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Tuesday, August 28, 2018

 

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California Supreme Court:

Industry Custom Evidence Admissible in Product Liability Cases

Admissibility Is Restricted to a Determination of Whether the Product Is As Safe As Should Be—Kruger

 

By a MetNews Staff Writer

 

The state Supreme Court yesterday resolved a conflict among existing Court of Appeal decisions, holding that evidence of industry custom and practices is admissible in strict product liability cases prosecuted under the “risk-benefit” theory, so long as it is offered to support one of that theory’s elements under case law.

The majority opinion was penned by Justice Leondra R. Kruger and joined by four colleagues. Fourth District Court of Appeal Justice William Dato of Div. One, sitting on assignment, wrote a concurring opinion, joined by Justice Goodwin H. Liu.

Plaintiff William J. Kim wrecked his 2005 Toyota Tundra while driving through Angeles National Forest and was rendered a quadriplegic. He asserted in his suit against Toyota Motor Corporation and related entities that the truck was defective because it lacked, as a standard feature, vehicle stability control, or VSC, a technology that prevents the skidding or drifting of a vehicle’s tires when turning, which Kim said would have prevented his accident.

Kim and his wife—also a party to the suit—appealed after a jury found Toyota not liable, contending that Los Angeles Superior Court Judge Raul A. Sahagun had erred by denying their motion in limine to exclude evidence that, in 2005, no pickup trucks were sold with VSC standard, and the Tundra was the only truck on which it was even an option.

Two Case Lines

Court of Appeal Justice John L. Segal of this district’s Div. Seven wrote the opinion affirming Sahagun’s order. In it, like Kruger, he acknowledged two lines of cases addressing industry standard evidence, the first of which came out a year after the state high court explained the elements of the risk-benefit theory of strict product liability.

In 1978, the Supreme Court issued its decision in Barker v. Lull Engineering Co., in which it explained that the first element of such a theory is that the plaintiff was injured by a product’s design, and the second element is whether the risk inherent in that design outweighed the benefits of such a design. That opinion put forth a non-exhaustive list of factors for the second element, including the gravity and likelihood of danger inherent in a design and the feasibility, cost, and potential drawbacks of an alternate design.

One year after Barker, this district’s Div. Five issued its opinion in Titus v. Bethlehem Steel Corp., explaining that industry custom and practice evidence is not relevant to the risk-benefit theory of strict product liability. Other cases followed, reaffirming that same principal.

In 2012, however, the Fourth District’s Div. One issued the opinion in Howard v. Omni Hotels Management Corp. That opinion explains that such industry evidence can be appropriate to support the risk-benefit analysis of the second Barker element.

Solid Middle Ground

Affirming the lower courts’ holdings, Kruger wrote:

“What the Court of Appeal described as a ‘middle ground’ between these lines of authority is perhaps more accurately described as an extension of Howard. But the ground the Court of Appeal staked out is, in all events, solid.”

She said that the line of cases starting with Titus did not stand for the complete prohibition of industry custom evidence, but rather the fact that compliance or noncompliance with industry practices is not an element of the defendant’s liability in a risk-benefit strict product liability case.

The Howard court, on the other hand, “correctly observed that evidence of industry custom and practice sometimes does shed light not just on the reasonableness of the manufacturer’s conduct in designing a product, but on the adequacy of the design itself,” Kruger said.

Segal’s Rule Adopted

Adopting the rule put forth by Segal, she continued:

“First, the party seeking admission of such evidence must establish its relevance to at least one of the elements of the risk-benefit test, either causation or the Barker factors….

“Next, even if the party seeking admission of such evidence meets this threshold burden, the trial court retains the discretion to exclude this evidence if ‘its probative value is substantially outweighed by the probability that its admission will’ either ‘necessitate undue consumption of time’ or ‘create substantial danger of undue prejudice, of confusing the issues, or of misleading the jury.’…And finally, if the party opposing admission of this evidence makes a timely request, the trial court must issue a jury instruction that explains how this evidence may and may not be considered under the risk-benefit test.”

Dato’s Concurring Opinion

Though he concurred in the judgment, Dato did so after opining that Sahagun had indeed erred. Kruger and the majority, he contended, had framed the question on appeal too broadly.

In his view, the basic rule going back before even the Barker opinion was that a defendant cannot offer industry custom and practice evidence to show that it was acting reasonably, because how a defendant acted is irrelevant to strict product liability.

He wrote:

“The majority opinion appears to endorse admission of a defendant’s industry custom-and-practice evidence as a proxy for the foundational risks and benefits that a manufacturer should be evaluating in making product design decisions. That is a little like permitting evidence that an allegedly defective product received a J.D. Power award or the Good Housekeeping Seal of Approval—without anyone testifying about the criteria for that particular honor—because awards of this type may reflect a reasonable balancing of safety risks and benefits. Jurors should not be left to guess.”

Dato said he would require a defendant to first show that the evidence was in support of its risk-benefit analysis, and only then should such evidence be permitted, albeit with a jury instruction as to how such evidence can be used.

Sahagun had erred, in Dato’s opinion, because he had not given such an instruction. That error was ultimately harmless, however, Dato said, agreeing with the result the majority reached.

The case is Kim v. Toyota Motor Corporation, 2018 S.O.S. 4217.

Ian Herzog of Herzog, Yuhas, Ehrlich & Ardell in Los Angeles appeared before the high court on behalf of the Kims. Robert A. Brundage of Morgan, Lewis & Bockius in San Francisco argued for Toyota.

 

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