Opinion ID: 1248354
Heading Depth: 1
Heading Rank: 2

Heading: In a Design Defect Products Liability Case, What Test Applies Under Iowa Law to Determine Whether Cigarettes Are Unreasonably Dangerous? What Requirements Must Be Met Under the Applicable Test?

Text: A. Iowa law governing strict liability for defective products. The Iowa Supreme Court first applied strict liability in tort for a product defect in 1970, adopting Restatement (Second) of Torts section 402A (1965). Hawkeye-Sec. Ins. Co. v. Ford Motor Co., 174 N.W.2d 672, 684 (Iowa 1970). Section 402A provides: Special Liability of Seller of Product for Physical Harm to User or Consumer: (1) one who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property is subject to liability for physical harm thereby caused to the ultimate user or consumer, or to his property, if (a) the seller is engaged in the business of selling such a product, and (b) it is expected to and does reach the user or consumer without substantial change in the condition in which it is sold. (2) The rule stated in Subsection (1) applies although (a) the seller has exercised all possible care in the preparation and sale of his product, and (b) the user or consumer has not bought the product from or entered into any contractual relation with the seller. Restatement (Second) of Torts § 402A. Our purpose in adopting this provision was to relieve injured plaintiffs of the burden of proving the elements of warranty or negligence theories, thereby insuring `that the costs of injuries resulting from defective products are borne by the manufacturers that put such products on the market.' Hawkeye-Sec. Ins. Co., 174 N.W.2d at 683 (citation omitted). Consistent with this purpose we held that a plaintiff seeking to recover under a strict liability theory need not prove the manufacturer's negligence. Id. at 684. Moreover, we concluded that application of strict liability in tort was not exclusive and did not `preclude liability based on the alternative ground of negligence, when negligence could be proved.' Id. at 685 (citation omitted). Although Hawkeye-Security was a manufacturing defect case, id. at 676-77, our opinion implied that strict liability in tort was applicable to design defects as well, id. at 684 (quoting authority that strict liability is applicable when the defect arose out of the design or manufacture of the product). In Aller v. Rodgers Machinery Manufacturing Co., a design defect case, our court discussed in more detail the test to be applied in strict liability cases. 268 N.W.2d 830, 832 (Iowa 1978). In that case, the plaintiff asked the court to eliminate the unreasonably dangerous element of strict products liability, arguing that to require proof that the product was unreasonably dangerous injected considerations of negligence into strict liability, thwarting the purpose of adopting a strict liability theory. Id. at 833-34. We rejected the plaintiff's request to eliminate the unreasonably dangerous element, concluding the theories of strict liability and negligence were distinguishable: In strict liability the plaintiff's proof concerns the condition (dangerous) of a product which is designed or manufactured in a particular way. In negligence the proof concerns the reasonableness of the manufacturer's conduct in designing and selling the product as he did. In strict liability the plaintiff takes the design as it was finalized in the finished product and shows it was both dangerous and that it was unreasonable to subject the user to this danger because the user would not contemplate the danger in the normal and innocent use of the product or consumption of the product. In negligence the plaintiff shows the manufacturer was unreasonable in designing the product as he did. Id. at 835 (citation omitted). These articulated distinctions were, however, somewhat obscured by this court's explanation of the proof required in a strict liability case. Relying on comment i to section 402A, we held that a plaintiff seeking to prove a product was in a defective condition unreasonably dangerous must show that the product was dangerous to an extent beyond that which would be contemplated by the ordinary consumer who purchases it, with the ordinary knowledge common to the community as to its characteristics. Id. at 834 (quoting Restatement (Second) of Torts § 402A cmt. i ). We went on, however, to discuss how the plaintiff is to prove the defective condition was unreasonably dangerous: In order to prove that a product is unreasonably dangerous, the injured plaintiff must prove the product is dangerous and that it was unreasonable for such a danger to exist. Proof of unreasonableness involves a balancing process. On one side of the scale is the utility of the product and on the other is the risk of its use. Whether the doctrine of negligence or strict liability is being used to impose liability the same process is going on in each instance, i.e., weighing the utility of the article against the risk of its use. Id. at 835 (emphasis added). Two conclusions can be drawn from our discussion in Aller: (1) the legal principles applied in a strict liability case include both a consumer expectation or consumer contemplation test and a risk/benefit or risk/utility analysis; and (2) the risk/benefit analysis employed in a strict liability design defect case is the same weighing process as that used in a negligence case. Since Aller, this court has varied in its application of the tests set forth in that decision, sometimes applying both tests and sometimes applying only the consumer expectation test. On the other hand, we have continued to equate the strict liability risk/benefit analysis used in a design defect case with that applied in a design negligence case. In Chown v. USM Corp., 297 N.W.2d 218, 220 (Iowa 1980), a design defect case, we noted that proof of unreasonable danger was an essential element under both strict liability and negligence. We also observed there were two tests to determine this element, a consumer expectation test and a risk/benefit analysis. Chown, 297 N.W.2d at 220-21. This court then proceeded to apply both tests in deciding the trial court had not erred in ruling that the plaintiff failed to prove the essential element of unreasonable danger. Id. at 221. Finding no error, we held the absence of an unreasonably dangerous product was fatal to both the plaintiff's design negligence and strict liability design defect claims. Id. In Fell v. Kewanee Farm Equipment Co., 457 N.W.2d 911, 916-18 (Iowa 1990), this court again applied both the consumer expectation and risk/benefit tests in a strict liability design defect case. Accord Mercer v. Pittway Corp., 616 N.W.2d 602, 619-20 (Iowa 2000) (applying both tests). In contrast, some of our cases appear to analyze the element of unreasonably dangerous under the consumer expectation test alone. See Weyerhaeuser Co. v. Thermogas Co., 620 N.W.2d 819, 828 (Iowa 2000) (applying consumer expectation test without comment on risk/utility analysis); Maguire v. Pabst Brewing Co., 387 N.W.2d 565, 569-70 (Iowa 1986) (same). One final development in products liability law in Iowa is worth mentioning before we address the precise issue in this case. In Olson v. Prosoco, 522 N.W.2d 284 (Iowa 1994), this court rejected the distinction between negligence and strict liability claims first articulated in Aller. Olson, 522 N.W.2d at 289. Examining a failure-to-warn case, we abandoned the analysis that differentiated strict liability from negligence on the basis that negligence focuses on the defendant's conduct while strict liability focuses on the condition of the product. Id. We concluded that [i]nevitably the conduct of the defendant in a failure to warn case becomes the issue, and therefore, the product/conduct distinction had little practical significance. Id. Our acknowledgement that the test for negligence and strict liability were in essence the same led this court to discard the theory of strict liability in failure-to-warn cases and hold that such claims should be submitted under a theory of negligence only. Id. With this abbreviated review of the current status of Iowa product liability law in mind, we turn now to the parties' arguments on the question of the applicable test for determining whether cigarettes are unreasonably dangerous. B. Arguments of parties. The parties disagree as to whether the consumer contemplation test and the risk/benefit analysis are alternative tests or whether both apply in all product defect cases. Assuming the tests are alternative, the parties also differ on which test applies to cigarette cases. The defendants assert that only the consumer contemplation test of comment i to section 402A should be used to determine whether cigarettes are unreasonably dangerous. Their desire for this test stems from their related argument that common knowledge of the risks of cigarette smoking precludes a finding that cigarettes are dangerous to an extent beyond that which would be contemplated by the ordinary consumer. Restatement (Second) of Torts § 402A cmt. i. The defendants argue that the risk/utility test should not be applied because it was designed for those products, unlike cigarettes, about which the ordinary consumer would not normally have an expectation of safety or dangerousness. The plaintiff contends both the consumer contemplation and risk/utility tests apply in design defect cases to determine whether a product is unreasonably dangerous. Alternatively, he suggests this case presents an appropriate opportunity for the court to adopt the principles of law set forth in section 2 of Restatement (Third) of Torts: Product Liability [hereinafter Products Restatement]. As a final option, he argues that [s]ince the cigarette companies disputed for decades that their products were dangerous, [cigarettes] would not be products for which consumers would normally have an expectation of safety or dangerousness decades in the past, thus qualifying for the risk/utility test under the analytical scheme proposed by the defendants. C. Discussion. In determining what test should be applied in assessing whether cigarettes are unreasonably dangerous, we are confronted with the anomaly of using a risk/benefit analysis for purposes of strict liability based on defective design that is identical to the test employed in proving negligence in product design. See Hillrichs v. Avco Corp., 478 N.W.2d 70, 75 (Iowa 1991) (noting, with respect to allegation of enhanced injury due to a design defect, that standards applied in that case make the strict liability claim depend on virtually the same elements of proof as are required to establish the negligence claim), overruled on other grounds by Reed v. Chrysler Corp., 494 N.W.2d 224, 230 (Iowa 1992). This incongruity has drawn our attention once again to the debate over whether the distinction between strict liability and negligence theories should be maintained when applied to a design defect case. Lovick v. Wil-Rich, 588 N.W.2d 688, 698 (Iowa 1999). We are convinced such a distinction is illusory, just as we found no real difference between strict liability and negligence principles in failure-to-warn cases. See Olson, 522 N.W.2d at 289; Jones v. Hutchinson Mfg., Inc., 502 S.W.2d 66, 69-70 (Ky.1973) (finding no difference between standards of conduct under strict liability and negligence in design defect case: In either event the standard required is reasonable care.). See generally David Owen, Products Liability Law Restated, 49 S.C. L.Rev. 273, 286 (1998) (It long has been an open secret that, while purporting to apply `strict' liability doctrine to design and warnings cases, courts in fact have been applying principles that look remarkably like negligence.) [hereinafter Owen]. Because the Products Restatement is consistent with our conclusion, we think it sets forth an intellectually sound set of legal principles for product defect cases. Before we discuss these principles, we first explain our dissatisfaction with the consumer expectation test advocated by the defendants. As one writer has suggested, the consumer expectation test in reality does little to distinguish strict liability from ordinary negligence: The consumer expectations test for strict liability operates effectively when the product defect is a construction or manufacturing defect.... An internal standard exists against which to measure the product's condition  the manufacturer's own design standard. In essence, a product flawed in manufacture frustrates the manufacturer's own design objectives. Liability is imposed on manufacturers in these cases even if the manufacturer shows it acted reasonably in making the product.... When the claim of defect is based on the product's plan or design, however, the consumer expectations test is inadequate. The test seems to function as a negligence test because a consumer would likely expect the manufacturer to exercise reasonable care in designing the product and using the technology available at that time.... Although the consumer expectations test purports to establish the manufacturer's conduct is unimportant, it does not explain what truly converts it into a standard of strict liability. Keith Miller, Design Defect Litigation in Iowa: The Myths of Strict Liability, 40 Drake L.Rev. 465, 473-74 (1991). We agree that the consumer contemplation test is inadequate to differentiate a strict liability design defect claim from a negligent design case. Cf. Olson, 522 N.W.2d at 289 (concluding there was no real difference between the tests used in negligent failure to warn and strict liability based on a failure to warn, noting [i]nevitably the conduct of the defendant ... becomes the issue). Consequently, any attempts to distinguish the two theories in the context of a defective design are in vain. That brings us to the Products Restatement, which reflects a similar conclusion by its drafters. The Products Restatement demonstrates a recognition that strict liability is appropriate in manufacturing defect cases, but negligence principles are more suitable for other defective product cases. See 2 Dan B. Dobbs, The Law of Torts § 353, at 977 (2001) (The effect ... of the Products Restatement is that strict liability is retained when it comes to product flaws, but negligence or something very much like it is the test of liability when it comes to design and warning defects.) [hereinafter Dobbs]; Daniel Givelber, Cigarette Law, 73 Ind. L.J. 867, 885 (1998) (Some thirty years after the Restatement's [(Second) of Torts] apparent embrace of strict products liability, the dominant rule in American law appears to be that manufacturers are only strictly liable when they make a product different and more dangerous from that intended.). Accordingly, it establish[es] separate standards of liability for manufacturing defects, design defects, and defects based on inadequate instructions or warnings. Products Restatement § 2 cmt. a, at 14. Initially, section 1 of the Products Restatement provides: One engaged in the business of selling or otherwise distributing products who sells or distributes a defective product is subject to liability for harm to persons or property caused by the defect. Products Restatement § 1, at 5. The unreasonably dangerous element of section 402A has been eliminated and has been replaced with a multi-faceted definition of defective product. This definition is set out in section 2: A product is defective when, at the time of sale or distribution, it contains a manufacturing defect, is defective in design, or is defective because of inadequate instructions or warning. A product: (a) contains a manufacturing defect when the product departs from its intended design even though all possible care was exercised in the preparation and marketing of the product; (b) is defective in design when the foreseeable risks of harm posed by the product could have been reduced or avoided by the adoption of a reasonable alternative design by the seller or other distributor, or a predecessor in the commercial chain of distribution, and the omission of the alternative design renders the product not reasonably safe; (c) is defective because of inadequate instructions or warnings when the foreseeable risks of harm posed by the product could have been reduced or avoided by the provision of reasonable instructions or warnings by the seller or other distributor, or a predecessor in the commercial chain of distribution, and the omission of the instructions or warnings renders the product not reasonably safe. Products Restatement § 2, at 14. The commentators give the following explanation for the analytical framework adopted in the Products Restatement: In contrast to manufacturing defects, design defects and defects based on inadequate instructions or warnings are predicated on a different concept of responsibility. In the first place, such defects cannot be determined by reference to the manufacturer's own design or marketing standards because those standards are the very ones that the plaintiffs attack as unreasonable. Some sort of independent assessment of advantages and disadvantages, to which some attach the label risk-utility balancing, is necessary. Products are not generically defective merely because they are dangerous. Many product-related accident costs can be eliminated only by excessively sacrificing product features that make products useful and desirable. Thus, the various trade-offs need to be considered in determining whether accident costs are more fairly and efficiently borne by accident victims, on the one hand, or, on the other hand, by consumers generally through the mechanism of higher product prices attributable to liability costs imposed by the courts on product sellers. Products Restatement § 2 cmt. a, at 15-16. As we noted in Lovick, the Products Restatement has essentially dropped the consumer expectation test traditionally used in the strict liability analysis and adopted a risk-utility analysis traditionally found in the negligence standard. Lovick, 588 N.W.2d at 698; accord Products Restatement § 2 cmt. n, at 36 (Regardless of the doctrinal label attached to a particular claim, design and warning claims rest on a risk-utility assessment.); Owen, 49 S.C. L.Rev. at 285-86 (Thus, the Products Liability Restatement grounds liability for design and warnings defects in the reasonableness-balancing-negligence concepts that properly dominate the law of tort.). In addition, the Products Restatement does not place a conventional label, such as negligence or strict liability, on design defect cases. The rules in this Section and in other provisions of this Chapter define the bases of tort liability for harm caused by product defects existing at the time of sale or other distribution. The rules are stated functionally rather than in terms of traditional doctrinal categories. Claims based on product defect at time of sale or other distribution must meet the requisites set forth in Subsection (a), (b), or (c), or the other provisions in this Chapter. As long as these requisites are met, doctrinal tort categories such as negligence or strict liability may be utilized in bringing the claim. Products Restatement § 2 cmt. n, at 34-35. We question the need for or usefulness of any traditional doctrinal label in design defect cases because, as comment n points out, a court should not submit both a negligence claim and a strict liability claim based on the same design defect since both claims rest on an identical risk-utility evaluation. Id. at 36. Moreover, to persist in using two names for the same claim only continues the dysfunction engendered by section 402A. Therefore, we prefer to label a claim based on a defective product design as a design defect claim without reference to strict liability or negligence. D. Conclusion. In summary, we now adopt Restatement (Third) of Torts: Product Liability sections 1 and 2 for product defect cases. Under these sections, a plaintiff seeking to recover damages on the basis of a design defect must prove the foreseeable risks of harm posed by the product could have been reduced or avoided by the adoption of a reasonable alternative design by the seller or other distributor, or a predecessor in the commercial chain of distribution, and the omission of the alternative design renders the product not reasonably safe. Id. § 2(b); accord Hawkeye Bank v. State, 515 N.W.2d 348, 352 (Iowa 1994) (requiring proof of an alternative safer design that is practicable under the circumstances in negligent design case); Hillrichs, 478 N.W.2d at 75 (requiring proof of an alternative safer design under a theory of enhanced injury caused by a design defect).