Products Liability Update - June 2011

Contents

• Misusing Misuse: California's Proposed Misguidance to Juries on the Effect of Unforeseeable Product Misuse
• Medicare Reporting and Product Liability Claims – The Basics and Recent Updates
• Daubert in the States: Strange Bedfellows
• Pennsylvania's Fair Share Act: Will Pennsylvania join the Majority of States and Adopt Proportionate Share Liability Among Joint Tortfeasors?
  
  

Misusing Misuse: California's Proposed Misguidance To Juries On The Effect Of Unforeseeable Product Misuse
By Alan J. Lazarus, William A. Hanssen, Siobhan A. Cullen

Introduction

California courts have often been at the forefront of expansion of manufacturers' obligations under products liability law. But the California courts have consistently drawn a public policy line on the burdens the law can permissibly impose on product manufacturers: product liability law must avoid making manufacturers insurers of the safe use of their products. The Judicial Council of California recently announced proposed revisions to California Civil Jury Instructions (known as CACI) related to the element of the foreseeability and effect of product misuse, which breach that public policy and precedential limitation. Drinker Biddle & Reath submitted comments to the Judicial Counsel in early March opposing the revisions. A copy of the letter is available upon request.

The proposed revisions, if adopted, will significantly impact litigation of product liability claims in California. The instructions expand manufacturers' design and warning obligations while simultaneously lessening the evidentiary burdens on plaintiffs by eliminating or shifting the burden of proof on key issues to the defendant manufacturer. The net result of these proposed changes is to take California further from the mainstream in common product liability issues, and to make it more difficult for manufacturers to defend product liability cases. In particular, the proposed changes would result in standards that would hold manufacturers responsible for injuries resulting from unforeseeable misuses of their products. In other words, manufacturers are being made insurers of the safe use of their products.

The Proposed Revisions

1203. Strict Liability—Design Defect—Consumer Expectation Test—Essential Factual Elements

[Name of plaintiff] claims the [product]'s design was defective because the [product] did not perform as safely as an ordinary consumer would have expected it to perform. To establish this claim, [name of plaintiff] must prove all of the following:

1. That [name of defendant] [manufactured/ distributed/sold] the [product];
2. That the [product] did not perform as safely as an ordinary consumer would have expected it to perform when used or misused in an intended or reasonably foreseeable way;
3. That [name of plaintiff] was harmed; and
4. That the [product]'s failure to perform safely was a substantial factor in causing [name of plaintiff]'s harm.

1204. Strict Liability—Design Defect—Risk-Benefit Test—Essential Factual Elements—Shifting Burden of Proof

[Name of plaintiff] claims that the [product]'s design caused harm to [name of plaintiff]. To establish this claim, [name of plaintiff] must prove all of the following:

1. That [name of defendant] [manufactured/distributed/sold] the [product];
2. That [name of plaintiff] was harmed; and
3. That the [product]'s design was a substantial factor in causing harm to [name of plaintiff].

If [name of plaintiff] has proved these three facts, then your decision on this claim must be for [name of plaintiff] unless [name of defendant] proves that the benefits of the design outweigh the risks of the design. In deciding whether the benefits outweigh the risks, you should consider the following:

1. The gravity of the potential harm resulting from the use of the [product];
2. The likelihood that this harm would occur;
3. The feasibility of an alternative safer design at the time of manufacture;
4. The cost of an alternative design;
5. The disadvantages of an alternative design; [and]
6. [Other relevant factor(s)].

1205. Strict Liability—Failure to Warn—Essential Factual Elements

[Name of plaintiff] claims that the [product] lacked sufficient [instructions] [or] [warning of potential [risks/side effects/allergic reactions]]. To establish this claim, [name of plaintiff] must prove all of the following:

1. That [name of defendants] [manufactured/distributed/sold] the [product];
2. That the [product] had potential [risks/side effects/allergic reactions] that were [known] [or] [knowable by the use of scientific knowledge available] at the time of [manufacture/distribution/sale];
3. That the potential [risks/side effects/allergic reactions] presented a substantial danger to the [product]
4. That ordinary consumers would not have recognized the potential [risks/side effects/allergic reactions];
5. That [name of defendant] failed to adequately warn [or instruct] of the potential [risks/side effects/allergic reactions];
6. That [name of plaintiff] was harmed and
7. That the lack of sufficient [instructions] [or] [warnings] was a substantial factor in causing [name of plaintiff]'s harm.

[The warning must be given to the prescribing physician and must include the potential risks, side effects, or allergic reactions that may follow the foreseeable use of the product. [Name of defendant] had a continuing duty to warn physicians as long as the product was in use.]

The Proposed Revisions Pose a Significant Threat to the Carefully Crafted Balance Struck by The California Supreme Court's Rules Regulating Liability of Product Manufacturers

Though many may argue that the balance struck is already out of whack in various respects, the California rules regulating strict products liability are carefully crafted to balance the interests of those injured by alleged product defects and the interests of manufacturers and the public in having well-defined and reasonable liability limits. Anderson v. Owens-Corning Fiberglas Corp., 53 Cal.3d 987, 994, 998, 1003-1004 (1991). Fundamental fairness also requires that manufacturers be able to discern and apply the standards for potential liability, so that they may design, manufacture and label their products to comply with the design duties imposed by the law.

The proposed revisions to the design defect risk-benefit test instructions, CACI 1204, delete the requirement that plaintiff prove, as part of a prima facie case, that he or she was harmed while the product was being used in an intended or reasonably foreseeable way. Other proposed instructions on design defect (consumer expectations test) and failure to warn, CACI 1203 and 1205, substantially dilute the requirement. By abrogating or reducing this element of plaintiff's prima facie burden of proof, the instructions significantly expand the defendant's design duties and conflict with existing California law – which is beyond the appropriate role of a jury instruction drafting committee. California products liability law is already well outside the mainstream. If adopted, the proposed instructions would move it even further in that direction.

The Proposed Instructions Abrogate or Dilute The Reasonably Foreseeable Use Element of Strict Liability and Thereby Expand Manufacturers' Duties and Liabilities

The primary problem with the proposed revisions relates to their elimination of intended use or foreseeable misuse as an element of the plaintiff's claim, shifting the burden to manufacturers to prove as an affirmative defense what might be described as "bizarre misuse" in order to escape liability.¹ Courts nationwide generally see the issue of proper or foreseeable product use as a multi-faceted issue, relating both to the scope of the manufacturer's duty to adequately design and label the product (whether the product is defectively designed or labeled) and the question of proximate cause (was it the design/ label or the manner of use which proximately caused the injury?). As to the latter issue, most courts now treat the issue as one of comparative fault if the product was defective and the use foreseeable, even if improper. See David G. Owen, Products Liability: User Misconduct Defenses, 52 S.C. L. Rev. 1, 45-48 (2000).

The general rule in national products liability law, however, has been that a manufacturer's liability should be limited to injuries caused by reasonably foreseeable uses of their products – uses that should be reasonably anticipated by the designers of the product. See id. at 48: "[T]he correlative ideas of restricting a seller's responsibility to normal or expectable product uses, on the one hand, and making users responsible for their injuries caused by particularly unusual product uses on the other hand, have been central pillars of products liability law for many years."

In California, design defect standards have long been governed by two tests, the riskbenefit test and the consumer expectations test. Under either design defect theory, liability requires plaintiffs to prove that the product was being used in a reasonably foreseeable manner at the time of injury. See Soule v. General Motors Corp., 8 Cal.4th 548, 560 (1994) ("A manufacturer, distributor, or retailer is liable in tort if a defect in the manufacture or design of its product causes injury while the product is being used in a reasonably foreseeable way"); Pannu v. Land Rover North America, Inc., 191 Cal.App.4th 1298, 1312 (2011) ("Strict liability should not be imposed upon the manufacturer (or distributor) when injury results from the use of its product that is not reasonably foreseeable.")

Likewise, where liability is predicated on a failure to provide adequate warnings, the manufacturer is obligated to warn against any knowable risks which are presented by intended or reasonably foreseeable uses of the product. Carlin v. Superior Court, 13 Cal.4th 1104, 1146 (1996); Hansen v. Sunnyside Prods., 55 Cal.App.4th 1497, 1507 n.5 (1997).

Accordingly, consistent with the general rule, under each liability theory the scope of the manufacturer's duty is defined in part by requiring that the use of the product that resulted in the injury – the use which "exposed" the alleged defect – was one which was intended or reasonably foreseeable. By deleting or diminishing this requirement, as the proposed revisions would do, the scope of the manufacturer's duties is necessarily expanded and the manner of use issue is no longer tethered to the scope of those duties.

The net effect is to abrogate California's fundamental limitation on strict liability that liability standards must not make the manufacturer an insurer of the safe use of its product – a limitation said to be essential to preventing strict liability from transforming into absolute liability. See Johnson v. American Standard, Inc., 43 Cal.4th 56, 70 (2008) ("Although manufacturers are responsible for products that contain dangers of which the public is unaware, they are not insurers, even under strict liability, for the mistakes or carelessness of consumers who should know of the dangers involved"); Anderson, 53 Cal. 3d at 994 ("Strict liability, however, was never intended to make the manufacturer or distributor of a product its insurer. From its inception . . . strict liability has never been, and is not now, absolute liability) (emphasis in original").

Making the manufacturer responsible for designing the product to be safe when used in an unintended and unforeseeable manner would run afoul of California law holding that the manufacturer is not required to do so. See Romito v. Red Plastic Co., 38 Cal.App.4th 59, 63 (1995) ("We conclude as a matter of policy that despite the means to build a safer product, a manufacturer owes no duty to prevent injuries resulting from unforeseeable and accidental product misuse"); Finn v. G. D. Searle & Co., 35 Cal.3d 691, 708 (1984) (holding that a manufacturer is under a duty to warn only of reasonably foreseeable dangers that may result from use of its product).

Thus, the proposed revisions contradict long-standing California precedent and frustrate deeply-ingrained California public policy. Further, the proposed revisions, which purport to reflect the current law in California, do not. Rather, they rely primarily on dicta in a single flawed court of appeal case, Perez v. V.A.S., 188 Cal.App.4th 658 (2010). In Perez, the appellate court ruled that the trial court had erred in requiring plaintiff to prove reasonably foreseeable use of the product. That very recent case has not yet been subjected to scrutiny by other California appellate courts. In any event, the language and ruling from Perez relied upon to support the proposed revisions was unnecessary to the decision. The court of appeal held ultimately that the judgment for the defense was justified by the court's finding that the injury resulted from unforeseeable misuse of the product, such that any error in allocation of the burden of proof in this bench trial was harmless. Perez, 188 Cal.App.4th at 663, 679.

Modification of the Risk-Benefit Instruction

Examining specifically the proposed risk-benefit instruction, CACI 1204, the intended use or foreseeable misuse element is deleted entirely. This relaxation of plaintiff's prima facie burden is compounded in this context because under California law the burden is also shifted to the defendant to prove the benefits of the design outweigh the risks. Plaintiff would therefore be able to shift the burden of proof on the issue of defect to the manufacturer without having shown that the design caused his or her injury while the product was being used in a reasonably foreseeable manner. A manufacturer does not have to warn against unforeseeable risks, which includes risks posed by unforeseeable misuses. See Aguayo v. Crompton & Knowles Corp., 183 Cal.App.3d 1032, 1042 (1986) (the duty owed by a manufacturer is to provide an adequate warning to the user on how to safely use the product if a reasonably foreseeable use of the product involves a substantial danger that would not be readily recognized by the ordinary user); Finn, 35 Cal.3d at 708. It is therefore incongruous to require the manufacturer to design for risks it cannot reasonably foresee and is not required even to warn against.

The Perez court acknowledged that the plaintiff has the initial burden of showing that he or she was injured while using the product in an intended or reasonably foreseeable manner, but improperly minimized the nature of that burden, stating that this was only a burden of producing evidence – not a burden of ultimate persuasion.² Rather, it was the defendant's burden to establish "that its product was not defective because the plaintiff's injury resulted from a misuse of the product." 188 Cal.App.4th at 678. But the only support cited and discussed by the court, paradoxically, was a revision to the use note of existing CACI No. 1204 – not the case law. Id. at 678 n.6.

Though the court's reasoning is less than clear, it appears that the court fixated on the fact that under Barker v. Lull Eng'g Co., 20 Cal.3d 413 (1978) the ultimate burden of proof on the issue of risk vs. benefit resided with the defendant. But this shift is limited to the risk-benefit issue, and is justified by the manufacturer's unique access to evidence of the design considerations which went into the product. Barker, 20 Cal.3d at 431-32. Nothing in Barker, or any other case (other than Perez) holds, or even suggests, that this burden-shift extends to any other issue, including foreseeable use. And there is no practical or policy reason, such as unique access to proof, why plaintiff should be relieved of this burden. Certainly none was articulated in Perez.

Ironically, in the Barker case, the California Supreme Court found that the newly announced design defect standard, which included placement of the burden of proof on foreseeable use with the plaintiff, "stop[s] short of making the manufacturer an insurer for all injuries which may result from the use of its product." Id. at 432. Indeed, the Court reversed the trial court's instruction that the plaintiff needed to prove he used the product as "intended" only because the instruction did not allow plaintiff to prevail if he established that the use of the product was a reasonably foreseeable use. There was no suggestion that burden of proof on that issue was misallocated. See id. at 426 n.9. Barker also recognized the role manner of use plays in defining the scope of the manufacturer's duty, observing that under California law "the adequacy of a product must be determined in light of its reasonably foreseeable use, [because] the design and manufacture of products should not be carried out in an industrial vacuum but with recognition of the realities of their everyday use." Id. at 426 n.9. Barker provides no support for the decision in Perez, nor for the proposed revision of the risk-benefit instruction. To the contrary, Barker presents more reason to believe that the burden of proof revision is contrary to California law.

Modification of Failure-To-Warn and Consumer Expectation Instructions

In contrast to the proposed risk-benefit instruction, in the proposed failure to warn instruction, CACI 1205, and the proposed consumer expectations instruction, CACI 1203, the intended or reasonably foreseeable use element is not entirely eliminated. The problem here is that the element is shifted in a way which attenuates the link between the alleged defect and plaintiff's manner of use. Under the previous instruction, the manner of use was directly linked to the way the plaintiff was harmed – plaintiff had to prove that the injury occurred during a reasonably foreseeable use in order to prevail. In the revision, manner of use is only linked to defining the scope of risks to be warned against (that the unwarned-against risk "presented a substantial danger to persons using or misusing the product in an intended or reasonably foreseeable way") or the objective performance benchmark defining the ordinary user's safety expectations. This less straightforward approach both lightens plaintiff's burden and introduces unwarranted ambiguity. Existing law plainly requires that in a consumer expectations or warning case, plaintiff must demonstrate that the injury resulted from a reasonably foreseeable use of the product (e.g., Soule, supra, 8 Cal.4th at 560) and that the product either failed to perform as safely as the ordinary consumer would expect when used in a reasonably foreseeable manner (in a consumer expectations case) (e.g., Saller v. Crown Cork & Seal Co., 187 Cal.App.4th 1220, 1231- 1232 (2010)) or failed to include warnings concerning a risk presented by a reasonably foreseeable use of the product (in an inadequate warnings case) (e.g., Aguayo, 183 Cal. App.3d at 1042). The proposed revision, discarding the first requirement, is inconsistent with this well-established law.³

The proposed jury instruction revisions simply lack support. Perez, though cited by the Judicial Council as supporting authority for the proposed revisions, had nothing to do with application of the consumer expectations test or failure to warn standards. The other sources relied upon by the drafters of the proposed revisions are inapposite to these standards and instructions.

Jury instructions are intended to reflect the applicable law and to guide the jury by instructing as to what the law is. The drafting committees are tasked with translating that law into understandable and useable guidance to the jury. It is not the function of the drafting committee to change the law or otherwise deviate from the prevailing precedents.

The proposed modifications depart from this model. Perez relied on the work of a drafting committee to support a ruling in dicta that conflicts with the majority rule as well as California case law, and now the drafting committee has in turn relied on the dicta in Perez to justify the proposed revisions. Aside from the obvious process problem this poses, the provisions simply do not reflect the applicable law. They do not reflect the established limitations on defendants' design and warning duties and the separate functions of the manner of use in the contexts of duty and causation.

If the proposed revisions are implemented by the Judicial Council, they may have a significant impact on products liability litigation in California. Jury instructions inform the scope of allowable discovery, play a significant role in law and motion practice, frame issues for summary judgment and motions in limine, and contextualize the case for the jury at the end of trial both directly and through counsels' summation. Moreover, by paring down the essential elements of product defect cases that plaintiffs must prove up, these instructions serve to expand the scope of manufacturers' liability. Finally, because California courts apply a "stream of commerce" approach to products liability, the increased difficulty defending products cases will impact not only manufacturers but also retailers and distributors.

If the proposed instructions are adopted, manufacturers will need to challenge their validity as quickly as possible with an eye toward presenting the issue to a court of appeal. Only the courts can reverse the work of a renegade drafting committee, and given trial judges' practice of deferring to approved instructions like CACI, there may be little attention paid to these issues in trial courts.

Footnotes

^{1 The Judicial Council also proposed a revision to the misuse or product alteration defense that substantially heightens the burden by treating the issue solely as a question of superseding cause, under that doctrine's traditionally rigorous standards. CACI 1245. The Drinker Biddle submission also criticizes those revisions, but for space reasons, they will not be addressed here.}

^{2 The court cited only one case for this proposition – Campbell v. General Motors Corp., 32 Cal.3d 112 (1982). Campbell did not address the question of whose burden this is or the nature of that burden.}

^{3 The requirement that the injury resulted from a reasonably foreseeable use also applies in a manufacturing defect case, and is also omitted from the proposed revision to the manufacturing defect instruction, CACI 1201. For space reasons, that problem is not addressed in this article.}

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