CHAPTER 7 Business Torts and Product Liability

BUSINESS TORTS AND PRODUCT LIABILITY Key Points Identify the principal intentional business torts and available defenses Understand intentional torts Understand product liability Understand strict liability

A CRIME IS A PUBLIC WRONG WHEN ONE BREACHES A DUTY OWED TO SOCIETY CRIMES A CRIME IS A PUBLIC WRONG WHEN ONE BREACHES A DUTY OWED TO SOCIETY

TORT A TORT IS A CIVIL WRONG, OTHER THAN A BREACH OF CONTRACT, FOR WHICH THE COURT WILL PROVIDE A REMEDY NORMALLY IN THE FORM OF DAMAGES

3 GENERAL TORT CATEGORIES Intentional Product Liability Strict Liability

INTENTIONAL TORTS

FOUR ELEMENTS DUTY BREACH OF DUTY CAUSATION INJURY

An element in most torts except for: FAULT An element in most torts except for: Products liability Strict liability

INTENTIONAL TORTS AGAINST PERSONS Assault

INTENTIONAL TORTS AGAINST PERSONS Battery

INTENTIONAL TORTS AGAINST PERSONS False imprisonment

INTENTIONAL TORTS AGAINST PERSONS Fraud

INTENTIONAL TORTS AGAINST PERSONS Defamation: slander libel

INTENTIONAL TORTS AGAINST PERSONS Invasion of privacy: Appropriation of a person’s name or likeness Intrusion Public disclosure of private facts False light

INTENTIONAL TORTS AGAINST PERSONS Intentional infliction of emotional distress

INTENTIONAL TORTS AGAINST PERSONS Personal injury

INTENTIONAL TORTS AGAINST PERSONS Malpractice (Medical, legal, accounting, etc.)

INTENTIONAL TORTS AGAINST PERSONS Wrongful death

INTENTIONAL TORTS AGAINST PROPERTY Trespass to real property

INTENTIONAL TORTS AGAINST PROPERTY Trespass to personal property

INTENTIONAL TORTS AGAINST PROPERTY Conversion

INTENTIONAL TORTS AGAINST PROPERTY Nuisance

INTENTIONAL TORTS AGAINST PROPERTY Injurious falsehood

BUSINESS TORTS Patent Infringement

Copyright infringement BUSINESS TORTS Copyright infringement

Trademark infringement BUSINESS TORTS Trademark infringement

BUSINESS TORTS Unfair competition

INTENTIONAL TORT DEFENSES Consent Mistake Necessity Self-defense

PRODUCT LIABILITY

PRODUCT LIABILITY CLAIMS Causes of action against manufacturer, distributor and/or sellers for injury from a defective product to the person or property of purchaser, consumer and/or bystander

POSSIBLE TORT AND/OR CONTRACT CLAIMS Negligence Breach of warranty Strict liability

NEGLIGENCE

NEGLIGENCE Failure to do what a reasonable person would do or doing what a reasonable person would not do

PLAINTIFF MUST PROVE EACH OF THE FOLLOWING ELEMENTS: Duty Breach of duty Causation: Actual cause Proximate cause Injury

MANUFACTURING DEFECTS Improper manufacturing of goods gives rise to tort claim

DESIGN DEFECTS Negligence law requires that manufacturers designing products to anticipate and avoid consumer injury Two tests: Risk/utility test: Consumer expectations test:

INADEQUATE WARNINGS Failure to warn of a danger associated with its product creates manufacture and maybe seller liability!!!!

INADEQUATE WARNING Issues include: Whether the supplier knew or should have known that the product could be dangerous in a foreseeable use The feasibility of an effective warning The probable seriousness of the injury

NEGLIGENCE DEFENSES Comparative Negligence Contributory Negligence Assumption of Risk

WARRANTIES AND BREACH OF WARRANTIES

EXPRESS WARRANTIES Express warranty is when a seller of goods states a fact or makes a promise regarding the character or quality of the goods

EXPRESS WARRANTIES Created by: Any description of the goods Any affirmation of fact or promise Any description of the goods Any sample or model Advertisement

Sales talk or puffing does not create an express warranty EXPRESS WARRANTIES Sales talk or puffing does not create an express warranty

An “expert’s” opinion may create an express warranty EXPRESS WARRANTIES An “expert’s” opinion may create an express warranty

DISCLAIMERS – EXPRESS WARRANTIES May be disclaimed or modified only with great difficulty

IMPLIED WARRANTIES An implied warranty automatically attaches to the sale of goods by operation of law

TWO TYPES Merchantability 2. Fitness for a Particular Purpose

DISCLAIMERS-IMPLIED WARRANTIES May be excluded or modified as follows: Any disclaimer of merchantability must mention merchantability and, in the case of a writing, must be conspicuous Any disclaimer of fitness for a particular purpose must be by a writing and conspicuous

STRICT LIABILITY

RES IPSA LOQUITUR The thing speaks for itself In rare cases, plaintiff need not prove manufacturer’s negligence Injury caused by an instrumentality under control of defendant·

STRICT LIABILITY—PART I Definition: One who sells any product in a defective condition, unreasonably dangerous to user or consumer, is liable for harm caused if: · The seller is engaged in the business of selling such a product and · The product is expected to and does reach user without substantial change in the condition in which it is sold

STRICT LIABILITY—PART II Coverage: The rule applies— Even though seller has exercised all possible care Even where the user has not bought the product from seller To all those in the distribution chain, from manufacturer through ultimate retailer

STRICT LIABILITY—PART III Policy: To place the burden and cost of injury on the chain of distribution (which can both insure for and spread the cost), rather than imposing the entire burden on the injured user

Defenses: Assumption of risk Product misuse Normally not assumption of risk

TORT REFORM? PRO Tort costs are about 2.2% of America’s GDP Tort costs are higher in the U.S. than in other countries Too much of tort awards get paid to the attorneys rather than the victims

TORT REFORM? CON Lawsuits are less than 2% pf spending and product liability suits are only a fraction of that. Insurance costs don’t drop when tort damages awards are capped Only 3 % of tort cases go to trial Punitive damages are only awarded in 3.3% of tort cases

See You in Court? Maybe Not States have been cracking down on the types of suits that can be filed and how much can be recovered. Here’s a look at some of the restrictions.

See You in Court? Maybe Not States have been cracking down on the types of suits that can be filed and how much can be recovered. Here’s a look at some of the restrictions.

Class-action restrictions Legislatures in nine states have made it harder to combine large numbers of claimants in a single lawsuit

Medical- malpractice maximums Limits on damages, including pain and suffering, and similar measures have been approved by 23 states

Punitive-damages limits Ceilings on the amount of punitive damages have been passed in 32 states

Barring out-of-state plaintiffs Eight states, once meccas for out-of-state plaintiffs, now curtail suits by people with no connection to the jurisdiction

Appeal-bond reform Nearly three dozen states have limited the size of the bond needed to appeal a verdict, removing a huge burden for companies

Guns Some 33 states have passed laws protecting firearms makers from certain suits filed by gun victims

Obesity/junk food Laws in 23 states keep you from suing the likes of McDonald’s for making you fat

Drugs A number of states have made it harder to win claims against pharmaceutical companies if their products have been approved by the U.S. Food & Drug Administration

Class-action restrictions Legislatures in nine states have made it harder to combine large numbers of claimants in a single lawsuit

Medical- malpractice maximums Limits on damages, including pain and suffering, and similar measures have been approved by 23 states

Punitive-damages limits Ceilings on the amount of punitive damages have been passed in 32 states

Barring out-of-state plaintiffs Eight states, once meccas for out-of-state plaintiffs, now curtail suits by people with no connection to the jurisdiction

Appeal-bond reform Nearly three dozen states have limited the size of the bond needed to appeal a verdict, removing a huge burden for companies

Guns Some 33 states have passed laws protecting firearms makers from certain suits filed by gun victims

Obesity/junk food Laws in 23 states keep you from suing the likes of McDonald’s for making you fat

Drugs A number of states have made it harder to win claims against pharmaceutical companies if their products have been approved by the U.S. Food & Drug Administration