The American Law Institute promulgated the Restatement (Third) of Torts: Product Liability in 1998, but Wisconsin continues to resist its adoption. The Wisconsin Supreme Court states that the Restatement (Third), at best, represents an unnecessary departure from the strict liability standard set forth by the Restatement (Second) of Torts, and at worst, is a politically motivated attempt to advance the tort reform movement. A closer look at the Restatement (Third), however, reveals that it is a better representation of prevailing product liability laws in the U.S. than our court wants to believe, and merits closer consideration.
Significant changes in product liability law have occurred since the second half of the twentieth century. Nearly every state, including Wisconsin, adopted Section 402A of the Restatement (Second) by the late 1960s. Section 402A became the sole guiding light for countless judicial decisions relating to all manner of product liability. 1William E. Westerbeke, The Sources of Controversy in the New Restatement of Products Liability: Strict Liability Versus Products Liability, 8-FALL Kan. J.L. & Pub. Pol’y 1, 1, 4-5 (1998). In recognition of the dramatic evolution in product liability litigation since the introduction of Section 402A, a conscious decision was made by the ALI to create a more comprehensive restatement highlighting the developments in product liability law.
When the Restatement (Second) initially was drafted and adopted by the ALI in 1964, product liability law was in its formative years. Up to this point, injured product users and consumers often were prevented by three barriers from recovering for their injuries: (1) the privity requirement; (2) prohibitive burden of proof requirements; and (3) contract-based limitations. 2Id. at 2-4.
The privity requirement acted to bar recovery for plaintiffs who did not purchase the defective product directly from the manufacturer, such as in breach of express warranty cases where the product was purchased through a retail seller or given as a gift. Lack of privity prevented the consumer from claiming a breach.
Plaintiffs also found problems proving the seller’s fault in negligence actions. First, even if the plaintiff could prove a product was defective, they still had to prove that the defect resulted from negligence on the part of the manufacturer. Second, because many products are manufactured using parts and raw materials from various suppliers, a plaintiff claiming a manufacturing defect often could not establish which supplier was the negligent party.
The implied warranty of merchantability, which provides strict liability when breached, was meant to provide relief to the consumer from the privity and burden of proof problems. In reality, however, contractual limitations often prevented plaintiffs from relief. For instance, breach of warranty actions typically were available only to the original purchaser, and while these actions did extend to some third parties, such as family members, they did not extend to other third parties, such as employees, tenants or agents of the purchaser.
Section 402A
Section 402A was the solution to this dilemma. 3Restatement (Second) of Torts §402A, “Special Liability of Seller of Product for Physical Harm to User or Consumer.” It recognized that product liability lawsuits have a stronger correlation to tort claims than contract claims, and established strict liability in tort. Strict liability, which focuses on the nature of the product, 4Dolly M. Trompeter, Sex, Drugs, and the Restatement (Third) of Torts, Section 6(c): Why Comment e is the Answer to the Woman Question, 48 Am. U. L. Rev. 1139, 1147 (1999). imposes liability on a product seller or manufacturer without requiring the plaintiff to prove negligence, which focuses on the actions of the manufacturer. 5Id. Section 402A does not require the plaintiff prove either negligence on the part of the manufacturer or that the risk of harm posed by the offending product was foreseeable by the manufacturer. Strict liability, however, is not synonymous with absolute liability.
Under Section 402A, manufacturers are not without defenses to strict liability claims, such as a consumer’s contributory negligence. Even with available defenses, Section 402A gives the benefit of the doubt to the consumer. According to the initial drafter of the Restatement (Second), this largely is because manufacturers typically have greater resources, are better equipped to shoulder the burden of loss associated with defective products, and arguably should be held responsible for any harm caused by their products. 6Id. (citing William L. Prosser, The Assault Upon the Citadel (Strict Liability to the Consumer), 69 Yale L.J. 1099, 1120 (1960)).
Over the next two decades nearly every state adopted the Restatement (Second), including Wisconsin. In 1967, the Wisconsin Supreme Court, adopted strict liability as set forth in Section 402A. 7Dippel v. Sciano, 37 Wis. 2d 443, 459, 155 N.W.2d 55, 63 (1967). In a later decision, the court articulated the “consumer expectations” test, sometimes referred to as the “consumer contemplation” test. 8Vincer v. Esther Williams All-Alluminum Swimming Pool Company, 69 Wis. 2d 326, 331, 230 N.W.2d 794, 798 (1975). This test finds a product is not defectively dangerous “[i]f the average consumer would reasonably and fully appreciate the attendant risk of injury.” 9Id. at 332. This widely-adopted test would prove to be the basis under which most product liability cases were decided in Wisconsin since the late 1960s.
The drafters of the Restatement (Second) could not have predicted the developments in product liability litigation that occurred over the last 40 years. After Section 402A became the standard in most states, a steady stream of product liability litigation ensued, and in particular, litigation involving design defects arose. Section 402A, however, did not adequately address all of the issues confronting the courts with respect to product liability. Those shortcomings included excessively vague standards for design defect cases, the possibility that jurors would assign unreasonably high or unacceptably low expectations to consumers, and the lack of guidance for bystanders’ expectations. 10Horst v. Deere & Co., 2009 WI 75, ¶¶ 95, 97, 100; 319 Wis.2d 147, 769 N.W.2d 536 (Gableman, J., dissenting). Because of the shortcomings of §402A, ALI intended the Restatement (Third) to completely supersede it. 11Westerbeke, supra note 1, at 1.
The Restatement (Third) has 21 sections divided into four chapters with expanded analysis of related concepts, compared to only one section in the Restatement (Second), Section 402A. 12The four chapters of the Restatement (Third) of Torts: Products Liability are: Liability Of Commercial Product Sellers Based On Product Defects At Time Of Sale, Liability Of Commercial Product Sellers Not Based On Product Defects At Time Of Sale, Liability Of Successors And Apparent Manufacturers, Provisions Of General Applicability. One of the most notable updates in the Restatement (Third) is the recognition of the three distinct categories of defects: manufacturing, design and failure to warn. 13Godoy ex rel. Gramling v. E.I. Du Pont De Nemours & Co., 2009 WI 78, ¶ 17, 768 N.W.2d 674. For example, a manufacturing defect occurs, under Section 2, “when the product departs from its intended design even though all possible care was exercised in the preparation and marketing of the product.” 14Restatement (Third) of Torts: Products Liability §2; Berrier v. Simplicity Mfg., Inc., 563 F.3d 38, 54 (3rd Cir. 2009). A design defect occurs “when the foreseeable risks of harm posed by the product could have been reduced or avoided by the adoption of a reasonable alternative design … and the omission of the alternative design renders the product not reasonably safe.” 15Restatement (Third) of Torts: Products Liability §2(b); Berrier, 563 F.3d at 54. Warning defects occur when “the foreseeable risks of harm posed by the product could have been reduced or avoided by the provision of reasonable instructions or warning … and the omission of the instructions or warnings renders the product not reasonably safe.” 16Restatement (Third) of Torts: Products Liability §2(c); Berrier, 563 F.3d at 54. Strict liability works best when applied to manufacturing defects because it creates an incentive for manufacturers to be careful. 17Westerbeke, supra note 1, at 5. The Restatement (Third) limits strict liability to cases involving manufacturing defects and applies what amounts to a negligence standard to design and warning defects. 18Id. at 9.
Controversial Aspects
of the Third Restatement
One of the most controversial aspects of the Third Restatement, however, is the apparent abandonment of the consumer expectation test in favor of a “risk-utility” test. The risk-utility test finds a product defective as designed only if the magnitude of the risk created by the design is greater than the utility of the product. 19Restatement (Third) of Torts: Products Liability §2(b). The basic rationale is that risks and benefits are present with virtually all products, and there is no method by which design hazards can be assessed without balancing the dangers against the utility of the product. 20Restatement (Third) of Torts: Products Liability §2, cmt. a. Under the risk-utility test, the plaintiff need only show that the design of the product was the proximate cause of his injury, and the burden then shifts to the product manufacturer to demonstrate that the benefits of the particular design outweigh the risks. 21Some states have adopted this burden-shifting methodology, including California in Barker v. Lull Engineering Co., 20 Cal. 3d 413, 429-30, 573 P.2d 443, 454, 143 Cal.Rptr. 225, 236 (1978).
But does the risk-utility test necessarily preclude simultaneous consideration of the consumer expectations test in product liability claims? Under the Restatement (Third), the consumer expectations test is now one of many factors that are considered under the risk-utility balancing test with respect to design and warning defects. The comments to Section 2(b) of the Restatement (Third) note, “While disappointment of consumer expectations may not serve as an independent basis for allowing recovery … neither may conformance with consumer expectations serve as an independent basis for denying recovery.” 22Restatement (Third) of Torts: Products Liability §2(b) cmt. g. Other considerations include, but are not limited to, the open and obvious nature of the risk 23Blue v. Environmental Engineering, 215 Ill. 2d 78, 109-110, 828 N.E.2d 1128 (2005) (citing Scoby v. Vulcan-Hart Corp., 211 Ill.App.3d 106, 112, 155 Ill.Dec. 536, 569 N.E.2d 1147 (1991)). and the availability of a safer design. 24Tompkins v. R.J. Reynolds, Tobacco Co., 92 F. Supp.2d 70, 84 (N.D.N.Y., 2000) (citing Denny v. Ford Motor Co., 87 N.Y.2d 248, 257 (1995).
Despite the ALI’s hard work in creating a restatement that more accurately reflects the current state of the law, the Wisconsin Supreme Court consistently refuses to adopt the Third Restatement. The most notable example was in Green v. Smith & Nephew AHP, Inc. 25Green v. Smith & Nephew AHP, Inc., 2001 WI 109, ¶ 74, 245 Wis. 2d 772, 629 N.W.2d 727. In Green, the court declined to apply the risk-utility test set forth in Section 2(b) of the Restatement (Third), clinging instead to the consumer expectations test. Reasoning that the Third Restatement was at odds with established precedent, the court found no grounds that would justify abandoning Section 402A. At issue in Green were latex gloves worn by a health care worker who had an allergy to latex. Green sued the manufacturer of the gloves used at the hospital where she worked for design and warning defects.
Wisconsin Supreme Court
Declined to Adopt Treatise
In advocating for the Wisconsin Supreme Court to adopt the Restatement (Third) of Torts, the defendant manufacturer argued that Wisconsin law should recognize foreseeability of the risk of harm in evaluating product liability actions. 26Id. at ¶ 48. It asked the court to adopt the risk-utility test, arguing that relying solely on the consumer expectations test, without considering the risks and benefits of a product, would lead to the removal of useful products from the marketplace. 27Id. at ¶ 39. It also argued that the consumer expectations test was not appropriate for cases involving complex products, such as electricity or automobile design, where the ordinary consumer may not fully appreciate the technical or mechanical design features of the product. 28Id. at ¶ 43. The court, however, was not persuaded. In declining to adopt the Restatement (Third), the court stated that incorporating an element of foreseeability of the risk of harm and the risk-benefit test was “fundamentally at odds with current Wisconsin products liability law.” 29Id. at ¶ 72.
Two years after Green, the Wisconsin Court of Appeals almost adopted a portion of the Restatement (Third), but ultimately declined. 30Mohr v. St. Paul Fire & Marine Ins. Co., 2004 WI App 5, ¶ 34, 269 Wis. 2d 302, 674 N.W.2d 576 (footnote 11). In its opinion, the court noted that although it applied Section 402A to the inadequate warning claim, the same result would have occurred under Section 2(c) of the Restatement (Third). 31Footnote 11 of Mohr states that the Restatement (Third) “appears to adhere to the same fundamental concept that a warning is required when a manufacturer has reason to anticipate that danger may result from the particular use, but it is significantly more detailed.” Id. (internal quotations omitted). The only thing that stopped the court from adopting Section 2(c) of the Restatement (Third) was the fear that doing so might be contrary to the ruling in Green. 32Id.
The supreme court once again noted its distaste for the Restatement (Third) in Badger v. Haase. 33Badger v. Haase, 2004 WI 97, ¶ 23, 274 Wis. 2d 143, 153, 682 N.W.2d 389, 394. There, the court refused to affirm the lower courts’ application of Section 5 of the Restatement to find that a raw material, silica sand, used to make molds for metal manufacturing, was not defectively designed, and, thus, the supplier of the sand was not strictly liable. 34Id. at ¶ 12. Previously, both lower courts adopted Section 5 of the Restatement (Third) because it represented a “logical extension of…Section 402A.” 35Haase v. Badger Mining Corp., 2003 WI App 192, ¶ 29, 266 Wis. 2d 970, 669 N.W.2d 737. While the supreme court admitted that the Restatement (Third) “may offer new insights into strict liability law,” it declined to adopt Section 5 because it was not applicable to the facts at hand. 36Badger, 2004 WI at ¶ 23. The court then proceeded to apply Section 402A in finding in favor of the supplier, but noted that the end result was the same under either restatement. 37Id. at ¶¶ 14 and 43.
In 2007, the court of appeals in the lead paint case of Godoy v. E.I. du Pont de Nemours & Co., discussed the Restatement (Third) in dicta, again declining to expressly accept or reject it, but instead applying it to the facts of the case to illustrate how the Restatement (Third) “can help illumine our inquiry.” 38Godoy v. E.I. du Pont de Nemours and Co., 2007 WI App 239, ¶ 8, 306 Wis. 2d 226, 743 N.W.2d 159. Like Badger, the court observed that it would not have imposed liability on the defendants under either Restatement. 39Id. at ¶ 9. In its review of Godoy, the supreme court observed that “the Restatement (Third) may offer new insights into product liability,” but then applied Section 402A without any further analysis. 40Godoy v. E.I. du Pont de Nemours and Co., 2009 WI 78, ¶ 18, 768 N.W.2d 674. Other recent instances where the courts have demonstrated continued reluctance to adopt the Restatement (Third) include Horst v. Deere & Co
41Horst v. Deere & Co., 2009 WI 75, ¶¶ 63, 68, 319 Wis.2d 147, 769 N.W.2d 536. and Tatera v. FMC Corp. 42Tatera v. FMC Corp., 2009 WI App 80, ¶ 7 n.1, 768 N.W.2d 198. In Horst, which was decided by the supreme court the same day as Godoy, the court reaffirmed that the consumer expectations test is the standard for deciding all strict products liability claims, without any serious discussion of the Restatement (Third).
43Horst, 2009 WI at ¶ 68. The court of appeals mentioned the Restatement (Third) in a footnote to Tatera, but only to acknowledge that it exists and has not been adopted in Wisconsin. 44Tatera, 2009 WI App at ¶ 7 n.1.
Is the reluctance of Wisconsin courts to adopt the Restatement (Third) justified? In the opinion of the authors, the answer is no. While Wisconsin courts have not seen fit to embrace the Restatement (Third), other jurisdictions have done so, at least in part. Many states 45Such as New York, New Jersey, and Oregon. have adopted certain portions of the Restatement (Third), such as the reasonable alternative design concept, which places the burden on the plaintiff to produce evidence that there was a feasible and safer design available to the manufacturer at the time the product was built. 46Frank J. Vandall & Joshua F. Vandall, A Call for an Accurate Restatement (Third) of Torts: Design Defect, 33 U. Mem. L. Rev. 909, 930-2, 936-7 (2003). Other states, such as Louisiana, Texas and Mississippi, have even codified portions of the Restatement into their statutes. 47Id. at 936-9.
Iowa explicitly adopted Sections 1 and 2 of the Restatement (Third) in 2002. 48Wright v. Brooke Group Limited, 652 N.W.2d 159, 169 (Iowa, 2002). There, the court reiterated that the consumer expectation test remains appropriate for construction or manufacturing defects, that is, defects for which “[a]n internal standard exists against which to measure the product’s condition—the manufacturer’s own design standard.” 49Id. at 167. After declaring the consumer expectations test to be “inadequate” for design defects and failure to warn defects, the court instead chose to analyze these defects based on negligence principles and the risk-utility balancing test as suggested by Section 2 of the Restatement (Third). 50Id. at 167-8. The Iowa court discussed the appropriateness of the risk-utility test as an “independent assessment” of whether the accident costs are “more fairly and efficiently borne by accident victims … or … by consumers generally through the mechanism of higher product prices attributable to liability costs imposed by the courts on product sellers.” 51Id. at 168-9. It concluded by holding that plaintiffs in design defect disputes bear the burden of proving that foreseeable risk of harm could have been avoided by a reasonable alternative design that is safer and practicable given the circumstances, but also that consumer expectations can be a consideration in determining liability in both design defect and warning defect claims. 52Id. at 169.
In a later decision, the Eighth Circuit, in applying Iowa law, found that a supplier of silica sand was not liable for failure to warn an employee of its potential danger. 53Bergfeld v. Unimin Corp., 319 F.3d 350, (8th Cir. Iowa 2003). Instead the court found that the raw material supplier was justified in relying on the foundry from which it purchased the sand to warn its employees of the potential dangers. 54Id. Though the court did not explicitly discuss the Restatement (Third) in the decision, it applied a negligence standard, as opposed to a strict liability one, as is suggested by Section 2 of the Restatement (Third) in failure to warn cases. 55Id. See also Restatement (Third) of Torts: Products Liability §2, cmt. i. A key point in this decision is the court’s determination that raw materials manufacturers are not necessarily liable to third party users of the product in failure to warn disputes, particularly when the purchaser of the raw materials has some knowledge of the product’s risks. 56Bergfeld, 319 F.3d at 353-354.
The drafters of the Restatement (Second) could not have predicted the developments in product liability litigation that occurred over the last 40 years.
California was an early adopter of the risk-utility test, and is credited by many as being the test’s creator. 57Blue v. Environmental Engineering, 215 Ill. 2d 78, 91-2, 828 N.E.2d 1128 (2005) (citing Barker v. Lull Engineering Co., 20 Cal. 3d 413, 573 P.2d 443, 143 Cal.Rptr. 225 (1978)). Like Iowa, California has not abandoned the consumer expectations test, but rather has held that it can only be used in narrow circumstances with respect to design defects, and then only as a consideration when applying the risk-utility test, as suggested by the Restatement (Third). 58Morson v. The Superior Court of San Diego County, 90 Cal. App. 4th 775, 794, 109 Cal. Rptr. 2d 343 (2001).
Illinois also has chosen to continue applying the consumer expectations test in certain circumstances, while also adopting the risk-utility test. 59Blue, 215 Ill. 2d at 109-110, (citing Scoby v. Vulcan-Hart Corp., 211 Ill.App.3d 106, 112, 155 Ill.Dec. 536, 569 N.E.2d 1147 (1991)). For example, where the product is simple in design and obviously dangerous, such as a vat of hot oil that does not have a protective cover, Illinois would apply the consumer expectations test as the appropriate measure in determining liability for injury. 60Id.
Though the consumer expectations test is considered outdated by many, there is no reason Wisconsin courts need to completely abandon this test in order to adopt the Restatement (Third). In fact, there are many situations in which the test is the best indicator of liability, such as defect claims relating to food products that contain “natural” dangers, such as a fish bone in seafood chowder, and “product malfunctions” where a product fails in an unexpected and catastrophic manner and destroys any evidence of the defect. 61David G. Owen, The Graying of Products Liability Law: Paths Taken and Untaken in the New Restatement, 61 Tenn. L. Rev. 1241, 1248 (1994). On the other hand, design defects are best analyzed using risk-utility, which compares the design of the injuring product against a feasible alternative design. 62Id. at 1251-2.
Commentators Weigh In
Some commentators find it troublesome that the Restatement (Third) appears to promote traditional negligence standards in the same breath as strict liability. 63Mohr, 2004 WI App 5 at ¶ 34. Professor Aaron Twerski, one of the principal drafters of the Restatement (Third), argues that except for manufacturing defects where strict liability is applied, product liability is “based on fundamental concepts of negligence.” 64Aaron Twerski, Chasing the Illusory Pot of Gold at the End of the Rainbow: Negligence and Strict Liability in Design Defect Litigation, 90 Marq. L. Rev. 7, In fact, while most courts agree that strict liability applies to manufacturing defects, the majority of courts do not rigidly apply strict liability to design defects or warning defects, instead referring to a “strict liability cause of action” while actually applying a relaxed form of negligence. 65Westerbeke, supra note 1, at 6. For instance, in Mohr the Court specifically stated that it was applying only Section 402A of the Restatement (Second), i.e., strict liability, to a warning defect claim, but then arrived at the same result as it would have had it applied the negligence standard of Section 2(c) of the Restatement (Third). Mohr, 2004 WI App 5, ¶ 34 n.11.
Furthermore, in drafting the Restatement (Third), the authors chose not to place specific doctrinal labels on the test for defectiveness because “either label is acceptable, so long as the labels are not allowed to obscure the fact that the substance is the same in either case.” 66Twerski, supra note 64, at 20. Instead, they adopted a “functional test for defect that predicates liability when the foreseeable risks of harm … could have been reduced or avoided by the adoption of a reasonable alternative design.” 67Id. at 7.
Conclusion
As more states incorporate the provisions of the Restatement (Third), one must ask: why not Wisconsin? While it appears to depart from the time-honored conventions of the Restatement (Second), in reality the Restatement (Third) provides clarity with respect to concepts that were not contemplated at the adoption of Section 402A. Many of the concepts in the Restatement (Third), such as the three categories of defects and the risk-utility test, are not new to the courts, but by taking the time to articulate and define them, the Restatement (Third) offers the courts a template through which they can achieve a more unified and predictable approach to resolving product liability claims. The Wisconsin Court of Appeals even recognized this in Mohr when it noted that the Restatement (Third) provided greater detail as to the adequacy of warnings. 68Mohr, 2004 WI App 5, ¶ 34 n.11.
Our courts also recognized in both Mohr and Badger that applying the Restatement (Third) instead of the Restatement (Second) often results in the same outcome, thereby bolstering the argument that the Restatement (Third) is an accurate reflection of current product liability law that the courts should welcome. By taking a single section from the Restatement (Second), breaking it into 22 parts and including significant commentary, the Restatement (Third) provides the missing link that reflects 40 years of judicial interpretation of products liability law between the adoption of Section 402A of the Restatement (Second) and the adoption of the Restatement (Third). Perhaps now is the time for the Wisconsin courts to step forward and recognize this.
