Opinion ID: 424892
Heading Depth: 3
Heading Rank: 1

Heading: Would the Availability of Punitive Damages Disrupt the Regime of Strict Products Liability?

Text: 24 Defendants' first argument is that punitive damages are inherently inconsistent with a theory of strict products liability. Punitive damages, defendants note,  'evolved in the context of a one-on-one relationship and were viewed as a form of punishment--a deterrent for intentional and outrageous conduct.'  Br. at 25 (quoting Ghiardi & Koehn, Punitive Damages in Strict Liability Cases, 61 Marq.L.Rev. 245, 248 (1977)). The touchstone of section 402A, by contrast, is that the character of the manufacturer's conduct is essentially irrelevant to its liability--only the condition of the product is to be considered by the trier of fact. See Murray v. Fairbanks Morse, 610 F.2d 149, 157 (3d Cir.1979). Thus, defendants assert, the two claims should not be joined [b]ecause the strict liability claim expressly relaxes the proof requirements concerning the conduct of the defendant [while] the claim for punitive damages refocuses attention to the conduct of the defendant.... Id. 25 We reject the notion that punitive damages are theoretically inconsistent with strict products liability. While it is true that section 402A eschews the culpability of defendants' conduct as a factor in determining liability, it does not do so because focusing on culpability is always inappropriate. Indeed the drafters of the Restatement explicitly noted that 402A does not preclude liability based upon the alternative ground of negligence of the seller, where such negligence can be proved. Comment a. Rather, the rule is intended to expand recovery by circumventing the restrictions imposed by fault-based standards. See Murray v. Fairbanks Morse, supra, 610 F.2d at 158. The fact that some sellers therefore will be found liable in the absence of fault does not mean that those who are at fault--and outrageously so--should not be punished. 10 Accord Neal v. Carey Canadian Mines, Ltd., 548 F.Supp. 357, 378 (E.D.Pa.1982); Thomas v. American Cystoscope Makers, Inc., 414 F.Supp. 255, 264 n. 13 (E.D.Pa.1976) (dictum) (this Court knows of no sound reason why punitive damages should be precluded when liability is predicated on 402A); Wangen v. Ford Motor Co., 97 Wis.2d 260, 294 N.W.2d 437, 446 (1980). 26 One court, however, recently has advanced an economics-based objection to allowing punitive damages in a 402A action: 27 [T]he allowance of punitive damages would warp the valuation process which is implicit in the litigation process. That is, the product's price should reflect the cost of accidents or the cost of accident avoidance mechanisms in order that the market may assess the usefulness of the product.... The assessment of punitive damages upon the manufacturer and distributors can be analyzed as the imposition of costs for poor managerial decisions. These costs should not be spread to the buying public through an adjustment of the product's price. To do so will deflate the usefulness of the product on the basis of facts which do not relate to the product itself. 28 Gold v. Johns-Manville Sales Corp., 553 F.Supp. 482, 484 (D.N.J.1983) (citations omitted). Although the argument is attractive, it is predicated on a questionable premise, for it is not necessarily true that an award of punitive damages will be spread to the public through an adjustment of the price. In order for such spreading to occur, not only would a manufacturer have to be able to forecast punitive damages awards against him, but the market structure also would have to be such that he had sufficient unutilized market power to pass on the increased costs. Unless an entire competitive industry was behaving similarly (i.e., engaging in the same kind of opprobrious conduct and forecasting), a manufacturer would seem to be unable to afford to pass on the costs. 11 Accord Wangen v. Ford Motor Co., 97 Wis.2d 260, 294 N.W.2d 437, 452 (1980). 29