Product Liability Facts

There are three types of product liability cases: Manufacturing, Design Defects, and Marketing Defects. In California, manufacturers or distributors can be found strictly or negligently liable in all three types of product liability cases.

There are three types of product liability cases: Manufacturing, Design Defects, and Marketing Defects. Manufacturing claims occur when a problem during the manufacturing process injurs a consumer. Cases of Design Defects are usually brought against a manufacturer whose product was dangerously designed. A Marketing Defect liability occurs when a product is incorrectly labeled or fails to warn or instruct a consumer about the dangers or proper use of the product. In California, manufacturers or distributors can be found strictly or negligently liable in all three types of product liability cases.

Products liability cases account for only 4 percent of all tort cases in state courts, according to the National Center for State Courts.1

Non-asbestos products liability cases in federal courts declined by 40 percent between 1985 and 1991, reports law professor Marc Galanter of the University of Wisconsin.2

The real increase in litigation these past few years has been in businesses suing each other over contracts, not consumers seeking redress through products liability. The Wall Street Journal has reported that businesses suing each other comprised nearly half of all federal cases filed between 1985 and 1991. 3

Products liability awards are closely related to the severity of consumer injury, while punitive damages are rare and thus have little impact on the majority of businesses, according to a U.S. General Accounting Office (GAO) study.4

The most comprehensive study ever of punitive damages in products liability cases found only 355 punitive awards between 1965 and 1990. The study, by law professor Michael Rustad of Suffolk University in Boston, found that in nearly 80 percent of those cases the manufacturer took some subsequent safety measure in the wake of punitive damages.5

A 1995 U.S. Department of Justice study analyzing civil jury cases in the nation`s 75 most populous counties found that juries disposed of about 360 product liability cases during the 12-month study period. Plaintiffs won 41 percent of these cases. Of the 142 winning cases, just three resulted in punitive damage awards. The total punitive damages awarded in these three cases was $40,000.6

Products liability insurance only costs American consumers 26 cents out of a purchase of $100, according to a 1995 report by the Consumer Federation of America. The study also found that products liability premiums dropped 45 percent between 1987 and 1993.7

The GAO has found that liability insurance costs large businesses about six-tenths of 1 percent of annual gross receipts and costs small businesses about 1 percent. The National Insurance Consumer Organization found that liability insurance premiums in 1991 accounted for only fourteen one-hundredths of 1 percent of product retail sales.8




1 Association of Trial Lawyers of America, "Punitive Damages," www.atla.org.cjfact/Facts/punitive.
2 Ibid.
3 Ibid.
4 Ibid.
5 Ibid.
6 Ibid.
7 Ibid.
8 Ibid.