Tort Law’s Sleight of Hand

The last century’s landmark cases, which established products liability as it currently exists in the United States, involved consumer products.[1] The consumer products were sold to, or were designed to be used by, ordinary consumers, without any technical training or knowledge. The consumer products that gave rise to advent of products liability as we know it were not products that required technical supervision or were subject to regulatory oversight with the potential for governmental inspections to ascertain safe use.

Justice Roger Traynor’s classic concurrence in Escola v. Coca Cola Bottling Company provided the initial rationale for what became strict products liability. In addition to deterrence of marketing harmful products and the prevention of injury, Traymor observed that:

“public policy demands that responsibility be fixed wherever it will most effectively reduce the hazards to life and health inherent in defective products that reach the market. It is evident that the manufacturer can anticipate some hazards and guard against the recurrence of others, as the public cannot.”[2]

This difference in ability to know about and anticipate some hazards has become the doctrinal foundation for broad liability rules for consumer products. The complexity of products and the processes of their manufacture places consumers into a position of forced reliance upon manufacturers.[3]

Courts would later add a “deep pocket” explanation, a blatant appeal to a felt need to place liability with the party with greater financial resources. By marketing products and realizing at least a potential to profit from the marketing indicated the manufacturer as the appropriate source of compensation for the injured consumer.[4] More thoughtfully, some scholars sought to impose tort liability on the “cheapest cost avoider,” the party who could reduce the risks of accidents and their costs most efficiently and effectively.[5] In 1965, the march towards strict products liability reached a major success in the Restatement (Second) of Torts. Section 402A embraced the economic and moral rationales to support the application of strict liability to products sold “in a defective condition unreasonably dangerous to the user or consumer”.

The industrial customer is frequently very different from the consumer as imagined by the landmark tort cases that led up to the Restatement (Second) of Torts. Some of the key characteristics of the industrial customer that differentiate it from the so-called “ordinary” consumer include:

  1. The customer is at least as knowledgeable about the latent hazards as the seller.
  2. The customer typically has employees who will use the product.
  1. The customer is often more knowledgeable than the seller about the actual circumstances of the product’s use by the purchaser’s employees, and what preventive measures can be and have been taken;
  2. The customer is itself an industrial concern with economic resources, often greater than those of the seller.
  3. The customer is often in a better position to distribute the costs of injuries than the seller.
  4. The customer, qua employer, has common law, statutory, and regulatory duties to provide a safe workplace, often specifically with reference to the product at issue.
  5. The customer stands to profit from the use of the product, and the customer has the most to gain from ignoring known hazards in terms of speeding up its production.
  6. The customer, qua employer, is in the best position to, and often the only person who can, assess and determine the hazard, intervene to prevent the hazard, determine and implement the appropriate safety measures, and supervise its employees to ensure compliance with its safety measures (many of which are mandated by state or federal law).

As a generality, the facts and circumstances of the use of many industrial products are quite different from those in which consumer products are used. Historically, tort law has recognized the relevance of the differences in the form of the sophisticated intermediary, government contractor, bulk seller, component part, and bare metal defenses. In the context of industrial products, involving a manufacturer-seller, an industrial buyer, and an injured employee of the industrial buyer, none of the doctrinal rationales for strict liability work particularly well. The buyer may have greater financial resources and greater ability to spread the cost of injuries. Almost always, the buyer will have greater ability to avoid the risk by implementing known or knowable precautions that are required in any event by state and federal law. The buyer as employer will see deviations from safety rules and can correct them before injuries result. In the wake of the Restatement (Second) of Torts, however, many courts have fallen into the error of treating the industrial accident with the same rules and rationalia that were developed for consumer cases.

[1]  See, e.g., MacPherson v. Buick Motor Co., 217 N.Y. 382, 111 N.E. 1050, 145 N.Y. Supp. 462 (N.Y. 1916) (car); Escola v. Coca Cola Bottling Co., 24 Cal. 2d 453, 150 P.2d 436 (1944) (soft drink bottle); Henningsen v. Bloomfield Motors, Inc., 32 N.J. 358, 161 A.2d 69 (1960) (car); Greenman v. Yuba Power Prods., Inc., 59 Cal. 2d 57, 377 P.2d 897 (Cal. 1963) (power tool designed for home use). Two of these decisions (MacPherson and Escola) are discussed in Robert L. Rabin, “Past as Prelude: The Legacy of Five Landmarks of Twentieth-Century Injury Law for the Future of Torts,” chap. 2, in M. Stuart Madden, Exploring Tort Law 52 (2005). Professor Rabin does not include any tort decisions that involved liability by remote suppliers to industrial workplaces.

[2]  Escola v. Coca Cola Bottling Co., 24 Cal. 2d 453, 150 P.2d 436, 440-41 (1944) (Traynor, J., concurring) (positing in addition to the majority’s decision based upon negligence that the bottle manufacturer should be “strictly liable” to consumers for a bottle defectively made).

[3]  Id. at 443. See RESTATEMENT (SECOND) OF TORTS § 402A (1965), cmt. c (“[T]he justification for the strict liability has been said to be that the seller, by marketing his product for use and consumption, has undertaken and assumed a special responsibility toward any member of the consuming public who may be injured by it . . . .”).

[4]  Greenman v. Yuba Power Prods., Inc., 59 Cal. 2d 57, 377 P.2d 897, 901 (Cal. 1963) (“The purpose of such liability is to insure that the costs of injuries resulting from defective products are borne by the manufacturers that put such products on the market rather than by the injured persons . . . .”); Restatement (Second) of Torts §402A, cmt. c (1965) (“public policy demands that the burden of accidental injuries caused by products . . . be placed upon those who market them”).

[5]  Guido Calabresi & Jon T. Hirschoff, “Toward a Test for Strict Liability in Torts,” 81 Yale L.J. 1055 (1972).

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