2. LEE BURGUNDER LEGAL ASPECTS of MANAGING TECHNOLOGY Third Ed. LEGAL ASPECTS of MANAGING TECHNOLOGY Third Ed.

3. Tort Liability for Physical and Economic Harms Chapter 13

4. © 2004 West Legal Studies in Business A Division of Thomson Learning LEGAL ASPECTS OF MANAGING TECHNOLGY LEE BURGUNDER Third Ed. 3 Governed by state law. Governed by state law. Negligence defined: Negligence defined: –Conduct that falls below the standard established by law for the protection of others against unreasonable risk of harm. Negligence

5. © 2004 West Legal Studies in Business A Division of Thomson Learning LEGAL ASPECTS OF MANAGING TECHNOLGY LEE BURGUNDER Third Ed. 4 Negligence and the Restatement of Torts For tort liability to arise: For tort liability to arise: –The negligent conduct must cause injury. –Social policy must make the person responsible for the harm caused by the negligence. –There must be no defenses that limit tort liability.

6. © 2004 West Legal Studies in Business A Division of Thomson Learning LEGAL ASPECTS OF MANAGING TECHNOLGY LEE BURGUNDER Third Ed. 5 Negligence Analysis Duty of Care Duty of Care –Reasonable person standard. –Community standards. –Legal standards. –Professional standards. –Economic formulations. Prevention costs v. expected losses from injuries.Prevention costs v. expected losses from injuries. Cheapest cost provider.Cheapest cost provider.

7. © 2004 West Legal Studies in Business A Division of Thomson Learning LEGAL ASPECTS OF MANAGING TECHNOLGY LEE BURGUNDER Third Ed. 6 Causation Analysis Direct Causation. Direct Causation. –But-for analysis. –Joint and several liability. Proximate Cause. Proximate Cause. –Liability extends to persons and property to which harm from negligence is reasonably foreseeable.

8. © 2004 West Legal Studies in Business A Division of Thomson Learning LEGAL ASPECTS OF MANAGING TECHNOLGY LEE BURGUNDER Third Ed. 7 Defenses to Negligence Assumption of Risk. Assumption of Risk. Comparative fault. Comparative fault.

9. © 2004 West Legal Studies in Business A Division of Thomson Learning LEGAL ASPECTS OF MANAGING TECHNOLGY LEE BURGUNDER Third Ed. 8 Issue: Did the N.Y. Blood Center fulfill its duty of care with respect to the contaminated vial? Issue: Did the N.Y. Blood Center fulfill its duty of care with respect to the contaminated vial? Decision: No. It is possible that the N.Y. Blood Center was negligent for using the contaminated vial. Decision: No. It is possible that the N.Y. Blood Center was negligent for using the contaminated vial. Rationale: Standard of care for negligence may exceed industry standards. Rationale: Standard of care for negligence may exceed industry standards. Vuono v. New York Blood Center

10. © 2004 West Legal Studies in Business A Division of Thomson Learning LEGAL ASPECTS OF MANAGING TECHNOLGY LEE BURGUNDER Third Ed. 9 STRICT PRODUCTS LIABILITY

11. © 2004 West Legal Studies in Business A Division of Thomson Learning LEGAL ASPECTS OF MANAGING TECHNOLGY LEE BURGUNDER Third Ed. 10 Policy Reasons for Strict Products Liability Negligence may not compensate every consumer. Negligence may not compensate every consumer. –Coca-Cola example. Sense of justice. Sense of justice. Economic efficiency. Economic efficiency. Incentive for continuous improvement. Incentive for continuous improvement. Fundamental Negative. Fundamental Negative. –Making someone responsible for a tragedy when they are not blameworthy.

12. © 2004 West Legal Studies in Business A Division of Thomson Learning LEGAL ASPECTS OF MANAGING TECHNOLGY LEE BURGUNDER Third Ed. 11 Seller is liable for harm resulting from a product that was in a defective condition unreasonably dangerous to the user, regardless of fault. Seller is liable for harm resulting from a product that was in a defective condition unreasonably dangerous to the user, regardless of fault. Applies only to sellers who regularly engage in distributing the product. Applies only to sellers who regularly engage in distributing the product. Condition of the product must not be substantially changed by another party before the injuries take place. Condition of the product must not be substantially changed by another party before the injuries take place. Injured person may sue any seller within the distribution chain. Injured person may sue any seller within the distribution chain. Products Liability: General Principles

13. © 2004 West Legal Studies in Business A Division of Thomson Learning LEGAL ASPECTS OF MANAGING TECHNOLGY LEE BURGUNDER Third Ed. 12 Manufacturing Defects. Manufacturing Defects. –The unit causing injury was not manufactured as safely as the manufacturer intended. Design Defects. Design Defects. –The unit was manufactured as intended, but it is defective because it should have been designed more safely. Failure to Warn. Failure to Warn. –The unit is manufactured correctly and designed as safely as possible, but it nonetheless is defective because it did not warn users sufficiently about inherent dangers. Forms of Product Defects

14. © 2004 West Legal Studies in Business A Division of Thomson Learning LEGAL ASPECTS OF MANAGING TECHNOLGY LEE BURGUNDER Third Ed. 13 Barker v. Lull Engineering Issue: Was Lull’s High-Lift Loader defectively designed? Issue: Was Lull’s High-Lift Loader defectively designed? Decision: Yes. Lull’s design was defective. Decision: Yes. Lull’s design was defective. Rationale: Consumer Expectation Test. Rationale: Consumer Expectation Test. –The product fails to perform as safely as an ordinary consumer would expect for intended uses and reasonably foreseeable unintended uses. –Use of loader by inexperienced worker may be a reasonably foreseeable unintended use.

15. © 2004 West Legal Studies in Business A Division of Thomson Learning LEGAL ASPECTS OF MANAGING TECHNOLGY LEE BURGUNDER Third Ed. 14 The New Restatement of Torts on Product Liability The risk/benefit test is the sole basis of analysis. The risk/benefit test is the sole basis of analysis. Consumer expectations are not a separate test, but part of the risk/benefit test. Consumer expectations are not a separate test, but part of the risk/benefit test. Factors: Factors: –The magnitude and probability of harm. –Instructions and warnings. –Consumer expectations –The advantages and disadvantages of potential alternatives

16. © 2004 West Legal Studies in Business A Division of Thomson Learning LEGAL ASPECTS OF MANAGING TECHNOLGY LEE BURGUNDER Third Ed. 15 The New Restatement of Torts: Failure to Warn Foreseeable risks of harm could have been reduced by the provision of reasonable instructions or warnings. Foreseeable risks of harm could have been reduced by the provision of reasonable instructions or warnings. Important factors: Important factors: –Gravity and risks posed by the product. –Content and comprehensibility of the warning. –Intensity of expression. –Characteristics of expected user groups.

17. © 2004 West Legal Studies in Business A Division of Thomson Learning LEGAL ASPECTS OF MANAGING TECHNOLGY LEE BURGUNDER Third Ed. 16 A firm must notify CPSC when: A firm must notify CPSC when: –Information reasonably supports the conclusion that a product fails to comply with CPSC regulations or an industry standard. –Product contains a defect that could create a substantial product hazard. –Product creates an unreasonable risk of serious injury or death. –Product has been subject to 3 civil suits within 2 calendar years. CPSC Regulations

18. © 2004 West Legal Studies in Business A Division of Thomson Learning LEGAL ASPECTS OF MANAGING TECHNOLGY LEE BURGUNDER Third Ed. 17 Strict Product Liability and The Computer Industry Expert systems and medical treatment. Expert systems and medical treatment. Year 2000 (Y2K) concerns. Year 2000 (Y2K) concerns. Repetitive motion injuries. Repetitive motion injuries. Tort Litigation. Tort Litigation.

19. © 2004 West Legal Studies in Business A Division of Thomson Learning LEGAL ASPECTS OF MANAGING TECHNOLGY LEE BURGUNDER Third Ed. 18 Intentional Torts Involving Computer Systems Computer systems are vulnerable to both negligent and intentional injury. Computer systems are vulnerable to both negligent and intentional injury. Trespass by E-Robots. Trespass by E-Robots. –Ebay, Inc. v. Bidder’s Edge. Issue: Did BE trespass onto Ebay’s property? Decision: Yes. BE was enjoined from accessing Ebay’s computers.

20. © 2004 West Legal Studies in Business A Division of Thomson Learning LEGAL ASPECTS OF MANAGING TECHNOLGY LEE BURGUNDER Third Ed. 19 Spam. Spam. Spam and Trespass. Spam and Trespass. Computer Viruses, Trojan Horses and Worms. Computer Viruses, Trojan Horses and Worms. Electronic Coercion and Self Help. Electronic Coercion and Self Help. Intentional Torts Involving Computer Systems