May 27, 2016

Will a Fourth State Reject Product Maker-Friendly Test? By Martina Barash May 25 — Three state supreme courts recently declined to throw out a plaintiff-friendly test for determining defects in product liability cases, and the framework for strict liability claims that often goes with it.

Will a rollover widow's case in Nevada add a fourth?

In the case, plaintiff Theresa Garcia Trejo was awarded $4.5 million after a jury was instructed to use an ordinary consumer's reasonable expectations to determine whether the roof design of an older Ford sport utility vehicle was defective.

Ford Motor Co. has appealed to the Nevada Supreme Court.

It argues the jury should have been instructed instead to weigh the roof design's risks versus its benefits when assessing defectiveness, in Ford Motor Co. v. Trejo, Nev., No. 67843, briefing completed 4/11/16 .

The jury should also have weighed whether an alternative, safer feasible design existed, the car maker says.

Whether the court will side with Trejo and—like Pennsylvania, Florida and Connecticut before it—keep the older consumer-expectations framework for product liability cases is significant.

Selected States That Have Adopted Aspects of the Restatement (Third) South Carolina— Branham v. Ford Motor Co., 701 S.E.2d 5 (S.C. 2010), a case involving vehicle rollover;

Iowa— Wright v. Brooke Group Ltd., 652 N.W.2d 159 (Iowa 2002), a case involving cigarettes;

New Jersey— Myrlak v. Port Auth. of N.Y. and N.J., 723 A.2d 45 (N.J. 1999), a case involving movable desk chairs;

Massachusetts— Vassallo v. Baxter Healthcare Corp., 696 N.E.2d 909 (Mass. 1998), a case involving silicone breast implants.

Source: 1 David G. Owen & Mary J. Davis, “Owen & Davis on Products Liability” (4th ed. 2014)

“Everyone was thinking it was a matter of time” until states replaced the Restatement (Second) of Torts, Section 402A, with the risk-utility test of the Third Restatement, defense attorney Michael W. Eady told Bloomberg BNA.

But the Pennsylvania, Florida and Connecticut high courts bucked that prediction, in three product liability cases:

•   Tincher v. Omega Flex, Inc., 2014 BL 326137, 104 A.3d 328 (Pa. 2014) (42 PSLR 1388, 12/8/14), involving steel tubing used in a gas fireplace;

•   Aubin v. Union Carbide Corp., 177 So. 3d 489 (Fla. 2015) (43 PSLR 1274, 11/9/15) , involving asbestos exposure; and

•   Izzarelli v. R.J. Reynolds Tobacco Co., 2016 BL 130835 (Conn. 2016) (44 PSLR 446, 5/2/16) , involving cigarettes.

Following those cases, there's “definitely a trend” away from the Third Restatement's risk-utility balancing test, Eady said, echoing comments he made at a recent conference on motor-vehicle litigation.

Eady, who represents Ford in the Nevada suit, is with Thompson, Coe, Cousins & Irons LLP in Austin, Texas.

Revised Test Too Pro-Maker?

That trend is important to some plaintiffs' attorneys who believe the risk-utility test is too pro-manufacturer.

They say the test unduly shifts to the plaintiffs the burden of proving issues that are often solely in the makers' hands.

“The difference in the Restatement (Third), as I understand it, is it imposes an obligation upon the injured party to prove an alternative design, versus ‘You may do it,'  ” said Matthew L. Sharp, a plaintiffs' attorney who practices in Reno, Nev.

“And the problem with that is that in certain cases, it’s just not feasible because control of the understanding of the product and the design of the product is uniquely held by the manufacturer,” Sharp told Bloomberg BNA.

He submitted an amicus brief in support of Trejo on behalf of the Nevada Justice Association, a plaintiffs' attorneys' group.

“To me, that’s the fundamental unfairness about Restatement Third—it just flips the obligation onto the plaintiffs,” Sharp said.

Eady acknowledges the Third Restatement's risk-utility test is “more from a manufacturer's perspective.”

But in Ford's opening brief, the automaker tells the top court that the risk-utility test is critical to give jurors the complete picture of a product's total risks and benefits.

That's especially true when weighing complex product liability cases such as those involving motor vehicle design and structure, the company says.

In a case “involving the design of complex products for performance in circumstances unfamiliar to the ordinary consumer, the proper test for defect is the risk vs. benefit test,” the company wrote in its opening brief.

“Only a risk vs. benefit instruction was capable of directing the jury to consider the parties’ expert evidence concerning the overall risks (and lack of benefits) of strengthening a roof as plaintiff’s expert had proposed,” Ford says.

Fuel for Plaintiffs' Fire

Which side Nevada justices agree with may indicate whether a trend is really in the offing.

Professor David G. Owen, who was heavily involved in crafting the Third Restatement, said he doubts there's really a concerted move by state top courts away from the risk-utility model.

Owen teaches at the University of South Carolina School of Law, Columbia, S.C.

The specialized nature of the products involved in the Connecticut and Florida cases—tobacco and asbestos respectively—make Owen hesitant to find such a trend.

Those products aren't “typical durable goods with an alternative design,” Owen told Bloomberg BNA. And many states build on their own precedents, he said.

But, regardless, the set of decisions “strengthens plaintiffs' hands” in arguing for the Second Restatement, he said.

That “should make courts more reluctant now to adopt frankly any of the Third Restatement's provisions,” Owen said.

“What the three cases in a row do is give a broad brush to plaintiffs to argue to other courts that the design defect definitions, not only risk-utility but also the requirement of a reasonable alternative design, are being widely repudiated,” Owen said.

“These rejections are somewhat of an embarrassment to the Third Restatement, and I say that myself with reluctance since I was editorial adviser on the project,” he said.

Owen, a prominent author on the product liability law, also co-authored a treatise relied on by the Connecticut court in rejecting the risk-benefit test.

Sharp, the plaintiffs' attorney, questioned whether there was ever a movement toward the Third Restatement in the first place.

“Those states that adopted the Restatement (Third) have never really had a full-on consumer-expectation test” modeled on the Second Restatement, he said.

“So I think it was overblown that there was this movement to adopt the Restatement (Third),” he said.

Tests Overlap

Eady, Ford's lawyer, argues that in some states it might not make that much of a difference whether the old or the revised restatement is adopted.

There's an argument that “both tests encompass the other,” as in Texas, where risk-utility balancing includes the expectations of consumers. In some 402A states, a reasonable consumer is thought to expect a manufacturer to undertake a balancing of risks and benefits, he said.

But “it definitely matters on how you instruct the jury, what test to apply, and how you argue the case to the jury,” Eady said.

Sharp said the Second Restatement is “a more functional rule of law.”

“The test is basically, ‘Is the product unreasonably dangerous and did that defect cause injury?' ” he said.

That's “an easier test to apply for the benefit of the consumer and the benefit of safety,” he said.

Pending Nevada Case

The Nevada case arises from a rollover accident involving a 2000 Ford Excursion XLT, according to plaintiff Theresa Garcia Trejo's appellate response brief.

Trejo alleges her husband, Rafael Trejo, died in the rollover due to an insufficiently strong roof. Her theory is that Rafael Trejo was still alive when the SUV came to rest on its roof.

Rafael died because he was unable to breathe, “pinned in the vehicle by its crushed roof with his airways compromised,” according to the brief.

Ford acknowledges that the roof deformed during the rollover, according to its appellate brief.

But the company argues Rafael Trejo died instantly from a broken neck when his head struck the inside of the roof before its deformation, according to the plaintiff's brief.

The jury returned a $4.5 million verdict in favor of Trejo after being instructed on the consumer-expectations test.

Briefing before the Nevada Supreme Court is complete, but oral argument is not yet scheduled.