SUMMARY

Historically, product liability laws were adopted to protect consumers from unsafe products. Recent efforts at “reform” have significantly limited the effectiveness of product liability rules in our State. Despite “caps” and procedural hurdles, manufacturers and sometimes retailers remain responsible for injuries caused by foreseeable injuries caused by negligently-produced products.

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PRODUCT LIABILITY

As with many other areas of the law, product liability rules in Michigan have been drastically re-written in the past ten years under the guise of tort “reform”. The common denominator among these reforms is a desire to insulate product sellers and manufacturers from liability for unsafe products. In some cases this has been accomplished by “caps” that drastically restrict what a victim can recover after very expensive litigation. Other “reforms” have limited admissible evidence or thrown up financial obstacles to preclude a victim from reaching the courtroom. Lastly, some measure of protection has been afforded by literally immunizing certain sellers and manufacturers from certain types of claims. We will discuss all of these issues as well as the carcass of product liability as it currently exists in Michigan. In many cases, we encourage potential product liability victims to seek redress through the courts of another state, where that is possible.

Basic Law

Historically, product manufacturers and sellers could be liable for an unsafe product under two separate theories: either “negligence” [i.e., not exercising reasonable care in design, manufacture or marketing] or warranty [selling a product that is not “reasonably fit for the purpose intended”]. Product liability in civil lawsuits was considered to be a worthwhile method of protecting consumers by forcing manufacturers to take into account safety in design. Product liability was widely considered to be the catalyst and foundation for many safety initiatives, including the “crashworthiness” of automobiles, for example. Product liability has clearly saved many lives and rendered machinery guarding and product warning far safer than they had been in the past.

Product liability law related to injuries must be distinguished from product liability for property damage or product failure. The Uniform Commercial Code has been the standardized law in most states for a quarter-century with respect to the liabilities of a seller of “goods” if there is no injury involved. The UCC allows most sellers and manufacturers of goods to limit their liability and warranty exposure to one year from the date of sale and to limit in writing the collectible damages. Liability for injuries is a separate issue and has not been made uniform from state to state.

While warranty theories could hold a seller or manufacturer responsible for injuries caused by a defective product even without proving negligence, most product cases were tried by analyzing the social utility of a product, as produced, against reasonable expectations of how safe such a product could be made under all of the circumstances. Under the law as it developed through the twentieth century, in deciding whether a product was reasonably safe or fit, a product seller or manufacturer was held to the same “reasonable man” standard by which ordinary people’s actions were judged.

Needless to say, the product had to be fit only for the use intended or for uses that were “reasonably foreseeable” by the manufacturer. Eventually, it was also held that foreseeable misadventures (such as motor vehicle collisions, for example) had to be taken into account in the design and manufacture of a product. Fault or negligence by the user was a comparative defense to product liability claims, and product liability would not attach to injuries caused by misuse of a product. The standard or custom in the industry was always admissible in analyzing whether a product was reasonable, but the jury was free to conclude that an entire line of products or an entire group of manufacturers had adopted an unsafe practice. The latter ruling in Michigan had its genesis in the 1960s failure of charcoal retailers to warn consumers against the unsafe practice of burning charcoal indoors.

Drug liability

The reforming courts have drastically limited the basic product liability laws in a number of ways. For starters, in Michigan (and in no other state) drug manufacturers cannot be sued for an unsafe product if the drug was approved by the FDA. This rule obtains, even if it can be proven that the FDA approval was premised upon falsified or negligent drug testing or that the approval resulted from the failure to disclose known risks and complications to the FDA. It is especially ironic that FDA approval confers immunity on drug manufacturers in Michigan, since the FDA panels that usually grant such approval are routinely composed primarily of drug manufacturing representatives and doctors with grant-related interest in drug approval.

Liability for food-borne injury or illness

Another unique product with respect to liability is food. For nearly fifty years, Michigan has relied upon statutory law to hold food providers responsible for food-borne injury and illness. Under normal circumstances, the victim need only prove that an unhealthy item caused his or her illness; he need not prove that the food-item was negligently prepared. It can be difficult and expensive to establish the cause of a food-borne illness or injury, however, sophisticated methods of analyzing toxins may enable the victim to trace an organism to a particular farm or to identify the exact hour of consumption of the tainted materials.

“Learned Intermediary”

Another immunity that has conferred substantial protection on product manufacturers in Michigan is the rule preempting liability if the product is obtained through a learned intermediary. The clearest example of this form of immunity involved pre-FDA immunity drug claims. If a drug was prescribed by your doctor, you could not sue the manufacturer for inadequate product warnings or instructions: warnings and instructions were considered to be the sole province of the physician. Thus, even if the product insert packaged with your medication was misleading or mistaken, the drug manufacturer is immune from liability. This same rule applies with respect to all other products that are disseminated through a learned agent.

Exemption of Retailers

One of the most dramatic and far-reaching “reforms” of the modern era is the exemption of retailers from liability for a defective or unsafe product. Until the 1990s, a retailer could be held liable for injuries caused by an unsafe product. This meant that a reasonable retailer would adopt one or all of three strategies designed to protect himself and the consumer: First, he would investigate competing products and manufacturers and attempt to purchase the safer alternative, even if it cost slightly more. Second, he would purchase liability insurance to protect against claims that might be unavoidable on an occasional basis. Third, most retailers with substantial buying power required product providers to protect the seller by insisting that the manufacturer purchase insurance and that it provide the seller with liability coverage in the form of indemnity coverage.

Now that Michigan retailers have limited liability exposure for selling an unsafe product, they have no incentive to protect their customers. They also face increased pressure to buy cheap from abroad. Many foreign countries, particularly China, will not allow their manufacturers to be served with process or sued [in China, these suits would essentially be against the Chinese government in many cases] and thus, the combination of retailer immunity and foreign manufacture have resulted in practical immunity for the sale of the cheapest, most unsafe products. It will come as no surprise to most readers that the impact of these developments is to place a greater burden on competing American manufacturers–who remain subject to service of process in American courts–and a greater burden on American public resources which now must accommodate disabled persons injured by defective products who have no recourse against the at-fault party.

Procedural Issues including “Caps”, experts, burden of proof and “scientific evidence”

Another broad protection conferred on product claims is the limitation on recovery of non-economic damages. This “cap” is tied into the cost of living and by 2005 slightly exceeded one-half million dollars. Depending upon how the “reform” courts ultimately interpret economic damages, these caps represent a significant disadvantage for housewives, children and retired persons, since some judges insist on limiting economic damages to current wage loss and medical-related expense. The limits also influence lawsuits in two other ways that the “reformers” did not consider: by eliminating “runaway” jury verdicts in all cases (previously, excessive or “runaway”verdicts were subject to judicial discretion), and limiting verdicts to relatively small concrete numbers, regardless of the catastrophic nature of the injury, product defendants were encouraged to be bold and “roll the dice” on litigation, since the eventual down-side damage could be limited. Further, since the ultimate recovery could be measured and quantified at a smaller number, the practical cap for a victim became even smaller than the actual cap, since economic reality and risk, combined with the expense of trial, would force victims into settlements that did not equal the actual cap.

Finally, the caps themselves accomplished one additional result that was fully intended. These cases are nearly always very expensive and require difficult proofs developed from expensive testing, measuring, historical analysis and expert consultation. When substantial economic damages would be diverted to repaying medical or wage loss providers and non-economic damages were significantly capped, many meritorious claims could no longer be pursued because the risks and expense out-weighed the possibility of a modest recovery for the lawyer or client. Keep in mind that unlike most states, Michigan has never allowed punitive damages against product manufacturers, regardless of the extent to which they are callous to consumer injury.

Scientific evidence and expert testimony

The “reforming” courts have also tightened the standards with regard to what scientific and opinion evidence can be admitted in a product case (or in any injury case). While these limitations were presented as neutral standards not intended to favor either victims or industry, the fact remains that most engineers and scientists familiar with a given field are employed within that field for manufacturers, and most scientific literature is a proprietary product of individual manufacturers. Thus, just as cigarette manufacturers held a monopoly on the safety investigation of smoking for many decades, most product defendants have a “leg up” on science and opinion in their fields. The added restrictions imposed on victims and consumers by the “reforming” courts have enhanced product defendants’ advantages in Michigan. To achieve justice in this situation requires that the attorney have ample resources to bring to bear on the engineering and scientific issues in the case.

“Foreign” Claims, Jurisdiction and Venue

Under the law in Michigan, and in most states, injury cases must be pursued in the state and in the County where the injury occurred. Sometimes, the case can be pursued where a defendant resides or created the product, and occasionally it can be brought where the Plaintiff lives. In some cases, the Court will look to the forum that is “most convenient” for the parties and witnesses, even if it is required to apply the law of another jurisdiction. If there is complete diversity between the Plaintiff/victim and the Defendant(s), meaning there is no state where a Plaintiff and Defendant both “reside”, the Defendant may have the option of moving a state case to the Federal Court system, regardless of where the Plaintiff filed it or what law is to be applied. Normally, the law of the state where the injury occurred is applied to determine liability, however, this is not always the case.

Limitations on Recovery

As in all personal injury cases, there are limitations on recovery of which you should be aware. You may read more about these limitations here.

STATUTES OF LIMITATION

Whenever the law grants a right to seek recovery for wrongdoing, it also places restrictions on how long the victim has in which to take legal action. If the victim delays too long in seeking compensation, he is said to have “slept on his rights” and his claim will not be heard. These limits are called “statutes of limitations” and they vary depending on the nature of the wrong that was committed. In many cases, there are other limitations on taking legal action, as well.

You can review the time limits here.