As consumer class action attorneys are painfully aware, in AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011), the United States Supreme Court determined that the federal government views arbitration with such favor that state courts are sometimes preempted from striking provisions of arbitration clauses that are unconscionable under state law. Since Concepcion, courts are understandably reluctant to deny motions to compel arbitration when parties to a dispute have entered into an agreement to arbitrate. But a California court recently decided in a couple of cases that arbitration agreements can be invoked by manufacturers of defective products that are not even signatories to the arbitration agreement. These cases indicate a trending defense strategy by manufacturers that plaintiffs’ attorneys should consider when filing a products liability claim.

Read Avoiding Mandatory Arbitration in Products Liability Cases

A relatively unique aspect of products liability cases is that the event giving rise to a claim for product defects often also destroys the central evidence in the case—the defective product. Even if the product is not destroyed, the event may so damage the product that it is discarded as garbage by someone who fails to recognize its significance as evidence in a potential lawsuit. While turning down a potential products case may often be the first inclination of an attorney evaluating a claim based on a destroyed or discarded product, the recent decision in Murray v. Traxxas Corp., 78 So. 3d 691 (Fla. 2d DCA 2012), warrants giving such cases a second hard-look.

Due to an aggressive campaign seeking to legislatively overrule the Florida Supreme Court’s decision in D’Amario v. Ford, 806 So. 2d 424 (Fla. 2001), the decision may no longer be good law by the time this article is published. The abolition of this decision, which held that the fault of an automobile manufacturer in a crashworthiness case ordinarily may not be apportioned with the fault of the driver of the vehicle who allegedly caused the initial crash,(1) will be harmful not only to victims who suffer enhanced injuries in automobile accidents, but also to Florida’s consumers. 

Crashworthiness Doctrine
In the 1960s and 1970s, the products liability tort cause of action was developed to allow consumers injured by products to recover for their injuries according to a defect-based, rather than conduct-based, standard.(2) Under this new cause of action, a consumer could recover for injuries caused by a product defect, regardless of how the defect arose, because the action focused on the dangerous condition of the product, not the conduct that gave rise to the manifestation of the defect.(3) This law broadened the class of consumers injured by products that could recover for their damages from those that could recover only under traditional causes of action for negligence, breach of warranty, and fraud(4) by focusing only on the product and not on anyone’s conduct.(5)

(1) D’Amario v. Ford, 806 So. 2d 424, 426 (Fla. 2001).

(2) John C.P. Goldberg & Benjamin C. Zipursky, The Easy Case for Products Liability Law: A Response to Professors Polinsky and Shavell, 123 Harv. L. Rev. 1919, 1923 (2010). 

(3) Id. at 1923-24. 

(4) Id. 

(5) Thomas V. Van Flein, Allocation of Fault and Products Liability: A Comment on Safety Products and Human Error, 19 Alaska L. Rev. 141, 154 (2002). 

Co-Authored by Laura Posner née Gundersheim

During the period from late 2006 through mid-2007, the Court of Chancery of the State of Delaware (the “Chancery Court” or “Court”) asserted its jurisdiction and authority over numerous cases in situations where, in the past, it may have deferred to other jurisdictions. The Court’s decisions on motions to stay in Ryan v. Gifford¹ and In re The Topps Co. S’holders Litig.² most clearly mark, but are just examples of, this new trend. The Court justified its assertiveness, which arose in option backdating derivative suits and class actions challenging “going private” merger and acquisition (“M&A”) transactions, by emphasizing that the issues presented were “novel” and particularly important to the development of Delaware’s corporate law.

The factual nuances raised by the recent series of executive compensation and going private M&A cases may well be “novel.” More importantly, we believe the Court’s handling of these cases marked a deliberate effort to simplify the legal landscape surrounding the application of the business judgment rule, with potentially far-reaching and significant ramifications. We explore the reasons for this shift.

1. 918 A.2d 341 (Del. Ch. 2007).
2. 924 A.2d 951 (Del. Ch. 2007).