Products' Liability: an introduction. Aislinn Finnegan

Topic 1: Products’ Aislinn Finnegan BL Liability Background to Product Liability Directive, 1985 The Product Liability Directive 85/374/EEC (‘PLD’) is a harmonising directive, which aims to create a common approach to products’ liability within the EU Pre-transposition through the...

Topic 1: Products’ Aislinn Finnegan BL Liability Background to Product Liability Directive, 1985 The Product Liability Directive 85/374/EEC (‘PLD’) is a harmonising directive, which aims to create a common approach to products’ liability within the EU Pre-transposition through the Liability for Defective Products Act, 1991, the liability of producers for their defective products was regulated through contract law, or the law of negligence in tort The PLD eliminated the need to demonstrate fault; that is, that a producer will only be liable where it can be proven that a product fell below the reasonable care standard (no reasonable producer would have produced the product in X way) Focus taken away from what the producer deems an acceptable risk to what level of safety a consumer is entitled to expect Just a reminder/recap  When determining the SOC in negligence courts consider  The probability of the injury (predictability)  The degree or seriousness of the harm/injury  The avoidability of the accident (what precautions could be taken and were taken?)  The social utility of the activity  These questions are asked once the DOC is established (it is a recognised duty situation)  The test for duty is  RF  Proximity  Negativing policy considerations  Does is the type of injury result from positive conduct or a failure to make things better Look at the recitals of directives to understand their aims or purposes “Whereas approximation of the laws of the Member States concerning the liability of the producer for damage caused by the defectiveness of his products is necessary because the existing divergences may distort competition and affect the movement of goods within the common market and entail a differing degree of protection of the consumer against damage caused by a defective product to his health or property; “Whereas liability without fault on the part of the producer is the sole means of adequately solving the problem, peculiar to our age of increasing technicality, of a fair apportionment of the risks inherent in modern technological production” Basic concepts in the Directive/Act Producer Product Defect Cause Damage Defences and limitations 1. Producer (section 2, 1991 Act)  The manufacturer or producer of any raw materials, parts or the finished product  In the case of products of the soil, stock-farming and of fisheries and game, which have undergone initial processing, the person who does the processing  Any person putting his name or trade mark to the product  Any person who has imported the product into a member state from a place outside the EU in the course of business to supply it  If a producer cannot be identified, the supplier will be liable where he does not identify the producer in a reasonable time  E.g. My brother buys a bike from Alan’s bike shop. The bike is generic with no identifying information. The brakes fail. I ask Alan for information about who produced the bike, but he either refuses to tell me or doesn’t know. Alan may be liable. 2. Product (interpretation section)  product” means all movables, including primary agricultural products which have not undergone initial processing, and includes—  (a) movables even though incorporated into another product or into an immovable, whether by virtue of being a component part or raw material or otherwise, and  (b) electricity where damage is caused as a result of a failure in the process of generation of electricty,  E.g. if Raleigh produces the tyres, and Brompton produces the bike frame, it does not cease to be a product although it forms part of a larger unit commonly known as a bicycle. In other words, if you sue Raleigh because the tyres are defective, they can’t say it is not our product, sue Brompton 3. Defect? (section 5, 1991 Act)  A product is defective if:  it fails to provide the safety which a person is entitled to expect, taking all circumstances into account, including—  (a) the presentation of the product,  (b) the use to which it could reasonably be expected that the product would be put, and  (c) the time when the product was put into circulation.  (2) A product shall not be considered defective for the sole reason that a better product is subsequently put into circulation.  i.e. If a new model of car comes along with improved safety features, better ABS, motion sensors, etc, it does not make your ‘banger’ defective 4. Causation and the onus of proof (section 4, 1991 Act)  The onus shall be on the injured person concerned to prove the damage, the defect and the causal relationship between the defect and damage.  RC: by placing the onus of proof on the injured party, this has made it difficult for them to prove damage in the context of high tech. products such as in the case of pharmaceuticals or medical devices  Proof of causation requires you to prove that it is more likely than not that X product caused your injury, but if there is scientific uncertainty, you may be able, at most, to prove that a product has increased a risk of injury, but it cannot be identified as the cause of injury  E.g. certain inputs to the car’s computer increase the risk that it will tip over going around a bend a certain speed. But is it the ‘but for’ cause?  NB in different legal systems, different concepts of causation exist. There is no European definition. I’ve written a bit about this in my book. 5. Damage (interpretation, and section 16)  (a) death or personal injury, or  (b) loss of, damage to, or destruction of, any item of property other than the defective product itself:  Provided that the item of property—  (i) is of a type ordinarily intended for private use or consumption, and  (ii) was used by the injured person mainly for his own private use or consumption;  RC: So, you can’t obtain damages for nervous shock at witnessing an explosion or the like  Directive includes specific damages, and does not exclude general damages for pain and suffering; 1991 Act is silent on this, but judicial practice to include pain and suffering damages 6. Limitations, contributions and defences  Three years from date on which cause of action accrued or statute barred  10-year upper limit on cause of actions from time product put into circulation  Where there are several wrongdoers, they will be jointly and severally (concurrently) liable  The rules on contributory negligence apply (i.e. if the injured party him- or herself contribute to the injury)  The producer can’t ‘contract out’ of liability …defences (section 6, 1991 Act) A producer shall not be liable if he can prove  He did not put the product into circulation  That the defect did not exist at the time the product was put into circulation  Product not manufactured in the course of business, nor for sale or distribution  That the defect is due to the requirement to comply with any enactment or any requirement (‘regulatory compliance defence’)  ‘the state of scientific and technical knowledge at the time when he put the product into circulation was not such as to enable the existence of the defect to be discovered’ (‘risk development defence’)  That if you produce a component part for a product, the cause of the defect is the design of the overall product Let’s test our knowledge… Key facts:  Ms A buys microwave from retail store B;  B previously bought microwave from C;  C imported product from producer abroad D;  Microwave is defective (explodes) and injures Ms A  Please answer the following questions:  Under what conditions can B be liable under the 1991 Act?  Under what conditions can C be liable under the 1991 Act?  Under what conditions can D be liable under the 1991 Act? Illustrative case law related to the current Act  Richardson v Lrc Products Ltd P.I.Q.R. P164 (Kennedy J.) [Causation]  A v. National Blood Authority 3 All ER 289 [defect + causation]  Wilkes v DePuy EWHC 3096 (QB) (Hickinbottom J.) [defect + causation]  Dineen V DePuy (01 12 2017 Cross J. HC) Proving causation is difficult  Richardson v LRC Products Ltd P.I.Q.R. P164 (Kennedy J.) [Causation]  Condom fails, pl says must be because it is defective  Def advances argument that could have failed because exposed to sunlight in pl’s bathroom  Pl cannot disprove this hypothesis  Court (Kennedy J): based on the expert testimony, pl. does not have to eliminate all possible causes, she does have to eliminate all probable alternative causes and she failed to do so.  RC: Why do you think the court did not favour a ‘material contribution’ test for causation? Would it have made a difference? Material contribution?  The claimant does not have to prove ‘but for’ X’s conduct, they would have not been injured (therefore the problem of not disproving alternative causes arises)  Instead, they must prove that where there is causal uncertainty – several potential causes – that def’s wrongful conduct was a material contribution to their injury.  McGhee v National Coal Board UKHL 7  Lord Reid: ‘it has always been the law that a pursuer [or plaintiff] succeeds if he can show that fault of the defender caused or materially contributed to his injury. There may be two separate causes but it is enough if one of the causes arose from fault of the defender [or defendant]. The pursuer does not have to prove that this cause would of itself have been enough to cause him injury.’  Lord Simon: “Where an injury is caused by two or more factors operating cumulatively [concurrent cause], one or more of which is a breach of duty and one or more of which is not so, in such a way that it is impossible to ascertain the proportion in which the factors were effective in producing the injury or which factor was decisive, the law does not require the plaintiff to prove the impossible, but holds that he is entitled to damages for the injury if he proves on a balance of probabilities that the breach of duty contributed substantially to causing the injury”. Defect defined from the average consumer’s perspective  A v. National Blood Authority 3 All ER 289  Pl infected with Hep C due to a blood transfusion  Def, argued that at the time pl infected there was no test to screen for Hep C (avoidability argument), and getting infected via a blood transfusion is a known risk (what the consumer entitled to expect), so not entitled to expect risk free blood  Court:  It may have been a known risk among medical professional, but it was not among the average consumer, and that is the relevant group for the ‘consumer expectation test’  That the accident was unavoidable is irrelevant for PL; avoidability, impracticability, social utility, etc, go to the SOC in negligence, but are excluded under the act Change of approach to defect and avoidability?  Wilkes v DePuy EWHC 3096 (QB) (Hickinbottom J.)  Pl, a builder, got two hip replacements, and they failed three years later  He argued that he was entitled to expect that the hip replacements would not fail  He also argued that it was irrelevant that it was inevitable or unavoidable that some hip replacements would fail  Higginbottom J.  (i) Individuals are not entitled to expect a product is absolutely safe.  (ii) when determining what is ‘safe’ courts can, and should, consistent with the regulatory scheme, take risk-benefit into account.  Risk-benefit includes utility: utility measures the aggregate benefits and disbenefits of releasing a product to market – so ‘avoidability’ relevant (ie cost of avoiding vs benefit of bringing to market) Is this also the current Irish approach?  Dineen V DePuy (01 12 2017 Cross J. HC)  Very similar facts to Wilkes  Cross J.  Endorses Wilkes, but does not mean simply if cost-effective then not defective:  ‘While accepting the validity of the propositions in Wilkes … I reject any suggestion that a balancing of the risks or advantages to the producer can make a defective product into a safe or non-defective product. The test under the Act is an objective one’  Def, therefore, liable.  RC: on its face, it endorses Wilkes, but the approach is basically the same as in A v. National Blood Authority On the state of scientific knowledge  Dineen V DePuy: “The state of scientific knowledge cannot be identified with the views expressed by the majority of learned opinion, but the most advanced level of research which has been carried out at a given time … More generally the ‘state of knowledge’ must be construed so as to include all data in the information circuit of the scientific community as a whole, bearing in mind however on the basis of reasonableness test the actual opportunities for the information to circulate.”  Just because there isn’t a great deal of case law, does not mean the PLD is unimportant.  Often, parties bargain in the shadow of the law, see Blackwell (a minor) v Minister for Health and Children IEHC 124: a settlement reached based on developing narcolepsy and cataplexy after being vaccinated for swine flu vaccine in 2009.  Pl argued that vaccine was represented as safe even though it had received very little testing before being placed on the market. Def argued a lack of causation. But settlement reached at 50 percent of value of the claim (€990,000), and applied aspects of settlements to 80 other pending cases.  Why might the def make a settlement offer even if s/he thinks they have a strong claim? How to deal with New technologies and AI  There is a growing momentum to extend principles of liability to AI as an emerging technology  There are two obviously difficult questions (i) how does one establish cause when an AI system injures human agents (ii) who should be liable?  Two initiatives  (i) Updated PLD  (ii) New Proposed ‘AI Liability Directive’ Proposed AI Liability Directive  Title: Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on adapting non-contractual civil liability rules to artificial intelligence (AI Liability Directive) COM/2022/496 final  Basic aim of proposed directive?  Make it easier to bring cases by assisting claimants to obtain information on AI systems (the black box problem), and by making it easier to prove their cases by introducing a rebuttable presumption of causation Challenges: Difficulty proving causation  If a smoke detector in a smart home environment fails to trigger an alarm because of flawed wiring, this defect may be identifiable (and in this case is even visible). If, on the other hand, the smoke detector did not go off because of some firmware error, this may not be proven as easily (even though the absence of an alarm per se may be easily proven), if only because it requires a careful analysis of the firmware’s code and its suitability for the hardware components of the smoke detector.  (Expert Group on Liability and New Technologies New Technologies Formation LIABILITY FOR ARTIFICIAL INTELLIGENCE AND OTHER EMERGING DIGITAL TECHNOLOGIES, p. 20)  Even more difficult to prove where algorithm modified by some AI deep learning system  And…  Is software a product or a service?  Historically, consumer goods were products (movables), but today they combine elements of products (the phone) and services (the software, operating systems)  It is unlikely that the PLD covers services  Not the only problem: moment put into circulation vs self-learning tech.  Development risk defence vs all AI is high tech by nature Other examples  It is unclear whether the PLD covers cybersecurity: what about IOT? If a flaw in cybersecurity results in physical injury, weak cybersecurity allowing an intruder to enter a house  Or a child may have a smart watch, which can be accessed easily due to poor security and they may be preyed upon  More systemic = poor cybersecurity leading to the compromising of a power plant, or a dam!  The proposal seems to deal with these issues where cause is difficult to prove Other examples  Autonomous vehicles have AI embedded in them, and due to a flaw in their object recognition technology (internal complexity) a car may wrongly identify an object on a road causing an accident  Where an AV interacts with other AVs, a connected road infrastructure and various cloud services, it may be increasingly difficult to find out where a problem has its source and what ultimately caused an accident (plurality of actors)  It may be very difficult to prove cause, here, without the disclosure of data (sequence of events, inputs/outputs) or a rebuttable presumption of cause (difficult to prove the link to the injury) Two-pronged approach The first is to make it easier to recover for fault- based liability The second is to revise the products’ liability directive in the light of new technologies Why fault alongside strict liability?  These capture situations in which human agency is, at least, partly to blame for the accident, and it is not only or at all a design or manufacturing defect  Monitoring duties, in particular, capture this scenario  Despite adverse weather conditions due to a heavy storm, which were entirely foreseeable, retailer (R) continues to employ drones to deliver goods to customers. One of the drones is hit by a strong wind, falls to the ground and severely injures a passerby. R may not only be strictly liable for the risks inherent in operating drones, but also for its failure to interrupt the use of such drones during the storm. (p. 44)  A sort of cover all bases recommendation. It may be that the drone is not defective, but its use may be wrongful basically in the DvS sense. AI Liability Directive: 1. Fault-based recovery: Disclosure of evidence (art 3)  Providers must ‘disclose relevant evidence at its disposal about a specific high-risk AI system that is suspected of having caused damage’  National courts are empowered to order the disclosure of such evidence, and its preservation  The cl ‘must present facts and evidence sufficient to support the plausibility of a claim for damages’  When making an order, national courts must balance the legitimate interests of both parties (provider, e.g. trade secrets)  Where non-disclosure of evidence, the national court may presume (rebuttable) that there is a breach of the duty of care 1. Fault-based recovery: Presumption of causation (art 4)  National courts shall presume ‘the causal link between the fault of the defendant and the output produced by the AI system or the failure of the AI system to produce an output’  The presumption will arise where  The def has not complied with the disclosure requirement, or that the pl has proven fault by the def or someone for whose behaviour the def is responsible  It is ‘reasonably likely’ that the fault has ‘influenced’ the output produced by the AI system or the failure of an AI system to produce an output  Or, in the case of a ‘high risk’ AI system where it is proven that the def has not complied with a ‘risk management system’: failure to comply with quality standards re use of models with data; no provision for human oversight while in use; lack of cybersecurity; etc.  Presumption does not apply where there is no difficulty in accessing relevant information to prove cause High risk is defined in the AI ACT, 2024, art 6  An AI system is intended to be used as a safety component (e.g. motion sensors on cars; assisted breaking, etc) or is the safety component  ‘Annex III’ unless ‘it does not pose a significant risk of harm to the health, safety or fundamental rights of natural persons, including by not materially influencing the outcome of decision making.’  Annex III: Biometrics; critical infrastructure; education & training (uni admissions, evaluate learning outcomes, cheating tools; employment related tools (hiring, promotions); creditworthiness; access to public services; 999 calls; various uses for law enforcement; admin of justice; migration.  Relevant to tort law where loss of personal data.  It makes it easier to bring a case What does this It makes it easier to prove measure cause actually achieve? It reinforces national law, and seeks to harmonise causation and fault liability  It does not define fault It does not define cause What it It does not develop rules on attribution where does not there are several alternative actors who might be liable resolve? It does not impose duties on consumers, e.g. like a duty to update, etc It does not deal with responsibility after ‘the singularity’: legal personality for robots? 2. Strict liability: Revised Products’ Liability Directive (highlights) Products It also includes Losses (i.e. PI to include Product can be Joint and several Rebuttable redefined as interconnected damage) should nervous shock found defective liability where a presumptions of tangible and services, which include data loss because of its product has causation where intangible, i.e. affect safety, i.e. or destruction cybersecurity component due to scientific software is now software used in vulnerability parts or technical part of definition traffic complexity of of products management products, the (operating systems, for right to systems, which the TMS compensation firmware, would not work would be computer otherwise undermined programs, applications or Point of entry AI systems) into circulation relaxed In more detail: defectiveness, art 6  Keeps the objective standard: ‘the safety which the public at large is entitled to expect, taking all circumstances into account’ Includes  The presentation of the product, including instructions for installation and maintenance  The RF use and misuse of the product  the effect on the product of any ability to continue to learn after deployment  the effect on the product of other products that can reasonably be expected to be used together with the product  At the moment in which the product was placed on the market, or where the manufacturer retains control over the product after that moment, the moment in time when the product left the control of the manufacturer;  Product safety requirements including cybersecurity  the specific expectations of the end-users for whom the product is intended, etc  Economic operator (‘Producer’), art 7  Producer  Very similar to the definition in the PLD: producer, distributor, importer…  But adds  If someone modifies the product after it has been put into circulation, where the modification is substantial, and it is outside the original manufacturer’s control  If there is no identifiable manufacturer, distributor or importer, then the ‘fulfilment service provider’ can be held liable [any legal or natural person offering at least two of the following services warehousing, packaging, addressing and dispatching of a product, without having ownership of the product, but not the postal or delivery service provider]  In some cases, also applies to online platforms [where they manufacture, import or distribute a product]  Disclosure of evidence, art 8  Disclosure of evidence  Very similar rules to the fault-directive Burden of proof  Burden of proof in causation (art 9): the ordinary rule is that the cl. must prove the defect, causal link and damage.  But conditions may be relaxed  Defectiveness  Where a failure to disclose evidence  Where a failure to comply with mandatory EU law safety requirements  Where there is an obvious malfunction Causation Relaxed ‘where it has been established that the product is defective and the damage caused is of a kind typically consistent with the defect in question’ Defect and causal link may also be presumed where due to technical or scientific complexity the cl cannot prove the relationship between defect and cause of damage if they can show ‘on the basis of sufficiently relevant evidence’ The product contributed to the damage it is likely that the product was defective or that its defectiveness is a likely cause of the damage, or both. Exemptions from liability (art 10) Include  That the defectiveness that caused the damage did not exist when the product was placed on the market, or that the defectiveness came into being after that moment  the objective state of scientific and technical knowledge at the time when the product was placed on the market…or in the period in which the product was within the manufacturer’s control was not such that the defectiveness could be discovered; BUT if the product remains in the manufacturer’s control after being placed on the market  If upgrades or a lack of upgrades are the cause of injury, then manufacturer is not exempt from liability Who’s responsible where there are multiple possible tortfeasors?  Everyone! (art 11)  ‘Member States shall ensure that where two or more economic operators are liable for the same damage pursuant to this Directive, they can be held liable jointly and severally.’  But, of course, this requires proof of causation (which as we have seen can be presumed in certain situations)  What about this situation? It is established that ‘[a] patient’s artery is cut by an AI-driven surgical robot either due to a failure of the surgeon operating the robot, or due to the wrong execution of the surgeon’s movements by the robot.’  i.e. it cannot be definitely established, whether it was surgeon’s fault or robot’s defect  How would this case be resolved under the new rules? Or this example?  Two self-driven cars collide, severely injuring their passengers and a bystander.  In the case of car 1, ‘Aoife’ did not install the latest update to the car’s system resulting in a sub-optimal braking system (not the latest version)  In the case of car 2, driven by Beibhinn, the cars motion sensors were recalibrated by the car’s machine learning system after the car was sold to the consumer  It is unclear whether car 1’s braking system, or car 2’s motion sensors caused the accident  How should this situation be resolved under the new rules? Summary  It seems that the new PLD and AI Liability Directive are fairly robust  It is worth noting that the AI Liability Directive also interacts with the new proposed AI Directive on the issue of monitoring AI and standards of care  There is still room for divergence around concepts such as cause, but the CJEU should fill gaps  In terms of proving fault, this remains an issue for national law, but will be influenced by the new, proposed AI Directive