JURORS ALLOWED TO CONSIDER RISK-UTILITY EVIDENCE IN DECIDING IF A PRODUCT IS DEFECTIVE: A REASONABLE STEP IN STRICT LIABILITY?

BY: JERROLD P. ANDERS AND JAMES W. SCOTT, JR.

In a potentially dramatic shift in Pennsylvania product liability law, the United States Court of Appeals for the Third Circuit has clarified the application of a 30-year old Pennsylvania case. The Court expanded the types of evidence that a jury may hear when deciding products liability cases.

Azzarello and the Risk-Utility Analysis

Pennsylvania’s strict liability law (liability without fault) is derived from the RESTATEMENT(SECOND) OF TORTS § 402A. Generally, a plaintiff recovers when a product is in a “defective condition unreasonably dangerous” and causes harm to a user or consumer. In Azzarello v. Black Bros. Co., 391 A.2d 1020 (Pa. 1978), the Pennsylvania Supreme Court rejected the use of “unreasonably dangerous” in instructions given to the jury. Instead, the Azzarello Court concluded that whether a product was “unreasonably dangerous” is a question for the judge based on social policy considerations. The jury’s focus is on whether the product is “defective” and not on the user’s conduct.

Accordingly, Pennsylvania law requires that a judge determine whether a product is “unreasonably dangerous” by engaging in a risk-utility analysis. The court weighs “a product’s harms against its social utility.” Surace v. Caterpillar, Inc., 111 F.3d 1039, 1044 (3d Cir. 1997). Only after the judge has determined that a product is “unreasonably dangerous” is the case submitted to the jury, which then determines whether the product is defective. Specifically, the jury is required to consider whether the product “left the supplier’s control lacking any element necessary to make it safe for its intended use or possessing any feature that renders it unsafe for the intended use.” Phillips v. Cricket Lighters, 841 A.2d 1000, 1005 (Pa. 2003) (quoting Azzarello, 391 A.2d at 1027).

Pennsylvania courts have identified a number of factors that may be considered by a judge in making the risk-utility analysis. They include: (1) the usefulness and desirability of the product; (2) the safety of the product; (3) the availability of a substitute product which would meet the same need and not be as unsafe; (4) the manufacturer’s ability to eliminate the unsafe character; (5) the user’s ability to avoid danger by exercising care while using the product; (6) the user’s awareness of the inherent dangers in the product; and (7) the feasibility of spreading the loss by setting the price or carrying liability insurance. Dambacher v. Mallis, 485 A.2d 408, 423 n. 5 (Pa. Super. 1984). The riskutility analysis is made under a weighted view of the evidence, considering the facts in the light most favorable to the plaintiff.

Moyer v. United Dominion Industries, Inc., 473 F.3d 572 (3d Cir. 2007)

In Moyer, the Plaintiffs alleged that excessive vibrations generated by a swager manufactured by the Defendant caused them to develop Hand-Arm Vibration Syndrome. Plaintiffs’ employer had installed the swager in its rod and wire department as a component of a collection of machinery that is used to reduce the diameter of beryllium copper wire. At trial, the jury returned multi-million dollar plaintiffs’ verdicts. On appeal, the Defendant argued that the District Court erred in refusing to allow evidence of “conduct,” including misuse and improper maintenance of the swager by the Plaintiffs, and evidence of the lack of previous claims against the manufacturer for injuries caused by swager vibration. Citing Azzarello, the District Court justified its evidentiary rulings by distinguishing its role in performing risk-utility analysis from the evidence admitted at trial. The Third Circuit disagreed, holding that the District Court had misinterpreted Azzarello, and granted the Defendant a new trial.

The Third Circuit concluded that the Pennsylvania Supreme Court would not expect that a judge would prevent all evidence considered in a risk-utility analysis from reaching the jury. Nor did it believe that the Azzarello Court intended to deprive the jury of its own fact-finding responsibilities. In short, when comparing the risk-utility standard employed by a judge with the “intended use” standard employed by a jury, the Third Circuit observed that evidence pertinent to one standard would often be relevant to another.

For example, just as the judge will consider “safety” under the second risk-utility factor, the jury will also have to consider evidence as to whether the product is “safe.” Just as the judge will evaluate feasible alternatives to a product under the fourth riskutility factor, the jury will also have to evaluate them to assess the “condition” of the product. Regarding causation or lack of defect, the jury will have to consider evidence relied upon by the judge. In short, the Third Circuit held that evidence should not be excluded from the jury simply because it was also relevant to the judge’s threshold risk-utility analysis.

Another Step Toward Modifying Pennsylvania’s “Idiosyncratic” Products Liability Law?

Although the two-step process in Azzarello was intended to preserve the substantive distinction between strict liability and negligence actions, the process has generally led to confusion as to how to properly apply it. The practical application of this theory is increasingly being scrutinized. As the Third Circuit observed, commentators have criticized Azzarello as one of the “most controversial opinions ever issued on strict liability” and Section 402A as “difficult to decipher.” Even Justice Thomas G. Saylor of the Pennsylvania Supreme Court has criticized the “ambiguities and inconsistencies” of Pennsylvania procedure which render its product liability law “idiosyncratic.”

Section 402A was originally crafted to address manufacturing defects. As design defects and claims of inadequate warnings became more prevalent in the 1960’s and 1970’s, courts sought to impose strict liability for these types of claims under Section 402A.

This approach has often been difficult since design and warning claims often require an inquiry into the manufacturer’s conduct, rather than an examination of the product itself. This difficulty has been addressed in the RESTATEMENT (THIRD) OF TORTS § 2, which has not yet been adopted in Pennsylvania. In addressing design and warning claims, Sections 2(b) and 2(c) of the Third Restatement rely on a reasonableness test that has traditionally been used in determining whether a party has been negligent.

In Moyer, a design defect case, the Court held that a jury may hear “risk-utility” evidence. Such evidence may often be relevant to the reasonableness of the manufacturer’s actions. In so doing, the Third Circuit has further blurred the line between strict liability and negligence claims, and may have taken Pennsylvania one step closer to adopting the Third Restatement.

Practical Relevance

For the product manufacturer or supplier, the Moyer decision provides some practical guidance on presenting evidence regarding the absence of prior claims of product defects. Reiterating the three-part analysis from Forrest v. Beloit Corp., 424 F.3d 344 (3d Cir. 2005), the Court held that a defendant must establish similarity, breadth, and awareness. In other words, a defendant must show that the proffered evidence relates to similar products used in similar circumstances, the defendant must provide the court with information regarding the number of prior units sold and the extent of prior use, and the defendant must show that it would have known of prior accidents had they occurred. In Moyer, the Defendant was able to meet this standard because it maintained a comprehensive computerized database of claims and lawsuits. Accordingly, the importance of accurate and comprehensive record keeping cannot be overstated in defending products liability claims.

About the authors: Jerrold P. Anders is a partner in the Litigation Department and may be reached at 215-864-7003 or andersj@whiteandwilliams.com. James W. Scott, Jr. is an associate in the Litigation Department and may be reached at 215-864-6236 or scottj@whiteandwilliams.com.