An overview of the legal standard regarding product liability design defect claims and a fifty state survey on the applicable law in each jurisdiction.

• Author: McWilliams, Mike

This article originally appeared in the September 2014 Product Liability Committee newsletter.

IT has been said that "the expansion of product manufacturer liability throughout the latter half of the twentieth century stands among the most dramatic changes ever witnessed in the Anglo-American legal system." (1) Prior to the products liability revolution of the 1960's, manufacturers were rarely held liable for defective products. (2) With the advent of the American Law Institute's adoption of strict products liability in section 402A of the Restatement (Second) of Torts, a revolution was born. (3) "Section 402A caught on like wildfire in American state courts." In fact, "no single doctrinal common law principle was ever adopted so widely and quickly in the United States as strict products liability." (4)

The overwhelming majority of states initially adopted a "consumer expectations" test as the measure for determining the existence of a design defect under [section] 402A. The consumer expectations test set out to protect the ordinary consumer by requiring that "for a product to be considered unreasonably dangerous, it must be dangerous to an extent beyond that which would be contemplated by the ordinary consumer who purchases the product, with the ordinary knowledge common to the community as to the characteristics of the product." (5) However, problems arose by the 1980s, and a consensus view among products liability scholars emerged: "the consumer expectations test was both indefensible in theory and unworkable in practice." (6) In its place, "scholars advocated for the clear cost-benefit balancing approach of the primary alternative doctrine that courts had developed for determining design defectiveness, the risk-utility test." (7) The risk-utility test had first been articulated in a 1973 law review article, and slowly gained some acceptance throughout the country because of its appeal as a structured approach to design defect liability. (8)

After four decades of frustration regarding the precision of the consumer expectations test, "the American Law Institute ("ALI") appointed Professors Henderson and Twerski, two academic critics of judicial expansion of product manufacturer liability, as co-Reporters of the ALI's important project, the Restatement (Third) of Torts: Products Liability." (9) The ALI ultimately adopted the results of the Reporters' exceptional efforts on May 20, 1997. (10) In doing so, the ALI rejected the consumer expectations test as the sole test for product design defect in exchange for the more "analytically sound" risk-utility test. (11)

Rejection of the consumer expectations test may have been the plan, but it most certainly was not the result. In the seventeen years following promulgation of the Third Restatement, several courts have continued to issue opinions expressing varying degrees of judicial allegiance to the consumer expectations test. (12)

Even though the consumer expectations test closely resembles the risk-utility test in application, proponents of the risk-utility test criticize the consumer expectations test as "highly subjective, confusing, unpredictable, and unfair to manufacturers and defendants." (13) The Model Uniform Product Liability Act rejected the consumer expectations test altogether because, as the drafters stated, "the consumer expectations test takes subjectivity to its most extreme end. Each trier of fact is likely to have a different understanding of abstract consumer expectations." (14) Problematically, the consumer expectations test "depends on a determination--specifically, the expectation of the consumer--that the producer may not be able to predict with any reasonable degree of accuracy at the time of production." (15)

In light of the supposed unfairness of the consumer expectations test, many scholars thrust the risk-utility test forward as the answer to the prayers of both producers and consumers. According to Prosser and Keeton, the theory underlying this "saving grace" approach is quite simple: "virtually all products have both risks and benefits and there is no way to go about evaluating design hazards intelligently without weighing danger against utility." (16) Many courts have utilized some version of cost-benefit balancing, often by weighing the seven risk-utility factors identified by Dean Wade in his highly influential 1973 article. (17) More recently, however, "the trend among risk-utility jurisdictions has been to replace the aggregate cost-benefit balancing approach of the Wade test with a more narrow analysis focusing only on the marginal costs and benefits entailed by particularized safety aspects of the product design, a distinction that Professor David Owen terms 'macro-balancing' versus 'microbalancing.'" (18) By allowing courts to balance the risks and rewards posed by alternative product designs, the risk-utility test provides manufacturers with incentives to constantly evaluate and adopt such reasonable alternative designs. (19)

Opponents of the alternative design requirements argue that it imposes an undue burden on plaintiffs because it places a "potentially insurmountable stumbling block in the way of those injured by badly designed products." (20) "Many courts have treated the existence of a reasonable alternative design as a factor to be considered in the consumer-oriented risk-utility analysis of a product design, but have refused to make it an absolute requirement." (21) A second criticism of the risk-utility test is that "it is a retrogression in products liability because it returns to negligence concepts by placing the burden on the plaintiff." (22)

Some scholars have suggested a merger of the two tests; they wish to employ the risk-utility test with a consumer expectations prong. In their view, "the Restatement (Third) allows a consumer's expectations to establish the foreseeability and risk of harm under the risk portion of the risk-benefit test." (23) Though not an autonomous standard, consumer expectations "may still substantially influence or even be ultimately determinative on risk-utility balancing." (24)

A survey of the fifty states reveals no consensus with respect to application of either the consumer expectations test or the risk-utility test. Set forth below is a summary of the respective design defect standards utilized by each state as well as each state's position regarding any requirement for a claimant to demonstrate a feasible alternative design.

CONSUMER EXPECTATIONS TEST

Arkansas:

* Consumer expectations test. See Ark. Code [section] 16-116-102(7)(A).

* Requirement of feasible alternative design? Yes. Anderson v. Raymond Carp., 340 F.3d 320, 524-525 (8th Cir. 2003)

Indiana:

* Consumer expectations test. See Burns Ind. Code Ann. [section] 34-20-4-1; see also Vaughn v. Daniels Co. (West Virginia), Inc., Ill N.E.2d 1110, 1128 (Ind. Ct. App. 2002), abrogated on other grounds by Vaughn v. Daniels Co., 841 N.E.2d 1113 (Ind. 2006).

* Requirement of feasible alternative design? Yes. Burt v. Makita USA, Inc., 212 F. Supp.2d 893, 900 (N.D. Ind. 2002).

Kansas:

* Consumer expectation test. Delaney v...