doctrine, a manufacturer does not have a duty to warn end consumers of product dangers if the manufacturer can reasonably rely on an intermediary, such as a prescribing physician in a pharmaceutical case, to provide such warnings. The manufacturer's duty runs solely to the learned intermediary (e.g., the prescribing doctor), not to the end patient or consumer.

Economic loss rule

Most states follow some version of the economic loss rule, pursuant to which manufacturers are not liable in strict liability or negligence if a defect causes only 'economic loss'; that is, damage to the product itself, without any other property loss or personal injury. In these states, damage to the product itself, such as diminished resale value, may be compensable under principles of contract, but not under tort law.

Government contractor defence

A contractor hired by the government generally cannot be held liable for performing the contract 'in conformity with specifications established by the government'. This may be a form of pre-emption in federal contractor cases.

Regulatory compliance

Evidence that a product complied with all applicable safety regulations may be helpful to show that the manufacturer acted reasonably in designing and manufacturing the product and that the product was not defective. Importantly, though, this defence, standing alone, will probably not absolve the defendant of liability absolutely.

Employer immunity

Every state has enacted worker's compensation laws that provide the exclusive means of compensation for job-related injuries and shield employers from any resulting tort liability. However, employers can still be held liable for injuries caused by intentional torts or wilful misconduct.

Lack of privity

Lack of privity, or a direct contractual relationship between the defendant and plaintiff, is usually not a defence to tort claims premised on strict liability, negligence or fraud. A showing of privity may be required in some states, however, for a claim premised on a breach of contractual duty, such as breach of warranty.

iv Personal jurisdiction

No court may exercise power over a defendant in the absence of personal jurisdiction. A defendant wishing to challenge personal jurisdiction must do so promptly at the beginning of the lawsuit, or else risk waiving this defence. The reach of personal jurisdiction is governed by (1) the forum state's deliberately far-reaching 'long-arm' statute and (2) the federal constitutional requirements of due process (i.e., whether it is 'fair' to subject someone outside the forum to the forum's legal power). At the most basic level, due process requires that the defendant have at least 'minimum contacts' with the forum state before being subject to personal jurisdiction in that state. The law of minimum contacts is constantly evolving, however, and recent US Supreme Court cases have placed stricter requirements on a court's ability to exercise personal jurisdiction over a claim – most notably, last year's decision in Bristol-Myers Squibb Co v. Superior Court, which is discussed at length in Section V 'Year in review' below. That said, personal jurisdiction will likely exist if a defendant transacts any business in the forum state, perhaps if only through a website, and the lawsuit is related to such a transaction. Importantly, a company may always be subject to personal jurisdiction in a state, regardless of what any particular lawsuit alleges, if the company is incorporated in that state or conducts substantial business there such that it is 'fairly regarded as at home' (also known as 'general' personal jurisdiction).

v Expert witnesses

All jurisdictions in the United States allow expert witnesses – including those with no personal knowledge of the facts – to testify at trial. The use of experts is prevalent in product liability cases. Because the US legal system is adversarial in nature, each party is responsible for hiring its own experts to prove its case, and judges only rarely retain independent experts for assistance. As a result, product liability trials will often involve a 'battle of the experts', the outcome of which may dictate the jury's verdict.

In federal courts, the admission of expert testimony is governed by Federal Rule of Evidence 702 (mirrored in many states' statutes or rules of procedure). Rule 702 allows a qualified expert to testify if the expert's testimony (1) assists the trier of fact; (2) is 'based on sufficient facts or data'; (3) is 'the product of reliable principles and methods'; and (4) involves a reliable application of those 'principles and methods to the facts of the case'. Before admitting expert testimony into evidence, the trial judge must ensure that the testimony 'both rests on a reliable foundation and is relevant to the task at hand'. Sometimes, a party will seek to bar the other's expert testimony on the grounds that the expert's methodology was scientifically unreliable.

vi Discovery

Parties in civil litigation in the United States are usually entitled to considerably broader discovery than elsewhere. Such discovery can often become time-consuming, expensive and sometimes case-dispositive as a result. In federal courts, discovery is governed by the Federal Rules of Civil Procedure, and may be obtained through a number of methods, including depositions, interrogatories (usually limited to 25), requests for production of documents, requests for inspection of evidence or premises and requests for admissions. A party may also move the court to obtain a physical or mental examination of the other party.

The scope of discovery is extensive. Parties may seek information 'regarding any non-privileged matter that is relevant to any party's claim or defence'. Such information need not be admissible in evidence as long as it 'appears reasonably calculated to lead to the discovery of admissible evidence'. Most states have modelled their procedural rules on the federal system and allow for similar methods and scope of discovery. Thus, in a product liability suit against a manufacturer, plaintiffs may ask for information on the product's design, prior recalls and other accidents, complaints or lawsuits involving the same type of product. Discovery is not limitless, however, and a party may (and usually will) object to requests for information or documents on a number of grounds, including that the requests are overly broad, unduly burdensome, seek irrelevant materials or seek information protected by the attorney–client privilege, attorney work-product doctrine or trade secret privilege.

Judges in federal and state courts encourage parties to conduct discovery with minimal court supervision and to resolve discovery disputes among themselves. In the federal system, the district court will usually appoint a magistrate judge to preside over discovery matters and a state court may appoint a 'special master' to address unique or voluminous discovery issues.

vii ApportionmentJoint and several liability

According to the principle of joint and several liability that governs product liability cases in many jurisdictions, if multiple defendants are found to be responsible for the plaintiff's injuries, each defendant is liable for the entire amount of damages but has a legal right to seek contribution from other defendants. Thus, a plaintiff may join all tortfeasors in one action and choose which one to pursue for recovery. It is then up to the defendant to seek (by agreement or legal process) contribution by other defendants. A number of states have abolished the doctrine of joint and several liability in favour of apportioning damages based on each party's percentage of fault.

Successor liability

Traditionally, a purchaser of a company's assets (rather than stock) is not liable for the seller's liabilities unless (1) the successor company assumed the seller's liabilities via an express or implied agreement; (2) the purchasing company effectively merged with the selling company; (3) the transaction was fraudulent; or (4) the buying company was a mere continuation of the seller. Some states have developed an additional exception in product liability cases – the 'product line' theory – according to which successor corporations inherit their predecessors' liability for product defects if they 'undertake the manufacture of the same products as the predecessor'. A parent company usually cannot be held liable for the torts of its subsidiary, or vice versa, unless the parent exerts such control over the subsidiary as to make it 'a mere adjunct, instrumentality, or alter ego' of the parent, or some other basis exists to pierce the corporate veil.

Market share liability

The 'market share' principle of liability, adopted in a minority of states, can be applied if multiple companies produced identical products (e.g., generic drugs) and a plaintiff cannot identify the manufacturer of the particular product that caused the injury. In such cases, the plaintiff may join in the lawsuit all manufacturers of the product at issue. Then, each defendant 'will be held liable for the proportion of the judgment represented by its share of [the] market unless it demonstrates that it could not have made the product which caused plaintiff's injuries'. This theory has been sparingly applied by the courts. In the majority of product liability cases, there remains a burden on the plaintiff to prove that he or she was injured by the defendant's specific product.

Contribution and indemnity

A buyer of goods that are slated for resale may enter into an indemnity agreement with the seller, whereby the seller agrees to indemnify the buyer for third-party product liability claims. Such agreements are generally enforceable and subject to the general contract laws of each state.

viii Mass tort actionsClass actions

In product liability cases where the amount of damages suffered by each plaintiff is relatively small, a class action is often attractive as the only economically viable option for bringing a lawsuit. In federal courts, a class action may proceed only if (1) the class is 'so numerous that joinder of all members is impracticable'; (2) there are 'questions of law or fact common to the class'; (3) the claims or defences of class representatives are 'typical of the claims or defenses of the class'; and (4) the class representatives and their counsel can 'fairly and adequately protect the interests of the class'. Most states have similar requirements for class actions.

Class actions filed against product manufacturers can be brought on behalf of consumers residing in a single state, multiple states or nationwide. While plaintiffs' counsel often will seek to increase a defendant's exposure by filing a multi-state or nationwide class action, such classes have come under increasingly stringent review in recent years. Specifically, courts have held that variations in state law may predominate over 'common' issues or may create significant manageability problems such that a class action is not superior to other available methods for fairly and efficiently adjudicating the controversy.

One of the most important developments in the law of class actions in the past two decades was the enactment of the Class Action Fairness Act of 2005 (CAFA). This statute expanded the scope of federal jurisdiction over class actions, making it easier for defendants to remove such actions from state to federal courts.

Aggregated mass actions

Under federal law, when multiple civil actions, either class or individual, are filed in different federal districts but involve the same subject matter, these lawsuits may be consolidated in one district court for pretrial proceedings. This consolidation is referred to as multidistrict litigation (MDL) and is intended 'to provide centralised management of pretrial proceedings and to ensure their “just and efficient” conduct'. Actions may be transferred to an MDL either by a specially created judicial panel or by motion of a party. At the conclusion of pretrial proceedings, MDL cases are transferred back to their home districts for trial or other resolution. Many states also provide similar mechanisms for aggregating certain actions before a single judge for pretrial proceedings. One popular venue for aggregated mass tort actions is the Philadelphia Court of Common Pleas.

Government actions

Sometimes, a state government (e.g., a state attorney general) will bring a product liability lawsuit against a manufacturer on behalf of the state's citizens. As recently explained by the Supreme Court, such lawsuits do not qualify as 'mass actions' under CAFA and thus are not removable to federal court, because they only have a single plaintiff – the state – not the 100 or more required under CAFA.

ix DamagesCompensatory damages

As a primary method of recovery, most product liability plaintiffs will seek compensatory damages, which include both an economic and non-economic component. Economic or 'special' damages are those that are particular to each plaintiff, including 'out-of-pocket medical expenses, future medical expenses, lost wages and lost earning potential'. Non-economic or 'general' damages are those that plaintiffs are generally expected to incur in personal injury cases, such as mental suffering, inconvenience, loss of enjoyment or other losses of lifestyle. Some states impose caps on the amount of non-economic damages available to plaintiffs.

Injunctive relief

In most states, to obtain an injunction, a plaintiff must show that there is no adequate remedy at law and that he or she will suffer irreparable harm in the absence of an injunction. Many product liability plaintiffs will not be able to show a need for an injunction because, by virtue of their lawsuits, they are already aware of dangers associated with a particular product defect or inadequate label and will be able to avoid those dangers in the future. Some states may allow injunctive relief in the form of medical monitoring when a plaintiff alleges exposure to dangerous substances but cannot prove a physical injury (such as cancer) because the disease has not yet manifested itself.

Punitive damages

Punitive damages may greatly enhance a plaintiff's monetary recovery in a product liability case. Although states use a variety of different standards to determine the propriety of awarding punitive damages, most will allow such damages only upon a heightened showing of fault, such as intentional wrongdoing or conscious disregard for the safety of others. Most states will also require a plaintiff to establish the availability of punitive damages by 'clear and convincing evidence' – a higher standard of proof than the usual 'preponderance of the evidence' standard.

Criminal prosecutions

Criminal prosecutions against individuals or companies, though possible, are relatively rare in the product liability context. When such prosecutions do occur, they usually target company executives or other high-level individuals for conspiracy, lying to government authorities, or committing other types of fraud or intentional misrepresentation, not for merely introducing a defective product to market. Notably, however, the Federal Food, Drug, and Cosmetic Act (FDCA) criminalises even the unintentional production or distribution of 'adulterated or misbranded' food, drugs and cosmetics.