South Carolina Products Liability Law Blog

South Carolina's Tort Reform Statute Became Effective January 1, 2012

2012-02-09T08:59:00.005-05:00

This post is about 40 days late, and I meant to post it earlier. However, between discussing food liability over the holidays and getting busy, it went by the wayside.

South Carolina's tort reform statute became effective on January 1, 2012. From reviewing my Google Analytics daily report, there is a great deal of interest in what the statute means to South Carolina litigation in the future. There have been quite a few keyword searches about tort reform that brought readers to my blog.

So without further delay, let do a quick summary of what the South Carolina Fairness in Civil Justice Act means. I have done extensive previous blogging about the legislative process that brought about the Act, and you can find those posts here, here, here, here, here, and here. The final version of the Act can be found here.

In a nutshell, here is what the Act changes about South Carolina litigation:

A claim for punitive damages has to be specifically prayed for in the Complaint. It does not have to be a specific amount, but the plaintiff has to plead them as part of the relief being sought. S.C. Code § 15-32-510.

If requested by a defendant, all actions involving punitive damages must be conducted in a bifurcated trial before the same jury. The first stage of the trial is limited to assessment of liability, and punitive damages evidence is not admissible at this stage. Punitive damages can be considered if nominal or compensatory damages are awarded in the first stage. In the second stage, punitive damages may be awarded only if the plaintiff proves willful, wanton, or reckless conduct by the defendant by clear and convincing evidence. There is a long list of factors that the jury can consider in determining the amount of punitive damages. If punitive damages are awarded, the trial court reviews the award to ensure it is not excessive. In a case with multiple defendants, a punitive damages award must be specific to each defendant, and the defendant is only liable for that amount. See generally S.C. Code § 15-32-520, and see subsection (E) for the list of factors considered (e.g., degree of culpability, severity of harm, etc.).

S.C. Code § 15-32-530 sets forth the caps on punitive damages. Generally, punitive damages may not exceed the greater of three times the amount of compensatory damages awarded to each claimant, or $500,000. This limit cannot be disclosed to the jury. If the amount returned is greater than the cap, then the trial court has to assess whether the wrongful conduct was motivated primarily by unreasonable financial gain and was known by a policy decision-maker or whether the defendant's actions could subject the defendant to conviction of a felony and the conduct and was the proximate cause of plaintiff's damages. If so, then the "cap" becomes four times the compensatory damages or $2 million, whichever is greater. If not, then the amount is reduced to the initial cap (three times compensatory damages or $500,000). However, as Billy Mays once said, "But wait, there's more!" That's not the end of the loopholes in the "cap." If the trial court determines (1) there was an intent to harm by the defendant, and harm in fact, (2) the defendant pled guilty to or has been convicted of a felony concerning the same act or course of conduct that proximately caused plaintiff's injury, or (3) the defendant's actions were while under the influence of some sort of drug or alcohol....then "POOF"...the cap goes away. The State Budget and Control Board can adjust these limits each year to factor in changes to the Consumer Price Index. Finally, remedies under the South Carolina Tort Claims Act are exempt from this article. If you really want to understand how all of this works, read S.C. Code § 15-32-530 in its entirety.

A circuit solicitor can now employ outside counsel without the approval of the Attorney General for civil forfeiture proceedings arising from criminal activity or from estreatment of bail bonds. Other matters require written approval by the Attorney General. S.C. Code § 1-7-750.

There are some new provisions about automobile insurers providing coverage information upon request from a claimant. My colleague Jack Griffeth blogged about this portion of the law at the South Carolina Insurance Law Blog, and you can find his post here. The statute can be found at S.C. Code § 38-77-250.

I do not do construction law, but if you do, you need to check out S.C. Code § 15-3-670. In it, you will find there are some limitations on actions based on unsafe or defective improvements to real property, evidence of fraud, negligence, gross negligence, or recklessness. The statute also takes away the eight year statute of limitations in cases of personal injury or death.

Finally, S.C. Code § 18-9-130(A)(1) is amended to include some new limitations on appeal bonds. In short, the execution of a judgment is not stayed pending appeal unless the presiding judge grants a stay of execution. Furthermore, if a stay is granted and a bond is required, the bond should not exceed the amount of judgment or (a) $25 million, whichever is less, for a business with greater than 50 employees and $5 million in gross revenue for the previous tax year, or (b) $1 million, whichever is less, for all other entities or individuals.

Those are all of the statutes implicated by the Act. It will be interesting to see how they affect the administration of trials in South Carolina.

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Case Brief: Deloach v. Whitney, 275 S.C. 543, 273 S.E.2d 768 (1981)

2012-02-07T10:16:00.001-05:00

Today's Case Brief is Deloach v. Whitney, 274 S.C. 543, 273 S.E.2d 768 (1981). It stands for the principle that South Carolina's strict liability statute does not extend to negligent installation of a non-defective product. It also illustrates the importance of carefully considering the legal theory you use for a case.

FACTUAL BACKGROUND: Plaintiff won four tires in a raffle by Defendant tire company. 275 S.C. at 544, 273 S.E.2d at 769. Defendant installed the tires. Id. During part of the installation, a deteriorated valve stem, which was not part of the tire, was left on the wheel. Id. Plaintiff sustained injuries when the valve stem ruptured and he lost control of his car. Id.

PROCEDURE: Plaintiff sued Defendant and alleged negligence, breach of warranty, and strict liability in tort. 275 S.C. at 544, 273 S.E.2d at 769. Significantly, Plaintiff withdrew the causes of action for negligence and warranty and proceeded solely on strict liability in tort. Id. Defendant moved for a directed verdict at trial on strict liability, and the trial court denied the motion, finding services included within the scope of South Carolina's strict liability statute. Id. The sole issue submitted to the jury was whether Defendant was liable under a strict liability theory for failing to install a new valve stem or not warning Plaintiff of the deteriorated condition of the one on the wheel. Id. The jury returned a verdict for Defendant. Id. Plaintiff moved for a new trial because Defendant's closing argument was improper and prejudicial. Id. This motion was granted, and Defendant appealed. Id.

ISSUE(S): (1) Whether the trial court's denial of Defendant's motion for directed verdict was erroneous, and (2) whether Plaintiff should have been granted a new trial. 275 S.C. at 544, 273 S.E.2d at 769.

DISPOSITION: The trial court erred in granting a new trial because Defendant was entitled to a directed verdict as a matter of law, and any prejudice from Defendant counsel's closing argument was harmless. 275 S.C. at 545-46, 273 S.E.2d at 769-70.

RULES AND OPINION: Defendant moved for a directed verdict on the issue of strict liability because there had been no "sale" to bring the transaction within S.C. Code § 15-73-10. 275 S.C. at 544-45, 273 S.E.2d at 769. The statute imposes liability upon sellers of defective, unreasonably dangerous products. Id. at 545, 273 S.E.2d at 569. The court refused to expand the statute to include negligent installation of a non-defective product (e.g., the tire). Id. The alleged defect was already present when Defendant performed his service. Id. Defendant neither supplied nor used a defective product in conjunction with mounting the tires on Plaintiff's car. Id. As stated by the court:

The actionable conduct, if any, resulted from his negligence in not examining the value stem. We conclude this action does come within to scope of § 15-73-10, supra. We decline to expand the scope of strict liability in South Carolina to include the negligent installation of a non-defective product.

Id. As a result, the trial court should have directed a verdict, and there was no issue for the jury to decide. Any prejudice from the closing argument was harmless (and moot). 275 S.C. at 545-46, 273 S.E.2d at 769-70.

This post is subject to the DISCLAIMER AND TERMS OF USE of this website.

Upcoming DRI Products Liability Conference in Las Vegas, Nevada, April 11-13, 2012

2012-02-01T08:06:00.000-05:00

(I am happy to post information about legal conferences pertaining to products liability issues. I always try to provide products liability information that is useful to the defense bar, plaintiff's bar, manufacturers, and individuals. Therefore, if anyone has a products liability seminar or conference (regardless of whether it is defense or plaintiff-oriented), please pass it along and I will be happy to post the pertinent information).

The Defense Research Institute is holding their Products Liability Conference at the Venetian Palazzo in Las Vegas this year on April 11-13, 2012. This is a great conference. I went to the 2011 conference in New Orleans and the 2010 conference that was also in Las Vegas. The theme for this year's conference is "Product Liability Litigation in the 21st Century: The Future is Now." This is a "must-attend" event if you do products liability defense work, and I try to go every year. This year I am serving as the Vice-Chair of the "Agricultural/Construction/Mining/Industrial Equipment" ("ACMIE") Specialized Litigation Group. I will be helping with our breakout session, which is scheduled for 8:30 a.m. Friday morning.

For our breakout session, we are doing two panel discussions. The first discussion is entitled "What Keeps Me Up at Night: A Roundtable Discussoin of In-House Counsel's Expectations and Challenges, and How Outside Counsel Can Address Them." It will include both in-house counsel from some large equipment manufacturers and outside counsel representatives. The second discussion is entitled "'Age Ain't Nuthin' But a Number': The Challenges of Legacy Equipment." The panelists for this discussion will talk about products liability claims involving older equipment (which is pretty common in ACMIE cases). Finally, we will wrap up with the annual "ACMIE Top 10 Cases," which is a survey of the previous year's most interesting and most significant ACMIE cases. If ACMIE is not your interest, then there are many other groups that will also do breakout sessions (ranging from recreational equipment to fire/casualty, mass torts, class actions, and everything in between).

All the details for the conference, including a brochure of the agenda, registration, etc., can be found here.

A cut and paste of the information from DRI's website follows:

DRI’s Product Liability Conference is indispensible for anyone who defends product liability litigation. Attendees will learn about the latest trends and decisions affecting product liability cases and get valuable practice tips, strategies and trial techniques to gain an advantage in defending the modern product liability case. Main stage speakers include experienced and well known product liability defense trial lawyers, in-house counsel and government lawyers.

The specialized litigation group (SLG) sessions will offer detailed analysis in 18 different product practice areas. A concurrent session on Wednesday presented by the Young Lawyers Committee offers an alternative track for lawyers of any age looking for high quality nuts-and-bolts presentations. The Corporate Counsel Committee invites in-house lawyers to a program and roundtable discussion on Thursday afternoon on issues unique to corporate counsel.

REGISTRATION RATES

Advanced Registration Cutoff Date: 3/22/2012
Online Registration Cutoff Date: 4/10/2012

Type	Registration Fee
Government Member	$600.00
Member	$895.00
Member In-House *	$0.00
Non Member	$1,025.00
Non Member In-House	$0.00

* In order to qualify for the in-house counsel member rate, you must be a member of DRI and the Corporate Counsel Committee

I look forward to meeting anyone who plans to be there. If you plan on attending, shoot me a comment or email and maybe we can organize a dinner of attendees or meet up at one of the receptions.

(Post-)Holiday Season Food Law (Part V): Summary and Conclusion

2012-01-25T10:41:00.000-05:00

(This is the final post in my holiday series in which I surveyed South Carolina's products liability case law involving food/beverage. See also part I, part II, part III, and part IV).

Well the holidays are well over (sniff, sniff)...but the Super Bowl is on the way! So behold! I give you the "Snack Stadium!" It is a fitting illustration for this wrap-up to my 2011 holiday series surveying South Carolina's food products liability case law. I thought it would be a good idea to do a final post to summarize everything I learned in the survey. There were four different posts with a variety of cases, so let's bring some order to all of it.

1. First, it is probably helpful to have all of the cases surveyed in one spot. Therefore, set forth below is the cite of each case mentioned in the series and a parenthetical of the alleged issue with the food/beverage.

(Exploding Bottles)

Merchant v. Columbia Coca-Cola Bottling Co., 214 S.C. 206, 51 S.E.2d 749 (1949) (exploding bottle, plaintiff injured by fragments);
Boyd v. Marion Coca-Cola Bottling Co., 240 S.C. 383, 384, 126 S.E.2d 178, 179 (1962) (exploding bottle, plaintiff injured by fragments); and
Wallace v. Owens-Illinois, Inc., 300 S.C. 518, 389 S.E.2d 155 (Ct. App. 1989) (exploding bottle, plaintiff injured during slip and fall while cleaning up beverage).

(Hard Substance in Food)

Delk v. Liggett & Myers Tobacco Co., 180 S.C. 436, 186 S.E. 383 (1936) (tobacco plug with tack in it);
Irick v. Peoples Baking Co., 187 S.C. 238, 196 S.E. 887 (1938) (glass in piece of cake);
McKenzie v. Peoples Baking Co., 205 S.C. 149, 31 S.E.2d 154 (1944) (piece of steel in piece of cake);
Coward v. Borden Foods, Inc., 267 S.C. 423, 229 S.E.2d 262 (1976) (unidentified hard substance in Cracker Jacks); and
Creach v. Sara Lee Corp., 331 S.C. 461, 502 S.E.2d 923 (1998) (biscuit with rock in it).

(Insect/Animal in Beverage)

Tate v. Mauldin, 157 S.C. 392, 154 S.E. 431 (1930) (dead rat/mouse carcas in soft drink);
Culbertson v. Coca Cola Bottling Co., 157 S.C. 352, 154 S.E. 424 (1930) (dead yellow jacket in soft drink);
Burnette v. Augusta Coca-Cola Bottling Co., 157 S.C. 359, 154 S.E. 645 (1930) (dead "bug" in soft drink);
Floyd v. Florence Nehi Bottling Co, 188 S.C., 98, 198 S.E. 161 (1938) (dead flies in soft drink);
Hobbs v. Carolina Coca-Cola Bottling Co., 194 S.C. 543, 10 S.E.2d 25 (1940) (decomposed cockroach or other bug in soft drink); and
Cohen v. Allendale Coca-Cola Bottling Co., 291 S.C. 35, 351 S.E.2d 897 (Ct. App. 1987) (insect in soft drink).

(Food Poisoning)

Housand v. Armour & Co., 173 S.C. 268, 175 S.E. 516 (1934) (sickness after eating "oil sausages" a/k/a "potted meat");
Hollis v. Armour & Co., 190 S.C. 170, 2 S.E.2d 681 (1939) (sickness after eating "oil sausages" a/k/a "potted meat);
Boylston v. Armour & Co., 196 S.C. 1, 12 S.E.2d 34 (1940) (sickness after eating ham with a "bluish-greenish cast");
Gantt v. Columbia Coca-Cola Bottling Co., 193 S.C. 51, 7 S.E.2d 641 (1940) (sickness after drinking soft drink containing copper sulfate); and
Fowler v. Coastal Coca-Cola Bottling Co., 252 S.C. 579, 167 S.E.2d 572 (1969) (sickness after drinking soft drink with slimy substance determined to be yeast).

2. Although I divided the cases by their factual circumstances (e.g. exploding bottles, insects in beverages, etc.), this decision was purely for blogging purposes. The application of the law is very similar regardless of the different factual circumstances. I did not think the series would be very interesting if consisted of just a recitation of the applicable law. By dividing and categorizing the cases, I was able to survey each group over four or five blog posts. The application of the law is fairly consistent regardless of the alleged problem with the food/beverage.

3. If you are going to only read one case to get a general idea of the law, I would advise reading Tate v. Mauldin, 157 S.C. 392, 154 S.E. 431 (1930). This is the earliest South Carolina case where the court admits that it has not addressed food adulteration in the past, and it is also the most widely cited in later decisions. In Tate, the court surveys case law and sets forth the basic principles for South Carolina food products liability law. If you want to read the most interesting case for products liability analysis, read Wallace v. Owens-Illinois, Inc., 300 S.C. 518, 389 S.E.2d 155 (Ct. App. 1989). Although the case involves an exploding bottle, the alleged injury happened when the plaintiff slipped and fell during the clean-up. Wallace has some interesting analysis of causation and foreseeability.

4. Generally, these cases are not very kind to defendants. The general factual scenario is usually (a) plaintiff finds problem with food and is injured, (b) plaintiff brings a lawsuit, (c) plaintiff gets a verdict at trial, (d) defendant appeals on grounds that its motions for non-suit, directed verdict, etc. should have been granted, (e) the appellate court reviews the evidence, cites to the applicable food statute, and states that the alleged problem with the food is a violation of same, (f) the violation of the statute is found to be evidence of per se negligence, and (g) the appellate court affirms judgment. Obviously, there are some exceptions as set forth in some of the surveyed cases, but the cases generally seem to follow this general fact pattern.

That's the gist of it folks. I may convert this survey to an article that does a better job of summarizing the law, as opposed to surveying the cases. If/when that happens, I will let you know.

This post is subject to the DISCLAIMER AND TERMS OF USE of this website.

Holiday Season Food Law (Part IV): The food poisoning cases

2011-12-29T17:13:00.004-05:00

(This is the fourth post in my holiday series in which I am surveying South Carolina's products liability case law involving food/beverage. See also part I, part II, and part III).

As Christmas is behind us and New Year's Day is around the corner, it seems appropriate to begin bringing this series to a conclusion by talking about food that just flat out makes you sick.

This Saturday evening, people around the world will ring in 2012 with all sorts of food and beverage, and undoubtedly some of them will just become sick for no apparent reason (other than maybe imbibing a bit too much). There is another line of cases in South Carolina where the lawsuit relates to food that just made someone sick...no fragments of glass, no exploding bottles, no animal carcasses in the food. The plaintiff just eats/drinks something and gets food poisoning of some variation. If you are one of these unfortunate individuals, this post is dedicated to you.

In Gantt v. Columbia Coca-Cola Bottling Co., 193 S.C. 51, 7 S.E.2d 641 (1940), a man became sick after drinking a soft drink he believed contained some kind of poisonous substance. Only after analysis by some chemists was it determined that the soft drink contained copper sulphate (which apparently is used by farmers to protect crops from rust). 7 S.E.2d at 642. The plaintiff sued for negligence (in bottling of the soft drink, inspection, etc.), and the jury awarded $2,000. Id. On appeal, the defendant argued (1) there was no evidence it bottled the drink or that it contained the substance at the time of bottling, and (2) there was no evidence from which a jury could conclude it was negligent. Id. at 643. In a detailed opinion, the court pointed out that the only evidence of negligence was a violation of the applicable Pure Food Statute at the time (i.e., making it negligence per se if there is some poisonous or deleterious substance in the food). Id. It did not matter that the plaintiff failed to plead the statute in his Complaint, and "neither knowledge of the contamination nor negligence in fact is a material element of the offense." Id. It is negligence per se under the law, and this alone is sufficient for consideration by the jury. Id. at 645. However, the court reversed the case and remanded for a new trial. Id. at 645-46. Why? Because the trial judge excluded testimony by the defendant the instance at issue was the only time that copper sulphate had been found in the soft drink bottled by the defendant. Id. at 646. In short, if the plaintiff can get the case to the jury by just showing violation of the statute, the defendant also should be able to offer testimony relevant to the standard of care, and failure to allow this testimony required a new trial.

Yummy processed and potted meat. Love it. My dad's generation sure did, as I often heard stories of "eating Vi-enner sausages in the field" while growing up. I will pass, thank you very much (especially after reading Upton Sinclair's The Jungle in my high school history class). Nevertheless, there are three South Carolina cases I have found involving potted/processed meat, and reading them is pure entertainment.

Housand v. Armour & Co., 173 S.C. 268, 175 S.E. 516 (1934) involved consumption of "oil sausage" sold in 50-pound cans and retrieved via "an old fork which hung from the counter" in the retail shop." 175 S.E. at 517. This is a strange case in which the "defendant" Armour was found to not actually be the right defendant, but they answered and went to trial anyway. Ultimately, the judgment against the defendant corporation was reversed based on lack of evidence of negligence and improper expert testimony. Id. at 518. The court affirmed the judgment against the local defendants based on how they handled the meat (i.e., not keeping it refrigerated). Id. at 518-20. Hollis v. Armour & Co., 190 S.C. 170, 2 S.E.2d 681 (1939) also involved oil sausages, and the offending sausages in this case were sold from cans that had rusted. The concept of preemption rears its head in this early case, as one of the defendant's arguments was that the State Pure Food Statute interfered with federal acts and regulations. 2 S.E.2d at 684-85. The court disagreed, and it also believed the plaintiff had adequately pled a violation of the State Pure Food Statute so as to sustain the $1,500 award by the jury to the plaintiff. Id. at 685. Finally, Boylston v. Armour & Co., 196 S.C. 1, 12 S.E.2d 34 (1940) involved a ham that had a "bluish-greenish cast" that is "not unusual" in a cooked, smoked ham. 12 S.E.2d at 37. (Uhhh...okay). Contrary to the holding in Hollis, the Boylston court reversed the trial court and remanded the case for a new trial on grounds that the applicable State Pure Food Statute did not apply; it only applied to manufacture or sale or offer for sale of food within the state, and there was evidence that the meat at issue was prepared and sold out of state. Id. at 38.

Poor Armour. These cases are a mixed-up potted mess, and reading them can be exhausting. The above summary does not do them justice. If you have an interest in potted meat cases, I encourage you to read them for yourself.

Last but not least, Fowler v. Coastal Coca-Cola Bottling Co., 252 S.C. 579, 167 S.E.2d 572 (1969) involved a three-year-old child who became sick after drinking a soft drink that contained something "dark in color and slick and slimy to the touch." A pathologist determined that the substance was yeast, and he testified that certain yeasts can cause certain diseases. Id. at 582, 167 S.E.2d at 574. The problem was that the plaintiff's doctor testified there had been a rash of viruses at the time, and he could not say whether the plaintiff's sickness was from the virus or from the yeast in the soft drink. Id. at 583, 167 S.E.2d at 574. Although the court recognized a violation of the Pure Food and Drug Act in effect at the time constituted negligence per se, the plaintiff still had to show proximate causation.

We have held that where the cause of plaintiff's injury may be as reasonably attributed to an act for which the defendant is not liable as to one for which he is liable, the plaintiff has failed to carry the burden of establishing that his injury was the proximate result of defendant's negligence.

Id. at 575, 167 S.E.2d at 584. Based on this law, the court reversed the judgment because plaintiff failed to prove proximate causation.

This is the last group of cases in this series. In my next (concluding) post for this series, I will do my best to synthesize my blogs on food and beverage case law and bring some "order" to them.

Happy New Year!

This post is subject to the DISCLAIMER AND TERMS OF USE of this website.

Merry Christmas!

2011-12-25T08:58:00.000-05:00

Merry Christmas from the South Carolina Products Liability Law Blog. We set a record this year...kids woke us up at 5:30 a.m. I am sure that naps will be in order at some point during the day...for everyone.

Wherever you are celebrating, I hope you enjoy this special day, and thank you for following my blog. I look forward to the new year and plenty of blogging in 2012.

Merry Christmas!

Holiday Season Food Law (Part III): The fly in the soft drink cases.

2011-12-23T15:42:00.005-05:00

(This is the third post in my holiday series in which I am surveying South Carolina's products liability case law involving food/beverage. See also part I and part II).

I was just a young'un when the Christmas version of Coca-Cola's "Hilltop" commercial came out. You know the one I am talking about (above). When I hear those children of the 70s croon that they would like to buy the world a Coke, it evokes memories of me tearing into my Evel Knievel motorcycle or my Stretch Monster on Christmas morning. (Thanks Mom and Dad!).

But I digress. As nostalgic as the commercial is, it is also appropriate for another group of cases in South Carolina, e.g., where a plaintiff sips that carbonated, caramel-colored goodness and also gets a mouthful of yellow jacket, fly, or other previously living thing. Which brings us to our next bucket of cases for survey...

♪ ♫ On the third day of Christmas, my true love gave to me...A SOFT DRINK WITH A DEAD ANIMAL IN IT! ♪ ♫

On August 14, 1930, the South Carolina Supreme Court filed three similar cases involving a dead something-or-other in a bottle: Tate v. Mauldin, 157 S.C. 392, 154 S.E. 431 (1930) (dead rat/mouse carcas), Culbertson v. Coca Cola Bottling Co., 157 S.C. 352, 154 S.E. 424 (1930) (dead yellow jacket), and Burnette v. Augusta Coca-Cola Bottling Co., 157 S.C. 359, 154 S.E. 645 (1930) (dead "bug"). Tate appears to be the foundation of South Carolina's food products liability law and is the earliest "dead animal in a bottle case." In Tate, the South Carolina Supreme Court set forth the fundamental principles of South Carolina's food law. See generally 154 at S.E. 433-34. The courts in Culbertson and Burnette then cited to Tate as support for their holdings.

Culbertson is the most interesting of these three cases. In Culbertson, a man took a drink of Coke and ingested a dead yellow jacket. 154 S.E. at 425. At trial, he argued the defendant bottling company was negligent in bottling the beverage and failed to properly inspect it. Id. The jury awarded him $200 (which, by the way, is $2,586 by today's dollars according to this website). On appeal, the defendant argued the trial judge should have directed a verdict because it claimed there was no evidence to support the product was sold by the defendant. Id. The court denied this argument based on testimony from a retail employee that the beverage at issue was purchased from the defendant. Id. Defendant also argued that the real reason plaintiff became sick was because he drank some whiskey to relieve his condition. Id. The court denied this argument because there was testimony that the whiskey was actually ingested after emitting the yellow jacket, and whether the whiskey or yellow jacket made the man sick was a jury question. Id. Finally, the appellate court affirmed the jury charges used by the trial court and affirmed that there was sufficient evidence of negligence to submit the case to the jury. Id.

Floyd v. Florence Nehi Bottling Co, 188 S.C., 98, 198 S.E. 161 (1938) involved a plaintiff who swallowed dead flies in a bottle of Orange Crush. The jury awarded $1,000 to the plaintiff at trial. 198 S.E. at 162. The court stated that injury alone is not proof of negligence. Id. at 163. Instead, the plaintiff has the burden of proving negligence through direct or circumstantial evidence. Id. There was evidence that the bottler's inspector "inspected" 30 bottles per minute, or 14,000 bottles per day. The jury was entitled to consider whether or not this was the proper level of care in the inspection process. Id. The court ultimately affirmed the judgment. Id. at 164.

In Hobbs v. Carolina Coca-Cola Bottling Co., 194 S.C. 543, 10 S.E.2d 25 (1940), a man bought a Coke and drank about one-fourth of it before realizing that there was some "vile...poisonous...polluted...foul...contaminated...revolting substance" therein, resembling decomposed cockroaches or other bugs. 10 S.E.2d at 26. He became sick and sued for damages. Id. At trial, the jury awarded the man $350, and the defendant bottling company appealed. Id. Instead of focusing on negligence, this case really focuses on special damages. Id. at 27-28. The plaintiff claimed at trial that he had to hire someone to do work that he otherwise would have done but for his sickness, and he presented the amount paid for the work as "damages" to the jury. Id. at 27. The defendant objected on grounds that the plaintiff had not pled these special damages in his Complaint. Id. The appellate court agreed with the defendant, and it reversed the judgment and remanded the case for a new trial. Id. at 28. "[W]here damages do not necessarily result from the act complained of, and consequently are not implied by law, the plaintiff must state the particular damage sustained to in order to introduce testimony in regard to it. The rule is to avoid surprise." Id. at 27. Even though there was sufficient evidence to show violation of the applicable food statute in effect at the time (constituting negligence per se), there had to be a new trial because of the admission of the evidence of special damages that had not been pled in the Complaint. Id. at 28-29.

Finally, Cohen v. Allendale Coca-Cola Bottling Co., 291 S.C. 35, 351 S.E.2d 897 (Ct. App. 1987) involves similar facts (also involving an insect). The jury awarded the plaintiff $4,000 in actual damages and $1,000 in punitive damages. Id. at 37, 351 S.E.2d at 898. The defendant bottling company appealed the trial court's failure to direct a verdict in its favor or grant judgment notwithstanding the verdict. Id. First, the defendant claimed there was evidence to support the insect came to be in the bottle after plaintiff opened the drink in his office. Id. at 37, 351 S.E.2d at 899. Second, the defendant claimed there was no direct evidence of any negligent act or omission during the bottling and inspection process. Id. The court concluded there was sufficient circumstantial evidence for a jury to reasonably find the insect was in the bottle prior to the plaintiff opening it (e.g., the insect was at the bottom of the bottle and not floating, it was decomposed, and it happened on a day when plaintiff had not observed insects in his office). Id. Once the court admitted evidence showing the insect was in the bottle before opening it, plaintiff had also presented evidence of negligence. Id. at 39, 351 S.E.2d at 899. The court also believed the facts were sufficient to send the case to the jury on a breach of warranty theory. Id. "The presence of the insect in the bottle was evidence from which the jury could find [defendant] had breached its implied warranty that the soft drink was fit for ordinary consumption." Id.

However, a second issue in Cohen was whether the verdict was excessive in light of the facts. Id. at 39, 351 S.E.2d at 899-900. The plaintiff's only proven out-of-pocket damages were four or five dollars for prescription nausea medicine. Id. He had no doctor bills, lost wages, or physical impairment. Id. at 39, 351 S.E.2d at 900. The court set forth the following as the applicable rule:

In a personal injury case, the amount to be awarded for the injury and any resulting pain and suffering cannot be determined with mathematical precision and is necessarily a matter of judgment on the facts of each case which must be left to the jury's discretion. Where the amount of the verdict bears a reasonable relationship to the character and extent of the injury and the damage sustained, it is not excessive.

Id. at 40, 351 S.E.2d at 900. The court agreed that the award of actual damages may have been liberal, but it could not conclude that the trial judge abused his discretion in denying the motion for a new trial, or that the award bore no rational to the evidence presented. Id. However, the court reversed the award of punitive damages. Id. For recovery of punitive damages, there must be evidence that a defendant's conduct is wilful, wanton, or in reckless disregard of the plaintiff's rights. Id. The court noted that punitive damages involve deliberate intention or present consciousness of wrongdoing, and there was no evidence that the defendant intended to furnish the plaintiff with a soft drink containing an insect. Id. at 40-41, 351 S.E.2d at 900. Therefore, the court ruled that the punitive damages award should have been set aside by the trial court and reversed the award.

So...I'd like to teach the world to sing, in perfect harmony . . . I'd like to buy the world a Coke, and keep it free from...bees.

Happy Holidays All!

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Holiday Season Food Law (Part II): Careful with that salmon (salmon?)...Santa.

2011-12-19T08:46:00.000-05:00

(This is the second post in my holiday series in which I am surveying South Carolina's products liability case law involving food/beverage. See part I here).

There are certain "non-traditional" movies I associate with Christmas, and I love this scene from "Trading Places" where Dan Akroyd plays a down and out Santa Claus who is swiping holiday goodies from a Christmas party. My favorite part is when he steals a nice piece of salmon, stuffs it into his jacket, and then pulls it out later to feast on it while riding a bus.

The question is, what happens if -- when he bites into that salmony, beard-encrusted goodness -- he bites down on some hard substance or object and breaks a tooth? Let's discuss this "bucket" of cases.

♪ ♫ On the second day of Christmas, my true love gave to me...A CHRISTMAS COOKIE WITH A TACK IN IT! ♪ ♫

Most of these cases involve alleged negligence by the manufacturer in either the manufacture or post-manufacture inspection of the food product. The earliest case I have found in this group of cases is Delk v. Liggett & Myers Tobacco Co., 180 S.C. 436, 186 S.E. 383 (1936).

Delk involved a man who bought some chewing tobacco and, after putting some in his mouth, bit down on a carpet tack. (Ouch). The nerve of the tooth died, the tooth became infected, and he could not consume anything but liquids for ten days. 186 S.E. at 348. Plaintiff brought a lawsuit, and the defendant moved at trial for non-suit based on (1) absence of a contractual relationship with the plaintiff, and (2) lack of proof of negligence. Id. at 385. The motions were denied and the plaintiff won $500. Id. The defendant appealed based on the same aforementioned grounds, as well as an erroneous charge by the judge. Id. With regard to the privity of contract issue, the court held the trial court was not in error because chewing tobacco qualifies as a "food," and liability will exist regardless of privity of contract. Id. at 385-86. However, the court agreed with the defendant that there was lack of proof of negligence.

It is true that negligence may be established by circumstantial evidence as well as by positive evidence; but it is also a well settled precept founded upon the soundest principles of justice that a verdict must be supported by the evidence and not based upon conjecture, speculation, and surmise. Has [plaintiff] adduced testimony, positive or circumstantial, sufficient to show negligence on the part of appellant? We think not. The plug of tobacco was carried around in his pocket until he had taken four or five chews of same, and there was no proof of an impression made by the tack on or in said plug to show that when the tobacco was pressed the tack became a part of said plug. It is entirely possible that this tack could have become imbedded in this plug during the time that it was in possession of the jobber, retailer, or respondent.

Id. at 387. On this basis, the court remanded the case to the trial court with instructions to enter judgment in favor of the defendant. Id. at 388. Although the defendant's third ground for appeal (the erroneous jury charge) was largely moot, the court found the charge was not erroneous in light of its determination that tobacco qualified as a "food." Id.

Delk is somewhat of an anomaly in this line of cases because it involved tobacco. This is significant because although the court believed tobacco was "food" for purposes of its negligence analysis, it did not believe that tobacco should be classified as "food" for purposes of the Pure Food and Drug Act in effect at the time. Id. at 386. This is a significant distinction because subsequent cases involving more common food products involve an additional statutory line of analysis when assessing negligence.

For example, both Irick v. Peoples Baking Co., 187 S.C. 238, 196 S.E. 887 (1938) and McKenzie v. Peoples Baking Co., 205 S.C. 149, 31 S.E.2d 154 (1944) involved plaintiffs who bit into cakes that had glass (Irick) and a piece of steel (McKenzie) embedded in them. At trial, the defendants successfully moved for non-suit based on a lack of evidence of common law negligence (which was granted), and the plaintiffs appealed. In both cases, the appellate courts reversed on grounds that the Pure Food and Drug Act in effect at the time applied to the food products, that presence of the foreign material constituted violations of same, and that a violation constituted per se negligence that required the cases to be submitted to the jury. As stated by the McKenzie court:

[I]nclusion of a harmful foreign substance in cake prepared for human consumption (food) is a violation of our Pure Food Statute and negligence per se, and that Irick's case, supra, was correctly decided and should be adhered to, and it is. Nonsuit should not have been granted upon a contrary conclusion, as it was. Assuming that the facts in evidence, other than that involved in the appeal, warranted submission of the case to the jury (and the case was argued and heard upon such assumption), it should have been so submitted.

However, as this law continued to evolve, proof of a statutory violation was not an automatic "slam dunk" for a plaintiff. In Coward v. Borden Foods, Inc., 267 S.C. 423, 229 S.E.2d 262 (1976), the plaintiff bit into something hard in a pack of Cracker Jacks and brought suit for negligent manufacture and violation of the applicable Food and Cosmetic Act at the time. At trial, the court granted the defendant's motion for non-suit because there was no proof of negligence at common law or under the applicable Act. Id. at 425, 229 S.E.2d at 263. On appeal, the plaintiff admitted there was no proof of negligence but (again) cited to violation of the Act as per se negligence. Id. In this case, the court affirmed the trial court based on the evidence.

In brief, the testimony presented by appellant was simply that, while driving and eating popcorn, she bit a hard unidentified object or substance, causing pain, and subsequently she found that the tooth was cracked. The dentist could not determine from an examination of the tooth what caused it to crack but, based upon the statements of appellant, he was of the opinion that the break was caused by the tooth striking some hard object. It was inferable that no foreign object could have gotten into the box of popcorn after it was opened by appellant.

Id. at 426, 229 S.C. at 264. Based on this lack of evidence, there was no testimony to show that plaintiff's injury was proximately caused by an adulteration of the Cracker Jacks. Id. at 427, 229 S.C. at 264.

Finally, Creach v. Sara Lee Corp., 331 S.C. 461, 502 S.E.2d 923 (1998) involved a plaintiff who bit into a biscuit that appeared to have gravel or rock in it. She sued for negligence, breach of warranty and strict liability and was awarded $60,000 (against Sara Lee) and $7,600 (against co-defendant Western Steer). Id. at 463, 502 S.E.2d at 923-24. Sara Lee appealed and argued that the plaintiff received a triple recovery against it on all three causes of action and should have been forced to elect remedies. Id. at 463-64, 502 S.E.2d at 924. The court affirmed the trial court because (1) Sara Lee did not object to the jury charges or verdict form, and (2) no election of remedies was required because only one recovery was sought and obtained. Id. at 464, 502 S.E.2d at 924. Sara Lee also argued that the trial court erred in denying its motion for directed verdict and judgment notwithstanding the verdict on the negligence cause of action. Id. The court also affirmed the trial court in reviewing this argument based on the "two issue" rule. Id. "Pursuant to that rule, when the jury returns a general verdict involving two or more issues and its verdict is supported as to at least one issue, the appellate court will affirm unless the appellant appeals all causes of action." Id. Sara Lee did not appeal the breach of warranty or strict liability issues, and the verdict was supportable by these causes of action. Id. at 464-65, 502 S.E.2d at 924. In a footnote, the court said that even if the "two issue" rule did not apply, it would still affirm because Sara Lee offered no evidence that the hard substance was natural to the ingredients of the finished product, and the jury could infer a lack of due care from the rock/gravel's presence. Id. at 465, 502 S.E.2d at 924.

Wow...all of that was a mouthful...of carpet tacks, glass, steel, and rock/gravel.

Happy Holidays!

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Holiday Season Food Law: "It's a beautiful duck...but it's smiling at me."

2011-12-15T16:33:00.007-05:00

Last Christmas, I enjoyed blogging about South Carolina warnings law and food products, including posting the infamous dry turkey scene from the holiday classic, "Christmas Vacation." As the holiday season is upon us, I thought it would be appropriate to revisit this topic on a broader scale by doing a survey of South Carolina products liability law in the context of case law involving food and drink. The Chinese turkey scene from "A Christmas Story" seemed like an appropriate way to begin this topic. Can Ralphie's dad recover if he is traumatized by a turkey "smiling" at him?

(Before we tackle this age old question and dive into this area of law, allow me one caveat. This analysis does not include a review of "food" cases where the food at issue was consumed by livestock, pigs, household pets, or other non-humans. Although I do not deny that these cases implicate products liability law, that is a post for another day).

South Carolina's general food/beverage case law appears to break down into the following categories: exploding beverage bottles, "hard" substances in food, food containing a wayward insect, and otherwise spoiled/adulterated food that leads to someone becoming sick.

Let's tackle the first topic in today's post.

♪ ♫ On the first day of Christmas, my true love gave to me...A BOTTLE THAT EXPLODED! ♪ ♫

These cases are harder to come by in the era of plastic bottles, but I found three South Carolina cases involving glass bottles that exploded and resulted in injury. The theories of liability include some combination/variation of the following: (1) selling a bottle that is likely to explode from excess pressure; (2) selling bottles likely to explode because of some defect in the bottle; (3) failure to take the necessary precautions in filling the bottles at the manufacturing plant; (4) failing to provide a bottle of sufficient strength; (5) failure to use due care in the manufacture of the bottle; and (6) failure to use due care in the filling of the bottle of liquid. See, e.g., Boyd v. Marion Coca-Cola Bottling Co., 240 S.C. 383, 384, 126 S.E.2d 178, 179 (1962).

For example, in Merchant v. Columbia Coca-Cola Bottling Co., 214 S.C. 206, 51 S.E.2d 749 (1949), the plaintiff was was injured from fragments of glass after one of four bottles she picked up exploded. She alleged a negligence claim against the defendant by reason of some bottle defect or because of excessive gas pressure. Id. at 208, 51 S.E.2d at 750. After presentation of the evidence at trial, the defendant moved for a non-suit. The trial court granted the motion because it believed there was insufficient evidence to submit the case to the jury without invoking the doctrine of res ipsa loquitur, which is not applicable in South Carolina. Id. (For your information, the doctrine is still not recognized today. See, e.g., Watson v. Ford Motor Co., 389 S.C. 434, 452-53, 699 S.E.2d 169, 179 (2010) ("We also note that Respondents may not rely solely on the fact that an accident occurred to prove their products liability case under a negligence theory since South Carolina does not follow the doctrine of res ipsa loquitur.")).

However, the South Carolina Supreme Court reversed the trial court on appeal. The basis for the reversal was that the appellate court found that the plaintiff had provided evidence that both prior and subsequent to the plaintiff's injury, bottles of Coca Cola bottled and distributed by the defendant to the retailer had burst and exploded under similar circumstances. Merchant, 214 S.C. at 211, 51 S.E.2d at 751-52. Specifically, the store clerk testified that the store had nothing to do with the actual handling of the crates of soft drink other than to remove the top crate when it became empty. Id. at 209, 51 S.E.2d at 750-51. He also testified bottles had exploded prior to the plaintiff's incident, and in the same manner, and another bottle from the same shipment exploded about two hours after plaintiff's incident. Id. Another employee provided similar corroborating testimony. Id. at 209, 51 S.E.2d at 751.

Based on the evidence, the court was not concerned with whether to apply res ipsa loquitor. Id. at 210, 51 S.E.2d at 751. Instead, it believed that the circumstantial evidence was sufficient to take the case to the jury on the issue of negligence. Id. Citing to a North Carolina case, the court stated the one exploding bottle is not enough to make a case for neglience. Id. However, quoting from the same North Carolina case, the court adopted the following as a "sound rule of law" in cases involving multiple exploding bottles:

But in cases where compensation is sought for injury caused by such explosion, the rule established by this court is that when it is made to appear that other bottles filled by the same bottler, under similar circumstances, about the same time, have exploded, there is afforded some evidence of negligence sufficient to be submitted to the jury, as it would thus form the basis for the permissible inference that the bottler had not exercised that degree of care required of him under the circumstances. And this court has been careful, before permitting plaintiff's case to be submitted to the jury, to require that plaintiff offer evidence of other instances of bottles filled by defendant exploding under "substantially similar circumstances and reasonable proximity in time."

Id. at 210-11, 51 S.E.2d at 751 (quoting Davis v. Coca-Cola Bottling Co. of Asheville, 228 N.C. 32, 44 S.E.2d 337 (1947) (citations omitted). A later case, Boyd v. Marion Coca-Cola Bottling Co., 240 S.C. 383, 126 S.E.2d 178 (1962), had similar facts and reached the same holding and rule of law.

Together, Merchant and Boyd are cases where the bottle exploded and glass fragments injured the plaintiff. However, there is another case where the explosion of the bottle itself is not what caused the plaintiff's injury. Instead, the plaintiff was injured in a typical "slip and fall" case while cleaning up the mess from the exploding bottle.

For a fascinating case that is a treasure trove of information on proximate causation, foreseeability, intervening acts, contributory negligence, and assumption of risk, be sure to look at Wallace v. Owens-Illinois, Inc., 300 S.C. 518, 389 S.E.2d 155 (Ct. App. 1989). This case is way too "meaty" to summarize in this post (and I plan to make it a future "Case Brief"). However, rest assured that it includes heavy analysis of these concepts to basically hold that a bottler can be liable if a consumer is injured while cleaning up the mess from a bottle that has exploded. I am not sure that I agree with the holding, but it is an interesting opinion. The nutshell is that the court held that the consumer's attempt to clean up the spill was a foreseeable response and did not break the chain of causation. Id. at 520-22, 389 S.E.2d at 156-57. Furthermore, contributory negligence was not applicable based on the nature of the product liability claims. Id. at 522-24, 389 S.E.2d at 157-58. Finally, the consumer's choice to remove the hazard created by the spill was not a voluntary assumption of risk; the consumer really had no choice but to attempt the clean-up. Id. at 524-25, 389 S.E.2d at 158-59.

Be on the lookout for the next post, where I will address the dreaded "hard substance" in food products.

Happy Holidays!

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Case Brief: Samson v. Greenville Hospital System

2011-11-18T16:44:00.002-05:00

Today's case brief is for a very brief (i.e., two pages) case, Samson v. Greenville Hospital System, 297 S.C. 409, 377 S.E.2d 311 (1989). The case involves whether "blood" is a product for strict liability purposes.

FACTUAL BACKGROUND: Plaintiffs alleged Helen Samson contracted the AIDS virus from a blood transfusion given to her while she was a patient at a hospital. 297 S.C. at 409-10, 377 S.E.2d at 311. Plaintiffs also alleged the blood was supplied by a blood center that colected, stored, and distributed blood received from donors. Id.

PROCEDURE: Plaintiffs alleged a cause of action for strict liability against the distributing blood center. 297 S.C. at 410, 377 S.E.2d at 311.

ISSUE(S): The United States District Court certified a question to the South Carolina Supreme Court regarding whether blood is a product for purposes of a strict liability claim. 297 S.C. at 410, 377 S.E.2d at 311-12.

DISPOSITION: Blood is not a "product" for purposes of a strict liability claim. 297 S.C. at 409, 411, 377 S.E.2d at 311, 312.

RULES AND OPINION: The court cited to the strict liability statute at S.C. Code § 15-73-10 (1976) and its application to products, not services. 297 S.C. at 410, 377 S.E.2d at 311. The statute's plain language does not address whether blood is a product for purposes of strict liability. Id. Therefore, the court had to assess whether the South Carolina State Legislature intended for blood to be a product or service and looked to earlier legislation dealing with blood to answer this question. 297 S.C. at 410, 377 S.E.2d at 311-12.

The court cited to S.C. Code § 44-43-10 ("Applicability of implied warranties of merchantability and fitness"), which states as follows:

The implied warranties of merchantability and fitness are not applicable to a contract for the sale, procurement, processing, distribution, or use of human tissues including, but not limited to, corneas, bones or organs, whole blood, plasma, blood products, or blood derivatives. Human tissue, whole blood, plasma, blood products, and blood derivatives must not be considered commodities subject to sale or barter, and the transplanting, injection, transfusion, or other transfer of these substances into the human body are considered a medical service.

Id. at 410-11, 377 S.E.2d at 312. Based on this language, the court held that the Legislature did not intend for blood to be classified as a product. Id. at 411, 377 S.E.2d at 312. "Furthermore, this construction is consistent with the underlying purpose of the blood shield statute [S.C. Code § 44-43-10], namely, to facilitate a readily available supply of blood by limiting liability to defects resulting from negligence." Id.

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Do I Have to Have an Expert to Bring a Products Liability Action in South Carolina?

2011-10-27T08:44:00.002-04:00

Recently, I was spinning my wheels on the necessity of expert testimony in a products liability case and whether there is a case -- on point -- in South Carolina that requires it. As context, I have never known a products liability case to not include expert testimony. Furthermore, I have seen plenty of parties get summary judgment when they successfully excluded the opposing party's expert. The reason I was spinning my wheels about it is because sometimes these somewhat "obvious" points of law do not have a case that actually points out the obvious. (A good example is that it was not until the Branham v. Ford Motor Co. 390 S.C. 203, 701 S.E.2d 5 (2010) case that our state appellate court definitively set forth the necessity of proof of feasible alternative design in a design defect case. There was state court case law suggesting it, and our federal district court had indicated that state law would require it. Furthermore, in my experience, all plaintiffs presented such evidence. However, there was nothing on point by our state appellate court saying you had to have it in state court. That finally changed with Branham, at least for a design defect case.)

So, I decided to look this point up. Generally, the admission of expert testimony is governed by South Carolina Rule of Evidence 702, which sets forth as follows:

If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise.

This would clearly appear to apply to a products liability case. After all, if a plaintiff is arguing that a product has a design or manufacturing defect, then articulating the nature of the defect would seem to fall outside the realm of ordinary lay knowledge.

Two fairly recent cases affirmed my hunch. I recently briefed 5-Star, Inc. v. Ford Motor Co., 2011 WL 3568546 (Aug. 10, 2011 S.C. Ct. App.) and forgot that it addressed this issue. 5-Star involved allegations that a negligently designed speed control deactivation switch in a Ford truck caused a warehouse fire. The South Carolina Court of Appeals set forth the following with regard to the necessity of expert testimony in a products liability case:

In order to gain more than this limited understanding of the operation of the switch, and in particular, in order to understand whether 5 Star met its burden of proving that the design of the switch was negligent in 1996, a jury, the trial court, and this court on appeal would need the benefit of expertise in several subjects that are not included in this record. In other words, this is precisely the type of “design defect claim” our supreme court recently stated “necessarily involve[s] sophisticated issues of engineering, technical science, and other complex concepts that are quintessentially beyond the ken of a lay person.” Watson, 389 S.C. at 444, 699 S.E.2d at 174. When the plaintiff in a product liability case bears the burden of proof as to any issue within a subject matter beyond the common knowledge and understanding of lay jurors, that plaintiff must present expert witness testimony in order to meet its burden. 389 S.C. at 445, 699 S.E.2d at 175 (“Expert testimony ... is necessary in cases in which the subject matter falls outside the realm of ordinary lay knowledge.”). Because 5 Star failed to present any expert testimony on the design of the speed control deactivation switch and whether the design was negligent in 1996, the trial court erred in not directing a verdict in favor of Ford.

Id. at *4 (emphasis added).

The "Watson" case cited by the court is Watson v. Ford Motor Co., 389 S.C. 434, 699 S.E.2d 169 (2010). Watson involved a vehicle rollover case where the plaintiff alleged the cruise control system and seatbelts were defective. The court in Watson had this to say about expert testimony in a products liability case:

Expert testimony may be used to help the jury to determine a fact in issue based on the expert's specialized knowledge, experience, or skill and is necessary in cases in which the subject matter falls outside the realm of ordinary lay knowledge. Stated differently, expert evidence is required where a factual issue must be resolved with scientific, technical, or any other specialized knowledge. Expert testimony differs from lay testimony in that an expert witness is permitted to state an opinion based on facts not within his firsthand knowledge or may base his opinion on information made available before the hearing so long as it is the type of information that is reasonably relied upon in the field to make opinions. See Rule 703, SCRE. On the other hand, a lay witness may only testify as to matters within his personal knowledge and may not offer opinion testimony which requires special knowledge, skill, experience, or training. See Rules 602 and 701, SCRE.

389 S.C. at 445-46, 699 S.E.2d at 175 (empasis added). The court applied this law to exclude certain expert testimony and reverse the jury's verdict against Ford in the trial court.

So, with all of that, I am satisfied. Although it is not as easy as finding a case that says "all products liability cases require the testimony of an expert," the guidance provided in 5-Star and Watson certainly suggests that products liability cases involve technical and specialized subject matter that fall outside the realm of ordinary laypersons. For that reason, you need an expert.

I welcome any comments if your experience has been different either in South Carolina or elsewhere.

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What I've Been Up To

2011-10-25T15:52:00.001-04:00

Well, it has been like drinking water from a fire hose here lately at the South Carolina Products Liability Law Blog. As I indicated in a previous post, the last couple of months have been very busy, and my apologies for not having a more consistent blog schedule. I have finally come up for air, and I look forward to some posts again very soon.

As I indicated in my prior post, I did a presentation on South Carolina tort reform to the Palmetto Paralegal Association on October 7, 2011. The presentation was well-received, especially when I talked about the entire "Branham" issue that reared its head in the midst of the debate of the bill (and ultimately was not part of the final legislation).

I am now tailoring this presentation (albeit a much briefer version) for presentation at a breakout session at the SCDTAA Annual Meeting. I have been working with Frances Zacher and Ashley Cuttino to basically plan a joint breakout session for the products liability and torts/insurance substantive committees. We plan to include a brief presentation by me on the "nuts and bolts" of the tort reform bill, and then a panel discussion with input from members of our judiciary about how it will affect case administration. Frances and Ashley are going to lead this discussion and moderate, and we hope that it gives attending members the opportunity to learn more about the legislation and what it means for administration at the trial level (i.e., bifurcation of liability and punitive damages, etc.).

Finally, I attended the Primerus annual conference this past weekend in Charleston, South Carolina. Collins & Lacy, P.C. is a proud member of the Primerus network of law firms, and the annual meeting included lawyers from all across the country. There were some interesting presentations, and I was thoroughly impressed by a presentation conducted by Bob Weiss at Alyn-Weiss & Associates, Inc. in Lakewood, Colorada. Bob presented the results of eight different studies on legal marketing, and some of what he found was very, very interesting. Specifically, he reviewed some statistics of how counsel is chosen by clients and how it has changed over the years as a result of social media and the internet. In short, the days of getting mileage out of a yellow pages ad are over (although he gave a caveat that it may still be relevant to a plaintiff's practice). Surprisingly, studies indicate that "Youtube" and "Wikipedia" are pretty significant tools that counsel -- even in-house counsel -- use to choose counsel. And as Bob put it, "That's right...youtube and Wikipedia." Who knew.

Anyway, thanks for your patience, and I hope to post some new, more substantive, products liability posts here in the next week.

"Uncle!" a/k/a "Thank you sir may I have another!"

2011-09-27T08:51:00.000-04:00

Aye, yaye, yaye...it has been over a month since my last post. My sincere apologies. The last month has been a busy one here at the South Carolina Products Liability Law Blog with many depositions, work on various files, out of town travel, and other matters. I hope to get back on a more consistent blog schedule soon.

In terms of what is going on with me (outside of quite a bit of work per the above), I am speaking on October 7, 2011 at the Palmetto Paralegal Association Annual Seminar here in Columbia on the subject of tort reform and the bill passed by the South Carolina General Assembly and signed into law by Governor Haley.

Along with other SCDTAA members, I am planning a panel discussion of this same topic for the South Carolina Defense Trial Attorneys Association Annual Meeting November 3-6, 2011 at Amelia Island (i.e., as part of the "breakout" section for the Products Liability Substantive Law Committee).

Finally, I will be attending the 2011 Primerus Annual Conference, which is being held right here in South Carolina in Charleston on October 20-23, 2011. Primerus is an international society of the world’s finest independent boutique law firms, and Collins and Lacy, P.C. is a proud member.

There is quite a bit going on as we head into the last quarter of 2011. Check in soon for more updates and substantive legal discussion of South Carolina products liability law.

New SC Products Liability Case: 5 Star, Inc. v. Ford Motor Co.

2011-08-22T09:03:00.002-04:00

Recently, the South Carolina Court of Appeals issued its decision in 5 Star, Inc. v. Ford Motor Company. You can find the opinion on page 120 here, and also here. This is a negligent design defect case, and the court basically re-affirms that a negligence theory requires conduct evidence.

FACTUAL BACKGROUND: Plaintiff 5 Star, Inc. (“Plaintiff”) is a lawn maintenance/pressure washing company. It bought a 1996 Ford F-250 pickup truck in February 2005. In September 2005, Plaintiff’s owner parked the truck in a warehouse containing tractors, trailers, lawnmowers, and other business equipment. Upon returning a couple of days later, Plaintiff’s owner discovered a fire had occurred. Although there were no personal injuries, the truck was destroyed and the building and certain equipment was severely damaged. Before the lawsuit and before Ford could inspect the truck, Plaintiff’s owner had the truck towed and crushed.

PROCEDURE: Plaintiff filed a products liability action against Ford Motor Co. ("Ford") alleging that negligence in the design of a speed control deactivation switch in the truck caused the fire. Ford asked the circuit court to dismiss the case as a sanction for spoliation of evidence. The circuit court declined but instructed the jury that it could draw a negative inference from Plaintiff’s actions. Ford moved for a directed verdict at the close of Plaintiff’s case and at the end of trial, both of which were denied. The case was submitted to the jury exclusively on the claim of negligent design. The jury returned a verdict for $41,000 in actual damages.

ISSUE(S): (1) Whether the circuit court erred in declining to dismiss the action as a sanction for Plaintiff’s spoliation of evidence; (2) whether the circuit court erred in denying Ford’s motion for a directed verdict based on a lack of evidence that Ford was negligent in design of the speed control deactivation switch.

DISPOSITION: The court did not reach the question of whether the circuit court abused its discretion in ruling on the motion to dismiss based on spoliation, citing to Futch v. McAllister Towing of Georgetown, Inc., 335 S.C. 598, 518 S.E.2d 591, 598 (1999) and its recognition that an appellate court need not address remaining issues when resolution of one issue is dispositive. (See footnote 2). With regard to denial of Ford’s directed verdict motion, the court reversed the jury verdict and entered judgment in favor of Ford.

RULES AND OPINION: In addition to the three elements common to all products liability claims, a plaintiff asserting a negligent design theory must prove that the defendant manufacturer’s conduct in designing the product breached its duty of due care. Ford argued on appeal that Plaintiff failed to present such conduct evidence, or to present evidence that the product was in essentially the same condition as when it left the defendant (i.e., one of the three common elements). (The court did not discuss whether the product was in essentially the same condition for the same reason that it did not address spoliation).

Instead, the court focused on Plaintiff’s failure to present evidence of negligent conduct in the design of the product on or before the time of manufacture. The court elaborated on how a negligence theory is different in that “’[t]he focus [in a negligence action] is upon the action of the defendant. The mere fact a product malfunctions does not demonstrate the manufacturer’s negligence.” Quoting Sunvillas Homeowner’s Ass’n v. Square D Co., 301 S.C. 330, 333, 391 S.E.2d 868, 870 (Ct. App. 1990).

Ford conceded the switch was defective. However, Plaintiff was obligated to offer evidence that Ford’s conduct was negligent. Plaintiff failed to offer any evidence of Ford’s conduct whatsoever. Neither the City Fire Investigator witness nor Plaintiff’s cause and origin expert testified to any events at or before the manufacture of the truck and switch. Furthermore, neither witness was qualified as an expert in automotive design or other expertise so as to enable them to offer opinions on whether Ford’s conduct was negligent. The only other witness who could have provided conduct testimony was a desgn analysis engineer for Ford. He was qualified as an a vehicle fire cause and origin expert, but he offered no conduct facts/opinions, and Plaintiff's counsel did not ask him any questions relating to Ford's conduct in designing the switch that occurred in 1996 or earlier.

In short, the court held that Plaintiff failed to present expert testimony to prove that Ford was negligent in its design of the switch in 1996. Therefore, the circuit court erred in not directing a verdict in favor of Ford. The court distinguished its opinion from the holding in Duncan v. Ford Motor Co., 285 S.C. 119, 128, 682 S.E.2d 877, 881 (Ct. App. 2009) because the plaintiff in Duncan presented expert testimony concerning Ford's conduct. (See footnote 4).

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Drilling Down: Implied Warranty of Fitness for a Particular Purpose a/k/a The Stiletto Heel Warranty

2011-08-05T14:50:00.003-04:00

You are probably wondering why there are pictures of a red stiletto heel and a hiking shoe at the beginning of this blog post. Although you may not realize it, the contrast in function and use of these shoes provides the perfect example of this particular warranty. How? Read on, as we drill down a bit on the implied warranty of fitness for particular purpose.

The implied warranty of fitness for particular purpose is set forth in S.C. Code § 36-2-315. It states:

Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller's skill or judgment to select or furnish suitable goods, there is unless excluded or modfied under the next section (§ 36-2-316) an implied warranty that the goods shall be fit for such purpose.

So what exactly does this mean? Official Comment 2 provides some guidance. A particular purpose differs from an ordinary purpose for which goods are used because it envisages a specific use by the buyer that is peculiar to his/her business. "For example, shoes are generally used for the purpose of walking upon ordinary ground, but a seller may know that a particular pair was selected to be used for climbing mountains." (S.C. Code § 36-2-315, Off. Cmt. 2).

So imagine this hypothetical: Gisele Bundchen walks into a shoe store and says, "Tom and I were thinking about getting away this weekend for a hike somewhere...maybe on the Appalachian Trail. Can you give me some shoes for that?" Overwhelmed by her beauty, the merchant automatically reaches for a pair of fire engine red stiletto heels and gawks as Gisele tries them on. Speechless, he hands her the change as she buys the heels and heads out the door.

If Gisele breaks a heel and her ankle while on her hiking trip, then she may have an action for breach of implied warranty of fitness for particular purpose against the seller. Why? Because she conveyed to him a very particular purpose for which she needed some gear, and it was different from the ordinary purpose for which shoes are generally used (i.e., walking on ordinary ground).

Obviously, this is an oversimplification of a cause of action for breach of this implied warranty. However, you get the point. This implied warranty contemplates -- as its name suggests -- a very specific purpose for the product. Whether this warranty arises is basically a question of fact determined by the circumstances of the contracting. The buyer does not necessarily have to prove knowledge of the particular purpose or reliance thereon by the buyer if the circumstances are such that the seller has reason to know of the purpose or reliance. (S.C. Code § 36-2-315, Off. Cmt. 1).

This really is not known as "The Stiletto Heel Warranty" (and you probably figured out by now that I made that up). However, it helps me remember how this implied warranty differs from ordinary use encompassed by the implied warranty of merchantability.

Have a nice weekend all.

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Case Brief: Soaper v. Hope Industries, Inc., 309 S.C. 438, 424 S.E.2d 493 (1992)

2011-08-02T08:40:00.003-04:00

Today's Case Brief is for Soaper v. Hope Indus., Inc., 309 S.C. 438, 424 S.E.2d 493 (1992). Soaper involved a color film processor and printer, and it is significant because it illustrates a merger of “fitness for particular purpose” with the warranty of merchantability under its facts.

FACTUAL BACKGROUND: Plaintiff purchased a color film processing machine from Defendant for use in his fast photo business. 309 S.C. at 439, 424 S.E. 2d at 494. The machine malfunctioned over a period of three years, and Plaintiff ultimately had to close his business. Id.

PROCEDURE: Plaintiff sued Defendant alleging (1) breach of express warranty, (2) breach of the implied warranty of merchantability, and (3) breach of the implied warranty of fitness for particular purpose. 309 S.C. at 439, 424 S.E. 2d at 494. At trial, Plaintiff proceeded solely on the cause of action for breach of implied warranty of fitness for a particular purpose. The jury returned a verdict for Plaintiff for $84,783.40 (i.e., the full value of the machine and its component parts). Id. The South Carolina Court of Appeals affirmed, finding ample evidence that "the goods were defective so as to be unfit for their intended use in Soapers fast photo business." 306 S.C. 531, ----, 413 S.E.2d 38, 40 (Ct. App. 1992). Defendant sought rehearing, which the Court of Appeals denied. 309 S.C. at 439, 424 S.E. 2d at 494. The South Carolina Supreme Court granted certiorari on the issue sought for re-hearing by Defendant. Id.

ISSUE(S): "Does a purchaser establish a warranty of fitness for a particular purpose when goods, purchased solely for their ordinary purpose, are found to be unfit for any and all purposes?" 309 S.C. at 439, 424 S.E. 2d at 494.

DISPOSITION: "[W]here a product is not fit for any purpose, it is not fit for its particular purpose. Accordingly, the Court of Appeals opinion is affirmed as modified." 309 S.C. at 441, 424 S.E.2d at 495.

RULES AND OPINION: The implied warranty of fitness for a particular purpose arises under the Uniform Commercial Code, S.C. Code section 36-2-315 (1976). 309 S.C. at 439, 424 S.E. 2d at 494. Defendant maintained that this warranty applies only when the buyer has a particular purpose for a product other than its ordinary/contemplated use. Id. at 440, 424 S.E.2d at 494. The court recognized that there was authority for this position but declined to follow it. Id., 424 S.E.2d at 495. The court referred to comment 2 to section 2-315, which states that "a contract may of course include both a warranty of merchantability and one of fitness for a particular purpose." Id. Section 2-317 also requires that warranties arising under the UCC "be construed as consistent with each other and as cumulative." Id.

When Plaintiff purchased the product, he made known to Defendant that his particular purpose for the machine was fast film developing. Id. at 441, 424 S.E.2d at 395. When it failed in that purpose, it was both unmerchantable and unfit for its particular purpose. Id.

We hold that, where the particular purpose for which a product is purchased is also the ordinary or intended purpose of the product, the warranties of merchantability and of fitness for a particular purpose merge and are cumulative, such that a plaintiff may proceed upon either theory.

Id. at 440, 424 S.E.2d at 495. This holding accords with other jurisdictions. Id. at 441, 424 S.E.2d at 495.

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Passing of the Honorable Matthew J. Perry, Jr.

2011-08-01T08:57:00.000-04:00

I was saddened to learn of the passing of U.S. District Judge Matthew J. Perry, Jr. over the weekend. Approximately one year ago to the day, I tried a products liability case before Judge Perry that lasted a couple of weeks. During that time, I had the opportunity to get to know Judge Perry, see him interact with the attorneys and the jury, and generally watch him run his courtroom. He was a true gentleman and an icon in South Carolina's history. I saw him again a few months ago while shopping for groceries and had the opportunity to reminisce with him about our case and how he was doing.

Judge Perry had an almost "regal" air about him. He was a delight to be around, but also had the ability to strike fear in even the most seasoned lawyer with his booming voice and his ability to get his point across in as few words as possible. I cannot say that I knew him "well," but I feel lucky to have had a chance to try a case before him toward the end of his storied career. He will be missed.

South Carolina Tort Reform: Governor Nikki Haley Signs Bill Capping Punitive Damages Into Law

2011-07-28T11:44:00.000-04:00

On Tuesday, Governor Nikki Haley signed into law the tort reform bill passed by the South Carolina State Legislature earlier this year. The bill includes numerous provisions relating to punitive damages that I blogged about as it was debated earlier this year. The Charleston Regional Business Journal did a nice write-up yesterday about the signing of the bill and impressions of the bill by members of the South Carolina business community. The article can be found online here, and a cut and paste is below.

Haley signs tort reform law, creating punitive damages cap

By James T. Hammond
jhammond@scbiznews.com
Published July 27, 2011

Gov. Nikki Haley signed changes to South Carolina civil litigation laws on Tuesday, including a $2 million cap on punitive damages that she said was long overdue.

According to the S.C. Chamber of Commerce, which had sought the changes, the new law includes a cap on punitive damages modeled after the state of Florida. The legislation caps punitive damages greater than $500,000 or three times the compensatory damages awarded.

However, if the court finds a defendant is motivated primarily by financial gain or a defendant’s actions rise to the level of felony charges, then the award can be increased to the greater of $2 million or four times compensatory damages.

If it is proven the defendant intended to harm the claimant, was convicted of a felony arising out of the same act or acted under the influence of drugs or alcohol, there is no cap for punitive damages.

S.C. Chamber of Commerce President Otis Rawl said passage of the tort reform law was his organization’s No. 1 priority this year. The changes in the law were not everything the chamber wanted, Rawl said, but he added that the legislation was a good compromise.

“We were the only state in the Southeast without a punitive damages cap,” said Rawl, adding that until now, that status had been a competitive disadvantage in recruiting new businesses to the state.

Haley agreed that the lack of such a provision hurt recruiting of industries.

“It automatically became a topic of conversation,” Haley said. “This was very simple. This was a vote either for business or for trial lawyers.”

Haley said tort reform remains a work in progress. She wants provisions added to the law that would require losers in civil litigation to pay the costs of the trial.

She said she thinks the changes create a “fair balance in our state,” while still permitting citizens their day in court.

Harry Lightsey, a Columbia attorney who worked for passage of the civil litigation changes, said the tort reform bill was the culmination of efforts that began in 2003.

“In 2003, Hampton County was recognized as a litigation hell hole,” Lightsey said, referring to a South Carolina county that had become notorious for its generous civil lawsuit awards to plaintiffs.

“Businesses large and small came together to change that,” Lightsey said, adding, “the governor was the difference-maker this year.”

Haley also said the new law represented a just compromise between two extremes.

“The House had a $350,000 cap on punitive damages. I’d like to have seen that happen,” Haley said. “But the original Senate version had no cap at all.”

Louis Gossett, president of the S.C. Manufacturers Alliance, said tort reform remains a work in progress.

“We’re always going to be working on this,” Gossett said. “We’d like loser-pay. What tort reform is about is certainty; it’s about stability. There is a place for litigation in our society. But there must be consequences for frivolous acts.”

As far as who decides what is frivolous, Gossett said, “That’s a good question. Probably the General Assembly and the courts.”

South Carolina Tort Reform: Quotation in South Carolina Lawyers Weekly Article

2011-07-28T11:27:00.005-04:00

I did numerous blog entries earlier this year about my involvment in South Carolina's debate and passage of tort reform in the General Assembly. I failed to blog about it, but I was recently quoted in South Carolina Lawyers Weekly about the bill that was ultimately passed. My colleague at Collins & Lacy, P.C., Gray Culbreath, was also quoted. A cut and paste of the article is below.

Not all tort-related wishes come true

by Caitlin Coakley

Published: July 1st, 2011

Looking back on the past legislative session, attorneys mostly see just one bill: HB 3375, the S.C. Fairness in Civil Justice Act – commonly called the tort reform bill.

Pushed by business groups and conservatives in the legislature, the bill imposes caps on punitive damages to be awarded in tort cases, with some exceptions. It gave Mike Hemlepp, executive director of the South Carolina Association for Justice, a big case of heartburn. As part of an organization that represents trial lawyers, Hemlepp said that he and his group are, on principal, opposed to tort reform and caps of any kind.

“We trust juries,” he said. “Anything that interferes with a jury’s ability to make a judgment, we are opposed to it.”

But with the bill signed into law, Hemlepp is less venomous and more resigned to the new laws. Despite his fundamental opposition to the goal of the bill, he recognizes that the lawyers his organization represents could have gotten off a lot worse.

On the other side of the issue, the defense attorneys say the new law is a good start, but wasn’t as effective as it could have been. Gray Culbreath, president of the South Carolina Defense Trial Attorneys’ Association, said that the bill is a good one, “as a matter of perspective.”

“We have caps now, and we didn’t have any before,” he said. “There is a belief that something’s better than nothing.”

Those mixed feelings are perhaps a reflection of the compromise between the bill introduced in the House of Representatives and the bill that passed the Senate. The House’s original hill was much stricter: a $350,000 across-the-board cap on punitive damages with no exemptions.

But by the time the bill hit the governor’s desk, the punitive-damage caps were more fluid: $500,000 or no more than three times the compensatory damages for most cases, rising to $2 million or four times compensatory damages in cases where the jury ruled that the business or person cut corners in order to rake in an unreasonable profit or if the defendant, business or individual, committed a felony in the process. If the defendant is actually convicted of a felony, caused harm intentionally, or was under the influence of drugs or alcohol, the case is exempted from caps altogether.

The amending and softening that the bill underwent while making its way through the legislative chambers made it into something that Hemlepp begrudgingly admits isn’t too bad.

“I think the legislature did a very good job of educating themselves on something that was very complicated,” he said. “We don’t believe in caps of any kind, but what was passed in this bill is reasonable compared to other states.”

But defense attorneys like Culbreath can’t help but lament some of the things that it left out.

One provision included in the original bill would have overturned a South Carolina statute that disallows information about whether the plaintiff in an automobile accident was wearing a seatbelt.

In the Senate, that provision was taken out, but Culbreath said that the some trucking and manufacturing associations to whom he had spoken have said they wished it had been retained.

Brian Comer, a Columbia attorney who worked with the legislature on the proposed product liability aspects of the bill, also acknowledged that the bill has been watered down from its original form. However, he adds that if the alternative would be to not have anything pass, the new law is enough.

“It’s a compromise,” he said. “It does some good things, there are some things that could have been done, but overall there was something done.” In fact, Comer was happy that he and other product liability attorneys were successful in keeping the bill from being watered down any further.

The legislature briefly considered adding an amendment that would overturn the August 2010 ruling in Branham v. Ford Motor Co., which created the “feasible design” standard: In cases that alleged a company created a defective product, a plaintiff must demonstrate that the company could feasibly have manufactured a safer product.

Had the case been overturned, the plaintiff would only have to prove that the product did not live up to consumer expectations.

Comer said that the issue is one that deserves another look, but should be considered as a separate issue and not as an amendment to a larger bill.

“We aren’t necessarily averse to doing that, but it needs to come at the end of a debate involving members of bar and academic community,” he said. “It shouldn’t be something that happens at the eleventh hour.”

Even Hemlepp acknowledges that the bill wasn’t completely devastating to trial lawyers. The SCAJ successfully added a provision to the bill that prohibits award caps from being disclosed to the jury. By keeping the jury in the dark as to the award caps, it left the jurors to determine what a fair award would be. Under the bill, if the jury’s punitive damage award exceeds the cap, the plaintiff would get the maximum amount allowed by law.

C. Stuart Mauney, a defense trial lawyer in Greenville, said that even if the bill wasn’t everything the business community hoped for, it accomplished the ultimate goal of sending the message that South Carolina was making an effort to become more business friendly.

Having the caps in place, Mauney said, “creates a more positive business climate. When executives make decisions about whether or not to do business in South Carolina, they make the decisions in part based on the state’s lawsuit environment.”

But Terry Haselden, a Spartanburg attorney who handles tort cases, said the bill isn’t good for much else. He calls it a “feel-good bill” that lawmakers can crow about to constituents but doesn’t have much practical impact, since “punitive damages are extremely rare in South Carolina.”

The cases where the cap will come into play, he said, will be the most tragic ones where people are most severely hurt and the jury believes that the plaintiff deserves a higher sum – in other words, he said, the ones that deserve it the most.

“Juries in South Carolina are extremely conservative,” he said. “They rarely award punitive damages unless there’s a darn good reason.”

Upcoming Webinar: "Warnings - Scope of and Exceptions to Duty to Warn"

2011-07-15T16:57:00.008-04:00

My firm is a member of the Primerus network of law firms, and on July 21, 2011 at 2 p.m. ET, I am going to be presenting in a webinar entitled "Warnings - Scope of and Exceptions to Duty to Warn." I am one of three speakers who will be discussing the various limitations on the duty to warn in a products liability case. We anticipate that the webinar will last between an hour and an hour-and-a-half. It will include a powerpoint presentation of the various topics discussed, and my co-presenters include Rick Quinlivan and John Brydon. Both of these gentlemen also have extensive experience in products liability cases and warnings cases (in particular).

I have written numerous blog posts and articles about South Carolina's limitations on the duty to warn , so this is a topic that is fairly familiar to me. (See, e.g., this post, this post, this article, and this article). This webinar takes a more general, national approach to this topic so as to provide the audience with some high-level guidance for application in various jurisdictions.

Although I try to keep this blog fairly "even keel" in terms of plaintiff and defense themes/perspectives, this webinar is presented as part of the Primerus Defense Institute, so it is primarily focused on defense strategies in a warnings case. If you are interested in registering for this webinar, go to this link for more information. I hope you will join us for what should be an informative presentation.

Drilling Down: Spoliation of Evidence

2011-07-14T16:26:00.004-04:00

On June 20, 2011, the South Carolina Supreme Court filed its opinion in Cole Vision Corp. v. Hobbs, No. 26988, 2011 WL 2447090 (S.C. June 20, 2011) (you can find it online at this link, page 30). This case is a medical malpractice case, not a products liability case. Therefore, I am not going to do a "Case Brief" of the opinion. However, it is significant because the court deals with whether South Carolina recognizes a claim for negligent spoliation of evidence. After reading the case, and after reflecting on my own experience in products cases with spoliation, it seemed like a good topic for a blog post. So hear we go.

What is South Carolina's general law with regard to spoliation of evidence between parties?

A party has a duty to preserve evidence for inspection in litigation. See Gathers v. South Carolina Elec. & Gas, 311 S.C. 81, 427 S.E.2d 687 (Ct. App. 1993) (where the court sanctioned a party for removing the service line and meter at issue in an electrocution death case so that it was unavailable for inspection). The well‑established law is that courts have the power to sanction parties for mishandling evidence, and they have exercised this authority where the mishandling rises to the level of destruction or loss of evidence.

Generally, “spoliation” is a rule of evidence to be applied at the court’s discretion. Cole v. Keller Indus., Inc., 132 F.3d 1044, 1046 (4th Cir. 1998). Courts have statutory authority to impose sanctions for spoliation of evidence pursuant to Federal Rule of Civil Procedure 37(b) (or its state counterpart, South Carolina Rule of Civil Procedure 37(b)) when a party fails to comply with a discovery order. Kershaw County Bd. of Educ. v. United States Gypsum Co., 302 S.C. 390, 396 S.E.2d 369 (1990). However, courts also have inherent authority to sanction parties, which goes beyond any extrinsic statutory authority. This inherent power is based on the court’s commonly recognized authority to control the judicial process and litigation. Silvestri v. General Motors Corp., 271 F.3d 583 (4th Cir. 2001). Despite these different sources of authority, the range of remedies for spoliation of evidence remains the same. The three primary sanctions allowed by Rule 37(b) —adverse inference, exclusion of evidence and dismissal — have also been applied by courts pursuant to their inherent authority.

South Carolina courts have long recognized the court’s power to sanction parties for mishandling evidence. See Welch v. Gibbons, 211 S.C. 516, 46 S.E.2d 147 (1948) (affirming the imposition of an adverse inference against a plaintiff who withheld evidence from the defendant); Wisconsin Motor Corp. v. Green, 224 S.C. 460, 79 S.E.2d 718 (1954) (allowing an adverse inference for failure to produce records). (Though neither of these cases dealt specifically with destruction of evidence, they illustrate the availability of sanctions in South Carolina for mishandling of evidence. They also closely resemble the situation that arises in a spoliation case. Whether a defendant is unable to inspect evidence because it is withheld or because it is destroyed, the effect is the same. Thus, the logic of Welch and Wisconsin Motor Corp. can be applied in the spoliation context.).

Courts permit an inference that withheld or destroyed evidence would be adverse to the party failing to produce such evidence. Kershaw County Bd. of Educ., 302 S.C. at 371-72, 396 S.E.2d at 394-95; Gathers, 311 S.C. at 83, 427 S.E.2d at 689. This inference can be imposed regardless of the motives or circumstances surrounding the non-producing party. Gathers, 311 S.C. at 83, 427 S.E.2d at 689. In Gathers, the court imposed this inference in spite of the fact that the defendant in the case removed evidence out of safety considerations. Id. (emphasis added). Therefore, it is inconsequential that the loss of evidence may have been accidental. Where the court determines that an adverse inference might apply in lieu of a more severe court-imposed penalty, it is for the jury to decide whether the negative inference is justified. Stokes v. Spartanburg Reg’l Med. Ctr., 368 S.C. 515, 629 S.E.2d 675 (Ct. App. 2006) (holding that although hospital provided explanation for why evidence was missing, jury was entitled to hear adverse inference instruction and apply it if the jury determined application was justified). However, the party advocating for the adverse inference must be prepare to show that the evidence might reasonably have supported whatever presumption is being requested of the fact finder. Pringle v. SLR, Inc. of Summerton, 382 S.C. 397, 405-06, 675 S.E.2d 783, 787-88 (Ct. App. 2009) (citing Kevin Eberle, Spoliation in South Carolina, South Carolina Lawyer, Sept. 2007, 26, 32).

Under South Carolina law, dismissal is only appropriate in cases where there is intentional misconduct on the part of the plaintiff or his counsel. Kershaw County Bd. of Educ., 302 S.C. at 372, 396 S.E.2d at 395. Fourth Circuit law provides supporting authority for this principle. Cole, 132 F.3d at 1047.

What about when evidence is spoliated by a third party?

This is where Cole Vision Corp. v. Hobbs comes in. Existing evidentiary rules and discretionary sanction powers granted to courts are not as effective when dealing with third-party spoliators. The dilemma is that under traditional remedies, a court can only hold a party before it accountable for spoliation of evidence. Sanctions may not be imposed upon an independent, disinterested third party because these individuals do not have a duty to preserve evidence at common law. See Koplin v. Rosel Well Perforators, Inc., 734 P.2d 1177, 1180 (Kan. 1987) (“[A]bsent some special relationship or circumstance there is no duty to preserve evidence for the benefit of another.”); see also Joseph J. Ortego & Glenn M. Vogel, Spoliation of Evidence in Products Liability Cases, Practical Litigator, Sept. 2001, at 23 (citing Stefan Rubin, Tort Reform: A Call for Florida to Scale Back its Independent Tort for the Spoliation of Evidence, 51 Fla. L. Rev. 345, 359 (1999)). Therefore, recognized sanctions such as an adverse inference jury instruction, prohibition on expert testimony, and dismissal serve no real purpose in the case of a third-party spoliator. To remedy this dilemma, some states have adopted a separate independent tort for negligent spoliation or intentional spoliation so as to allow recovery from a third party.

This was the precise issue addressed by the court in Cole Vision Corp. The case generally involved an optometrist who failed to properly treat and diagnose a patient. The case with the patient eventually settled, and the case on appeal involved an action by the entities who sublet space to the optometrist (Cole Vision Corp. and Sears) against the optometrist himself, Steven Hobbs, and his insurance company, for indemnification. Hobbs filed a defense and counterclaim against Cole Vision and Sears stemming from the loss of the patient’s profile sheet. Cole Vision filed a motion to dismiss on grounds that South Carolina does not recognize a cause of action for spoliation of evidence. The circuit court agreed and granted the motion to dismiss. The court of appeals reversed the circuit court based on its characterization of Hobb’s claim as sounding in general negligence. See Cole Vision Corp. v. Hobbs, 384 S.C. 283, 680 S.E.3d 923 (Ct. App. 2009). The South Carolina Supreme Court granted Cole Vision’s petition for certiorari.

After dispensing with arguments concerning whether Hobbs’ attempt to characterize his counterclaim as one for general negligence was properly preserved, the court addressed spoliation of evidence. The court reviewed a prior case, Austin v. Beaufort County Sheriff’s Office, 377 S.C. 31, 659 S.E.2d 122 (2008). In that case, the South Carolina Supreme Court determined that even if it recognized the tort of third-party spoliation of evidence, the plaintiff’s claims (Austin) did not rise to the level of stating a claim. However, in that case, the court declined to address whether it would adopt the tort of third party spoliation of evidence. Id. at 36, 659 S.E.2d at 124.

The court in Cole Vision Corp. found Austin to be distinguishable. However, this did not resolve the issue presented in the case: whether South Carolina should recognize a stand-alone tort for spoliation of evidence. To dispense with this question, the court held that although the optometrist could assert Cole Visions’ failure to maintain the patient’s profile sheet as a defense to the indemnification claim, “the circuit court properly held that South Carolina does not recognize an independent tort for the negligent spoliation of evidence, third-party or otherwise.” (Emphasis added).

The court reviewed case law in other states where an independent action for spoliation of evidence has been adopted, or where the state(s) permitted recovery for spoliation under traditional negligence principles. However, it found that “[m]ost states . . . have refused to recognize an independent spoliation tort and continue to rely on traditional non-tort remedies such as sanctions and adverse jury instructions for redress.” The court also cited to public policy considerations (e.g., other remedies are already available with respect to first-party claims) and the speculative nature of the damages calculation for negligent spoliation claims. Finally, the court noted that there is a potential for duplicative and inconsistent litigation with the adoption of a negligent spoliation claim.

For all of these reasons, the court in Cole Vision Corp. definitively declined to adopt an independent tort for negligent spoliation of evidence, either directly or against a third party. The court also noted that characterizing spoliation as “negligence” does not make it a viable claim because the substance of the claim is the same as an independent tort for spoliation. However, the court maintained that Hobbs could use spoliation as a defense to the indemnity claim. Therefore, the court found that the circuit court was correct and reversed the decision of the South Carolina Court of Appeals.

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Kiss the Rings!!!

2011-06-29T09:47:00.001-04:00

This is a products liability blog, but as a proud graduate of the University of South Carolina (undergrad, grad school, and law school....yeah, I liked college), I have to take a moment to say...

CONGRATULATIONS TO THE UNIVERSITY OF SOUTH CAROLINA GAMECOCK BASEBALL TEAM ON REPEATING AS NCAA BASEBALL NATIONAL CHAMPIONS!

What a series. South Carolina earned its first baseball national championship last year in the final game at legendary Rosenblatt Stadium (which I blogged about here) by defeating UCLA in the first two games of the final three-game series.

This was the first year in the magnificent $130 million TD Ameritrade Stadium, and our team again made history by (1) repeating as national champions, which I believe only six teams have been able to do (the last being Oregon State about four or five years ago), (2) having the longest College World Series winning streak (10 games), (3) having the longest tournament winning streak, at 16 games, and (4) being the first team to win in the new park. We went 5-0 at the College World Series, defeating Texas A&M, Virginia (twice), and then defeating the Florida Gators in the first two games of a three game series, 2-1 and 5-3.

If you watched this year's team, and especially the games against Virginia and the first game against Florida, then you know that this team won through heart, grittiness, and stellar defense. It wasn't a team of first round draft picks and "stars," but they had great team chemistry and never stopped believing they could win. We overcame injuries to numerous players and just pieced together a line-up throughout the year to get it done. The team's mantra became "Win Anyway" and "Battle."

I have never seen a team get out of so many bases loaded, one or two out "jams" as our team did in this tournament. It was really fun to watch.

The headline, "Kiss the Rings," refers to a funny statement by our radio announcer earlier this year. When we played Vanderbilt in a three game series, our starting ace Michael Roth faced off against Vandy's star, Sonny Gray. The match-up became a game of "The Godfather" cliches..."Sonny" versus "Michael." When we won the first game, our announcer said "Kiss the Ring!" (again... referring to The Godfather). It became a fitting slogan for the team as we defended last year's championship and gutted out win after win to earn a second championship and second CWS ring.

Congratulations guys, you earned it!

DRI Fly-In Meeting and Planning for 2012 Products Liability Conference

2011-06-24T09:25:00.004-04:00

On Wednesday, I attended a "Fly-In" meeting for DRI's Products Liability Committee steering committee. The meeting was held in Chicago (which, like Columbia, was sweltering hot), and the purpose of the meeting was to basically plan for the 2012 Products Liability Conference, which will be held April 11-13, 2012 at the Venetian in Las Vegas.

We had probably around 50 attendees at the Fly-In meeting, and we talked a great deal about the conference, possible themes, speakers, and other things. Although it is still a good ways off, go ahead and mark your calendar for the 2012 conference, as it should be a good one. Also, if anyone has a potential topic of interest, please comment. We are still in the planning stages, but our deadline for a draft agenda is quickly approaching, so I need ideas quickly.

It has been a busy last couple of weeks, but I hope to get back to some substantive blogging next week, including an interesting case I want to brief and maybe some additional material on warranties.

Exclusive: Copy of Judge's "Penalty Order" in SC Risperdal Action

2011-06-07T16:20:00.002-04:00

Well, maybe not "exclusive," but I did manage to obtain a copy of the Penalty Order in the South Carolina Attorney General's action against Johnson and Johnson and the award of $327 million in damages against the pharmaceutical company (which I have blogged about, including a post yesterday). Since that post, I have obtained a copy of Judge Roger Couch's "Penalty Order" in which he sets damages and explains the rationale for them. You can find a copy of the Penalty Order at this link.

I have not had a chance to digest the Order yet, and I wanted to get it posted as I can tell from my site statistics that there is considerable interest about this case and the award of damages. However, from my quick review, the high spots are as follows:

The judge focuses on the "Credo of Johnson and Johnson" as published on its website and referred to in annual reports to tee up how he is approaching the case (p. 3).
He recognizes the benefits of drug companies, medicine in general, and even Risperdal. He also points out that they are a for-profit company...but he goes back to the Credo as the company's "first obligation" (pp. 3-4).
He assesses the good/bad faith of the defendant and stresses that he is focused on what was known about the drug at the time statements were made (pp. 4-5).
He reviews the labeling of the drug, what the company knew and when, and finds that the "Defendants exhibited a callous disregard to a patient's right to have all possible information available, and in the hands of their physician, before deciding to use or continue to use the drug" (p. 8).
He reviews the "Dear Doctor" letter from November of 2003 and describes it as an effort to "manipulate the message about Risperdal" (p. 9). He also relies on some testimony from a Janssen executive about the "Dear Doctor" letter that is unfavorable (p. 10) and concludes that the actions of the company exhibited "extreme bad faith" (id.).
He talks about "Injury to the Public" as a component of a South Carolina Unfair Trade Practices action, including reference to his charge on this component (pp. 10-12). He notes that the jury found that the actions injured the public and were capable of repetition (p. 12).
He assesses the "Desire to eliminate the benefits derived from a violation" and admits that this is "virtually impossible to accurately determine" (p. 13). However, he points out the profit from the drug were "enormous," but also notes the releative small percentage of business conducted in South Carolina (id.).
He assesses "The necessity of vindicating the authority of the agency involved" and notes that the South Carolina Attorney General is the one with the burden and duty to vindicate the public's interest in the case (pp. 13-14).
He then goes into "The Defendant's ability to pay" at length (pp. 14-16), including the number of violations. This includes a statement of Annual Sales of Risperdal worldwide (p. 15) and J&J's earnings.
Finally, he assesses the number of times the label was published -- 509,499 sample boxes distributed -- and assesses $300 per violation, for a total of $152,849,700 (p.16-17). He does similar analysis for the number of "Dear Doctor" letters mailed (7,184) and sales calles where the letter was published (36,372), for a total publication of 43,556, and assesses $4,000 per violation, for a total of $174,224,000 (id).
Therefore, the total damages are $327,073,700 (p. 17).

An interesting order, and I welcome reader comments.

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SC Judge Hands Down Damages Order in Johnson & Johnson Risperdal Case

2011-06-06T09:12:00.007-04:00

I have previously blogged (here and here) about South Carolina Attorney General Alan Wilson's lawsuit against Johnson & Johnson and the March 22, 2011 jury verdict against the pharmaceutical manufacturer. A jury concluded that J&J violated South Carolina's consumer protection laws by sending South Carolina doctors a misleading letter about the safety and effectiveness of the anti-psychotic drug Risperdal.

Last Friday, Judge Roger Couch issued his order on damages in which he ordered J&J to pay $327 million. An article about the decision can be found at this link, and it is cut and pasted below. Thanks to bloomberg.com for the excellent coverage.

J&J Ordered to Pay $327 Million Over Deceptive-Marketing Claims

By Jef Feeley and Steven Church - Jun 4, 2011 12:01 AM ET

Johnson & Johnson's schizophrenia drug Risperdal. Photographer: JB Reed/Bloomberg News.

A Johnson & Johnson (JNJ) unit was ordered by a South Carolina judge to pay more than $327 million in penalties for deceptively marketing the antipsychotic drug Risperdal as safer and better than competing medicines.

J&J’s Ortho-McNeil-Janssen Pharmaceuticals unit repeatedly violated the state’s consumer-protection laws by sending a 2003 letter to doctors touting Risperdal as superior to rival drugs and including deceptive information in the product’s warning label, Judge Roger Couch in Spartanburg, South Carolina, concluded.

The drugmaker’s executives “allowed the profit-at-all- costs mentality to cloud” their judgment in connection with the drug’s marketing campaign and its labeling, Couch said in his 17-page ruling.

Janssen official said yesterday they’ll appeal Couch’s order and maintained the company fully disclosed Risperdal’s health risks and properly marketed the antipsychotic medicine.

“We don’t believe that the dissemination of an FDA- approved package insert constitutes a violation of the South Carolina Trade Practices Act,” Kara Russell, a spokeswoman for Janssen said in an e-mailed statement. “We do not believe the ruling can be upheld on appeal.”

South Carolina’s lawyers, who originally sued the J&J unit in 2007 for making misleading claims about Risperdal, sought billions of dollars in penalties over the targeted marketing and labeling material.

Sales Decline

Risperdal’s global sales peaked at $4.5 billion in 2007 and declined after the company lost patent protection. The drug generated $3.4 billion in sales in 2008, or 5.4 percent of New Brunswick, New Jersey-based J&J’s total revenue, according to company filings. Sales of the drug fell to $527 million last year, according to a January earnings report.

Risperdal Consta, the long-acting version of the antipsychotic drug, generated $1.5 billion in sales last year for J&J.

The state’s case centered on drug-safety claims that J&J and Janssen made in November 2003 correspondence to about 700,000 doctors across the U.S., including more than 7,000 in South Carolina.

The U.S. Food and Drug Administration responded with a warning letter saying J&J made false and misleading claims that minimized the potentially fatal risks of diabetes and overstated the drug’s superiority to competing products.

South Carolina’s lawyers argued during a two-week trial of the state’s suit that Risperdal’s safety label also downplayed diabetes and other health risks.

‘Clever Effort’

The faulty labels were included in as many as 722,000 Risperdal prescriptions written in South Carolina from 1994 to 2007, the state’s lawyers told Couch at an April hearing. The deceptive information also was presented in 183,144 sales calls on doctors by Janssen drug representatives, and 496,565 sample boxes distributed over that 13-year period, South Carolina’s lawyers argued.

In his ruling, Couch found the Risperdal letter to South Carolina doctors was a “clever effort” to “manipulate the message” about the drug.

He concluded penalties were warranted for 7,180 letters Janssen officials mailed to physicians in the state along with another 36,372 instances in which the drugmaker’s salespeople used the missive to market Risperdal in person, according to court records.

$4,000 per Violation

Couch awarded South Carolina a total of $174.2 million in penalties over the letter based on a rate of $4,000 per violation of the state’s consumer-protection laws, according to his ruling.

He also found 509,499 sample boxes of Risperdal distributed in the state contained labels with deceptive materials that warranted penalties. The judge awarded the state $152.8 million in penalties over the label at a rate of $300 per violation.

J&J’s lawyers claimed in court papers that the state engaged in “triple counting” by seeking to have prescriptions, marketing letters and sales calls on individual doctors included as violations.

Penalizing the drugmaker for multiple contacts with doctors who were allegedly “misled or deceived each time he or she had been exposed to” the targeted information would be unfair, Steven Pugh, one of the company’s attorneys, said in May 3 filing.

Hold Them Accountable

The award puts drugmakers on notice that if they “try to spin information or try to see what they can get away with,” state officials will hold them accountable, Donald Coggins, a Spartanburg-based lawyer who represented the state, said in an interview yesterday.

The case is the third of about 10 state lawsuits to be considered by jurors over J&J’s Risperdal marketing campaigns. In June, J&J won dismissal of Pennsylvania’s suit alleging the company hid the drug’s diabetes risk and tricked regulators into paying millions more than they should have for the medicine.

A Louisiana jury in October ordered the drugmaker to pay $257.7 million in damages to that state for making misleading claims about Risperdal’s safety. A judge later added $73 million in legal fees to the award.

A West Virginia judge in a 2009 non-jury trial awarded $3.95 million, finding the company misled doctors about the risks and benefits of Risperdal. The state dropped its Risperdal claim after J&J won an appeal, company officials said in February.

J&J fell 39 cents to $66.09 in New York Stock Exchange composite trading yesterday. J&J’s 4.95 percent bonds due in 2033 fell 1.36 percent to 102.3 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

The case is State of South Carolina v. Janssen Pharmaceuticals, 2007-CP-42-1438, Circuit Court for Spartanburg County, South Carolina (Spartanburg).

To contact the reporter on this story: Jef Feeley in Wilmington, Delaware, at jfeeley@bloomberg.net; Steven Church in Wilmington, Delaware, at schurch3@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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SC House Agrees to Amended Tort Reform Bill

2011-06-03T09:12:00.000-04:00

I received word yesterday that the house passed the amended tort reform bill by a vote of 99-16. The State Newspaper has a short write-up about it here, and cut and pasted below.

House agrees to amended tort reform bill

GINA SMITH, gsmith@thestate.com

House members agreed to Senate amendments Thursday on a tort reform bill.

Under the measure, punitive awards would be limited to $500,000 or three times the actual damages, whichever is greater.

In the worst cases, punitive awards would be capped at the greater of $2 million or four times the actual damages, which includes things like lost wages and medical expenses.

The House vote signals a victory for Gov. Nikki Haley who made tort reform one of her priorities this session.

Update on South Carolina Tort Reform, Punitive Damages Caps, Etc.

2011-06-01T10:34:00.008-04:00

I have previously blogged about tort reform efforts in the South Carolina General Assembly this year. (See prior posts here and here for context). This issue has been consuming a great deal of my time in the last couple of months, and it seemed to be an appropriate time to provide an update.

As you may recall, there was an effort brewing to legislatively overturn Branham v. Ford Motor Co. Some members of the Legislature viewed the case as judicial activism and a movement away from the comments to Restatement (Second) of Torts § 402A, which have been codified at S.C. Code § 15-73-30 as the legislative intent of South Carolina's Defective Products Act . The first effort to overturn the case came in the form of a "renewal" of sorts of South Carolina's Defective Products Act. Basically, the amendment to the tort reform bill was to strike the prior act (S.C. Code §§ 15-73-10, 20, and 30), and then renew it in identical form as S.C. Code §§ 15-73-11, 21, and 31. The rationale behind this amendment was that by renewing the statute, the Legislature would re-affirm that South Carolina follows the Restatement (Second) of Torts, and not the Restatement (Third) (as suggested by the court in Branham).

After the initial amendment to renew the language of the Defective Products Act, the focus shifted. Instead of renewing the language, the effort shifted toward a dialogue about adopting the Restatement (Third) of Torts as South Carolina's products liability law. Therefore, over the last couple of weeks, I have spent a substantial amount of time drafting papers on what the court did in Branham, options for compromise, distinctions between the Restatement (Second) and Restatement (Third), and what other states have done with regard to adopting either of them.

In short, my research revealed that although there are some worthwhile provisions of the Restatement (Third) of Torts, this is not something (in my opinion) that South Carolina should do "on the fly," by amendment, and toward the end of a legislative session. If we are going to talk about substantial changes to the products liability law in South Carolina, this blogger's opinion is that it should take the form of a separate bill and should involve debate and input from members of the bar who practice in this area. Adopting the Restatement (Third) would change South Carolina's products liability law overnight. As a lifelong South Carolinian, I can say (with pride) that we do not do anything very quickly. Adopting the Restatement (Third) should not be an exception based on the differences between it and current South Carolina law. I welcome your comments on this issue.

After spending yesterday at the Legislature with my colleague Gray Culbreath, President of the South Carolina Defense Trial Attorneys' Association, we learned that the effort to overturn Branham no longer appears to be a focus of the tort reform bill. Instead, the focus is on capping punitive damages, and there is no language to adopt the Restatement (Third) or to overturn Branham. The most current form of the bill, as given second reading by the Senate yesterday evening, can be found at the following link:

http://www.scstatehouse.gov/sess119_2011-2012/prever/3375_20110531.htm

My understanding is that the provisions relating to the capping of punitive damages are based in large part on a Florida statute, with some variations. Because I have been focused on the Branham issue, I have not fully analyzed the punitive damages provisions. However, a quick review reveals that the bill provides for bifurcation of trials where punitive damages are at issue and a cap on punitive damages of the greater of three times the amount of compensatory damages or $500,000. However, there are some exceptions in the bill that either increase this cap or remove it altogether, based on certain conduct.

There is an article in The State today about the Senate's debate and the current status. You can find it here, and cut and pasted below.

Senate caps lawsuit awards

By JOHN O’CONNOR - joconnor@thestate.com

The South Carolina Senate agreed to limit lawsuit awards Tuesday, ending years of debate about whether to make the state legal system more business-friendly.

The bill would create a tiered system of damages based upon the degree of negligence or criminal behavior involved. Most lawsuits would cap punitive damages at $500,000, or three times actual costs, whichever is greater.

But that cap rises to $2 million, or four times actual damages, under several circumstances, including if an injury resulted because of an unreasonable profit-based decision or if the person or business that caused the injury was subject to a felony conviction.

The cap is lifted entirely if the person or business that caused the injury is convicted of a felony, intended to harm or was under the influence of drugs and alcohol.

The vote knocks out a key issue pushed by Senate Republican leadership, Gov. Nikki Haley and business interests in the session’s final week. The bill heads back to the House, which approved a $350,000 cap, or three times actual damages, with no exemptions earlier this year.

Business groups noted the caps are still among the highest in the Southeast, but they supported the compromise.

“It’s a decent day’s work,” said Rick Scott, president of the South Carolina Trucking Association. “This puts us close to being competitive; … it is a move forward.”

Attorneys said despite debating the need for years, the bill addressed a problem which did not exist.

“We still do not believe there is a need to put caps on punitive damages,” said Mark Joye with the South Carolina Association for Justice.

The bill has churned in the Senate for weeks as others issues, such as the budget, took precedence and those who opposed the caps sought to avoid a vote. But Haley and the state Republican Party dialed up the pressure Tuesday, with the governor insisting on the House version of the bill and telling lawmakers she would include their vote on her end-of-session report cards.

Lawmakers huddled all day, but it took a late afternoon five-minute recess that stretched more than three hours for the two sides to finally parse the bill’s language. Business lobbyists huddled near the House chamber poring over the latest revision, while lobbyists for trial lawyers did the same thing across the lobby.

Senators shuttled back and forth between the two groups with the others’ thoughts.

The bill now heads back for the House to agree or disagree with the Senate version. In a letter to Senators Tuesday, Haley said she supports the House version of the bill. If the House insists on its version, House and Senate lawmakers will have to work out a compromise.

“We got as good a bill as we can under the circumstances,” said Sen. Gerald Malloy, D-Darlington and an opponent of the caps. “We need to lean on the Senate to try to maintain the Senate position.

Reach O’Connor at (803) 771-8358

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SC Attorney General Action Against GlaxoSmithKline

2011-06-01T09:15:00.004-04:00

South Carolina Attorney General Alan Wilson has brought another lawsuit against a pharmaceutical manufacturer. On May 17, the Office of the Attorney General filed a lawsuit against GlaxoSmithKline in which he alleges that the pharmaceutical manufacturer improperly marketed the diabetes drug Avandia. I have not seen a copy of the complaint, but an article here at wcnc.com (and cut and pasted below) seems to suggest that this is another off-label promotion lawsuit, similar to past lawsuits brought by South Carolina against pharmaceutical companies. (See blog posts about prior off-label promotion lawsuits here). There are also some inadequate warning allegations according to the article.

SC prosecutor suing GlaxoSmithKline over Avandia

by MEG KINNARD / Associated Press

COLUMBIA, S.C. (AP) -- British drug maker GlaxoSmithKline PLC improperly marketed the diabetes drug Avandia to South Carolina consumers, hiding the medication's harmful side effects, according to a lawsuit filed by the state's top prosecutor.

Posted on June 1, 2011 at 8:56 AM

A spokeswoman for the company, however, said GlaxoSmithKline supports both its drug and the ways in which it was marketed.

In a lawsuit filed May 17 in Spartanburg County, Attorney General Alan Wilson argued that the drug maker acted negligently when it claimed that Avandia did not put patients' hearts at risks and could actually reduce the potential for heart problems.

"GSK did not just fail to disclose the potential cardiovascular risks Avandia posed, which include heart attacks and sudden cardiac death, it affirmatively represented that Avandia could reduce diabetics' cardiovascular risks," Wilson wrote. "GSK knew or should have known that these representations were not true and likely to deceive."

First approved by the Food and Drug Administration in 1999, Avandia quickly became the top-selling diabetes pill in the world. The drug works by increasing the body's sensitivity to insulin, a key protein needed for digestion that diabetics don't adequately produce.

But Avandia's popularity has diminished since 2007 when its heart risks were first publicized. That year, the New England Journal of Medicine printed an article that evaluated dozens of studies on Avandia, concluding that the drug increases the risk of heart attack and death.

In July 2007, the FDA ruled that Avandia could remain on the market, but sales had already taken a hit. At a safety panel meeting that month, FDA scientists said that Avandia had caused approximately 83,000 heart attacks since coming on the market, according to Wilson's lawsuit.

GlaxoSmithKline rolled out new labels in February to indicate that Avandia is intended only for patients who cannot control their blood sugar with any other diabetes medication on the market. Regulators in Europe have pulled the drug off the market altogether, and other authorities including Louisiana's attorney general are investigating the drug.

The exact amount South Carolina was seeking was not clear. Wilson is seeking a civil penalty of up to $5,000 for each action in violation of the state's unfair trade practices act, as well as unspecified punitive damages and $2,000 for each false claim or overstatement made to the state in connection with prescriptions for its Medicaid recipients.

"GlaxoSmithKline stands behind the safety and efficacy of Avandia when used appropriately and according to its label," said Bernadette King, a spokeswoman for the company. "GSK acted properly and responsibly in conducting its clinical trial program for Avandia, in marketing the medicine, in monitoring its safety once it was approved for use and in updating information in the medicine's labeling as new information became available."

The lawsuit, which says millions of dollars in state funding was spent on prescriptions for Medicaid patients and state employees, also cites several warnings from the FDA for "false and deceptive advertising" that Wilson says attempted to minimize the required warnings.

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Drilling Down: Breach of Express Warranty

2011-05-26T11:44:00.000-04:00

Okay, let's get this warranty party started. A South Carolina products liability action can be brought pursuant to various different theories, including strict liability, negligence, and breach of warranty. (For further explanation on this, I encourage you to see "The Basics" generally, and specifically this post). If your theory of choice is "breach of warranty," then it is important to understand that there are different types of warranties, as provided by statute and common law. One is breach of "express warranty," which is the subject of today's post.

An express warranty is probably what a non-practioner/layperson thinks of when they hear "breach of warranty." A warranty generally conjures up images of that long, boilerplate document you received when you last purchased GLH Spray-On Hair, a Super Bass-o-Matic, Flowbee, or other product. (If you have a favorite product infomercial or SNL parody that I can link, shoot me a comment...I love them). It usually lays out a ton of different terms and conditions, and many times it requires the purchaser to mail in some sort of postcard so as to register the purchase of the product and make the warranty effective.

Although this is an example of an express warranty, South Carolina law does not limit an express warranty to the terms contained in a document entitled "Warranty." Instead, South Carolina has codified what constitutes an express warranty at S.C. Code Ann. § 36-2-313. This statute sets forth the following:

SECTION 36-2-313. Express warranties by affirmation, promise, description, sample.

(1) Express warranties by the seller are created as follows:
(a) Any affirmation of fact or promise, including those on containers or labels, made by the seller to the buyer, whether directly or indirectly, which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods conform to the affirmation or promise.
(b) Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description.
(c) Any sample or model which is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model.
(2) It is not necessary to the creation of an express warranty that the seller use formal words such as "warrant" or "guarantee" or that he have a specific intention to make a warranty, but an affirmation merely of the value of the goods or a statement purporting to be merely the seller's opinion or commendation of the goods does not create a warranty.

There is South Carolina case law interpreting this statute that is helpful. See, e.g., Triple E, Inc. v. Hendrix and Dail, Inc., 344 S.C. 186, 543 S.E.2d 245 (Ct. App. 2001); First State Sav. and Loan v. Phelps, 299 S.C. 441, 385 S.E.2d 821 (1989).

However, the most helpful resource I found was to go to the statute itself and read the Official and South Carolina Reporter's Comments. Some bullet points from these comments are as follows:

Express warranties rest on "dickered" aspects of the individual bargain and are the essence of the bargain. (I had to look up "dickered"....it means the "process of bargaining" or something to that effect). Official Cmt. 1.
The statute deals with affirmations of fact, descriptions of the goods, exhibition or samples, or other parts of the negotiation the result in a contract. Intent to create a warranty is not required. Affirmations of fact by the seller include descriptions of the goods, and a buyer does not have to show reliance. Official Cmt. 3.
Express warranties deal with what a seller has agreed to sell as described. Therefore, a clause generally disclaiming "all warranties, express or implied" cannot reduce the seller's obligations with regard to the description and cannot be given literal effect. This does not mean people cannot make their own bargain, but good faith is a factor for determining what was agreed to by the parties, and the probability is small that the buyer did not pay for what was described. Official Cmt. 4.
A description does not have to be words. Technical specifications, blueprints, samples, illustrations, etc. may be an affirmation of fact if part of the basis of the bargain. Official Cmt. 5.
When the affirmation of fact occurs is immaterial. The question is whether it was a to be regarded as part of the contract. Official Cmt. 7. (Although immaterial, it sounds like it has to come before the sale, though, to be part of the bargain...that is just my opinion).
Typical statements held to be an express warranty under South Carolina law include representing that a carpet is of first quality, colorfast, will not fade, and is suitable for the hotel needs of a buyer. S.C. Reporter Cmt. (citing Spartanburg Hotel Corp. v. Alexander Smith, 231 S.C. 1, 97 S.E.2d 199 (1957)). Another example is "fertilizer compounded of the purest materials and of the highest standard." Id. (citing Robson v. Miller, 12 S.C. 586 (1879)). Another example is a case where insecticide was represented to be "not harmful to pigs and would not damage buyer's pigs." Id. (citing Herndon v. Southern Pest Control Co., 307 F.2d 753 (4th Cir. 1962)).
A seller does not have to use the word "warrant" or even intend to create a warranty. S.C. Reporter Cmt.

I will take a closer look at some of these cases and include them in future Case Briefs. Have a great Memorial Day weekend.

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Upcoming Focus on Breach of Warranty Theory

2011-05-17T10:41:00.000-04:00

I have a great tool for this blog called "Google Analytics," and I check it fairly frequently to determine how many people come to the site and other useful information. If you blog, I would highly recommend checking it out and incorporating it into your site. (Not to worry, privacy enthusiasts...it does not tell me who you are or any identifying information). However, the tool provides me with what key word searches lead people to the site, as well as a listing of the pages on the site that are most frequently reviewed by site visitors.

Surprisingly, many, many people come to this blog as a result of key word searches relating to "breach of warranty" or some variation of that search term. It is a recurring, daily key word search that brings people to the site, and this is somewhat surprising to me. When I think of products liability law, I think of strict liability, negligent design, warnings, etc. Although breach of warranty is an additional theory in this body of law, I find in my own practice that there is not as great of a focus on it and how it relates to defect. Although it is frequently asserted as a theory of recovery, I generally find that practitioners focus more on negligence and strict liability, and breach of warranty is kind of thrown in purely to cover all the bases.

Well . . . "the people have spoken." There is clearly an interest in breach of warranty law, as indicated by my google analytics data. Therefore, I am going to try and start posting more in the future about it. I am hesitant to say that this is the beginning of a "series" per se, but we will see what happens. (Usually, when I do a "series" on this blog, it is because I have already conducted a substantial amount of research in the subject matter of the series, i.e., as part of an article for publication. That is not the case here). So look for more warranty case briefs and posts in the future. I am going to try and make it a focus since I have not devoted many posts to this subject area in the past.

Case Brief: Rhodes v. McDonald

2011-05-16T13:18:00.002-04:00

Rhodes v. McDonald, 345 S.C. 500, 548 S.E.2d 220 (Ct. App. 2001), involves the installation of vinyl siding. It stands for the principle that a plaintiff cannot recover punitive damages in a breach of warranty action.

FACTUAL BACKGROUND: Defendant Bill Gillespie ("Gillespie") owned and operated an insulation company, Defendant Southern Insulation ("SI"). 345 S.C. at 502, 548 S.E.2d at 221. Plaintiffs contracted with SI to install vinyl siding on their mobile home and extend the room over their kitchen. Id. After installation, plaintiffs complained that the siding was "wavy looking." Id. Despite assurances that it would "settle down," it became worse and began pulling apart. Id. It also led to the roof "bowing up." Id.

PROCEDURE: Plaintiffs brought an action against defendants for breach of contract and breach of certain implied warranties. 345 S.C. at 501, 548 S.E.2d at 221. A jury awarded plaintiffs $11,464.50 in actual damages and $27,500 in punitive damages. Id. at 503, 548 S.E.2d at 221. Defendants appealed.

ISSUE: Whether the trial court erred in failing to grant defendants' motions for directed verdict (1) as to Gillespie's individual liability and (2) as to the availability of punitive damages in the breach of contract and breach of implied warranty causes of action. 345 S.C. at 501, 548 S.E.2d at 221. Defendants also contended that the trial court erred in submitting an improper special verdict form to the jury. Id.

DISPOSITION: Affirmed with regard to individual liability of Gillespie. Reversed with regard to award of punitive damages. The special interrogatories question was not preserved for appeal (and moot in light of the punitive damages reversal).

OPINION: With regard to the availability of punitive damages, the court agreed that the trial court should not have submitted this issue to the jury. 345 S.C. at 503-05, 548 S.E.2d at 221-23. The measure of damages that a buyer may recover under the Uniform Commercial Code ("UCC") is set forth at S.C. Code sections 36-2-714 and 715. Id. at 503, 548 S.E.2d at 222. The court reviewed the wording of both statutes and concluded that the plain language of the statutes indicated intent by the legislature to limit damages recoverable for breach of warranty to actual, incidental, and consequential damages. Id. at 503-04, 548 S.E.2d at 221-22. There was no provision for punitive damages in either statute. Id. This is further supported by S.C. Code section 36-1-106(1), which provides, in part, that "neither consequential or special nor penal damages may be had except as specifically provided in the act or by other rule of law." Id. at 505, 548 S.E.2d at 222. Again, the court pointed out that the UCC does not include such a provision. Id. Although punitive damages are allowed in South Carolina in a breach of contract action where the breach is accompanied by a fraudulent act, there was no such evidence in the case. Id. at 505, 548 S.E.2d at 222-23.

With regard to the trial court's failure to direct a verdict for Gillespie as to his individual liability, the court disagreed. Id. at 505, 548 S.E.2d at 223. SI was not incorporated at the time of the contract, and the general rule is that owners of unincorporated companies are not entitled to the same protection as owners of incorporated entities. Id.

Finally, the court held that defendants had not adequately preserved their argument relating to the trial court's submission of special interrogatories to the jury. Id. at 506, 548 S.E.2d at 223. Therefore, the court did not address this issue, but also pointed out that it was moot in light of the reversal of the punitive damages award.

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South Carolina Bar CLE Presentation on Warnings Goes "Live"

2011-05-04T15:35:00.002-04:00

You probably recall from a previous post that I recently participated in the South Carolina Bar's "Distance Learning" program by taping a one-hour presentation on South Carolina warnings law. I received an email today that my presentation has gone "live" on the website.

So...if you want to watch my ugly mug and some slides for an hour-long, fun-filled warnings extravaganza, check out this link.

Case Brief: Holst v. KCI Konecranes Int'l Corp., 390 S.C. 29, 699 S.E.2d 715 (Ct. App. 2010)

2011-05-03T10:08:00.001-04:00

It has been awhile since I posted a Case Brief, so I thought I would provide one for Holst v. KCI Konecranes Int'l Corp, 390 S.C. 29, 699 S.E.2d 715 (Ct. App. 2010). I originally blogged about this case when it came out, and its opinion has now been published. This is a crane accident case involving a "KCI rubber-tired gantry crane" at a terminal of the South Carolina State Ports Authority in Charleston, South Carolina. I was not familiar with a "gantry crane" and how it differed from a regular crane, so I did the trusty google image search to see what came up. I am glad that I did. As you can see from one of the the pictures (below), it is different than your typical idea of a "crane." (This picture is only intended to give you an idea of a "rubber-tired gantry crane" generally. I have no idea if it is the make or model of the crane at issue).

The case has some good discussion about the necessity of alternative design in a design defect case. There is also discussion of what the court looks at in terms of other manufacturers and industry standards when evaluating design, warnings, etc.

FACTUAL BACKGROUND: Decedent was a checker at a terminal at the port in Charleston, South Carolina. 390 S.C. at 33, 699 S.E.2d at 718. He was responsible for identifying containers needed for transport between the container yard and ships. Id. He would instruct crane operators to move and load the containers in the proper sequence. Id. at 33-34, 699 S.E.2d at 718. Decedent was killed when a crane operator lowered containers in an area where he was standing, crushing him. Id. at 34, 699 S.E.2d at 718.

PROCEDURE: Plaintiff (decedent’s wife) filed suit alleging negligence, breach of warranty, and strict liability for defective design against the crane manufacturer. 390 S.C. at 34, 699 S.E.2d at 718. The crane manufacturer moved for summary judgment, which was granted by the lower court. Id. at 34-35, 699 S.E.2d at 718. Plaintiff appealed. Id.

ISSUE: Whether the circuit (trial) court erred in granting KCI's motion for summary judgment.

DISPOSITION: The South Carolina Court of Appeals affirmed the grant of summary judgment. 390 S.C. at 44, 699 S.E.2d at 723.

OPINION: Plaintiff’s first argument was that the lower court improperly weighed conflicting testimony concerning product defect, compliance with industry standards, and comparisons of the crane to others on the market. 390 S.C. at 35-36, 699 S.E.2d at 719. Plaintiff cited to the testimony of two experts (Dr. George Pearsall and Richard Leonard) to support that the crane operator did not have obstruction-free visibility and that the crane should have been equipped with a camera. Id. at 36, 699 S.E.2d at 719. Even so, both experts for plaintiff conceded that a camera would not eliminate a blind spot, they did not know of other manufacturers who utilized a camera, and the crane met industry standards/regulations. Id. Mr. Leonard testified that he had never seen a comparable model crane with greater visibility than the one at issue. Id. Because of a lack of evidence of alternative design or that a risk-utility test was conducted with regard to the crane by plaintiff’s experts, the court held that plaintiff could not establish the crane was defective and unreasonably dangerous as a matter of law. Id. at 37, 699 S.E.2d at 719-20.

With regard to compliance with industry standards, the court reviewed American Society of Mechanical Engineers standard B30.2-1.5.1(b) and International Organization for Standardization section 8566-1. Id. at 37-38, 699 S.E.2d at 720. The court affirmed that the manufacturer complied with these standards from the evidence and that the operator’s access to a telephone, intercom with a loudspeaker, and two-way radio also aided in his “view” of the load block so as to bring the crane into compliance with applicable standards. Id. Finally, the court affirmed that plaintiff’s experts failed to provide evidence that another crane was similar enough to the one at issue so as to provide proof that other cranes on the market had better visibility. Id. at 38-39, 699 S.E.2d at 720.

Plaintiffs also argued that the lower court applied an improper legal standard by basing its grant of summary judgment on the crane’s conformity with industry custom. Id. at 39, 699 S.E.2d at 721. The appellate court did not agree and noted that conformity with industry standards was only one factor considered by the trial court. Id.

Plaintiff also argued that the lower court erred in applying inapplicable legal standards from certain Fourth Circuit Court of Appeals and South Carolina state court cases (i.e., Sexton By & Through Sexton v. Bell Helmets, Inc., 926 F.2d 331 (4th Cir. 1991), Marchant v. Mitchell Distributing Co., 270 S.C. 29, 240 S.E.2d 511 (1977), and Bragg v. Hi-Ranger, Inc., 319 S.C. 531 462 S.E.2d 321 (Ct. App. 1995)). Id. at 40-42, 699 S.E.2d at 721-22. The court distinguished each cited case on legal or factual grounds and ruled that the lower court did not err in relying on them. Id.

Finally, the court addressed summary judgment on each of plaintiff’s claims (strict liability, negligence – defective design, and negligence – failure to warn). Id. at 42-44, 699 S.E.2d at 722-23. The court cited to its prior discussion as also applying to support dismissal of the strict liability claim. Id. at 42, 699 S.E.2d at 722. On the negligent design claim, the court focused on the superiority of the design of the crane in comparison to others, its compliance with applicable standards, and the fact that the blind spot could not be eliminated to support its holding that there was no material issue of fact. Id. at 42-43, 699 S.E.2d at 722-23. The court also found that the crane included proper warnings both in the Operator’s Manual and on the crane itself so as to support summary judgment on plaintiff’s negligent failure to warn claim. Id. at 43-44, 699 S.E.2d at 723. Affirmed.

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Distance Learning Program on South Carolina Warnings Law Recorded at South Carolina Bar

2011-04-25T17:06:00.000-04:00

Back in February, I posted that the South Carolina Bar asked if I would do a Distance Learning program based on my warnings article that was published in the January 2011 edition of South Carolina Lawyer, entitled "Products Liability Claims in South Carolina: What is South Carolina's Law on Warnings?" I taped the segment this morning, and it was a great experience. I spoke for about an hour on South Carolina warnings law. I prepared some PowerPoint slides to illustrate certain points, and I anticipate that the program will also come with a copy of my January 2011 article for download by anyone who purchases it.

In short, I felt like a news anchor for about an hour. The studio is set up so that you are sitting at a table and speaking on camera, with no "audience" per se. This took a little getting used to, especially if you are more accustomed to presenting at public venues. However, it went off without a hitch, and I enjoyed the preparation and experience. Be on the lookout for it if you need CLE credit and want to do it in the comfort of your own home/office at your computer.

Most of my posts lately have been on various marketing and research projects that I have been working on. However, I am going to try and post a "Case Brief" later this week so as to try and get back to some more substantive discussion.

Written Materials from DRI Presentation

2011-04-15T09:28:00.000-04:00

I previously posted here a de-brief from my time at the 2011 DRI Products Liability Conference in New Orleans last week. As indicated in the post, I had the opportunity to speak at the Agricultural, Construction, Mining, and Industrial Equipment ("ACMIE") Specialized Litigation Group breakout session on Thursday. My task was to present on the "top 10" ACMIE cases from 2010.

Although this is the "South Carolina Products Liability Law Blog" and it focuses on South Carolina law, I thought that you may find the materials to be of interest if you work with this type of equipment. The written materials from my presentation can be found at this link, and the materials include a brief of Holst v. KCI Konecranes Int’l Corp., 699 S.E.2d 715 (S.C. Ct. App. 2010) , a South Carolina case from 2010 that I blogged about here when the South Carolina Court of Appeals issued its opinion.

You are probably wondering my "methodology" (for you Daubert v. Merrell Dow Pharmaceuticals fans) for singling out these ten ACMIE cases. This was no small task. Suffice it to say that I checked all the boxes for meeting a stringent Daubert analysis. First, my methodology was "reliable" because it involved a Westlaw search that included all the products liability key words for these types of products: agricultural, construction, mining, "industrial equipment," "products liability," "strict liability," "breach of warranty," negligence...and the list goes on. After entering all of these words into the legal database, it generated well over 200 cases in both state and federal court from 2010. To ensure the "relevance" of the cases, I then skimmed all of them to make a first cut at whittling the list down to about thirty cases that really seemed to focus on this type of equipment and involve substantive legal issues. From these cases, I selected ten that I thought were the most interesting. After that, I read and briefed all the cases, which is what is set forth in the written materials.

Hey, if you went through this drill, I am sure you would probably come up with a different list. However, I doubt you want to take that kind of time when I have done the work for you. These are the ones I came up with, and hopefully you find them to be of interest if you work with these types of products.

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Upcoming DRI Drug and Medical Device Seminar in Chicago, Illinois on May 5-6, 2011

2011-04-14T12:23:00.002-04:00

Overview

DRI’s Drug and Medical Device Seminar is the preeminent program for lawyers who represent pharmaceutical and medical device manufacturers. We are pleased again to feature a number of nationally recognized attorneys, both in-house and outside counsel, and other professionals who will address cutting-edge topics that are relevant to all who practice in this area, whether they are associates, lead trial counsel or in-house attorneys. This year’s program will offer a mixture of presentations, including trial skills demonstrations, a panel discussion of a groundbreaking defense and litigation insights from leading defenders of drug and device cases. In addition to the outstanding program, there will be numerous networking opportunities, including our annual Young Lawyers Blockbuster. Be sure to register now to reserve your place in Chicago at DRI’s 27th annual Drug and Medical Device Seminar.

Registration

The registration fee is $895 for members and those who join DRI when registering and $1,125 for non-members. The registration fee includes CD-ROM course materials, continental breakfasts, refreshment breaks and networking receptions. If you wish to have your name appear on the registration list distributed at the conference and receive the course materials in advance, DRI must receive your registration by April 15, 2011 (please allow 10 days for processing mailed registrations). Registrations received after April 15, 2011, will be processed on-site.

In-house counsel are eligible for free registration to DRI seminars. In-house counsel are defined as licensed attorneys, who are employed exclusively by a corporation or other private sector organization, for the purpose of providing legal representation and counsel only to that corporation, its affiliates and subsidiaries. In order to qualify for free registration, the individual must also be a DRI member and a member of DRI’s Corporate Counsel Committee. Offer excludes DRI Annual Meeting.

Hotel

A limited number of discounted hotel rooms have been made available at the Sheraton Chicago Hotel and Towers, 301 East North Water Street, Chicago, Illinois 60611. For reservations, contact the hotel directly at 312.464.1000. Please mention DRI’s Drug and Medical Device Seminar to take advantage of the group rate of $255 Single/$285 Double. The hotel block is limited and rooms and rates are available on a first-come, first-served basis. You must make reservations by April 12, 2011, to be eligible for the group rate. Requests for reservations made after April 6 are subject to room and rate availability.

Travel Discounts

DRI offers discounted meeting fares on various major air carriers for DRI seminar attendees. To receive these discounts, please contact Hobson Travel Ltd., DRI’s official travel provider at 800.538.7464 or you can book your travel on online at RESX.com. If you are a first time user use dri as company, your first initial and last name as Member ID and leave password blank the first time you login to enter a password. As always, to obtain the lowest available fares, early booking is recommended.

Special Discounts

No special discounts are provided for the Diversity for Success or Young Lawyers Seminars, Fidelity and Surety Roundtable, Defending Drug and Medical Device Litigation Young Lawyer Primer, the DRI Annual Meeting, or any non-CLE DRI meeting. For all other seminars, the first and second registrations from the same firm or company are subject to the fees outlined above. The registration fee for additional registrants from the same firm or company is $50 off the member rate, regardless of membership status. All registrations must be received at the same time to receive the discount.

Refund Policy

The registration fee is fully refundable for cancellations received on or before April 15, 2011. Cancellations received after April 15 and on or before April 22, 2011, will receive a refund, less a $50 processing fee. Cancellations made after April 22 will not receive a refund, but the course materials on CD-ROM and a $100 certificate good for any DRI seminar within the next 12 months will be issued. All cancellations and requests for refunds must be made in writing. Fax to DRI’s Accounting Department at 312.795.0747. All refunds will be mailed within four weeks after the date of the conference. Substitutions may be made at any time without charge and must be submitted in writing.

Article Published in SCDTAA Publication "The Defense Line"

2011-04-13T08:00:00.010-04:00

I am pleased to announce that my article entitled "Limits on the Duty to Warn in South Carolina Products Liability Law" was recently published in the Spring 2011 edition of The Defense Line, which is published by the South Carolina Defense Trial Attorneys' Association. You can find a .pdf of the article here.

As background, South Carolina Lawyer was kind enough to publish my article, "South Carolina Products Liability Law: What is South Carolina's Law on Warnings?" in its January 2011 edition. (See my post about this publication here). The original draft of the article was intended to be a comprehensive review of South Carolina warnings law, with the exception of the doctrine of preemption (which is a topic for an entirely different article by itself). The problem was that the article was extremely long and nearly double the word limitations requested by South Carolina Lawyer. To prepare it for publication, I had to cut a substantial amount of material from the section dealing with exceptions to and limitations on the duty to warn. My hope was that I could use this material to create a separate article and have it published in a different publication.

Fast forward to the Spring edition of The Defense Line, and there you have it: the "lost material" from the original article. This article has substantially more information on limitations/exceptions to the duty to warn in South Carolina than what was in the original South Carolina Lawyer article, with more case law and analysis. Enjoy.

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De-Brief From 2011 DRI Products Liability Law Conference

2011-04-12T16:06:00.011-04:00

I am back from the 2011 DRI Products Liability Law Conference in New Orleans. I had a great time at this year's conference and wanted to provide a quick re-cap of everything that went on.

I arrived in New Orleans at about 3:30 on Tuesday afternoon. After checking out the Hilton New Orleans Riverside and walking around a bit, I attended the networking reception that evening and met numerous attorneys and vendors from across the country who do products liability work. I went to dinner with a large group of attorneys that evening, and we enjoyed a great meal at Mr. John's Steakhouse. I highly recommend the red snapper special. Crazy delicious. Fantastic meal and group of attorneys.

On Wednesday, I attended the full session, which began at 8:15 a.m. My favorite presentation of the entire conference was later that morning and was presented by Richard S. Levick of Levick Strategic Communications. I have heard Richard speak before at a retreat at my prior law firm, and he is always extremely informative and very entertaining in discussing how to manage crisis communications in the world of litigation. He also has an excellent blog, entitled "BulletProofBlog: The Blog on Crisis Communications." After the morning session, I went to a "luncharound" with nine other attorneys at Palace Cafe, which was also very good. As I had learned from the previous night's dinner, good food is never "quick" in New Orleans, so we were a bit late for the afternoon session. When we returned, I attended the Manufacturer's Risk Prevention Specialized Litigation Group ("SLG") breakout meeting. After the breakout, I attended another networking reception, and dinner on Wednesday night was at Arnaud's with some of my friends and colleagues on the Agricultural, Construction, Mining and Industrial Equipment ("ACMIE") SLG. John Phelps entertained our table with some great war stories about litigation and politics in Arkansas.

Thursday was more of the same, and I attended the full session where Mark Kircher gave a really good presentation on "High Tech Demonstrative Exhibits that Work." The presentation involved animations used in cases to prove the defense's theory of the case, and some of them were really impressive. After another luncharound with attorneys at Restaurant August, it was time to prepare for my presentation at the ACMIE SLG breakout session. Our breakout session was two hours during the afternoon and the primary focus was on equipment fire cases. We had some great speakers, including John Phelps, representatives of John Deere and Caterpillar, and a forensic fire investigator. My presentation lasted approximately 20 minutes as was entitled "Who Needs Letterman? The Annual ACMIE Top 10 Cases." (I hope to post a link to the written materials once I get them on my biography website, but in the meantime, email me if you would like a copy of the written materials I prepared for my presentation). We got very good feedback from the SLG attendees after the session on all of the presentations. After another networking reception that evening, I went to Tommy's Cuisine with Lois Yamaguchi, Amy Fischer, Larry Ottaway, and Beth Anderson. Lois, Amy and Larry are attorneys affiliated with the Primerus group of law firms (of which Collins & Lacy, P.C. is a proud member), and Beth is an engineer with Anderson Engineering of New Prague, Inc. We had a great meal, and I would say that Tommy's was probably my favorite restaurant from the entire time I was in New Orleans.

Friday was the end of the conference, and I attended the Products Liability Committee meeting. Planning has already begun for next year's conference, and my congratulations to Nick Pappas, outgoing ACMIE SLG Chairman, who was selected to head up the planning of next year's conference in Las Vegas. I look forward to attending and hope to play a role in the planning of next year's activities.

Jury Reaches Verdict in South Carolina Attorney General's Lawsuit Against Johnson & Johnson

2011-03-23T08:02:00.006-04:00

Yesterday I posted an update about the South Carolina Attorney General's lawsuit against Johnson & Johnson and how the case went to the jury for deliberation (and the link to that post is here). The same reporters who provided news coverage about the closing arguments posted another article late yesterday that the jury reached a verdict, and their conclusion was that Johnson & Johnson violated South Carolina's consumer protection laws by sending South Carolina doctors a misleading letter about the safety and effectiveness of the anti-psychotic drug Risperdal.

A link to the article can be found here, and a cut and paste of it is below. (Thanks again to Bloomberg.com and these reporters for the coverage).

J&J’s Risperdal Letter Violated Consumer Law, Jury Finds

By Jef Feeley and Gary Henderson - Mar 22, 2011 7:23 PM ET

A Johnson & Johnson (JNJ) unit violated consumer-protection laws by sending South Carolina doctors a misleading letter about the safety and effectiveness of the antipsychotic drug Risperdal, a jury concluded.

Jurors in state court in Spartanburg, South Carolina, deliberated more than six hours before finding today that J&J’s Ortho-McNeil-Janssen Pharmaceuticals unit engaged in “unfair and deceptive acts” by sending a 2003 letter touting Risperdal as better and safer than competing drugs to more than 7,000 doctors across the state. A judge will decide later whether the drugmaker should pay $360 million in penalties over the mailings.

“The verdict they handed down is just and speaks the truth,” John White, a Spartanburg-based lawyer representing the state, said in an interview. Jurors also found that J&J warning label information on Risperdal was deceptive.

The state’s case centered on drug-safety claims that New Brunswick, New Jersey-based J&J and Janssen made in November 2003 correspondence to about 700,000 doctors across the U.S., including 7,200 in South Carolina.

The U.S. Food and Drug Administration responded with a warning letter saying J&J made false and misleading claims that minimized the potentially fatal risks of diabetes and overstated the drug’s superiority to competitors’ products.

‘Acted Responsibly’

“We are disappointed,” Greg Panico, a J&J spokesman, said in a statement. “Janssen acted responsibly and believes it did not violate” South Carolina law, he said.

South Carolina officials argued in the case that J&J sent the letter to protect billions of dollars in sales of the antipsychotic drug.

Risperdal’s global sales peaked at $4.5 billion in 2007 and declined after the company lost patent protection. Risperdal generated $3.4 billion in sales in 2008, or 5.4 percent of J&J’s total sales, according to company filings. Sales of the drug fell to $527 million last year, J&J said in a January earnings report.

Risperdal Consta, the long-acting version of the antipsychotic drug, generated $1.5 billion in sales last year for J&J.

The case is the third of about 10 state lawsuits to be considered by jurors over J&J’s Risperdal marketing campaigns. In June, J&J won dismissal of Pennsylvania’s suit alleging the company hid the drug’s diabetes risk and tricked regulators into paying millions more than they should have for the medicine.

Louisiana Verdict

A Louisiana jury ordered the drugmaker in October to pay $257.7 million in damages to that state for making misleading claims about Risperdal’s safety. A judge later added $73 million in legal fees to the award.

A West Virginia judge in a 2009 non-jury trial awarded $3.95 million, finding the company misled doctors about the risks and benefits of Risperdal. The state dropped its Risperdal claim after J&J won an appeal, company officials said in February.

Under South Carolina’s unfair trade practices law, Janssen can be fined as much as $5,000 for each Risperdal letter sent to South Carolina doctors. Judge Roger Couch will decide the financial-penalty issue after an April 18th hearing.

“After the judge makes a determination as to damages, we will consider our options,” Panico said in his statement.

The case is State of South Carolina v. Janssen Pharmaceuticals, 2007-CP-4201438, Circuit Court for Spartanburg County, South Carolina (Spartanburg).

To contact the reporters on this story: Jef Feeley in Wilmington, Delaware, at jfeeley@bloomberg.net ; Gary Henderson in Spartanburg, South Carolina at wgaryh@gmail.com .

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net .

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Reminder: 2011 DRI Products Liability Conference Coming Up April 6-8, 2011

2011-03-22T15:32:00.003-04:00

I previously posted all of the information about the upcoming 2011 DRI Products Liability Conference here, and I have been asked to post a reminder since we are only a couple of weeks away.

The Defense Research Institute is holding their Products Liability Conference at the Hilton New Orleans Riverside in New Orleans, Louisiana this year from Wednesday, April 6 through Friday, April 8, 2011. This is a great conference. I went to the one last year that was in Las Vegas, and I am attending this year's conference. In fact, I will be presenting on Thursday at one of the Specialized Litigation Group ("SLG") breakout sessions. I joined the "Agricultural/Construction/Mining/Industrial Equipment" ("ACMIE") SLG last year, and this year I am doing a presentation entitled "Who Needs Letterman? The Annual ACMIE Top 10 Cases." As the title suggests, the presentation is basically a survey of significant cases in 2010 that involved ACMIE products and equipment (and if you know of a case that I should consider for inclusion, please comment so that I can get in touch and discuss it with you).

All the details for the conference, including a brochure of the agenda, registration, etc., can be found here. I'm flying in Tuesday for the networking reception that evening, and I look forward to seeing anyone else who will be there.

Update: South Carolina Attorney General's Lawsuit Against Johnson and Johnson to Begin Jury Deliberations

2011-03-22T08:08:00.009-04:00

This is an update to the post below in which I provided an article about the beginning of the South Carolina Attorney General's lawsuit against Johnson & Johnson about the drug Risperdal. According to the article below written by Jef Feeley and Gary Henderson, the jury will begin deliberations in the trial today. The article is a good account of the closing arguments during trial, and the direct link to the article is here. (Thanks to Bloomberg.com for the coverage).

J&J Duped South Carolina Doctors Over Risperdal, Lawyer Says

By Jef Feeley and Gary Henderson - Mar 21, 2011 5:38 PM ET

Johnson & Johnson executives deceived South Carolina doctors about the safety of the antipsychotic drug Risperdal, and the drugmaker should be held liable for that deception, a lawyer said.

J&J made misleading claims about Risperdal’s health risks and effectiveness in a letter to more than 7,000 South Carolina doctors and that violated consumer protection laws, John Simmons, a lawyer for the state, said in closing arguments of the trial of a lawsuit seeking at least $360 million in penalties.

The drugmaker, based in New Brunswick, New Jersey, used “unfair and deceptive acts” in a marketing campaign designed to dupe doctors into signing off on Risperdal for mental-health patients, Simmons told jurors today.

The state’s case centers on drug-safety claims that J&J and its Ortho-McNeil-Janssen Pharmaceuticals unit made in November 2003 correspondence to 700,000 doctors across the U.S., including 7,200 in South Carolina. The U.S. Food and Drug Administration responded with a warning letter saying J&J made false and misleading claims that minimized the potentially fatal risks of diabetes and overstated the drug’s superiority to those from competitors.

J&J contends the state hasn’t proved the company set out to mislead doctors about Risperdal or started a “spin campaign” to bolster sales of the drug, Steven J. Pugh, one of the drugmaker’s lawyers, said in his closing statement.

Fall in Sales

South Carolinians with mental-health issues “have benefited from Risperdal,” Pugh said. “You haven’t heard that anyone in South Carolina has been harmed by Risperdal.”

Risperdal’s global sales peaked at $4.5 billion in 2007 and declined after the company lost patent protection. It generated $3.4 billion in sales in 2008, or 5.4 percent of J&J’s total sales, according to company filings. Sales of the drug fell to $527 million last year, according to a January earnings report.

Risperdal Consta, the long-acting version of the antipsychotic drug, generated $1.5 billion in sales last year for Johnson & Johnson (JNJ), officials said this month.

Under South Carolina’s unfair trade practices law, if jurors decide Johnson & Johnson deceived doctors about Risperdal in the 2003 letter, the company can be fined as much as $5,000 for each letter. Judge Roger Couch will decide the financial- penalty issue after jurors hand down their decision.

Third Jury Trial

The case is the third of about 10 state lawsuits to be considered by jurors over J&J’s Risperdal marketing campaigns. In June, J&J won dismissal of Pennsylvania’s suit alleging the company hid the drug’s diabetes risk and tricked regulators into paying millions more than they should have for the medicine.

A Louisiana jury ordered the drugmaker in October to pay $257.7 million in damages to that state for making misleading claims about Risperdal’s safety. A judge later added $73 million in legal fees to the award.

A West Virginia judge in a 2009 non-jury trial awarded $3.95 million, finding the company misled doctors about the risks and benefits of Risperdal. The state dropped its Risperdal claim after J&J won an appeal, company officials said in February.

J&J’s Risperdal letter to doctors was part of a campaign to protect billions of dollars in sales of the antipsychotic drug and showed a lack of concern for the safety of South Carolina patients who took the drug, Simmons said.

The drugmaker set up a “spin machine” to deceive doctors about the drug and hid studies casting doubt on the medication’s safety and effectiveness, the lawyer said. “It was all about the money,” he added.

‘Send a Message’

“You have the power to send a message to these companies that you can’t hide stuff,” Simmons said. “Tell them, no unethical, immoral conduct in South Carolina.”

The Risperdal letter in the state’s crosshairs isn’t a proper basis for the attorney general’s claims that the drugmaker violated consumer-protection laws, Pugh countered.

The FDA warned J&J in 2004 to correct some things in the letter, but never formally sanctioned the drugmaker for sending it out, the lawyer added.

“The November 2003 letter was true then and it’s true now,” Pugh said. Risperdal is different from other antipsychotic medicines and “doctors needed to know that,” he added.

Jurors will begin deliberating the case tomorrow.

The case is State of South Carolina v. Janssen Pharmaceuticals, 2007-CP-4201438, Circuit Court for Spartanburg County, South Carolina (Spartanburg).

To contact the reporters on this story: Jef Feeley in Wilmington, Delaware, at jfeeley@bloomberg.net Gary Henderson in Spartanburg, South Carolina at wgaryh@gmail.com.

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.

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South Carolina Attorney General's Lawsuit Against Johnson and Johnson

2011-03-09T14:34:00.004-05:00

Apparently the State's lawsuit against Johnson and Johnson began yesterday. Stephen Largen at the Spartanburg Herald Journal ran the below article yesterday, and you can find the direct link here. A cut and paste of it is below. This lawsuit sounds a good bit like the one against Eli Lilly, which I blogged about here and here awhile back. It includes allegations of off-label promotion and overcharging. I will try to keep my eyes out for coverage of the trial in the papers.

SC's lawsuit vs. Johnson & Johnson goes to trial

By Stephen Largen
stephen.largen@shj.com

Published: Tuesday, March 8, 2011 at 3:15 a.m.
Last Modified: Monday, March 7, 2011 at 9:58 p.m.

Nearly four years after the state of South Carolina first sued Johnson & Johnson over claims a subsidiary company overcharged the state for an antipsychotic drug and hid the risk of its side effects, the trial will begin this morning in 7th Judicial Circuit Court.

A jury, which will decide liability in the case but leave the awarding of any potential monetary damages to Judge Roger Couch, was seated Monday.

The S.C. Attorney General’s Office claims in its lawsuit that J&J’s Titusville, N.J.-based Janssen unit improperly marketed the drug Risperdal for unapproved uses, including treating children and dementia patients, dramatically overcharged the state for the drug, and did not adequately disclose the risk to patients of diabetes and other side effects.

A lawsuit represents only one side of a legal argument.

The S.C. Department of Health and Human Services paid about $10 million annually for a decade to provide the drug for Medicaid recipients.

Risperdal hit the market in 1994, and by 2008 generated $3.4 billion in sales.

Attorneys for the state aim to prove that the massive sales figures were due in large part to aggressive, deceptive marketing.

Two other states that made similar claims against J&J have won monetary awards, while another had its case dismissed.

Last fall, Louisiana was awarded $257 million in damages. Two years ago, West Virginia was awarded $4.4 million.

Pennsylvania had its case dismissed last summer.

Several other states have pending Risperdal claims against J&J.

South Carolina filed a similar fraudulent-marketing lawsuit against drugmaker Eli Lilly related to the marketing of its antipsychotic drug Zyprexa, and it settled with the company for $45 million in 2009.

The state’s representation in the J&J case includes attorneys who worked on the Eli Lilly case and Risperdal cases in other states.

The Risperdal trial is scheduled to open at 9 a.m. today. The trial is expected to last three weeks.

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Voila!

2011-03-04T09:22:00.005-05:00

The kind people in the marketing and IT departments here at Collins & Lacy, P.C. have been helping me with a "bold, fresh new look." I am not sure how "bold" or "fresh" a legal blog can be, but we strive for excellence here at the South Carolina Products Liability Law Blog. I hope you enjoy the updated look, and comments are always welcome. I am also going to add a new blogroll and update some links, so check in from time to time.

More on the Legislative Amendment to Overturn Branham v. Ford

2011-03-02T08:10:00.006-05:00

I wanted to provide an update on the post below concerning the proposed amendment to reverse the holding in Branham v. Ford. Admittedly, I was not at the hearing in question, and all the information I had at the time of my post was through the grapevine and from the article in the South Carolina Chamber of Commerce Update. Since my post, I have learned that the bill in question is H.B. 3375, which is entitled the "South Carolina Fairness in Civil Justice Act of 2011." At the hyperlink, you can find the various versions of the bill, by date. The version with the amendment in question is here, which is the committee report from February 23, 2011.

As you read through it, you are not going to find language that says "hey, this is the part that reverses Branham v. Ford." Instead, the amendment is more subtle. It strikes Sections 15-73-10, 20 and 30 of the South Carolina Code and adopts identical Sections 15-73-11, 21 and 31. My understanding is that the expressed purpose of the amendment was to overturn Branham. I am told that at the hearing, it was stated that the Branham case stood for the principle that if the Legislature did not actively renew a statue after a number of years, the Supreme Court felt it was empowered to overturn statutory authority and to adopt a rule of law directly contrary to the statute. Therefore, the amendment is to "renew" the statutory authority. The amendment re-adopts the comments to Section 402A of the Restatement (Second) of Torts as new Section 15-73-31.

My brief of Branham discusses how the South Carolina Supreme Court addressed the evolution of products liability law since incorporation of comment 402A into the statute, including the Restatement (Third) of Torts: Products Liability in 1998. The Restatement (Third) and the majority of jurisdictions have evolved toward the risk-utility test for design defect cases, and South Carolina's appellate courts have also gravitated toward this test over the years. Therefore, it makes sense to adopt it as the test for design defect cases. I do not read Branham as some sort of judicial slap to the face of the statutory authority or the Legislature. Rather, it is an attempt to keep South Carolina current in products liability law. However, I welcome reader comments.

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Something is afoot at the Legislature...(Update on Branham v. Ford and Proposed Punitive Damages Cap)

2011-02-25T14:50:00.006-05:00

I have been hearing for awhile that there is a chance that the South Carolina State Legislature may take action in response to the South Carolina Supreme Court's decision in Branham v. Ford, and these rumors (may have been) confirmed today.

Apparently Senator Brad Hutto has offered an amendment to repeal the holding in the case. I say "may have been" above because I have not obtained a copy of the amendment, but the South Carolina Chamber of Commerce Competitiveness Update talks about this particular issue, and proposed caps on punitive damages, in today's edition. A cut and paste of the article is below (click the hyperlink above for the actual article). I will try to obtain the amendment and determine the nature of the provision.

Trial Lawyers Take Tort Reform Hostage

Last week, a Senate Judiciary subcommittee passed a comprehensive tort reform bill supported by the business community. However, this week the full Senate Judiciary Committee watered down key pieces of tort reform, including a meaningful punitive damage cap. The subcommittee also set unreasonable monetary thresholds for the admissibility of the non-use of seat belts.

The amended bill could be debated on the Senate floor as early as next week, and the South Carolina Chamber of Commerce is asking senators to vote against the committee amendment. If the committee amendment is defeated, the bill will revert back to the House-passed version of tort reform, which is a much stronger, pro-business bill championed by Speaker Bobby Harrell (Charleston).

The South Carolina Chamber and the South Carolina Civil Justice Coalition are also asking senators to examine neighboring states’ punitive damage limits, specifically Virginia, North Carolina, Georgia and Florida, and pick a model. Currently, trial lawyers are picking and choosing words and phrases from the other states in an attempt to render any cap in South Carolina meaningless.

The Chamber is also very concerned with an amendment offered by Senator Brad Hutto (Orangeburg), which was adopted by the full committee and repeals the Branham v Ford decision. The decision places South Carolina in the minority compared with other states on product liability issues. It also weakens the state’s business climate. At a time when the South Carolina Department of Commerce is working to expand the automotive cluster, this amendment must be stripped out of the tort reform bill.

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Case Brief: Salladin v. Tellis

2011-02-24T08:45:00.001-05:00

Today's case brief is Salladin v. Tellis, 247 S.C. 267, 146 S.E.2d 875 (1966). This an older, short opinion that reviews the landmark case of MacPherson v. Buick Motor Co., 217 N.Y. 382, 111 N.E. 1050 (1916) and the concept of privity in tort law.

FACTUAL BACKGROUND: The decedent was electrocuted while working in the repair and renovation of a pharmacy in Charleston, South Carolina. 247 S.C. at 269, 146 S.E.2d at 876. As alleged in the Complaint, decedent "came into contact with a highly charged piece of metal." Id.

PROCEDURE: Plaintiff brought a wrongful death lawsuit on behalf of the decedent's estate against numerous defendants. 247 S.C. at 269, 146 S.E.2d at 876. Defendant Universal Manufacturing Corporation ("Defendant"), a manufacturer of electrical transformers and devices, demurred to the Complaint on grounds of lack of privity between Defendant and the decedent. Id. Defendant also argued that the decedent was not a vendee of Defendant's product and was not using the product at the time of his injury. Id. The circuit court overruled the demurrer. Id.

ISSUE(S): Defendant appealed the overruling of the demurrer by the circuit court.

DISPOSITION: The South Carolina Supreme Court affirmed the circuit court's decision.

RULES AND OPINION: The court reviewed the "celebrated decision" in MacPherson v. Buick Motor Co., 217 N.Y. 382, 111 N.E. 1050 (1916) which established that the manufacturer of a product which, when put to its intended use, is imminently dangerous if defective, is liable in tort for negligence in its manufacture. 247 S.C. at 269, 146 S.E.2d at 876. The court noted that the MacPherson case abolished the concept of privity in products liability cases and that a manufacturer's duty extends to anyone who may reasonably be expected to be in the vicinity of a products probable use and to be endangered if the product is defective. Id. at 269-70, 146 S.E.2d at 876-77. The court cited to the following rule as the applicable law for opposing the demurrer:

A manufacturer who fails to exercise reasonable care in the manufacture of a chattel which, unless carefully made, he should recognize as involving an unreasonable risk of causing physical harm to those who use it for a purpose for which the manufacturer should expect it to be used and to those whom he should expect to be endangered by its probable use, is subject to liability for physical harm caused to them by its lawful use in a manner and for a purpose for which it is supplied.

Id. at 271, 146 S.E.2d at 877. Therefore, in this case, it did not matter that the decedent lacked privity and/or was not a vendor of the product.

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South Carolina Bar "Distance Learning" CLE Presentation on Warnings Law

2011-02-23T10:43:00.004-05:00

I have been asked by the South Carolina Bar to do a one hour "Distance Learning" presentation on South Carolina warnings law based on the article I recently had published in South Carolina Lawyer. I guess I did not realize that the Bar offers these types of videotaped programs for CLE credit, but I was very happy to be offered the opportunity to do it.

We have tentatively scheduled the videotaping for April 19, 2011, but my hope is that we can do it sooner (depending on how some scheduling works out). I intend to cover much of the material written about in South Carolina Lawyer article. However, because of space constraints for that particular article, I had to cut out much of the text relating to limitations on the duty to warn in South Carolina (I hope to have the material that was cut published as a separate article in the near future). Therefore, this presentation will afford me the opportunity to cover that material, as well.

If there are any lawyers licensed in South Carolina who practice out of state, or any in-state lawyers who just need the convenience of a video CLE, I invite you to be on the lookout for this new addition. I assume you will be able to find it listed here, but will update this post once the presentation goes online.

Case Brief: Benford v. Berkeley Heating Co.

2011-02-21T09:13:00.012-05:00

Today's case "brief" (I should call these "surveys" since they admittedly are never very "brief") is Benford v. Berkeley Heating Co., 258 S.C. 357, 188 S.E.2d 841 (Ct. App. 1972). The case involves a furnace and component blower switch that -- although found not to be defective in design -- combines with improper installation to cause a fire. There is some artful pleading and and election of remedies that influence the outcome of this case. It is not a case of "bad facts make bad law," as I do not disagree with the court's findings based on the theory of recovery. However, I am not sure that the outcome would be the same if this case was heard today or if the case asserted negligence or strict liability as a theory of recovery.

FACTUAL BACKGROUND: Berkeley Heating Company ("Berkeley") installed a furnace manufactured by The Trane Company ("Trane") in the crawlspace of a new home in August of 1977. 258 S.C. at 361, 188 S.E.3d at 842. The home burned on November 30, 1967. Id. As installed, the furnace's vent was only two and three-quarter inches from the pine joist where the fire originated. Id. Trane's manual required clearance of at least six inches between the heater's draft hood and the joist. Id. The manual also required that the flue pipe to be pitched upwards to facilitate escape of exhaust through a "short and direct route." Id. However, as installed by Berkeley, the flue pipe was ten feet long and made three ninety degree turns. Id. Two experts investigated the fire for Plaintiff Marvin Benford ("Plaintiff"). Id. The first expert did not find anything wrong with the furnace itself, but cited to three errors in the furnace's installation: (1) inadequate clearance between the draft hood and joist, (2) three ninety degree elbows in the vent connector, and (3) the down pitch of the vent connector to the chimney. Id. at 361-362, 188 S.E.2d at 842. Another expert investigated the case for Plaintiff in February of 1969. Id. at 362, 188 S.E.2d at 842. He concluded that the blower had not operated during the fire. Id.

PROCEDURE: After receiving the first expert's report, Plaintiff sued Berkeley alone in Charleston County. 258 S.C. at 362, 188 S.E.2d at 842. After the second expert's report, Plaintiff discontinued his Charleston County suit against Berkeley alone and commenced a lawsuit against Berkeley and Trane in Dorchester County. Id. Plaintiff sought recovery on several theories, including negligence and implied warranty. Id. Plaintiff alleged that the failure of the blower to operate caused the temperature to become higher than normal. Id. The higher temperature and faulty installation by Berkeley combined to cause the fire. Id. The trial court required Plaintiff to elect a remedy for recovery at the end of his testimony, and Plaintiff chose breach of implied warranty. Id. The jury found in favor Berkeley, but returned a verdict against Trane. Id. at 361, 188 S.E. 2d at 842. Trane appealed.

ISSUES: Whether the trial court erred in not granting Trane's motion for judgment notwithstanding the verdict or for a new trial. 258 S.C. at 361, 188 S.E.2d at 842.

DISPOSITION: Reversed. "For the reasons stated, the only reasonable inference from the evidence is that the intervening independent negligence of Berkeley was not reasonably foreseeable by Trane and that the destruction of plaintiff's house was not a natural and probable result of the failure of the blower switch. Trane's motion for judgment Non obstante verdicto should have been granted." 258 S.C. 368, 188 S.E.2d at 846.

RULES AND OPINION: The court set forth the applicable law for breach of implied warranty as follows:

The vendor is answerable for breach of implied warranty incident to a sale, as for any breach of contract, "for whatever damages follow as a natural consequence and proximate result of his conduct, or which may be reasonably be supposed to have been within the contemplation of the parties at the time the contract was made as a probable result of a breach of it."

258 S.C. at 362, 188 S.E.2d at 843 (quoting Nat'l Tire & Rubb Co. v. Hoover, 128 S.C. 344, 347-48, 122 S.E. 858, 859 (1924)). Applying this law, liability only extends to consequences that would follow the breach in the usual course of events, i.e., events that are foreseeable. Id. The court found that there was sufficient evidence to support the verdict that the switch was defective when it left Trane's hands. Id. at 363, 188 S.E.2d at 843. The court therefore reviewed whether there was evidence to support that the fire was a natural and foreseeable consequence of Trane's breach of implied warranty. Id. In other words, the court reviewed whether Trane could have foreseen the fire as a probable and natural result of the failure of the blower switch. Id.

The court reviewed the normal function of the heater and determined that if the blower switch does not operate, the air inside the heat exchanger to the unit continues to to grow hotter instead of being expelled into the dust system. Id. at 364, 188 S.E.3d at 843. The unit can complete a cycle in this manner, but it is said to be "cycling on the limit switch" and the result is that the draft hood reaches a much higher peak temperature than it otherwise would during normal cycling. Id. at 364, 188 S.E.2d at 843-44. The limit switch's function is to prevent dangerous overheating. Id. at 364, 188 S.E.2d at 844. Be that as it may, the furnace is designed to run in this manner so that there is sufficient heat to prevent pipes from freezing if the blower fails while a family is away. Id.

Significantly, Plaintiff did not claim defective manufacture and design of the heater by Trane, or that the installation manual was inadequate. Id. at 365, 188 S.E.2d at 844. Plaintiff's sole claim against Trane was with regard to the defective blower switch. Id. His installation claim was directed solely at Berkeley. Id. The court found that in the absence of proof to the contrary, Plaintiff's evidence supported that Berkeley's improper installation "interrupted the normally foreseeable train of events linking manufacture with use." Id. Berkeley's installation did not "usually and naturally" precede the use of a furnace. Id. Therefore, "[u]nless there was evidence reasonably pointing to the conclusion that the defective blower switch alone would have caused the loss in natural course, the judgment must fall." Id. The court reviewed the testimony of Plaintiff's experts, and it could not find any such evidence. Id. at 365-68, 188 S.E.2d at 844-46. Plaintiff's first expert said that the defective blower switch would not have caused the fire without the faulty installation. Id. at 365-66, 188 S.E.2d at 844. Plaintiff's second expert admitted during his testimony that the faulty installation made the difference in the fire's ignition. Id. at 366-68, 188 S.E.2d at 844-46.

The court recognized that Trane anticipated that its blower may not work all the time for a variety of different reasons (e.g., clogging, etc.), so it was designed to cycle safely on the limit switch when properly installed. Id. at 368, 188 S.E.2d at 846. "Any evidence that the furnace cycling on the limit switch would have caused the fire, even if it had been installed in the manner directed by the manual, would have pointed to a defect in design as the cause of the fire, which is not charged as a ground of recovery." Id. Based on Plaintiff's theory of recovery, the court reversed the verdict.

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SC Lawyer Article on Warnings Published

2011-02-04T11:32:00.004-05:00

My apologies for the length of time since my last post. January was rough for the South Carolina Products Liability Law Blog, as your beloved author got sidetracked by one kid getting sick...for a week...then a second kid getting sick...for the entire next week....and then yours truly getting the flu this past week (most likely thanks to aforementioned kids). So basically, when I haven't been working, I've been helping tend to sick kids or trying to get myself healthy again. Fun stuff, people, fun stuff. But better days are ahead, as Punxsutawney Phil did NOT see his shadow this week, meaning spring is on the way!

But enough about all that. Let's talk about something that really gets the juices flowing...like South Carolina's law on warnings. South Carolina Lawyer was kind enough to publish my article entitled Products Liability Claims in South Carolina: What is South Carolina's Law on Warnings? in its January 2011 edition, and you can find a copy of it here (give it a couple seconds to load). This article started out as a very exhaustive look at South Carolina warnings law (with the exception of the doctrine of preemption...which is a big enough topic to be its own article). However, because of space constraints, I had to cut it down a fair amount for publication. The section on exceptions to the duty to warn was originally much longer and had a great deal of additional case law and information. Because much of this information had to be cut out, I plan to use it as the basis for a new article that focuses specifically on this area of South Carolina warnings law, and I hope to submit it for publication in the near future.

Hopefully you will find it to be of interest, and I welcome any comments or feedback.

A couple of other blog-worthy developments from the last month. The South Carolina Defense Trial Attorneys Association asked if I would co-chair the Products Liability Substantive Law Committee, which I was very happy to accept for this year. My co-chair is Nick Gladd, and we will be responsible for providing updates to the organization on developments in products liability law in South Carolina, as well as helping plan for certain breakout sessions at the SCDTAA's meetings this year. If any followers of the blog are members of the SCDTAA and have suggestions for breakout topics, then please let me know.

Finally, my firm has asked me to chair our Products Liability Practice Group. The outgoing chairperson is Gray Culbreath, who also happens to be the Managing Partner of Collins & Lacy, P.C. and serves as the current President of the SCDTAA. Needless to say, Gray is wearing many different hats these days, so I appreciated my firm asking me to take over this duty so as to free him up a bit. I look forward to serving in this role.

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Upcoming DRI Products Liability Conference in April

2011-01-04T15:22:00.003-05:00

I am happy to post information about legal conferences pertaining to products liability issues. I always try to provide products liability information that is useful to the defense bar, plaintiff's bar, manufacturers, and individuals. Therefore, if anyone has a seminar or conference (regardless of whether it is defense or plaintiff-oriented), please pass it along and I will be happy to post the pertinent information.

The Defense Research Institute is holding their Products Liability Conference at the Hilton New Orleans Riverside in New Orleans, Louisiana this year from Wednesday, April 6 through Friday, April 8, 2011. This is a great conference. I went to the one last year that was in Las Vegas. and I am attending this year's conference. In fact, I will be presenting on Thursday at one of the Specialized Litigation Group ("SLG") breakout sessions. I joined the "Agricultural/Construction/Mining/Industrial Equipment" ("ACMIE") SLG last year, and this year I am doing a presentation entitled "Who Needs Letterman? The Annual ACMIE Top 10 Cases." As the title suggests, the presentation is basically a survey of significant cases in 2010 that involved ACMIE products and equipment (and if you know of a case that I should consider for inclusion, please comment so that I can get in touch and discuss it with you).

All the details for the conference, including a brochure of the agenda, registration, etc., can be found here. I look forward to meeting anyone who plans to be there.

Open and Obvious Risk . . . or a/k/a "You Had a Bad Day"

2010-12-29T12:30:00.010-05:00

You had a bad day. Like the song in the video, that phrase epitomizes an accident involving an open and obvious risk. The risk was right there, in front of you, and you ran headfirst into it in spite of yourself. You want to blame someone...someone should have told you about the danger. "That wheelbarrow should have warned about operating it near a trench!!!" But c'mon...you can't blame anyone. You knew better. You just had a bad day.

Admittedly, the accidents in the video are not directly on point as all of them do not necessarily involve a "product" per se. (Although any accident involving a ladder being placed near an obvious risk implicates Anderson v. Green Bull, Inc., 322 S.C. 268, 471 S.E.2d 708 (1996) discussed further below). However, the point remains the same. A seller is not required to warn of dangers or potential dangers that are generally known and recognized by users. Moore v. Barony House Restaurant, LLC, 382 S.C.35, 41, 674 S.E.2d 500, 504 (Ct. App. 2009); Anderson, 322 S.C. at 270, 471 S.E.2d at 710. This exception to the duty to warn includes dangers that are open, obvious, or matters that should be “common sense” to the user. Id; Dema v. Shore Enterprises, Ltd., 312 S.C. 528, 435 S.E.2d 875 (Ct. App. 1993).

The rationale for this exception is that the product is not defective or unreasonably dangerous because these dangers are contemplated by the ultimate user. Anderson, 322 S.C. at 270, 471 S.E.3d at 710 (citing Restatement (Second) of Torts § 402A cmt. g. (1965) for the principle that “a product is defective only ‘where the product is, at the time it leaves the seller’s hands, in a condition not contemplated by the ultimate consumer, which will be unreasonably dangerous to him.”) (emphasis in original).

This exception applies where the obvious risk poses a danger to the user of the product or to others. For example, operating an unlighted golf cart on a public highway at night has been held to present an open and obvious risk. In Moore v. Barony House Restaurant, LLC, the plaintiff brought negligence and strict liability claims against a golf cart manufacturer and claimed that the manufacturer failed to provide an adequate warning about operation of the cart at night and on public roads. The South Carolina Court of Appeals affirmed the circuit court’s grant of summary judgment for both claims, finding that “operation of an unlighted golf car on a public highway at night presents an open and obvious risk.” Moore, 382 S.C. at 42, 674 S.E.2d at 504. Furthermore, the court stated that although questions of negligence are often for the jury, there is no duty to warn of an open and obvious risk as a matter of law. Id.

The threat of electrocution from placing a ladder in close proximity to power lines has also been held to be an open and obvious risk. Anderson v. Green Bull, Inc. involved a lawsuit by the personal representative of a roofer who was electrocuted when his aluminum ladder came in contact with overhead power lines. The ladder contained a red warning label that read, “KEEP ENTIRE UNIT CLEAR OF ALL UTILITY AND ELECTRICAL WIRING.” Anderson, 322 S.C. at 270, 471 S.E.2d at 710. The trial court denied the manufacturer’s motion for a directed verdict, the jury returned a $50,000 verdict in favor of the plaintiff, and the trial court denied the manufacturer’s motion for judgment notwithstanding the verdict. Id. at 269, 471 S.E.2d at 710. However, the South Carolina Court of Appeals reversed the trial court’s decisions. The court did not believe that there was any evidence from which the jury could have reasonably inferred that the ladder was defective because “the conductivity of an aluminum ladder is a condition commonly known and recognized.’” Id. at 271, 471 S.E.2d at 711. “Any person of normal intelligence would know ‘the risk posed by an aluminum ladder in close proximity to an energized high-voltage line.” Id., 471 S.E.2d at 710. The plaintiff also raised the issue of whether the ladder manufacturer should have provided a warning to users to shorten the length whenever the ladder’s length would make it more dangerous because of surrounding conditions, such as overhead high voltage transmission lines. Id. at 271 n.3, 471 S.E.2d at 711 n.3. Because the manufacturer was not required to warn users to stay clear of power lines in the first place, the manufacturer was not required to warn users to take specific measures to stay clear of the lines (i.e., by moving the ladder, shortening it, or actions). Id.

Moore and Anderson involved injuries to the users of the products at issue. However, this exception also applies where certain use of a product poses a risk to someone else. A manufacturer is not required to warn about certain uses that could pose a danger to someone else as a matter of common sense. For example, in Dema v. Shore Enterprises, Ltd., the South Carolina Court of Appeals held that an Aqua-Cycle water recreational vehicle was not defective for failure to include a warning label cautioning the user to “watch out for swimmers” and to “avoid strong current, wind, or waves.” 312 S.C. 528, 435 S.E.2d 875 (Ct. App. 1993). In reaching its conclusion, the court stated as follows:

[U]sers of the Aqua-Cycle would be aware, as a matter of common sense, that they should be careful around swimmers in the surf. Because it is obvious that an Aqua-Cycle can cause injury to a swimmer, [the manufacturer] did not have a duty to warn Aqua-Cycle users of that risk.

Id. at 531-32, 435 S.E.2d at 876. South Carolina courts have used similar analysis to determine that there is no duty to warn about overtightening of lug nuts so as to avoid cracking them. Claytor v. General Motors, Corp., 277 S.C. 259, 286 S.E.2d 129 (1982).

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'Tis the Season for Good Food...And Warnings

2010-12-09T09:57:00.009-05:00

During this time of year when we enjoy turkey, turkey ala king, turkey sandwiches, turkey soup, turkey casserole, and crazy delicious holiday food (see above classic example from National Lampoon's "Christmas Vacation"), it is a good time to reflect on...warnings. Yes, that's right, there is even a body of law concerning warnings about food.

You are probably saying to yourself right now, "I've always thought that the turkey packaging should warn about L-Tryptophan and the danger of driving after Christmas lunch." Whether sleepiness after excessive turkey consumption is an open and obvious risk (and therefore constitutes an exception to the duty to warn) is an issue that will be debated for eons among the most sophisticated jurists.

But I digress. The reality is that food warnings law is set forth fairly clearly in comment J. to section 402A of the Restatement (Second) of Torts. As you will recall, South Carolina has incorporated this comment by reference into its strict liability statute as the legislative intent of the chapter. See S.C. Code Ann. § 15-73-30 (1976) (“Comments to § 402A of the Restatement of Torts, Second, are incorporated herein by reference thereto as the legislative intent of this chapter.”). Comment j. includes certain exceptions to the duty to warn, and it just so happens that two such exceptions deal with warnings about food.

(1) Common Allergies

The first exception to the duty to warn set forth in comment j. is that “the seller may reasonably assume that those with common allergies, as for example to eggs or strawberries, will be aware of them, and he is not required to warn against them.” Restatement (Second) of Torts § 402A cmt. j. Although this exception to the duty to warn may be straightforward when the consumer’s conduct relates to avoiding individual food products, it becomes more problematic when these food products are ingredients in other dishes. Comment j. therefore qualifies this exception with additional language.

Where, however, the product contains an ingredient to which a substantial number of the population are allergic, and the ingredient is one whose danger is not generally known, or if known is one which the consumer would reasonably not expect to find in the product, the seller is required to give warning against it, if he has knowledge, or by the application of reasonable, developed human skill and foresight should have knowledge of the presence of the ingredient and the danger.

For example, the Food Allergen Labeling and Consumer Act (“FALCA”) went into effect in 2006 to require that packaged foods containing milk, eggs, fish, crustacean shellfish, peanuts, tree nuts, wheat and soy must display them prominently in the ingredient list. See 21 U.S.C. § 201 et. seq. According to FALCA, these “Big Eight” food allergens account for 90 percent of all food-allergic reactions, and federal law requires their disclosure on packaged foods. Id. at § 201(2). Comment j. provides some of the rationale for this disclosure: a substantial number of the population is allergic to these ingredients, and the consumer may not know if one of the ingredients is in a food product without the disclosure.

Neither South Carolina state nor federal courts have interpreted this specific aspect of comment j. in the context of a food products failure to warn case. However, in Vaughn v. Nissan Motor Corp., 77 F.3d 736, 738 (4th Cir. 1996), the court stated in dicta that the “ordinary consumer” standard for determining if a product is unreasonably dangerous does not necessarily apply in the case of products associated with allergic reactions in an appreciable number of consumers.

(2) Products Consumed Over a Long Period of Time

Comment j. also carves out an exception to the duty to warn if the potential danger of a product relates to its use over a long period of time or in excessive quantities: “[A] seller is not required to warn with respect to products, or ingredients in them, which are only dangerous, or potentially so, when consumed in excessive quantity, or over a long period of time, when the danger, or potentiality of danger, is generally known and recognized.” Restatement (Second) of Torts § 402A cmt. j. As examples, the comment cites to alcoholic beverages and foods containing substances such as saturated fats. A seller has no duty to warn about the risks associated with such products from extended or excessive consumption.

Neither South Carolina state nor federal courts have interpreted this exception in comment j. In Aldana v. R.J. Reynolds Tobacco Co., No. 2:06-3366-CWH, 2008 WL 1883404 (D.S.C. Apr. 25, 2008), the court cited to this portion of comment j. to support that the warnings for defendant’s cigarette products were not required to make the product itself “safe,” but the court did not otherwise apply it to excessive or extended use of cigarettes. Id. at *2.

From the South Carolina Products Liability Law Blog, here's wishing you and your friends/families a very Merry Christmas and happy holiday season.

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Drilling Down: Does SC Recognize a Post-Sale Duty to Warn?

2010-10-13T08:00:00.000-04:00

From doing research on warnings and from my experience in litigation, a frequent question that comes up is whether a manufacturer has a post-sale duty to warn, i.e., after the product is sold in the marketplace.

South Carolina does not recognize a post-sale duty to warn. In Bragg v. Hi-Ranger, Inc., 319 S.C. 531, 462 S.E.2d 321 (Ct. App. 1995), the South Carolina Court of Appeals agreed with the trial court’s charge that a manufacturer “has no duty to notify previous purchasers of its products about later developed safety devices or to retrofit those products if the products were nondefective under standards existing at the time of the manufacture or sale.” Bragg, 319 S.C. at 548, 462 S.E.2d 331. Subsequent cases have also cited to Bragg’s language and have indicated that South Carolina does not recognize a post-sale duty to warn. Ervin v. Continental Conveyor & Equip. Co., Inc., 674 F. Supp.2d 709, 725 (D.S.C. 2009); Campbell v. Gala Indus., Inc., No. 6:04-2036-RBH, 2006 WL, at *4-5 1073796 (D.S.C. Apr. 20, 2006).

I have seen defendants try to argue that Bragg's language supports that a manufacturer-defendant has no post-sale duty to warn...period. For example, I was involved in a case where one of the issues at trial was whether a manufacturer's service representative had a duty to notify a customer that a guard on the machine at issue was missing (i.e., a guard that might have prevented the injury at issue). The issue was framed as more of a negligent maintenance and inspection issue, as opposed to a products liability issue. However, the manufacturer argued that Bragg's language supported that it had no post-sale duty to warn of the missing guard during its maintenance of the machine.

This is not how I interpret Bragg. From my reading (and I welcome your comments), it clearly applies to improvements made after the manufacture of the product. In such cases, the manufacturer has no duty to circulate a new warning about the consequences not having the improvement, and it certainly has no duty to recall all products to retrofit them. However, I do not believe that it -- carte blanche -- means that a manufacturer has no post-sale duty to warn of any kind. See also Hubband & Felix, The South Carolina Law of Torts 292 (1997) ("Moreover, Bragg does not appear to be applicable to situations where a seller discovers dangers or defects after the sale. In this situation, the weight of authority clearly imposes a duty of due care on the seller.). Rather, the manufacturer has no post-sale duty to warn about improvements.

Although this is the current status of South Carolina law, recent opinions issued by the South Carolina Supreme Court have cited to the Restatement (Third) of Torts: Products Liability (1998) to support adoption of the risk-utility test as the exclusive test for a design defect claim. See Branham v. Ford Motor Co., No. 26860, 2010 WL 3219499 (S.C. Sup. Ct. Aug. 16, 2010) (citing to Restatement (Third) of Torts: Products Liability § 2b (1998) in support of adoption of risk-utility test); Watson v. Ford Motor Co., No. 26786, 2010 WL 3543725 (S.C. Sup. Ct. Sept. 13, 2010) (reiterating in footnote four its adoption of the Restatement (Third) approach for the risk-utility test in Branham). These opinions have been the subjects of prior blog posts where I noted the citation to the Restatement (Third).

Although this citation does not change South Carolina’s lack of recognition of a post-sale duty to warn, it may have opened the door for plaintiffs to argue that South Carolina should adopt other sections of the Restatement (Third), and specifically section 10. Section 10 of the Restatement (Third) provides for “Liability Of Commercial Product Seller Or Distributor For Harm Caused By Post–Sale Failure To Warn,” or a post-sale duty to warn.

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Case Brief: Nelson v. Coleman Co.

2010-10-07T11:00:00.002-04:00

Today's case brief is Nelson v. Coleman Co., Inc., 249 S.C. 652, 155 S.E.2d 917 (Ct. App. 1967). This case involves a floor furnace and outlines a manufacturer's duty to test and inspect components in its products. It also discusses circumstantial evidence in a negligence case and the consequences of a defendant's failure to present its own evidence in response to a plaintiff's case. Specifically, although the decision admits that South Carolina does not recognize the Res Ipsa Loquitor doctrine, if a plaintiff is injured and provides circumstantial evidence to explain the cause of the injury, then a defendant proceeds at his own peril by not responding.

FACTUAL BACKGROUND: Plaintiff Homeowner purchased an oil burning floor furnace from Defendant Manufacturer through Defendant's authorized dealer. 249 S.C. at 655, 155 S.E.2d at 919. The dealer installed the furnace, and sixteen hours later, it emitted sparks and flames and destroyed the house and its contents. Id.

PROCEDURE: Plaintiff sued Defendant on negligence grounds. 249 S.C. at 655, 155 S.E.2d at 919. At trial, Defendant moved for nonsuit and directed verdict at the conclusion of Plaintiff's case, and without offering testimony or evidence of its own. Id. at 656, 155 S.E.2d at 919. The motions were denied, and the jury returned a verdict for Plaintiff. Id. Defendant moved for a judgment notwithstanding the verdict or a new trial, and both motions were denied. Id. Defendant appealed the denial of its motions by the trial court.

ISSUES: Defendant raised various different evidentiary and legal rulings as the basis for the appeal, including whether there was sufficient evidence of negligence and damages.

DISPOSITION: The South Carolina Supreme Court affirmed the rulings of the trial court. 249 S.C. at 662, 155 S.E.2d at 922.

RULES AND OPINION: The furnace was delivered from Defendant and installed at Plaintiff's residence without any changes to its condition. 249 S.C. at 655, 155 S.E.2d at 919. Plaintiff offered expert testimony that the fire was caused by a malfunctioning of the fuel regulator, which allowed oil to go into the burner and overflow and burn outside the furnace. Id. at 656, 155 S.E.2d at 919. Plaintiff's expert further testified that the defect in the fuel regulator was not apparent and could only be detected by testing conducted before shipping of the product. Id. at 657, 155 S.E.2d at 920. Defendant contended that the fuel regulator was manufactured by a third-party. Id. Although it was a component to Defendant's product, Defendant contended that it had no duty to test and inspect the component. Id. Even if it had a duty, Defendant contended there was no evidence that it failed to fulfill this duty. Id. The court stated the applicable law as follows:

It is generally held that a manufacturer who incorporates into his product a component made by another has a responsibility to test and inspect such component, and that his negligent failure properly to perform such duty renders him liable for injuries proximately caused thereby.

Id. In this context, the court believed that Plaintiff had provided sufficient circumstantial evidence to support that the fire was caused by the malfunctioning fuel regulator and that the defect could have been discovered by the Defendant with proper inspection and testing. Id. at 658, 155 S.E.2d at 920. Therefore, with regard to the sufficiency of evidence of negligence, there was no error in refusing the Defendant's motions. Id.

Defendant also contested whether Plaintiff had provided competent evidence to support a finding of money damages. Id. Plaintiff presented evidence that the reasonable value of items lost in the fire was $11,198.20, which included a list compiled by Plaintiff of the personal property lost in the fire. Id. at 659, 155 S.E.2d at 921. The court found that it was reasonable for Plaintiff to provide his own estimate of the value of the personal property, and there was no error in refusing Defendant's motions on grounds of insufficient evidence of damages. Id.

Defendant also contested that the trial judge erred in sustaining Plaintiff's objection to certain questions posed to Plaintiff's expert witness, i.e., "Is it customery in the trade for the manufacturers of these regulators to test them after they are manufactured." Id. at 660, 155 S.E.2d at 921. The court found that the trial judge's decision to sustain Plaintiff's objection to this question was not error because Defendant was able to pose a similar question to Plaintiff's expert and get his answer. Id. at 660-61, 155 S.E.2d at 921.

Defendant also asserted that Plaintiff's argument to the jury that Defendant had failed to produce witnesses or offer testimony was improper. Id. at 661, 155 S.E.2d at 922. The court disagreed, stating "We have held in a number of cases that it is proper for counsel to comment on the fact that the defendant has not taken the stand or offered testimony. It would be error in a criminal case so to do but not in a civil case. " Id. Therefore, the court held that this exception by Defendant was meritless. Id.

Finally, Defendant objected to the trial judge's charge that if a party fails to produce testimony of an available witness on a material issue, then the jury may infer that such testimony (if presented) would be adverse to the party failing to call the witness. Id. at 661-662, 155 S.E.2d at 922. Defendant's objection was that the trial judge left out the requirement that the witness be "available." Id. at 662, 155 S.E.2d at 922. However, the court found that Defendant had not properly preserved this objection at trial (i.e., Defendant did not request any clarification, amplification, or other curative measure by the trial judge). Id.

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Forthcoming Article on SC Warnings Law

2010-10-06T13:30:00.003-04:00

I have been busy finalizing an article on South Carolina warnings law, and I'm pleased to announced that it is (tentatively) scheduled for publication in the January 2011 edition of South Carolina Lawyer. The article focuses on the theory behind warnings, when a duty to warn arises, and what makes a warning adequate (or inadequate). I have tried to exhaustively review any South Carolina authority I could dig up to study all of the nuances of South Carolina's warnings law. Once I hear final determination of publication, I will let any of my blog readers know of the month of publication, but it is currently scheduled for January. Look for it!

SC Supreme Court Issues Substitute Opinion in Watson v. Ford

2010-09-13T12:52:00.003-04:00

Today, the South Carolina Supreme Court issued a substitute opinion in the Watson v. Ford Motor Co. case. The re-filed opinion can be found here (first opinion) and here.

I previously briefed this case at this post, so I plan to update it once I have had a chance to digest this re-filed opinion. The re-filed opinion appears to deal with the same issues that were in the first opinion (admission of testimony of two experts and admission of prior incidents). However, it also deals with Ford's motion for judgment notwithstanding the verdict and holds that the trial court erred in denying Ford's motion.

Be sure to check out footnote 4 where the court talks about its recent adoption of the Restatement (Third) approach to design defect cases. Informative footnote? Or more playing footsy with adopting the Restatement (Third) of Products Liability? You decide.

Check back for further analysis of this re-filed opinion.

Palmetto RIMS Speaking Engagement This Week

2010-09-10T15:57:00.004-04:00

On Wednesday of this week, I had the opportunity to speak at the Palmetto Chapter of the Risk and Insurance Management Society, Inc. This is a great group of folks involved in insurance and risk management, and I appreciate them giving me the opportunity to meet them, eat lunch, and speak for about 30 minutes on "South Carolina Products Liability Law." I spoke about the nuts and bolts of South Carolina's products law, including the three elements common to all products claims, the economic loss doctrine, some case studies, and the future of this area of the law. Thanks folks for your hospitality!

New SC Products Liability Case: Holst v. KCI Konecranes International Corporation

2010-09-09T16:11:00.005-04:00

Yesterday, the South Carolina Court of Appeals affirmed summary judgment in Holst v. KCI Konecranes International Corporation, Opinion Number 4736 (Sept. 9, 2010), which can be found here. I have not yet read it in its entirety, but the case involved a man's death when he was crushed under some containers that were being stacked by a crane. The plaintiff alleged that the crane was defective because of visibility limitations from the crane's cab.

At the circuit level, KCI filed a motion for summary judgment on grounds that there were no genuine issues of material facts as to the claimed defective and unreasonably dangerous condition of the crane. KCI asserted asserted additional grounds for summary judgment including comparative negligence and assumption of the risk. In addition to visibility limitations, Holst proposed mounting a closed-circuit video camera on the edge of the crane's trolley as a feasible design alternative to increase the operator's visibility. Holst also argued KCI failed to warn crane users about the crane's sight limitations. The circuit court granted summary judgment, and determined Holst's defective design and failure to warn claims failed as a matter of law.

The Court of Appeals affirmed the decision, and a quick reading indicates that the Court focused on the failure of plaintiff's experts to incorporate the risk-utility test into their analysis. There is also discussion of industry standards, the fault analysis in a negligence theory, and plaintiff's warnings claim. I will try an get a brief up in the next few days, but this looks like an interesting case.

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Ten Takeaways from Branham v. Ford Motor Co.

2010-08-27T08:43:00.004-04:00

By Brian A. Comer

I'm sure many folks who have stumbled across my site as a result of the Branham v. Ford Motor Co. case are looking at the case "brief" below, and their eyes are glazing over at its sheer length. Trust me, it took awhile to digest the case and write it. So...what's the "meat of the coconut" as a former colleague of mine used to say? Here are my "Ten Takeaways from Branham v. Ford Motor Co."

(1) Where strict liability and negligence are asserted as product liability claims in South Carolina, failure to prove an element that is common to both results in a directed verdict of both. In other words, if you cannot prove the product was defective and unreasonably dangerous for one of the claims, then the other does not survive either. Although there may be circumstances where one of the claims survives, it depends on the basis of the dismissal of the other claim.

(2) There is no separate "failure to test" claim apart from the duty to design and manufacture a product that is not defective and unreasonably dangerous. (This is significant to me, as "failure to test" has become a prevalent theory, especially in drug and medical device cases).

(3) As a sports talk radio host that I listen to says, "POWWWWWWWWW!!!!"....the consumer expectations test is GONE in a South Carolina design defect case. The risk-utility test is now the exclusive test, and it requires proof of feasible alternative design. Also, in supporting this holding, the Court cited extensively to the Restatement (Third) of Torts: Products Liability, which opens the door to its adoption in South Carolina.

(4) "The use of post-distribution evidence to evaluate a product's design through the lens of hindsight is improper." Admission of it is prejudicial.

(5) Although evidence of other incidents must be "substantially similar" and tend to prove or disprove some fact in dispute to be admissible, this issue is not even examined if the evidence is post-distribution evidence (see number 4). If it is pre-manufacture, then the Court will look at whether the data is relevant to an issue, even if the specific cause of the other incident is not known (e.g., comparative rollover data).

(6) You cannot inflame the passion and prejudice of the jury with inadmissible and prejudicial evidence in your closing argument. Period.

(7) If co-defendants are joint tortfeasors under the law, then it is improper to apportion fault on the jury form.

(8) The "harm to others" prohibition is alive and well in South Carolina when it comes to punitive damages. Trying to convince a jury that they should punish a manufacturer for all other injuries/deaths/etc. is forbidden by South Carolina and federal authority.

(9) When it comes to evidence for punitive damages, net worth is the safest harbor. Although admission of extrapolated financial data (down to hourly and daily income) has not been found to be abuse of discretion, the Court indicated there could be a limit to this kind of evidence. Furthermore, if you start getting into compensation of executives, stock options, etc., you are asking for reversal on the basis of prejudice.

(10) Courts have authority to re-align parties at any time and at their discretion.

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