I sat for a few hours in the Atlanta airport last night during a thunder storm so had some time to finish up my PowerPoint for my speech in a few weeks in London before the Royal Society for Public Health.  Here is the PowerPoint – there will be two added videos – which one to use?:

Product Liability in England & Wales

General Liability Principles

Product liability claims in England may be made under the Consumer Protection Act 1987 (“CPA”), in negligence or in respect of breach of contract. In negligence, fault rests on the party found to be negligent; this can be any person or organization in the supply chain. Although claims can be made in respect of the breach of some statutory obligations, such as certain duties imposed by product safety and health and safety legislation, consumer fraud legislation does not give rise to private law rights to claim compensation.

Under section 2 of the CPA, liability principally rests on the ‘producer’ (the manufacturer), or the importer of the product into the EU, or an own brander (i.e. any person who, by labeling or the use of trademarks, holds himself out as being the producer of the product). The supplier (whether the retailer, distributor or a wholesaler) may be liable in place of the manufacturer if, in response to a request by the Claimant, he fails to identify the producer or at least the person who supplied the product to him. In the context of a recent reference to the European Court of Justice from the English Court (Case C-127/04, O’Byrne v Sanofi Pasteur MDS Limited and Sanofi Pasteur SA) Advocate-General Geelhoed stated in his opinion that “if the supplier is erroneously sued as the producer, he should immediately inform the suing party as to the identity of the producer… If he were to fail to do so, by analogy with Article 3(3) of the Directive he should be treated as the producer.”

Under the CPA, a product is defective if it is not as “safe as persons generally are entitled to expect” taking account of a number of factors including any instructions or warnings provided with the product and the manner in which it has been marketed. Liability is strict: it is not necessary to prove that the manufacturer was at fault in causing the defect.

Claims for a failure to recall may also be brought under the CPA, in negligence and in contract. A duty to withdraw unsafe products underpins the CPA as this imposes strict liability for defective products. Manufacturers/retailers may owe a duty of care in negligence to institute a recall or product withdrawal in appropriate cases. They owe a duty to keep the products they produce/supply under review and to warn of risks that come to light after the product has been supplied. If warnings are not adequate to manage the risk the product may need to be modified or withdrawn.

Claims for breach of contract may only be brought against the immediate supplier of the defective product to the person injured. Liability is strict where the contract has been breached and will depend upon the terms of the contract agreed between the parties or implied into the contract. Under the Sale of Goods Act 1979 (as amended) and the Supply of Goods and Services Act 1982, standard terms are implied into all contracts for the sale of goods, unless the parties agree to exclude them.
Products sold in the course of business must be:

• of satisfactory quality;
• reasonably fit for their stated purpose made known by the buyer to the seller; and
• comply with the description applied to them or a sample supplied.

The seller will not be liable for faults drawn to the buyer’s attention prior to the contract, or which should have been revealed by the buyer’s examination of the goods. Additional obligations apply to contracts between a business and a consumer (“consumer contracts”). There is a presumption that goods that malfunction during the first six months after delivery were in breach of contract at the time of supply. Public statements made by manufacturers, importers, distributors and retailers of the product, for example in labeling and advertising, must also be factually correct and form part of the retailer’s contract with the consumer.

Under the General Product Safety (GPS) Regulations 2005 producers must ensure that they only place safe products on the market, and must take measures to manage any risks that are identified including, in appropriate cases, issuing warnings or withdrawing or recalling the product from the market. The GPS Regulations impose an obligation on producers and distributors to inform the authorities if a product is unsafe. Although the regulations impose criminal penalties, breach of the requirements may be of evidential value in supporting a civil claim. Under the GPS Regulations, it is an offense for a producer to offer or agree to supply or otherwise place an unsafe product on the market, punishable on conviction with a maximum fine of £20,000 and/or a 12-month term of imprisonment (if the case is tried on indictment in the Crown Court).

Causation

The Claimant has the burden of proving his/her case on the ‘balance of probabilities’:

• Under the CPA, the Claimant must prove that the product is defective, and that the defect caused damage to the Claimant.
• In negligence, the Claimant must prove that the Defendant breached the duty of care he owed to the Claimant, and that this negligence caused damage to the Claimant.
• In contract, the Claimant must establish that the Defendant breached his contract with the Claimant by supplying product(s) that did not meet the terms and conditions of the contract, and that such breach damaged the Claimant. The burden of proving breach of contract is reversed in the case of consumer contracts if the product malfunctions in the first six months after delivery; the product is presumed not to conform to the contract at the time of supply.

The traditional test of causation is the ‘but-for test’: the Claimant must prove that, but for the Defendant’s negligence, or (as the case may be) supply of a defective product, the Claimant would not have sustained the injury. At present the position remains that, where it cannot be established which of several possible producers manufactured the defective product, the Claimant’s evidential burden cannot be met and the claim will be dismissed.

A failure to warn may give rise to liability under both the CPA and in negligence. The CPA provides that the “get up” of the product and any instructions or warnings relating to its use form part of the circumstances to be taken into account in assessing if the product is defective.

In negligence, manufacturers and suppliers owe a duty to take reasonable care to provide adequate warnings and instructions with their products. There is no duty to warn of dangers that are obvious or a matter of common knowledge (see for example, Bogle and others v McDonalds Restaurants Ltd [2002] All ER (D) 436 where the court found that McDonalds were not negligent in supplying cups of hot tea and coffee without a warning as consumers generally knew that there was a risk of scalding if hot drinks were spilled). Manufacturers owe a duty to warn of dangers identified after the product was first supplied.

Defenses

Under the CPA the following defenses are available:

• the defect is due to compliance with legal obligations imposed by UK or EU law;
• the defective product was not supplied by the Defendant;
• the product was not supplied for profit and in the course of business;
• the defect did not exist at the time the product was supplied;
• the so-called “development risks defense” applies: the state of scientific and technical knowledge at the relevant time was not such that a producer of products of the same description as the allegedly defective product might be expected to have discovered the defect if it had existed in his products while they were under his control; and
• if the product was a component used in another product, the producer of the component will not be liable if he can show that the defect was due to the design of the final product, or to defective specifications provided to the component producer by the producer of the final product.

The Defendant has the burden of proving each of these defenses. Such defenses have rarely been successful.

Procedure

Trials are by a judge. Proceedings can be brought by any party that has a claim, whether an individual, a company or another legal entity. There is no mechanism by which claims can be brought by a representative body on behalf of a number of claimants.

Where claims give rise to common or related issues of fact or law, the court has power to make a group litigation order (GLO) enabling it to manage the claims covered by the Order in a coordinated way. The procedure is “opt-in.” Claims managed under a GLO remain individual actions in their own right. The court will usually, however, order that one or more actions that are representative of the rest of the claims cohort are tried as lead actions. The outcome of the lead actions does not, in theory, determine liability in the remaining cohort of claims, but those actions will establish findings of law and fact that may, in practice, allow the parties to compromise or simplify resolution of the remainder of the litigation by focusing further proceedings on clarifying any remaining points of principle.

Statutes of Limitation

Under the Limitation Act 1980 the basic limitation period for tortious actions (including negligence claims) and for breach of contract is six years from the date on which the cause of action accrued. Additional requirements apply in the case of latent damage caused by negligence.

Special time limits apply to personal injury claims for damages in respect of negligence, nuisance or breach of duty. In such cases, the claim must be brought within three years from the date on which the cause of action accrued (i.e. the date of injury or death) or the date of knowledge by the Claimant of certain facts. The date of knowledge is when the Claimant is aware of the identity of the Defendant, that the injury was significant, and that it was attributable in whole or part to the alleged negligence, nuisance or breach of duty. The court has a discretionary power to overcome this time limit where it would be equitable to do so.

Where proceedings are brought under the CPA, there is also a general long-stop provision (similar to a statute of repose). A right of action under the CPA is extinguished ten years after the defective product was put into circulation and this applies irrespective of the other provisions of the Limitation Act (including the requirements relating to the date of knowledge set out above).

Special rules apply to persons under a disability, during such period if they are a minor or of unsound mind. In general time only begins to run for limitation purposes when the Claimant dies or ceases to be under a disability. The 10-year long-stop for CPA claims, however, still applies.

Damages

Under the CPA, damage includes death or personal injury (including mental injury) or loss of, or damage to, property for private use and consumption (provided the damages recoverable in respect of property loss exceed the minimum threshold of £275). In negligence, damages are awarded to put the injured party into the position he would have been in if the negligent act had not occurred. Damages can be recovered for death or personal injury (including mental injuries), damage to property and damage to the product itself.

Punitive or exemplary damages are rarely, if ever, awarded. Although they are available in tort claims (see Kuddus (AP) v Chief Constable of Leicester Constabulary [2001] 2 WLR 1789), exemplary damages will only be awarded in certain limited circumstances, including where the Defendant’s conduct was calculated to make a profit that exceeds the compensation recoverable by the Claimant or where there has been oppressive, arbitrary and unconstitutional conduct by Government servants (see Rowlands v Chief Constable of Merseyside [2006] All ER (D) 298 (Dec)).

No settlement or compromise of a claim made by, or on behalf of, or against, a child (aged under 18) or an adult who is incapable of managing her own property and affairs is enforceable without the approval of the court. There is no requirement to seek court approval in other circumstances, for example, on the settlement of the claims comprising a group action.

Costs and Funding

The assessment of costs is a matter for the court’s discretion. The general rule is that the unsuccessful party pays the costs of the successful party (costs “follow the event”), including both court fees and legal costs (including incidental expenses). The court, however, can make such orders as it considers appropriate reflecting matters such as the parties’ success or failure on particular issues in the proceedings (issue based cost orders) and the parties’ conduct.

Of particular importance in product liability actions are the rules relating to the recovery of costs from legally aided Claimants. Most group litigation in the product liability field is funded by legal aid. Costs will only be enforced against a publicly funded Claimant in exceptional circumstances, as the Claimant may only be ordered to pay such amount as is reasonable taking account of all the circumstances, including the parties’ resources. Although costs are generally awarded against a legally-aided party they cannot be enforced without the court’s permission and, in practice, this will not be granted unless the Claimant’s financial position improves significantly. In effect, this means that Defendants are unlikely to recover their costs of defending unsuccessful proceedings brought by legally aided Claimants.

If the amount of costs cannot be agreed between the parties they will be assessed by the court to determine if the sums claimed are reasonable; costs are commonly discounted (sometimes by up to one third) on assessment. The court also has power to manage the costs incurred during the course of the litigation. For example, in group litigation it can impose a cap on the costs to be incurred by the parties in litigating generic or common issues (see AB and Others v Leeds Teaching Hospitals NHS Trust and in the matter of the Nationwide Organ Group Litigation [2003] Lloyds Law Reports 355).

Legal aid is not available to fund personal injury claims arising from negligence or breach of a statutory or contractual duty equivalent to negligence (although it is available for claims based on allegations of clinical negligence which may include claims relating to the lack of safety of drugs used in treatment). It will also be refused if alternative funding is available, for example, if the Claimant’s case can be pursued under a Conditional Fee Agreement (CFA). The combination of these rules means that the majority of product liability claims involving personal injury are unlikely to benefit from public funding. Legal aid, however, remains available for cases involving a ‘wider significant public interest.’

Even if it is determined that the proceedings have a significant wider public interest, full funding will only be granted if the following requirements are met:

• means test – the applicant meets certain financial eligibility criteria; and
• cost-benefit test – the likely benefit of the proceedings to the applicant and others justifies the likely costs, having regard to the prospects of success.