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Liability

Product defects

How is a ‘product defect’ defined in your jurisdiction?

The states define ‘product defect’ in numerous ways. Generally, a jury will determine whether an alleged product defect exists under one or a combination of two separate defect tests:

  • the consumer expectations test; and
  • the risk-utility test.

The consumer expectations test provides that a product is unreasonably dangerous if it is dangerous to an extent beyond that which would be contemplated by an ordinary consumer with knowledge of the product common to the community.

The risk utility test attempts to balance the utility of the product against the risks of its particular design.

Broadly speaking, a product can be defective in one of three ways:

  • Manufacturing defect – if the product left the defendant’s control with a material deviation from the its intended design specifications, formula or performance standards (one-off rather than systemic).
  • Design defect – if the design of the product at issue, rather than an error in the manufacturing process, is alleged to be the cause of the defect (a systemic rather than one-off defect).
  • Warning defect – if the defendant’s alleged failure to warn or adequately warn of a reasonable foreseeable danger of the product.

Causation and burden of proof

How is causation of loss or damage established in relation to product liability claims and where does the burden of proof lie? Can this burden be shifted in any way?

Typically, the plaintiff bears the burden of proof on each element of a claim – including causation – though several mechanisms exist for shifting the burden to the defendant. Whether the plaintiff alleges a breach of duty in a tort claim, breach of contract in a warranty claim or product defect in a strict liability claim, the plaintiff must prove by a preponderance of the evidence that the breach or defect proximately caused the plaintiff’s injury.

This analysis involves two distinct concepts: cause-in-fact and policy concerns. The former is often analysed under either the ‘but-for’ or ‘substantial factor’ causation standard, while the latter consider whether, even if the defendant’s conduct factually caused the injury, the relationship between the conduct and the injury is too remote or indirect to support liability as a matter of law.

Some states provide inferences in favour of a plaintiff (eg, a rebuttable presumption of defect where a product malfunctions). In a multi-defendant case, where the plaintiff cannot prove which defendants are liable, the burden of proof may shift to the defendant to prove that they are not the liable party or to show their relative share of liability.

Legal bases for claims

On what legal bases can a product liability claim be brought?

Product liability claims are generally brought under one of three theories:

  • strict product liability;
  • tort (negligence or fraud); and
  • warranty.

Further, most states have some version of a deceptive trade practices act or consumer protection statutes.

Criminal liability

Can a defendant be held criminally liable for defective products?

There is no criminal liability specific to defective products. To be criminally liable under state law, a product manufacturer must have the required level of criminal intent for any other similar crime, otherwise, only the deliberate misrepresentations to federal regulatory bodies with respect to a product that results in death or serious injury may subject officers or agents to criminal penalties.

Liable parties

Which parties can be held liable for defective products?

Theoretically, any entity in the ‘stream of commerce’ – a term of art which usually includes any and all manufacturers, distributors, sellers and importers – may be held liable under a strict liability theory for injury caused by a defective product. Under a negligence theory, only those with a duty to the plaintiff will be potentially liable. Typically, this includes the final manufacturer, but may also include a component parts manufacturer.

Limitation of liability

Can liability be excluded or mitigated in any way?

Many states have so-called ‘sealed container’ or ‘innocent seller’ statutes that insulate non-culpable retailers or other non-manufacturers from liability in certain circumstances.

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