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South Carolina Supreme Court Endorses Risk-Utility Test

By Jeffrey B. Tracy, Litigation News Associate Editor – November 2, 2010

The South Carolina Supreme Court has joined the majority of state court jurisdictions endorsing some form of the risk-utility test in products liability design defect cases. Branham v. Ford Motor Co. The court reserved the less “objective” consumer expectations test for manufacturing defect claims.


Background
The case arose out of a 2001 single-car rollover accident in which a child was ejected from a Ford Bronco and injured. The plaintiff asserted negligence and strict liability based claims against Ford. At trial, the jury awarded the plaintiff $16,000,000 in actual damages and $15,000,000 in punitive damages. Ford appealed on several grounds.


The court focused on Ford’s argument that the trial court erred in submitting the plaintiff’s claims alleging a “handling and stability” design defect to the jury. Ford argued that these claims should not have gone to the jury because plaintiff failed to present evidence of a “feasible alternative design” as required by the risk-utility test.


In its decision, South Carolina’s highest court found no error in submitting the claims to the jury, but announced that “the exclusive test in a product liability design case is the risk-utility test with its requirement of showing a feasible alternative design.” Because the court was remanding for a new trial on other grounds, the court held that, on retrial, the plaintiff’s design defect claim “will proceed pursuant to the risk-utility test and not the consumer expectations test.”


The Court’s Analysis
The court first detailed the design defect standard in South Carolina, noting that “for a plaintiff to successfully advance a design defect claim, he must show that the design of the product caused it to be ‘unreasonably dangerous.’” This showing was historically done through the risk-utility test and consumer expectations test.


Under the risk-utility test, according to prior decisions in South Carolina courts, “a product is unreasonably dangerous and defective if the danger associated with the use of the product outweighs the utility of the product.” Juries were allowed to consider a variety of factors in determining whether the use outweighs the utility “including the usefulness and desirability of the product, the cost involved for the added safety, the likelihood and potential seriousness of injury, and the obviousness of danger.”


Conversely, in using the consumer expectations test, a jury decides “whether the product is unreasonably dangerous to the consumer or user given the conditions and circumstances that foreseeably attend use of the product.”


In adopting the risk-utility test, the court analyzed cases from the 46 jurisdictions that recognize strict products liability claims. The court determined that 35 of the 46 jurisdictions use some form of risk-utility analysis in design defect cases.


The court endorsed the risk-utility test primarily because it is based on objective factors. “Unlike the consumer expectations test, the focus of a risk-utility test centers upon the alleged defectively designed product,” the court stated. “The risk-utility test provides objective factors for a trier of fact to analyze when presented with a challenge to a manufacturer’s design.” According to the court, the consumer expectations test is “ill-suited” for design defect claims because it puts its focus on the consumer instead of the product. The court noted that the consumer expectations test was “best suited” for manufacturing defect claims.


Ramifications for Litigators
Nathaniel Cade, Milwaukee, WI, cochair of the ABA Section of Litigation’s Products Liability Committee, notes that it is difficult to say whether plaintiffs or defendants are better off in South Carolina after Branham. “With the consumer expectations test, an average juror can understand that a burger or soup should not make you sick and that something obviously went wrong if it does,” Cade says.


“On the other hand, an average juror usually cannot understand that just because a vehicle rolled over that it is not necessarily defective. That is what the risk-utility test provides for jurors—it requires that a plaintiff come forward with a feasible, alternative design that provides juries with some context as to what made the product defective,” he says.


Lori B. Leskin, New York City, cochair of the Section of Litigation’s Products Liability Committee, agrees. “The difficulty with the consumer expectations test for defense lawyers is that it is difficult to gauge how a jury will respond when asked to evaluate what a consumer would expect out of a product without industry information. Similarly, plaintiff’s lawyers generally fare better with a consumer expectations test but have a tough time making it fit with the risk-utility part of the equation,” she says.


Cade also notes that, from a manufacturer’s perspective, the consumer expectations test is difficult to predict. “The consumer expectations test seems to be vague and less dynamic compared to the risk-utility test,” Cade says.


“In Branham, however, the court leaves open the evidentiary question and does not address what standard or level of evidence is required to establish that a manufacture breached its duty under a risk-utility analysis,” Cade observes. “The result is that lower South Carolina courts, courts from other jurisdictions, and litigators looking at Branham are left with very little to help them wade through either test and how they apply in products cases,” he says.


Keywords: litigation, South Carolina Supreme Court, products liability, risk-utility test


 

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