• In connection with consumer complaints about products, I've heard the term "products liability" and "strict liability" used. What's the difference and how does it affect my business?

These terms refer to two of the most the most significant common law (i.e. judge made law) developments of the 20th Century. The term product liability refers to the liability of a manufacturer of a product sold to consumers for injuries caused by that product. At the beginning of the last century manufacturers were not liable to consumers for defectively made or inadequately labeled products because consumers lacked “privity of contract” with the manufacturer. Starting in 1918 state courts began dumping the privity requirement and allowing injured consumers to sue manufacturers.

The second development started about 40 years ago when manufacturers of consumer products were made strictly liable for any injuries that their products cause a consumer. In order to understand the significance of strict liability we need to review four types or degrees of civil legal culpability that a manufacturer can have to a consumer. The first type is intentional misconduct. For example, a food processor sells a product that the processor knows is adulterated. The second type is called recklessness. (The law school example of recklessness is firing a gun into a crowd not knowing for sure whether the bullet will hit anyone.) In this case a food processor sells a product which the processor believes may be adulterated but does not know this for a fact. In essence the processor is shifting a known risk to its customers. The third type is negligence. The processor believes that its products are wholesome, but it fails to adhere to an industry or regulatory standard when it makes the products and consequently sells an adulterated product. The fourth type is strict liability. In this case not only does the processor believe that its products are wholesome, but it has conformed to industry and regulatory standards when it made the products. Nevertheless, the products turn out to be adulterated.

What’s significant about the development of strict liability? Well, first of all it means that no matter how careful you are, if you sell an adulterated product that injures a consumer, you are liable for the consumer’s damages. In other words, all of the risk of product injury has been shifted to the processor and the processor’s insurer. For the plaintiff’s attorney it makes proving the case much easier. The attorney doesn’t need to prove the processor’s state of mind or whether the processor complied with some sort of standard. Most product liability cases concern whether the product caused the injury. In most cases this is probably obvious, but in some it could be an evidentiary puzzle such as the whether administering of a particular drug caused a medical complication.

There are limits on who is subject to the rule of strict liability. Generally service providers such as doctors, accountants, engineers, attorneys, restaurants, mechanics etc. are not subject to strict liability. Of course, they can still be liable for negligence as well as intentional or reckless misconduct. Also this rule does not cover non-consumer commodities such as industrial chemicals unless they are used to make consumer products, and the injured person must be suing as a consumer of the subject product and not in some other capacity (e.g. a victim of a toxic tort caused by the chemical plant down the street).

One final note. The concept of strict liability is also ubiquitous in the regulatory area although regulators may take into account your degree of culpability is assessing any penalties.