The Product Regulation and Liability Review: USA

Introduction to the product liability framework

Product liability in the United States is complex and constantly evolving, governed by distinct legal systems in each of the 50 states and the federal government. Each state has developed its own constitutional and statutory framework and its own common law through decisions by the courts. Owing to the peculiarities of the US federalist system, product liability lawsuits sometimes end up in federal courts, which must nonetheless apply the applicable state's law of product liability. Many industries are heavily regulated by the federal government and federal regulations. All this leads to a complex, interesting, and sometimes confusing, interaction between state and federal law. Fortunately, many of the most important principles of product liability are similar throughout these jurisdictions. This chapter contains an overview of these principles, without purporting to describe every statute, regulation or common-law rule that may apply in a given product liability lawsuit.

As a general matter, US product liability law, in its current state, favours the right of an injured consumer to sue. The litigation environment in the United States for product manufacturers may present greater potential exposure and liability concerns than elsewhere.

Regulatory oversight

The federal government has created a number of administrative agencies to regulate product safety. Among the most prominent are the Consumer Product Safety Commission, which, as the name suggests, oversees the safety of consumer products; the Food and Drug Administration (FDA), which, inter alia, regulates the marketing and labelling of food and prescription drugs; the National Highway Traffic Safety Administration, which regulates motor vehicle safety; the Federal Aviation Administration, which governs all aspects of air transportation; the Federal Railroad Administration, which oversees trains and railways; and the Occupational Safety and Health Administration, which was created to prevent injuries in the workplace. Under certain circumstances, the rules and regulations promulgated by these federal agencies may pre-empt conflicting state law, barring an otherwise viable product liability claim. Each state may also have its own laws, agencies and regulations governing some aspects of product safety.

Causes of action

i Strict liability

Strict liability is one of the most common and plaintiff-friendly causes of action. It is recognised in the vast majority of states either through common law or by statute. A plaintiff asserting strict liability need not prove fault by the manufacturer; that is, a manufacturer can be liable even if it acted reasonably in designing and manufacturing the product and followed all applicable procedures and protocols, but nonetheless ended up producing a product later adjudged 'defective'.

To prevail on a claim of strict liability, a plaintiff must generally show the following elements: the product contained a defect; the defect existed at the time the product left the manufacturer's control; the defect rendered the product unreasonably dangerous; and the defect actually and proximately caused the plaintiff's injuries.

Generally, there are three types of defects for which a manufacturer may be strictly liable: a defect in manufacture, a defect in design and a defect in labelling. To prove a manufacturing defect, a plaintiff must show that a product became unreasonably dangerous because it did not meet manufacturing specifications or deviated from the great majority of otherwise identical products with the same design. In determining whether a design defect exists, most courts apply a risk-utility analysis, weighing the benefits and utility of a product's design against its resultant risks. Some courts also apply a 'consumer expectations' test, according to which a product's design is defective if the product fails 'to perform as safely as an ordinary consumer would expect when used in an intended or reasonably foreseeable manner'.

Causation is a necessary element of any strict product liability claim. In toxic tort cases, a plaintiff must prove both 'general causation' – that a particular substance is capable of causing the injury at issue – and 'specific causation' – that the substance did in fact cause the particular injury of this particular plaintiff. In all product liability cases, the plaintiff must also prove 'proximate' or 'legal' causation (i.e., that the injury was a reasonably foreseeable consequence of a product defect or wrongful act). Notably, a product defect or wrongful act need not be the sole cause of the injury, as long as it is a significant proximate cause. There may well be other contributing causes of the injury.

Sometimes, a plaintiff will allege that a product defect enhanced, rather than caused, the injury. Such claims are commonly referred to as 'enhanced injury', 'second-collision', or 'crashworthiness' claims, and are premised on the theory that accidents (e.g., car crashes) are foreseeable with certain products and manufacturers must take reasonable steps to design and produce products that will 'minimise the unavoidable danger'. A crashworthiness plaintiff need only show that 'the defective product was the proximate cause of the enhanced injuries – not the proximate cause of the accident itself'.

ii Negligence

To prove negligence, a plaintiff must show that the defendant owed a duty to the plaintiff; the defendant breached that duty; and the breach actually and proximately caused the plaintiff's injury. The primary difference between strict liability and negligence is that the latter requires a showing of fault, while the former does not. It is frequently stated that strict liability focuses on the condition of the product, while negligence focuses on the actual conduct of the manufacturer.

As a general principle of tort law, every person has a duty to act 'reasonably'. In keeping with this principle, a manufacturer has a duty to design and construct products that are reasonably safe for their foreseeable uses. In addition, a non-manufacturing dealer or supplier of a product may have a duty to inspect a product if it knows or has reason to know that the product may be defective.

Because a reasonable person will obey the law in most circumstances, a violation of a statute or regulation may constitute negligence in itself, or 'negligence per se'. The negligence per se doctrine does not impose strict liability, but merely reduces a plaintiff's burden of proof on the elements of duty and breach. A plaintiff who proves negligence per se must still establish that the defendant's statutory violation actually and proximately caused the injury.

iii Failure to warn

An increasingly popular cause of action in product liability is the failure-to-warn claim, alleging that the manufacturer failed to provide an adequate warning of the dangers associated with its product. These claims may be premised on either strict liability or negligence. The exact elements needed to prove a failure-to-warn claim vary between states. Generally, however, a plaintiff must show that the manufacturer had a duty to warn and breached that duty, proximately causing the plaintiff's injuries.

A manufacturer has a duty to warn consumers of dangers associated with the use of its products when the manufacturer knows or should know of such dangers. Sometimes, a product will contain a latent defect that does not manifest itself until months or years after the product is first sold. For this reason, a number of states impose a continuing duty on a manufacturer to warn of hazards that become known to the manufacturer after the sale. Importantly, many jurisdictions hold that manufacturers have no duty to warn of 'open or obvious' dangers in their products.

iv Fraud or misrepresentation

A product liability plaintiff may allege that a manufacturer committed fraud or misrepresentation, either through affirmative acts, such as false advertising, or through non-disclosure, such as a failure to disclose a known defect. To prove intentional fraud, a plaintiff must typically establish a false representation (or, in some jurisdictions, omission) of a material fact; 'scienter', in other words, knowledge that the representation is false; intent to mislead; justifiable reliance on the misrepresentation or omission; and damages.

Although many fraud-based product liability claims are grounded in common law, most states have also promulgated 'consumer protection' statutes that specifically prohibit misrepresentations in advertising, marketing or labelling, and grant private individuals a cause of action for such misrepresentations.

v Breach of warranty

Actions for a breach of warranty are somewhat unique in the products liability context because they are governed largely by the law of contracts rather than torts. Most states have adopted some version of the Uniform Commercial Code (UCC), Article 2, which applies to contracts for the sale of goods and provides for both express and implied warranties. Implied warranties generate the most product liability litigation. The most important of implied warranties is that of 'merchantability', or fitness for 'ordinary use'. The implied warranty of merchantability has been stated to exist in every contract for the sale of goods if the seller is 'a merchant with respect to goods of that kind'. Of course, a seller may disclaim any implied warranties, for example, by conspicuously labelling the product 'as is'.

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, will only hear cases that arise under federal law, such as the US Constitution or federal statutes; 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 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 Defences

Statutes 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, limitation periods range from two to four years and begin 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 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: when a federal statute specifically provides for pre-emption (express pre-emption); when federal law directly conflicts with state law and it is impossible to comply with both (conflict pre-emption); and 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 defences

Product alteration or misuse

Generally, a manufacturer 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 (e.g., an experienced professional) 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 (i.e., 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 the forum state's deliberately far-reaching 'long-arm' statute and 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, the US Supreme Court's 2017 decision in Bristol-Myers Squibb Co v. Superior Court. That said, some courts have found that 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 assists the trier of fact; is 'based on sufficient facts or data'; is 'the product of reliable principles and methods'; and 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, written 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 defense and proportional to the needs of the case'. In considering what discovery is 'proportional' to the needs of the case, courts must weigh 'the importance of the issues at stake in the action, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of the discovery in resolving the issues and whether the burden or expense of the proposed discovery outweighs its likely benefit'. 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 sometimes appoint a magistrate judge to preside over discovery matters. State and federal courts may also appoint a 'special master' to address unique or voluminous discovery issues.

vii Apportionment

Joint 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 majority of states have abolished the doctrine of pure 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 the successor company assumed the seller's liabilities via an express or implied agreement; the purchasing company effectively merged with the selling company; the transaction was fraudulent; or 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 actions

Class 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 the class is 'so numerous that joinder of all members is impracticable'; there are 'questions of law or fact common to the class'; the claims or defences of class representatives are 'typical of the claims or defenses of the class'; and 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 Damages

Compensatory 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.

Year in review

i Notable court decisions

The US Supreme Court decided several notable product liability cases in 2019. In May, the Supreme Court issued its opinion in Merck Sharp & Dohme Corp. v. Albrecht, a case involving hundreds of plaintiffs who allege that the drug manufacturer Merck failed to adequately warn consumers that its osteoporosis drug Fosamax carried a risk of atypical femur fractures. Previously, the district court had held that the plaintiffs' claims were pre-empted by federal law because there was 'clear evidence' that the FDA would not have approved the plaintiffs' proposed warning. On appeal, the Third Circuit reversed, holding that the plaintiffs had produced sufficient evidence from which a reasonable juror could determine that it was not 'highly probable' that the FDA would have rejected the plaintiffs' proposed warning. The Third Circuit reasoned that the 'clear evidence' standard was an evidentiary standard and posed a question of fact for the jury.

In a nine to zero decision, the Supreme Court reversed and decided that 'clear evidence' was a question of law for the judge to decide. In answering the question, the judge must determine whether the drug manufacturer fully informed the FDA of the justifications for the warning required by state law and that the FDA, in turn, informed the drug manufacturer that the FDA would not approve a change to the drug's label to include that warning. Although this decision was viewed as a win for the pharmaceutical industry, the majority opinion – along with a concurrence in the judgment – nevertheless emphasised the high standard required for 'impossibility' pre-emption to apply in prescription drug cases.

Additionally, the Supreme Court decided Air & Liquid Systems Corp. v. Devries, a maritime personal injury action filed against the manufacturer of engines installed on Navy vessels. The estates of deceased sailors and their spouses alleged that the engines were insulated by materials containing asbestos, which contributed to the sailors' cancer. The question on appeal was whether the defendants could be held liable for the sailors' injuries even though the asbestos was fitted onto the defendants' engines by third parties, well after the defendants distributed the engines to the Navy. The Supreme Court held that the manufacturer could be held liable if its product requires incorporation of a part, the manufacturer knows or has reason to know that the integrated product is likely to be dangerous for its intended uses, and the manufacturer has no reason to believe that the product's users will realise that danger. The decision expands the general scope of product liability, which traditionally imposes liability only when the defendant manufactured, distributed or sold the actual product that was defective. The breadth of this decision, however, is limited since it was established as a matter of federal maritime law, whereas most product liability actions in the United States are brought under the laws of an individual state.

Beyond the US Supreme Court, there were several notable product liability decisions issued by lower federal and state courts last year.

In Oberdorf v. Amazon.com Inc, a Third Circuit panel considered whether Amazon was a 'seller' of a third-party vendor's product when the vendor uses Amazon's website to facilitate the sale. The panel held that Amazon was the 'seller' and therefore liable for any product defects. The divided panel rejected Amazon's argument that it was not the seller because it never took title to or possession of the third-party vendor's product. If left undisturbed, the ruling would expand the potential liability of online retailers who sell third-party products in Pennsylvania – and potentially other states with similar product liability regimes. In August, however, the Third Circuit granted Amazon's petition to rehear the case en banc, vacating the panel's opinion and judgment. The Third Circuit's decision to take the case en banc underscores the importance of this unsettled issue of state tort law.

Additionally, in Soto et al. v. Bushmaster Firearms International LLC, the Supreme Court of Connecticut held that gun manufacturers could be held liable for certain marketing practices, notwithstanding the Protection of Lawful Commerce in Arms Act, a federal law that generally provides civil immunity for gun manufacturers and dealers when third parties use their products for unlawful purposes. The Supreme Court of Connecticut held that the act does not provide immunity when the manufacturer's marketing practices inspire or intensify illegal, offensive uses of the products. The US Supreme Court denied certiorari, which allows the Connecticut decision to remain in effect within the state. It remains to be seen whether other state high courts will follow suit.

ii Federal laws and regulation

As 2019 drew to a close, federal lawmakers passed amendments to the federal Food, Drug, and Cosmetic Act to raise the federal minimum age of sale of tobacco products from 18 to 21 years. While this legislation comprised one of the few noteworthy product liability reforms enacted by Congress last year, federal agencies ushered in new regulations and guidance that could entail significant changes for certain product manufacturers.

For instance, the FDA has taken steps to investigate certain vaping products in the wake of several deaths associated with e-cigarettes containing tetrahydrocannabinol (THC). Data suggest that the majority of these injuries may be derived from pre-filled THC cartridges sold in states where neither medical nor recreational marijuana use has been legalised. The FDA also banned certain flavoured vaping products in an attempt to prevent the sale of nicotine products that disproportionately appeal to children.

Additionally, the Department of Transportation continues to provide guidance on autonomous vehicles. Notably, the National Transportation Safety Board has been investigating crashes involving automated vehicle technology to promote safety, harmonise regulatory policies and facilitate the integration of automated vehicles throughout the transportation system. The agency continues to rely on voluntary consensus standards to promote cost-efficient innovation.

Finally, while federal lawmaking concerning product liability issues has been intermittent and relatively limited during the Trump administration, states are enacting substantial reforms to their tort laws. Last year, for example, Missouri adopted several sweeping tort reform measures, the most significant of which seeks to curtail the ability of plaintiffs to bring mass tort and class action cases in Missouri if their claims lack a sufficient nexus with the state. Reverberations may soon be felt in other jurisdictions, as the city of St Louis has become the epicentre of several mass tort actions, due to its reputation as one of the most plaintiff-friendly jurisdictions in the nation.

iii Multi-district litigation

2019 was another big year for multi-district litigation (MDL). Claims against pharmaceutical manufacturers about their alleged role in the opioid epidemic continued to dominate the headlines. There are several different categories of pending opioid cases. State attorneys general have often pursued their own actions in their respective state courts. For instance, Oklahoma has secured a US$465 million judgment against opioid manufacturers. Additionally, well over a thousand state and local governments have brought suits that are consolidated in the US District Court for the Northern District of Ohio. Finally, private parties, such as hospitals and individual consumers, have also filed suit, though these actions have generally garnered less publicity. Most notably, in the consolidated proceeding involving claims asserted by local governments, the MDL court recently approved a novel class action device called a 'negotiation class'. Specifically, the court certified a class of 49 representative local governments authorised to negotiate a settlement with opioid manufacturers on behalf of all other local governments within the class. The result of the negotiation would bind any local government that did not 'opt out' of the settlement class. While the viability of such a device has yet to be tested on appeal, the novel prospect of certifying a 'negotiation class' – in which the court elides complicated questions of causation and liability among dozens of differently situated parties – could have a profound effect on mass-tort litigation if replicated elsewhere.

Other high-profile MDLs concern Monsanto's Roundup, 3M's military earplugs and Johnson & Johnson's talcum powder, which are consolidated in federal courts in California, Florida and New Jersey, respectively. In the Roundup litigation, plaintiffs have filed suit over Monsanto's Roundup weed killer, which contains a herbicide called glyphosate. Over 40,000 plaintiffs have alleged that long-term use of the product caused them to develop non-Hodgkin's lymphoma. Jury verdicts in these cases include billion-dollar punitive damages awards, though many of these judgments have been judicially reduced in post-trial motions. The 3M military earplug litigation involves military veterans who allegedly suffered hearing loss, tinnitus and loss of balance after their use of 3M's earplugs, which were designed to block loud noises that soldiers experience during combat. The manufacturer has already settled with the Pentagon, the government agency that originally purchased the earplugs. Now, the manufacturer faces personal injury suits brought by individual veterans who claim their injuries were caused by the allegedly defective product. Finally, in the talcum powder litigation, consumer product manufacturers are being sued over claims that their baby powder contains asbestos, which allegedly caused plaintiffs to develop various forms of cancer. Trials have produced mixed results thus far, with some juries awarding damages as high as US$4.6 billion, while other juries have rendered complete defence verdicts.

In short, the stakes in multi-district litigation continue to rise each year. And, not surprisingly, more cases than ever are consolidated in MDLs. Indeed, for the first time in history, multi-district litigation now accounts for a majority of the federal civil docket, with 52 per cent of the entire civil caseload consolidated in MDLs. Accordingly, product manufacturers doing business in the United States must be prepared to mobilise a defence strategy quickly if the company faces a potential viral litigation risk.

Footnotes

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