lee burgunder legal aspects of managing technology third ed. legal aspects of managing technology...

LEE BURGUNDERLEE BURGUNDER

LEGAL ASPECTS LEGAL ASPECTS of of MANAGING MANAGING TECHNOLOGYTECHNOLOGY

Third Ed.Third Ed.

LEGAL ASPECTS LEGAL ASPECTS of of MANAGING MANAGING TECHNOLOGYTECHNOLOGY

Third Ed.Third Ed.

Tort Liability forTort Liability forPhysical and Economic Physical and Economic

HarmsHarms

Tort Liability forTort Liability forPhysical and Economic Physical and Economic

HarmsHarms

Chapter 13Chapter 13

3© 2004 West Legal Studies in BusinessA Division of Thomson Learning

LEGAL ASPECTS OF MANAGING TECHNOLGYLEE BURGUNDER • Third Ed.

Governed by state law.Governed by state law.Negligence defined: Negligence defined:

– Conduct that falls below the standard Conduct that falls below the standard established by law for the protection of established by law for the protection of others against unreasonable risk of harm.others against unreasonable risk of harm.

NegligenceNegligence



Negligence and the Negligence and the Restatement of TortsRestatement of Torts

For tort liability to arise:For tort liability to arise:– The negligent conduct must cause injury.The negligent conduct must cause injury.

– Social policy must make the person Social policy must make the person responsible for the harm caused by the responsible for the harm caused by the negligence.negligence.

– There must be no defenses that limit tort There must be no defenses that limit tort liability.liability.



Negligence AnalysisNegligence Analysis

Duty of CareDuty of Care– Reasonable person standard.Reasonable person standard.– Community standards.Community standards.– Legal standards.Legal standards.– Professional standards.Professional standards.– Economic formulations.Economic formulations.

• Prevention costs v. expected losses from injuries.Prevention costs v. expected losses from injuries.• Cheapest cost provider.Cheapest cost provider.



Causation AnalysisCausation Analysis

Direct Causation.Direct Causation.– But-for analysis.But-for analysis.

– Joint and several liability.Joint and several liability.

Proximate Cause.Proximate Cause.– Liability extends to persons and property Liability extends to persons and property

to which harm from negligence is to which harm from negligence is reasonably foreseeable.reasonably foreseeable.



Defenses to NegligenceDefenses to Negligence

Assumption of Risk.Assumption of Risk.Comparative fault.Comparative fault.



Issue:Issue: Did the N.Y. Blood Center fulfill its Did the N.Y. Blood Center fulfill its duty of care with respect to the contaminated duty of care with respect to the contaminated vial?vial?

Decision:Decision: No. No. It is possible that the N.Y. It is possible that the N.Y. Blood Center was negligent for using the Blood Center was negligent for using the contaminated vial.contaminated vial.

Rationale: Rationale: Standard of care for negligence Standard of care for negligence may exceed industry standards.may exceed industry standards.

Vuono v. New York Blood CenterVuono v. New York Blood Center



STRICT PRODUCTS LIABILITYSTRICT PRODUCTS LIABILITY



Policy Reasons for Policy Reasons for Strict Products LiabilityStrict Products Liability

Negligence may not compensate every Negligence may not compensate every consumer.consumer.– Coca-Cola example.Coca-Cola example.

Sense of justice.Sense of justice.Economic efficiency.Economic efficiency.Incentive for continuous improvement.Incentive for continuous improvement.Fundamental NegativeFundamental Negative..

– Making someone responsible for a tragedy when Making someone responsible for a tragedy when they are not blameworthy.they are not blameworthy.



Seller is liable for harm resulting from a product Seller is liable for harm resulting from a product that was in a defective condition unreasonably that was in a defective condition unreasonably dangerous to the user, regardless of fault. dangerous to the user, regardless of fault.

Applies only to sellers who regularly engage in Applies only to sellers who regularly engage in distributing the product.distributing the product.

Condition of the product must not be Condition of the product must not be substantially changed by another party before substantially changed by another party before the injuries take place.the injuries take place.

Injured person may sue any seller within the Injured person may sue any seller within the distribution chain.distribution chain.

Products Liability: General Products Liability: General PrinciplesPrinciples



Manufacturing Defects.Manufacturing Defects.– The unit causing injury was not manufactured as The unit causing injury was not manufactured as

safely as the manufacturer intended.safely as the manufacturer intended.Design Defects.Design Defects.

– The unit was manufactured as intended, but it is The unit was manufactured as intended, but it is defective because it should have been designed more defective because it should have been designed more safely.safely.

Failure to Warn.Failure to Warn.– The unit is manufactured correctly and designed as The unit is manufactured correctly and designed as

safely as possible, but it nonetheless is defective safely as possible, but it nonetheless is defective because it did not warn users sufficiently about because it did not warn users sufficiently about inherent dangers.inherent dangers.

Forms of Product DefectsForms of Product Defects



Barker v. Lull EngineeringBarker v. Lull Engineering

Issue: Issue: Was Lull’s High-Lift Loader Was Lull’s High-Lift Loader defectively designed?defectively designed?

Decision:Decision: Yes. Lull’s design was defective. Yes. Lull’s design was defective.Rationale: Rationale: Consumer Expectation Test.Consumer Expectation Test.

– The product fails to perform as safely as an The product fails to perform as safely as an ordinary consumer would expect for intended ordinary consumer would expect for intended uses uses andand reasonably foreseeable unintended uses. reasonably foreseeable unintended uses.

– Use of loader by inexperienced worker may be a Use of loader by inexperienced worker may be a reasonably foreseeable unintended use.reasonably foreseeable unintended use.



The New Restatement of The New Restatement of Torts on Product LiabilityTorts on Product Liability

The risk/benefit test is the sole basis of The risk/benefit test is the sole basis of analysis.analysis.

Consumer expectations are not a separate test, Consumer expectations are not a separate test, but part of the risk/benefit test.but part of the risk/benefit test.

Factors: Factors: – The magnitude and probability of harm.The magnitude and probability of harm.– Instructions and warnings.Instructions and warnings.– Consumer expectationsConsumer expectations– The advantages and disadvantages of potential The advantages and disadvantages of potential

alternativesalternatives



The New Restatement of Torts:The New Restatement of Torts:Failure to WarnFailure to Warn

Foreseeable risks of harm could have Foreseeable risks of harm could have been reduced by the provision of been reduced by the provision of reasonable instructions or warnings.reasonable instructions or warnings.

Important factors:Important factors:– Gravity and risks posed by the product.Gravity and risks posed by the product.– Content and comprehensibility of the Content and comprehensibility of the

warning.warning.– Intensity of expression.Intensity of expression.– Characteristics of expected user groups.Characteristics of expected user groups.



A firm must notify CPSC when:A firm must notify CPSC when:– Information reasonably supports the conclusion Information reasonably supports the conclusion

that a product fails to comply with CPSC that a product fails to comply with CPSC regulations or an industry standard.regulations or an industry standard.

– Product contains a defect that could create a Product contains a defect that could create a substantial product hazard.substantial product hazard.

– Product creates an unreasonable risk of serious Product creates an unreasonable risk of serious injury or death.injury or death.

– Product has been subject to 3 civil suits within 2 Product has been subject to 3 civil suits within 2 calendar years.calendar years.

CPSC RegulationsCPSC Regulations



Strict Product Liability and Strict Product Liability and The Computer IndustryThe Computer Industry

Expert systems and medical treatment.Expert systems and medical treatment.Year 2000 (Y2K) concerns.Year 2000 (Y2K) concerns.Repetitive motion injuries.Repetitive motion injuries.Tort Litigation.Tort Litigation.



Intentional Torts Involving Intentional Torts Involving Computer SystemsComputer Systems

Computer systems are vulnerable to Computer systems are vulnerable to both negligent and intentional injury.both negligent and intentional injury.

Trespass by E-Robots.Trespass by E-Robots.– Ebay, Inc. v. Bidder’s Edge.Ebay, Inc. v. Bidder’s Edge. Issue: Did Issue: Did

BE trespass onto Ebay’s property? BE trespass onto Ebay’s property? Decision: Yes. BE was enjoined from Decision: Yes. BE was enjoined from accessing Ebay’s computers.accessing Ebay’s computers.



Spam.Spam.Spam and Trespass.Spam and Trespass.Computer Viruses, Trojan Horses and Computer Viruses, Trojan Horses and

Worms.Worms.Electronic Coercion and Self Help.Electronic Coercion and Self Help.

Intentional Torts Involving Intentional Torts Involving Computer SystemsComputer Systems

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