Ray by Holman v. BIC Corp.

• Decision Date: 15 July 1996
• Parties: , Prod.Liab.Rep. (CCH) P 14,697 Frederick Turner RAY, a Minor by Next Friend and Natural Mother, Erma L. HOLMAN, Plaintiff/Petitioner, v. BIC CORPORATION, Defendant/Respondent.
• Court: Tennessee Supreme Court

Page 527

925 S.W.2d 527

65 USLW 2140, Prod.Liab.Rep. (CCH) P 14,697

Frederick Turner RAY, a Minor by Next Friend and Natural Mother, Erma L. HOLMAN, Plaintiff/Petitioner, v. BIC CORPORATION, Defendant/Respondent.

Supreme Court of Tennessee at Nashville.

July 15, 1996.

L. Anthony Deal, Paul Berry Cooper, III, Memphis, for Plaintiff/Petitioner.

J. Brook Lathram, Susan M. Clark, Memphis, for Defendant/Respondent.

OPINION

WHITE, Justice.

In this Rule 23 case we are called upon to address whether our products liability statute, codified at Tennessee Code Annotated Section 29-28-101 to -108, provides for a risk-utility test in addition to the consumer expectation test for determining whether a product is unreasonably dangerous. For the reasons set forth below, we hold that our present statute provides for two tests: the consumer expectation test and the prudent manufacturer test. The latter requires risk-utility balancing in its application.

I. Facts

On September 3, 1982, the Memphis apartment building in which Erma Holman and her two minor sons, Frederick and Donnie Ray, were residing was destroyed by fire. A cigarette lighter, manufactured by the BIC Corporation, had been left in the apartment by a friend of Holman's. ¹ When Holman left to walk her oldest son, Donnie, to the bus stop, four-year old Frederick was left alone in the apartment. When Holman returned, the apartment was ablaze. Young Frederick sustained serious injuries, including incapacitating brain damage.

Ten years later, on September 3, 1992, Holman filed a lawsuit against BIC Corporation on behalf of her minor son, Frederick. In her complaint, she alleged that the source of the fire, ² the BIC cigarette lighter, was an "unreasonably dangerous" product within the meaning of Tennessee Code Annotated Section 29-28-102(8) because it was not child-resistant. Specifically, plaintiff alleged that "[d]efendant ... manufactured an unreasonably dangerous disposable cigarette lighter which was unreasonably dangerous at the time it left the control of the Defendant." Additionally, plaintiff contended that defendant was liable because the lighter "would not be put on the market by a reasonably prudent manufacturer or seller assuming that [the manufacturer or seller] knew of its dangerous condition."

BIC Corporation moved for summary judgment on the basis that the product was not unreasonably dangerous. Plaintiff countered with the affidavit of an engineer whose opinion was that the lighter could have been manufactured without significantly increasing the cost to include child-resistant features which would more likely than not have prevented the injuries.

The federal district court granted summary judgment to defendant. Plaintiff appealed to the Sixth Circuit Court of Appeals which has certified this question for our consideration:

whether Tenn.Code Ann. § 29-28-102(8), in addition to the "consumer expectation" test, provides for another separate and distinct test for determining whether a product is "unreasonably dangerous," i.e., the "risk-utility" test.

II. Background of the Act

The Tennessee Products Liability Act provides that a manufacturer or seller may be liable for injuries caused by a product that is determined to be in a "defective condition or unreasonably dangerous at the time it left the control of the manufacturer or seller." Tenn.Code Ann. § 29-28-105(a) (1980 Repl.). In this case, plaintiff alleges that the BIC cigarette lighter was an unreasonably dangerous product. ³ The Act defines an unreasonably dangerous product as

a product [that] is dangerous to an extent beyond that which would be contemplated by the ordinary consumer who purchases it, or a product [that] because of its dangerous condition would not be put on the market by a reasonably prudent manufacturer or seller assuming that [the manufacturer or seller] knew of its dangerous condition.

Tenn.Code Ann. § 29-28-102(8)(1980 Repl.).

Unquestionably, the first clause of the definition establishes a "consumer expectation" test for determining whether a product is unreasonably dangerous. That test, defined generally as, whether the product's condition poses a danger beyond that expected by an ordinary consumer with reasonable knowledge, has been employed by many states. See e.g., Caterpillar Tractor v. Beck, 593 P.2d 871 (Alaska 1979); Barker v. Lull Eng'g Co., Inc., 20 Cal.3d 413, 143 Cal.Rptr. 225, 573 P.2d 443 (1978)(one prong of test); Ontai v. Straub Clinic and Hosp., Inc., 66 Haw. 237, 659 P.2d 734 (1983); Lester v. Magic Chef, 230 Kan. 643, 641 P.2d 353 (1982); Rahmig v. Mosley Machinery Co., 226 Neb. 423, 412 N.W.2d 56 (1987); Woods v. Fruehauf Trailer Corp., 765 P.2d 770 (Okla.1988). In a host of cases, decided prior to and after the passage of the Products Liability Act, Tennessee courts have used the standard. See generally Gann, et al. v. International Harvester Co., 712 S.W.2d 100, 105 (Tenn.1986); Pemberton v. American Distilled Spirits Co., 664 S.W.2d 690, 692 (Tenn.1984); Reece v. Lowe's of Boone, Inc., 754 S.W.2d 67, 71 (Tenn.App.), perm. to appeal denied, (Tenn.1988). While many states are abandoning its approach, ⁴ or meshing it with more sophisticated proof requirements, it has remained unchanged in our statute for nearly two decades. See generally William L. Prosser & W. Page Keeton, The Law of Torts, § 99, at 669 (5th ed.1984); M. Stuart Madden, Products Liability § 6.23 (2d ed.1994); Schwartz, Forward: Understanding Products Liability, 67 Cal.L.Rev. 435 (1979); Keeton, Products Liability Design Hazard and the Meaning of Defect, 10 Cumb.L.Rev. 293, 310 (1979).

It is also unquestionable that defendant in this case would be entitled to summary judgment if the consumer expectation test is the only applicable standard for determining unreasonable dangerousness. An ordinary consumer would expect that a cigarette lighter, left in the hands of a young child, could cause danger and injury concomitant to that occurring in this case. The more difficult question is whether that conclusion ends the inquiry. Again, unquestionably, it does not.

In addition to the consumer expectation test clearly set forth in the first clause of the statutory definition, the second clause, joined disjunctively with the first, establishes a second test. That clause provides that a product is unreasonably dangerous if a reasonably prudent manufacturer or seller, aware of the product's dangerous condition, would not put the product on the market. Tenn.Code Ann. § 29-28-102(8)(1980 Repl.). We must determine whether that test, which we will refer to as the "prudent manufacturer" test, is a separate, distinct test from the consumer expectation test found exclusive by the district court or the risk-utility test urged by the plaintiff.

A. Consumer Expectation Test v. Prudent Manufacturer Test

The consumer expectation test, clearly set forth in the first clause of the definition section, derives from the Restatement (Second) of Torts, Section 402A. Comment (i) to that section states that before a product is deemed unreasonably dangerous it must be "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." Restatement (Second) of Torts, § 402A, comment i; Vincer v. Esther Williams All-Aluminum, 69 Wis.2d 326, 230 N.W.2d 794, 798-99 (1975). ⁵ Under this test, a product is not unreasonably dangerous if the ordinary consumer would appreciate the condition of the product and the risk of injury.

By contrast, the prudent manufacturer test imputes knowledge ⁶ of the condition of the product to the manufacturer. The test is whether, given that knowledge, a prudent manufacturer would market the product. Phillips v. Kimwood Machine Co., 269 Or. 485, 525 P.2d 1033, 1036 (1974).

Some jurisdictions--notably Washington and Oregon--have, at times, concluded that the two approaches are really one, representing "two sides of the same coin." Estate of Ryder v. Kelly-Springfield Tire Co., 91 Wash.2d 111, 587 P.2d 160, 164 (1978); Phillips v. Kimwood Machine Co., 269 Or. 485, 525 P.2d 1033, 1036 (1974). In explaining this conclusion these courts have suggested that "a manufacturer who would be negligent in marketing a given product ..., would necessarily be marketing a product which fell below the reasonable expectations of consumers who purchase it." Phillips v. Kimwood Machine Co., 525 P.2d at 1037.

Clearly, however, as the courts combining the tests have come to realize, the focus of the two tests is entirely different. The consumer expectation test is, by definition, buyer oriented; the prudent manufacturer test, seller oriented. Notwithstanding the difference in focus, these courts predict that the tests "should produce similar results." Estate of Ryder v. Kelly-Springfield Tire Co., 587 P.2d at 164.

While this prediction may be accurate, we see distinct and important differences in the consumer expectation and the prudent manufacturer tests under our statute. First, the former requires the consumer to establish what an ordinary consumer purchasing the product would expect. The manufacturer or seller's conduct, knowledge, or intention is irrelevant. What is determinative is what an ordinary purchaser would have expected. Obviously, this test can only be applied to products about which an ordinary consumer would have knowledge. By definition, it could be applied only to those products in which "everyday experience of the product's users permits a conclusion...." Soule v. General Motors Corp., 8 Cal.4th 548, 34 Cal.Rptr.2d 607, 617, 882 P.2d 298, 308 (1994)(emphasis in original). For example, ordinary consumers would have a basis for expectations about the safety of a can opener or coffee pot, but, perhaps, not about the safety of a fuel-injection engine or an air bag.

Alternatively, the prudent manufacturer test requires proof about the reasonableness of the...