Everybody knows the excuses that courts use to justify imposing – and expanding – product liability: (1) It induces the manufacture of safer products; (2) it causes the prices of products to reflect their “true” cost by internalizing risk; (3) victims will be compensated for their losses. Courts say these things all the time, but is there really any support – actual, real life support, not just circular citations to other cases – for any of them?
We’ve never seen any.
A recent article in the Harvard Law Review discusses what the authors found when they actually went out and looked for empirical support for these three hoary tort platitudes. Guess what? There isn’t any. Quite the opposite, actual studies of the cost/benefit ratio of product liability demonstrate the opposite – that due to the externalities of product liability litigation, litigation doesn’t actually confer any measurable safety benefits over other alternatives. Polinsky & Shavell, “The Uneasy Case For Product Liability,” 124 Harv. L. Rev. 1437 (April 2010). We also found a copy on the Cantabs’ website, here.
Here’s the author’s summary of the findings of their article:
In this Article we compare the benefits of product liability to its costs and conclude that the case for product liability is weak for a wide range of products. One benefit of product liability is that it can induce firms to improve product safety. Even in the absence of product liability, however, firms would often be motivated by market forces to enhance product safety because their sales may fall if their products harm consumers. Moreover, products must frequently conform to safety regulations. Consequently, product liability might not exert a significant additional influence on product safety for many products – and empirical studies of several widely sold products lend support to this hypothesis. A second benefit of product liability is that it can improve consumer purchase decisions by causing product prices to increase to reflect product risks. But because of litigation costs and other factors, product liability may raise prices excessively and undesirably chill purchases. A third benefit of product liability is that it compensates victims of product-related accidents for their losses. Yet this benefit is only partial, for accident victims are frequently compensated by insurers for some or all of their losses. Furthermore, the award of damages for pain and suffering tends to reduce the welfare of individuals because it effectively forces them to purchase insurance for a type of loss for which they ordinarily do not wish to be covered. Opposing the benefits of product liability are its costs, which are great. Notably, the transfer of a dollar to a victim of a product accident through the liability system requires more than a dollar on average in legal expenses. Given the limited nature of the benefits and the high costs of product liability, we come to the judgment that its use is often unwarranted. This is especially likely for products for which market forces and regulation are relatively strong, which includes many widely sold products. Our generally skeptical assessment of product liability for such products is in tension with the broad social endorsement of this form of liability.
Id. (emphasis added).
here aren’t many law review articles that we think that practicing defense litigators in product liability really need to read – but this is one of them. If you’ve got somebody on the other side spouting these platitudes, this article provides the best counter we’ve seen in quite some time.