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In the European Union, products liability law in the 25 member states is governed by a directive issued by the European Council. See 85/374/EEC of 25 July 1985, as amended. The member states implement the Product Liability Directive through their own national laws, most of which involve a civil law-rather than common law-tradition. The Product Liability Directive- which adopted strict liability for defective products in 1985-was so controversial that it contained a provision requiring the European Commission to report periodically on how the directive is being implemented and applied in the member states and recommend whether the directive should be amended. On Sept. 14, the European Commission issued its third report, which recommended against further amendments to the directive, but offered suggestions for how the member states can harmonize their application of the directive in individual cases. See Report from the Commission to the Council, the European Parliament and the European Economic and Social Committee, http://eur-lex.europa.eu/LexUriServ/site/en/com/2006/com2006_0496en01.pdf. National courts differ in interpreting the directive Products liability cases are not common in the European Union, and the report noted that “for the first time there was some collective experience of the Directive being used in almost all Member States.” Id. at 6. With this increase in experience, however, came an increase in instances in which national courts offered differing interpretations of the directive. The commission vowed to continue to monitor developments in 2007 through the use of two working groups. One comprises experts designated by national authorities, and the other comprises interested stakeholders representing, among others, consumer advocates, product producers and insurers. The commission warned that “[a]s experience in the use of the Directive between Member States grows, discrepancies . . . between [them] may assume greater practical significance, in which case some intervention by the Commission may be warranted.” Id. at 12. Historically, E.U. member states had based liability for injuries to people or property either on contract law or tort law. Faced with growing demands for consumer protection, various member states had developed rules that made it easier for plaintiffs to recover. For example, France had eliminated the privity of contract defense, while Germany had adopted rules that made it more difficult for manufacturers to prove that they were not at fault. With its adoption, the Product Liability Directive brought “liability without fault” to the European Union. The directive starts with the fundamental premise that a “producer shall be liable for damage caused by a defect in his product.” Directive 85/374/ EEC at Art. 1. A “producer” is defined as a manufacturer of a finished product, a supplier of a raw material or the manufacturer of a component part. The directive places the burden on the plaintiff to prove “the damage, the defect and the causal relationship between the defect and the damage.” Id. at Art. 4. The recent report notes that “[q]uestions relating to the burden of proof continue to be controversial, and of real practical significance.” Some member states are using presumptions that effectively reverse the burden of proving the existence of a defect. Report at 9. Unlike the American experience detailed in the Restatement (Third) of Torts: Product Liability, the Product Liability Directive does not set forth the commonly understood three types of product defect: manufacturing defect, design defect and warning defect (or “failure to adequately warn or instruct”). Rather, the directive simply defines “defect” using a “consumer expectations” test: “A product is defective when it does not provide the safety which a person is entitled to expect, taking all circumstances into account, including: (a) the presentation of the product; (b) the use to which it could reasonably be expected that the product would be put; (c) the time the product was put into circulation.” Id. at Art. 6. As the reporters for the Restatement (Third) have observed, by adopting strict liability in this fashion, the European Union has “adopted a page from American legal history that the new Restatement has properly relegated to the waste basket.” James A. Henderson Jr. and Aaron D. Twerski, “What Europe, Japan, and Other Countries Can Learn from the New American Restatement of Products Liability,” 34 Tex. Int’l L.J. 1, 20 (1999). The major impetus for the Restatement (Third) was to correct two important problems with the original articulation of strict liability in � 402A of the Restatement (Second) of Torts (1965). First, � 402A failed to differentiate among the three different types of product defects identified above. Second, it failed to articulate a workable test for defining a “design defect.” Henderson & Twerski, supra, at 5-6. Both of these problems also are inherent in the Product Liability Directive, and by recommending that the directive not be amended, the European Commission has ensured that these problems will continue to be an issue. Distinguishing among the types of defect is important, the Restatement (Third) reporters recognized, because the test for measuring defectiveness should differ based on the type of defect alleged. The classic case for strict liability is the manufacturing defect. In manufacturing defect cases-such as with an exploding soda bottle-the product does not conform to what the consumer expected a product of that type to do. In the Restatement (Third), the reporters defined a manufacturing defect as a product that “departs from its intended design even though all possible care was exercised in [its] preparation and marketing.” Id. at 7. As the reporters have observed, a different, values-based test for defect must be used when the product does not obviously fail and the allegation instead is that it is defective in design or in its warnings. For these types of defects, the ultimate question is the “reasonableness of the risks posed by the product,” which in America is accomplished through the sort of risk-utility balancing that formed the basis of negligence at common law. Id. at 7-9. Thus, a product’s design is defective when “the risks of foreseeable harm . . . could have been reduced or avoided by the adoption of a reasonable alternative design,” and its warnings and instructions are inadequate when “the foreseeable risks of harm . . . could have been reduced or avoided by the provision of reasonable instructions or warnings.” Id. at 7 (quoting � 2 of the Restatement (Third)). Factors to consider in applying the risk-utility test include “the magnitude and probability of the foreseeable risks of harm, the instructions and warnings accompanying the product, and the nature and strength of consumer expectations regarding the product.” Id. at 19. Using a consumer expectations test exclusively-as the Product Liability Directive does-to determine whether a design or warning defect exists presents a host of problems that lead to the sort of unpredictability that the commission reported it was beginning to see in decisions applying the directive. The commission reported that the consumer expectations test has proven to be “incapable of precise definition,” and has led courts to disagree on whether a risk-utility balancing was ever appropriate and whether a producer’s conduct was ever relevant to the liability question. The American reporters had explained the difference between the risk-utility and consumer expectations tests in this way: “The perspective from which one engages in risk-utility analysis is the overall good of society . . . .By contrast, the notion of ‘expectations’ clings stubbornly to a more selfish, personal perspective. By common experience, different persons with different backgrounds have different expectations.” Id. at 19. For example, focusing on what a consumer expects does not answer the question of how much safety the law should require when “a design feature disappoints reasonable expectations of safety, but it is clear to the court that correcting the feature will introduce risks of a different sort, to a different group of consumers whose reasonable expectations will be disappointed by the new design.” Id. at 18. Similarly, when the product’s risks are obvious-such as with a punch press that lacks safety features-the consumer expectations test may not result in liability, whereas a risk-utility balancing would focus on what alternative designs were reasonably feasible and thus provide more safety. Id. Development risks defense is another source of dissent The commission also reported differences among national courts applying the “development risks defense” in which a producer is not liable when “the state of scientific knowledge at the time when he put the product into circulation was not such as to enable the existence of the defect to be discovered.” Report at 10-11. And it noted that some stakeholders-particularly the pharmaceutical industry-had argued strongly for a “regulatory compliance” defense, or what we would call “pre-emption.” The fact remains that, to date, there has not been much products liability litigation in the European Union and, without more cases promoting an increased disparity of national court rulings, the commission appears unlikely to rock the boat by proposing amendments to its 1985 compromise. Some commentators attribute this lack of litigation to the lack of contingency fees, limitations on discovery, the lack of jury trials, the “loser pays” rule and the lack of punitive damages. See, e.g., Rebekah Rollo, “Products Liability: Why the European Union Doesn’t Need the Restatement (Third),” 69 Brook. L. Rev. 1073, 1117-18 (2004). But as even the commission noted, many of these procedural barriers to recovery are under attack and, if changed, present “a risk of upsetting the prevailing balance.” Report at 6. J. Russell. Jackson is a partner in the complex mass torts group at New York’s Skadden, Arps, Slate, Meagher & Flom and an adjunct professor at Brooklyn Law School.

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