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DESIGN DEFECTS IN NEW JERSEY FOLLOWING THE 1997 RESTATEMENT (THIRD) OF TORTS: PRODUCTS LIABILITY

By: William A. Dreier

The heart of sec. 2(b) of the Restatement (Third) of Torts: Products Liability (1997) is the requirement that to prove a design defect, a plaintiff must show a “reasonable alternative design” for the product.

The Reporters explained during the ALI general discussions and committee meetings that they and their assistants had read many thousands of design defect cases throughout the country, and what had struck them was a single unifying factor. The proof in virtually all the cases involved the plaintiff coming forward with an alternative design and then demonstrating to the jury that the particular design would have reduced the danger or prevented the occurrence.

Thus, the Reporters abandoned the language, but not the concepts, of the 1965 Restatement (Second) of Torts, sec. 402A, and substituted the more easily understood reasonable alternative design test.

Risk-Utility Under Section 2(b)

There is no doubt that this test adopts, as did the 402A language, a negligence-based standard. Section 2(b) expressly incorporates the risk-utility principles so familiar in New Jersey, except as they were modified by the 1987 Products Liability Act. N.J.S.A. 2A:58C-1 et seq. See Cavanaugh v. Skil Corp., 164 N.J. 1 (2000); Lewis v. American Cyanamid Co., 155 N.J. 544, 75 (1998); Zaza v. Marquess & Nell, Inc., 144 N.J. 34 (1996); Jurado v. Western Gear Works, 131 N.J. 375 (1993); Michalko v. Cooke Color & Chem. Corp., 91 N.J. 386 (1982); Suter v. San Angelo Foundry & Mach. Co., 81 N.J. 150 (1979); and Cepeda v. Cumberland Eng’g Co., 76 N.J. 152 (1978). The Restatement merely expresses the concept in more understandable terms.

In Suter, New Jersey determined that the old standards of the 1965 Restatement (Second) of Torts, sec. 402A should be modified to remove the obligation to prove “unreasonable danger.” Instead, proof in New Jersey was to be that the product was not “reasonably fit, suitable and safe for its intended or reasonably foreseeable purposes,” but fitness and suitability were deemed largely synonymous with safety. Therefore, the standard was reasonable safety.

The Products Liability Act in N.J.S.A. 2A:58C-2 uses a shorthand for this phrase: “fit, suitable or safe for its intended purpose.” Thus, the manufacturer must look at the class of reasonably anticipated users to determine how the product should be designed. (There is a similar requirement concerning warnings.) The Restatement is similarly clear in comment f that the manufacturer must focus on the class of reasonably anticipated users, not the individual plaintiff.

To show how the Reporters have brought together the many factors that bear on the reasonableness of the alternative design and to see how the Restatement places no new onerous burden on a plaintiff, one only need read comment f to sec. 2, an excerpt of which follows:

The factors include, among others, the magnitude and probability of the foreseeable risks of harm, the instructions and warnings accompanying the product, and the nature and strength of consumer expectations regarding the product, including expectations arising from product portrayal and marketing … Thus, the likely effects of the alternative design on production costs; the effects of the alternative design on product longevity, maintenance, repair, and esthetics; and the range of consumer choice among products are factors that may be taken into account.

Sufficient evidence must be presented so that reasonable persons could conclude that a reasonable alternative could have been practically adopted. Assuming that a court concludes that sufficient evidence on this issue has been presented, the issue is then for the trier of fact.

In 1998, the New Jersey Supreme Court Model Charge Committee revised the Product Liability Design Defect Charge. Interestingly, the committee modified the “reasonable alternative design” language of the Restatement and replaced it with the term “alternative safer design.” In some cases this might be misleading.

Although safety is the primary standard, other factors may influence the reasonableness of plaintiff’s proposed alternative design. The Supreme Court in Cavanaugh and Lewis endorsed the Restatement formulation as an alternative test to risk-utility, but as can be seen from even a casual reading of comment f to Restatement sec. 2(b), they are usually the same.

Plaintiffs must initially demonstrate that the proposed design was within the state of the art. If a defendant contends to the contrary, New Jersey places the trial burden of persuasion concerning this issue on the defendant. See Cavanaugh, 164 N.J. at 6-10, and Feldman v. Lederle Lab., 97 N.J. 429, 455-56 (1984). The 1987 Products Liability Act confirms this shift by denoting state of the art as a defense. N.J.S.A. 2A:58C-3a(l). This is one of the few differences between strict product liability and ordinary negligence cases. See Suter, 81 N.J. at 171.

It is the jury, not the court, who will decide the reasonableness of the alternative design in the vast majority of cases, so long as a plaintiff has presented at least an alternative concerning which reasonable people could differ. However, if the defect is self-evident, a consumer expectation standard can apply as a basis for the court striking the opposition to a design-defect claim. Even if there is no such obvious defect, the case may fall under Restatement sec. 3, and a plaintiff may prevail under a theory akin to res ipsa loquitur: Myrlak v. Port Auth. of N.Y. and N.J., 157 N.J. 84, 103-07 (1999).

The risk and extent of harm, the costs of substituting the alternative product and other downside factors of the substitution, all are to be considered when the jury determines whether the risk-utility balance is to be determined in favor of the alternative design proposed by the plaintiff. According to both New Jersey law and the Restatement, plaintiffs are not required to produce experts if none are needed to understand the benefits and feasibility of the alternative design. No working model of the alternative need be constructed in the usual case, although such a model might bolster an expert’s credibility. As in a negligence case, the test is one of reasonableness, except as the rules may be modified by the 1987 Products Liability Act, N.J.S.A. 2A:58-1 et seq.

Exceptions

The Restatement Reporters did not stop with the reasonable alternative design test. They recognized that there are some products that may be so egregiously unsafe that they should not have been placed on the market at all, even though there may be no alternative. See comment e to Sec. 2. The Reporters’ Note accompanying this comment states that they were unable to find a single case in the country to which this exception would have applied, but it was theoretically possible, and had indeed been recognized by the New Jersey Products Liability Act as an exception to the state-of-the-art defense. See N.J.S.A. 2A:58C-3b.

A second exception to the requirement that a plaintiff prove a “reasonable alternative design” is the situation covered by sec. 3 of the Restatement, where the product is so apparently defective that the alternative design need not be presented.

In New Jersey we have recognized this principle in two ways. Although not explicitly stated, it appears that the Restatement under sec. 3(a) would accept New Jersey’s principle that a judgment may also be ordered for a plaintiff on motion where the design defect is self-evident. See Suter, 81 N.J. at 171 (giving as an example a bicycle designed without brakes); Mettinger v. W. W. Lowensten, Inc., 292 N.J. Super. 293, 309 (App. Div. 1996), aff’d, 153 N.J. 371 (1998) (tracing history of consumer expectation principles in product liability cases).

Otherwise, the risk and extent of harm, the fees and costs of substituting the alternative product and the downside factors of the substitution, all are thrown into the equation. The Restatement cites to New Jersey law in this point, and notes that New Jersey has explicitly adopted sec. 3. See Myrlak, 157 N.J. at 107.

Another principle covered by sec. 3 that also bears on sec. 2(b) is the permitted use of circumstantial proof to show the presence of some defect, although the particular defect cannot be identified. This is exemplified by the New Jersey cases of Lynch v. Galler Seven-Up Pre-Mix Corp., 74 N.J. 146, 152 (1977); Scanlon v. General Motors Corp., 65 N.J. 582, 591 (1974); Sabloff v. Yamaha Motor Co., Ltd., 59 N.J. 365, 366 (1971); and Jakubowski v. Minnesota Mining & Mfg., 42 N.J. 177, 183-84 (1964). Where causes for which the defendant would not be responsible have been negated, proof of the defect merely requires a showing of a failure in performance caused by some undefined design defect. The specific defect need not be shown.

A car whose steering wheel suddenly locks and a motorcycle whose front wheel suddenly stops turning are examples of obvious defectiveness. Even though the plaintiff can demonstrate no specific manufacturing defect or specific design defect, the product may be assumed to be defective under what is essentially a res ipsa loquitur theory.

Consumer Expectations

New Jersey has departed slightly from the classical risk-utility analysis by virtue of the Products Liability Act. But it is fair to say that New Jersey is firmly committed to a negligence-based risk-utility analysis in which consumer expectations are to be a relevant factor, rather than to the primary consumer expectation analysis adopted in a few states (see, e.g., Alaska, Arkansas, Hawaii, Nebraska, Oklahoma and Wisconsin).

However, although it is beyond the scope of this article, some other states, California, Connecticut and Tennessee, have adopted a consumer-expectations test in name only, but in fact still require a risk-utility analysis, as explained in the Reporters’ Note II D to comment d of the Restatement.

The consumer-expectations test, employed by those few American jurisdictions that base liability on this theory, resembles the consumer-expectations test which is prevalent throughout the rest of the world. Article 6 of the European Commission Directive of July 25,1985 establishes a pure consumer-expectations test in that “[a] product is defective when it does not provide the safety which a person is entitled to expect, taking all circumstances into account, including: (a) the presentation of the product.” Other factors include the reasonably expected uses of the product and the time it was “put into circulation.”

The European Community is not alone. Similar statutes are present throughout South America, Japan and the rest of Asia, Australia and even Canada. In these countries, however, the use of civil juries is virtually unknown, the contingent fee is not permitted and damages are severely limited.

Consumer expectations and the obviousness of danger, however, are recognized risk factors under the Restatement reasonable alternative design standard. See comments f and g. Both the Restatement and the New Jersey tests look through the eyes of a reasonable manufacturer to determine the product to be placed on the market. In determining whether the original design was reasonable, one consideration is what a member of the class of users, that is, a reasonable person in the class of anticipated or reasonably foreseeable users, would anticipate with respect to this product. Comment f includes consumer expectations in the risk-utility analysis, but it is comment g that explains the role of consumer expectations as a factor:

Courts frequently rely, in part, on consumer expectations when discussing liability based on other theories of liability. … However, consumer expectations do not play a determinative role in determining defectiveness. See comment h. … Nevertheless, consumer expectations about product performance and the dangers attendant to product use affect how risks are perceived and relate to foreseeability and frequency of the risks of harm, both of which are relevant under Subsection (b). … It follows that, while disappointment of consumer expectations may not serve as an independent basis for allowing recovery under Subsection (b), neither may conformance with consumer expectations serve as an independent basis for denying recovery. Such expectations may be relevant in both contexts, but in neither are they controlling.

New Jersey has, however, carried the consumer expectation “shield” a large step beyond the Restatement standards. Under New Jersey law prior to the enactment of the 1987 Products Liability Act, consumer expectations and the obviousness of the danger were only risk-utility factors. Under the Act, however, these objective consumer expectations and obvious danger standards are combined to present an absolute defense to a design defect claim. N.J.S.A. 2A:58C-3a(2), the broadly worded consumer-expectations/obvious-danger defense, states that the manufacturer is not liable if

(2) The characteristics of the product are known to the ordinary consumer or user, and the harm was caused by an unsafe aspect of the product that is an inherent characteristic of the product and that would be recognized by the ordinary person who uses or consumes the product with the ordinary knowledge common to the class of persons for whom the product is intended.

There are exceptions to this defense. It is not applicable to workplace injuries where the Legislature maintained the broad protections of Suter. In addition, although the Legislature did not absolve manufacturers who failed to install reasonable protections on machinery and equipment, the defendant may not look to the statute for a defense. The statutory exception states that the defense protects manufacturers except that this paragraph shall not apply to industrial machinery or other equipment used in the workplace and it is not intended to apply to dangers posed by products such as machinery or equipment that can feasibly be eliminated without impairing the usefulness of the product.” The Sponsors’ Statement appended to the Act explains that the “such as” language is not limited to machinery and equipment, but even includes industrial chemicals. Basically, these exceptions mirror pre-statute case law.

Employee Conduct

The Suter rule concerning employee workplace protection also radically departs from the Restatement. Not only would New Jersey not give the defendant manufacturer substantial protection, in most cases Suter takes away the defense entirely. An employee who is performing a function reasonably believed by the employee to be part of the job is deemed to have no meaningful choice, and thus the employee’s contributory fault is not to be assessed. See Suter, 81 N.J. at 160; Ramos v. Silent Hoist & Crane Co., 256 N.J. Super. 467, 478 (App. Div. 1992).

An employee’s conduct may be presented for other purposes, such as to show that the defendant’s product was not a proximate cause of the accident, or to demonstrate how the accident occurred; but comparative fault is barred. The Restatement, in sec. 17, takes a different position, but notes New Jersey’s divergence from the rule followed in most of the rest of the country. See Reporters’ Note to comment a.

Safety Devices

The Restatement does not single out the lack of a safety device for special treatment, except in the comments and Reporters’ Notes. New Jersey, however, has a number of cases involving such devices.

A long series of cases had established the principle that the duty to provide an appropriate safety device could not be delegated by a manufacturer to a downstream purchaser. See Michalko. In Zaza, however, now the defining case in this area, this rule was modified to permit the manufacturer of a component part to delegate this duty in certain limited circumstances. If the owner’s specifications indicate that the owner or another processor of the equipment will install the required safety device at a later time, before the user could be harmed, a component part manufacturer will be able to rely on the owner’s specifications if they are not “obviously dangerous.”

There is a statutory issue relating to safety devices. Under N.J.S.A. 2A:58C-3a(2), known as the obvious-danger/consumer-expectations defense, the manufacturer is protected from claims based on characteristics of the product known to the ordinary consumer or user if the “unsafe aspect of the product that is an inherent characteristic of the product … would be recognized by the ordinary person who uses or consumes the product.”

Therefore, it might be thought that a product that was missing a removable safety device, thereby exposing a user to obvious risks, would be nonactionable, except that the statute contains an exception to this principle. The statute excepts “industrial machinery or other equipment used in the workplace.” As noted earlier, it further states that this defense “is not intended to apply to dangers posed by products such as machinery or equipment that can feasibly be eliminated without impairing the usefulness of the product.” See Roberts v. Rich Foods Inc., 139 N.J. 365, 381 (1995); McWilliams v. Yamaha Motor Corp. USA, 987 F.2d 200 (3d Cir. 1992).

An easily removable safety device that does not disable the product when the device is removed has been held a basis for liability. See Cepeda v. Cumberland Eng’g Co., 76 N.J. 152

(1978). Parenthetically, it should be noted that an employer, who removes a safety device where there is a “substantial certainty” that workers will be injured, may be held liable despite the existence of the workers’ compensation bar to such liability. See Millison v. E. I. duPont de Nemours & Co., 101 N.J. 161, 184-88 (1985); Mabee v. Borden Inc., 316 N.J. Super. 218, 229 (App. Div. 1998); Calderone v. Machinefabriek Bollegraaf Appingedam BV, 285 N.J. Super. 623 (App. Div. 1995), certif. denied, 144 N.J. 174 (1996). With this one exception, the workers’ compensation bar prohibits a product manufacturer from seeking contribution or indemnification from the employer.

Where there is a design defect, the manufacturer must correct this defect by causing the owner to retrofit the product, failing which the manufacturer will be liable to the injured user. See Stephenson v. R. A. Jones & Co. Inc., 103 N.J. 194 (1986). The Restatement in sec. 10 imposes liability on a seller for a post-sale failure to recall a product only if there has been a governmental recall directive or where the seller itself has undertaken to recall the product. There is no liability for the failure to retrofit a product separately stated in the Restatement, since the product without the retrofit would merely be a defective product subject to the general rules of sec. 2(b).

State of the Art

Another absolute defense to a design-defect claim under the New Jersey statute is the state-of-the-art defense established in N.J.S.A. 2A:58C-3a(l), which provides that a manufacturer is not liable if

(1) At the time the product left the control of the manufacturer, there was not a practical and technically feasible alternative design that would have prevented the harm without substantially impairing the reasonably anticipated or intended function of the product.

Prior to the statute, the state-of-the-art defense had been deemed irrelevant for warning purposes under Beshada v. Johns-Manville Products Corp., 90 N.J. 191 (1982), but was then declared to be a relevant factor in O’Brien v. Muskin Corp., 94 N.J. 169 (1983). Finally, in Feldman, Beshada was “limited to its facts.” The statute, however, raised this defense from a risk-utility consideration to an absolute defense.

Although much was made of this point, it really has little effect. If the design was not scientifically and technologically feasible when the product was manufactured, this fact provides a complete defense. It cannot merely be considered just one of the risk-utility considerations. A manufacturer cannot be required to design something that was not feasible when the product was made. The statute sets contrary claims to rest. The Court in Cavanaugh points out that one must distinguish between two situations: (1) an ordinary defense that the alternative design proposed by the plaintiff was not practical or that one of the other considerations of comment f or the risk-utility analysis showed the reasonableness of defendant’s design, and (2) a claim that the plaintiff’s proposed design was not feasible. Only this latter case raises the state-of-the-art defense. When properly raised, it can bar a plaintiff’s claim without further consideration of practicality. We must note, however, that it is the defendant, not the plaintiff, who must prove the state-of-the-art. See Feldman.

The Restatement discusses the state-of-the-art defense in comment d, and the Reporters’ Notes explain that the term has three meanings: first, a standard of the industry, second, a technologically and scientifically feasible alternative, and third, a theoretical possibility that is “cutting edge,” but is not known generally even to most experts in the area. It is the middle possibility that is adopted in the comments, and the language practically tracks that of New Jersey law for the state-of-the-art defense.

This factor is not viewed in the Restatement as a defense, but as a consideration in determining what alternative design is reasonable. However, because the comments indicate that it is not reasonable to require something that was not scientifically and technologically feasible, the Restatement test requiring a reasonable alternative design implicitly includes a state-of-the-art test. There thus is no variance between New Jersey law and the Restatement on this point. The only real difference is the shift of the burden of proof from plaintiff to defendant on this issue. The statute only confirmed this shift, which originated in Feldman.

The third absolute defense under the Products Liability Act is a showing by a defendant that the product was unavoidably unsafe. N.J.S.A. 2A:58C-3a(3). This defense is intuitively obvious, when viewed from the perspective of the reasonable alternative design. If one posits that the product is unavoidably unsafe, it is difficult to see that there could be a reasonable alternative design. There, thus, is no conflict between the Restatement and New Jersey law on this point. The issues here are simple. First, was there a reasonable alternative design that could have reduced the risks? If not, the case turns into a warning defect matter. Second, had there been an adequate warning of the risks that could not be avoided? The New Jersey statute recognizes these issues.

Section 2(b) of the Restatement has been recognized as a readily understood synopsis of New Jersey law in areas where our statute does not require other action. See Cavanaugh; Lewis; Green v. General Motors Corp., 310 N.J. Super. 507, certif. denied, 156 N.J. 381 (1998); Smith v. Keller Ladder Co., 275 N.J. Super. 280 (App. Div. 1994). Although there is an intimation in Lewis that the reasonable alternative design standard is a separate but accepted basis on which to base defective design liability, a close reading of the Restatement, Cavanaugh and other New Jersey authorities clearly shows otherwise. The sec. 2(b) standard of reasonable alternative design and its model charge equivalent of alternative safer design are really shorthand and easily understood descriptions of the risk-utility principle that has long been the foundation of New Jersey law. It does not stand along side of, but rather encompasses the long and sometimes complicated risk-utility analyses that have troubled practitioners, judges and juries. This simplified language need be elaborated on only where specific issues in the case so require, and thus should make this portion of the Restatement a solid foundation for jury charges and opinions long into the future.

This article is reprinted with permission from the December 4, 2000 issue of the New Jersey Law Journal. © 2000 NLP IP Company.