BRUCE DOMAZLICKY PROFESSOR OF ECONOMICS SOUTHEAST MISSOURI STATE UNIVERSITY Products Liability in...
-
date post
21-Dec-2015 -
Category
Documents
-
view
214 -
download
0
Transcript of BRUCE DOMAZLICKY PROFESSOR OF ECONOMICS SOUTHEAST MISSOURI STATE UNIVERSITY Products Liability in...
![Page 1: BRUCE DOMAZLICKY PROFESSOR OF ECONOMICS SOUTHEAST MISSOURI STATE UNIVERSITY Products Liability in the United States.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649d6a5503460f94a4924d/html5/thumbnails/1.jpg)
BRUCE DOMAZLICKY PROFESSOR OF ECONOMICS
SOUTHEAST MISSOURI STATE UNIVERSITY
Products Liability in the United States
![Page 2: BRUCE DOMAZLICKY PROFESSOR OF ECONOMICS SOUTHEAST MISSOURI STATE UNIVERSITY Products Liability in the United States.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649d6a5503460f94a4924d/html5/thumbnails/2.jpg)
Outline of Presentation
Historical BackgroundStrict Liability v. Negligence3 Ways that products can be defectiveDefenses in products liability casesComputation of damagesThe Liability “Crisis” in the United StatesPossible Reforms
![Page 3: BRUCE DOMAZLICKY PROFESSOR OF ECONOMICS SOUTHEAST MISSOURI STATE UNIVERSITY Products Liability in the United States.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649d6a5503460f94a4924d/html5/thumbnails/3.jpg)
Historical Background
Privity of Contract-protected manufacturersEscola v. Coca-Cola Bottling Co. (1944)
(negligence standard applied, res ipsa loquitur)
Greenman v. Yuba Power Products, Inc. (1963) (strict liability applied by Supreme Court of California)
![Page 4: BRUCE DOMAZLICKY PROFESSOR OF ECONOMICS SOUTHEAST MISSOURI STATE UNIVERSITY Products Liability in the United States.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649d6a5503460f94a4924d/html5/thumbnails/4.jpg)
Why Strict Liability?
Manufacturer in best position to prevent defectsManufacturer best understands the risk of using
the productManufacturer can spread risk of loss over all
units sold through increase in priceProving negligence by manufacturer difficult for
consumerGives manufacturer incentive to adopt cost-
justified improvementsDeep pockets??
![Page 5: BRUCE DOMAZLICKY PROFESSOR OF ECONOMICS SOUTHEAST MISSOURI STATE UNIVERSITY Products Liability in the United States.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649d6a5503460f94a4924d/html5/thumbnails/5.jpg)
Three Ways a Product Is Defective
Manufacturing Defect-usually the easiest to prove
Design DefectDueling ExpertsJeopardizes manufacturer’s entire product line
Failure to Give Adequate Warning
![Page 6: BRUCE DOMAZLICKY PROFESSOR OF ECONOMICS SOUTHEAST MISSOURI STATE UNIVERSITY Products Liability in the United States.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649d6a5503460f94a4924d/html5/thumbnails/6.jpg)
Warning: Cape does not allow person to fly. Cape does not give personSuperhuman powers.
![Page 7: BRUCE DOMAZLICKY PROFESSOR OF ECONOMICS SOUTHEAST MISSOURI STATE UNIVERSITY Products Liability in the United States.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649d6a5503460f94a4924d/html5/thumbnails/7.jpg)
Warning: Product contains eggs.
![Page 8: BRUCE DOMAZLICKY PROFESSOR OF ECONOMICS SOUTHEAST MISSOURI STATE UNIVERSITY Products Liability in the United States.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649d6a5503460f94a4924d/html5/thumbnails/8.jpg)
![Page 9: BRUCE DOMAZLICKY PROFESSOR OF ECONOMICS SOUTHEAST MISSOURI STATE UNIVERSITY Products Liability in the United States.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649d6a5503460f94a4924d/html5/thumbnails/9.jpg)
![Page 10: BRUCE DOMAZLICKY PROFESSOR OF ECONOMICS SOUTHEAST MISSOURI STATE UNIVERSITY Products Liability in the United States.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649d6a5503460f94a4924d/html5/thumbnails/10.jpg)
![Page 11: BRUCE DOMAZLICKY PROFESSOR OF ECONOMICS SOUTHEAST MISSOURI STATE UNIVERSITY Products Liability in the United States.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649d6a5503460f94a4924d/html5/thumbnails/11.jpg)
Warning: Product may cause drowsiness.
![Page 12: BRUCE DOMAZLICKY PROFESSOR OF ECONOMICS SOUTHEAST MISSOURI STATE UNIVERSITY Products Liability in the United States.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649d6a5503460f94a4924d/html5/thumbnails/12.jpg)
Economics of Hazard Warnings
Provide consumer with information on risk of using product
Consumer then decides if the expected utility of his use of product exceeds the expected cost of using the product, including risk
![Page 13: BRUCE DOMAZLICKY PROFESSOR OF ECONOMICS SOUTHEAST MISSOURI STATE UNIVERSITY Products Liability in the United States.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649d6a5503460f94a4924d/html5/thumbnails/13.jpg)
Role of Warnings
Influence the Decision to Purchase a ProductInfluence the level of care of consumer when
using the product
![Page 14: BRUCE DOMAZLICKY PROFESSOR OF ECONOMICS SOUTHEAST MISSOURI STATE UNIVERSITY Products Liability in the United States.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649d6a5503460f94a4924d/html5/thumbnails/14.jpg)
Problems with Current Warning Regime
Information Overload-to be effective, warnings need to be selective
Label ClutterExcessive Warnings-warnings should provide
new information, no need to warn of obvious risks
![Page 15: BRUCE DOMAZLICKY PROFESSOR OF ECONOMICS SOUTHEAST MISSOURI STATE UNIVERSITY Products Liability in the United States.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649d6a5503460f94a4924d/html5/thumbnails/15.jpg)
Defenses in Products Liability Cases
Unforeseeable MisuseDaniell v. Ford Motor Co. (1984)Cryts v. Ford Motor Co. (1978)
Unreasonable Assumption of RiskProduct has obvious defect and consumer chooses to use it anyway
State of the Art Defense (Design Defect Cases)
![Page 16: BRUCE DOMAZLICKY PROFESSOR OF ECONOMICS SOUTHEAST MISSOURI STATE UNIVERSITY Products Liability in the United States.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649d6a5503460f94a4924d/html5/thumbnails/16.jpg)
Calculating Damages: Some Issues
Some Damages easy to Compute: Lost Earnings, Medical Expenses
Other damages More difficult: Value of Life, Pain & Suffering, Loss of Consortium
Collateral Source Rule-allows recovery even when third party covers costs Medical Insurance-subrogation clausesLife Insurance
Joint and Several LiabilityPunitive Damages
![Page 17: BRUCE DOMAZLICKY PROFESSOR OF ECONOMICS SOUTHEAST MISSOURI STATE UNIVERSITY Products Liability in the United States.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649d6a5503460f94a4924d/html5/thumbnails/17.jpg)
Liability “Crisis”
1975-89: Products Liability Cases Increased Sixfold
1984-1987: Liability Premiums Increased from $6.5B to $20B
1985: Premiums Increased 78%1986: Premiums Increased another 68%
![Page 18: BRUCE DOMAZLICKY PROFESSOR OF ECONOMICS SOUTHEAST MISSOURI STATE UNIVERSITY Products Liability in the United States.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649d6a5503460f94a4924d/html5/thumbnails/18.jpg)
Contributors to Crisis
Mass Toxic Torts: Asbestos CasesDesign Defect DoctrineHazard Warning Cases
![Page 19: BRUCE DOMAZLICKY PROFESSOR OF ECONOMICS SOUTHEAST MISSOURI STATE UNIVERSITY Products Liability in the United States.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649d6a5503460f94a4924d/html5/thumbnails/19.jpg)
Manufacturers’ Concerns
Stock Market LossRetroactive Losses: Cannot go back and raise
price to spread cost of lawsuitsLiability for not warning about hazard that
was unknowable at the time of manufacture (asbestos)
![Page 20: BRUCE DOMAZLICKY PROFESSOR OF ECONOMICS SOUTHEAST MISSOURI STATE UNIVERSITY Products Liability in the United States.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649d6a5503460f94a4924d/html5/thumbnails/20.jpg)
Possible Reforms
Allow state of the art defense(Problem: Reduces incentive to improve product)
Shorten the statute of limitations(Problem: Some risks take a long time to appear)
Change collateral source rules so can only collect up to amount of loss(Problem: manufacturer may not get correct signals)
![Page 21: BRUCE DOMAZLICKY PROFESSOR OF ECONOMICS SOUTHEAST MISSOURI STATE UNIVERSITY Products Liability in the United States.](https://reader036.fdocuments.in/reader036/viewer/2022062516/56649d6a5503460f94a4924d/html5/thumbnails/21.jpg)
Possible Reforms, Continued
Joint and Several Liability-defendants are only responsible for their share of loss(Problem: Plaintiffs may not get full compensation)
Limit Pain & Suffering Awards(Problem: Plaintiffs may not get full compensation)
Loser Pays Court Costs, Lawyers’ Fees(Problem: Consumers afraid to sue)