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Circumstantial Evidence May Be Sufficient to Infer Product Defect

By Joseph Callanan, Litigation News Associate Editor – October 31, 2011

Products liability plaintiffs may prove, under a “malfunction theory,” the existence of a product defect by offering circumstantial evidence and ruling out other known causes. Three recent cases underscore the perhaps controversial nature of this theory, and suggest limits on when and how plaintiffs might successfully implement it.

Plaintiff Avoids Summary Judgment on Malfunction Theory
In Liberty Mutual Fire Insurance Co. v. Sharp Electronics Corp. [PDF], the U.S. District Court for the Middle District of Pennsylvania denied defendants’ motion for summary judgment, ruling that under Pennsylvania law, application of the malfunction theory allowed plaintiffs to proceed to trial with only circumstantial evidence. Such evidence may include expert testimony on the process of elimination and thus the existence of a defect.

In Liberty Mutual Fire, a fire broke out at a Pennsylvania restaurant shortly after closing. The fire damaged the restaurant and adjacent shopping mall.

An investigation concluded that the origin of the fire was the restaurant’s cash register. The only remaining parts of the cash register were its drawer and transformer. The owners and insurers of the damaged businesses sued the manufacturer and dealer of the cash register.

The defendants moved for summary judgment on the grounds that the plaintiffs failed to proffer sufficient evidence to infer a defect in the cash register that caused the fire. Rejecting a recommendation [Pacer required] by the magistrate judge in the defendants’ favor, the district court permitted the case to proceed. Despite the lack of direct evidence of a specific defect, the plaintiffs could present the malfunction theory to the jury.

Product Unavailability and No Other Identifiable Causes
The court noted that where “direct evidence of a product’s malfunction is unavailable” and the plaintiffs can rule out extrinsic sources such as consumer misuse, the plaintiffs might rely on the malfunction theory. Although perhaps superficially counterintuitive, the court’s denial of summary judgment solely upon circumstantial evidence was neither “radical” nor “surprising,” several experts agree.

“The decision is deceptive in that it is not just the plaintiff’s expert who says the origin of the fire was the cash register. An outside investigator and the county fire marshal also thought the fire originated with the cash register—that’s a big deal,” states Nathaniel Cade Jr., Milwaukee, cochair of the ABA Section of Litigation’s Products Liability Committee. “If everyone points to the cash register, no one should be surprised by the outcome,” he adds.

Liberty Mutual Fire follows a line of products liability cases decided under Pennsylvania law. In 2009, the Pennsylvania Supreme Court reaffirmed the malfunction theory in Barnish v. KWI Bldg. Co. [PDF], describing it as “encompass[ing] nothing more than circumstantial evidence of product malfunction.” In contrast to Liberty Mutual Fire, however, the Barnish court affirmed summary judgment for the defendants because the plaintiffs failed to introduce sufficient evidence on another portion of the malfunction theory—that the product was defective when it left the manufacturer’s control.

Most States Allow Circumstantial Evidence of Defect
The Restatement (Third) of Torts: Product Liability observes that a “huge body of case law supports” using circumstantial evidence to sustain an inference of product defect without specific proof of what the defect was. The Restatement notes a majority of states allow an inference that a product defect may have caused harm and existed when the product left the manufacturer’s control if (i) damages are of a “kind that ordinarily occurs as a result of product defect,” and (ii) the plaintiff rules out secondary causes or abnormal use.

The malfunction theory is “similar to the logic of res ipsa loquitur,” the Liberty Mutual Fire court observed, and the theory extends negligence principles to the products liability field. The Restatement concurs that res ipsa loquitur is the historical precedent for the Restatement version of the malfunction theory.

The malfunction theory is “an entrenched area of law,” offers Jeffrey A. Beaver, Seattle, cochair of the Section of Litigation’s Expert Witness Committee. Res ipsa loquitur and the malfunction theory help “set up the prima facie case to get to the jury, but [is it] not the end of the day and not the end of the story,” he adds.

Section leaders concur the decision is correct. “The decision is reminiscent of other indirect causation arguments in tort, such as “differential diagnosis,” observes D. Alan Rudlin, Richmond, VA, cochair of the Section’s Products Liability Committee.

“The decision is troubling, but it is difficult to reject as wrongly decided,” echoes Cade. Moreover, and although the theory may allow the plaintiff “to get by summary judgment, it does not mean the plaintiffs win—only that they get to take it to the jury,” notes Beaver.

“At first blush, the district court judge appeared to go off the reservation by relying solely on circumstantial evidence of a defect to defeat summary judgment,” agrees Rudlin. A careful reading of the decision reveals that “the judge did not make a radical finding, [in fact] the decision was more conventional that it initially appears,” he concludes.

Defendants Obtain Summary Judgment Malfunction Case in Connecticut
While a federal court in Pennsylvania denied summary judgment in a malfunction theory case, a Connecticut appellate court held that summary judgment should have been allowed in a malfunction theory case that went to the jury. In Metropolitan Property & Casualty [PDF], a Connecticut homeowner failed to finish mowing her lawn because of the rough operation of her five-year-old lawn tractor that the dealer and homeowner had recently maintained.

Within hours, a fire damaged her garage and home. An investigation revealed that the fire had started in the garage by where the homeowner left the tractor after encountering trouble.

After trial, the Connecticut Supreme Court reversed the plaintiff’s verdict while holding that the plaintiff may proceed under the malfunction theory. Like Barnish, however, the plaintiff’s evidence failed in applying the malfunction theory because there was no evidence for the jury to infer that any defect in the tractor existed when it left the manufacturer’s control.

After taking the case from the appellate court on its own initiative, the Supreme Court explicitly allowed the malfunction theory. It noted, however, “It is important that appropriate limitations be placed on the application of the malfunction theory.”

A key limitation to the malfunction theory that the Barnish and Metropolitan Property & Casualty courts applied, and Liberty Mutual Fire may at trial, is that plaintiffs must not only rule out secondary causes; they must also include evidence that the inferred defect existed when the product left the manufacturer’s control.

Keywords: litigation, products liability, malfunction theory, circumstantial evidence, expert witness, defect

Related Resources

  • November 4, 2011 – We convinced a manufacturer to settle a case involving the malfunction of a surgical cutter/stapler on the basis of only circumstantial evidence of product defect. The surgeon used the product for arthroscopic surgery in an emergency appendectomy. The product cut but did not staple. The surgeon had to convert closed surgery to open surgery to minimize the infection in this procedure.

    In Texas there are 3 kinds of product defects: design, marketing (warnings, instructions) and manufacturing. Your article does not indicate the type of defect of which malfunction may be circumstantial evidence. Malfunction is evidence of a manufacturing defect, unless there is evidence of lots of malfunctions, in which case it might be evidence of a design defect. The proof in our case included receipt by the hospital of the new/unused product in a sealed package/container, appropriate care in handling and opening the package, appropriate care and handling the product when delivered to the surgeon, experience of the surgeon and nursing staff in using this kind of product, skilled use by the surgeon in this surgery, and testimony about the malfunction. We were able to prove manufacturing defect even though the hospital (routinely) disposed of the product after the surgery. One aspect of this type of proof which is advantagous to plaintiffs is that we did not have to retain an expert in design of the product because we did not even attempt to prove a design defect. We did not have to prove design or marketing defect, did not have to attack the product line, only this product.


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