What you’ll learn to do: explain product liability, forms of negligence, fraud, and the “theories of recovery” in a product liability claim

The theory of caveat emptor—let the buyer beware—which pretty much governed consumer law from the early eighteenth century until the early twentieth century, made some sense. A horse-drawn buggy is a fairly simple device: its workings are apparent; a person of average experience in the 1870s would know whether it was constructed well and made of the proper woods. Most foodstuffs 150 years ago were grown at home and “put up” in the home kitchen or bought in bulk from a local grocer, subject to inspection and sampling; people made home remedies for coughs and colds and made many of their own clothes. Houses and furnishings were built of wood, stone, glass, and plaster—familiar substances. Entertainment was a book or a piano. The state of technology was such that the things consumed were, for the most part, comprehensible and—very important—mostly locally made, which meant that the consumer who suffered damages from a defective product could confront the product’s maker directly.

The world has changed since the days of the horse-drawn buggy and consumers cannot confront the manufacturer of many of the goods and services they consume when there is a problem. For business, product liability can tarnish an otherwise golden image or in more extreme cases—bankrupt the company. Although laws to protect consumers from dangerous products have made great progress there are still problems today.

Consider the following, which occurred in 2009–10:

• In the United States, Toyota recalled 412,000 passenger cars, mostly the Avalon model, for steering problems that reportedly led to three accidents.
• Portable baby recliners that are supposed to help fussy babies sleep better were recalled after the death of an infant: the Consumer Product Safety Commission announced the recall of 30,000 Nap Nanny recliners made by Baby Matters of Berwyn, Pennsylvania.
• More than 70,000 children and teens go to the emergency room each year for injuries and complications from medical devices. Contact lenses are the leading culprit, the first detailed national estimate suggests.
• Smith and Noble recalled 1.3 million Roman shades and roller shades after a child was nearly strangled: the Consumer Product Safety Commission says a five-year-old boy in Tacoma, Washington, was entangled in the cord of a roller shade in May 2009.^[1]
• The Consumer Product Safety Commission reported that 4,521 people were killed in the United States in consumer-product-related incidences in 2009, and millions of people visited hospital emergency rooms from consumer-product-related injuries.^[2]
• Reports about the possibility that cell-phone use causes brain cancer continue to be hotly debated. Critics suggest that the studies minimizing the risk were paid for by cell-phone manufacturers.^[3]

Product liability can also be a life-or-death matter from the manufacturer’s perspective. In 2009, Bloomberg BusinessWeek reported that the costs of product safety for manufacturing firms can be enormous: “Peanut Corp., based in Lynchberg, Va., has been driven into bankruptcy since health officials linked tainted peanuts to more than 600 illnesses and nine deaths.” Mattel said the first of several toy recalls it announced in 2007 cut its quarterly operating income by $30 million. Earlier this decade, Ford Motor spent roughly $3 billion replacing 10.6 million potentially defective Firestone tires. The laws upon which these cases were based is the subject for this module.

LEARNING ACTIVITIES

The learning activities for this section include:

• Reading: Product Liability
• Video: What is Negligence?
• Reading: Dimensions of Tort Liability
• Self Check: Liability, Negligence, and Fraud

Take time to review and reflect on each of these activities in order to improve your performance on the assessment for this section.