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Subject:                                Products Liability Law Daily Wrap Up - Jan 17

 

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Products Liability Law Daily

January 17, 2017

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LAW FIRMS

·        Andrew C. Burrell, PA

·        Baker, Donelson, Bearman, Caldwell & Berkowitz, PC

·        Blackledge Law Firm, PA

·        Bubalo Goode Sales & Cronen PLC

·        John B. Bruce Law Office

·        McDonald Toole Wiggins, PA

·        McGuirewoods, LLP

·        Moss & Gilmore, LLP

·        Phillips Parker Orberson & Arnett, PLC

·        Pope McGlamry Kilpatrick Morrison & Norwood PC

·        Schmidt Kramer PC

·        Sutter O'Connell Co.

·        Thomas Thomas & Hafer LLP

COMPANIES

·        Argos Cement, LLC

·        Argos USA Corp.

·        Baptist Healthcare System, Inc., d/b/a Central Baptist Hospital

TOP STORY

TOP STORY—REPORTS AND STUDIES—NHTSA reviews progress on 2016 proactive safety principles

By Colleen Kave, J.D.

A report on the actions taken over the past year by the National Highway Traffic Safety Administration, the U.S. Department of Transportation, and 18 automobile manufacturers pursuant to a set of proactive safety principles adopted in January 2016, has been released by NHTSA. The report, entitled Proactive Safety Principles: A Year in Review highlights some of the progress stimulated by those safety principles, which were crafted as a response to unprecedented recall and enforcement activity and were intended to improve the safety culture of the automobile industry by exploring a more effective dialogue on cross-industry safety issues and trends; to foster proactive safety solutions; and to enhance timely, consistent issue identification.

The first proactive safety principle, Enhance and Facilitate Proactive Safety, aimed to emphasize and actively encourage processes that promote steady improvement in vehicle safety and quality within organizations across the industry and with other stakeholders. NHTSA listed several events that furthered this goal, including a commitment by 20 automobile manufacturers to provide automatic emergency braking (AEB) in nearly all passenger vehicles by 2022; the release of the Federal Automated Vehicles Policy that will guide the safe testing and deployment of automated vehicles while promoting innovation; NHTSA’s efforts with the Automotive Coalition for Traffic Safety (ACTS) to advance the deployment of the Driver Alcohol Detection System for Safety; and the "Vehicle Safety Training Best Practices Workshop" hosted by Fiat Chrysler (FCA, US), where 12 global automakers gathered to discuss, learn about, and share current approaches for improving vehicle safety training.

The second safety principle, Enhance Analysis and Examination of EWR Data, was designed to incorporate advanced methods in data analytics into the analyses and examinations of Early Warning Reporting (EWR) data to better identify potential risks earlier. In addition to NHTSA’s continued implementation of a Corporate Information Factory (CIF) to integrate multiple databases that facilitate data mining across internal and external data sources, sharing of best practices in data analytics took place at the Advancing Safety Through Data Conference, which was hosted by FCA, Honda, and the IIHS.

The third safety principle, Maximize Safety Recall Participation Rates, sought to explore and employ new ways to increase safety recall participation rates by the public by working toward the aspirational goal of 100-percent participation. Among the efforts undertaken to achieve that goal were NHTSA’s launch of the national Safe Cars Save Lives recall campaign and bus tour; the addition of the Takata Spotlight section on SaferCar.gov to highlight consumer information on airbag recalls; the creation of the Takata Monitoring Group to increase outreach efforts to owners of vehicles impacted by the Takata airbag inflator recalls; and two Automotive Safety Recall Best Practices Summits hosted by FCA.

The final safety principle, Enhance Automotive Cybersecurity, focuses on emphasizing and actively encouraging processes that promote steady improvement in vehicle safety and quality within organizations across the industry and with other stakeholders. To further those goals, NHTSA convened a Cybersecurity Roundtable in Washington, DC, where cybersecurity experts gathered to discuss standards and best practices; NHTSA issued a proposed guidance on cybersecurity best practices in October 2016; and the automotive industry set up an information sharing and analysis center (ISAC) to identify and share vulnerabilities across the industry.

NHTSA concluded that the work completed in 2016 constituted solid first steps in improving the safety culture of the auto industry, and the agency remains committed to promoting cross-industry communications on safety issues.

MainStory: TopStory NHTSANews ReportsandStudiesNews MotorVehiclesNews MotorEquipmentNews

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CASES

DESIGN AND MANUFACTURING DEFECTS—BUILDING AND CONSTRUCTION—Pa. Super.: Design, warning defect claims for jury in concrete burn injury matter

By Susan Lasser, J.D.

In an action by two brothers who were severely burned while using a manufacturer’s concrete, a trial court’s grant of summary judgment for the manufacturer was improper because there were genuine issues of material fact for a jury to resolve on the brothers’ design defect and failure to warn claims, the Pennsylvania Superior Court held, reversing the lower court’s decision (High v. Pennsy Supply, Inc., January 13, 2017, Stevens, C.).

One of the brothers, a homeowner, ordered the delivery of concrete from Pennsy Supply, Inc., a manufacturer and supplier of asphalt products, to create a floor in a three-foot high crawlspace in the basement of his residence. A Pennsy Supply supervisor had advised the brother to purchase flowable fill concrete, which is characterized as self-leveling, as it was agreed that it would create less work in creating a level floor in a tight place. The brother believed he had ordered flowable fill concrete. When the concrete arrived, the Pennsy Supply driver gave the homeowner brother a delivery ticket with a warning that the product was "irritating to skin and eyes"; and that users should avoid contact with eyes and prolonged contact with skin. The homeowner brother signed the ticket below the warning. The other brother, who was assisting, did not see the warning on the delivery ticket, but admitted he was aware of similar warnings based on his prior use of bagged concrete. Exposure to that type of concrete caused only skin dryness, not chemical burns.

When the brothers discovered that the concrete surface was wavy after it was poured, they ended up leveling it with the tools they had available and, at times, kneeling in the concrete to do so, saturating their clothes with wet concrete. When they stopped to wash off, however, one brother’s skin peeled off, and the other’s skin turned black. They eventually were hospitalized with second and third degree chemical burns and required surgery.

Proceedings. The brothers filed separate strict products liability actions against the manufacturer claiming the concrete sold to the homeowner was a product in a defective condition unreasonably dangerous to consumers. Specifically, they alleged that the concrete that was delivered had a pH that was too high, making it dangerous. The manufacturer responded that the brothers were aware of the dangers of concrete, did not adhere to the warnings on the delivery ticket, and caused their injuries by their misuse or abuse of the product. The maker also contended that the brother who assisted the homeowner was a sophisticated user of concrete, and, therefore, it was not liable on his claims. The manufacturer, on a motion for summary judgment, claimed that the brothers could not prove the concrete was in a defective condition unreasonably dangerous to the intended user, noting that the brothers failed to provide expert reports showing that: there was any defect in the concrete, any manufacturing defect, or any indication that the manufacturer’s warnings were inadequate. Further, the maker asserted that the product’s high pH was an inherent property that was necessary for it to perform as expected. While the homeowner brother acknowledged the warning, he stated that the warning was inadequate because it did not inform the user of the possibility of sustaining third degree chemical burns. The brother who assisted claimed he was unaware of the danger of the concrete’s high pH as he was not provided with any warning by the maker.

Trial court ruling. The trial court granted summary judgment to the manufacturer after concluding the brothers could not prove that the wet concrete was in a defective condition unreasonably dangerous to consumers. The trial court reasoned that the brothers could not prove that the manufacturer delivered a product in a "defective condition" under the consumer expectations test as they failed to show the danger of wet concrete was unknowable and unacceptable to the average or ordinary consumer.

Arguments on appeal. The brothers claimed that the trial court erred in refusing to allow a jury to decide as factfinder whether wet concrete was a defective product unreasonably dangerous to the consumer under the standards set forth by the Pennsylvania Supreme Court in Tincher v. Omega Flex, 628 Pa. 296, 104 A.3d 328 (2014) [see Products Liability Law Daily’s November 21, 2014 analysis]. In Tincher, the state supreme court concluded that the question of whether a product is in a defective condition unreasonably dangerous to the consumer is a question of fact that should be reserved for the finder of fact. The Tincher court set forth two alternative standards for proving a product is in a "defective condition" in the context of a design defect claim: (1) the consumer expectations standard, or (2) the risk-utility standard. Although the trial court in the current case found that the brothers failed to show a defective condition under both the consumer expectations and risk-utility standards, the brothers focused on showing the appellate court that they presented sufficient evidence to allow a jury to conclude that wet concrete is unreasonably dangerous under the consumer expectations test.

Specifically, the brothers argued that the trial court’s grant of summary judgment conflicted with Tincher because the trial court removed the question of whether the product was "unreasonably dangerous" from the jury. They also challenged the lower court’s reliance on case law from other jurisdictions to reach its finding that the caustic properties of concrete were common knowledge and not subject to liability. The brothers, in fact, cited to several decisions in which other jurisdictions found that the dangers of concrete are not common knowledge to the average consumer. The manufacturer contended that the brothers could not prove that the concrete was defective under the consumer expectations standard because the danger of concrete’s high pH was knowable and acceptable to the average person. The appellate court noted that the manufacturer did not argue that the brothers should have been required to prove that concrete is defective under the alternative risk-utility standard as articulated in Tincher.

Design defect claims. The appellate court agreed with the brothers that the trial court erred in entering summary judgment based on its finding that concrete is not defective after finding that "the caustic properties of concrete are common knowledge and not subject to liability." Instead, the Pennsylvania Superior Court determined that a genuine issue of material fact existed as to whether an ordinary consumer would reasonably anticipate and appreciate the dangerous condition of concrete and the attendant risk of injury. The court was unconvinced by the trial court’s recitation of case law in support of its finding for the manufacturer because it was countered by the brothers’ presentation of case law from other jurisdictions supporting the opposite conclusion.

Further, the court noted that the trial court failed to address any of the factors set forth under the consumer expectations standard—in particular, "the nature of the product, the identity of the user, the product’s intended use and intended user, and any express or implied representations by a manufacturer or other seller." While the brothers’ defect claim centered on the danger posed by the high pH of concrete, the trial court did not discuss the manufacturer’s expert testimony that discussed the nature of concrete; nor did the trial court offer any discussion of the product’s intended use or intended user, nor any of the express or implied representations made by the manufacturer to the brothers.

Thus, the court held that the determination of whether the concrete was in a defective condition unreasonably dangerous to the consumer should have been left to the jury to decide; and, consequentially, the trial court erred in granting summary judgment to Pennsy Supply on the brothers’ design defect claims.

Failure to warn. The court also ruled that the trial court erred in granting summary judgment for the manufacturer on the brothers’ strict liability claim under a theory that the concrete delivered was defective because the manufacturer failed to adequately warn them of the inherent danger of concrete to cause severe burns. A plaintiff can show a product was defective under a failure-to-warn theory by showing that a warning of a certain danger was either inadequate or lacking, and that this warning deficiency made the product "unreasonably dangerous." While the theory of liability seemed to be the brothers’ argument, it was not clear whether either brother was pursuing the claim. One of the brothers provided conflicting assertions, stating that the case was not based on a failure-to-warn theory, yet his arguments were based on the manufacturer’s failure to inform him that concrete can cause severe burns. The trial court, however, did not discuss the representations and warnings made by the manufacturer through its representatives. Thus, the appellate court remanded the claims for the trial court to resolve to the extent that the brothers properly raised a failure to warn theory.

The case is No. 411 MDA 2016.

Attorneys: Daryl Edwin Christopher (Schmidt Kramer PC) for Jeffrey High. John F. Yaninek (Thomas Thomas & Hafer LLP) for Pennsy Supply, Inc.

Companies: Pennsy Supply, Inc.

Cases: CourtDecisions DesignManufacturingNews DefensesLiabilityNews WarningsNews BuildingConstructionNews ChemicalNews PennsylvaniaNews

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DESIGN AND MANUFACTURING DEFECTS—MOTOR VEHICLE EQUIPMENT—S.D. Miss.: Lack of expert testimony defeats defective speed control deactivation switch claim

By Miriam A. Friedman, J.D.

In the absence of expert testimony, there was no triable issue of material fact as to whether a defect in the speed control deactivation switch installed on a pickup truck was the proximate cause of a fire that damaged a brake shop, a federal court in Mississippi ruled, granting the pickup truck maker’s motions for summary judgment on the business owner’s products liability and negligence claims (the latter of which was subsumed by the products liability claim), and on the punitive damages claim (Mildemont, Inc. v. Ford Motor Co., January 13, 2017, Ozerden, H.).

The fire that occurred at the brake shop owner’s place of business caused damage to the "building, business, and equipment." At the time of the fire, a 2001 Ford F-150 Super Crew four-door pickup truck had been parked in the brake shop’s garage. The owner filed a products liability lawsuit against Ford Motor Company, the manufacturer of the truck, asserting that the fire was caused by "an electrical short or failure of the speed control deactivation switch." The manufacturer moved for summary judgment on the business owner’s Mississippi Products Liability Act (MPLA) and state common law claims, as well as on the punitive damages claim.

Expert testimony. While the MPLA does not necessarily require expert testimony, the nature of the business owner’s claims—that the speed control deactivation switch was defective when it left the manufacture's control and that it had not been substantially changed since that time—implicated scientific, technical, or other specialized knowledge that required such testimony. According to the court, the arguments of counsel without explanation or support from an expert could not possibly meet the burden of proof required to demonstrate a triable issue of material fact.

Admission of liability. The record failed to support the injured party’s assertion that expert testimony was not required because the manufacturer had admitted liability in its answer, its discovery responses, its recall notices, its settlement with the injured party’s insurer, and the testimony of its own expert. In fact, the manufacturer consistently denied such liability.

Negligence claims. Any common law negligence claims were subsumed by the MPLA. As such, since the MPLA claims failed to withstand summary judgment, the "redundant" negligence claims failed as well.

Punitive damages. Because the injured party was barred from going forward with regard to its compensatory damages claims, it was not entitled to proceed with regard to punitive damages.

The case is No. 1:15-cv-204-HSO-JCG.

Attorneys: Joel L. Blackledge (Blackledge Law Firm, PA) and Andrew Charles Burrell (Andrew C. Burrell, PA) for Mildemont, Inc. d/b/a Big Brake of MS. Dean Sterling Kidd (Baker, Donelson, Bearman, Caldwell & Berkowitz, PC) and Scott A. Richman (McDonald Toole Wiggins, PA) for Ford Motor Co.

Companies: Mildemont, Inc. d/b/a Big Brake of MS; Ford Motor Co.

Cases: CourtDecisions DesignManufacturingNews ExpertEvidenceNews DamagesNews MotorEquipmentNews MississippiNews

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PREEMPTION—MEDICAL DEVICES—Ky. App.: Personal injury claims based on product ‘use’ outside scope of product liability action

By Kathleen Bianco, J.D.

State law product liability claims arising from a healthcare provider’s off-label use of a Class III medical device were preempted by federal law, according to the Kentucky Court of Appeals. While affirming the dismissal of the product liability claims, the appellate panel reversed the dismissal of the medical negligence claims, finding that those actions were not subject to federal preemption (Cales v. Baptist Healthcare System, Inc., January 13, 2017, per curiam).

In June of 2014, a patient underwent a lumbar fusion surgery at Central Baptist Hospital. The procedure included a transforaminal lumbar interbody fusion at L4-S using a Capstone fusion cage packed with a BMP collagen sponge, a component of an implantable device manufactured by Medtronic. The sponge is a component of the Infuse Device, a Class III medical device that had received premarket approval by the Food and Drug Administration (FDA) in July 2002, pursuant to the Medical Device Amendments of 1976 (the MDA) to the Food, Drug, and Cosmetic Act (FDC Act). The implant device is generally used for patients seeking a vertebral fusion and is composed of two components, a titanium cage (LT-Cage) and the BMP collagen sponge. The labeling materials approved by the FDA specified that the two components must be used as a system.

In her complaint against the hospital, the patient alleged a strict product liability claim based on the hospital’s use of the BMP sponge without the LT-Cage. A second claim asserted negligent product liability for resellers of medical products. The patient’s final claim involved medical negligence caused by the off-label use of the BMP sponge with the Capstone Cage. The hospital sought dismissal, arguing that because the implanted device was approved by the FDA, as a healthcare provider, it could use the device in any manner deemed appropriate, including off-label uses. The hospital further contended that the state law product liability claims were preempted under the MDA. The lower court agreed, granting the hospital’s motion to dismiss both the product liability claims and the medical negligence action. The patient appealed.

Preemption arguments. The patient argued that the trial court erred by dismissing her product liability claims as preempted by the FDC Act. Under the express preemption provision of the MDA, a state cannot establish a requirement that is different from, or in addition to, any federal requirement under the FDC Act relating to the safety or effectiveness of the device at issue. The Infuse Device received premarket approval from the FDA; therefore, MDA preemption was applicable. The patient attempted to escape the reach of preemption by arguing that her claims were against a healthcare provider, not the manufacturer. The court, however, found no distinction between the two entities.

The FDA approved the device (its design, manufacture, and labeling) and not how the device should be used. The appellate panel observed that the MDA express preemption provision applied if federal requirements were applicable to the device rather than a particular use of a device. Moreover, the FDC Act’s definition of "device" included "any component, part, or accessory," and the preemption provision broadly preempted state requirements with respect to a device.

As to the patient’s product liability claim based on negligence, the court opined that the hospital was protected from liability under a provision of the state’s product liability act referred to as the "middleman statute," which shields certain distributors, wholesalers, or retailers from liability. As a final note, the appellate court concluded that the primary shortfall in the patient’s claim was that it simply was not a product liability action. An essential element to any strict liability or negligence claim is a defective product, which was noticeably absent from the patient’s claim. According to the court, the claims were more properly framed as medical negligence claims and after reviewing the evidence, the appellate panel determined that unlike the product liability claims, the medical negligence claims were not preempted. Thus, the circuit court’s decision to grant the hospital’s motion for dismissal was affirmed in part and reversed in part.

The case is No. 2015-CA-001103-MR.

Attorneys: Gregory J. Bubalo (Bubalo Goode Sales & Cronen PLC) for Joyce Cales. Patricia C. Le Meur (Phillips Parker Orberson & Arnett, PLC) for Baptist Healthcare System, Inc., d/b/a Central Baptist Hospital.

Companies: Baptist Healthcare System, Inc., d/b/a Central Baptist Hospital

Cases: CourtDecisions PreemptionNews DefensesLiabilityNews MedicalDevicesNews KentuckyNews

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WARNINGS ISSUES—BUILDING AND CONSTRUCTION—S.D. Ga.: Maker of defective concrete could be liable for dust damage to other property and failure to warn of risk

By: Sara Cracau, J.D.

In a products liability class action, a concrete manufacturer could be liable for personal and real property damage resulting from dust arising from defective concrete and for failure to warn consumers against the risk of such damage, a federal court in Georgia ruled, denying in part the manufacturer’s motion to dismiss consumers’ negligent design and manufacture claims. The court denied dismissal of the negligent failure to warn claims with respect to the damage resulting to the consumers’ personal and real property (other than damage to the concrete itself) caused by the dust invasion. However, the manufacturer’s motion to dismiss the consumers’ claim was granted insofar as it sought to recover the loss of the economic value of the defective concrete because those damages were barred by the economic loss rule. The court also granted the motion to dismiss as to unidentified damages and health risks as being overly vague (McGaffin v. Cementos Argos S.A., January 13, 2017, Godbey Wood, L).

Products liability class action. Consumers brought a products liability class action against a Cementos Argos S.A., a concrete manufacturer, alleging that its concrete was defective due to "insufficient amounts of Portland cement and/or too much fly ash and/or too much poor quality fly ash." As a result, the concrete continually released a fine dust which damaged the consumers’ dwellings and real property as well as their personal property. Cementos Argos had supplied concrete to at least 250 homes during the relevant period and held itself out as an "expert in the field of concrete design and manufacture." The consumers claimed negligent design and manufacture, negligent failure to warn, among other claims. They alleged that the dust constantly coated and re-coated everything in their homes and posed health risks in the form of increased "risk of silicosis, lung cancer, other nonmalignant respiratory disease, as well as renal and autoimmune problems." The manufacturer moved to dismiss.

Negligent design and manufacture claims. The court granted the manufacturer’s motion to dismiss the consumers’ claim as to inspecting, removing, and replacing defective concrete as, in essence, it sought to recover the loss of the economic value of the defective concrete, losses which are barred by the economic loss rule. The consumers had alleged that the manufacturer’s negligence required them to "inspect and remedy, replace and remove the defective concrete." As such, they sought to recover in negligence for the loss of the value of the defective concrete which they could not.

Personal and real property damage. The manufacturer’s motion to dismiss was denied as to the consumers’ personal and real property damage claims which were based on allegations that the manufacturer’s negligence had caused them to "clean, inspect, remedy, replace, and remove property other than their concrete." The manufacturer’s argument that the consumers did not suffer damage was rejected. Substantial portions of the consumers’ homes other than the work of subcontractors were damaged and dismissal based on the economic loss rule is not appropriate. In fact, the court noted that the claim could survive even if the consumers complained of dust alone and the need to clean it because Georgia courts have long recognized the right to recover in negligence resulting from dust invasion.

The manufacturer’s reliance on a nuisance and condemnation case to support its claim was misplaced. In a condemnation action, recovery of damages for temporary inconvenience is not permitted. This case was not a condemnation action and there was no public project. Furthermore, the consumers alleged that the dust is persistent not temporary.

The court went on to find that the consumers could recover for damage to home components other than the concrete because components supplied by sources other than the manufacturer were damaged as a result of defects in the components in the manufacturer’s components. In such a situation, recovery was not barred by the economic loss rule.

Negligent failure to warn. The court dismissed in part the consumers’ negligent failure to warn claim with respect to damage to the consumers’ concrete and health for the same reasons discussed above. However, the court refused to dismiss the remaining negligent failure to warn claims. Manufacturers have a duty to consumers and reasonably foreseeable users and here, the manufacturer was able to identify the consumers in order to warn them. The manufacturer failed to warn the consumers, their builders, and others with properties containing their defective concrete of the dangers presented by the concrete.

The court rejected the manufacturer’s argument that the danger was an obvious and foreseeable deterioration of the concrete over time, noting that it was not reasonable for a buyer of a new home to expect to see such damage from white silicate dust within four years of the purchase. It also rejected the manufacturer’s misplaced reliance on the "learned intermediary rule" noting that the rule is a defense not an element and, therefore, it need not be pleaded. Furthermore, the rule was not triggered by the mere presence of a builder unless the manufacturer knew that the builder had knowledge of the alleged defects. Consequently, the court found that the consumers adequately had alleged that the manufacturer breached its duty to warn.

The manufacturer did not contest the consumers’ causation allegation and the court found that the consumers alleged causation adequately. Further, it found that sufficient facts were pleased to allow the court to draw a reasonable inference that they would not have received the concrete given an adequate warning.

Remaining claims. The court granted the manufacturer’s motion to dismiss the consumers claim for "damages yet to be identified" finding such claim to be overly vague. Similarly, the manufacturer’s motion to dismiss the consumers’ claim for health threats were dismissed based on the court’s finding that the claim was overly vague and not adequately alleging "injury to life or limb" as required by Georgia law.

The case is No. 4:16-CV-104.

Attorneys: Michael J. Moore (Pope McGlamry Kilpatrick Morrison & Norwood PC) and Raymond L. Moss (Moss & Gilmore, LLP) for Becky McGaffin. Andrew G. Phillips (McGuirewoods, LLP) for Cementos Argos S.A., Argos USA Corp. and Argos Cement, LLC.

Companies: Cementos Argos S.A.; Argos USA Corp.; Argos Cement, LLC

Cases: CourtDecisions WarningsNews DesignManufacturingNews DamagesNews BuildingConstructionNews GeorgiaNews

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WARNINGS ISSUES—SPORTS AND RECREATIONAL EQUIPMENT—6th Cir.: Arrow defect claims unsupported by expert testimony remain off-target

By Jordan A. Silver, J.D.

In an injured consumer’s case against a sporting goods company that manufactured arrows, the U.S. Court of Appeals for the Sixth Circuit determined that the trial court did not abuse its discretion in excluding the testimony of the consumer’s proposed expert, and that the manufacturer was entitled to summary judgment on the consumer’s substantive claims (Yonts v. Easton Technical Products, Inc., January 13, 2017, Rogers, J.).

The consumer’s hand was injured while target-shooting with carbon-fiber arrows manufactured by Easton Technical Products, Inc. Since the consumer purchased the arrow second-hand, the only warning information available to him was text on the arrow’s shaft indicating a website and telephone number which could be accessed for details concerning the arrow’s warnings and proper use. In his deposition, the consumer admitted to reading the warning contained on the shaft prior to the incident, although he did not bother to call the listed number or visit the website. The consumer sued the manufacturer, initially alleging strict liability and negligence, including design defect, manufacturing defect, and failure to warn theories; and breach of express and implied warranties.

Trial court’s decision. A federal district court in Kentucky dismissed the consumer’s manufacturing and design defect theories, since the consumer did not produce expert testimony to support those theories [see Products Liability Law Daily’s May 28, 2015 analysis]. While the consumer produced a human-factors expert to bolster his failure-to-warn claims under strict liability and negligence theories, the lower court rejected all four of the opinions by the human-factors expert and excluded her testimony. The expert had opined that (1) it was reasonable and foreseeable that a consumer would not notice the on-arrow "warning message" as it was entirely inconspicuous in contrast to other messages found on the arrow; (2) the website instructions were important, but inadequately communicated effectively warnings to a user; (3) the manufacturer should have made efforts to mitigate the arrow breakage hazard in the product’s design; and (4) the content of the on-arrow message failed to adequately warn users to the hazard and draw them to the website, and, further, the consumer’s failure to access to telephone number or website was reasonable and foreseeable. The district court reasoned that the first two opinions were irrelevant to the consumer’s failure-to-warn claims, the proposed expert was not qualified to give the third opinion, and that the fourth opinion was unreliable. Lacking expert testimony support, the district court granted summary judgment on the consumer’s claims because the consumer failed to provide evidence that the arrow was unreasonably or inherently dangerous.

Consumer’s warnings expert. The Court of Appeals for the Sixth Circuit found that the district court did not abuse its discretion in excluding the testimony of the consumer’s purported expert, because it was only proper to overturn an evidentiary ruling when no reasonable court could agree with the decision, and it was reasonable to exclude all four of the human-factors expert’s opinions. The witness’s first opinion, that the on-arrow message was "entirely inconspicuous" was irrelevant to the consumer’s claims. Since the consumer had actually seen and read the on-arrow message, a "bolder, flashier statement" would have made no difference in outcome. Likewise, it was reasonable for the district court to conclude that the expert’s second opinion, that the website instructions were inadequate, also was irrelevant. As the court reasoned, the consumer’s failure to warn claims begin and end with the on-arrow message. If the on-arrow message was inadequate, whether because of inconspicuous text or because the message failed to convey sufficient urgency to motivate users to visit the website or call the phone number, then the claim would succeed regardless of the website’s content. Conversely, if the on-arrow warning was adequate, or if its inadequacy did not cause the consumer’s failure to consult the website or telephone number, then the consumer’s claim would fail, regardless of whether the website message was effective. Either because the on-arrow warning was adequate or because of his own indifference, the consumer did not visit the website. Thus, any opinion on the website’s content was irrelevant. Moreover, the district court reasonably concluded that the witness was not qualified to give an expert opinion on whether the manufacturer should have taken additional steps to make its arrows safe. While the witness’s role as a human-factors expert potentially qualified her to opine on how the arrow’s warning interacted with the product’s overall safety, much of her third opinion was focused on potential engineering modifications which the manufacturer had not implemented. The witness acknowledged that she was not qualified to opine on the feasibility of alternative designs, and coupled with her failure to investigate the manufacturer’s product safety efforts, the witness did not establish a sufficient basis to offer expert opinion on design improvements.

Finally, the district court reasonably concluded that the witness’s fourth opinion—that the on-arrow message failed to alert users to the hazard and draw them to the website—was inadmissible. Under Kentucky law, a warning is adequate if it conveys the product’s underlying risk to a reasonable consumer. Determining a warning’s sufficiency requires examining the likelihood and seriousness of risk involved. Although the witness could potentially offer expertise on product warnings, she possessed no qualifications or background knowledge to expertly comment on the nature and risk posed by carbon-fiber arrows. Lacking a reliable basis for connecting the on-arrow message with its adequacy in conveying an understanding of risk to a reasonable user, the witness’ opinion would not educate a jury on the warning’s adequacy, and was therefore properly excluded.

Failure-to-warn claim. The court also held that summary judgment was proper on the consumer’s strict liability and negligent failure-to-warn claims because there was insufficient evidence of an unreasonably dangerous condition to create a question of fact for a jury. Under Kentucky law, a manufacturer is only liable if a defective, unreasonably dangerous condition exists. For strict liability, it is sufficient that a manufacturer knows of an unreasonably dangerous condition. To prove negligence, a plaintiff must show both the knowledge of the unreasonably dangerous condition and that the manufacturer would have foreseen the harm and did not act reasonably to prevent it. The adequacy of a warning is relevant to whether a product is unreasonably dangerous, but an inadequate warning itself does not make a product unreasonably dangerous. Although the consumer produced some evidence of the carbon-fiber arrow’s propensity to break, absent evidence connecting that issue with the effectiveness of the on-arrow warning message, there was insufficient evidence of a defective and unreasonably dangerous condition for the consumer’s claim to survive summary judgment. The court also reasoned that even if evidence of a propensity to break did show an unreasonably dangerous condition in the arrow, the consumer’s claim still failed because of the absence of evidence concerning what type of warning was required to alert a reasonable user to the risk.

Warranty claims. The court additionally upheld summary judgment for the manufacturer on the consumer’s breach of warranty claims. Under Kentucky law, only the original purchaser of a product can bring claims for breach of warranty. Since the consumer bought the arrows second-hand, he did not have a cause of action against the manufacturer.

The case is No. 16-5437.

Attorneys: John B. Bruce (John B. Bruce Law Office) for Darcy Yonts. Jonathan M. Menuez (Sutter O'Connell Co.) for Easton Technical Products, Inc.

Companies: Easton Technical Products, Inc.

Cases: CourtDecisions WarningsNews ExpertEvidenceNews SportsandRecEquipmentNews KentuckyNews MichiganNews OhioNews TennesseeNews

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SETTLEMENT AGREEMENTS

SETTLEMENT AGREEMENTS—MOTOR VEHICLE EQUIPMENT—Takata takes on guilty plea, $1B penalty for fraudulent conduct in airbag inflator scheme

By Colleen Kave, J.D.

Takata Corporation agreed to plead guilty to wire fraud charges and to pay $1 billion in criminal penalties in the ongoing case against the automotive supplier stemming from its sale of defective airbag inflators, according to a January 13, 2017, U.S. Department of Justice news release. Three Takata executives were also indicted in relation to the same conduct and charged with wire fraud and conspiracy.

U.S. Attorney Barbara McQuade of the Eastern District of Michigan and other officials from the Justice Department’s Criminal Division, the FBI, and the U.S. Department of Transportation announced the plea agreement and indictments, asserting their commitment to hold accountable corporations and individual employees that put profits and production schedules ahead of consumer safety. Inspector General Calvin L. Scovel III of the U.S. Department of Transportation Office of Inspector General cautioned, "Along with similar settlements with General Motors in September 2015 and Toyota in March 2014, today’s agreement makes clear to all auto manufacturers and parts suppliers their duty in keeping the public safe."

Background. In the late 1990s, Takata began developing airbag inflators that relied upon ammonium nitrate as their primary propellant. However, even when the company knew that the inflators were not performing to the specifications required by auto manufacturers and were, in some cases, rupturing during tests, Takata nevertheless induced its customers to purchase these airbag systems by submitting false and fraudulent reports and other information that concealed the true condition of the inflators. This fraudulent data made the performance of the company’s airbag inflators appear better than it actually was. Moreover, Takata employees, including a number of key executives, routinely discussed the falsification of test reports in email and in verbal communications. Takata executives continued to withhold the true and accurate inflator test information and data from their customers even after the company became aware of problems in the field, and the company did not take disciplinary action against those involved in the fraudulent conduct until 2015.

Settlement terms. Takata has agreed to plead guilty to one count of wire fraud and will pay a total criminal penalty of $1 billion, including $975 million in restitution and a $25 million fine. Two restitution funds will be established: a $125 million fund for individuals who have been physically injured by Takata’s airbags and who have not already reached a settlement with the company, and an $850 million fund for airbag recall and replacement costs incurred by auto manufacturers who were victims of Takata’s fraud scheme. A court-appointed special master will oversee administration of the restitution funds. Takata has also agreed to implement rigorous internal controls, retain a compliance monitor for a term of three years, and cooperate fully with the department’s ongoing investigation, including its investigation of individuals.

Indictments. Additionally, three Takata executives—Shinichi Tanaka, 59; Hideo Nakajima, 65; and Tsuneo Chikaraishi, 61—were each charged in an indictment filed on December 7, 2016, with one count of conspiracy to commit wire fraud and five counts of wire fraud for their alleged conduct in connection with the airbag inflator fraud scheme.

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NEWS

CPSC NEWS—COMMENT CALENDAR—CPSC actions open for public comment

By Colleen Kave, J.D.

As detailed in previous Products Liability Daily stories, the following Consumer Product Safety Commission actions are open for public comment until the dates indicated below. Comments may be submitted to the docket number identified in the heading of the document by any of the following methods: Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting comments. Mail/Hand delivery/Courier (for paper, disk, or CD-ROM submissions), preferably in five copies, to: Office of the Secretary, U.S. Consumer Product Safety Commission, Room 820, 4330 East West Highway, Bethesda, MD 20814; telephone (301) 504-7923.

March 20, 2017. Proposed amendments to CPSC’s Freedom of Information Act (FOIA) rule designed to revise the rule to conform to the amendments of the FOIA Improvement Act of 2016 (the 2016 FOIA). (82 FR 00059, January 3, 2017).

April 24, 2017. Proposed rule limiting carbon monoxide (CO) emissions from operating portable generators. (81 FR 83556, November 21, 2016).

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NHTSA NEWS—COMMENT CALENDAR—NHTSA actions open for public comment

As detailed in previous Products Liability Law Daily stories, the following National Highway Traffic Safety Administration actions are open for public comment until the dates indicated below. Comments may be submitted to the docket number identified in the heading of this document by any of the following methods: Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting comments. Mail: Docket Management Facility: U.S. Department of Transportation, 1200 New Jersey Avenue, SE., West Building Ground Floor, Room W12-140, Washington, DC 20590-0001. Hand Delivery or Courier: 1200 New Jersey Avenue, SE., West Building Ground Floor, Room W12-140, between 9 a.m. and 5 p.m. ET, Monday through Friday, except Federal holidays. Fax: 202-493-2251.

January 27, 2017. Proposed rule that would require auto manufacturers to place a label on the passenger side sun visor of light-duty vehicles that provides information about how to submit a safety-related motor vehicle defect complaint. (81 FR 85478, November 28, 2016).

January 30, 2017. Petitions for reconsideration of final rule creating FMVSS No. 141, Minimum Sound Requirements for Hybrid and Electric Vehicles, to help pedestrians, particularly those who are blind or have low vision, detect the presence, direction, and location of quieter vehicles. (81 FR 90416, December 14, 2016).

February 3, 2017. Proposed guidelines encouraging manufacturers of portable and aftermarket electronic devices to design products that reduce the potential for driver distraction. (81 FR 87656, December 5, 2016).

April 12, 2017. Proposed rule to establish a FMVSS No. 150 to mandate vehicle-to-vehicle (V2V) communications for new light vehicles and to standardize the message and format of V2V transmissions (82 FR 03854, January 12, 2017).

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NHTSA NEWS—REPORTS AND STUDIES—GAO issues review of school bus safety

By Colleen Kave, J.D.

The U.S. Government Accountability Office (GAO) has completed a review of school bus safety pursuant to a provision in the Fixing America’s Surface Transportation Act. As part of the study, entitled School Bus Safety: Crash Data Trends and Federal and State Requirements, GAO analyzed two sets of data from the National Highway Traffic Safety Administration (NHTSA) and the University of Michigan Transportation Research Institute on fatal school bus crashes for 2000 to 2014, the latest year for which data were available; reviewed federal laws and regulations; systematically searched state laws and regulations on school-bus inspections, driver training, and maximum vehicle age and capacity in all 50 states; and interviewed federal officials from the Department of Transportation (DOT), school bus industry associations and manufacturers, and other stakeholders.

GAO found that 115 fatal crashes involved a school bus on average each year, which is 0.3 percent of the 34,835 total fatal motor vehicle crashes on average each year. The school bus driver and school bus vehicle (e.g., a defect) were cited as contributing factors in 27 percent and less than 1 percent of fatal school bus crashes, respectively. Seventy-two percent of fatal crashes occurred during home-to-school and school-to-home travel times. According to GAO, limited national data on school bus crashes exist beyond data on fatal school bus crashes, but some states have richer data on details such as the type of bus involved or whether the operator was a school district or private contractor.

The GAO report also indicates that state laws and regulations for certain aspects of school bus safety in many cases go beyond the requirements set by federal laws and regulations. Federal regulations for school bus vehicle standards and driver licensing apply to both school districts and contractors. DOT has reported that new school buses must meet more Federal Motor Vehicle Safety Standards than any other type of new motor vehicle. Additionally, federal safety regulations for commercial motor vehicle operations apply in certain cases, such as for contractors hired by schools to provide transportation for extracurricular activities across state lines. Based on a systematic search of state laws and regulations, GAO found that all 50 states require school bus inspections; most states require refresher training for school bus drivers; less than a quarter of states set specific requirements for the maximum age and seating capacity of school buses; and states' requirements vary for school bus inspections, driver training, and vehicles, but tend not to differ based on the type of operator.

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In the News

LAW FIRMS

Andrew C. Burrell, PA |Baker, Donelson, Bearman, Caldwell & Berkowitz, PC |Blackledge Law Firm, PA |Bubalo Goode Sales & Cronen PLC |John B. Bruce Law Office |McDonald Toole Wiggins, PA |McGuirewoods, LLP |Moss & Gilmore, LLP |Phillips Parker Orberson & Arnett, PLC |Pope McGlamry Kilpatrick Morrison & Norwood PC |Schmidt Kramer PC |Sutter O'Connell Co. |Thomas Thomas & Hafer LLP

COMPANIES

Argos Cement, LLC | Argos USA Corp. | Baptist Healthcare System, Inc., d/b/a Central Baptist Hospital | Cementos Argos S.A. | Easton Technical Products, Inc. | Ford Motor Co. | Mildemont, Inc. d/b/a Big Brake of MS | Pennsy Supply, Inc.

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