Subsequent Remedial Measures in Strict Product Liability Actions

Matthew A. Cartwright ^{[ATTORNEY BIO] *}
Lackawanna County
Member of the Pennsylvania Bar

I. INTRODUCTION

One rule of evidence well known to the trial bar is the general inadmissibility of post-accident remedial measures if offered for the purpose of proving antecedent negligence. An issue about which much ink has been spilled is whether and to what extent this negligence rule should be applied in cases of strict product liability.Federal evidence law, which for some time has favored inadmissibility in products cases, seems to be hardening in that position, with the adoption of a newly revised Federal Rule of Evidence 407. Pennsylvania law is currently unsettled on the point, the Supreme Court not having spoken on it, and several panels of the Superior Court having sharply disagreed with each other about it.

A.Scope of this Article

This article will attempt to come to grips with the reasons for having a rule preventing juries from knowing about a defendant's post-accident remedial measures. Since this rule of evidence originated at least a century before the arrival of strict tort liability for defective products, its development in the early negligence cases will be addressed first. After discussion of the various exceptions to the rule, and their use in practice, some comments are ventured concerning the validity of the conventional statement of the policy basis of the exclusionary rule. State and federal caselaw is then surveyed on the issue of whether the rule applies in strict product liability cases. Examination is made of the 1997 amendment to Federal Rule of Evidence 407. Finally, a policy discussion is set forth with respect to the wisdom of some prevalent assumptions about how manufacturers will respond to particular changes in courtroom evidence law, and the propriety of cost-benefit analysis.

II.DEVELOPMENT OF THE PENNSYLVANIA RULE IN NEGLIGENCE CASES

It was during the last part of the nineteenth century that attention was drawn in Pennsylvania to making subsequent remedial repairs inadmissible to prove antecedent negligence. In the 1866 case of Pennsylvania Railroad Co. v. Henderson,¹ the Supreme Court of Pennsylvania had held that such evidence was properly admitted. In that case, the plaintiff's decedent was directed to go to a platform between two tracks and wait for his train which was slowing up. He followed these instructions; an express train passing on the adjacent track struck and killed him. The platform was six feet wide and the cars overlapped it so as to leave only 2½ feet of clear space in which to stand. Immediately afterward, the agent of the railroad telegraphed his supervisor, explaining the situation of the platform. The next day, the defendant removed the platform. The trial court admitted evidence of the subsequent removal, and the Supreme Court of Pennsylvania affirmed that, calling the admission of that evidence "clearly proper."

Other cases continued to admit evidence of subsequent remedial repairs in negligence cases without restriction.²

A.The Nationwide Trend

Meanwhile, across the country, the trend of cases was clearly toward inadmissibility of such evidence.³

Significantly, in the case of Morse v. Minneapolis & St. Louis Railway Co.⁴, the Supreme Court of Minnesota, which had previously followed the rule of unrestricted admission of evidence of subsequent remedial repairs, changed its mind on the subject and overruled all its prior decisions:

•  

  but, on mature reflection, we have concluded that evidence of this kind ought not to be admitted under any circumstances, and that the rule heretofore adopted by this court is, in principle, wrong, not for the reason given in some courts that the acts of the employes in making such repairs are not admissible against their principals, but upon the broader ground that such acts offer no legitimate basis for construing an act as an admission of previous neglect of duty.⁵

Following Minnesota's decision in Morse, the Supreme Court of the United States addressed the issue in Columbia & Puget Sound R.R. Co. v. Hawthorne,⁶ which was an appeal from the Supreme Court of the Territory of Washington. In Hawthorne, the Supreme Court noted that the only two American jurisdictions it was able to identify as supporting admissibility of post-accident changes were Kansas and Pennsylvania.⁷ The Court stated:

•  

  upon this question there has been some difference of opinion in the courts of the several states. But it is now settled upon much consideration, by the decisions of the highest courts in most of the states in which the question has arisen, that the evidence is incompetent, because the taking of such precautions against the future is not to be considered as an admission of responsibility for the past. It has no legitimate tendency to prove that the defendant had been negligent before the accident happened, and it is calculated to distract the minds of the jury from the real issue, and to create a prejudice against the defendant.⁸

B.Pennsylvania on the Bandwagon

By the turn of the century, dissatisfaction with the wholesale admission of subsequent remedial repair evidence began to surface among the Pennsylvania appellate judiciary. In Hager v. Wharton Twp.,the Supreme Court of Pennsylvania discussed the "doubtful" nature of the rule of general admissibility of subsequent repairs.⁹

Against this backdrop, the Supreme Court of Pennsylvania received the appeal of Baran v. Reading Iron Co.,¹⁰. Baran was an action by the parents of a minor child who had been killed in a boiler explosion. The plaintiffs case was founded on two theories of negligence, first that the boiler which exploded had not been properly supported and second that it was improperly allowed to cool while still connected with other boilers which were still in operation. After the child's death, the foundry replaced the exploded boiler, supporting it in a different manner and giving its employees in charge of the boilers instructions to disconnect the boilers from the main steam line when conducting similar operations. "The distinct purpose of these offers was to show a recognition by the Defendant of its negligence in not having properly supported and managed the boiler, and the overruling of them raises the question whether evidence of precautions taken after the alleged negligent act is admissible for the purpose of showing antecedent negligence."¹¹

Affirming exclusion of the subsequent remedial repair evidence, the Supreme Court overruled all of the prior jurisprudence on this point in Pennsylvania and thus made Baran v. Reading Iron the landmark case.

•  

  The admission of such testimony cannot be defended on principle. It is not more likely to show that there was negligence before the accident than that the occurrence of the accident first suggested the use of methods or appliances not before thought of. It applies to conduct before an accident a standard of duty determined by after-acquired knowledge. It punishes a prudent and well-meaning defendant who guards against the recurrence of an accident he had no reason to anticipate, or who, out of a considerate regard for the safety of others, exercises a higher degree of care than the law requires.¹²

In addition to quoting the Supreme Court of the United States decision in Hawthorne as well as the Morse decision from Minnesota, the Baran opinion also quotes an English decision from the Court of the Exchequer, Hart v. Lancashire & Yorkshire R.R. Co.¹³:

•  

  There are matters of considerable importance involved in this particular case. One of them is that people do not furnish evidence against themselves simply by adopting a new plan in order to prevent the recurrence of an accident. I think that a proposition to the contrary would be barbarous. It would be, as I have often had occasion to tell juries, to hold that, because the world gets wiser as it gets older, therefore it was foolish before.¹⁴

In overruling the prior decisions of general admissibility of subsequent repairs, the Supreme Court took pains to illustrate the egregious nature of the negligence in those cases, starting with the 1866 Henderson decision. "In view of the manifest and gross negligence of the company in so locating a platform that it would be a deathtrap, the court may have been of opinion that the admission of this testimony did not call for a reversal..."¹⁵ In other words, if it is so clear and free from doubt that a defendant was negligent, admission of a post-accident remedial measure could only have been harmless error.

C.Application of the Rule after Baran

In an appeal which reached the Supreme Court of Pennsylvania six months after Baran, the Supreme Court adhered to the new rule. In Elias v. City of Lancaster,¹⁶ the plaintiff had sued Lancaster for not having properly secured an iron plate covering a gutter at a street crossing. After the plaintiff's accident, the city fastened the iron plate to the granite heading by means of iron pins. Trying the case before the Baran decision came down, the trial judge refused to charge the jury that "no prior negligence on the part of the defendant can be presumed from the fact that the plate was fastened after the accident."¹⁷ In a brief discussion, the Supreme Court noted that the trial court's refusing to give that charge raised "the question whether evidence of precaution taken after an accident is admissible as tending in itself to prove prior negligence."¹⁸ Again, the Supreme Court notes that the level of negligence was "not so manifest" in that case as to make admission of the subsequent measure harmless.¹⁹ Accordingly, the court reversed the case and remanded for a new trial consistent with the Baran decision.²⁰

Since 1902, the Pennsylvania courts have applied the general rule of inadmissibility of subsequent repairs to prove antecedent negligence uniformly.²¹

Pennsylvania has applied the rule in a much broader spectrum of situations than simply repairs of broken steps and unsecured manhole covers. For example, in O'Malley v. Peerless Petroleum,²², the court precluded evidence of the subsequent introduction of a chemical into the sewer systems to prevent gasoline explosions. Similarly, in Ball v. Rolling Hall Hospital,²³ the court held that adoption of nursing guidelines relating to the administration of medication subsequent to an event alleged to have been malpractice was inadmissible. Indeed, the age of automobiles soon brought about an interesting application. In 1912, the Pennsylvania Superior Court held evidence that the defendant fired his chauffeur shortly after an accident to be inadmissible to prove that the chauffeur had been negligent, citing Baran²⁴

The rule excluding evidence of subsequent remedial repairs has also been held to include evidence that the defendant formed the intention after the accident to repair the problem.²⁵ Note also the decision of Pressler v. City of Pittsburgh,²⁶ which affirmed a trial court's refusal to admit evidence that the City of Pittsburgh at the time of the accident already was planning to install special warning devices at the particular intersection where a collision occurred. At first blush this would appear to be an incorrect application of the rule in a situation where the City knew of a problem and was in the process of remedying it at the time of the accident. However, the Supreme Court in that case emphasized that the remedial plan was not directed solely at the intersection involved but in fact was a plan that applied to the entire City of Pittsburgh. "The appellant company did not show any special circumstances, such as numerous accidents at the street or intersection in question, which would put the City on notice that it should exercise an unusual degree of care at this point. There was no evidence that the City had reason to expect exceptional risks at Forbes and Stephenson."²⁷ Although in Pressler there appears a reference to penalizing a party for making a remedial repair, the focus is almost exclusively on whether the City's planned installation of warning devices throughout Pittsburgh was relevant on the question of whether the particular intersection in that case was unreasonably dangerous before the accident in question occurred.

D.Examining the Underpinnings

After a review of the evolution of the rule excluding evidence of post-accident repairs in negligence cases, two broad comments may be made concerning the development of the rationale for this rule. Before any intelligent discussion can be made about the proper course for the future application of a rule, the original rule and the reasons for it must be thoroughly understood.

1.Relevance is King

First, it is plain that the emphasis in these opinions discussing the rule as it developed was on one issue: relevance. In discussing whether a defendant exercised reasonable care up to the time of an accident, the only relevant examination centers on what he did and knew and what he should have done and known at that time. Nothing about his conduct afterward necessarily sheds any light on what he knew before the accident.

This is so particularly because the fact of the accident changes all the circumstances. Baran v. Reading Iron concentrates its focus very intently on the fact that a subsequent repair is simply not relevant to establishing the level of the defendant's awareness and care before the accident in question occurred. There is a clear thrust in the Baran opinion that the Justices were specifically thinking about the situation where a defendant had no way of knowing of a dangerous condition before or until the accident in question occurred. One gets this distinct flavor from the Baran opinion particularly because the court distinguishes the prior Pennsylvania cases with reference to the overwhelming amount of negligence in those cases. The railroad in Henderson did not need to wait for a passenger to die to find out that 2½ feet was not enough space for people to stand between passing trains. In less obvious cases, however, a hazardous condition may be difficult to discern until an accident actually does happen. In such cases, what the defendant knew or should have known are two vastly different things before and after the accident in question. Thus, what the defendant did afterward simply does not make it more or less likely that he was being careless before the accident. It is this irrelevancy that dominates the discussion in all of the opinions through which the rule developed.

2."Unfairness" v. "Inhibition"

Second, it is important to make a critical reading of these early cases for how they address what is now referred to as the "public policy" basis for the rule. The problem is this: if the public policy foundation is an attempt not to deter or inhibit defendants from making remedial changes, this is not particularly evident in the seminal cases cited above. In Baran, the subject of the prospective effect of admissibility on the defendants is entirely absent from the discussion. In the main, these decisions are devoid of comment on the effect of the ruling on the probable future conduct of the defendants. The words "deter" or "inhibit" are not used in these landmark opinions.

Instead, the matter is discussed on a different plane: whether a fundamental sense of fairness and justice would allow a defendant who makes a post-accident change to be punished for it by allowing the change to be used against him in court. Baran: "It punishes a prudent and well-meaning defendant ... or who, out of a considerate regard for the safety of others, exercises a higher degree of care than the law requires."²⁸ Morse: "it would seem unjust" and it would put an "unfair interpretation upon human conduct".²⁹ Hart: It would be "barbarous."³⁰

Whether it was because judicial restraint was so much the rule in the last century that shaping "public policy" was simply not done, or not discussed, or for whatever reason, the modern dialogue of "promoting" or "inhibiting" certain conduct was simply absent from the cases that originally brought this rule to Pennsylvania.³¹

In short, as the original rule developed in negligence cases, the primary discussion was about relevance. There was no examination of whether admissibility would inhibit remedial changes, and almost no comment on the "policy" topic, other than that admissibility would be "unjust" or "unfair."

III.EXCEPTIONS TO THE RULE OF INADMISSIBILITY

The exceptions to the general inadmissibility of subsequent remedial repairs are as well known to the trial bar as the rule itself, and they receive regular exercise. At the outset, it should be noted that the "exceptions" are not really exceptions, since they do not fall within the rule as stated. The rule is that subsequent remedial repairs are not admissible to prove antecedent negligence. This of course does not preclude the use of such evidence to prove anything else that is relevant.

A.Control, Feasibility, Impeachment and Avoiding Confusion

The first such area of relevant inquiry was suggested by the Supreme Court in the very decision of Baran v. Reading Iron itself. There, the Supreme Court of Pennsylvania took pains to distinguish cases where such evidence should be inadmissible "from a class with which they are sometimes confounded, in which evidence of acts of repair or construction is received to prove dominion or control."³² Thus, since Baran, the admissibility of subsequent measures has never been questioned in cases where control of the instrumentality or premises of the accident was in dispute.³³

The second commonly invoked "exception" to the subsequent remedial measures rule is that such measures are admissible to prove feasibility of precautionary measures which the defendant could have taken but did not.³⁴

In addition, subsequent repairs are admissible to impeach. ³⁵ For example, in Buchanan v. Flinn, the Superior Court held that it was proper to introduce evidence of the chauffeur's termination for the purpose of impeaching the owner, who had testified that his man was a careful driver. ³⁶

Finally, subsequent repairs may be admissible in cases where demonstrative evidence, or perhaps the jury's view of the site necessitates the jury's seeing the subsequent repair; an instruction is necessary to explain to the jury that a change has occurred from the time of the incident in question, so as to avoid confusion.³⁷

Naturally, where a defendant does not contest the feasibility of a repair or design change, or his control over the instrumentality in question, it has always been the rule that these exceptions do not apply.³⁸ Thus, where a subsequent repair or design change has been made, it has become rote for careful defense lawyers to admit feasibility or control,³⁹ even where a party other than the defendant undertook the remedial measure.⁴⁰

•  

  B.The Exceptions Prove that the Policy Basis is Superfluous and Has Never Been Essential to the Purpose of the Rule

The frequency and facility with which evidence of post-accident changes is admitted under one of these exceptions is significant to the examination of the importance of the "public policy" underpinning of the exclusionary rule. No case has been found where a court excluded a subsequent remedial measure -- on policy grounds -- despite having found that the evidence was relevant to one of the four topics noted above.

Two comments may be made here. First, if this is so, if no decision has turned solely on this point, then the "policy" underpinning of the exclusionary rule must truly be makeweight.⁴¹

Second, any effect of the exclusionary rule on prospective conduct of defendants is brought seriously into doubt by this constant use of exceptions. Defendants must surely ask: "why should I pay any attention to this exclusionary rule, when the plaintiff will find some way to get it into evidence anyway" In short, the exceptions to this rule, which were born at the same time as the rule itself, and have never been compromised, prove that the real point of the rule has very little to do indeed with attempting to promote or inhibit particular conduct.

IV.THE EXCLUSIONARY RULE IN PRODUCT LIABILITY CASES

A majority of the States that have considered the question have held that the rule excluding post-accident remedial measures to prove antecedent negligence has no application to product liability cases, which are not about negligence.⁴² Two of the federal circuits have also held to this view.⁴³ However, the majority of federal circuits⁴⁴ and a minority of States⁴⁵ have held to the contrary.

•  

  A.Product Liability Legal Analysis Excludes Negligence Principles

Following basic principles of stare decisis, one would expect the Pennsylvania appellate courts to reject out of hand any application of the exclusionary rule in the strict product liability setting. Pennsylvania has always been in the vanguard of the States which refuse to allow negligence concepts to contaminate product liability analysis.⁴⁶ Consistent with this approach, Pennsylvania declines to require proof that products are "unreasonably" dangerous,⁴⁷ holds it improper to instruct juries on negligence concepts in failure-to-warn products cases,⁴⁸ refuses to allow state-of-the-art defenses in products cases,⁴⁹ and rejects contributory or comparative negligence as an irrelevant defense to products cases.⁵⁰ As the Superior Court stated in Dambacher v. Mallis, "in a strict liability case, principles of negligence have no place."⁵¹ The law of strict product liability in Pennsylvania is that a manufacturer of a defective and dangerous product may be held liable for resulting injuries even if he has exercised all possible care in the creation of his product.⁵²

1.It is Impossible to Call Admission of Post-Accident Remedial Repairs Unfairly Prejudicial Without Resorting to Negligence Analysis

Accordingly, a rule precluding the admission of evidence for the purpose of proving antecedent negligence would have no application in a strict products case. If the focus is solely on whether the product was dangerous, and whether it could have been made less dangerous, a subsequent remedial change is quite relevant. It is not unfairly prejudicial in the way it is in negligence cases, because the jury is not examining what the defendant knew or should have known. In a negligence case, we have seen that it is unfairly prejudicial to admit evidence of post-accident remedial changes to prove antecedent negligence simply because the accident itself may have been necessary for the defendant to become aware of the danger. In strict products cases, this is not unfairly prejudicial because the level of the defendant's awareness is irrelevant and not to be considered.

2.Matsko v. Harley Davidson

In fact, Pennsylvania treatment of the question at hand was first handled consistently with existing strict product liability analysis by the Superior Court in the case of Matsko v. Harley Davidson Motor Co.⁵³ Matsko was an appeal from a jury verdict for a plaintiff alleging a defect in a Harley Davidson motorcycle. The manufacturer appealed, assigning error to the admission of evidence that Harley Davidson had issued a post-accident recall notice of the motorcycle. Harley argued that the subsequent repair rule forbade the admission of the evidence. In a unanimous decision, Judges Cavanaugh, Brosky and Montgomery affirmed the admission of the post-accident recall notice.

In doing so, and writing for the court, Judge Brosky engages in a thorough analysis of the principles involved. According to the court, "The principal reasons for excluding evidence of subsequent repair in a negligence case is that it is both irrelevant and prejudicial."⁵⁴

•  

  Other courts have held, and we agree, that this rationale for excluding the evidence no longer applies in product liability cases where we "shift the emphasis from the defendant manufacturer's conduct to the character of the product." Sutkowski v. Universal Marion Corp., 5 Ill. App. 3d 313, 281 N.E.2d 749 at 753 (1972). In a products liability case our focus is on whether or not the product was in fact defective and not, as in a negligence case, on what the manufacturer knew or should have known about the defects in the product. Consequently, "At the very least, the balance that, in the traditional negligence cause, was weighted to avoid the prejudice rather than to find irrelevancy is tipped the other way in a strict liability suit."⁵⁵

The Superior Court then turns to Vockie v. General Motors Corp.,⁵⁶ a Pennsylvania federal district court case which was directly on point. Vockie ruled that a post-accident recall notice was inadmissible. Initially, Judge Brosky notes that Vockie was a federal decision, which, although it was applying the substantive law of Pennsylvania, was not using substantive law when it decided this question. "Rather, it was analyzed as a question of Federal procedure, to be governed by Federal evidentiary rules. As such, Vockie is not only not binding upon us, it is not even an interpretation of the law of this Commonwealth."⁵⁷

Nevertheless, Judge Brosky considers whether the rationale in Vockie should be accepted as the rule of evidence in Pennsylvania products cases. According to the Superior Court, "the other justification for this subsequent repair rule is a public policy one. "Manufacturers should not be inhibited in, or prejudiced by, a good faith effort to protect the public safety and comply with their statutory duty^"58

In Matsko, the Superior Court holds that this second rationale for the rule is also not applicable to a product liability context. Judge Brosky lists the reasons: first, he addresses the difference between the one-owner, one-incident situation commonly seen in negligence cases from the situation involving product manufacturers where many thousands of products may be involved.

•  

  Historically, the common law rule . . . was developed with reference to the usual negligence action, in which a pedestrian fell into a hole in the sidewalk, or a plaintiff was injured on unstable stairs; in such circumstances, it may be realistic to assume that a landowner or potential defendant might be deterred from making repairs if such repairs could be used against him in determining liability for the initial accident.

  When the context is transformed from a typical negligence setting to the modern product liability field, however, the "public policy" assumptions justifying this evidentiary rule are no longer valid. The contemporary corporate mass producer of goods, the normal products liability defendant, manufactures tens of thousands of units of goods; it is manifestly unrealistic to suggest that such a producer will forego making improvements in its product, and risk innumerable additional lawsuits and the attendant adverse effect upon its public image, simply because evidence of adoption of such improvement may be admitted in an action founded on strict liability for recovery on an injury that preceded the improvement. In the products liability area, the exclusionary rule "does not affect the primary conduct of the mass producer of goods, but serves merely as a shield against potential liability."⁵⁹

Moreover, notes Judge Brosky, it is not reasonable to assume that the evidentiary rule will have any effect on manufacturers conduct where such conduct is already regulated by another applicable law. "It is not reasonable to assume that ... manufacturers will risk wholesale violation of the National Traffic and Motor Vehicle Safety Act and liability for subsequent injuries caused by defects known by them to exist in order to avoid the possible use of recall evidence as an admission against them."⁶⁰

Continuing, the Superior Court quotes with approval the Caprara decision from the court of Appeal in New York which noted that among other things, the "escalation of governmental regulation" tended to undermine "any assumption that it is necessary to pay the price of sheltering defendants in strict products liability litigation from an evidentiary use of their product changes in order to persuade them to make improvements to which self-interest must propel them in any event ..." ⁶¹

The court further notes the deterrent factor of the specter of punitive damages awardable against a product manufacturer which continues to manufacture a product knowing that the design may or will result in injury and that an alternative feasible design was available.⁶²

Next, there is the relevant inquiry, in the public policy discussion, of the effect of insurance. Judge Brosky quotes a law review article with approval which makes the following observation:

•  

  In fact, in addition to humanitarian reasons, there are at least two compelling practical reasons why manufacturers are likely to take immediate safety precautions upon learning of existing defects. First, manufacturers realize that liability insurance companies will not continue to insure the further production of known defective products; as a condition of continuing the existing insurance coverage the manufacturer would be required by the liability insurance company to correct these defects. Second, manufacturers are well aware of the marketing impact which adverse publicity can have on future sales; and future sales will definitely take high priority over the payment by a manufacturer's insurance carrier of a damage suit judgment.⁶³

Finally, the Matsko court quotes a law review article that suggests that, looking at the broader picture, since product liability exposure overall tends to encourage manufacturers to build safer products, if admissibility of post-accident design changes or remedial measures results in more plaintiff's verdicts or more liability, then the overall incentive to for manufacturers to build their products safer is only increased⁶⁴

According to the court, each of these several quotations is persuasive. "Cumulatively they constitute an overwhelming set of arguments in favor of the admissibility of the recall notice."⁶⁵

3.Post-Matsko Pennsylvania decisions

After Matsko, other Pennsylvania Superior Court panel decisions have declined to apply this decision to post-accident remedial measures other than recall notices.⁶⁶ Although the Superior Court cases attempt to distinguish themselves on the facts, the statement that they really are "partially conflicting decisions" is correct.⁶⁷ Given the breadth of the statements in Matsko, subsequent remedial measures of any kind should be admissible. In 1992, in a diversity case applying Pennsylvania law,⁶⁸ the Third Circuit recognized that the "arguable conflict between the Federal Rule of Evidence and Pennsylvania law," was enough to trigger an examination, pursuant to Hanna v. Plumer, as to whether the conflict was one of substantive law.⁶⁹ In any event, the drafters of the proposed Pennsylvania Rules of Evidence have perhaps properly not taken a position on the issue⁷⁰, and the Supreme Court of Pennsylvania has not spoken on the subject.

V. THE NEWLY AMENDED FEDERAL RULE OF EVIDENCE 407

Meanwhile, the newly formulated Rule 407 of the Federal Rules of Evidence creates a whole new set of questions.Rule 407 has been amended, effective December 1, 1997, to read as follows:

•  

  Rule 407.Subsequent Remedial Measures.

  When, after an injury or harm allegedly caused by an event, measures are taken that, if taken previously, would have made the injury or harm less likely to occur, evidence of the subsequent measures is not admissible to prove negligence, culpable conduct, a defect in a product, a defect in a product's design, or a need for a warning or instruction.⁷¹

As all but two of the federal circuits already apply the exclusionary rule to product liability cases, this rule is more a restatement than a departure.

One somewhat disconcerting element in the announced change in Federal Rule 407 -- which applies to garden variety negligence cases as well as it does to product liablity litigation -- is that there is no mention made of the operation of the exceptions to the rule of inadmissibility. The previous rule specifically listed the exceptions. Following standard rules of statutory contruction, is the new rule to be interpreted to do away with the exceptions

Such a result would plainly be absurd. For example, in a case in federal court, where the defendant has made a post-accident change that would have prevented the accident in question, he could nonetheless defend the case on the disingenuous basis that a change he actually made was not feasible. Similarly, a defendant could deny that he had control over the instrumentality of an accident while concealing from the jury that he exercised such control after the accident. Such a reading of the new rule as prohibiting the use of the exceptions would lead to results so obviously incongruous that it would be inconsistent with the purpose of the Federal Rules of Evidence.⁷² The more sensible reading of the new rule, and no doubt the intention of the drafters, is to treat a listing of the exceptions as unnecessary, since, as has been noted, they are not "exceptions" at all, but situations falling outside the scope of the rule.⁷³

VI. ADMISSIBILITY OF POST-ACCIDENT REMEDIAL MEASURES WILL NOT INHIBIT SAFETY IMPROVEMENTS IN THE MANUFACTURE OF PRODUCTS

Having seen that it is logically inappropriate to exclude evidence of subsequent remedial changes in product liability cases, the only reason for doing so would be on the "policy" ground that to admit such evidence would be to inhibit safety changes. As has been shown, in the negligence setting, no case has ever turned on that question alone. Nevertheless, it has been urged that in order to prevent manufacturers from refusing to improve the safety of their products, this relevant evidence must be excluded.⁷⁴

A.Policy and the Short-Sighted Manager

It has been argued that many managers of American corporations tend to focus on the short term, spending the bulk of their efforts on achieving quarterly, or perhaps annual, profits.⁷⁵ As a result of this, when considering making safety improvements to products, such managers are highly likely to weigh in the balance the effect of a design change on the potential liability exposure for existing and potential claims for products already sold. Accordingly, it is suggested, if product design changes are made inadmissible, such managers really will no longer be inhibited from ordering the change.⁷⁶

There are several problems with this model. First, almost by definition, managers who take the time to sit down with counsel and discuss the evidentiary effect on pending and future cases of redesigning a product -- these are not short-sighted managers. If a manager stops to consider this question at all, he or she is not likely to take a foolish approach to the subject, but will take the long view. Of course, the broader issue here is whether public policy should ever set its incentives by the thought processes of people who are not thinking clearly.

Second, short-sighted managers think about short-term financial results. Lawsuits take years. How many product liability lawsuits come to trial against the same company in one quarter More likely, it will be the cost of retooling that will make the quarterly-results oriented manager shy away from redesigning a product, not the way a trial judge rules on a particular evidence issue.

Third, as Judge Brosky noted in Matsko, the prevalence of insurance is likely to obscure the relevance to the typical manager of evidentiary rulings in many cases, and indeed make it more difficult for a manufacturer to obtain coverage if he refuses to upgrade the safety of his products.⁷⁷

B.Good Managers Take the Long View

Consider the position of the prudent manager taking the long view. His company has been producing these lawnmowers for 40 years. If he rejects the newer, safer design, his chances at prevailing at trial on the ten pending cases will improve by 20%. However, his lawnmowers will continue to injure twice as many people per year as would be injured if he implemented the new design. For all but the shortest-sighted managers, this is not a difficult decision to make. It is not simply a matter of a 20% increase in exposure versus a 50% reduction, since the factor of time must be included. The statute of repose means that once the change is made, there is a limit to the number of cases that can be brought for the old, defective machines. On the other hand, the number of lawnmowers being sold, for which because of the design change no claim will ever be made, is bounded only by the length of time the company continues to sell lawnmowers. Unless the company plans on going out of business shortly, if the company moves to the safer model, the amount of money it will save will dwarf the short-term increase in liability payments.

The following table is an illustration of this point. We assume that the product is a commercial grade lawnmower, which typically is made with no dead-man shutoff control, such as are provided with the type of lawnmower sold to the ordinary consumer. The manufacturer is faced with the question of changing over to the dead-man design for the commercial grade mower, but is concerned about the effect on pending cases. Because the injuries involved are at least deep lacerations, and quite often the complete loss of digits or larger parts of the extremities, it is reasonable to take an average claim payment of $50,000, an average that includes all the cases tried to defense verdicts or otherwise resulting in defense judgments.

If the manufacturer switches over to a dead-man system, assume it will reduce injuries, claims made, and payments for injuries, by half. Allowing for the existence of mowers without dead-man systems remaining in the stream of commerce, assume that the absolute number of claims is reduced by 4 per year. This rate of claim reduction is carried through until the 12 year statute of repose immunizes the manufacturer from any liability to the victims of its older machines. At that 12-year point, the claim rate will jump to the 50% level, reflecting the half-claims rate for the newer models with the dead-man systems. Of course, this slow rate of reduction in claims is conservative for this type of product, since a lawnmower that delivers 12 years of service is exceptional.

Finally, 20% is added to the amount of the average claim payment, to reflect the additional exposure owing to the admissibility of the post-accident design change. Instead of $50,000 per claim, $60,000 is paid.⁷⁸ Note that the design change is made at the beginning of Year 1.

In this way, even with subsequent design changes being admissible, the company that makes the change anyway breaks even before the end of eight years, and nets a savings of $13.2 million in 15 years. Thus, even where the post-accident remedial design evidence is admissible against a manufacturer, only the most myopic manager would decline to make a change because he is worried about the short-term increased exposure in product liability cases.

C.Punitive Damages and "Cost-Benefit" Analysis

As Judge Brosky noted in Matsko, there is another strong reason why it is incorrect to assume that manufacturers will forego product safety improvements for fear of it being used against them. This is that a conscious decision to allow consumers to continue to be hurt so that a corporation can maintain its profits properly exposes a manufacturer to liability for punitive damages.⁷⁹

It has been argued, not only that corporations ought not to be punished for making such decisions, but also that such straight "cost-benefit" decisions should be encouraged.⁸⁰ The idea is that cost-benefit analysis has been sanctioned since Learned Hand first spoke of the gravity of the harm times the risk of the harm.⁸¹ Of course, the difference is that in the product liability setting, which was not what Judge Hand was discussing, it is no longer a matter of the risk of harm; what is being weighed is the certainty of harm against reducing the corporation's profits.

Punitive damages are awardable in cases of outrageous conduct.⁸² The archetypical example of punitive damages against an American manufacturer remains Grimshaw v. Ford Motor Co.⁸³ In Grimshaw, Ford had calculated how much it would cost to settle the cases of 180 people who it knew were going to burn alive in Pintos. Ford decided it would save money by not recalling the vehicles, and allowing the 180 people to burn. Twenty years ago, Americans felt this was outrageous. Since then, revisionist scholars and economic theorists have attempted to argue that it was not.⁸⁴

The problem with straight cost-benefit analysis is that it assumes that the product must be made. It assumes that if it is too expensive to make the product safe for consumers, then that should be taken into account in assessing whether the product is defective. This analysis entirely ignores the option that the product should be taken off the market as too dangerous to be worth making. In other words, cost-benefit analysis is not valid or proper unless it takes into account the utility of the product.⁸⁵ Only if the product is one of indispensable utility can it be said that straight cost-benefit analysi