The South Carolina Supreme Court has decided to adopt a risk-utility test for plaintiffs bringing design defect claims and will require a showing of a reasonable alternative design to hold a manufacturer strictly liable for harm caused by the alleged defective design. Branham v. Ford Motor Co., No. 26860 (S.C., decided August 16, 2010). The issue arose in a case involving the rollover of a sports utility vehicle (SUV) and injury to a minor passenger. A jury awarded the plaintiffs $16 million in actual damages and $15 million in punitive damages, and the automaker appealed.
The court found that the plaintiffs’ allegations about the vehicle’s rollover propensity, i.e., the “handling and stability” design defect claim, were properly submitted to the jury and thus the trial court did not err in denying the defendant’s motion for a directed verdict. The court also found that the plaintiff produced evidence of a feasible alternative design, which was also sufficient to survive a directed verdict motion. While the case was submitted to the jury on both a consumer-expectations test and a risk-utility test, the court determined that it would adopt as “the exclusive test in a products liability design case[,] the risk-utility test with its requirement of showing a feasible alternative design.” According to the court, this approach has been adopted by a majority of the states and is in accord with the Restatement (Third) of Torts: Products Liability.
The court decided to reverse and remand for a new trial, “[n]otwithstanding the existence of ample evidence to withstand a directed verdict motion.” According to the court, the plaintiffs had introduced post-manufacture evidence and evidence of similar accidents, which the court said violated two product liability rules: (i) “whether a product is defective must be measured against information known at the time the product was placed into the stream of commerce”; and (ii) “evidence of similar incidents is admissible where there is a substantial similarity between the other incidents and the accident in dispute tending to prove or disprove some fact in controversy.” The court also found error in plaintiffs’ closing argument, which “was a direct appeal to the passion and prejudice of the jury.”
While the court refused to say whether the compensatory and punitive damages awards were excessive, it found that the trial court improperly allowed the jury to punish the automaker for all rollover deaths and injuries involving its SUV contrary to Philip Morris USA v. Williams, 549 U.S. 346 (2007). The court also found that the plaintiffs “went far beyond the pale in submitting evidence of Ford’s senior management compensation,” when establishing the defendant’s wealth for purposes of establishing punitive damages.
Two concurring and dissenting justices agreed that risk-utility was the appropriate test to adopt, but disagreed that the “post-manufacture” evidence was improperly submitted to the jury. According to the dissenters, this evidence was admissible to show foreseeable risk: “the date on which the evidence was created is of little utility in determining the relevance of the evidence and a broad rule barring evidence created ‘post manufacture’ actually serves to defeat the goals of the risk-utility test.”