Who Should Pay?
The Product Liability Debate
By Claire Andre and Manuel Velasquez
In 1977 Esther Kociemba began wearing the "Cu-7," a copper
intrauterine contraceptive device (IUD) manufactured by G.D.
Searle & Co. A year and a half later, hoping to become pregnant,
she removed the device only to find she had become infertile.
Doctors blamed her sterility on pelvic inflammatory disease
(PID), a condition frequently associated with the use of IUDs.
Kociemba hired a lawyer and brought a product liability suit
against G.D. Searle, stating that the company should be held
liable for her infertility. The company countered that PID was
also associated with certain sexual activities, activities in
which Kociemba might have engaged. In addition, corporate representatives
said that the risks of IUDs were well known to her doctor. Therefore,
the company asserted, she and her doctor should be held responsible
for her injuries.
Every year, 34 million people are injured or killed as a result
of product related accidents. Such injuries are the major cause
of death for people between the ages of 1 and 36, outnumbering
deaths from cancer or heart disease. The estimated cost of these
injuries is $12 billion annually.
Tens of thousands of product injury lawsuits are filed each
year. As the number of claims has risen, so too have the number
of companies forced to file bankruptcy because of massive suits.
Moreover, an increasing number of companies are claiming that
they have pulled established products off the market and halted
research on promising products for fear of liability.
Manufacturers claim that they are victims of a system gone
haywire. According to strict liability laws, a manufacturer
can be held liable for injuries even when he or she had no way
of preventing those injuries. Holding manufacturers responsible
for injuries caused by products known to be defective or potentially
dangerous is one thing, but today manufacturers face lawsuits--often
bordering on the outrageous--for injuries they could not have
Consumer activists, on the other hand, claim that the threat
of product liability suits forces manufacturers to make product
safety a priority and that those who suffer injuries caused
by products should be compensated for their injuries by the
manufacturers of those products.
Product injuries represent a major cost of introducing products
into a society. Since virtually every new product carries some
unknown risk, a possibility always exists that the product may
cause injuries or impose other costs on users. This raises an
important moral question: How should these costs be distributed
among the members of our society?
Should Consumers Bear More Responsibility?
Manufacturers contend that consumers should bear more responsibility
for product injuries because the costs of placing full liability
onto companies far outweigh the benefits. Since the 1960s, there
has been a steady increase of product liability cases. According
to one study, 13,500 product liability suits were filed in federal
court in 1986, compared to only 1,500 in 1974. Due to this barrage
of litigation, the cost of doing business has risen dramatically.
Insurance premiums have skyrocketed, where insurance is available
at all. Manufacturers' legal costs have also soared: about 60%
of the average corporation's litigation expenses today are product
liability cases. The rising cost of product liability insurance
and lawsuits has led, in turn, to great increases in consumer
The economy also has suffered from the boom in product liability
claims. When companies facing massive lawsuits have been forced
to scale down their operations, the result is a loss of jobs.
In a recent report by the Conference Board, 15% of corporations
surveyed had laid off workers because of product liability costs,
while 8% had been forced to close plants altogether. In addition,
the threat of liability has affected American businesses' ability
to compete internationally. In other countries, there are severe
limits on what manufacturers can be held responsible for and
there is less tendency to sue. By not having to contend with
a morass of lawsuits, these companies can offer cheaper products,
and put American manufacturers at a competitive disadvantage.
It is also argued that the fear of being hit with a liability
claim keeps many lifesaving drugs and devices off the market,
and stifles creativity and innovation. Even the most rigorous
conformity to safety regulations doesn't prevent liability.
One report found that 39% of the companies surveyed delayed
introducing new products or had discontinued products because
of product liability suits. The pharmaceutical industry has
been hit the hardest. Only one company in the U.S. now manufactures
vaccines, a product often targeted in lawsuits. Vaccines for
AIDS will certainly not reach the market without protection
against lawsuits. Said one spokesperson from the drug industry,
"Decisions [are] already being made on [AIDS] research priorities
for liability reasons."
The costs to manufacturers and to society will only increase
as technologies grow more complex and their applications more
varied. Testing products for safety under every possible condition
of use will not only impose great testing costs on manufacturers
but will result in enormous delays in the introduction of new
products that could benefit society.
Manufacturers also maintain that it is morally unjust to hold
someone liable for injuries that he or she could not have prevented.
Through extensive research and repeated testing, companies do
all that they possibly can to ensure product safety. And, to
prevent harm, warnings and instructions are plastered over each
piece of merchandise.
Finally, some manufacturers point out that in a free market
system, businesses have the right to make and sell whatever
products they choose and consumers have the right to choose
what they buy. But rights carry with them responsibilities.
When consumers choose to buy risky products rather than safe
ones (both of which businesses may offer in a free market) or
when they choose not to inform themselves about products, they
must accept the consequences, including the responsibility for
any injuries resulting from those choices.
Should Manufacturers Bear More Responsibility?
Those who hold that manufacturers should bear more of the responsibility
for product injuries argue that the benefits of holding companies
liable for these injuries outweigh the costs. In a recent year,
more than 200,000 infants were hospitalized for injuries resulting
from the use of toys, or nursery or recreational equipment.
About 1,777,000 people required emergency treatment because
of injuries involving home furnishings; more than 1,200 of these
injuries were fatal. An additional 1,782,000 individuals required
treatment for injuries involving home construction materials;
1,300 of them died from the injuries. Society has an obligation
to minimize such tragedy and suffering. Without the threat of
liability, manufacturers would have little incentive to ensure
product safety, and the number of product-related injuries would
The costs of holding manufacturers responsible for product
injuries are not as great as company representatives would have
us believe. For example, the so-called "explosion" in product
liability suits, "crippling American business," is a myth. A
recent study by the RAND Corporation found that although the
number of product liability lawsuits had increased nearly eight-fold
during the last decade, more that half of these lawsuits involved
only a handful of companies, reflecting mass litigation against
a few asbestos and pharmaceutical companies. A report by the
Government Accounting Office also concluded that, except for
cases involving a few drug or asbestos companies, product liability
suits "do not appear to have been rapidly accelerating or explosive."
Furthermore, it cannot be claimed that product litigation
makes domestic companies any less competitive internationally.
Foreign companies that sell in the U.S. have to abide by the
same product liability laws that American companies face. And
when American companies compete abroad, they have the same advantages
that foreign companies have.
Those who hold manufacturers liable for product-related injuries
also claim that justice is on their side. Since the defective
product that caused the injury was produced by the manufacturer,
it is fair that the manufacturer bear the costs of that injury.
Moreover, they argue, justice requires that the party that is
most able to pay for an injury be the party that bears most
of the financial burden. Manufacturers know in advance that
there is always a risk of liability in introducing new products,
and can therefore build the cost of potential lawsuits into
the price of those products. Manufacturers also have the research
expertise and laboratories, the engineering and technical knowledge,
and the budgets to assess the risks of product use and to ensure
that these products are safe. Consumers lack these. It is just
to place greater burdens on those who are better able to bear
Consumer activists also challenge the corporate claim that
consumers "freely" choose to buy unsafe products. Consumers,
they argue, are woefully uninformed about the products they
buy because they don't have access to information about the
products. Others lack a comprehensive understanding of the seriousness
of the printed warning. Still others may be functionally illiterate
or too young to make informed choices. It is manufacturers,
not consumers, who make the "free" choices to compromise product
safety and it is manufacturers who must therefore accept the
As long as products are produced, product injuries will occur.
Who should bear the costs of those injuries? Our answer requires
that we weigh the claims of consumers against those of manufacturers--claims
which appeal, in different ways, to our desire to minimize harm,
our ideal of justice, and our commitment to taking responsibility
for the choices we make.
Andrew Eiler, The Consumer Protection Manual (New York:
Facts on File, 1983).
Peter Huber, "Are We Afraid of the Future?" Reader's Digest,
Vol. 133 (December 1988), pp. 191-2, 194.
Peter Huber, "Litigation Thwarts Innovation in the U.S.,"
Scientific American, Vol. 260 (March 1989), p. 120.
Deborah Johnson, Computer Ethics (Englewood Cliffs:
Prentice Hall, Inc., 1985), pp. 39-55.
Catolyn Lockhead, "Liability's Creative Clamp Holds Finns
to the Status Quo," Insight (August 29, 1988) , pp. 38-40.
"Unsafe Products: The Great Debate Over Blame and Punishment,"
Business Week (April 30,1984), pp. 96-104.