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Unproductible! Losing Clarity In The Law of Product Liability

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About The Author

Keir Baker (Consulting Editor)

Keir is a Trainee Solicitor currently sitting in the Finance department at a major US law firm. A law graduate from Selwyn College, Cambridge University, his main areas of interest are Employment, Discrimination and Competition law. Outside the law, Keir is an accomplished goalkeeper in both football and hockey, as well as a keen actor and pianist. He is a long-suffering supporter of Middlesbrough FC.

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Don’t find fault. Find a remedy. Anyone can complain.

Henry Ford.

In England and Wales, the law of product liability is governed by the Consumer Protection Act 1987 (CPA) which primarily derives its content from EC Directive 85/374. The relationship between these two legal instruments results in British industry being subject to broadly the same rules as other jurisdictions within the European Union. Indeed, the pervasive nature of the Directive is such that, in the case of A v National Blood Authority, English courts decided that, where interpretation of the CPA is in doubt, the wording of the Directive should prevail.

Given that the Directive is one of the two main sources of law for product liability in England and Wales (the other being the common law of negligence), a recent decision in the European Court of Justice in the combined cases of Boston Scientific Medizintechnick v AOK Sachsen-Anhalt – Die Gesundheitskasse und Betriebskrankenkasse REW (the “Boston cases”) has the potential to influence future decisions in English courtrooms.

Both cases concerned disputes relating to defective medical products, and were referred to the ECJ by the national courts of Germany. The importance of the cases lies in the ECJ discussion of what was meant by a ‘defective product’. This article will aim to explain and examine the court’s final decision.

Product Liability Law: An Overview

Section 2 of the CPA creates a strict liability regime, meaning that the producer of a product may be liable for injury caused to a consumer if a product or any of its component parts are defective, regardless of any contractual limitations of liability.

What is a product?

In section (1)(2)(c), the CPA defines a product as ‘any goods or electricity’ and includes within that definition component parts to products, with only immovable property such as land and its fixtures excluded. Indeed, even agricultural crops and donated blood, as in the case of A, have been considered products.

Who can be sued?

In short, a producer is considered to be any person involved in the primary production and marketing of goods. Accordingly, a producer can be made liable if they are:

Section 1(2)

(a) The person who manufactured it;

(b) In the case of a substance which has not been manufactured but has been won or abstracted, the person who won or abstracted it;

(c) In the case of a product which has not been manufactured, won or abstracted but essential characteristics of which are attributable to an industrial or other process having been carried out...the person who carried out that process.

Or if they are:

Section 2(2)

(a) The producer of the product;

(b) Any person who, by putting his name on the product or using a trade mark or other distinguishing mark in relation to the product, has held himself out to be the producer of the product;

(c) Any person who has imported the product into a member State from a place outside the member States in order, in the course of any business of his, to supply it to another.

Or, subject to certain defences, if they are:

Section 2 (3)

Any person who supplied the product...

Who can sue?

Section 5 of the CPA holds that a consumer is any person to whom the defective product wholly or even partly causes death, personal injury, or damage to private property; they need not be the purchaser or even the direct user of the faulty product. An unborn baby to whom a defective product causes damage before its birth is even able to sue later for its disabilities, thanks to duty of care provisions outlined in the Congenital Disabilities (Civil Liability) Act 1976 that was introduced in response to the thalidomide crisis.

In order to be awarded damages, s5 of the CPA states that the claimant must prove that a defect in the product caused them injury. However, in the case of Ide v ATB Sales Ltd, it was held that a claimant has no obligation to prove the cause of that defect.

The Cases

In the Boston cases, manufacturers of pacemakers and defibrillators identified defects within a single production series following their distribution to patients. Having acknowledged that this group of products (in this case, pacemakers) had a heightened risk of a defect, namely the premature depletion of their battery life, the manufacturer made replacement devices available to patients free of charge.

Two patients underwent surgery to fit the replacement pacemakers, and their insurer sued the manufacturer for damages incurred as a result of the surgery that was required for the replacement of the medical devices.

However, as the defective pacemakers were destroyed before any expert examination, it was impossible to prove whether the specific devices implanted into the patients were defective, or whether they were fully functioning devices from an otherwise defective production series.

As a result, the ECJ was tasked with deciding whether a medical device implanted in someone’s body could be considered by the law to be defective if the same product group or production series has a significantly increased risk of failure, but no defect had been, or could be, proven in the specific device.

The Law on Defective Products

Section 3(1) of the CPA defines a defect as ‘when the safety of a product ‘is not at the standards which persons generally are entitled to expect.’

As no products are risk-free, the burden of proof to show that the product is defective is on the claimant. To calculate the ‘standards’ they are entitled to expect, the factors in section 3(2) are used:

(2) In determining for the purposes of subsection (1) above what persons generally are entitled to expect in relation to a product all the circumstances shall be taken into account, including—

(a) The manner in which, and purposes for which, the product has been marketed, its get-up, the use of any mark in relation to the product and any instructions for, or warnings with respect to, doing or refraining from doing anything with or in relation to the product;

(b) What might reasonably be expected to be done with or in relation to the product; and

(c) The time when the product was supplied by its producer to another

Safety standards must be judged by the generally acceptable standards at the time at which the product was put on the market. For example, it was held in Pollard v Tesco Stores Ltd [2006] that newly published technical or scientific research on the dangers of a particular product ought not to be taken into account during the calculation. Furthermore, if the danger of a product is both obvious and inherent – such as the potential of hot coffee to scald as was discussed in B v McDonald’s Restaurants Ltd [2002] – the courts will conclude that the product is not defective.

Interestingly for the Boston cases, the law allows for the use of a risk-benefit analysis when considering what constitutes a defective pharmaceutical or medicinal product.

By analogy from the case of A, if an identifiable group of person should or could be foreseen as being susceptible to damage from the product, a producer’s failure to warn doctors of the potential for that group of people to suffer an allergic reaction may conclude the issue of defect. This means that producers have a rather constraining obligation to ensure, when utilising new or innovative ingredients with their drug, that the potential for all possible side-effects have been reasonably explored and mitigated against.

Otherwise, the purpose of the drug may turn the case: a drug with a purpose of aiming to ease the symptoms of the common cold will have be more readily considered defective following harmful side effects than a drug that was created as an attempt to cure AIDS. Furthermore, where the consumer of a drug or recipient of a treatment (such as the installation of a pacemaker) faces a prospect of almost certain death without it, any product offering realistic hope of cure or palliation may generally thought to be acceptable, even if it is inherently dangerous.

The Decision

In its decision, the ECJ held that it was possible for an individual medical device implanted in someone’s body to be considered defective without the need to establish that the particular product had a defect. But this only applied if it had transpired that the same product group or production series had a significantly increased risk of failure.

On the grounds that the CPA is the English implementation of EC Directive 85/374, the reasoning of the Court can be explained by reference to the aforementioned factors in section 3(2).

Indeed, in order to work out what standards of safety the claimants could expect, the Court placed great weight upon the purpose for which the medical devices had been marketed. Given that the potentially defective medical devices were pacemakers and defibrillators used to help patients with heart issues to stay alive, the Court held that the claimants were entitled to expect a high degree of safety from the products.

By virtue of this calculation, the ECJ held that the increased risk of failure of the product group was enough; patients rely upon the safety of such devices and expect few, if any, faults or defects. As a result, the fact that there was potential for the product to fail meant that the devices did not meet the generally expected standards.

Conclusion

Although the decision itself is limited to life-sustaining medical devices with an elevated risk of premature failure, the strict liability regime of the law of product liability is indicative of the law’s current leaning towards the rights and safety of the consumer over those of producers. Therefore, it is possible that national courts will interpret the decision and the Directive more widely to apply to all medical devices.

Indeed, the Court was keen to emphasise that the reasoning behind the decision revolved around the safety requirements for the pacemakers which the patients were entitled to expect being ‘particularly high.’ It follows that the interpretation of this decision may extend to other products which may carry a similar risk.

For example, there are many potential products where the specific use and the vulnerability of their users could see the same reasoning apply. Examples could include safety equipment, products to be used with hazardous or flammable materials, and products to be used by children.

However, the judgment itself is open to criticism. Although there appears to be no express provision within the Directive that limits the definition of ‘defect’ to those that are proven, lawyers, and academics had worked upon a fair and logical assumption that for liability to arise for a specific product, the claimant must show that the product was actually unsafe, not that it merely had the potential to be so. It is argued that the ECJ’s ruling has the alarming potential to expose producers to a much greater scale of liability than seems just.

The law of product liability is already heavily favoured towards consumers, thanks to the strict liability regime imposed by the CPA. Opening up the avenue for claimants to claim against producers merely when a product might have the potential to be defective could have significant ramifications for the introduction of innovative new products, particularly in the world of medicine.

It seems therefore that extending and imposing this precedent onto producers would involve the erroneous constraining of their ability to bring out new products that could change, better, and save lives.

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Tagged: Commercial Law, Consumer Rights, Contract Law, European Union, Medical Law & Ethics, Personal Injury, Retail, Tort Law

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