Opinion ID: 2831507
Heading Depth: 2
Heading Rank: 1

Heading: The Risk-Utility Analysis

Text: To decide whether a product design is unreasonably dangerous, the jury must balance the product’s utility against the risks involved in its use. Caterpillar, Inc. v. Shears, 911 S.W.2d 379, 383–84 (Tex. 1995); Turner v. Gen. Motors Corp., 584 S.W.2d 844, 850 (Tex. 1979). We have identified five factors that may be relevant to the jury’s risk-utility balancing determination: (1) the utility of the product to the user and to the public as a whole weighed against the gravity and likelihood of injury from its use; (2) the availability of a substitute product which would meet the same need and not be unsafe or unreasonably expensive; (3) the manufacturer’s ability to eliminate the unsafe character of the product without seriously impairing its usefulness or significantly increasing its costs; (4) the user’s anticipated awareness of the dangers inherent in the product and their avoidability because of general public knowledge of the obvious condition of the product, or of the existence of suitable warnings or instructions; and (5) the expectations of the ordinary consumer. Timpte, 286 S.W.3d at 311 (citing Grinnell, 951 S.W.2d at 432).2 2 This Court has never explained how, or even whether, appellate courts should utilize these factors when conducting a no-evidence review of a jury’s verdict. In all of the cases in which we utilized these five factors, we were reviewing a trial court’s decision on summary judgment, not a jury verdict. See Timpte, 286 S.W.3d at 308; Hernandez, 2 S.W.3d at 255; Grinnell, 951 S.W.3d at 425. We referred to various factors when reviewing a jury verdict in Martinez, but we did not utilize them in our no-evidence analysis. Martinez, 977 S.W.2d at 335. In other cases 5 By design, this risk-utility analysis is a fluid process. The first factor sets forth the basic balancing test that the jury must conduct: weighing the product’s usefulness (its utility) against the likelihood and seriousness of injuries that its use may cause (its risks). To oversimplify the analysis, if the product’s risks outweigh its utility, it is unreasonably dangerous, and if its utility outweighs its risks, it is not. But neither the determination of a product’s utility and risks nor the weighing of the two is that simple. A product’s utility is not just its usefulness, but its degree of usefulness and the relative uniqueness of that usefulness as compared to other products. In this sense, the second and third factors—the availability of a substitute product and the ability to eliminate the unsafe character of the product—aid in determining the weight of the product’s utility. If a product is extremely useful, but other safer products or designs are similarly or more useful, its utility may be relatively low, in spite of its extreme usefulness. By contrast, if it is only minimally or rarely useful, but no safer products or designs are as useful, then its utility might be very high. Similarly, a product’s risks are not just the dangers it creates, but the nature, likelihood, and extent of those dangers. In this sense, the fourth and fifth factors—the user’s awareness and involving a jury verdict—including our most recent decision—we “analyze[d] the evidence in light of the charge as given,” without ever referring to the factors. Kia Motors Corp. v. Ruiz, 432 S.W.3d 865, 875 (Tex. 2014); see also Caterpillar, 911 S.W.2d at 384. Whether and how appellate courts should utilize the factors when reviewing a jury verdict is a relevant issue because we have held that the factors should not be included in the jury instructions, so the jury will never actually be aware of these factors when making its decision. Turner, 584 S.W.2d at 849 (explaining that “the analysis [of the factors] is most helpful and can be used by appellate and trial judges, and by students and commentators, but that it is not normally given to the jury”). It makes little sense for appellate courts to utilize specific factors to determine whether evidence supports a jury’s verdict when the jury was not instructed to consider those factors. Since the factors, at least in theory, limit the scope of the risk-utility analysis, the better rule would be that appellate courts, when reviewing a jury verdict, should consider whether any evidence supports the jury’s finding when measured against the jury instructions, whether that evidence fits within the factors or not. Since neither party raises this issue in this case, however, and since there is evidence to support the jury’s verdict even when analyzed in light of the listed factors, we need not decide that issue here. 6 the avoidability of the dangers due to general knowledge, obviousness, warnings, and the ordinary consumer’s expectations—aid in determining the weight of the product’s risks. If a product is extremely dangerous, but consumers and users are aware of those dangers and consistently avoid them, its actual risks may be quite low. But a relatively safe product may present a very high risk if unsuspecting users are severely injured by the rare danger it does present. A product with very high utility, due to its great usefulness and the unavailability of substitute products or designs, is unlikely to be unreasonably dangerous unless the risks are also extremely high. A product that creates very high risks, by contrast, is likely to be unreasonably dangerous unless its utility is also extremely high. We have made it very clear that the fluid process that this risk-utility analysis requires is not susceptible to absolutes. For example, the analysis does not absolutely require manufacturers to warn of a product’s risks, especially if those risks are obvious and apparent to the ordinary user. Caterpillar, 911 S.W.2d at 382. 3 But it also does not absolutely absolve a manufacturer that provides an adequate warning, because “it is not at all unusual for a person to fail to follow basic warnings and instructions.” Martinez, 977 S.W.2d at 337 (quoting Gen. Motors Corp. v. Saenz, 3 The Court relies on Caterpillar to support its matter-of-law conclusion that the Genie lift’s risks do not outweigh its utility. When addressing the plaintiff’s defective-design claim in Caterpillar, however, the Court held that the claim failed as a matter of law not because there was no evidence that the product’s risks outweighed its utility, but because the plaintiff “offered no evidence of a safer design . . . that could perform the same tasks” as the product at issue. Id. at 384. The Court resolved the defective design claim in that case based on the lack of any evidence of a safer alternative design, not based on the risk-utility determination. The Court also held as a matter of law that the manufacturers “did not have the duty to warn” because the dangers were obvious to the product’s ordinary user. Id. at 383. The Court relied on Joseph E. Seagram & Sons, Inc. v. McGuire, 814 S.W.2d 385 (Tex. 1991), in which the Court held as a matter of law that the defendant owed no duty to warn of “the danger of developing the disease of alcoholism from prolonged and excessive consumption of alcoholic beverages.” Id. at 385. We have recognized that “the duty to warn of defects is distinct from the duty to design safe products,” and that the obviousness of a risk is not determinative of the latter duty in Texas. Timpte, 286 S.W.3d at 313. Moreover, “[i]t is firmly established in Texas that the existence and elements of a common law duty are ordinarily legal issues for the court to decide.” Humble Sand & Gravel, Inc. v. Gomez, 146 S.W.3d 170, 181 (Tex. 2004). In short, the Court’s matter-of-law conclusions in Caterpillar did not involve the risk-utility analysis at all. 7 873 S.W.2d 353, 358 (Tex. 1993)). Nor does it absolutely absolve a manufacturer when “the defect is apparent.” Id. at 336; Timpte, 286 S.W.3d at 312 (“liability for a design defect may attach even if the defect is apparent”); Turner, 584 S.W.2d at 850 (same). It used to be the law in Texas that the plaintiff’s awareness and appreciation of the risk, whether due to warnings or to the obviousness of the risk, was an absolute defense against a defective-design claim. See Rourke v. Garza, 530 S.W.2d 794, 800 (Tex. 1975) (“It is an appropriate defense that the user voluntarily exposed himself to the risk posed by the defective product with knowledge and appreciation of the danger.”), abrogated on other grounds by Ford Motor Co. v. Ledesma, 242 S.W.3d 32 (Tex. 2007). But we have since rejected such absolutes, holding that an “open and obvious” and “generally known” danger can give rise to liability, see Timpte, 286 S.W.3d at 313, and an otherwise adequate warning is not a bar to liability, id. at 313– 14. Under the risk-utility analysis, “warnings and safer alternative designs are factors, among others, for the jury to consider in determining whether the product as designed is reasonably safe.” Martinez, 977 S.W.2d at 337. A product may thus be unreasonably dangerous as designed even if the defect is apparent or the manufacturer has adequately warned of the dangers, because the anticipated awareness and avoidability of the dangers and the ordinary consumer’s expectations are not absolutes. Instead, they “are but two factors for the jury to consider when determining whether a product was defectively designed.” Grinnell, 951 S.W.2d at 432; see also Hernandez, 2 S.W.3d at 257; Martinez, 977 S.W.2d at 335–37. We have rejected such absolute rules in favor of the more fluid risk-utility analysis because that analysis provides a more effective way to “encourage manufacturers to reach an optimum level of safety in designing their products.” Timpte, 286 S.W.3d at 314. A design that eliminates a 8 risk is safer than a design that retains the risk, even if the risk is open and obvious or warned against. Id. As “we have long recognized[,] . . . the duty to warn of defects is distinct from the duty to design safe products,” even “in the context of an obvious risk.” Id. at 313. “Thus, if it is reasonable for a product’s designer to incorporate a design that eliminates an open and obvious risk, the product reaches a more optimum level of safety by incorporating the safer design than by keeping the current design with the open and obvious risk.” Id. In this case, the Court concludes, as a matter of law, that the Genie lift was not unreasonably dangerous because its risks were both obvious and warned against. While those facts are certainly important to the risk-utility analysis, the Court’s own precedent rejects the idea that they make the lift safe as a matter of law. “The fact that a product user is or should be aware of the existence and avoidability of dangers inherent in a product’s use that are obvious, commonly known, or warned against, . . . may . . . be decisive in a particular case.” Hernandez, 2 S.W.3d at 258. But such a determination cannot be based merely on the existence of a warning or obviousness of the dangers, as if either were “an absolute bar—like certain affirmative defenses—to liability for a defective design.” Id. We must therefore review the record in this case to determine whether it contains any evidence that would allow a reasonable juror to conclude that the risks of the Genie lift outweigh its utility, in spite of the warnings and the allegedly obvious nature of its risks.