Bliley Lorillard
STRICT LIABILITY, RISK UTILITY AND TOBACCO
Abstract
Discusses the concept of product liability which falls under tort (wrongful act) law dating back to 1266 English common law. States that "damage settlements have been based on a developing judicial concept of an implied 'warranty' from seller to consumer that a product in the marketplace is indeed fit for human use or consumption." Explains strict liability and examines the issue of identifying defective products. Reviews the Restatement of Torts project initiated by the American Law Institute which defined strict liability. Discusses strict liability as it pertains to tobacco and tobacco litigation. Opines that the "well-communicated potential risks of tobacco should put this product outside the realm of strict liability concerns."
Fields
- Type
- STATEMENT
- Draft material
- Author (Organization)
- Bjurson-Marsteller
- Author
- Han, V.
- Recipient
- Ricke, T.
- Sachs, R.H.
- Sollis, T.
- Fyock, J.A.
- Harrow, E.A.
- Helewicz, J.S.
- Newton, G.D., J.R.
- Purvis, A.R.
- Copied
- Andelman, D.
- Lindheim, J.
- Ave, J.R.
- Stevens, Arthur Joseph (LOR Sr. VP '89-95 and TI Communications)Served on Lorillard Board of Directors 1985-92, was Senior Vice President from 1989 to 1995, served as General Counsel for Lorillard '93-95. Served on Tobacco Institute Communications Committee.
- Cherry, James R., Jr. (PM; LOR, Assoc. General Counsel; General Counsel & VP)J. R. Cherry, Jr. was employed by Lorillard, Inc. and served as Vice President from 1989 to 1993 and then again in 1995; served as Legal Counsel in 1993 and then again in 1995.
- Named Person
- Prosser, W.
- Named Organization
- Congress
- A.L.I.
- Harvard
- American Law Institute
- Region
- New Jersey
- California
- Texas
- Keyword
- Restatement of Torts
- marijuana
- Thesaurus Term
- industry response
- industry position
- Product liability
- tobacco manufacturer
- litigation
- lawsuit
- risk assessment
- industry strategy
- tobacco use
Document Images
Burson.Marsteller
Position Paper
Draft I
2/10/88
STRICT LIABILITY, RISK UTILITY AND TOBACCO
From the earliest days of English common-law, the concept of
product liability has been fundamental to the branch of
legal practices known as Torts, or wrongful acts. As long
ago as 1266 special criminal statutes imposed penalties on
"victualers, vintners, brewers, butchers, cooks" and others
who supplied "corrupt food and drink."
Product liability law seeks to fix responsibility for the
damages of such acts, apportion the blame and find some sort
of remedy, generally financial, against the individual or
the institution that might have been responsible for the
injury. These damage settlements have been based on a
developing judicial concept of an implied "warranty" from
seller to consumer that a product in the marketplace is
indeed fit for human use or consumption.
Strict Liability
For centuries a plaintiff in a product liability action
could not recover damages unless he demonstrated that the
manufacturer had engaged in some culpable conduct. Usually
this was accomplished by showing that the manufacturer was
negligent in designing or manufacturing a product and that
such negligence caused harm to the plaintiff.
...continued...
In the early 1960's, the focus in product liability cases
shifted from the conduct of the manufacturer to the product
itself. Under a newly developing doctrine known as "strict
liability," a plaintiff who was unable to prove negligence
on the part of the manufacturer could still recover damages
as long as the plaintiff could show that his injuries were
caused by a product that was defective.
The concept of strict liability is formulated differently in
each state. But generally, it asks the fact-finder, be it a
judge, juror or other arbitrator, to determine whether a
prudent manufacturer would have placed the particular
product on the market. Under strict liability, the
manufacturer could be held liable if the product is
imprudently placed on the market. If a product is
defective, a pruden~ company would not distribute it. This
would seem fairly clear-cut. So the key problem, perhaps
the most difficult in tort law as applied to corporations,
is defining just what constitutes a product defect.
Take for instance a case of injury caused by "failed
brakes." If the brakes were old and crumbling, the driver
may well be held blamable for failing to service them
regularly. But if the brakes were designed in a way that
early failure was inevitable, then the brakes may be judged
defective and the manufacturer held liable.
Identifying Defective Products
A number of different tests are used to identify a defective
product, depending on the state. One test is the most
routine formulation -- whether the product is "unreasonably
dangerous." The second is the concept of consumer
expectation -- does the consumer recognize the product as
clearly dangerous? The third and most recent test that is
increasingly being applied in a number of states is the
concept of risk-utility.
In states, such as New Jersey or California, where
risk-utility has been accepted as law, a judge or jury may
be asked to examine whether the risks associated with a
product or design element of that product outweigh the
benefits it provides the user or society-at-large. In other
words, placed on a scale where the risks associated with a
product are on one side and its utility is on the other,
which way does the scale tilt? A product or design that
tilts the scales toward "utility" or usefulness cannot be
considered defective.
There are various ways of determining this question of risks
outweighing benefits. For instance: were alternative
products or design features yielding the same benefits
available? If so, and the manufacturer failed to remove the
questionable product or a feature of its design, it could be
held that the risk he provoked outweighed the utility. In
the hypothetical brake example, if the manufacturer used
unusual lining materials to save on cost, the risks of that
choice may outweigh its benefits and he could be liable for
damages the brakes caused. Alternatively, was the product
in question used for decades with positive effects? In this
case it could be argued, the product might be risky but its
long use proved that society generally found it to be
overwhelmingly utilitarian.
Restatement of Torts
-4-
The developing concep~ of torts and the rise of more and
more product liability cases has caused confusion and
concern over the past 20 years. Have we gone too far
imposing liability under too many circumstances? Is it not
time that people begin taking more responsibility for their
own actions?
To clarify many of the legal issues, the American Law
Institute took on a project in the early 1960s which became
known as the Restatement of Torts -- an effort to
rationalize inconsistencies in different states on just what
constituted liability, strict liability and all of their
various proofs.
Congress has never adopted a nationwide standard of tort
law, leaving the matter to each state. In the absence of a
federal standard, the A.L.I.'s Restatement of Torts has
become a benchmark, though still by no means uniformly or
universally applied.
It was the Restatement of Torts that defined strict
liability as making the seller or manufacturer of a product
strictly liable to the user even though he may have
exercised all possible care in its preparation -- in other
words if the product itself turns out to have been
defective.
At the same time, however, the Restatement of Torts also
declared a number of exemptions, particularly in defining
the standards of "defective" products, or those that are
"unreasonably dangerous." This was essential since many
products will always involve some element of risk to the
user.
-5-
Strict Liability and Tobacco
One of the exemptions is contained in "comment i" of the
Restatement of Torts (second). This excludes from strict
liability cases all products that are "inherently
dangerous." As stated in "comment i": "The article sold
must be dangerous to an extent beyond that which would be
contemplated by the ordinary consumer who purchases it, with
the ordinary knowledge common to the community as to its
characteristics."
In case there was any doubt, the A.L.I. then became even
more specific:
"Good tobacco is not unreasonably dangerous [within the
meaning of Section 402A] merely because the effects of
smoking may be harmful; but tobacco containing something
like marijuana may be unreasonably dangerous. Good
butter is not unreasonably dangerous merely because, if
such be the case, it deposits cholesterol in the
arteries and leads to heart attacks; but bad butter,
contaminated with poisonous fish oil is unreasonably
dangerous."
The late William Prosser, a famous Harvard torts professor
and one of the drafters for the A.L.I., explained that "the~
fact that the product itself is dangerous, or even
unreasonably dangerous, to people who consume it is not
enough. There has to be something wrong with the product."
Strict Liability and Tobacco Litigation
Strict liability, as defined by the A.L.I., has played a
central role in many tobacco liability cases. Yet there is
still a substantial difference between many states in
applying the Restatement of Torts. In some states it has
been formally codified. More frequently it is a product of
judicial interpretation.
In some states, the A.L.I.'s definition of strict liability,
and particularly the exclusion of cigarettes in Mcomment i"
has been adopted as law, thereby removing cigarettes from
the list of products that can result in damages recoverable
in a court.
Furthermore, in states such as Texas, California, New Jersey
and Ohio that accept the doctrine of risk-utility as a test
of whether a product is defective, most juries have tended
to accept the fact that a person who chooses to smoke makes
a personal risk-utility decision and should be responsible
for his or her own actions.
The fact is that we all make risk-utility decisions a
thousand times a day. In our society, every choice involves
some kind of risk. There is no such thing as risk-free
behavior. We trade off risks against financial, emotional
and physical benefits all the time.
With tobacco, the approach of the A.L.I. reflects common
sense. The well-communicated potential risks of tobacco
should put this product outside the realm of strict
liability concerns. No one using the product can claim that
its possible dangers make it "defective," certainly not in
the same sense as a set of poorly designed brakes. And
anyone who smokes for many years has made an implicit
risk-utility choice, a choice where the pleasures of smoking
outweigh its well-publicized possible risks.
