Torts - Cases, Principles, and Institutions Fifth Edition, 2016a

Witt & Tani, TCPI 9. Liability without Fault?
Notes
1. The Third Restatement. The Third Restatement approach preserves the strict liability of
402A for manufacturing defects: liability exists “even though all possible care” was exerted to
make the manufacturing process safe.
But for design defects—for situations like the one in Barker and Wright—the American
Law Institute recommends a different approach, one that determines defectiveness not on the basis
of ex post risk-utility or consumer expectations, but on the basis of an ex ante cost-benefit test.
The view of section 2(b) of the Third Restatement is that a product is defective in its design if the
“foreseeable” risks could have been reduced or avoided by a “reasonable alternative design,”
which by hypothesis must have been available at the time of production. The current view of the
American Law Institute is thus that liability for design defects effectively ought to be liability for
negligence in design.
As for what courts actually do, a fifty state survey published in 2015 found “no consensus
with respect to application of either the consumer expectations test or the risk-utility test,” and
among the jurisdictions that employ a risk-utility test, no consensus as to whether the plaintiff
must prove that the harm could have been avoided by a “reasonable alternative design.” Mike
McWilliams & Margaret Smith, An Overview of the Legal Standard Regarding Product Design
Defect Claims and a Fifty State Survey on the Applicable Law in Each Jurisdiction, 82 DEF.
COUNSEL J. 80 (2015). In the early 2000s, some scholars predicted that the Third Restatement
would eventually prevail. See, e.g., Cami Perkins, The Increasing Acceptance of the Restatement
(Third) Risk Utility Analysis in Design Defect Claims, 4 Nev. L.J. 609 (2004). The trendline is no
longer clear. The Wisconsin Supreme Court observed in 2007 that “[s]ome jurisdictions that have
adopted the Restatement (Third) are now back-tracking. The current judicial trend appears to be a
return to the pro-consumer policies of origin and reinstating strict products liability under §
402A.” Godoy ex rel. Gramling v. E.I. du Pont de Nemours & Co., 768 N.W.2d 674, 690 (2007).
2. General Motors fuel tank saga. In 1999, a California jury awarded $4.9 billion to six
plaintiffs injured in Chevrolet Malibu cars who alleged that the fuel tank of the vehicle was placed
unreasonably and dangerously close to the bumper. The plaintiffs’ injuries were severe. Plaintiff
Patricia Anderson and her children, for example, were struck from the rear by a drunk driver; the
collision caused the fuel tank to explode, causing severe injuries to all the occupants of the car.
Ms. Anderson’s daughter Alisha was “horribly disfigured on her face and lost her right hand.”
Still, the size of the damages award stunned observers. The General Motors Corporation as a
whole reported only $3 billion in earnings from its operations the previous year. The jury
awarded $107.6 million in compensatory damages and $4.8 billion in punitive damages.
For our purposes, there are two striking features of the GM fuel tank case. The first has to
do with cost-benefit calculations and the jury. A key piece of evidence for the plaintiffs was an
internal General Motors memorandum revealing that the costs of moving the fuel tank further
from the bumper would have been $8.59 per vehicle, while the costs of fuel tank fires arising out
of the existing bumper would amount only to $2.40 per vehicle. The jury seems to have viewed
the defendant’s cost-benefit calculation as a kind of reckless disregard for the safety of its
customers and their passengers. But versions of this kind of cost-benefit calculation seem to be
precisely what the risk-utility analysis of the Second Restatement and the reasonable alternative
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