Judges as regulators: using injunctive relief to recall products.

• Author: Warmer, Richard C.
• Position: California

Motor vehicle recall order of a California trial judge highlights many reasons recall should be left exclusively to federal administrative agencies

OVER the last century, an important feature of the American economy has been the proliferation of nationally distributed consumer products, many of which incorporate sophisticated technology. In turn, there has been a burgeoning wave of litigation involving alleged product defects. In these cases, trial judges traditionally have addressed claims for damages in the context of a dispute between a manufacturer or other seller and a consumer who alleges an injury caused by a product defect. In class actions and individual actions alike, the focus of product defect litigation has been on claims for monetary relief. Courts in private actions have not undertaken to order a manufacturer to recall and repair an entire population of products based on claims of future risk.

In a California case, however, a state court trial judge has stated his intention to issue a mandatory injunction requiring Ford Motor Co. to recall more than a million vehicles and repair an ignition system component that the judge found to be defective. This decision raises serious questions of judicial authority and competence. Yet it has been widely hailed by "consumer advocates" and may give rise to demands for product recalls by plaintiffs in other contexts.

AN UNPRECEDENTED DECISION

Product recalls have long been thought to be the province of administrative agencies--in the United States, for example, the Consumer Products Safety Commission, the Food and Drug Administration, the Environmental Protection Agency, and the National Highway Traffic Safety Administration. These agencies have the authority and the resources to make a nationwide evaluation of claimed threats to safety or to other legislatively protected interests.(1) The exclusive role of administrative agencies in ordering and overseeing product recalls has been uniformly respected. Courts addressing the question of whether the judiciary may order product recalls have answered that question in the negative.(2)

These consistent holdings are reflected in Section 11, comment a, of the Restatement (Third) of Torts: Products Liability, which concludes that manufacturers and sellers have no common law duty to conduct a product recall:

1. Rationale. Duties to recall products impose significant burdens on manufacturers. Many product lines are periodically redesigned so that they become safer over time. If every improvement in product safety were to trigger a common-law duty to recall, manufacturers would face incalculable costs every time they sought to make their product lines better and safer. Moreover, even when a product is defective within the meaning of [sections] 2, [sections] 3, or [sections] 4, an involuntary duty to recall should be imposed on the seller only by a governmental directive issued pursuant to statute or regulation. Issues relating to product recalls are best evaluated by governmental agencies capable of gathering adequate data regarding the ramifications of such undertakings.... Notwithstanding this unbroken line of authority, last October, Alameda County (California) Superior Court Judge Michael E. Ballachey decided to order the recall and repair of a large number of motor vehicles in a consumer class action based on state law.(3) This unprecedented decision has been seen by some as a "historic ruling" that will encourage plaintiffs' attorneys in the future "to bypass the federal regulatory system and head straight to court."(4) For example, a story in the Los Angeles Times stated: "While such a move may be without precedent, a former California Supreme Court justice said the judge may have the authority to order a recall. `I don't know why it can't be done,' Joseph Grodin, now a professor at Hastings. College of Law in San Francisco, said in an interview with Associated Press."(5) And a Wall Street Journal article observed: "Jeffrey Fazio, the San Francisco lawyer who represented the plaintiff in the case, said the ruling might well encourage other judges to issue product recalls. He said that wouldn't be a problem, asserting that federal agencies aren't uniquely qualified to decide issues of, say, auto safety. `Anyone can do this,' he said. `What they're so concerned about is, it's a Pandora's box that's been opened. Judges are going to realize that it's not so complicated. The myth has been exploded."(6)

The plaintiffs in this California case, Howard v. Ford, represent a class of California residents who as of the August 1998 class notice owned vehicles equipped with distributor-mounted thick film ignition (TFI) modules that were installed by Ford in more than 250 lines of cars and light trucks manufactured in model years 1983 through 1995, as well as California residents who purchased these vehicles when they were new. The plaintiffs' fundamental contention is that the design of Ford's TFI modules is defective because of their mounting location on the distributor, directly above the engine block, where the modules allegedly are subject to higher temperatures than they can withstand.

Uncontradicted evidence in the trial record showed that during the class period virtually all motor vehicle manufacturers used similar TFI modules and that distributor mounting was the industry standard. The plaintiffs nonetheless alleged that this design causes the modules on all class vehicles to fail with an "inordinate" frequency, resulting in a risk of stalling, accidents and injuries.

The plaintiffs did not advance any product liability theories and disavowed any attempt to prove that the alleged defect has caused accidents or injuries. They relied solely on a consumer fraud theory under California's Unfair Competition Law (UCL), which is Section 17200 et seq. of the California Business and Professions Code, and the Consumers Legal Remedies Act (CLRA), which is Section 1750 et seq. of the California Civil Code. The plaintiffs alleged that the design of distributor-mounted TFI modules poses an unreasonable risk to motor vehicle safety, that Ford knew of that risk from the outset, and that Ford was obligated to disclose information about the alleged TFI defect to government regulators and to consumers.

In his ruling, Judge Ballachey emphasized that the National Highway Traffic Safety Administration (NHTSA) and the Environmental Protection Agency (EPA) within the federal system, and the California Air Resources Board (CARB) in California, "are `watchdog' agencies designated to protect consumer safety and the environment." He concluded that Ford had failed to make required disclosures to those agencies and had thereby incurred liability to the class under the UCL and the CLRA. According to Judge Ballachey, "Ford withheld responsive information from NHTSA that it was obligated to divulge" in response to agency information requests served in five investigations that were opened by NHTSA during the mid1980s as a result of complaints of stalling in Ford vehicles.

In a special proceeding opened by NHTSA at the urging of plaintiffs' counsel in 1998, the agency ruled that the great majority of the documents alleged to have been wrongfully withheld were not responsive to any of NHTSA's information requests. NHTSA declined to reopen any of the investigations. But Judge Ballachey ruled that "neither NHTSA's findings in that regard, nor its determination not to reopen any if its investigations, is binding on this court."

The judge also found that Ford failed to provide information that it was required to report to the EPA and CARB regarding the emissions-related performance of TFI modules. Thus, Ford's conduct "violated its obligations under various state and federal statutes and regulations." The judge concluded, in sum, that "Ford failed to meet its obligations to report safety related defect information to relevant governmental agencies and, by so doing, concealed vital information related to vehicle safety from the consuming public," in violation of both the UCL and the CRLA.

On this basis, Judge Ballachey stated that he "intends to issue orders compelling recall and repair of class vehicles...